Australia: Queensland District Court orders buyer to settle purchase of three lots

Last Updated: 12 January 2015
Article by Oliver Meehan

In brief - Buyer fails in bid to avoid settlement

The Queensland District Court recently found against a buyer of three vacant land lots in Mackay, who attempted to avoid settlement on the basis of verbal discussions and claims of hardship, and ordered the buyer to settle the contracts.

Seller reinstates contracts after buyer waives finance condition benefit

In the case Bakers Creek Developments P/L atf for Bakers Creek Trust v Pacific Homes (Mackay) P/L & Anor [2014] QDC 237, the buyer had signed a separate contract for each of the three lots. Initially, each contract was conditional on the buyer obtaining finance approval.

The seller terminated for failure of the buyer to notify regarding finance within the required timeframe. The seller then agreed to reinstate the contracts on the basis that the buyer waived the benefit of the finance condition (which duly occurred).

Third-party buyer risk and seller's position on connecting specified services

The contracts specifically noted that:

  • A substitute third-party buyer could be located by the contracted buyer to effect settlement, but whether the third-party buyer effected settlement would be at the risk of the contracted buyer.
  • The seller did not promise that telephone and electricity services to the lots would be in place by settlement of the contracts.

Buyer claims contracts incorporate oral terms

The buyer attempted to argue that these oral terms were incorporated into the contracts:

  • The seller was told that one of the purchase contracts was being entered into so that substitute buyers could be located in order to effect settlement.
  • The seller was told that substitute buyers would only be located for one of the lots once services (including telecommunications and electricity services) were connected to the lot.
  • Services would be connected to one of the lots, and a residence constructed on the lot, before settlement of the relevant purchase contract was to occur.

The buyer avoided settlement on the basis that these verbal terms had not been satisfied as at the date of settlement.

Written purchase contracts constitute whole of the agreement

The court found that the written purchase contracts constituted the whole of the agreement between the parties, noting that the verbal discussions that had apparently occurred between the buyer and the seller were not reflected in the terms of the purchase contracts that were signed.

Financial hardship claimed, but court finds settlement order not inappropriate

The buyer tried to argue that it should not be forced to complete the purchase contracts on the basis that the buyer did not have the funds, nor could it source funds, to do so. If the buyer was successful in this argument, the court could have ordered an award of damages in favour of the seller.

However, the court considered the evidence provided by the buyer of its financial affairs and declined to find that an order forcing the buyer to settle the purchase contracts would be inappropriate.

Buyer ordered to settle the purchase

The buyer was ordered to settle the purchase of the three contracts within 60 days of the court order.

Oliver Meehan
Buying property in Australia
CBP Lawyers

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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Oliver Meehan
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