Sentinel Property Group Pty Ltd v ABH Hotel Pty Ltd

Sentinel Property Group Pty Ltd sought to enforce a call option that ABH Hotel Pty Ltd had granted them over certain land. The call option was contingent on ABH Hotel obtaining the consent of its mortgagees within a specified period. ABH Hotel failed to secure consent within the given timeframe and subsequently attempted to terminate the call option. Sentinel Property rejected the termination and argued that ABH Hotel had breached its implied obligation to make reasonable efforts to obtain the mortgagees’ consent. The primary judge ruled that Sentinel Property bore the burden of proving that ABH Hotel's alleged breaches were causally significant. This decision was challenged on appeal.

The central legal issue was whether the primary judge correctly assigned the burden of proof to Sentinel Property to demonstrate that ABH Hotel's alleged breaches of the implied obligation were causally significant. Another issue was whether the primary judge was correct in finding that Sentinel Property had failed to prove that ABH Hotel had indeed breached the implied obligation. Finally, the court considered whether the primary judge was correct in finding that even if the breaches had been proved, they would not have been causally significant.

The Court of Appeal dismissed the appeal and found that the primary judge had correctly assigned the onus to Sentinel Property to prove that the alleged breaches were causally significant. The court held that there was no evidence that ABH Hotel had not made reasonable efforts to obtain the mortgagees’ consent. Therefore, Sentinel Property failed to meet its burden of proof on both counts. Consequently, the primary judge's decision was upheld, and the appeal was dismissed. Sentinel Property was ordered to pay ABH Hotel's costs of the appeal and the costs of the interlocutory injunction application. Order 1 of the interlocutory order made by Dalton JA on 11 October 2022 was discharged, and ABH Hotel's application for orders under rule 264 was remitted to the trial division for further determination.