Redevelopments Pty Limited v Enima Pty Limited

The Court of Appeal of the Australian Capital Territory heard an appeal from orders made by a single judge of the Supreme Court. The dispute concerned the purchase of a Crown lease for land at Macquarie, ACT, upon which an hotel was situated. The appellant, Redevelopments Pty Limited, purchased the lease from the respondent, Enima Pty Limited, under a call option deed and subsequent contract of sale. The respondent sought to enforce a higher purchase price than that stipulated in the contract, alleging that the appellant had failed to fulfil an assumed obligation to lodge a development application, which would have triggered a change of use charge and, in the respondent's view, a higher effective purchase price.

The central legal issues before the Court of Appeal were whether the trial judge erred in implying a term into the contract, rectifying the contract, or finding an estoppel against the appellant. Specifically, the court had to determine if a common assumption between the respondent and the original option holder, Mbark Pty Ltd, that a development application would be lodged before the option was exercised, could override the express terms of the option and contract. The court also considered whether the appellant, as a nominee of Mbark, was bound by any equities or assumptions that existed between the respondent and Mbark, and whether there was an implied duty on the appellant to co-operate in achieving a higher purchase price for the respondent.

The Court of Appeal found that the trial judge's conclusions were not sufficiently supported by the evidence. The court held that the express terms of the option and contract did not impose an obligation on Mbark or the appellant to make or pursue a development application. The court applied the objective theory of contract, emphasising that the meaning of contractual terms is determined by what a reasonable person would understand them to convey, rather than by subjective intentions. It was held that the appellant, as a nominee, was entitled to rely on the terms of the option and contract as they stood, and was not bound by prior assumptions between the respondent and Mbark that were not reflected in those terms. The court distinguished between an implied duty to co-operate in fundamental obligations and acts necessary for a party to gain a benefit, finding that the latter did not apply here, and that the contract adequately accommodated the absence of a development application.

The appeal was allowed with costs. The orders made by the trial judge, including the declaration regarding the purchase price, rectification, and estoppel, were discharged and set aside. The originating claim and statement of claim were dismissed with costs.