Vale No 1 Pty Ltd v Delorain Pty Ltd  QSC
A recent case has once again brought the issue of option deeds
and relevant contracts in relation to PAMDA to the forefront. In
this case, the Court had to determine whether 3 option deeds were
'relevant contracts' for the purposes of the Property
Agents and Motor Dealers Act 2000 (PAMDA). If they were found
to be "relevant contracts" then the consumer protection
provisions dealing with warning statements applied.
The option deeds in question were between a developer and a
property marketer. They allowed the developer to grant call options
to the property marketer to buy subdivided residential lots. The
property marketer would then introduce buyers, which would be
subject to a minimum sale price. Once sold, any sale price above
the agreed minimum would be given to the property marketer.
The option deeds also contemplated that if the call options were
not exercised then the developer could exercise put options to
force the property marketer to buy the lots. Consequently, the
option deeds only identified the seller and the terms of the sale.
The sale contracts which were attached to the option deeds did not
identify the buyer.
After the call options lapsed, the developer exercised its put
options to force the property marketer to buy the lots. The
property marketer then attempted to terminate the sales claiming
that the developer had failed to comply with PAMDA by attaching
warning statements to the option deeds.
PAMDA applies to a "relevant contract" which is
defined as a "contract for the sale of residential property in
Queensland ...". The property marketer argued that the option
deeds were contracts for the sale of residential property.
The judge (Douglas J) found for the developer and relied on the
reasoning of Mullins J in Cheree-Ann Property Developers Pty
Ltd v East West International Developments Pty Ltd who found
that option deeds did not by themselves result in a contract for
the sale of the residential property because the buyer was not
identified. In arriving at this conclusion, Douglas J observed that
the identity of the buyer depended upon whether the property
marketer introduced a buyer or the developer forced the property
marketer to buy the lots itself. Until the buyer was identified it
was "impossible to conclude that a contract for the sale of
property has come into existence".
Whilst this case found that the option deeds are not relevant
contracts under PAMDA, you should be aware that this result arose
due to the particular facts in this situation. If you are
contemplating entering into an option deed relating to residential
property then the possible application of PAMDA should be
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.
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