In This Issue

• eNews index
• PAMDA – Minister stalls on reform promise
• Court crashes 12 high-rise contracts: failure to observe statutory disclosure requirements
• How good is your lease? "Ratchet" rent review provisos valid - for now
• Commercial landlords save costs with leasing bureau

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Court crashes 12 high-rise contracts: failure to observe statutory disclosure requirements

Non-compliance with the disclosure requirements of the Environmental Protection Act ("EPA") and the Body Corporate and Community Management Act ("BCCMA") was the basis of a September court ruling allowing the termination of 12 off-the-plan unit sales in the Matisse Tower in Mary Street Brisbane.

The sales - for commercial rather than residential units - were by way of put and call options that were signed up in early 2007.

EPA non-disclosure

The land upon which the units were constructed had been included in the "environmental management register" at the date the options were entered into in 2007 but had been removed from the registered by mid-June 2009.

Section 421 of the EPA specifies that a seller must give written notice to a buyer "before agreeing to dispose" of land included on an EPA register. The consequence of non-compliance is that the buyer may terminate before completing or obtaining possession.

The seller did not give any s 421 notices to the buyers when the options were entered into. The buyers purported to rescind the options on this basis.

The seller sought injunctions in the Supreme Court to enforce the sales, arguing that it was not obliged to give any EPA notices because only the original site was included on the register, not the strata title lots. The seller also argued that s 421 notices were not required to be given at the time of entry into the put and call option, because unlike a contract, options did not constitute an agreement for sale.

The court ruled in favour of the buyers on both points*. The s 421 notice was required to be given in respect of each lot of the time the options were entered into. It mattered not that the sales were by way of put and call option. Thus the termination by the buyers on this ground was upheld.

BCCMA non-disclosure

Section 213 provides:-

Before a contract is entered into by a person with another person for the sale of a lot intended to come into existence, the seller must give the buyer a disclosure statement.

Each option agreement had a BCCMA disclosure statement annexed but it was not signed on behalf of the seller.

The Seller argued that the disclosure statement did not have to be signed because there was no contract in existence at the time the options were entered into.

The court found in favour of the buyers: that the requirements of s 213 of the BCCMA mandated that the disclosure statement annexed to the option agreements be signed on behalf of the seller.

Accordingly the buyers were entitled to terminate on this ground also.

The buyers also raised issues under PAMDA, arguing that the warning statement etc requirement should have been complied with because the lots were in a "residential area" notwithstanding they were intended to be used for commercial purposes. The court rejected this argument.

* APM Property 3 Pty Ltd v Blondeau & Ors [2009] QSC 236

Alert: it is always prudent for sellers to conduct EPA contaminated land searches before entering into contracts for land that could be subject to EPA requirements.

Why take a risk on disclosure? Carter Capner Law ensures 100% disclosure compliance for all its seller clients – PAMDA, BCCMA & EPA.

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