M & W Zaki Pty Ltd v MindChamps Preschool Ltd (No 2)

M & W Zaki Pty Ltd (appellants) appealed a decision of the primary judge concerning a dispute with MindChamps Preschool Ltd (respondent) arising from the sale of nine childcare centres. The dispute centred on a Term Sheet executed by the parties, which outlined a process for expressions of interest and included an exclusivity period. The appellants were alleged to have breached their exclusivity obligations under the Term Sheet by continuing to communicate with other interested parties during this period.

The central legal issues before the Court of Appeal were whether the primary judge had erred in finding that the appellants had breached their exclusivity obligations under the Term Sheet, and consequently, whether such breaches entitled the respondent to the return of a $500,000 deposit.

The Court of Appeal affirmed the primary judge's findings. It reasoned that the Term Sheet clearly imposed an obligation on the appellants to cease discussions and communications with other interested parties for a six-week period. The evidence demonstrated that the appellants had continued to engage with other potential buyers during this exclusivity period, thereby breaching the terms of the agreement. The Court held that this breach of the exclusivity provisions enlivened the respondent's right to the return of the deposit paid under the Term Sheet.

The appeal was dismissed with costs.