Hobhouse v Macarthur-Onslow

The appeal concerned a dispute between Hobhouse (appellant) and Macarthur-Onslow (respondent) regarding the exercise of an option to purchase land contained within a Deed of Settlement and Release. The primary judge had found that the option was validly exercised, but this decision was challenged on appeal.

The Court of Appeal was required to determine two principal issues: first, whether a term should have been implied into the deed to validate the purported exercise of the option, and second, whether the respondent was entitled to equitable relief against forfeiture if the option was not validly exercised.

On the first issue, the Court held that the conditions for implying a term, as established in *BP Refinery (Westernport) Pty Ltd v Shire of Hastings*, were not satisfied. The implied term was not necessary to give business efficacy to the deed, nor was it so obvious that it went without saying, and it was inconsistent with the express terms. The Court found that the option was capable of being exercised in many foreseeable circumstances without the implied term. Regarding the second issue, the Court determined that the respondent had not established any of the recognised "special heads" for relief against forfeiture, such as fraud, accident, mistake, or surprise, nor any other circumstances demonstrating unconscientious conduct by the appellant. The Court considered the circumstances to be reasonably within the contemplation of the parties and therefore not amounting to "accident".

Consequently, the Court of Appeal allowed the appeal, dismissed the cross-appeal, set aside the primary judge's orders, and declared that the purported exercise of the option was ineffective. The respondents were ordered to pay the appellant's costs.