Nergl Developments Pty Ltd v Vella

In the New South Wales Court of Appeal, Nergl Developments Pty Ltd and Kindelon Pty Ltd (appellants) appealed against orders made by the primary judge concerning a dispute with Ms Vella (respondent). The dispute arose from a mediation process that resulted in heads of agreement, intended to terminate an earlier agreement. A proposed deed of release was to be entered into by the parties, and the central question was whether this deed was intended to encompass all terms of the settlement.

The court was required to determine several legal issues. Firstly, it had to construe the heads of agreement and the proposed deed of release to ascertain whether a binding contract had been formed, particularly in light of the principles established in *Masters v Cameron* regarding agreements to enter into a formal contract. Secondly, the court considered the construction of an easement, specifically whether a specified width included a kerb, gutter, and footpath, and whether any ambiguity existed in its description. Finally, the court examined whether implied terms were necessary to give business efficacy to the agreement, including a temporary easement for construction and an expansion of the easement to permit the construction of a roundabout.

The Court of Appeal reasoned that the heads of agreement, when read in conjunction with the proposed deed of release, indicated that the parties intended to be bound by the terms agreed upon in the heads of agreement, even though a formal deed was yet to be executed. The court found that the proposed deed was not a condition precedent to the formation of a binding agreement, but rather a document to give effect to the terms already settled. Regarding the easement, the court determined that the specified width was not ambiguous and did not include the kerb, gutter, and footpath. Furthermore, the court held that no temporary construction easement or expansion of the easement for a roundabout was to be implied, as such terms were not necessary for the business efficacy of the agreement.

The appeal was otherwise dismissed, with the court setting aside the primary judge's costs orders and substituting new orders regarding the apportionment of costs between the parties in the Equity Division. Nergl Developments Pty Ltd was ordered to pay Ms Vella’s costs in the Court of Appeal.