Waters Lane v Sweeney

Waters Lane Pty Ltd and others (appellants) appealed a decision concerning the termination of a Heads of Agreement dated 9 March 2004 with Sweeney and others (respondents). The dispute centred on whether the respondents had validly terminated the agreement.

The primary legal issues before the court were: whether the Heads of Agreement was validly terminated; whether the respondents' termination notice was effective given that a condition subsequent had not been satisfied by a sunset date, and whether an unexercised unilateral right to extend that sunset date should be considered when assessing a breach; and whether a contractual right of termination, which required notice to cure a breach, could be validly exercised for a breach that was incapable of being cured within the stipulated notice period. The court also considered whether the act of giving notice of termination under the contract constituted an election that waived any right to terminate at common law.

The court reasoned that the Heads of Agreement was validly terminated by the respondents. It held that the termination notice was effective, and that the failure to satisfy the condition subsequent by the sunset date constituted a breach. The court found that the existence of an unexercised unilateral right to extend the sunset date did not prevent the assessment of a breach occurring by that date. Furthermore, the court determined that a contractual right to terminate, requiring a notice period to cure a breach, could be validly invoked even if the breach was not capable of being cured within that time. The court also concluded that giving notice of termination pursuant to the contract did not amount to an election that waived the right to terminate at common law.

Consequently, the appeal was dismissed, and it was declared that the Heads of Agreement was validly terminated by the respondents. The appellants were ordered to pay the respondents' costs of the appeal.