Melco v Hall – Beware of Your Conduct!

In this 2022 Supreme Court’s decision, the Court confirms the relevance of the conduct of the party cancelling an agreement. If such conduct has a material effect on the non-satisfaction of condition, then that party may not rely on such non-satisfaction to cancel an agreement.

In this case, Hall cancelled last-minute to provide Melco with access to the property in order for Melco to satisfy its due diligence condition due to expire the next day. Hall did so after he had received a call from another purchaser with a better offer. Melco’s solicitor sought an extension of the due diligence condition the next morning but Hall instructed his solicitor not to respond and to cancel the agreement after 5pm, which Hall’s solicitor did. The Court concluded that Hall’s failure to facilitate access had the necessary material effect on the prospect of satisfaction of the condition.

It is not uncommon for one or more conditions to be included in the sale and purchase agreement of a property. This case shows the court may examine the circumstances leading to the non-fulfilment of any condition, including each party’s conduct and role in the default, in determining whether the right to cancel or avoid an agreement has been lost.

Whether you are a vendor or a purchaser, it is therefore critical that you seek the correct advice right from the start. Contact our property team and we will guide you through.