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Farrow v Hodge & Lawe Park Ridge Pty Ltd[2022] QSC 183

Farrow v Hodge & Lawe Park Ridge Pty Ltd[2022] QSC 183

SUPREME COURT OF QUEENSLAND

CITATION:

Farrow & anor v Hodge & Lawe Park Ridge Pty Ltd [2022] QSC 183

PARTIES:

Simon William Farrow

(First Applicant)

AND

Belinda Hayne Gollan

(Second Applicant)

AND

Mark Bernard Hayden and Kate Bouman Van Der Drift

(Third Applicant)

AND

Alexandra Kate McInnes

(Fourth Applicant)

AND

Graham Campbell Don and Nadine Mary Banks

(Fifth Applicant)

AND

Nayantara Umashankar

(Sixth Applicant)

AND

Bernard Nadal

(Seventh Applicant)

AND

Guy Sharon

(Eighth Applicant)

AND

Adam Sontag and Lauren Shelly Sontag

(Ninth Applicant)

V

Hodge & Lawe Park Ridge Pty Ltd ACN 629 968 056

(Respondent)

FILE NO/S:

BS No 8604 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

2 September 2022

DELIVERED AT:

Brisbane

HEARING DATE:

19 August 2022

JUDGE:

Hindman J

ORDERS:

  1. A contract between the fifth applicants and the respondent in relation to the purchase of proposed lot 31 of the development came into existence on 2 March 2022.
  2. A contract between the eighth applicant and the respondent in relation to the purchase of proposed lot 34 of the development came into existence on 21 April 2022.
  3. The respondent has validly terminated the purchase contracts with each of the applicants.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT – WHERE CONCLUDED CONTRACT – where the respondent is a property developer and the applicants are purchasers of residential lots – where the respondent entered into a put and call option agreement – where the call option was exercised – where the seller did not take steps to comply with the option deed including not signing the purchase contract – whether the exercise of the call option did not bring a purchase contract into existence – whether the purchase contract was not enforceable by reason of s 59 of the Property Law Act 1974 (Qld).

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the respondent is a property developer and the applicants are purchasers of residential lots – where the respondent obtained development approval from council – where the development approval was subject to development conditions including compliance with an infrastructure agreement – where purchase contracts for a number of the lots in the proposed development were made – where the respondent is unwilling to pay infrastructure charges quoted by the council to seal the survey plan – where the respondent purported to terminate the purchase contracts in reliance on a special condition enlivened where the council imposes a condition with which the respondent is unwilling to comply – where the respondent is honestly unwilling to pay the infrastructure charges – whether the respondent validity terminated the purchase contracts with the applicants.

Planning Act 2016

Property Law Act 1974, s 59

Mark Arnesan v Springs Beach Development Pty Ltd [2008] QSC 283

Moffat Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60

Tordell Pty Ltd v Finch [2008] 1 Qd R 540

COUNSEL:

M Long for the applicant

C Heyworth-Smith QC and M Waard for the respondent

SOLICITORS:

HWL Ebsworth Lawyers for the applicant

Thynne + Macartney Lawyers for the respondent

The relief sought by the applicants 

  1. [1]
    The respondent is a developer.  The applicants are purchasers of residential lots in a development being undertaken by the respondent. 
  2. [2]
    The fifth applicants and the eighth applicant each apply for a declaration, respectively, that a purchase contract came into existence between:
    1. (a)
      the fifth applicants and the respondent on 2 March 2022 in respect of proposed lot 31 in the development;
    2. (b)
      the eighth applicant and the respondent on 21 April 2022 in respect of proposed lot 34 in the development.
  3. [3]
    All applicants seek a declaration that the respondent did not validly terminate their respective purchase contracts in respect of lots in the development. 
  4. [4]
    There are no disputed facts.  

Did an enforceable purchase contract come in existence between fifth applicants and the respondent? 

