Fobeza Pty Ltd v James Adam Pty Ltd [2020] NSWSC 597

Fobeza Pty Ltd v James Adam Pty Ltd [2020] NSWSC 597

The plaintiff validly rescinded the contract because the area of lot 101 as shown on the registered plan exceeded the 2100m2 threshold stipulated in Additional Clause 41.3(a). The mistake in the area shown on the sketch plan did not constitute an obvious error apparent to a reasonable person in the parties' position, nor was the literal application of the rescission clause absurd. Correction of the threshold figure as a matter of construction was not justified. Accordingly, the contract was validly rescinded and the plaintiff entitled to a refund of the deposit.

Jurisdiction
Australia
Judgment Date
20 May 2020
Procedural Posture
Contract Dispute (rescission of Contract for Sale of Land) / Final Judgment and Orders After Trial
Outcome
Plaintiff declared to have validly rescinded the contract; deposit to be refunded; defendant's cross-claim dismissed; costs to the plaintiff.
Legal Topics
['construction of Commercial Contracts' 'right to Rescind Contract on Specified Ground' 'correction of Contractual Mistakes as a Matter of Construction']
['equity' 'contracts'] ['construction of Commercial Contracts' 'right to Rescind Contract on Specified Ground' 'correction of Contractual Mistakes as a Matter of Construction']

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Procedural Posture

Contract Dispute (rescission of Contract for Sale of Land) / Final Judgment and Orders After Trial

Legal Issues

  1. 1 ['Whether purchaser validly rescinded the contract under Additional Clause 41.3(a) due to the area of lot 101 exceeding 2100m2 on the registered plan' 'Whether the mistake regarding the area of proposed lot 101 on the sketch plan could be corrected as a matter of construction to align with the registered plan' 'Whether the location of the easement as registered was substantially different to that shown on the sketch plan, entitling rescission']

Ratio Decidendi

The plaintiff validly rescinded the contract because the area of lot 101 as shown on the registered plan exceeded the 2100m2 threshold stipulated in Additional Clause 41.3(a). The mistake in the area shown on the sketch plan did not constitute an obvious error apparent to a reasonable person in the parties' position, nor was the literal application of the rescission clause absurd. Correction of the threshold figure as a matter of construction was not justified. Accordingly, the contract was validly rescinded and the plaintiff entitled to a refund of the deposit.

Court Disposition

Plaintiff declared to have validly rescinded the contract; deposit to be refunded; defendant's cross-claim dismissed; costs to the plaintiff.

Orders

  • ['Declaration that the contract was validly rescinded by the plaintiff on 24 October 2019.' 'Declaration that the plaintiff is entitled to have the deposit of $112,500 refunded.' 'Liberty to apply on issues concerning deposit or interest.' "Defendant's cross-claim dismissed." "Defendant/cross-claimant to pay...