In a recent decision of the Supreme Court of Queensland it was
held that the settlement mechanism in an off the plan contract
between two parties did not comply with the particular section of
the Body Corporate and Community Management Act 1997
("Act") which governs how developers can call for
settlement to occur.
The case is known as Bossichix1.
This case highlights that the Court will take a strict approach
to interpreting how certain sections of the Act will apply to off
the plan contracts. It is essential that parties who are
contemplating buying or selling "off the plan" are aware
of the implications of this decision.
The Relevant Section
The relevant section is section 212 of the Act. It provides that
settlement of an off the plan contract must not take place earlier
than 14 days after the seller advises the buyer that the scheme has
been established. It also provides that there must be a proposed
community management statement for the scheme. If settlement has
not occurred and section 212 of the Act has not been complied with,
a buyer may have the right to terminate the contract.
Facts of the case
The off the plan contract between these parties contained a
clause which read as follows:
'The settlement date is the later of:
14 days after the Seller notifies the Buyer that the
Building Format Plan is registered; and
Three days after the Seller notifies the Buyer that a
Certificate of Classification is issued for the
This type of clause was used in off the plan contracts under
legislation which predated the Act.
The Court's Decision
The Court held that the wording used in the clause detailing how
settlement could be called failed to comply with section 212 as it
did not strictly follow the wording in the relevant section.
The Court was motivated by the notion of consumer protection in
requiring strict compliance with the wording used in the relevant
The Court acknowledged that there may have been little practical
difference between the sequence of events which the seller was
relying upon to call for settlement to occur and those mentioned in
section 212. However, the Court took the view that section 212 is
"essentially a consumer protection provision", and the
seller's failure to comply with the section meant that the
seller had not and could not appropriately fix the time for
Substantial compliance and the fact that the events leading up
to settlement did not disadvantage the buyer were insufficient to
assist the seller.
We understand that the decision is currently the subject of an
appeal by the seller which may or may not be successful. At this
juncture, it is wise to proceed on the basis that the appeal will
not be successful and that strict compliance with section 212 is a
It is clear that the Courts will look for strict compliance with
particular sections of the Act where consumer protection is being
provided. Substantial compliance may not be sufficient.
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