We are Here Pty Ltd v Zandata Pty Ltd - [2010] NSWSC 262

CITATION: We Are Here Pty Ltd v Zandata Pty Ltd [2010] NSWSC 262

HEARING DATE(S): 24.03.10, 25.03.10

JUDGMENT DATE :
9 April 2010

JUDGMENT OF: Windeyer AJ

DECISION: The plaintiff is entitled to orders for specific performance, that the cross claim be dismissed and that the defendant pay its costs

CATCHWORDS: CONTRACTS – mistake – unilateral mistake – option to purchase included in lease by mistake – lease result of exercise of option for new lease which should not have included option to purchase – new lease assigned to plaintiff company which exercised option to purchase – whether defence to specific performance available on ground of mistake REAL PROPERTY – leases – assignment of leases – whether assignee had knowledge of mistake – whether specific performance available to assignee REAL PROPERTY – leases – whether option to purchase lease exercisable by assignee – effect after registration of knowledge gained prior to registration

LEGISLATION CITED: Real Property Act 1900
Land Registration Act 1925 (UK)

CATEGORY: Principal judgment

CASES CITED: Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183
Downie v Lockwood [1965] VR 257
Tanzone Pty Ltd v Westpac Banking Corporation [1999] NSWSC 478; (1999) NSW ConvR 55-908
Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422
Thirsty Mack’s Pty Ltd v Hasbeen Pty Ltd [2008] FCA 32
Tutt v Doyle (1997) 42 NSWLR 10
Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521

PARTIES: We Are Here Pty Ltd - plaintiff
Zandata Pty Ltd - defendant

FILE NUMBER(S): SC 09/288827

COUNSEL: H Stowe - plaintiff
Dr C Birch SC/J Atkin - defendant

SOLICITORS: Fishburn Watson O’Brien - plaintiff
Bonfield Riley Solicitors - defendant

LOWER COURT JURISDICTION: Supreme Court

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER AJ

9 April 2010

2009/288827 We are Here Pty Ltd v Zandata Pty Ltd

JUDGMENT

Issue

1 The plaintiff We Are Here Pty Ltd (We Are Here) seeks specific performance of a contract claimed to have arisen between it as purchaser and the defendant Zandata Pty Ltd (Zandata) as vendor pursuant to the exercise of an option to purchase contained in a registered lease between Zandata and Mr and Mrs Boyd. The plaintiff by transfer from Mr and Mrs Boyd is now the registered proprietor of that lease. The defendant says that the clause in the lease granting the option was included by mistake. The question is whether or not specific performance should be granted.

Facts

2 The property in question is the land in folio identifier 241/751385 and Folio: Auto Consol 15436-93 upon which land is situated the Hi-Way Motel South Grafton. Zandata is the registered proprietor of the property.

3 The property was subject to a ten year lease registered No. 3391230 (the first lease) from Zandata to Rapidale Pty Ltd which was to expire on 19 August 2007. That lease included an option to purchase set out in cl 28 for a purchase price of $662,500 subject to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 262
Decision Date: 9 April 2010

CaseChat Overview and Summary

In this case, We are Here Pty Ltd sought specific performance of a contract for the sale of a property. The property was originally leased to Zandata Pty Ltd, who then assigned the lease to We are Here Pty Ltd. Zandata Pty Ltd had included an option to purchase the property in the original lease, but this was done in error. We are Here Pty Ltd exercised the option to purchase the property after the assignment of the lease. Zandata Pty Ltd argued that the contract for the sale of the property should be set aside because of the unilateral mistake in including the option to purchase in the lease.

The primary legal issues were whether a unilateral mistake could provide a defence to an action for specific performance and whether the assignment of the lease to We are Here Pty Ltd, which occurred before the mistake was discovered, had any impact on the enforceability of the contract. Additionally, the court had to determine whether We are Here Pty Ltd, as the assignee, was bound by the mistake made by Zandata Pty Ltd and whether the option to purchase the lease was exercisable by We are Here Pty Ltd.

The court found that a unilateral mistake could be a valid defence to an action for specific performance if the mistake was material and the party seeking to set aside the contract was not at fault. The court noted that the mistake in including the option to purchase was material and that We are Here Pty Ltd was not at fault for the mistake. However, the court also found that the assignment of the lease to We are Here Pty Ltd, which occurred before the mistake was discovered, meant that We are Here Pty Ltd was not bound by the mistake. Therefore, the court held that We are Here Pty Ltd could enforce the option to purchase the property. The court also found that the registration of the assignment of the lease after the mistake was discovered did not affect the enforceability of the contract.

The court ordered Zandata Pty Ltd to specifically perform the contract for the sale of the property to We are Here Pty Ltd. The court held that We are Here Pty Ltd was entitled to specific performance because the mistake in including the option to purchase was not their fault, and the assignment of the lease occurred before the mistake was discovered. The court also held that the registration of the assignment of the lease after the mistake was discovered did not affect the enforceability of the contract.

Orders