Relevant facts

  1. [5]
    On 10 June 2021, JLF Corporation Pty Ltd (JLF) and the respondent entered into a put and call option agreement (the Option Deed) in relation to fourteen proposed lots in the development. 
  2. [6]
    On 2 March 2022, JLF exercised the call option in clause 3.1 of the Option Deed for proposed lot 31 in the development by delivering to the respondent’s solicitors by email the documents required by clauses 3.1(a) and (b) of the Option Deed, including a Third Party Contract within the meaning of the Option Deed signed by the fifth applicants.  There is no dispute between the parties as to compliance with the terms of clause 3.1 of the Option Deed.  
  3. [7]
    Clause 3.1 of the Option Deed provides:

“3.1 The Call Option may be exercised at any time in relation to a Lot during the Call Option Period by the Buyer delivering to the Seller or Seller’s lawyer (by any method permitted in accordance with clause 26, including electronically by email or facsimile) in respect of that Lot:

  1. (a)
    a Contract or a Third Party Contract:
  1. (i)
    duly executed by the Buyer or the Third Party (as the case may be) as ‘Buyer’; and
  1. (ii)
    with the following details completed in the Reference Schedule:
  1. A.The full name, address and other particulars of the Buyer or the Third Party (as the case may be) under ‘Buyer’;
  1. B.If applicable, the solicitor’s details for the Buyer or the Third Party (as the case may be) under ‘Buyer’s Solicitor’;
  1. C.The Lot in relation to which the Call Option is exercised;
  1. D.The real property description, the title particulars and any other particulars such as easements and covenants in relation to the Lot;
  1. E.The Contract Price (which will not be less than the Purchase Price for that Lot, subject to clause 3.3);
  1. F.The deposit as required by the terms of this Agreement; and
  1. G.Any other details required by the terms of this Agreement; and
  1. (b)
    if a separate indefeasible title to the Lot has not yet issued at the time the Third Party signs the Third Party Contract, the LSA Disclosure Statement and Plan for that Lot, given to the Third Party before the Third Party signed the Third Party Contract.”
  1. [8]
    Clauses 4.1 and 4.2 of the Option Deed provide:

“4.1 The Contract or Third Party Contract (as the case may be) is deemed to come into existence on valid exercise of the Call Option by the Buyer (or the Seller signing the Contract or Third Party Contract in accordance with clause 3.5). The Seller must:

  1. (a)
    date a Contract as the date of the receipt of all the documents in accordance with clause 3.1 (or the date the Seller signs the Contract if clause 3.5 applies); and
  1. (b)
    date a Third Party Contract as the date the Seller signs the Third Party Contract and provides a copy of the Third Party Contract to the Third Party or its solicitor as required by law and the due date for satisfaction of any condition under a Third Party Contract is to be calculated only from that date.

4.2 After valid exercise of the Call Option by the Buyer, the Seller must sign the Contract or Third Party Contract and return a copy to the Buyer (or the Third Party or solicitors acting for the Third Party, as the case may be) within 2 Business Days of receipt from the Buyer.”

  1. [9]
    The respondent took no steps to comply with clauses 4.1 or 4.2 of the Option Deed.  In particular, the Third Party Contract signed by the fifth applicants was not signed by the respondent. 
  2. [10]
    There is no evidence of the respondent giving a notice under clause 5.1 of the Option Deed (concerning what is to occur if the respondent is of the opinion that a buyer has not validly exercised the call option in the Option Deed). 

Parties’ positions

  1. [11]
    The fifth applicants say that the call option was exercised in relation to proposed lot 31 in the development and a Third Party Contract came into existence on 2 March 2022 for the purchase of proposed lot 31 by the fifth applicants from the respondent. 
  2. [12]
    The respondent says no such purchase contract came into existence because:
    1. (a)
      the exercise of rights under clause 3.1 of the Option Deed of itself does not operate to bring a purchase contract into existence.  No enforceable contract comes into existence until the respondent signs a formal purchase contract.  Satisfaction of clause 3.1 of the Option Deed only conveys an offer to purchase which is then required to be accepted by the respondent by the signing of a formal purchase contract.
    2. (b)
      alternatively, any purchase contract that came into existence by reason of the exercise of rights under clause 3.1 of the Option Deed is not enforceable by reason of s 59 of the Property Law Act 1974 (Qld) (PLA).  The relevant requirements of writing are not satisfied.
  3. [13]
    Section 59 PLA provides:

“No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.”

