A matter was recently heard by the Supreme Court of Queensland
concerning a purchaser's right to terminate a contract for sale
as a result of damage caused by the recent Queensland floods.
The case concerns Section 64 of the Property Law Act 1974
(Qld) and relates to a riverside development
Section 64 states that in any contract for the sale of a
dwelling house where, before the date of completion or possession
whichever earlier occurs,the dwelling house is so destroyed or
damaged as to be unfit for occupation as a dwelling house, the
purchaser may, at the purchaser's option, rescind the contract
by notice in writing given to the vendor or the vendor's
solicitor not later than the date of completion or possession
whichever the earlier occurs.
In this case, the apartment was on the ground floor of the
building and included car parking and storage on one of the
The developer and seller, Mirvac, had previously called for
completion after the Community Title Scheme was established. The
purchaser unsuccessfully sought an order declaring the contract
void and a new completion date was established as 8 February
The Brisbane River then flooded. Both basement levels of the
building were inundated. Water entered the apartment on the ground
floor. Mirvac made an open offer to the purchaser to clear up and
restore the apartment to its original condition at Mirvac's
cost. Mirvac sought to delay settlement so that it could do this.
The purchaser rejected that offer and looked to rescind the
contract in accordance with Section 64 of the Act.
The Court Action
The purchaser sought a declaration that the contract was duly
rescinded. The Supreme Court of Queensland noted that there were
legal questions and related factual questions about the application
of Section 64 including:
the date at which fitness (i.e. fit for occupation) must be
the meaning of fitness and the relevance, if any, of the damage
being capable of repair.
The Court found that these were matters which should go to trial
and could not be determined in a summary fashion. The Court
therefore found that the purchaser would be adequately protected by
an order extending the date for completion. This would not prevent
the Court determining whether or not the purchaser had a right to
seek to rescind under Section 64 at a later trial.
The case is a reminder that regardless of the extensive damage
caused by a flood, reliance on Section 64 of the Act (and
equivalent provisions in other States) to rescind cannot be
guaranteed and will be determined on a case by case basis.
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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