Terence Street was rapidly reaching the limit of his $450k bank line of credit when he floated his Hope Island home as a development prospect to neighbour and long term friend, Gianni Ladini.
With the help of Ladini’s lawyer, they soon nutted out terms: a $100,000 non-refundable option fee payable immediately on a $2.5 million option with a put/call date in two years.
The grantee could also elect to extend the option period by 12 months and at settlement need only pay $1 million in cash, with interest free vendor finance for the balance over a further five year period.
Not bad development terms.
Maybe so, but with no evidence of the value of the land against which to compare the price that was being paid, it could not be said to be so one-sided, as to be unconscionable or “grossly improvident”.
Neither was there any evidence that age (67 years); infirmity (a recent stroke and heart problems); or lack of assistance (the Street’s insisted on avoiding the expense of their own lawyer), put them in the position of being taken advantage of.
The principal argument the Streets – pensioners to the extent of about $1000/week – relied on in purporting to terminate the option in July 2011, was that Ladini had reneged on a side deal to pay down $5,000 per month to them during the option period.
In support, Street swore that immediately after signing up the option agreement in the solicitor’s office in June 2009, they descended to the car park where Ladini – circumstances that her honour concluded were unlikely to have actually occurred – “opened the boot of his car and took out $5,000 in cash and handed it to them”.
A Gold Coast restauranteur, Ladini did in fact advance a total of $53,000 prior to the purported termination but the court concluded that this was to provide cash assistance to help out his friend “to the extent he could and therefore in a non-binding way”.
There was, so held the court, “a lack of frankness in Mr Street’s responses” and he had recalled in evidence more “what he wished for, rather than what happened”.
In reality, there was no additional oral term to the agreement and hence the non-payment did not constitute any breach of the option. The offer to pay always “depended upon the respondent’s capacity to give it”.
Having used up the $100,000 option fee, the additional $53,000 and their pension cheques of another $34,000, all within a 17 month period, they were “clearly living beyond their means”.
One might have thought that they would have at least been sensible enought to spend a little of that very large sum on just a little bit of prudent legal advice.
But no. A case of penny wise and pound foolish? Perhaps merely a change of mind.
At least our impulsive do-it-yourselfers can still look ahead to eventually getting their hands on the sale proceeds – if they can even imagine a further 5 years out.
Let’s just hope for everyone’s sake, the Gold Coast real estate market has recovered a little by then.