Exchanged contract of sale different from contract vendor
subsequently offers tenant
Mayfair Property Holdings Pty Limited v Southland Packers
Pty Limited dealt with a matter where Mayfair Property (the
plaintiff) had exchanged contracts to acquire a property at Ashmore
in Queensland. The contract for sale contained a clause stating
that the lease contained a pre-emptive right to purchase the
property on the same terms which was in favour of the tenant, BP
Australia, and that, if the tenant availed itself of that right,
the exchanged contract would come to an end.
After exchange, the vendor (Southland Packers, the defendant)
gave notice to the tenant of the terms of the exchanged contract
with Mayfair Property.
As a result of negotiations, the tenant was given an offer by
Southland Packers to enter into a sale contract on terms which were
not the same as the terms of the contract with Mayfair
Further, the offer (by agreement between the tenant and the
vendor) was to an associated company of the tenant, BP Refinery,
not to BP Australia itself.
BP Refinery exchanged and quickly settled contracts to acquire
the property, and Southland Packers terminated the contract with
Contract provision, terms and timeframes considered by
The Court found that Southland Packers' termination of the
contract with Mayfair Property was a breach of that contract.
Relevantly, the Court held that:
The provision in the contract contemplated an offer strictly in
accordance with the lease, which was an offer to BP Australia, not
an associated company. There was no nominee provision in the lease
pre-emptive rights provision.
There was a timeframe within which the offer had to be accepted
under the clause in the contract, making the contract conditional
upon the tenant not exercising its pre-emptive rights.
This timeframe was not strictly adhered to. Therefore, the
offer made by Southland Packers to the tenant was not an offer
contemplated by and accepted in accordance with the provisions of
The contract entered into with BP Refinery, the entity
associated with the tenant, was on materially different terms to
those the subject of the contract which Mayfair Property had
exchanged. The provisions of the special conditions in the contract
between Mayfair and Southland Packers, dealing with the
tenant's pre-emptive rights, required the offer to be made on
the same terms.
There was a significant number of changes, some of which were
fundamental, such as a requirement not to pay a deposit (as the
purchaser was a subsidiary of a public company), a shorter
settlement time and the deletion of some of the conditions
contained in the contract with Mayfair Property.
The Court had no problems in finding that there was no
justification for the termination of the contract between Mayfair
Property and Southland Packers, and that, as Southland Packers had
breached the terms of the contract, Southland Packers was liable
Specific contract provisions should be complied with
This is yet another example of recent cases in which a court has
held that, where strict procedures are set out in documents for the
exercise of rights or termination of agreements conferring rights
and benefits on parties, strict adherence is required.
The courts are increasingly of the view that parties put in
specific provisions for a purpose, and that the courts should do
what they can to give business efficacy to and require strict
compliance with those requirements.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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