Manning Motel Pty Limited v DH MB Pty Limited [2013] NSWSC 1582

Manning Motel Pty Limited v DH MB Pty Limited [2013] NSWSC 1582

A binding collateral contract was formed between plaintiff and second defendant, whereby second defendant guaranteed referral business of $4,000 per month if plaintiff entered lease. This contract was not invalidated by Statute of Frauds or alleged inconsistency with the lease. Plaintiff relied on the promise and executed the lease. Defendant breached the collateral contract and is liable for damages. First defendant breached its repair covenant and is liable for rent paid by plaintiff to provide alternative accommodation. Lease termination was valid under demolition clause and plaintiff's claim for loss of bargain damages was not made out.

Parties
Plaintiff: Manning Motel Pty Limited; First Defendant: DH MB Pty Limited; Second Defendant: DHBI Pty Limited; Third Defendant: Matthew John Duffy
Jurisdiction
Australia
Judgment Date
01 November 2013
Procedural Posture
Civil / Principal Judgment
Outcome
Judgment for the plaintiff against first and second defendants; proceedings against third defendant dismissed; costs and pre-judgment interest assessed.
Legal Topics
Collateral Contracts, Lease Agreements, Tripartite Contracts, Statute of Frauds, Misleading and Deceptive Conduct, Repair Covenants, Termination of Lease, Damages Assessment, Referral Business Warranties
Contract Law Collateral Contracts Lease Agreements Tripartite Contracts Statute of Frauds Misleading and Deceptive Conduct Repair Covenants Termination of Lease +2 more

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Parties

Manning Motel Pty Limited

Plaintiff

DH MB Pty Limited

First Defendant

DHBI Pty Limited

Second Defendant

Matthew John Duffy

Third Defendant

Procedural Posture

Civil / Principal Judgment

Legal Issues

  1. 1 Whether a tripartite collateral contract was entered into between plaintiff and second defendant
  2. 2 Whether collateral contract was enforceable given Statute of Frauds
  3. 3 Whether collateral contract inconsistent with lease terms

Ratio Decidendi

A binding collateral contract was formed between plaintiff and second defendant, whereby second defendant guaranteed referral business of $4,000 per month if plaintiff entered lease. This contract was not invalidated by Statute of Frauds or alleged inconsistency with the lease. Plaintiff relied on the promise and executed the lease. Defendant breached the collateral contract and is liable for damages. First defendant breached its repair covenant and is liable for rent paid by plaintiff to provide alternative accommodation. Lease termination was valid under demolition clause and plaintiff's claim for loss of bargain damages was not made out.

Court Disposition

Judgment for the plaintiff against first and second defendants; proceedings against third defendant dismissed; costs and pre-judgment interest assessed.

Orders

  • Judgment for plaintiff against first defendant in the sum of $85,123.20 inclusive of interest
  • Judgment for plaintiff against second defendant in the sum of $195,055.08 inclusive of interest