Queensland Law
Community title scheme developments are governed by the Body Corporate and Community Management Act 1997 (Qld) (“BCCMA”). The Act purports to “provide an appropriate level of consumer protection for intending buyers of lots included in community title schemes”. More specifically, the Act governs the provision of information by sellers, and termination options for buyers where information is, or becomes, inaccurate.
Section 214 of the “BCCMA” states that if prior to settlement, the seller becomes aware of inaccuracies in the disclosure statement at the day the contract was signed, or if the disclosure statement would now be inaccurate, they must provide a further disclosure statement within 14 days which rectifies the inaccuracies.
Buyers may only terminate a contract under s 214 where three elements are satisfied:
• The original disclosure statement, or further statements, are or become inaccurate
• The buyer must be materially prejudiced by the inaccuracy
• The buyer has 14 days to terminate
The following case examples illustrate how these principles have been put into practice in the courts. Bella Besser v Alma Homes Pty Ltd [2012] VSC 460 Ms Besser contracted to purchase an off-the-plan property in a 4 lot subdivision. The “Owners Corporation Schedule” referred to and attached the disclosure statement set out the lot entitlements as 400, with each lot to have a 25% share.
Upon registration of the plan of subdivision, the lot entitlements had changed, with Ms Besser’s lot now only aving a 0.5% share of the now 202 total. While the entitlements were amended to reflect the usage of the common areas for the lots, the amendment was a material change, and Ms Besser rescinded the contract.
In looking at what is a material change, the Judge stated it’s not to be judged ‘by reference to the reason the amendment is made but by objective facts and circumstances’.
Queensland Cases
Mirvac Queensland Pty Ltd v Wilson [2010] QCA 322 This case involved an appeal by Mirvac Queensland Pty Ltd in response to a finding by the Supreme Court that Catherine Wilson’s termination of her off-theplan contract was lawful. Ms Wilson had contracted to purchase a unit in a high rise luxury development, in which the disclosure statement stated that the Body Corporate that would provide assets such as a gym, pool, BBQ etc, as well as CCTV, cameras and security monitoring equipment.
Mirvac provided a further statement pursuant to s 214 of the “BCCMA”, following inaccuracies in the original disclosure statement. However, this statement didn’t include CCTV, cameras or security monitoring equipment. Ms Wilson therefore cancelled the contract within the 14 day limitation period.
Mirvac followed the termination notice with a letter stating that there was an oversight, and that all assets included in the original disclosure statement would be included. However it was found that the consequence of the inaccuracy was Ms Wilson’s ability to terminate the contract.
Latitude Developments Pty Ltd v Haswell [2010] QSC 346
“This is a case which involved a property in Airlie Beach. Our Cannonvale director, Andrew Telford, had acted in the purchase and initial termination of the contract and our Mackay office director Stuart Naylor acted in the court proceedings which were ultimately successful.”
This case involved a contract to purchase an off-the-plan unit. Prior to settlement, changes were made to the project, so that it was broken down into various development stages. The effect of this on Mr Haswell’s rights in relation to the common property meant he was purchasing a unit with no additional facilities such as the pool area, until the second stage was completed. Following notice by the purchaser to the seller to terminate, the court found that Mr Haswell could have been materially prejudiced, if he was required to complete the contract.
It is interesting to note in this case, that when providing notice of termination, there is no express requirement to refer to section 214 of the “BCCMA”, nor to provide a basis for ending the contract. All that is required is a written notice, within the 14 days, stating that the contract is to be cancelled.
Mirvac Queensland Pty Ltd v Beioley and Anor [2010] QSC 113
In this case, an amendment was made regarding the area of the proposed lot. The purchasers were entitled to erminate the contract if they became materially prejudiced by the changes. This option wasn’t taken by the
purchasers. In addition, the purchasers unsuccessfully raised the issue that the lot area wasn’t ‘substantially as shown or described in the Disclosure Statement’. It was a term of the contract that changes of 5% were allowed, and the lot is to be considered as a whole, not spilt into balcony areas and inside areas etc – there had been a change of 10-15% of the balcony areas, but less than 5% overall here.
Gough & Anor v South Sky Investments Py Ltd [2011] QSC 361
This case illustrated the need for terminations pursuant to s 214 of the “BCCMA” to be pursuant to an inaccuracy disclosed in the Disclosure Statement. Where purchasers expectations aren’t based on the ‘core documents’ (contract and Disclosure Statement), it becomes difficult to prove there are contractual promises, and therefore contractual protection.
