Watpac Developments Pty Ltd v Latrobe King Commercial Pty Ltd

In the case of Watpac Developments Pty Ltd v Latrobe King Commercial Pty Ltd, the dispute centred around the sale of real property, with the plaintiff, Watpac, suing the first defendant, Latrobe King Commercial, and the second defendant, who had guaranteed the first defendant’s performance under the contract. The plaintiff, Watpac Developments Pty Ltd, contracted to sell real property to Latrobe King Commercial Pty Ltd, with the second defendant, another entity, providing a guarantee and indemnity. The original contract was later varied to extend the completion date and introduce instalment payments, which the first defendant failed to make. Watpac terminated the contract, treated the unpaid instalments as a forfeited deposit, and resold the property, experiencing a financial shortfall.

The primary legal issues before the court were whether the contract constituted an instalment contract under section 71 of the Property Law Act 1974 (Qld) and if Watpac was justified in terminating the contract and forfeiting the instalments as a deposit under section 72 of the Act. Specifically, the court needed to determine if the instalments were indeed deposits that could be forfeited in the event of a breach by the purchaser, and if Watpac’s actions in terminating the contract and treating the instalments as forfeited were legally permissible.

The court found that the contract was an instalment contract as defined by section 71 of the Act, as it allowed for the payment of purchase money in instalments. Furthermore, the court held that the instalments were akin to a deposit, as they were "liable to be forfeited and retained by the vendor in the event of a breach of contract by the purchaser," as stipulated in section 72 of the Act. Consequently, Watpac was entitled to terminate the contract and treat the unpaid instalments as a forfeited deposit. The court ultimately ruled in favour of Watpac, awarding them the sum of $1,849,553.31 against the defendants.