Law401

Malago Pty Ltd v AW Ellis Engineering Pty Ltd [2012] NSWCA 227

Name of Court: Court of Appeal, Supreme Court, New South Wales

Name of Judges: Bathurst CJ, Macfarlan JA, Meagher JA

Date of Judgement: 27 July 2012

FACTS

According to Sinclair (2014, p.4), “the appellant, ‘James Interests’, entered into negotiations with the respondent, ‘Ellis Interests’, for the sale of a super yacht marina business in Sydney. The parties fell into dispute during negotiations, culminating in mediation. After mediation, the parties entered into a Heads of Agreement for James Interests to purchase Ellis’ Interests in the business.

Subsequently, the parties failed to settle a formal contract clarifying the terms of the Heads of Agreement, and James Interests withdrew from the negotiations. Ellis Interests commenced proceedings, seeking specific performance of the Heads of Agreement and the sale of the business.

At trial in the New South Wales Supreme Court Equity Division, Sackar J gave orders for specific performance, requiring the parties to enter into a deed with particular clauses to be included. Sackar J considered the parties to have already agreed on these clauses before the negotiations broke down. The decision was appealed to the NSW Court of Appeal.”

Furthermore, Gilbert + Tobin (2012) says that the dispute at the hearing was whether the parties had factually anticipated to be bound by the Heads of Agreement which envisaged the execution of a formal agreement or whether the Heads of Agreement was void for uncertainty. The plaintiff contended that the Heads of Agreement was void for uncertainty because not all relevant parties including the Maritime Authority of NSW (‘Maritime Authority’), were parties to the Heads of Agreement, the 21.6% area was not precisely identified, the expression ‘Gross Marina berth income’ was not defined in the Heads of Agreement and there was an apparent conflict between the indemnity and mutual releases clauses.

Judgement

The Appeal Judgement...