MARY is interested in purchasing a unit in a local housing development. The unit is yet to be constructed, so she proposes to purchase the unit “off the plan”.
Mary negotiates a price with the real estate agent and a draft contract is soon sent to her conveyancer of choice.
The contract states that Mary has a choice of interior styles for her unit. Mary decides to proceed with the white colour scheme as opposed to the green colour scheme.
Contracts are exchanged and settlement is scheduled to occur after the unit has been constructed.
Unfortunately, after the unit is constructed, Mary attends a prepurchase inspection and discovers that the green colour scheme is installed.
Mary is unhappy with the green colour scheme and refuses to proceed to settlement of her purchase. She seeks the return of her $100,000 deposit.
The developer states that the difference in colour is an “inconsequential matter” and refuses to change the colour scheme. The developer insists that settlement is to proceed.
Mary’s conveyancer terminates the contract, stating that the developer has “repudiated” the contract by not complying with their contractual obligations.
The dispute proceeds to determination in the Supreme Court of New South Wales.
The Court conducts a careful analysis of the contract and the relevant case law.
The Court notes that under the contract, the vendor is permitted to alter “any manner finish of at least equivalent quality” and further, that a purchaser cannot terminate the contract only due to the “quality of the inclusions”.
The Court further notes that under the contract, after settlement, Mary could seek compensation as determined by an arbitrator.
Ultimately, the Court rules that in circumstances where the developer was “ready, willing and able” to complete the contract and based on a finding that the colour change was not a “substantial defect”, Mary is ordered to proceed to settlement of the purchase of her unit.
Mary is also ordered to pay the developer’s legal costs and is liable to pay “penalty interest” due to the delay.
Email Manny Wood, Principal Solicitor and Accredited Specialist in Wills and Estates at TB Law at manny@tblaw.net.au or call him on (02) 66 487 487. This fictional column is not legal advice.
By Manny WOOD, Solicitor
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