G. Soni

The applicant brought an application seeking the release of a $60,000 deposit held in trust pursuant to a share purchase agreement.

The applicant argued the respondent breached a covenant by failing to obtain releases of the applicant's personal guarantees from third-party creditors.

The respondent argued the obligation was a condition precedent.

The court found that the completion of the agreement was conditional on obtaining the releases, which depended on the will of a third party.

As the condition could not be fulfilled, the agreement was declared null and void, and the deposit was ordered released to the respondent.

The applicant vendor brought an application seeking the forfeiture of a $60,000 deposit paid by the respondent purchaser under a share purchase agreement.

The agreement was conditional on the respondent obtaining releases of the applicant's personal guarantees from third-party creditors (Roynat and Pioneer).

One creditor refused to provide a full release.

The applicant argued this was a breach of covenant entitling him to the deposit, while the respondent argued it was a failure of a condition precedent.

The court held that the requirement to obtain third-party releases was a true condition precedent dependent on the will of a third party.

Because the condition could not be fulfilled, the agreement was null and void, and the deposit was ordered returned to the respondent.