Royal Pines Projects Pty Ltd v Brightman

This appeal concerned whether contracts for the purchase of “off the plan” apartments contained an implied term requiring the appellant developer to provide the respondent buyers sufficient time to value the apartments and obtain finance so that settlement could occur. Various clauses in the contracts contemplated that the buyers might obtain finance in order to settle, but the contracts were not subject to finance. In the proceedings below, relief was granted against the appellants on the basis that the contracts contained an implied obligation to co-operate requiring the appellant to allow sufficient or reasonable time for valuations to occur and finance to be provided in reliance upon those valuations. The appellant breached that implied term by giving notice, fixing the time for settlement at a time before what was prescribed in the contracts. The Court of Appeal concluded that there was no error in interpreting the contract in a manner which implied that obligation. The Court held that the relevant terms of the contract demonstrated that the contracts contemplated that notice fixing the time for settlement would occur when construction of the units were complete or nearing completion, such that the appellant could not reasonably determine to give a notice which meant that the buyers would have less than the time prescribed in the contracts to prepare for settlement. Accordingly, the Court held that there was no error in implying the relevant term and dismissed the appeal.

Dalton JA and Wilson and Crowley JJ

13 August 2024 (date of publication of reasons)

Background

The appellant developer built an apartment block and sold units from that development to the respondent buyers “off the plan”. The contracts for the sale of the apartments were between the appellant and different buyers individually, although each contract was in identical terms. [2].

Those contracts also contemplated that the buyers of the apartments would have 14 clear days to prepare for settlement after a notice fixing the time for settlement was given. Clause 10.1 of the contracts provided that the appellant could give written notice fixing the time for settlement at any time after the appellant became aware of plan registration that a separate indefeasible title for the relevant lot has been created, and cl 10.2 provided that settlement is conditional upon plan registration and the appellant giving notice pursuant to cl 10.1. Clause 8.5 provided that the settlement “must not take place earlier than 14 days after [the appellant gives the respondent] notice of plan registration”. The contracts also contemplated in several clauses that the buyers might obtain finance in order to settle, but the contracts were not actually subject to finance. [3].

When the construction of the apartments was nearing completion, the respondents requested that the appellant allow a valuer to value the apartments. The appellant did not respond to that request and instead, it fixed the period allowed under the contract for settlement. The appellant 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, such that the effect of the appellant fixing the time for settlement at the time that it did was that the appellant wasted half of the 14-day notice period contemplated in the contract. The appellant purported to terminate the contracts because the respondents could not settle within the nominated timeframe, and the respondents applied to the Supreme Court to prevent this. [4].

The primary judge granted relief to the respondents on the basis that the appellant breached an obligation to co-operate which was implied into the contracts, and which required the appellant to provide notice in a way that allowed sufficient time for the properties to be valued. The primary judge found that the appellant had fixed the settlement date without allowing for sufficient or reasonable time for a valuation to be undertaken and finance to be provided in reliance upon that valuation for the purposes of settlement. As a result, the primary judge held that the appellant breached its implied duty to co-operate. The primary judge made declarations to that effect and granted an injunction preventing the appellant from relying on the notice that they provided requiring settlement. [5].

The appellant appealed on multiple grounds, but the thrust of the relevant grounds which this note focusses on can be summarised as being that, in essence, the primary judge erred by finding that there was an implied duty to co-operate in the contracts. [6].

Implication of the duty to co-operate

The Court of Appeal considered that together, cll 8.5 and 10.1 ensured that the buyers would have 14 days’ notice before they were required to settle, and that to fulfil that requirement the contracts contemplated that the buyers might obtain finance, and the primary judge relied on this to interpret the contract and imply the relevant term. [10], [13], [16].

Under cl 10.1, the appellant was obliged to act reasonably in determining the time at which it gave the notice to start the not-less-than-14-day period for fixing the time for settlement. Because the units were sold “off the plan”, such that neither the buyers nor their financiers’ valuers could have inspected the units before signing the contracts to buy, the Court considered that it must have been in the parties’ contemplation that notice would be given when the construction of the units was complete or nearing completion. In the Court’s view, the appellant could not reasonably determine to give a notice which meant that the buyers would have less than 14 days to access the units for the purposes of preparing for settlement. [16].

Accordingly, their Honours held that there was no error by the primary judge in interpreting the contract as containing an implied term requiring the appellant to respond promptly to requests so as to allow the purchaser the full 14 days in which to provide access to a valuer. This ground of appeal was unsuccessful. [17]–[18].

Disposition

In the result, the appeal was dismissed. [1], [30], [31].

A Lukacs