37 York Rd Pty Ltd v Lord and Stone [2025] NSWSC 352 | Case summary | Zoe

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37 York Rd Pty Ltd v Lord and Stone [2025] NSWSC 352 | Case summary | Zoe

The Court has six reasons for rejecting 37 York Rd's application to vary or set aside Order 7.
First, Order 7 is clear in its terms and there is no need to go beyond its words. There is no dispute that the two conditions precedent in the chapeau to Order 7 have, in the events which have happened, been satisfied. Order 7 therefore applies, in the absence of the Court varying or setting it aside.
Second, I accept the submission that whatever implied term there might be in the agreement, it cannot be in terms or be construed to have an operation to the same effect as a term expressly considered and rejected by the parties. The parties rejected 37 York Rd's proposed qualification to Order 7. A term will not be implied or, if implied, it will not be construed in a way that would have the effect of the rejected qualification.
This is a matter in respect of which evidence of the contractual negotiations (in this case see [9]-[16] above) is admissible: see, Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352-353 per Mason J (as his Honour then was) (Stephen and Wilson JJ agreeing). As Young J (as his Honour then was) observed in Brennan v Kinjella (1993) 6 BPR 13,168 at 13,172: “Accordingly, it seems to me that in this state the court can look at words which have been deleted in order to avoid the implication of terms which might otherwise have been implied.” See also Lewison and Hughes, The Interpretation of Contracts in Australia (2nd edn, Lawbook Co, 2025) at [6.10] and [7.07] and Walker Group Constructions Pty Ltd v Tzaneros I**nvestments Pty Ltd (2017) 94 NSWLR 108; [2017] NSWCA 27 at [114] to [120] per Bathurst CJ (Beazley P and Gleeson JA agreeing), noting that later that year the Court of Appeal held that ambiguity was not required to permit an examination of surrounding circumstances: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295.
Third, I accept that even if there were such an applicable implied term, there is no evidence that Kurvest's conduct, allegedly in breach, has brought about 37 York Rd's inability to achieve the Refinance Proposal. I do not regard the evidence of the email exchanges as sufficient to enable the Court to draw the inference implicit in 37 York Rd’s submissions (see [21] above) in what appears to be a complex dispute where the various parties have different and conflicting commercial interests.
Fourth, in considering what is the benefit of the bargain to which a party is entitled, the bargain must be identified because the content of the implied term is confined by that bargain. The implied term cannot expand the parties’ substantive obligations under the agreement. In my respectful view, the bargain was that Kurvest and the other defendants agreed to an extension of the caveat until today to give 37 York Rd an opportunity to complete the Refinance Proposal and discharge Judo Bank's debt. This agreement was in return for at least Kurvest being paid its costs thrown away by reason of the adjournment of the caveat extension hearing before Meek J. On the evidence before me, nothing has been done contrary to that bargain, properly understood. I add for completeness that I would, on the same view of the bargain, have reached the same conclusion if 37 York Rd had relied on an implied negative covenant not to hinder the fulfilment of a party’s contractual obligations.
Fifth, I do not accept Mr Burke's submission that the orders should be read “in the light of” the Assurance (see [15] above). That statement does not have contractual effect. It goes no further, in my respectful opinion, than an expression of goodwill and, in any event, is made only on behalf of the Receivers and Judo Bank, and not Kurvest. Nor do I accept that Judo Bank’s Comfort Request (see [19] above) is a derogation from the Assurance, even if it had legally binding effect, which it does not.
Sixth, having regard to the principles set out in Lachlan, it may be accepted that the cases generally speak of an applicant in the position of 37 York Rd being required to show, in accordance with the principles of contract, something which would vitiate the underlying contract (for example, fraud or mistake) to warrant the setting aside or varying of consent orders made pursuant to the parties’ agreement. Nor do I overlook McHugh J's observation quoted in Lachlan, that failure to comply with the consent order could rarely be a sufficient ground to set aside the order.
Nevertheless, in my respectful view, if a party were able to show that it had a right to terminate the contract which had been carried into execution by the parties consenting to the making of orders (as opposed to a vitiating factor), that might, depending on the facts, be sufficient to provide the Court with a basis to set aside those orders. It may also be, at the very least, that the existence of a right of termination could constitute an exceptional circumstance within the principles referred to in Lachlan.
However, in the present case, because of the views I have set out above about the implied term, I am not satisfied that 37 York Rd has a right to terminate the agreement in any event. Furthermore, none of the matters raised by Mr Burke otherwise rises to the level of exceptional circumstances that would warrant the Court setting aside Order 7.
For these reasons, 37 York Rd's application will be dismissed.