Dyco Hotels Pty Ltd & Ors v Laundy Hotels (Quarry) Pty Ltd [2021] NSWCA 332

Dyco Hotels Pty Ltd & Ors v Laundy Hotels (Quarry) Pty Ltd [2021] NSWCA 332

The obligation under clause 50.1 required the vendor to carry on the business in its usual and ordinary course as to nature, scope, and manner, and could not be fulfilled in the limited fashion imposed by the Public Health Order. Since risk passed only on completion, the vendor bore the risk of supervening illegality affecting business operations pre-completion. The vendor was not entitled to serve a Notice to Complete or terminate the contract while unable to provide the business as a going concern in its usual form. The vendor's purported termination was a repudiation, which the purchasers were entitled to accept, ending the contract and entitling them to return of the deposit.

Jurisdiction
Australia
Judgment Date
21 December 2021
Procedural Posture
Appeal / Decision
Outcome
Appeal allowed
Legal Topics
['contract Interpretation' 'implied Terms' 'repudiation' 'supervening Illegality' 'severability' 'contract for Sale of Business' 'covid 19 Effects on Contracts' 'frustration']
['contract Law'] ['contract Interpretation' 'implied Terms' 'repudiation' 'supervening Illegality' 'severability' 'contract for Sale of Business' 'covid 19 Effects on Contracts' 'frustration']

Case Brief

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Procedural Posture

Appeal / Decision

Legal Issues

  1. 1 ['What is the proper construction of clause 50.1 of the contract for sale regarding the obligation to carry on the business in its usual and ordinary course during the COVID-19 Public Health Order period?' 'Does a supervening Public Health Order excuse non-performance under the contract or amount to frustration?' 'Was the vendor entitled to issue a Notice to Complete and terminate the contract?' 'Was the termination by the vendor a repudiation, entitling the purchasers to relief?']

Ratio Decidendi

The obligation under clause 50.1 required the vendor to carry on the business in its usual and ordinary course as to nature, scope, and manner, and could not be fulfilled in the limited fashion imposed by the Public Health Order. Since risk passed only on completion, the vendor bore the risk of supervening illegality affecting business operations pre-completion. The vendor was not entitled to serve a Notice to Complete or terminate the contract while unable to provide the business as a going concern in its usual form. The vendor's purported termination was a repudiation, which the purchasers were entitled to accept, ending the contract and entitling them to return of the deposit.

Court Disposition

Appeal allowed

Orders

  • ['Appeal allowed.' 'Set aside the orders made by the primary judge and in lieu thereof:' 'Declare that by issuing a notice of termination of the contract the defendant (vendor) repudiated the contract which repudiation was accepted by the plaintiffs (purchasers).' 'Declare the plaintiffs are entitled to a return of...