A Brisbane investor has been ordered to pay substantial losses to a developer as a result of his failure to settle on two inner-city condos signed up for off-the-plan in November 2015.
Jiahe Zhang signed up to buy two separate Fortitude Valley units in respect of which construction was yet to commence knowing that settlement on the Utopia units would be due by early 2020 at the latest.
He paid the 10% deposit on the $659k and $652k units but following registration of the community title plan for the 300-unit building, failed to stump up with the settlement cheque when called for in March 2020.
Rather than terminating the contracts, developer Australia Sunrise Development at first affirmed the contracts and called for settlement again.
Zhang notified in response that “due to his employment status and financial situation” he couldn’t complete the buy of the Wickham St properties.
Sunrise eventually terminated both deals in October 2020 by reason of the continuing breaches, forfeited the deposits and sued for its losses on the failed transactions.
An order for damages to be assessed was made by consent in October 2020 by Judge Barlow QC in the District Court in Brisbane.
Zhang did not appear or file any material in relation to the assessment of damages proceedings that eventually came before Judge Byrne QC in Maroochydore in August 2021.
The condominiums in the 300-unit development had not as at such date been resold and had not been the subject of any offers made for their purchase.
Sunrise’s solicitor deposed to valuation evidence that put the market value of the units at the date of termination of the transactions in October 2020 at $149k and $82k below the prices at which Zhang had agreed to buy.
Sales agent commissions on the original sales – claimed at $40k for each unit but allowed in a total of just $20k – and holding costs of another $18k had to be added to those sums in calculating Sunrise’s total loss.
As for interest, this was allowed from the due date of settlement to the date of termination at the contractual rate of 15% per annum in the total of $106k and for the period from then until the date of judgement at a total of a further $20k.
After already forfeiting the deposits, Zhang must pay a further $164k by way of damages plus 15% p.a. interest thereon until the date of payment and must also pay the developer’s solicitors legal costs, putting the total cost to Zhang for the missed timed acquisitions in the upper $300ks.