In January 2009 Toni Clarke and Shayne Tapper signed a rent to buy contract with the aim of eventually gaining outright home ownership after paying 780 installments over a 30 year period.

Tapper had responded to a sale advert explaining he could not obtain bank finance due to previous defaults and was interested in a rent to buy purchase.

He explained that inclusive of a first home owners grant, he and partner Toni Clark had $34k for a deposit.

Seller Evolution Properties Pty Ltd warmed to the idea and drew up a contract at $349k with the $315k balance purchase price payable at $1207.60 fortnightly and totaling with interest, $942k over 30 years.

Evolution would retain ownership of the Hunter Valley property and title until receipt of the final installment but would permit the buyers to occupy provided they pay rates and insurance.

Evolution’s Vanessa Steer recommended them to a particular solicitor who offered a fee discount to advise on and conduct the transaction if they turned up and paid the legal fees that day.

Although it was clear Tapper’s income from mining work would be used to discharge the contractual obligations, they were described as “joint purchasers” in the documents. Steer insisted that the deal could only proceed if both signed up to the commitment.

The pair married in 2010 but later separated. Payments ceased in February 2015 and in July Steer terminated the sale. She forfeited the deposit and re-gained possession of the home by August 2015 – by which time the couple had paid a total of $204k.

At a subsequent trial in the New South Wales Supreme Court, Clarke asserted she had been coerced into the transaction by Tapper who was frequently violent towards her.

She specifically enquired of Steer whether the proposed contract was a “rent to buy” but was assured “it’s a mortgage” and that “this type of finance option intake enables you to improve your credit rating and then move into the mainstream banking system”.

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Clarke defended Steer’s arrears claim of $27.2k and contended the contract was “unfair”.

Her Honour Justice Helen Wilson noted “the contract was one which bound the defendants contractually for a period of 30 years in respect of which any default would likely have disastrous consequences”.

She agreed Clarke alone had no hope meeting the financial obligations imposed given her income was that of sole supporting parent and she was not employed.

Also doubted was the efficacy of Clarke’s legal advice “particularly where she was accompanied by a baby and toddler to the meeting with solicitor and was not in a position to take in what she was told.”

“It is clear that her understanding of the contract, its terms and effect was very limited,” ruled Judge Wilson. “The advice she received that the contract was akin to a mortgage through a bank was wholly incorrect”.

The court ruled that in all the circumstances the contract was unfair both in the way it was entered into and its terms.

It ordered the $34k deposit, the value of improvements made and all installments paid should be returned to the buyers, less rent at market rate for the entire period of their occupation.

Evolution Lifestyles Pty Ltd v Clarke (No 3) [2016] NSWSC 1237 Wilson J, 6 September 2016 Read case


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