Disputes between developers and purchasers of “off the plan” units are relatively common but with carefully crafted contractual provisions in lengthy and complicated contracts, the odds are generally stacked well and truly in favour of the developer.
So, it was somewhat of a rare success for an off the plan purchaser, when the Brisbane District Court recently found in favour of a New Zealand couple who had signed up to buy a two bedroom Hilton Surfers Paradise apartment for $930,000.00 “off the plan”.
The New Zealand couple had been holidaying on the Gold Coast when a sales agent convinced them to put down a $5,000.00 deposit to secure what was said to be the “last two bedroom apartment available at that price” in the particular tower. The agent represented that the property would be worth $1.1 million once the building had been completed and that it would be able to achieve rental returns of about $1,000.00 per night at 80% occupancy.
As it turned out, however, when the New Zealand couple did an inspection of the unit after construction but prior to settlement, they realised that the property was never going to be worth what the agent had represented and similarly, that it would never be able to achieve the rental returns promised.
The purchasers refused to settle and were duly sued by the developer who, by that point in time, had re-sold the unit for only $620,000.00 a year later and had achieved about $3,900.00 in rental income over that period.
In handing down his decision, Judge McGill in the Brisbane District Court found that there had been misleading and deceptive conduct on the part of the agent and that this was something for which the developer was liable. His Honour thought that despite the contractual terms, they could not take the benefit of the misconduct as that would be contrary to the intention of the consumer protection legislation.
For builders, developers and project managers, the decision highlights how important it is to ensure that anyone selling your product sticks strictly to the script!
Schultz Toomey O’Brien
Ph: (07) 5413 8900
Fax: (07) 5413 8958