Analysis

  1. [14]
    I do not accept the respondent’s submissions. 
  2. [15]
    An enforceable contract between the fifth applicants and the respondent for the purchase of proposed lot 31 in the development came into existence on 2 March 2022 when the call option was exercised under clause 3.1 of the Option Deed.  That is the effect of clause 4.1 of the Option Deed.  The execution of the Third Party Contract by the respondent was not a requirement for a binding purchase contract to come into existence. 
  3. [16]
    Properly construed, the exercise of an option under the Option Deed gives rise to a contract and is not merely an offer made by one party to the other.  The usual purpose of a put and call option agreement, and of the Option Deed, is to create a binding contract when an option is exercised (regardless of which party exercises the option).
  4. [17]
    That is clear from considering the Option Deed as a whole, but also particularly:
    1. (a)
      recitals C and D;
    2. (b)
      the definitions of Call Option and Put Option, the payment of a Call Option Fee and a Put Option Fee, the fact of there being a Call Option Period and a Put Option Period, the definitions of Contract and Third Party Contract;
    3. (c)
      clauses 2 (Grant of Call Option) and 7 (Grant of Put Option);
    4. (d)
      clause 3 (Exercise of Call Option);
    5. (e)
      clause 4.1 (by which a contract is deemed to come into existence on the valid exercise of the Call Option);
    6. (f)
      clause 4.2 (noting the mandatory signing requirement for the Contract or the Third Party Contract);
    7. (g)
      clause 5.1 (Ineffective exercise of Call Option or Reinstated Call Option) (which clause would not be necessary if the exercise of the Call Option was no more than an offer);  
    8. (h)
      clause 8 (by which a Contract comes into effect on exercise of the Put Option).
  5. [18]
    Further, the Option Deed taken with the documents exercising the option contain the writing required to satisfy s 59 PLA.[1]
  6. [19]
    No separate signed purchase contract is required.  The writing identifies the parties, the subject matter of the agreement, consideration, time of completion and other essential terms of the agreement.  The writing is signed by the respondent. 

Result

  1. [20]
    A contract for the purchase of proposed lot 31 in the development came into existence on 2 March 2022 between the fifth applicants and the respondent.

Did an enforceable purchase contract come in existence between the eighth applicant and the respondent? 

Relevant facts

  1. [21]
    See [5] above. 
  2. [22]
    On 21 April 2022, JLF exercised the call option in clause 3.1 of the Option Deed for proposed lot 34 in the development by delivering to the respondent’s solicitors by email the documents required by clauses 3.1(a) and (b) of the Option Deed, including a Third Party Contract within the meaning of the Option Deed signed by the eighth applicant.  There is no dispute between the parties as to compliance with the terms of clause 3.1 of the Option Deed.
  3. [23]
    See [7] and [8] above.
  4. [24]
    The respondent took no steps to comply with clauses 4.1 or 4.2 of the Option Deed.  In particular, the Third Party Contract signed by the eighth applicant was not signed by the respondent. 
  5. [25]
    There is no evidence of the respondent giving a notice under clause 5.1 of the Option Deed (concerning what is to occur if the respondent is of the opinion that a buyer has not validly exercised the call option in the Option Deed).  

Parties’ position, analysis and result 

  1. [26]
    The parties’ positions, analysis and result as set out in [11] to [20] above apply equally to the eighth applicant and proposed lot 34.  A contract for the purchase of proposed lot 34 in the development came into existence on 21 April 2022 between the eighth applicant and the respondent.

Did the respondent validity terminate the purchase contracts with the applicants?

Relevant facts

  1. [27]
    The respondent became the owner of the development land on 18 February 2020.
  2. [28]
    On 11 December 2020 the respondent obtained a development approval from the Logan City Council (LCC)[2] to subdivide the development land into 35 residential lots, subject to conditions.
  3. [29]
    The development conditions included conditions, inter alia, as to certain engineering works including stormwater works (clause 7), water operations including water and sewerage infrastructure works (clause 8), the granting of an easement to LCC at no cost over certain of the development land for the purpose of stormwater drainage (clauses 2.2 to 2.3), and the dedication of certain of the development land to LCC at no cost for both road and drainage purposes (clauses 2.4 to 2.7).
  4. [30]
    The development conditions also required, inter alia, the respondent’s compliance with an executed Infrastructure Agreement (IA) (see, for example, conditions 4.18 and 8.25).  
  5. [31]
    The IA was between the respondent and LCC, and was dated 10 December 2020.[3]  The recitals of the IA record:

“This document has been entered into for the following purposes:

  1. (a)
    the Development Land is to be the subject of the Proposed Development;
  1. (b)
    the Proposed Development of the Development Land requires the provision of Infrastructure Contributions;
  1. (c)
    the Development Obligations require Infrastructure Contributions to be provided before or as part of the Proposed Development so that the Development Conditions are correlated with the Proposed Development.”
  1. [32]
    Schedule 2 to the IA contained special conditions dealing with:
    1. (a)
      special condition 1:  entitlement to infrastructure offset;
    2. (b)
      special condition 2:  accrual of an infrastructure offset;
    3. (c)
      special condition 3:  working out an infrastructure offset;
    4. (d)
      special condition 4:  application of an infrastructure offset against a financial contribution;
    5. (e)
      special condition 5:  adjustment of establishment cost;
    6. (f)
      special condition 6:  limitation on infrastructure offset;
    7. (g)
      special condition 7: works contribution for DN450 gravity sewerage infrastructure.
  2. [33]
    Included in schedule 3 of the IA were two LCC Infrastructure Charges Decision Notices under the Planning Act 2016 (Planning Act) dated 8 December 2020 (one for stage 1 of the development reconfiguring a lot into 17 lots plus the balance lot; one for stage 2 of the development reconfiguring a lot into 18 lots).  As explained in the notices, under the Planning Act, infrastructure charges are not imposed by condition on a development permit, instead they are an action that follows the issue of such a permit. 
  3. [34]
    The notices each attached an Infrastructure Charges Notice (ICN).  The ICNs identify, inter alia:
    1. (a)
      a gross charge;
    2. (b)
      an applied offset amount (only on the first notice, a “sewer network – financial contribution offset”, which appeared to have already been paid);
    3. (c)
      a net charge payable;
    4. (d)
      the trigger for payment;
    5. (e)
      that part or the entire charge may be offset by provision of infrastructure by the respondent (including by way of constructed assets or transfer of land to LCC);
    6. (f)
      two expressly mentioned offsets to be applied in respect of stage 1:
      1. (i)
        a “road network – land contribution offset”;
      1. (ii)
        a “sewer network – financial contribution offset”, 
    7. (g)
      in respect of the “road network – land contribution offset” that the amount of that offset was to be accounted for in an amount “to be determined”.  In that respect the details of charges on the ICN noted:

“602m2 of transport land resumption for future road widening along Bumstead Road in accordance with Logan City Council Planning Scheme 2015 Local Government Infrastructure Plan (LGIP).  Table SC 3.2.4 – Movement network schedule of works, Item 222 at a rate of $69.00/m2.  That has been determined by Council utilising the extrinsic material outlined in the LGIP.  Total land to be dedicated maybe subject to change with the submission of detailed plans to Council at future operational works stage.”

  1. (h)
    in respect of the “sewer network – financial contribution offset” that the amount of that contribution had been paid, noting on the details of charges on the ICN:

“Sewer Network – Offset for Financial Contribution for sewer infrastructure in accordance with Schedule 4 Section 1.2.1 the Infrastructure agreement executed under COM/61/2019.[4]  As identified in Schedule 4 Column 3 Section 1.2.1 the Financial Contribution is the amount of $79,772.00 (exclusive of GST).[5]  The Total Financial Contribution paid of $87,749.20 has been applied inclusive of GST.”

  1. (i)
    the net infrastructure charge payable for stage 1 (allowing for the “sewer network – financial contribution offset”, but without having regard to the “to be determined” “road network – land contribution offset” or any other offsets) was $419,037.77;
  2. (j)
    the net infrastructure charge payable for stage 2 (without having regard to any offsets) was $498,772.35.
  1. [35]
    Further to (e) above, that there was the possibility of other offsets not specifically mentioned in the details of charges is made clear in Schedules 4 and 5 to the IA. 
  2. [36]
    Schedule 4 to the IA expanded on infrastructure contributions by the respondent (both in terms of constructed assets and transfer of land) that would be eligible for offset against the infrastructure contributions payable by the respondent.  Four types of contributions by the respondent were contemplated: (1) land contribution for road infrastructure, (2) work contribution for road infrastructure, (3) land contribution for sewerage infrastructure, (4) work contribution for sewerage infrastructure.  The estimates (in terms of offsets) for those infrastructure contributions were set out in Schedule 5 to the IA.  Whilst the estimates for the four items totalled $893,851.23, Schedule 5 also identified the total maximum infrastructure offset of $1,005,559.32 in accordance with special condition 5 (in Schedule 2).
  3. [37]
    On 10 June 2021, JLF and the respondent entered into the Option Deed. 
  4. [38]
    Between 14 July 2021 and 27 September 2021 purchase contracts in relation to seven of the proposed lots in the development came into existence between the respective applicants and the respondent.
  5. [39]
    Special condition 4 of the purchase contracts is in the following terms:

“4 CONDITION SUBSEQUENT

  1. 4.1The Contract is conditional upon the Seller causing a survey plan to be registered with the Queensland Land Registry (‘DNRM’) which creates indefeasible title to the Land on or before the Sunset Date (the ‘Condition Subsequent’).
  1. 4.2The Seller must take reasonable steps to satisfy the Condition Subsequent.
  1. 4.3If any Authority refuses to grant or revokes any necessary permit or approval or refuses to seal any survey plan or imposes any conditions on any permit, certificate or approval with which the Seller is unwilling to comply, then the Seller may terminate this contract by notice to the Buyer. If this happens, the Buyer’s only right is to a refund of the Deposit.
  1. 4.4If failure to satisfy the Condition Subsequent on or before the Sunset Date is due to delays attributable to:
  1. a)
    Damage from natural causes, war, civil commotion or acts of terrorism;
  1. b)
    Legal proceedings concerning the Land
  1. c)
    Delay of any Authority in issuing any necessary approval or permit;
  1. d)
    Inclement weather;
  1. e)
    Unavailability of materials or labour for civil works and construction;
  1. f)
    Labour or industrial dispute; or
  1. g)
    Any other cause beyond the control of the Seller,

then the Seller may extend beyond the Sunset Date once by a period equal to or less than the period of the delay of no more than three months. Certification by the Seller’s Solicitor as to the causes and period of delay is sufficient proof of the things stated in the certificate. If the Seller extends the Sunset Date for a period less than the period of the delay, the Seller may later further extend the Sunset Date for the same reason up to the period of the delay.”

  1. [40]
    The respondent performed required works in respect of road and sewerage infrastructure at the development.  On 21 February 2022, LCC issued an ‘on maintenance notice’ confirming that all the requirements of LCC for the operational works (undertaken by the respondent) were completed.  That meant the development was at a stage that the respondent could lodge a survey plan with LCC for approval (which would create the residential lots and allow the purchase contracts to be settled).
  2. [41]
    On or about 25 February 2022 the respondent received from LCC quotations for infrastructure charges LCC required to be paid as a prerequisite for the sealing of the survey plan.  The quotes were $130,301.62 for stage 1 of the development and $159,888.20 for stage 2 of the development (a total of $290,189.82).
  3. [42]
    In respect of the stage 1 quotation, all imposed infrastructure charges were fully offset except for infrastructure charges in respect of: (1) parks ($76,553.82), (2) land for community facilities ($2,449.09), (3) stormwater ($51,298.71).
  4. [43]
    All of the charges in the stage 1 quotation appear to be consistent with the net charges (after discount) for those items in the ICN for stage 1 of the development.  
  5. [44]
    In respect of the stage 2 quotation, all imposed infrastructure charges were fully offset except for infrastructure charges:
    1. (a)
      only partially offset - (1) wastewater ($13,406.25 not offset), (2) roads ($16,180.33 not offset);
    2. (b)
      not offset at all - (1) parks ($76,553.82), (2) land for community facilities ($2,449.09), (3) stormwater ($51,298.71).
  6. [45]
    All of the charges in the stage 2 quotation appear to be consistent with the net charges (after discount) for those items in the ICN for stage 2 of the development. 
  7. [46]
    In neither quotation is it disclosed or obvious how the various offsets applied are calculated.  
  8. [47]
    On 2 March 2022 and 21 April 2022 purchase contracts between the fifth applicants and the eighth applicant respectively and the respondent came into existence in relation to a further two of the proposed lots.  Those purchase contracts contained the same special condition 4 set out in [39] above. 
  9. [48]
    The respondent is unwilling to pay and has not paid the quotations, and therefore the survey plan has not been sealed.  The respondent’s director has several complaints about how the development has unfolded, but particularly in respect of infrastructure charges says the respondent is unwilling to pay any amount to LCC as he believed that all infrastructure charges would (and should) be fully offset by contributions (work and land) provided by the respondent.  That there was a prospect that all infrastructure charges may be offset by contributions provided by the respondent is plain when regard is had to the amounts in [34] (i) and (j) compared to [36] above. 
  10. [49]
    Between 23 May 2022 and 1 June 2022 the respondent’s solicitors issued notices to each of the applicants purporting to terminate the purchase contracts pursuant to special condition 4.3 of the purchase contracts.
  11. [50]
    The identified ground for the notices was that the respondent was unwilling to comply with the conditions imposed by LCC including the payment of the infrastructure charges and the development conditions generally.   

