Veremu Pty Ltd v Ezishop.Net Ltd

Veremu Pty Ltd (in liquidation) as the plaintiff, sued Ezishop.Net Ltd as the defendant, for amounts allegedly due under a share subscriber agreement. The agreement contemplated a future subscription for shares as part of a funding programme. The company subsequently went into liquidation, and the plaintiff, as the liquidator, sought to recover the subscription amounts. The defendant argued that the agreement was frustrated by the company's insolvency and subsequent liquidation.

The central legal issue before the Court of Appeal was whether the share subscriber agreement had been frustrated by the company's cessation of trading and entry into liquidation. This required the court to consider whether the supervening event (liquidation) had rendered performance of the contract impossible or radically different from what was originally contemplated, thereby discharging the parties from their obligations.

The Court of Appeal held that the agreement was not frustrated. Their Honours reasoned that the agreement contemplated a future subscription for shares, and the company remained able and willing to issue those shares. Crucially, the court found that the risk of the company ceasing to trade and going into liquidation was within the contemplation of the parties at the time the agreement was made, and the terms of the agreement covered such a scenario. Therefore, the supervening event did not fundamentally alter the nature of the contractual obligations, and the doctrine of frustration did not apply.

The appeal was dismissed, and the defendant was awarded costs.