St Hilliers (Developments) Pty Ltd & Anor v Radmanovich & Anor [2002] NSWSC 524

Reported Decision : (2003) NSW ConvR 56-030

New South Wales Supreme Court

CITATION : St Hilliers (Developments) Pty Ltd & Anor v Radmanovich & Anor [2002] NSWSC 524 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1781/02 HEARING DATE(S) : 11 June 2002 JUDGMENT DATE : 12 June 2002

PARTIES : St Hilliers (Developments) Pty Ltd and Austcorp International Limited - Plaintiffs Max Radmanovich and Jelena Radmanovich - Defendants JUDGMENT OF : Palmer J

COUNSEL : M.S. Henry - Plaintiffs D.G. Pullinger - Defendants SOLICITORS : Tzovaras Legal - Plaintiffs P. Dobrich & Co - Defendants CATCHWORDS : REAL PROPERTY - VENDOR AND PURCHASER - OPTION TO PURCHASE - ASSIGNMENT - CONSENT - Option to purchase entitles grantee to assign with consent, such consent not to be unreasonably refused - if option exercised, purchaser must carry out subdivision providing for five parcels of land to be retained by vendor with road access - grantee proposes to assign option to third party - third party indicates that it cannot carry out the subdivision as required - third party later proffers assurance that it will be bound by the terms of the option and the attached contract - discussion of principles upon which the Court considers whether consent to an assignment of contract for sale under which work is to be performed has been unreasonably refused. HELD: Refusal of consent to assignment was reasonable. CASES CITED : International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513 DECISION : Summons dismissed with costs.

Introduction

1 The Defendants are the registered proprietors of Lot C in Deposited Plan 367229, known as 6 Orchard Street, Warriewood ("the Property"). The Plaintiffs are related development companies which, in 2000, were endeavouring to acquire options to purchase adjoining parcels of land in Warriewood for the purpose of carrying out a large development. 2 On 23 January 2001 the Plaintiffs and the Defendants entered into a Deed of Option whereunder the Plaintiffs were granted the option to purchase the Property. In November 2001 the Plaintiffs advised the Defendants that they had not been able to acquire sufficient land to carry out their proposed development and that they intended to assign their rights under the Option Deed to another developer which had been acquiring land in the area, namely, A.V. Jennings Ltd ("Jennings"). The Plaintiffs requested the Defendants to consent to the assignment in accordance with Clause 11.1 of the Option Deed. That clause provides that either the Defendants or the Plaintiffs may assign their rights and obligations under the Deed, subject to the consent of the other parties and that such consent is not to be refused unreasonably. 3 The Defendants did not consent to the assignment to Jennings. They say, firstly, that on its true construction, Clause 11.1 of the Option Deed does not permit the Plaintiffs to assign their option rights at all except in accordance with another, inapplicable, provision of the Deed and, secondly, that if the Deed does permit an assignment to Jennings with the Defendants' consent, then the Defendants have not unreasonably refused their consent. 4 The Plaintiffs commenced proceedings by way of Summons filed on 5 March 2002 seeking declarations that they were entitled to assign the Option Deed to Jennings and that the Defendants were unreasonably refusing their consent to that assignment. They also sought an order for specific performance of the Defendants' obligation to execute a consent to the assignment. 5 The option under the Option Deed lapsed on 24 April 2002, neither the Plaintiffs nor Jennings having purported to give a notice of exercise within the prescribed period. The order for specific performance of the Defendants' obligations under the Option Deed is now, therefore, no longer sought. However, the Plaintiffs say that if the Defendants had not, in breach of their obligations under Clause 11.1, refused their consent to the assignment to Jennings then the Plaintiffs would have been entitled to a payment of $97,140.69 from Jennings pursuant to an agreement between the Plaintiffs and Jennings dated 16 January 2002. By their Amended Summons, filed on 3 May 2002, the Plaintiffs claim that sum as damages for breach of contract. 6 Mr Pullinger, who appears for the Defendants, concedes that if the Plaintiffs were entitled to assign their rights under the Option Deed to Jennings subject to the Defendants' consent and if the Defendants unreasonably refused their consent, then the Defendants are in breach of their obligations under the Deed and are liable for the damages claimed by the Plaintiffs in the amount specified. 7 The issues are, therefore: