Farrow v Hodge & Lawe Park Ridge Pty Ltd

Farrow and others have brought an action against Hodge and Lawe Park Ridge Pty Ltd, seeking to enforce contracts for the purchase of residential lots. The applicants, prospective purchasers, argue that a binding contract was formed with the respondent, a property developer, upon the exercise of a call option. They contend that the respondent’s failure to sign the purchase contract meant that the contract was not enforceable, despite the exercise of the option. Additionally, the applicants challenge the respondent’s termination of the purchase contracts, claiming it was not validly exercised.

The court was required to determine whether the exercise of the call option created a binding contract for the purchase of the lots and whether the contracts were enforceable. The court also needed to assess whether the respondent was justified in terminating the contracts due to its unwillingness to comply with the council's infrastructure conditions.

The court found that a binding contract came into existence upon the exercise of the call option, as the execution of a formal document was contemplated by the option agreement. However, the contracts were unenforceable under section 59 of the Property Law Act 1974 (Qld) due to the respondent’s failure to sign the purchase contract. Despite this, the court ruled that the respondent had validly terminated the contracts. The court accepted the respondent’s evidence that it was honestly unwilling to pay the infrastructure charges imposed by the council and, therefore, the termination was justified under the special conditions of the purchase contracts.

The court ordered that contracts existed between the applicants and the respondent for the purchase of specific lots. It also confirmed that the respondent's termination of the purchase contracts was valid.