Written by In Alamdo Holdings Pty Ltd v Reece Australia Pty Ltd [2025] NSWSC 946, the Supreme Court of New South Wales affirmed that a party cannot rely on its own breach to terminate a lease. The Court emphasised that this principle is not confined to leases, but applies broadly across all contractual arrangements.
In this case, Alamdo Holdings Pty Ltd (‘Alamdo’) leased commercial premises to Reece Australia Pty Ltd (‘Reece’). Under the lease, Reece was required to secure development approval and an occupation certificate before utilising the premises for its business. Under Article 29(9) of the lease, either party had the right to terminate the lease if the occupation certificate was not issued within six months from the commencement of the lease.
When the certificate had not been granted in this timeframe, Reece attempted to terminate the lease. Alamdo disputed this, arguing that the delay was largely caused by Reece’s own mismanagement of the approval process, including its slow response to Council requests for information, missed payment deadlines, and provision of incomplete or deficient documentation to the Council. Reece argued that it was entitled to terminate regardless of fault, and also raised Alamdo’s outstanding fire safety works as a contributing factor to the delay.
The Court rejected Reece’s arguments, finding that its failures played a significant role in the delay. The minor outstanding fire safety works on Alamdo’s part did not prevent the Council from processing the development application, so Reece could not claim they were responsible. Accordingly, Reece was not entitled to rely on the termination clause and the lease remained in force.
This case serves as a clear reminder that a party cannot terminate a contract when its own conduct significantly contributes to the breach. Strict adherence to contractual obligations and procedural requirements is essential, and parties should carefully consider their role in any delay before attempting to rely on a termination right.