Lutre Pty Ltd & Anor v Ellison, Barry [1997] FCA 1474

Lutre Pty Ltd & Anor v Ellison, Barry [1997] FCA 1474

Sections 1073 and 1073A of the Corporations Law did not exclude the doctrine of election. The statutory wording made the contract voidable at the purchaser's option, leaving a choice between avoidance and affirmation. Mr Ellison had knowledge from September 1993, and certainly by February 1996, of facts sufficient to alert him to the possibility of avoiding the contracts. His continued enjoyment of ownership benefits, receipt of pooled income and guaranteed payments, participation in efforts to regularise the scheme, and long inactivity after legal advice were conduct consistent with affirmation and inconsistent with avoidance. He therefore elected to affirm the contracts, and the notice...

Jurisdiction
Australia
Judgment Date
19 December 1997
Procedural Posture
Application for Declarations Concerning Purported Avoidance of Contracts for Prescribed Interests Under the Corporations Law / Judgment After Hearing; Proceedings Adjourned for Short Minutes of Order and Costs Reserved
Outcome
The respondent's notice dated 7 January 1997 was held ineffective; the applicants were found entitled to appropriate declaratory relief, with proceedings adjourned for short minutes and costs reserved.
Legal Topics
['prescribed Interests' 'statutory Right to Avoid a Contract' 'election and Affirmation' 'waiver of Right to Rescind' 'approved Deed and Prospectus Requirements']
['corporations' 'contract'] ['prescribed Interests' 'statutory Right to Avoid a Contract' 'election and Affirmation' 'waiver of Right to Rescind' 'approved Deed and Prospectus Requirements']

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Procedural Posture

Application for Declarations Concerning Purported Avoidance of Contracts for Prescribed Interests Under the Corporations Law / Judgment After Hearing; Proceedings Adjourned for Short Minutes of Order and Costs Reserved

Legal Issues

  1. 1 ['Whether ss 1073 and 1073A of the Corporations Law constituted a comprehensive code excluding affirmation or election.' 'Whether a purchaser with a statutory option to avoid a contract under subs 1073(2) could lose that right by electing to affirm the contract.' 'Whether Mr Barry Ellison had knowledge of facts sufficient to require an election, even if he lacked knowledge of the precise legal right to avoid.' "Whether Mr Barry Ellison's conduct between September 1993 and January 1997 amounted to affirmation of the contracts."]

Ratio Decidendi

Sections 1073 and 1073A of the Corporations Law did not exclude the doctrine of election. The statutory wording made the contract voidable at the purchaser's option, leaving a choice between avoidance and affirmation. Mr Ellison had knowledge from September 1993, and certainly by February 1996, of facts sufficient to alert him to the possibility of avoiding the contracts. His continued enjoyment of ownership benefits, receipt of pooled income and guaranteed payments, participation in efforts to regularise the scheme, and long inactivity after legal advice were conduct consistent with affirmation and inconsistent with avoidance. He therefore elected to affirm the contracts, and the notice...

Court Disposition

The respondent's notice dated 7 January 1997 was held ineffective; the applicants were found entitled to appropriate declaratory relief, with proceedings adjourned for short minutes and costs reserved.

Orders

  • ['The applicants file and serve within twenty eight days of this date short minutes of order in terms consistent with the reasons of the Court as published this day.' 'Each party have leave to speak to the minutes.' 'The question of costs be reserved for argument on the resumed hearing.']