Developer installs stormwater tank and timber deck instead of grass lawn. Could the purchasers rescind the contract? Which case won?

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Purchasers entered into off-the-plan contract to buy townhouse with grass lawn, but lawn was replaced by tank and deck.

Australia Real Estate and Construction

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The Facts

Purchasers enter into off-the-plan contract to buy townhouse with grass lawn

In June 2017, the purchasers entered into an off-the-plan contract to buy a townhouse from the developer.

At the time of signing the contract, the townhouse's outside area was bare dirt.

However, the purchasers' understanding was that this area would be covered with grass.

A grass area was important to them as they had an 18-month-old son.

The grass area was shown in the floor plan and the landscape plans.

These were approved for the purposes of the development consent and the construction certificate that had been issued to the developer before construction of the townhouse began.

Grass lawn replaced by stormwater detention tank and timber deck

In November 2017, the purchasers discovered that instead of installing grass, the developer had built a stormwater detention tank on the townhouse's outside area and covered it with a raised timber deck.

After a final occupation certificate was issued in December 2017, the developer pressed for completion of the contract.

Purchasers initiate proceedings in Supreme Court to rescind contract

In January 2018, the developer served a notice to complete, calling for completion by 20 January 2018.

The purchasers declined to proceed to completion.

Instead they sought a declaration from the NSW Supreme Court that they were entitled to rescind the contract and had elected to do so.

The developer disagreed and sought an order requiring the buyers to complete the purchase.

case a - The case for the purchasers

case b - The case for the developer

The developer promised us a grassed outdoor area as set out in the approved plans for the construction of the townhouse.
Instead, the developer built a stormwater detention tank on the property and put a raised timber deck over the top of it.
Prior to signing the contract, we explicitly told the developer that a yard was essential for our 18-month-old son to play in. The developer assured us that we would have grass for our son to run around on and plenty of room for a cubbyhouse.
Had we been made aware prior to signing the contract that, instead of grass, the outdoor area would contain a stormwater tank covered by a timber deck, we would not have entered into the contract.
If we were to proceed with this purchase now, we would be buying something entirely different to what we contracted to acquire.
In these circumstances, the law allows us to rescind the contract. The court should affirm our decision to do so and order the developer to repay our deposit, plus interest and costs.

After we signed the contract with the purchasers, we were advised by our plumbing contractor that it was no longer possible to place the stormwater detention tank in its originally planned location. This meant that we were required to relocate the tank to its present position.
The buyers' main concern was not that the outdoor area must be grassy, but that it had to be of a sufficient size for their child to play in. The outdoor area has never changed in size, and we gave the buyers the option, if they preferred, to install artificial grass over the stormwater detention tank instead of a deck.
Contrary to what the buyers say, the property as currently built is not entirely different from what they contracted to acquire. The discrepancy between a grassed area and a timber deck is merely nominal and there is still ample space for their son to play.
Accordingly, the purchasers are not entitled to rescind the contract and the court should order that they complete the purchase.

So, which case won?

Cast your judgment below to find out

Tony Mitchell
Property development
Stacks Law Firm

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