Agents are familiar with the nervous feeling in their stomach when it comes to PAMDA and the sale of a development site – “Do I need a form 30C and have to go through the PAMDA process or can I ignore it because it’s a vacant development site?”
Regrettably this problem was not addressed in the recent PAMDA changes although, in our May post, we urged authorities that it should have been.
Confusion is rife over this issue. It has also baffled Queensland judges who have produced reams of paper to compile their varying and lengthy – but not necessarily elucidating – judgments. So if judges can be confused, what hope is there for real estate agents to get it right?
This month, the court of appeal had to consider * whether PAMDA applied to the $5 million sale of a three hectare broad-acre site on the Gold Coast. The buyer terminated on the day of settlement because of the absence of any PAMDA warning statement having been attached to the contract.
The buyer – represented by Delaneys lawyers – then sued the seller for return of its $250,000 deposit. It also sued the agent – Main Commercial First National – who had prepared the contract, for $330,000 compensation, for expenses “thrown away”.
The buyer’s argument was the land was “residential property”, even though it was a development site because the lot was “a single parcel of vacant land in a residential area” and therefore within the definition in s 17. “Residential area” is specifically defined as an area identified on a map in a planning scheme has an area for residential purposes.
The land was shown on a council map as “public open space” which under the planning scheme included “urban residential” uses. However another planning map, which depicted some residential uses, had ill-defined boundaries, making it impossible to determine whether the land actually fell into one or other of the areas broadly illustrated thereon.
Thus the court ruled that the buyer had not established that the lot was in a “residential area”. The best the buyer had been able to prove was that it was contained in the “public open space” designation. The mere fact that such designation allowed urban residential, among other uses, was not enough.
The buyer failed to escape the contract and presumably the agent was entitled to claim commission (although this is not clear from the judgment).
The appeal court confirmed that the land could not be considered to be “in a residential area” merely because one of the various permitted uses of the land was residential.
Confused? You are in good company. The court’s reasoning occupied 14 pages. There have been many other cases on this very issue, including appeals that have overruled supreme court judges.
Even more confusing is that the judgment against the buyer was made in spite of a current approval pertaining to the land allowed for development of 54 residential town houses. At trial, the seller argued that the additional approval for a tennis court (for use by residents) and for drainage, roadworks etc, made the development “other than” for residential purposes and therefore within the sub-paragraph (b) (ii) exception to the section 17 (3) exclusion.
In ruling against the seller on this argument, the trial judge had to consider whether:-
- a council approved reconfiguration to create more residential lots is for subdivision and therefore ipso facto, not for “residential purposes”; and/or
- an approval for development of improvements to the land which are not residences (eg a tennis court)
would bring the land under the exception in s 17 (3) (b) (ii) which would render a single parcel of residential land not to be residential land even though it is in a residential area because of the status of the purpose of a current council approval pertaining to it.
Very confused? You ought to be. And it’s not because the court is being deliberately long-winded – it’s because the PAMDA definition is convoluted and among other departures from sound syntax, employs a triple (for real) negative!
The trial judge, following an earlier case, ruled the first theory incorrect and – although accepting the correctness of the second theory – ruled that on the particular facts, the tennis court and drainage etc were for the residential purposes reasonably connected to the townhouse residential use.
Whew!
Surely we can rely on our elected representatives and ministers of the crown to alleviate statutory absurdities and to stem the enormous cost associated with this type of disputation. Apparently not.
* Arc Holdings Pty Ltd v Riana P/L & Main Commercial First National [2010] QCA 269
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