Dencal Pty Limited v CB International Pty Limited [2007] NSWSC 1373

Reported Decision : (2007) NSW Conv R 56-204

New South Wales Supreme Court

CITATION : Dencal Pty Limited v CB International Pty Limited [2007] NSWSC 1373

HEARING DATE(S) : 14, 15, 16 and 19 November 2007

JUDGMENT DATE : 6 December 2007

JUDGMENT OF : McDougall J at 1

DECISION : See paragraph 109 of the judgment.

CATCHWORDS : CONTRACTS – Construction and interpretation – Heads of agreement for sale of hotel – "Subject to formal exchange of contracts" – Whether heads of agreement created binding obligation on defendant to procure sale of hotel to plaintiff.

Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Ballas v Theophilos (No.2) (1957) 98 CLR 193 Ballas v Theophilos [1958] VR 576 Butt v M'Donald (1896) 7 QLJ 68 CASES CITED : Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Mackay v Dick (1881) 6 App Cas 251 Masters v Cameron (1954) 91 CLR 353 Santa Fe Land Co Ltd v Forestal Land etc Ltd (1910) 26 TLR 534 Sinclair, Scott and Co Ltd v Naughton (1929) 43 CLR 310

PARTIES : Dencal Pty Limited (Plaintiff) CB International Pty Limited (Defendant)

FILE NUMBER(S) : SC 3973/07

COUNSEL : M J Leeming SC / C H Withers (Plaintiff) S D Epstein SC / H P T Bevan (Defendant)

SOLICITORS : JDK Legal (Plaintiff) Baron & Associates (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

6 December 2007

3973/07 DENCAL PTY LIMITED v CB INTERNATIONAL PTY LIMITED JUDGMENT 1 HIS HONOUR: On 6 July 2007, the defendant (CB International) as "Vendor" and the plaintiff (Dencal) as "Purchaser" executed a document described as "heads of agreement". By that document, CB International agreed to procure the sale to Dencal, and Dencal agreed to purchase, the freehold and plant, equipment, goodwill and business of the CB Hotel in Pitt Street Sydney. That agreement was expressed to be upon terms and conditions set out "and subject to a formal exchange of contracts". The essential question for decision is whether, upon the proper construction of the heads of agreement and in the events that have happened, CB International is bound to sell to Dencal's nominee the subject matter defined in the heads of agreement. For convenience, I will refer to that subject matter as the CB Hotel unless the context requires a more precise usage.