Saleh v Romanous

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Citation: [2010] NSWCA 274

This information can be found in the Supplement: Saleh v Romanous [available on Blackboard]

Contents

Background facts

  • The Appellants owned a property. The brother [Edmond] of the first Appellant, owned the neighbouring property.
  • The Appellants and Edmond obtained development approval for developing their sites together to make 8 townhouses.
  • The Respondents came and entered a contract to purchase the Appellants property, based on the assumption, induced by the Appellants, that Edmond would participate in a joint venture with the purchasers to develop the two properties.
  • The first Appellant to first Respondent:
    • "Leave Eddie up to me. I’m taking responsibility for Eddie. If Eddie doesn’t want to build you don’t have to buy and you’ll get your money back."
  • Respondents were unable to reach an agreement with Edmond, so tried to terminate the contract and started these proceedings to force the Appellants to return the deposit.

Argument

  • The Appellants argued that that the parol evidence rule and cl 10.1.5 of the contract, an “entire agreement” clause, excluded any pre-contractual promissory estoppel.
  • Relied on

Legal issues

Judgment

  • Equity is enforced in equity and not in contract (which is common law).
    • "A promissory estoppel is not enforced as a contract, but as an equitable restraint on the exercise or enforcement of the promisor’s rights[1]."
  • This means that the Respondents don't seek some contractual right, rather, they seek to estopp the Appellants from enforcing the contract.
  • Since this is in equity and not a contractual right, it is not suspect to the parol evidence rule.
    • Franklins Pty Ltd v Metcash Trading Ltd: “if the estoppel ... is equitable ... the common law parol evidence rule will not impede its proper operation[2]”, and “equity would not permit an entire agreement clause to stultify the operation of its doctrines[3]”.
    • "the legal rights trumped by equity include those protected by the parol evidence and entire contract rules[4]."
  • It should be noted that the precedents specifically add "pre-contractual promissory estoppel to the grounds on which equity will protect one contracting party from inequitable conduct by the other[5]."
  • The bottom line is that the effect of the estoppel is negative and only stops the Appellants from enforcing the contract. They do not have a positive right, as a contractual right would give them, to recover the deposit.
  • However, "The inherent limitations on the scope of promissory estoppel do not matter in this case because the purchasers [Respondents] can rely on the statutory remedy conferred by s 55(2A) of the Conveyancing Act to recover their deposit without the need to rescind the contract[6]."
    • “In every case where the court refuses to grant specific performance of a contract, or in any proceedings for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.”
  • Thus, the promissory estoppel entitles the Respondents to an order under 55(2A).
  • Appeal dismissed.

References

  1. [2010] NSWCA 274, [62]
  2. [2009] NSWCA 407, 264 ALR 15 [34]
  3. [2009] NSWCA 407, 264 ALR 15 [554]
  4. [2010] NSWCA 274, [68]
  5. [2010] NSWCA 274, [68]
  6. [2010] NSWCA 274, [77]
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