Mercator Property Consultants v Sumampow

Mercator Property Consultants v Sumampow


Supreme Court of Western Australia – 16 June 2000


Mercator had acquired 10% of the shares in the company owning the Christmas Island Resort (“the Casino”) while 90% of the shares were acquired by Sumampow. A Deed between Mercator and Sumampow provided that Mercator would sell its shares in the Casino to Sumampow subject to the satisfaction of conditions precedent by 15 August 1997. On 10 December 1997,  Sumampow confirmed that all the conditions precedents had been fulfilled and he submitted two Deeds which purported to vary the original Deed. The new deeds were executed by Mercator.

Sumampow paid the first instalment of the remaining purchase price for the shares but the balance of $4.5million was not paid. After numerous delays in the negotiations to finalise the sale of the shares, Mercator applied to the Federal Court to appoint a receiver to manage the affairs of the Casino as the authorities were threatening to cancel the casino licence due to the Casino failing to meet its financial commitments.

On 28 July 1998 the casino licence was cancelled and on 29 July 1998 the Court appointed a receiver. Mercator sued for the unpaid balance owing for the sale of the shares and Sumampow counter sued for the moneys already paid to Mercator.


  1. Did the application to appoint a receiver breach an implied term in the contract?
  2. Had the original deed been discharged when the conditions precedent were not fulfilled on 15 August 1997?


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