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

Background

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’).

Contentions

Dankeith contended...