The Supreme Court last month ruled on the PAMDA derailment of a successful off-the-plan sales campaign by distressed Mudgeeraba unit developer SDW Projects, opening the way for damages claims against some of the developer’s lawyers.

The developer sought declarations that Gold Coast City Solicitors had failed to comply with section 365A (2A) (c) on 12 occasions because they did not “direct the attention” of the buyer to the cooling off provisions of the form 30C warning statement when distributing the buyers’ copies of the fully signed contracts.

The same allegation was made against Clements law firm in respect of two further contracts.

Coinciding with deteriorating market conditions, these 14 buyers – there were 30 apartments in all – gave notice in early 2009 of their intention to exploit the claimed deficiencies, by withdrawing from their contracts.

SDW engaged a third law firm, Holding Redlich who recruited counsel, to advise upon the validity of the withdrawal by the group of 14.

In their defence, the former firms countered that such advice was wrong and that the buyers were never entitled to withdraw.

To cover all bases, SDW decided Holding Redlich and its counsel must also be named as respondents: to meet the possibility of the court ruling the contracts valid and binding and the defence being upheld.

The court reasoned that the correspondence returning the contract booklets to the buyers’ solicitors – in that they made no reference to the warning statement whatsoever – could not be said to contain the (since repealed) PAMDA requirement of an  “attention directing” statement.

That the enclosing correspondence referred to the “contract of sale” – a reference to the bound booklet containing the contract and the warning statement – was not enough to achieve compliance, said the court.

In reaching this conclusion, the court also decided there was no reason to think that a solicitor – as opposed to a lay person – would understand a reference to the ‘contract of sale’ as being a reference to the booklet comprised of both the contract and the warning statement.

Appeals have been filed which will be heard in the coming months.

All of which demonstrates the senselessness of some PAMDA provisions. What purpose could be served by an “attention directing” statement when addressed to a solicitor rather than the buyer personally.  An enormous waste of resources, all for no benefit.

The industry awaits the promised further reform which was spoken of as being available for comment by the end of December, but which is still yet to be revealed.

SDW Projects Pty Ltd v Modi & Ors [2012] QSC 400 Brisbane Peter Lyons J published 20/12/2012


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