MAAG Developments Pty Ltd v Oxanda Childcare Pty Ltd

MAAG Developments Pty Ltd, the purchaser of a parcel of land, contested the validity of a termination clause in a lease agreement with Oxanda Childcare Pty Ltd, the intended lessee of the property. The dispute arose because the land, intended for the construction of a childcare centre, was to be acquired by MAAG from a company related to Oxanda. The agreement for lease contained a termination clause which allowed either party to terminate if council approvals were not obtained and if the settlement of the sale of the land had not occurred. MAAG argued that this 'failure to settle requirement' was inconsistent with the parties' intention that the settlement of the sale would occur simultaneously with the execution of the lease agreement.

The central legal issues before the court were whether the termination clause, specifically the 'failure to settle requirement', was consistent with the contractual intention of the parties and whether MAAG could raise a new argument on appeal that had not been expressly put to the trial judge. The court considered whether the clause was surplus to the contractual intention, and if so, whether it could be disregarded under the principle established in Fitzgerald v Masters. The court also considered the applicability of Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd in determining the enforceability of the termination clause.

The court found that the contractual scheme was inconsistent with the 'failure to settle requirement', as the parties had intended the settlement of the land to occur at the same time as the execution of the lease agreement. This inconsistency rendered the 'failure to settle requirement' surplus to the contractual intention, and therefore it could be disregarded. The court allowed the appeal, holding that the termination clause was unenforceable. Furthermore, the court permitted MAAG to raise the new argument on appeal, as the basis of the argument was before the trial judge, it was a question of law only, and no prejudice was identified by Oxanda.