Savannah Ray’s first offer on the morning of 18 February 2009 to purchase the $8.5 million property at 31 Hedges Ave Mermaid Beach by way of a partial swap of two properties she owned in Kingscliffe, was rejected by owner Tim Rice.

Later the same day, Ray made a second offer, again through the seller’s agent who amended the paperwork to reflect an amended offer that had the sale price of the Mermaid Beach property reduced to $7.5 million and a corresponding reduction in the agreed values of the Kingscliffe trade properties by $1 million.

Before she signed her opening offer, the seller’s agent drew Ray’s attention to the warning statement which she signed as required by PAMDA.

The same documents, including warning statement, were used for the second offer except that a new reference schedule and special conditions page were inserted. The pages were initialled but the Warning Statement was not re-signed.

It was conceded that the agent did not, on this occasion, draw Ms Ray’s attention to the warning statement.

Rice accepted the second offer.

A cheque for the $250,000 deposit was dishonoured when it was presented four days later on 23 February at which time Ray contended she validly terminated the deal.

Rice sued Ray for the unpaid deposit.

In her defence, Ray argued that the contract was void because the seller had been obliged to comply with the PAMDA s 366B (4) direction requirements when presenting the contract for the second offer to her. Further, she contended that by reason of her not signing the warning statement before signing the second contract, it was not binding.

The seller’s contention was that because Ray’s attention was drawn to the warning statement at the time the first offer was made and because she had signed it then, the process did not have to be repeated the second time around.

The District Court ruled in Ray’s favour: even though the documents related to the same transaction, they were two different contracts. Thus the PAMDA warning statement provisions had to have been compiled on the each occasion of each offer – even though the second offer originated from the buyer – prepared by a seller’s agent: “it is intended to be a warning applicable to the proposed relevant contract then under consideration”.

The seller instituted an appeal but it was withdrawn.

This case represents one of the milestones in the engagement of PAMDA compliance issues in connection with big ticket sales in the post-GFC era.

Rice v Ray [2009] QDC 275 Southport Wall QC DCJ 11/08/2009


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