Two buyers who thought their Chevron One apartment purchases had fallen away have kept their contracts, after the Supreme Court found a Gold Coast developer could not engage its own missed sunset date to terminate them.
In 2021, Chevron Apartments Pty Ltd marketed Chevron One, a 40-storey development of more than 230 residential lots on Chevron Island. Proposed unit 703 was sold off-the plan for $760,000 to Linda Malligan and unit 1305 for $840,000 to Claudio Cantavenera and Maria Salonia.
The contracts set a Sunset Date five years after signing, while also preserving various, specified termination rights for the developer.
Chevron purported to terminate the two contracts shortly after those dates arrived in April and May 2026.
Clause 10.2 required the developer to create legal title for the units it agreed to build. It was expressed the same way in both contracts: Chevron ‘must establish the Scheme, register the Plan and effect Settlement’ by the Sunset Date. The contracts allowed the developer to terminate on several grounds including economic viability; insufficient pre-sales; and absence of funding.
By each sunset date, the Scheme had not been established and the plan had not been registered.
Both buyers relied on the literal meaning of clause 10.2.
Chevron argued that clause should not be read as a mandatory obligation to settle by a particular date. It submitted that the contract as a whole, the statutory setting and construction-industry uncertainty in the COVID-19 period pointed to a different result.
At stake was the increase in value of the units by at least 70% since the date the contracts had been signed up.
Justice Paul Freeburn did not accept the developer’s interpretation. The word ‘must’ should be given its ordinary meaning. The contracts were carefully drafted, and clause 16 already gave Chevron extensive rights to terminate, including where the project became unviable, finance could not be obtained on satisfactory terms, sales were insufficient or construction costs increased.
“On its face, clause 10.2 imposes a positive obligation on Chevron to establish and register the Scheme and to effect Settlement by the Sunset Date,” said the judge. The expression is unambiguous and is susceptible of only one meaning”.
The Court also rejected the developer’s argument that the unfulfilled settlement conditions or an alternate contractual termination right justified what had happened. The relevant Settlement Dates had not arrived when Chevron purported to terminate.
Chevron also contended that “materially prejudicial’ changes to the development gave the buyers a right to terminate under section 214 of the Body Corporate and Community Management Act, which would in turn give Chevron a reciprocal right. The buyers disputed that they were materially prejudiced.
The Court found no material prejudice on the evidence. For example, the projected annual contributions for unit 1305 rose from $5,547 to $7,789 over five years, but that did not substantially disadvantage the purchasers in the circumstances. The evidence also pointed to the development being largely complete, apart from landscaping and possible fit-out work.
The court granted a declaration that both contracts remain valid and binding.
