The recent judgements of the NSW Supreme Court in DGF Property Holdings Pty Ltd v Butros & Ors  NSWSC 344 and DGF Property Holdings Pty Ltd v Butros & Ors (No.2)  NSWSC 1137 are amongst the first judgements with respect to the controversial (relatively) new section 66ZL of the Conveyancing Act 1919 (NSW) (Act) – the section which permits rescission of off-the-plan contracts following the passing of the Sunset Date for registration of the proposed plan of subdivision.
Upon hearing of the developer’s application for rescission under the Act, the Supreme Court held that permitting rescission would not be an outcome which was ‘just and equitable in all the circumstances’. Rather, despite recognising that whilst the developer’s conduct was ‘generally less than entirely sufficient and competent’ it had not ‘acted in bad faith or unreasonably’, the developer was ordered to offer to each purchaser, a new contract on identical terms to previous, with only the following changes:
(a) the price under the new contract would be the previous price payable under the previous contract plus interest at the rate of 4.75% per annum on the balance of the purchase price payable to account for market fluctuation, less the costs of the purchaser in hearing the application; and
(b) all provisions permitting rescission for failure to register the proposed plan of subdivision being deleted.
This judgment not only supports the preconceived notion that the Supreme Court will baulk at rescission of off-the-plan contracts under section 66ZL of the Act but goes further to demonstrate that it will exhaust all means available to it to preserve these agreements; even in an instance where the developer’s conduct was not in bad faith or unreasonable.
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Madison Marcus Law Firm produced this article. It is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.