A $5k deposit was all that the developer required for each of the three lots signed up off-the-plan in September 2012 to builder Pacific Homes.
The deal required the developer to connect sewerage and water to the lots in a subdivision south of Mackay prior to settlement but specified that phone, electricity and broadband might only be connected after, at a time decided by the relevant utility.
When the plan registered in January 2014, the developer gave notice requiring completion in the specified 90 days allowed, on 14April.
That date came and went, with no cash forthcoming from Pacific. The seller promptly began specific performance proceedings in the Mackay District Court.
In their defence, Pacific and director Paul Dingle claimed the “due date for settlement hadn’t actually arrived” by operation of oral terms agreed between him and real estate agents O’Riley and Booth.
Dingle asserted an understanding that notwithstanding the written terms, settlement would only follow the connection of electricity and phone so as to facilitate the on-sale of the blocks as a house and land package. Because the connections had not been made settlement as not yet required and there was no default for the court to consider.
Arrangements between developers and builders to commonly allow the latter to on-sell to the builder’s buyer and the prior connection of services is also a commonplace requirement.
What troubled His Honour Judge Stuart Durward though was that the alleged oral terms were completely at odds with what what had been recorded in writing.
Regardless that the absence of utility connections would make it virtually impossible for the builder to effect a contemporaneous resale to its customer, the contract specified that settlement was not dependant on such prior work being done.
Given that the parties had been legally advised, the court could only assume that the written contract superseded any prior negotiations.
Pacific also asserted that specific performance was inappropriate given that neither it nor director Dingle had any financial capacity to effect settlement. They contended the court should instead, order payment of damages for any loss on resale.
Notwithstanding the production of financial evidence supporting their impecuniosity, the judge declined to allow their claim of “hardship” and made the order that the developer sought.
Pacific and Dingle are required to complete the three contracts and pay the outstanding $650k, within 60 days of the judgment.