In this article, I want to explore a recent Queensland Supreme Court decision.
I am generally reluctant to refer disputes to the courts because all too often the courts deserve their reputation for being slow, expensive and time-consuming.
The decision of Brightman & Ors v Royal Pines Projects Pty Ltd is an example of the legal system working. I think the case also highlights some interesting legal principles that are worth highlighting. You can access the full text of the decision by clicking here.
The Background
The case was brought to the Court by 15 off the plan purchasers. They had each purchased off the plan units in a development called “Vantage View” at Benowa in Queensland. The contracts were signed between January 2021 and late 2023.
The developer provided notice on 1 July that settlements were scheduled for 16 July, 2024 – being roughly 14 days later.
The issue was that, at least initially, the developer didn’t allow the purchaser’s lender’s valuers access to the Property. The developer argued that the contracts weren’t subject to finance and it had no obligation to allow access. There is a suggestion that the value of the units had increased and the developer would have been happy to terminate the contracts and re-sell the units at higher prices. (To be fair, it appears that the builder had gone bust along the way and the developer likely faced higher-than-expected costs.)
This made it virtually impossible for many of the purchasers to obtain finance. As is usual, the lenders to the purchasers wanted a valuer to inspect and value the units being purchased.
On 5 July, the lawyers acting for the purchasers applied to the Supreme Court for relief.
On 8 July, after the proceedings were initiated, the developer agreed to allow the valuers access to the Property – but still asserted that the settlements were due to proceed on 16 July,
The Court heard the matter on 11 July and rendered a decision on 12 July.
The Courts
It is truly impressive that the proceedings were initiated on 5 July, set down for hearing on 11 July and a decision was handed down on 12 July, Congratulations to the Queensland Supreme Court for rendering a decision in a commercially relevant time frame!
I am not aware of what their turnaround time is in other matters – but in this case, I think the Court was spot on.
There is an old saying that “Justice delayed in Justice denied”. When court cases can take years from start to decision – then I think there is a lot of room for improvement.
Legal Principles
The Court, in its decision, noted that the contracts were not subject to finance and did not include an explicit clause that required the developer to provide access to each purchaser’s valuer.
The Court’s starting point was that:
“There is no dispute that the contract includes terms implied by law, including a duty to co‑operate so as to give the other party the benefit of the contract.”
Put another way, the law of contract creates:
“an implied obligation on each party to do all that [is] reasonably necessary to secure performance of the contract.”
The Court had little difficulty in deciding that most purchasers would need a loan to settle and also that most loans would require a valuer to inspect the property being purchased. Hence, the developer was legally obliged to allow the valuer access in a timely manner even though there was not a specific clause in the contract to this effect.
The Court also proposed allowing the affected purchasers an extension to the settlement date.
In my opinion, this is a triumph of common sense and reflects our common law legal system at its best. (The common law is the body of law that has been developed by the courts over hundreds of years – as opposed to statutes and regulations made by parliament.)
Too often parliament seeks to impose increasingly detailed rules and regulations seeking to regulate every single possible eventuality.
Key Takeaway
The key lesson for property investors here is that there is more to a contract than the specific clauses in the contract. There is a general obligation to cooperate with the other party to the contract to try to make the contract work.
Clearly, there are limits to this obligation – but the obligation does exist.
At Lewis O’Brien & Associates we regularly provide advice in relation to tricky property contract questions. If you have a tricky property contract question feel free to book a fixed-price consultation with me by clicking here.
Lewis O’Brien
Your Preferred Property Lawyer