In This Issue

• eNews index
• PAMDA – the monthly cost of reform delay
• "Glimpses" + "view" ≠ "ocean views" - Lessons from beachside unit contract termination
• Residential Put & Call Options – does PAMDA apply?
• Land Tax & Valuations: reprieve for investors & landlords

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"Glimpses" + "view" ≠ "ocean views" - Lessons from beachside unit contract termination

In February, the Supreme Court* upheld a buyer's termination of a residential apartment contract because the outlook from the balcony did not measure up to contract terms.

The buyer signed an off-the-plan contract in May 2008 for a Maroochydore apartment subject to a special condition agreed to by the seller: "The position of the unit must provide unobstructed ocean views".

After construction, the purchaser purported to terminate the contract on the basis that the special condition had been breached - the ocean views were obscured.

PAMDA compliance was not an issue.

The apartment - on the fourth floor on the ocean side - had a large front balcony facing east and a smaller balcony off one of the bedrooms looking south. Located one street back from the oceanfront esplanade, there were buildings in front and trees planted in the beach protection zone.

The outlook to the east clearly captured a full view of the ocean but the beach and breaking surf were obstructed by vegetation.

Did this constitute "unobstructed ocean views"?

Yes and no.

The court decided that notwithstanding the hindrance to the views of the beach and surf, the eastern outlook was indeed an "unobstructed ocean view". 

However, to the northeast, only sky - and no ocean - could be seen above rooftops.  And to the southeast there were at best, mere "ocean glimpses" over other rooftops.

Thus the special condition had not been satisfied. The ocean view directly to the east when considered with the impeded views in other quarters towards the ocean, did not add up to "unobstructed ocean views".

The court ruled that the views clause was an "essential term" and the buyer was entitled to terminate the contract as a result of its breach.

* Gilson v Flamingo Enterprises P/L, Supreme Ct Qld, February 2010

Practice Note: Developers should ensure that all special conditions accurately reflect what is intended. Had the special condition been drafted to say: "The position of the unit will provide an unobstructed ocean view", it is unlikely that the termination would have been upheld.

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