Special conditions: Out of control!

The Issue

Difficulties can often arise in interpreting the special conditions of a Contract when things do not go to plan. Here is an example of what can go wrong.

What Happened?

The Magistrates' Court recently heard a matter where the Purchaser had purchased an off-the-plan apartment. The parties agreed that the registration of the plan of subdivision must happen within 36 months of the Contract date. If the plan were not registered in time, either party could then withdraw from the contract by providing written notice to the other. A special condition was inserted which stated exactly that.

The plan was not registered in time and the Purchaser gave the Vendor written notice, in accordance with the Contract, demanding the return of their deposit. The Vendor tried to get a further extension of time, but the Purchaser refused to agree.

In Court, the Vendor argued that the notice given by the Purchaser should have been specific about the Vendor's default and allowed it 14 days to remedy the default pursuant to the general conditions of the Contract. Further, the Vendor argued that a special condition in the Contract gave the Vendor a right to extend the time to register the plan of subdivision for various reasons, including where circumstances arise 'beyond the reasonable control of the Vendor' and the Purchaser would then be unable to withdraw from the Contract given good and substantive reasons for delay.

The Court found that:

1. The special condition in the Contract about the time for registration of the plan of subdivision did not require the party giving notice to give the other party time to remedy any issue. It only required a notice to be sent to end the Contract and nothing more. As such, the purchaser had complied with their obligations and had validly ended the Contract.
2. The 'catch all' in the special condition allowing the Vendor to extend the time for registration required a high standard of evidence to show that delay was actually beyond the reasonable control of the Vendor given the nature of the special condition. The Vendor could not provide such evidence.

Practical Tip

Of course, contracts can and do vary considerably. However, it is important to pay careful attention to the wording of special conditions and consider how the special condition might apply if things do not go according to plan. If unsure about what a contractual term requires or how it should be best worded, legal advice should be sought. If you require assistance, please feel free to get in contact with a member of our Property Law team on 1300 205 506.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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