The key provision; other matters not in dispute 

  1. [51]
    The respondent purported to terminate the purchase contracts pursuant to special condition 4.3 of the purchase contracts that provides:

“4.3 If any Authority refuses to grant or revokes any necessary permit or approval or refuses to seal any survey plan or imposes any conditions on any permit, certificate or approval with which the Seller is unwilling to comply, the the Seller may terminate this contract by notice to the Buyer. If this happens, the Buyer’s only right is to a refund of the Deposit.”

  1. [52]
    The purported condition on the development approval by the local authority with which the respondent was unwilling to comply was submitted by the respondent to be the requirement to pay the infrastructure charges set out in the provided quotations.
  2. [53]
    The applicants take no issue that the respondent in fact (and in accordance with special condition 4.3 of the purchase contracts) is unwilling to pay the infrastructure charges set out in the provided quotations, and that the respondent did in fact purport to terminate the purchase contracts by giving the notices required by special condition 4.3. 
  3. [54]
    The dispute centres on whether the requirement of LCC for the respondent to pay the infrastructure charges set out in the provided quotations is the imposition of a condition as contemplated by special condition 4.3 of the purchase contracts. 

Parties’ positions

  1. [55]
    The applicants submit that the respondent’s reliance upon special condition 4.3 of the purchase contracts is misconceived because:
    1. (a)
      The respondent’s obligations to pay the infrastructure charges the subject of the quotations was a pre-existing obligation by reason of the development permit, the IA and the ICNs. 
    2. (b)
      Special condition 4.3 of the purchase contracts is prospective in operation – it is not engaged where the pre-existing obligation to pay infrastructure charges merely remains.  To construe special condition 4.3 otherwise would be to undermine the obligations imposed on the respondent under special conditions 4.1 and 4.2 and give the respondent a right to terminate the contracts at will where no such term was expressly agreed.
  2. [56]
    The respondent submits that:
    1. (a)
      Special condition 4.3 of the purchase contracts has application in respect of all conditions, regardless of the time of imposition of the conditions – it is not merely prospective in operation;
    2. (b)
      In any event, here the amount of the infrastructure charges to be paid was unknown at the time of the development permit and entry into the IA.  The quantifying of the amount of infrastructure charges to be paid amounts to “imposing any conditions on any permit, certificate or approval”.

Key case

  1. [57]
    Both parties rely upon the decision in Mark Arnesan v Springs Beach Development Pty Ltd[6] (Arnesan) per McMurdo J (as his Honour then was), although emphasising different aspects of it. 
  2. [58]
    The facts of Arnesan bear some similarities to this case and involve a clause similar to special condition 4.3 of the purchase contracts.
  3. [59]
    Relevantly in Arnesan:
    1. (a)
      The parties executed an option deed on 5 June 2006 for the purchase of proposed lot 4 shown on a survey plan.  The option deed included the form of contract to be executed once the option was exercised.
    2. (b)
      The option was exercisable by the plaintiff (the purchaser) within a period of seven days from being told of the registration of the plan and the creation of the lot.  The subdivision included the establishment of a community title scheme.
    3. (c)
      The drafting of the option deed and attached contract was described as incongruous in that certain terms were contained in the contract that properly ought to have been contained in the option deed.  Ultimately nothing turned on that – the documents were construed having regard to each other.
    4. (d)
      Clause 6.1 of the contract provided that the contract was subject to and conditional upon the registration of the plan and the community management statement creating the scheme and the issue of a separate title for the lot. 
    5. (e)
      Clause 6.4 of the contract provided –

