Petan Pty Ltd v Schult

Petan Pty Ltd (the purchaser) and Schult (the vendor) were parties to a contract for the sale of a property. The purchaser sought to terminate the contract, alleging a breach of a special condition. The matter came before the Court of Appeal of the Supreme Court of New South Wales.

The central legal issue was the interpretation of a special condition which stipulated that it was a condition precedent to settlement that, at the contract date, there was no legal restriction on the use of the property for a residential dwelling. The property was listed on the Heritage Register, which required approval for any works that might alter its nature or appearance. The purchaser contended that this heritage listing constituted a legal restriction on the use of the property as a residential dwelling.

The Court of Appeal held that the special condition was not confined to the habitable state of the property at the contract date. It reasoned that the heritage listing imposed a legal restriction on the use of the property because any works, even routine maintenance or repairs, that involved a change to the fabric of the building would require approval. This requirement for approval, and the potential for it to be withheld or to incur additional costs, amounted to a legal restriction on the unfettered use of the property as a residential dwelling. The court found that the condition precedent had not been satisfied.

The appeal was dismissed.