“Off the plan” Contracts and the new Sale of Land (Rights and Duties of Parties) Bill

1. “Off the plan” Contracts and the new Sale of Land (Rights and Duties of Parties) Bill Alistair Wyvill SC Vince Peters William Forster Chambers & the Law Society of the NT

2. Litigating “Off the Plan” Contracts • Remedies under contract • Remedies under the TPA/CAFTA

3. Contract - context • Property subject to the contract does not yet exist • Control over the creation of the property is with vendor only • Knowledge of the nature of the property is principally with the vendor

4. Section 26K of Unit Titles Act (1)Each contract entered into by a developer for the sale of a unit, proposed unit or other interest in a condominium development...shall..., be deemed to be subject to the condition that the developer will construct and complete the condominium development in accordance with the disclosure statement, and each successor in title to a unit or interest so sold shall be deemed to be the original purchaser from or contractor with the developer and may enforce the contract accordingly. (2)A person is incapable of contracting out of the effect of subsection (1). See also s.26ZA (estate developments)

5. Disclosure Notice • Plans of areas including common areas • “schedule of materials and finishes” • Commencement and completion dates

6. Grounds for avoiding contract. • Misrepresentation - fraudulent, negligent, innocent • Failure of a condition • Subject to finance, etc: Parland (1995) 5 Tas R 121 • Notice requirements: Chin v Frances Park • Breach of condition • Disclosure statement • Breach of “conditions” of the contract • Repudiation

7. Remedies • Terms of agreement • Election between inconsistent remedies • Specific performance • vendor • purchaser • Forfeiture of deposit/bank guarantees • Damages

8. TPA/CAFTA Types of misrepresentation • Existing fact • Future matter – reasonable grounds: s.51A • Statement of intention • Opinion (as to existing fact or future matter) a positive unqualified prediction may be misleading if relevant circumstances show a need for some qualification to be attached or the possibility of non-fulfillment to be disclosed as a requirement of fair trading Wheeler Grace (1989) ATPR 40-940

9. TPA/CAFTA Types of misrepresentation – off the plan contracts • attributes of property when constructed – size/quality present fact/future matter/intention? • market conditions: Henville v Walker (2001) 206 CLR 459 • current value of “the property” • number and value of comparative sales • value when completed • rentability

10. Effect of exclusions/limitations in contract • Conduct must be considered as a whole • Entire agreement clauses – do not exclude misrepresentation claims as such: Inntrepreneur [2000] 2 Lloyds Rep 611 • No reliance on any representations not included in contract: “evidentiary estoppel” • “purchaser should make own enquiries” clause: Butcher v Lachlan Elder (2004) 218 CLR 592

11. SALE OF LAND (RIGHTS & DUTIES OF PARTIES) BILL DISCLOSURE STATEMENT COOLING OFF PERIOD

12. COMPENSATION • Person who prepares document is liable to compensate buyer if document is misleading or prepared without exercise of reasonable skill and care. • Section 24

13. SECTION 3-DEFINITIONS • Encumbrance • Land • Lot • Required Certificate • Required Document • Required Report • Residential Property

14. REQUIRED CONTENT • Proposed Contract • Title Search • Particulars of registered and unregistered encumbrances • All registered documents pertaining to an existing unit on a Unit Plan • Certificates required by regulation

15. Criminal Code Applies • Be wary of recklessly or carelessly preparing the document.

16. PENALTIES • 100 penalty units for failure to provide the disclosure document or not taking care to ensure its provision

17. Exemptions • Unit or Lot to be created • Related party transactions • Joint tenants and tenants in common • Exercise of option longer than 60 days

18. WHEN REQUIRED • When property is offered for sale

19. BUYER MAY RESCIND • If no disclosure • If disclosure contains error or omission of material particulars • Rescission at no cost to Buyer-full deposit refund • No commission or expenses payable by Seller • Buyer may rescind or complete and pay damages

20. PRACTICAL IMPLICATIONS • Instruction Sheets • Professional Indemnity • Marketing tool • Real Estate Agents

21. COOLING OFF • 4 Day cooling off period • Starts day after contract signed • Applies only to residential property not sold by tender or auction or sold within 4 days before or 2 days after auction

22. CERTIFICATES • To waive or shorten cooling off period • Given by legal practitioner or licensed conveyancing agent • Format required by Section 21

23. RESCISSION NOTICE • Must be given during the cooling off period • No cost to buyer • No commission to sellers agent • Can be signed by buyer or buyer’s legal practitioner or conveyancing agent • Can be given to seller or seller’s legal practitioner or conveyancing agent

24. TRANSITIONAL PROVISIONS • Does not apply to listings made within 6 months prior to Act commencing AND if contract within 6 months after Act commences

25. Conclusion and Questions