“Planning or Building Restrictions

If the Local Authority or any other statutory body having jurisdiction refuses to grant or revokes any development permit or approval or certificate or other permit relating to the Land the subject of this Contract or refuses to seal or approve the Plans or the [community management statement], or imposes any conditions on the sealing of such Plans with which the Seller shall be unable or unwilling to comply, or if for any other reason outside the Seller’s control the development of the scheme Land becomes unviable, the Seller may terminate this Contract by notice in writing to the Buyer or his Solicitors and upon termination all monies paid by the Buyer shall be refunded without deduction and neither party shall have any claim against the other for any costs, expenses or otherwise by virtue of this Contract or its termination pursuant to this clause.”

  1. (f)
    After the option deed had been entered into, the council published a decision to approve the development application subject to conditions.  The relevant conditions to the proceeding included ones about the building envelopes, including where on the lots the building envelopes were to be located.  
  2. (g)
    The defendant (the developer) appealed against certain conditions and continued to negotiate with council about same.  That resulted in the defendant and the council agreeing amended conditions to resolve the appeal, including in respect of the building envelopes, and including where on the lots the building envelopes were to be located (namely, the upper slope of the lots).
  3. (h)
    The defendant lodged a plan it considered was compliant with the amended conditions.  The council did not consider it compliant with the amended conditions, in particular in respect of the building envelopes, including where on the lots the building envelopes were to be located.  Negotiations and then further legal proceedings ensued between the defendant and the council. 
  4. (i)
    On 21 June 2017 the defendant wrote to the plaintiff giving notice of termination of the agreements pursuant to clause 6.4 of the contract on the basis that the defendant had not been able to obtain the consent of the council to the subdivision plan on terms and conditions satisfactory to the defendant.  The defendant said that “further negotiations with the council are no longer viable or practical for [the defendant].”
  5. (j)
    The plaintiff argued that the defendant had consented to the resolution of the appeal on terms and so was willing to comply with those conditions at that time.  The true reason for the defendant seeking to terminate the agreements was to pursue an alternative development. 
  1. [60]
    The important aspects of the Arnesan decision are these:
    1. (a)
      It was accepted that the defendant was willing to comply with the amended conditions when it agreed to the amended conditions to resolve the appeal.[7]
    2. (b)
      The plaintiff accepted (and the court implicitly accepted) that such willingness did not preclude a subsequent termination of the option deed by the defendant in reliance upon clause 6.4 of the contract if by that time, the defendant had become unwilling to comply with the conditions.[8]
    3. (c)
      There was no inconsistency between the defendant’s consent to the amended conditions and its unwillingness to put the building envelopes where the council required.[9]  The council was effectively seeking to impose a further condition.[10] And even if the council was not effectively seeking to impose a further condition, the defendant believed that what it had proposed did comply, or at least arguably complied, with the amended conditions.[11]  That meant that even if the position of the council was simply to apply the amended conditions, the defendant still became unwilling to comply with the condition once it realised the council would not permit the building envelopes to be as per the submitted plan.[12] 
    4. (d)
      Whilst there was a prospect of a more intensive development and other matters important to the defendant in deciding to terminate the option deed/contract with the plaintiff, it did not follow that the defendant was not entitled to rely upon clause 6.4 of the contract.[13]  All that was required was the defendant being unwilling (honestly) to comply with the council’s condition.[14] 

