Westjade Pty. Limited v Ava Enterprises, Inc

Westjade Pty. Limited (Westjade) and Ava Enterprises, Inc. (Ava) were parties to a dispute before the Supreme Court of Victoria. The core of the disagreement concerned the interpretation and enforceability of a settlement agreement reached between the parties, which Westjade sought to enforce. Ava, however, resisted enforcement, alleging that the settlement agreement was void due to a fundamental mistake regarding the subject matter of the dispute.

The primary legal issue before the Court was whether a settlement agreement, purportedly entered into by the parties to resolve a prior contractual dispute, could be set aside on the grounds of a fundamental mistake. Specifically, the Court had to determine if Ava could successfully resist the enforcement of the settlement agreement by demonstrating that both parties, at the time of its formation, shared a common mistaken belief about a crucial aspect of the underlying dispute, such that the agreement would not have been made had the true facts been known.

Justice Vija Zars applied the principles governing the setting aside of contracts due to common mistake. The Court considered the established legal tests for fundamental mistake, which require the mistake to be so fundamental that it goes to the root of the contract and renders the subject matter of the agreement essentially different from what the parties believed it to be. The Court found that Ava had failed to establish that the mistake alleged was sufficiently fundamental to vitiate the settlement agreement. Consequently, the Court held that the settlement agreement remained valid and enforceable. The Court ordered that the settlement agreement be enforced.