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.
