Saturday, June 13, 2009

Off The Plan Contracts

This week, the Queensland Fair Trading Minister Peter Lawlor announced that the Government would be legislating in response to the Court of Appeal decision of Bossichix Pty Ltd v Martinek Holdings Pty Ltd [2009] QCA 154 handed down on June 5.

The Minister said:

"The Supreme Court last Friday dismissed an appeal where, in the first instance, the buyer of a unit in a community titles scheme was held to have validly terminated the contract based on a technical breach of the Body Corporate and Community Management Act 1997. The technical breach related to section 212 of the Act and the court held that the contract did not strictly comply with the wording required to be used by the section.

The decision means that buyers can now potentially avoid a contract purely on a technical breach of the Act, even if they haven't experienced any material detriment. This puts hundreds and potentially thousands of off-the-plan contracts at risk. It is a potentially serious situation for the development sector and the wider Queensland economy.

The issue is that this legal precedent could be used, for example, where a buyer simply regrets entering into a contract, or if the buyer could have purchased a unit or property at a lower price. This was never the intention of the legislation and creates great uncertainty for sellers and developers, particularly in relation to off-the-plan sales where there is a long period of time between execution of the contract and settlement. We cannot afford this uncertainty in today's economic climate.

At the same time, the Government is not looking to in any way water down the legitimate consumer protections encompassed in the Act - rather to correct a technical failure of the contracts to fully reflect the requirements of the legislation. All of the normal protections of the legislation will be preserved.

The Government will be introducing legislation next week to address this situation and ensure that both buyer and seller are returned to the situation they believed to be the case - and agreed to - at the time of the signing of the contract."

Lawyer's comment

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