Following-on from our previous article regarding the first substantive judgment on recently-introduced protections afforded to purchasers of off-the-plan developments in NSW (available here), the Supreme Court of NSW has now made final orders in DGF Property Holdings Pty Ltd v Butros & Ors. The final orders provide further insight on how the Court may resolve future applications under section 66ZL of the Conveyancing Act.
The final orders require the developer to do all such acts and things necessary to procure the registration of the proposed plan of subdivision as soon as reasonably possible. Importantly, the developer was also required to offer to enter into a new contract with each of the purchasers on the same terms as the rescinded contract, except that:
- the purchase price under the new contract would be the price payable under the rescinded contract, plus 'interest' on the balance of the purchase price payable under the rescinded contract from 10 June 2016 until the date of acceptance of the offer at the rate of 4.75% per annum less the costs that the developer was ordered to pay each purchaser; and
- any provision relating to rescission of the new contract by reason of the proposed plan of subdivision not being registered would be deleted.
Three aspects of point 1 above should be carefully observed when considering the application of section 66ZL in future cases:
The date of 10 June 2016 was the date on which the developer's notice of purported rescission pursuant to section 66ZL(4) expired.
The rate of 4.75% per annum was determined by the Court to be an appropriate bank lending rate for residential properties.
The purchasers were each awarded a 'lump sum' costs order, the amount of which was off-set against the 'interest' to be paid when calculating the new purchase price for each proposed lot.
The judgment held that while the developer's conduct was 'generally less than entirely sufficient and competent', it had not 'acted in bad faith or unreasonably'. The final orders demonstrate the flexibility of section 66ZL in reaching an outcome that is 'just and equitable in all the circumstances'.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.