The decision in the Supreme Court of Victoria, Besser v Alma
Homes Pty Ltd1, provides some guidance as to the
basis on which a purchaser may rescind an 'off-the-plan'
contract where the vendor amends the plan of subdivision in a way
which will "materially affect the lot to which the
The case concerned a contract of sale for a lot on an
unregistered plan of subdivision (defined as a "prescribed
contract of sale" in the Sale of Land Act 1962 (Vic),
but commonly referred to as an 'off-the-plan'
The purchaser (Ms Besser) entered into an 'off-the-plan'
contract to acquire the property from the vendor, one of four lots
on an unregistered plan of subdivision, and paid a 10% deposit of
$125,000 in doing so.
The property was identified in the contract by reference to a
proposed plan of subdivision, a copy of which was annexed to the
vendor's statement. That plan included an owner's
corporation schedule identifying the entitlements and liabilities
of each lot. The purchaser's entitlement and liability was
specified as 25% of the total (i.e. 100 out of 400).
The plan of subdivision that was ultimately registered
identified the purchaser's lot entitlement and liability as
.49% (1 out of 202).
After receiving notification of the plan's registration, the
Purchaser sought to rescind the contract on the basis that the
amendment to the plan of subdivision would "materially
affect the lot to which the contract relates" under
section 9AC of the Sale of Land Act 1962 (Vic). Section
9AC states as follows:
If after a prescribed contract has been entered into and
before the registration of the relevant plan of subdivision an
amendment to the plan is required by the Registrar or requested by
the vendor, the vendor shall within 14 days after the receipt of
the requirement of the Registrar or the making of the request by
the vendor (as the case requires) advise the purchaser in writing
of the proposed amendment.
The purchaser may rescind a prescribed contract of sale
within 14 days after being advised by the vendor under subsection
(1) of an amendment to the plan of subdivision which will
materially affect the lot to which the contract relates.
The purchaser also sought a refund of the deposit on the basis
of her purported rescission.
The vendor contended that the purchaser was not entitled to
rescind or to a refund of the deposit on the following grounds:
The amendment to the lot entitlement and liability was not an
amendment to the plan of subdivision because it "did not
affect the boundaries of the property or its physical
The amendment to the lot entitlement and liability did not
materially affect the purchaser's lot because it was primarily
made in order to benefit the purchaser's lot by shifting the
liability for the maintenance of the common property to the lots in
the plan which would have more use of the common property.
Decision of Supreme Court
The Supreme Court ultimately declared the purchaser's
rescission to be valid and ordered the return of her deposit by the
vendor. The Court determined that the amendment to the lot
entitlement and liability within the meaning of Section 9AC:
was "an amendment to the plan"; and
did "materially affect the lot",
In determining that an amendment had been made to the plan of
subdivision, the Court adopted a broad view of what constitutes a
plan of subdivision, extending it beyond the physical dimensions
and boundaries to "the respective rights and obligations
which were attached to each of the lots" by virtue of the
owners' corporation entitlement and liability.
In determining that the amendment to the lot entitlement and
liability would "materially affect the lot", the
promoted a test which looks at "objective facts and
circumstances" (rather than the reason for, or benefits
which may arise from, the amendment); and
considered the various voting and other rights under the
Owners Corporation Act 2006 which would be affected by
such a significant change to a lot's entitlement and
Lessons to be learned
Amendments to plans of subdivision prior to registration are
common, particularly in large master-planned or multi-stage
Developers should remain mindful of the risks associated with
amending their plans of subdivision during the course of
development, including where the amendment will result in a change
to a purchaser's owner's corporation lot entitlement or
Such risks may be mitigated by developers by ensuring that the
proposed plans of subdivision attached to their
'off-the-plan' contracts are as close to their final form
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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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