Ousley v Varsity Life - [2005] NSWSC 462

CITATION:
Ousley v Varsity Life [2005] NSWSC 462

HEARING DATE(S): 9 May 2005

JUDGMENT DATE :

9 May 2005

JURISDICTION:
Equity Division - Commercial List

JUDGMENT OF:
McDougall J at 1

DECISION:
See paras [49] and [50] of judgment

CATCHWORDS:
CONTRACT - where plaintiff and defendant concluded Management Rights Agreement and Unit Sale Agreement - where common ground that Unit Sale Agreement rescinded - whether Management Rights Agreement terminated - whether implied term that lawful rescission of Unit Sale Agreement determines Management Rights Agreement - whether Management Rights Agreement continues to be enforceable upon rescission of Unit Sale Agreement - whether Management Rights Agreement discharged by frustration after rescission of Unit Sale Agreement - whether plaintiff entitled to forfeit deposit for Management Rights Agreement - whether plaintiff entitled to damages - no question of principle

CASES CITED:
Australis Media Holdings v Telstra Corporation (1998) 43 NSWLR 104
B P Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Davis Contractors Limited v Fareham Urban District Council [1956] AC 696
Mackay v Dick (1881) 6 App Cas 251
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153
Secured Income Real Estate v St Martins Investments Pty Ltd (1979) 144 CLR 596

PARTIES:
Ousley Pty Limited (Plaintiff)
Varsity Life Pty Limited (Defendant)

FILE NUMBER(S):
SC 50039/05

COUNSEL:
R R I Harper SC (Plaintiff)
R W Tregenza (Defendant)

SOLICITORS:
Massey Bailey (Plaintiff)
Andreones (Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

9 May 2005 Ex tempore (revised 11 May 2005)

50039/05 OUSLEY PTY LIMITED v VARSITY LIFE PTY LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff (Ousley) and the defendant (Varsity Life) entered into two agreements in August 2003. One, called the Management Rights Agreement, was made on 12 August 2003. It gave Varsity Life the right to manage (otherwise than as a strata management agent) a strata title development in Wollongong known as Northgate Apartments. The other, called the Unit Sale Agreement, was a contract for sale by Ousley to Varsity Life of unit 111 in the Northgate Apartments.

2 The consideration under the Management Rights Agreement was $1.6 million, with a deposit of $160,000 payable to Ousley's solicitors Mallesons Stephen Jaques as stakeholder. The consideration under the Unit Sale Agreement was $300,000, with a deposit of $30,000 which was likewise payable to Mallesons Stephen Jaques as stakeholder.

3 It is common ground that Varsity Life rescinded the Unit Sale Agreement on 13 February 2004 pursuant to its express contractual right under cl 31. The question for decision is whether the Management Rights Agreement has thereby come to an end. Varsity Life says that it has, and that it is entitled to the return of its deposit together with any interest accrued thereon.

The Issues

4 On 22 April 2005 the Court…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] NSWSC 462
Decision Date: 9 May 2005

CaseChat Overview and Summary

The case involved the plaintiff, Ousley, and the defendant, Varsity Life, concerning a dispute over the termination and enforceability of a Management Rights Agreement (MRA) following the rescission of a Unit Sale Agreement (USA). The parties appeared before the Federal Court of Australia. The central issue was whether the MRA was terminated, discharged by frustration, or remained enforceable upon the rescission of the USA. A secondary issue was whether the plaintiff was entitled to forfeit the deposit for the MRA or claim damages.

The court considered whether an implied term existed that the MRA would terminate upon the lawful rescission of the USA. The court determined that no such term was implied and therefore, the MRA did not automatically terminate. The court further held that the MRA was not discharged by frustration, meaning the contract remained enforceable despite the rescission of the USA. The court found that the plaintiff was not entitled to forfeit the deposit for the MRA or claim damages, as there was no question of principle that would justify such an outcome. The court's reasoning was based on the absence of any express or implied terms in the MRA that would lead to its termination or frustration upon the rescission of the USA. The court held that the MRA remained enforceable and binding on the parties.

Orders