Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Malago Pty Ltd v AW Ellis Engineering Pty Ltd [2012] NSWCA 227 Hearing dates: 16 May 2012 Decision date: 27 July 2012 Before: Bathurst CJ at [1]
Macfarlan JA at [2]
Meagher JA at [58]Decision: (1) Grant leave to appeal from the orders made at first instance on 28 February 2012.
(2) Appeal allowed in part.
(3) Set aside Orders 2 to 13 inclusive made on 28 February 2012.
(4) Order that the contract referred to in Order 1 made on that date be specifically performed as provided in the orders below.
(5) Order that within 14 days of the date of these orders (or within such extended period as may be determined by a judge of the Equity Division) each of the appellants and the respondents executes a document in the form set out in Annexure A to these orders (the "Formal Contract").
(6) Liberty to apply on three days' notice to a judge of the Equity Division in relation to the date and time of settlement of the Formal Contract and generally in relation to the implementation and enforcement of these orders.
(7) Order that the Formal Contract be settled in accordance with clause (2) of it and such directions as to the date and time of settlement as may be given by a judge of the Equity Division
(8) Order, pursuant to s. 94 of the Civil Procedure Act 2005, that if any of the appellants does not comply with order 5, the Formal Contract be executed on his or its behalf by a Registrar of the Supreme Court.
(9) Order that the appellants specifically perform each of the obligations assumed by them under the Formal Contract as and when the time for performance of those obligations arises under the Deed.
(10) Order the appellants to pay 75 per cent of the respondents' costs of the proceedings on appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: CONTRACTS - Heads of Agreement relating to super yacht marina business - whether parties intended to be legally bound - whether void for uncertainty or incompleteness
CONTRACTS - negotiations between solicitors concerning formal agreement intended to give effect to Heads of Agreement - whether parties bound by agreements on some terms prior to agreement on all and execution of document
EQUITABLE REMEDIES - Heads of Agreement - specific performance of term that formal agreement be executed - whether permissible for court to add to the agreed terms provisions that are simply consistent with the Heads of Agreement and reasonable - court may only add provisions of a…
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- Case
- [2012] NSWCA 227
- Decision Date
CaseChat Overview and Summary
The Court of Appeal was required to determine whether the Heads of Agreement created a binding contract, and if so, whether specific performance could be ordered for the execution of a formal contract. A key legal issue was the extent to which a court could add provisions to an agreement in the process of ordering specific performance, particularly whether it could include terms merely consistent with and reasonable in light of the Heads of Agreement, or only those of a mechanical nature necessary to implement the existing agreement.
The Court found that the Heads of Agreement did create a binding contract, despite the intention to execute a formal document. It held that where parties intend to be bound by Heads of Agreement, they are bound even if a formal contract is contemplated, unless it is clear that the Heads of Agreement were conditional upon the execution of the formal document. Regarding specific performance, the Court clarified that a court can only add provisions that are mechanical in nature and designed to implement the existing agreement, not those that add to or vary the agreed terms, even if they appear reasonable or consistent. The Court allowed the appeal in part, setting aside some of the first instance orders and ordering specific performance of the contract, including the execution of a Formal Contract within a specified period.
Orders
Orders of the court
(1) Grant leave to appeal from the orders made at first instance on 28 February 2012.
(2) Appeal allowed in part.
(3) Set aside Orders 2 to 13 inclusive made on 28 February 2012.
(4) Order that the contract referred to in Order 1 made on that date be specifically performed as provided in the orders below.
(5) Order that within 14 days of the date of these orders (or within such extended period as may be determined by a judge of the Equity Division) each of the appellants and the respondents executes a document in the form set out in Annexure A to these orders (the "Formal Contract").
(6) Liberty to apply on three days' notice to a judge of the Equity Division in relation to the date and time of settlement of the Formal Contract and generally in relation to the implementation and enforcement of these orders.
(7) Order that the Formal Contract be settled in accordance with clause (2) of it and such directions as to the date and time of settlement as may be given by a judge of the Equity Division
(8) Order, pursuant to s. 94 of the Civil Procedure Act 2005, that if any of the appellants does not comply with order 5, the Formal Contract be executed on his or its behalf by a Registrar of the Supreme Court.
(9) Order that the appellants specifically perform each of the obligations assumed by them under the Formal Contract as and when the time for performance of those obligations arises under the Deed.
(10) Order the appellants to pay 75 per cent of the respondents' costs of the proceedings on appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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