The Facts

Contract for sale notes the presence of rubbish at the property

A property in North Bondi was sold at auction on 21 November 2013 for $4,400,000.00. Settlement of the contract was delayed but ultimately took place on 13 March 2014.

The contract for sale of the property noted that there was a substantial amount of "equipment, building materials and rubbish in and about the property" and included a special condition that "the purchaser agrees that the vendor will have given vacant possession of the property even if ... equipment, building materials or rubbish are located in or about the property on the completion date".

Buyer alarmed by state of property at settlement

The buyer had inspected the property prior to the auction and observed the state it was in at that time. However, he was alarmed to discover when he inspected the property again just prior to settlement some three months later that it was in a much less tidy state, with greater quantities of rubbish strewn throughout the property.

Nevertheless, the parties agreed that settlement should proceed and that some monies would be kept aside while any claims were resolved between the parties.

Buyer seeks reduction in purchase price

Under the Conveyancing Act 1919 (NSW), a purchaser is entitled to a reduction in the purchase price where the land they are buying is "damaged" in the period between the making of a contract for the sale of the land and the time at which the property passes to the purchaser. Where damage has occurred, the price is to be reduced by such amount as is "just and equitable in the circumstances".

The purchaser alleged that the land had been damaged within the meaning of the Conveyancing Act and sought a refund of some of the purchase price. The vendor disagreed, and the matter came before the court for determination.

case a - The case for the purchaser

case b - The case for the vendor
  • There was significantly more additional rubbish on the property at the date of settlement than at the date of contract and before-and-after photographic evidence supports this claim.
  • In their own evidence, the vendors concede that items previously stored away in a relatively ordered fashion had been taken out and placed on the floor to create a mess.
  • The property had become a dumping ground, with items abandoned and scattered all over the floor right throughout the residence.
  • This rendered large parts of the residence unusable and therefore amounted to damage to the property.
  • It will cost me considerable money to tidy up the residence and remove this additional rubbish and it is just and equitable in the circumstances that I be compensated.
  • We accept that a large amount of rubbish was left on the property and that items in the attic, storage areas and cupboards had been taken out and left strewn on the floor.
  • However, while items were moved around, the total volume of rubbish did not change between the date of contract and the date of completion. A closer examination of the photographic evidence supports this.
  • Indeed, after the auction we had organised for the removal of vegetation and rubbish that had accumulated in the driveway at a cost to us of $2,600.
  • There was no damage to the property within the meaning of the Conveyancing Act and there should be no reduction in the purchase price.
  • Further, there were special conditions in the contract that specifically dealt with the issue of rubbish at the property and the purchaser agreed to these conditions when he signed the contract after the auction.

So, which case won?
Cast your judgment below to find out

Vote case A – the case for the purchaser
Vote case B – the case for the vendor

Nathan Stack
Property law and conveyancing
Stacks Law Firm

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