World Best Holdings Ltd v Sarker

The dispute in *World Best Holdings Ltd v Sarker* concerned a retail lease and arose between the landlord, World Best Holdings Ltd (appellant), and the tenant, Sarker (respondent). The matter came before the Supreme Court of New South Wales, Court of Appeal.

The Court was required to determine several legal issues, including whether pre-contractual negotiations or post-contractual conduct could be admitted to construe the terms of the lease. It also considered whether the landlord, by preventing or obstructing the tenant's performance, could take advantage of its own wrong, thereby rendering the tenant not in breach. Further issues involved the availability of reliance loss damages, the onus of proof in such claims, and whether the landlord was entitled to terminate the lease for the tenant's breach of an essential term without complying with section 129 of the *Conveyancing Act 1919* (NSW). The Court also had to consider whether the landlord's conduct constituted unconscionable conduct under the relevant retail lease legislation and the principles governing appeals from the Administrative Decisions Tribunal on questions of law.

The Court held that pre-contractual negotiations and post-contractual conduct are generally inadmissible for the purpose of construing a contract. It affirmed the principle that a party who prevents or obstructs the performance of a contract by the other party cannot rely on that non-performance as a breach. Regarding damages, the Court noted that the onus rests on the party in breach to demonstrate that performance would not have enabled the innocent party to recover their expenditure. The Court found that the landlord had breached the lease and engaged in unconscionable conduct, and that the landlord was not entitled to terminate the lease without complying with section 129 of the *Conveyancing Act 1919* (NSW).

The Court ordered that the appeal concerning grounds 1 to 15 be dismissed, leave to appeal in respect of grounds 16 to 22 be refused, and that the appellant pay the respondent's costs.