Confusion resulting from multiple handwritten amendments to an off-the-plan condominium contract signed up for in May 2009, has allowed a buyer to win damages for the increase in value of the unit after a botched termination attempt by the developer.

Garland Pty Ltd purported to terminate the $460k sale to Lin Feng Wang – a 23-year-old student from the People’s Republic of China – when she failed to settle in December 2011, because of a dispute over an $8k surcharge to the purchase price for the selection of a powder room option for the ground floor of the apartment.

It immediately resold the condo in April 2012 at a price $60k higher and retained Wang’s $46k deposit as a result of her alleged default. Wang sued.

At issue was whether an annotation to the floor plan on one counterpart only, that made reference to the powder room was indicative of Wang’s request for and agreement to pay for, such option.

“In the ordinary course it would be unconventional,” noted the Court “for a conveyancer knowingly to permit the two counterparts to contain different and inconsistent” items.

Because the counterparts had however been exchanged “without the difference being brought to light by the solicitors”, the court was required to decipher numerous annotations – in dissimilar handwriting – and some in Mandarin characters.

The error was explained in part by the “general practice” of the developer’s officeholders – because of the extent of contract documentation and the number of units in the development – to only concern themselves with the execution page of the contract they were required to sign and to ignore intricacies such as floor plans.

Wang’s case was that she had initially made enquiries about the powder room in the Kensington (Sydney) apartment but decided not to take up that option. She didn’t want the powder room and was certainly not going to pay an extra $8k for the unit.

The developer completed construction as if the option had been selected but only belatedly – on the day of settlement after settlement figures had been agreed – demanded the additional cost.

While it was clear the parties cooperated in making a significant number of handwritten alterations to the original draft contract, the court could not conclude the circumstances in which the changes to the floor plan in the seller’s counterpart were made or by whom.

“These amendments demonstrate a moderately complex series of changes. This process did not lead to the inclusion of any term which required Garland to include the powder room or which required Wang to pay for it.”

Thus when it purported to terminate the contract in March 2012, Garland had wrongly repudiated the contract and was held liable to pay the resulting damages to Ms Wang to allow her to re-enter the market and purchase similar stock.

Her loss was simply calculated by reference to the $60k resale uplift (less the $8k powder room surcharge = $52k) plus conveyancing fees, interest and the amount of her deposit.

Her claim for “loss of time, stress and disappointment” at $10,000 was dismissed but Wang did recover an additional $17,000 for the difference in the FHOS rebate to which she was eligible in March 2012 as compared to the 2013 rebate value.

In all damages were awarded by the NSW Supreme Court at $113,000 plus interest and costs.

Given that the Sydney market is traditionally 12-24 months ahead of Queensland, Ms Wang’s case heralds a likely shift locally,  in the dynamics of settlement manoeuvring and in contract litigation.

Wang v Garland Lot 3 Pty Ltd Robb J Sydney [2013] NSWSC 1112 19/08/2013
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