Toohey v Golder

Toohey v Golder involved a dispute between the plaintiff, Ms Toohey, and the defendants, Mr and Mrs Golder, regarding the formation of a contractual relationship. The plaintiff claimed that she had entered into a contract with Mr and Mrs Golder but was seeking clarification on whether the contract was with the individuals or with the company they had incorporated, High Church Pty Ltd. The defendants argued that the contract was with the company, either from its inception or as a result of subsequent novation or ratification. The matter was heard in the Supreme Court of New South Wales.

The primary legal issue before the Court was whether the contract was initially formed with Mr and Mrs Golder personally or with High Church Pty Ltd, and if the former, whether the contract was subsequently novated to involve High Church Pty Ltd in place of the individual defendants. The defendants attempted to rely on section 131 of the Corporations Act 2001 (Cth), which addresses contracts entered into before a company is registered. The Court found that Mr and Mrs Golder did not purport to enter into a contract on behalf of High Church Pty Ltd before its registration, and therefore the statutory provision did not apply. The Court also dismissed the argument that the contract had been novated, finding that the requirements for establishing novation had not been met.

The Court held that the defendants' argument for novation failed because it did not sufficiently address the legal requirements for novation, which involve an agreement to substitute a new contract for an old one, discharging the obligations of the original contract. The Court relied on the authoritative statement of these requirements from the High Court's decision in ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW). The Court found that no such agreement existed in this case, and therefore the contract remained with Mr and Mrs Golder personally.

The final orders of the Court were that the contract remained with Mr and Mrs Golder personally, and that there had been no novation of the contract to involve High Church Pty Ltd. The Court did not find it necessary to consider whether there had been ratification of a pre-registration contract by High Church Pty Ltd.