Adicho v Dankeith Homes Pty Ltd [2012] NSWCA 316: When can you enforce a side agreement containing terms inconsistent with a formal agreement?
| Author | Selva Veeriah |
Dankeith Homes Pty Ltd (‘Dankeith’) was the developer and owner of eight units of residential property. Dankeith entered into sale contracts with Mr John Adicho in relation to those properties. Under the sale contracts, Mr Adicho was required to pay as the deposit an amount equal to ten per cent of the purchase price of each unit.
Before entering into the sale contracts, Dankeith had orally agreed with Mr Adicho to accept an insignificant amount as the deposit for each of the properties. For reasons best known to the parties, the sale contracts did not include this side agreement.
Mr Adicho failed to complete the sale contracts within the specified time. After some unsuccessful negotiations, Dankeith terminated the sale contracts and sold those properties to third parties. Dankeith then sued Mr Adicho to recover the difference between the agreed price under the sale contracts and the amount it received from the sales to third parties. The action was premised on Dankeith’s entitlement to ten per cent of the purchase price as the deposit (‘full deposit’).
Dankeith contended that there was no oral agreement as alleged by Mr Adicho, and he was liable for the full deposit.
Mr Adicho contended that there was such an agreement between the parties, and that it varied the sale contracts to reduce his liability for the full deposit.
The questions before the court included: first, whether there was a side agreement between Dankeith and Mr Adicho, as alleged; and, secondly, if there was such an agreement, whether it was valid and enforceable.
The Supreme Court made a finding of fact that there was a side agreement. However, it ruled that the side agreement was invalid because it lacked consideration.
Further, even if the side agreement were valid, it could not be enforced because it was an oral agreement. By statute, any agreement relating to sale of land must be in writing.
The NSW Court of Appeal agreed with the decision at first instance and found that Mr Adicho was liable to pay Dankeith the full deposit for reasons set out below.
The principal agreement was treated, unless the parties show otherwise, as the full expression of Mr Adicho and Dankeith's obligations. But, Mr Adicho may establish that an entirely separate agreement was made, in that, Dankeith gave...
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