This case concerned an agreement between the parties under which P Battlay Holdings Pty Ltd (PHB) granted JD No 6 (Dava) Pty Ltd (JD) an option to purchase one of PHB's properties. JD then exercised the option and paid the $400,000 due under the agreement. The issue was whether JD could recover this payment in full following PBH's failure to perform its obligations.
In finding for JD, Croft J found that PHB failed to perform its obligations under the agreement to provide copies of the contract of sale once the option had been exercised. Furthermore, it was subsequently impossible for PHB to perform its obligations as it could not register the proposed plan of subdivision in accordance with the parties' agreed terms, in circumstances where the parties had indicated that strict adherence to the agreed terms was required.
His Honour therefore held that there was a total failure of consideration on PHB's behalf. JD's payment could therefore be recovered as it was provided solely for a purpose which had failed.
His Honour also rejected PHB's arguments that JD had repudiated the option agreement, or alternatively that the contract was not in existence. Instead, on the facts, his Honour found that the agreement was clearly on foot and in force, having been affirmed by PBH.
This case demonstrates that the Court may order repayment of money received by a party on the basis of the general law in relation to a total failure of consideration. The recovering party will however need to demonstrate that the parties' bargain had collapsed altogether, for example due to it becoming impossible for the terms to be strictly complied with.