Analysis

  1. [61]
    I am satisfied that the respondent properly terminated the purchase contracts with the applicants pursuant to special condition 4.3 of the purchase contracts.
  2. [62]
    Having the survey plan sealed requires that infrastructure charges quoted by LCC be paid.  The respondent is unwilling (honestly) to pay the quoted infrastructure charges. 
  3. [63]
    It does not matter that the infrastructure charges to be paid as contained in the quotations are consistent with the infrastructure charges referred to in the ICNs in the IA (see [42] to [45] above).  The respondent is (at least) unsatisfied with the offsets actually applied – the offsets were not in a fixed amount in the IA.  The amount that actually is required to be paid depends on the quantification of the offsets, which in the IA included estimates and “to be determined” amounts.
  4. [64]
    And even if the charges and offsets contained in the quotations were entirely consistent with the information contained about same in the ICNs and IA (which cannot in fact be the position here because an express offset in the ICN was “to be determined” and other offsets were estimates, with a total maximum provided), based on the analysis in Arensan (with which I agree), that the respondent was prepared to comply with the payment of infrastructure charges (even in a certain sum) at a particular earlier point in time does not preclude a subsequent termination of the purchase contracts by the respondent in reliance upon special condition 4.3 if by that time, the respondent had become unwilling (honestly) to comply with the payment condition.
  5. [65]
    Special conditions 4.1 and 4.2 do not compel any contrary conclusion.  The language of special condition 4.3 is plain – it does not need to be read as if the relevant condition must be imposed only after the purchase contracts come into existence.  And in so far as special condition 4.2 requires the respondent to take reasonable steps to cause the survey plan to be registered, the required step will not be reasonable if it is a matter which engages special condition 4.3 upon which the respondent properly relies to terminate the contract.   

Result

  1. [66]
    The orders I propose make are:
  1. A contract between the fifth applicants and the respondent in relation to the purchase of proposed lot 31 of the development came into existence on 2 March 2022.
  2. A contract between the eighth applicant and the respondent in relation to the purchase of proposed lot 34 of the development came into existence on 21 April 2022.
  3. The respondent has validly terminated the purchase contracts with each of the applicants.
  1. [67]
    I will hear the parties as to appropriate cost orders. 

Footnotes

[1]  See Tordell Pty Ltd v Finch [2008] 1 Qd R 540 per Chesterman J particularly at [85]; Moffat Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60.

[2]  Also known as a development permit.  The relevant application number was COM/26/2019, and it was a combined application for the reconfiguration of a lot.

[3]  It appears there was also an earlier IA dated May 2020 between the same parties.

[4]  Note that the development application the subject of the development permit was COM/26/2019.  It is unclear whether there was an earlier application.  The May 2020 IA also referred to application COM/26/2019 in schedule 3 (noting at that time the reconfiguration sought was into 36 lots, not 35 plus a balance lot).

[5]  This does not actually appear in Schedule 4 of the December 2020 IA.  It does appear in the earlier May 2020 IA.

[6]  [2008] QSC 283.

[7]  Ibid [51].

[8]  Ibid [51].

[9]  Ibid [59].

[10]  Ibid [59].

[11]  Ibid [59].

[12]  Ibid [69].

[13]  Ibid [69].

[14]  Ibid [70].

Close

Editorial Notes

  • Published Case Name:

    Farrow & anor v Hodge & Lawe Park Ridge Pty Ltd

  • Shortened Case Name:

    Farrow v Hodge & Lawe Park Ridge Pty Ltd

  • MNC:

    [2022] QSC 183

  • Court:

    QSC

  • Judge(s):

    Hindman J

  • Date:

    02 Sep 2022

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Arnesen v Springs Beach Development Pty Ltd [2008] QSC 283
10 citations
Jump To
Cite 1 - [2008] QSC 283
Cite 2 - [2008] QSC 283
Cite 3 - [2008] QSC 283
Cite 4 - [2008] QSC 283
Cite 5 - [2008] QSC 283
Cite 6 - [2008] QSC 283
Cite 7 - [2008] QSC 283
Cite 8 - [2008] QSC 283
Cite 9 - [2008] QSC 283
Cite 10 - [2008] QSC 283
Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60
2 citations
Jump To
Cite 1 - [2009] QCA 60
Cite 2 - [2009] QCA 60
Todrell Pty Ltd v Finch[2008] 1 Qd R 540; [2007] QSC 363
2 citations
Jump To
Cite 1 - [2008] 1 Qd R 540
Cite 2 - [2008] 1 Qd R 540

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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