Cao v ISPT Pty Ltd [2024] NSWCA 188

Cao v ISPT Pty Ltd [2024] NSWCA 188

The Court held that the public health orders did not frustrate the lease because they did not prevent the tenant from opening the premises for business (including for takeaway); the special condition did not require illegal activity and must be construed in context; and, most importantly, the risk of such supervening events was allocated to the tenant in the lease. The government restrictions did not render performance fundamentally or radically different from the bargain as agreed, nor was the lease rendered valueless or incapable of assignment. The high threshold for frustration is not met.

Parties
First Appellant: Howard Cao; Second Appellant: Yuan Zhao; First Respondent: ISPT Pty Ltd; Second Respondent: AWPF Management Pty Ltd
Jurisdiction
Australia
Judgment Date
08 August 2024
Procedural Posture
Appeal / Court of Appeal Decision
Outcome
Appeal dismissed
Legal Topics
Frustration of Contract, Commercial Leases, COVID 19 Restrictions, Impossibility of Performance, Allocation of Risk
Contract Law Landlord and Tenant Property Law Frustration of Contract Commercial Leases COVID 19 Restrictions Impossibility of Performance Allocation of Risk

Case Brief

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Parties

Howard Cao

First Appellant

Yuan Zhao

Second Appellant

ISPT Pty Ltd

First Respondent

AWPF Management Pty Ltd

Second Respondent

Procedural Posture

Appeal / Court of Appeal Decision

Legal Issues

  1. 1 Whether COVID public health restrictions prevented the tenant from 'opening' the premises for business and frustrated the lease
  2. 2 Whether the lease was otherwise frustrated due to supervening events and business unviability

Ratio Decidendi

The Court held that the public health orders did not frustrate the lease because they did not prevent the tenant from opening the premises for business (including for takeaway); the special condition did not require illegal activity and must be construed in context; and, most importantly, the risk of such supervening events was allocated to the tenant in the lease. The government restrictions did not render performance fundamentally or radically different from the bargain as agreed, nor was the lease rendered valueless or incapable of assignment. The high threshold for frustration is not met.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.
  • Appellants to pay the respondents' costs of the appeal.