Can a vendor/developer extend the date for registration of a plan of subdivision?

  • Author : Bill Stark - 11-09-2012

On 2 August 2012, I posted about a developer's obligation to use its best endeavours to obtain registration of a plan of subdivision as decided in Joseph Street Pty Ltd v Tan [2102] VSCA 113.

Recently, the Supreme Court of Victoria has considered another contract for an 'off-the-plan' sale in Allen & Ors v Harofam Pty Ltd; Scherman v Harofam Pty Ltd [2012] VSC 402.

The facts in Allen and Scherman were that 2 separate purchasers bought a property each 'off-the-plan' in a development by contract of sale both dated 20 June 2010. Each contract was expressed to be conditional upon the registration of the plan of subdivision within 2 years and also conferred on the purchasers a right to avoid the contract if the plan was not registered on the relevant date.


Each contract was a prescribed contract within the meaning of s 9AE(2) of the Sale of Land Act 1962 (Vic) (“the Act”), which provides:


 


    9AE. Rescission of prescribed contract

        (2) If the plan of subdivision is not registered within 18 months after the date of the prescribed contract of sale of a lot on that plan of subdivision, or, if the contract specifies another period, before the end of that specified period, the purchaser may, at any time after the expiration of that period but before the plan is so registered, rescind the contract.

Special condition 10.3 of each contract provided:


    10.3 Time for Registration of the Plan of Subdivision

        If the Plan of Subdivision is not registered within twenty-four (24) months of the Day of Sale or such further time, but such further time to not exceed 6 months, as the vendor may by notice in writing to the Purchaser require in the event that delays occur as a result of any act, matter or thing beyond the reasonable control of the Vendor which directly or indirectly causes the registration of the Plan to be delayed, either party may, at any time after the expiration of this period or such extended period, but before the Plan of Subdivision is registered, rescind the Contract by giving written notice to the other, in which case the deposit, any interest thereon and all other moneys paid by the Purchaser shall be refunded less any bank and government charges, GST and any legal fees for prior default.

As things turned out, the relevant plan of subdivision was not registered as at 19 June 2012 (being 24 months after the day of sale).

On 19 June 2012, the vendor/developer informed both purchasers by notice that it was purporting to exercise its right to a six month extension to finalise registration of subdivision.

On 21 June 2012 Ms Scherman gave notice of rescission of her contract.

On 22 June 2012, Ms Allen gave notice of rescission of her contract.

The only question before the court was whether the purchasers were entitled to rescind each contract in all the circumstances.

Warren CJ analysed the law based upon the decision of Bongiorno J in Clifford v Solid Investments Australia Pty Ltd [2009] VSC 223 and the Court of Appeal in Solid Investments Australia Pty Ltd v Clifford [2010] 27 VR 41.

Her Honour's conclusion (at paragraph 20) was that:

    The exercise of the right to nominate another plan registration date, even if limited by special condition 10.3 to a finite range of dates and occasions, does not constitute the nomination of a particular specified date that is, as considered by Bongiorno J in the Clifford matter, “fixed, definite and certain”.


And at paragraph 24, Her Honour noted:

    In my view the present case falls squarely within the principles set out in the decisions in the Clifford matter. In the hearing before me on 22 August 2012, concerning the Allen [purchasers], the [vendor/developer] effectively conceded that should no material distinction between this Condition and the one in the Clifford matter be found, then the purchaser would succeed.


In those circumstances, it is clear that the courts will be reluctant to allow a vendor/developer the opportunity to extend the date for registration of a plan of subdivision beyond the 'fixed, definite and certain' date that is specified in the original off-the-plan contract of sale.

About the Author

Bill Stark

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