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Australian Lawyers and Consultants

Risks and Remedies in Subdivisions and “Off the Plan” Concessions

February 2003

When a property developer does not ensure that the actual construction mirrors the proposed building plan, but is markedly different, the purchaser may seek to rescind the contract and retrieve the deposit paid.

The underlying issue in such a case will be whether the buyer would still have entered into the contract if they had possessed the knowledge about any differences from the original plan. To determine this, the court may examine the contract to find out whether the discrepancies were essential to the contract or not.

If the discrepancies are deemed essential, the court will also determine whether the changes left the buyer at a certain disadvantage. If yes, then the buyer has a good chance of successfully rescinding.

However, if the court finds that the changes are not essential to the terms of the contract, or that the buyer is in a similar or better position with the changes to the construction, the court may rule that the developer has fulfilled the contract and refuse the application to rescind the contract.

In Bantick v Boss Properties Pty Ltd (Victorian Supreme Court 2000), the buyer entered into the contract believing there were to be two body corporate entities managing the property – one for the shops and the other for residential units. In the plan registered with the Registrar of Titles, however, the developer expressed the intent to have only one body corporate for both the shops and the residential units. The court declared, in this case, that the existence of two body corporate entities was essential to the contract, and the buyer succeeded in rescinding the contract.

In an earlier case, Sommer v Abati Holdings Pty Ltd (Queensland Supreme Court 1992), the court ruled that, changes in garage construction did not leave the purchaser at a disadvantage as the specifications of the garages were not essential to the contract, which could not be rescinded.

The financial difficulties surrounding the Regis Towers Body Corporate in Sydney also offers a precautionary tale. Although there is more talk of amending the laws, the lack of sufficient statutory consumer protection for purchasers in large building developments makes it imperative to seek our legal advice.

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

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