A group of 34 off-the-plan buyers in a suburban high-rise development has sued a developer for its rescission of their contracts claiming the failure to register the strata title plan for the apartment tower by the contract sunset date was deliberate.
They alleged Kaymet Corp orchestrated a delay in completion of the Wolli Creek project in south Sydney to put itself in a position where it could terminate and then re-sell into a rising market.
The contracts all signed up in the grip of the GFC in late 2009 and early 2010 contained a term requiring the developer to use “reasonable endeavours” to register “draft strata documents” within 30 months of the contract date.
They also provided that if “for any reason” the draft strata documents were not registered within that time, either party could rescind.
The sunset dates for all contracts passed in the latter part of 2012.
The developer terminated each contract at various dates in 2013 and 2014 by which time the community title plan still had not been registered although construction was completed in August 2013.
The buyers sued to enforce the deals which specified buy prices well below that of their 2013 open market value.
Justice William Stevenson of the New South Wales Supreme Court noted there was no provision requiring construction to be completed expeditiously but nevertheless examined the construction performance of the developer to determine whether it had used “reasonable endeavours” in relation to the ultimate plan registration as required.
That analysis revealed a period of just six weeks from November 2010 when complications with piling were encountered, where it could be said that the developer “did not use the reasonable endeavours to keep the project moving”.
However the court was not persuaded that such delay was the cause of any failure to register the documents by the relevant sunset date of any of the contracts.
The fact that Kaymet declined to take advantage of the six-month sunset date extension provision to which it was entitled, was irrelevant
The developer’s termination was upheld and it was therefore permitted to gain the advantage of the appreciation in value and resell the units at the higher current market price to other buyers.
Wang v Kaymet Corporation Pty Ltd  NSWSC 1459 Stevenson J 06/10/2015