MSD Securities Pty Ltd v MFB Properties (NQ) Pty Ltd (No 2)

MSD Securities Pty Ltd (Applicants) sued MFB Properties (NQ) Pty Ltd (First Respondent) and others (Respondents) in the Supreme Court of Queensland, seeking, among other things, orders for specific performance of a contract for the sale of lots of real property, and orders for repayment of part payment made pursuant to the contract. The Applicants subsequently exercised their right to avoid the contract pursuant to s 73 of the Property Law Act 1974 (Qld), which provides that a purchaser under an instalment contract may avoid the contract if the vendor, without the consent of the purchaser, mortgages the land the subject of the contract. The Applicants were concerned that the exercise of their statutory right to avoid the contract would be rendered ineffective by the order for specific performance previously obtained. The Respondents argued that the Applicants were not entitled to avoid the contract, because they had consented to the mortgage. The Applicants argued that they were entitled to avoid the contract and, if they were not, they were entitled to restitutionary relief for the part payment made.

The court considered whether the Applicants were entitled to avoid the contract, whether the Applicants were entitled to restitutionary relief for the part payment made, and whether the order for specific performance rendered ineffective the Applicants' exercise of their right to avoid the contract. The court found that the Applicants were not entitled to avoid the contract, because they had consented to the mortgage. The Applicants were not entitled to restitutionary relief for the part payment made because the contract called for performance by the Applicants of their contractual obligations from the very commencement of the contract and continuously thereafter, and the advance payment should be regarded as the provision of consideration for each and every substantial benefit expected under the contract. The order for specific performance did not render ineffective the Applicants' exercise of their right to avoid the contract, because the order for specific performance was obtained before the Applicants exercised their right to avoid the contract.

The court made orders vacating certain orders of an earlier judgment, and made orders for repayment of the part payment made by the Applicants, and orders for an inquiry into occupational rental and mortgage payments. The court also made orders for liberty to apply.