Brightman & Ors v Royal Pines Projects Pty Ltd

This was an application for declaratory and injunctive relief by buyers of “off the plan” apartments against the respondent seller. The buyers needed access to the apartments to obtain a valuation so that they could obtain finance to complete settlement, but the seller denied and delayed the buyer’s access to the apartments for the purpose of valuation and instead fixed a time for settlement under the contract. The contract contemplated that the buyers would have 14 clear days to prepare for settlement after notice of such fixing occurred, but the delay caused by the respondent meant that half of that notice period was lost. The respondents then purported to terminate the contract because the buyers could not obtain finance in time for settlement. Justice Applegarth held that an obligation for the respondent to co-operate was implied into the contract, the content of which was in essence that the respondent was required to permit access to the apartments for valuations to occur with sufficient time for valuations to be completed and finance to be obtained. His Honour considered that the respondent’s conduct breached this implied obligation, and accordingly made the declaration sought by the applicants with the effect that the respondent was not permitted to rely on its own breach in purporting to terminate when that breach gave rise to the circumstances that prevented the buyers from settling.

Applegarth J

12 July 2024

The applicants were buyers of “off the plan” apartments in the respondent’s residential development. When they entered their “off the plan” contracts, they had no opportunity to inspect or value the apartments because they were yet to be built. [1]. The contracts for the sale of the apartments provided by the respondent envisaged that the buyers of the apartments would have a “financier”, but the contracts were not subject to finance. When the construction of the apartments was nearing completion, the applicants requested that the respondent allow a valuer to value the apartments. The respondent did not respond to that request and instead, it fixed the period allowed under the contract for settlement. [2]–[3], [13]–[14].

The respondent subsequently proposed a protocol for each buyer’s valuer to obtain access to the apartments, although this was done with approximately a week remaining until settlement. [18]–[19]. The contracts contemplated the buyers having 14 clear days to prepare for settlement after a notice fixing the time for settlement. The buyers argued that the effect of the respondent fixing the time for settlement and then refusing to respond to their requests for access for a full business week was that the respondent “burned” half of the notice period contemplated in the contract. [21]–[22].

The applicants argued that by denying or delaying access in the way that it did, with the effect that the applicants were denied the time they needed to be ready for settlement after obtaining a valuation, the respondent breached an implied obligation to co-operate and therefore cannot insist on settlement on the date they fixed. [4]–[6], [23]–[24].

The applicants sought a declaration that because of the respondent’s breach of that implied obligation, they are not required to settle on the date fixed by the respondent. The applicants also sought injunctive relief to prevent the respondent from purporting to terminate the contracts and to re-sell each of the lots because of a failure to settle on the fixed date. [7], [28]–[29].

Justice Applegarth accepted that a duty to co-operate was implied in the contracts and that the content of that duty required the respondent to not hinder the buyers in obtaining finance. That was because the performance of the buyer’s obligations under the contract and their ability to obtain the contract’s benefit were contingent on the buyers obtaining finance, even though the contract was not expressly subject to finance. [35], [66]–[67]. As such, Applegarth J considered that “the respondent’s duty to co-operate to allow the buyer the benefit of the contract required it to permit access to the property by a valuer appointed by the buyer in sufficient time to provide a valuation advice in advance of completion.” [71].

In particular, his Honour thought that for the notice of the fixing of time for settlement to be of practical benefit to a buyer, the 14-day period had to be available to allow the completed premises to be valued by the buyer’s valuer so as to enable anticipated finance to be available on settlement day. Without the implication contended for by the applicants, that is, that the respondent was not at liberty to “hamper, frustrate, or render impossible” the process of obtaining finance by “not permitting access for finance purposes to the completed property during that 14-day period”, the applicants’ contractual right to enjoy the rights and benefits conferred by the contracts (that is, ownership of the apartments) would be rendered inutile. [76]–[79].

In other words, the practical content of the respondent’s implied obligation to co-operate required it to provide notice in a way that allowed sufficient time for the properties to be valued. [81], [83]. Justice Applegarth held that by fixing the settlement date on a date which did not allow sufficient or reasonable time for a valuation to be undertaken and finance provided in reliance upon that valuation for the purposes of settlement, the respondent breached its implied duty to co-operate. [84]–[89].

His Honour considered that the breach hindered or precluded the buyers from obtaining the finance required for settlement, such that the respondent should not be entitled to rely upon its own breach in asserting a breach by the applicants for failing to perform in not settling on the fixed date. [90], [92]–[94]. Accordingly, his Honour held that because the respondent’s conduct produced the situation, the respondent cannot take advantage of it by purporting to terminate the contract for the buyers’ respective failures to settle. [94].

A declaration to that effect was accordingly made. [97]. Consistent with that declaration, his Honour was also minded to restrain the respondent from purporting to terminate the contract of any buyer who fails to settle on the relevant date fixed for settlement, but his Honour stated that he would hear further from the parties as to the necessity for and suitable terms of the proposed injunction. [99], [101], [110].

A Lukacs