Which case won?

casea
The case for the developer
  • It's not our fault that not enough progress was made on the development by the sunset date. We took over the development from another developer in 2014 and they failed to advance it.
  • The costs of construction have increased significantly since the contracts were signed.
  • We can’t secure additional construction finance unless the old contracts are terminated.
  • The price of units has also increased and we’ve offered the buyers the opportunity to continue with the purchase at a higher price.
  • The new law was introduced after we took over the development and we couldn't have foreseen this legislative change.
caseb
The case for the off-the-plan buyer
  • When the developer took on the development, it assumed all the obligations that the previous developer owed to people that had already bought off-the-plan.
  • It also took over the development knowing that the previous developer had done little construction work on the site.
  • The developer has extended the sunset dates for some contracts but not for others.
  • Construction work is currently underway on the site, so there must already be some construction finance in place.
  • New laws to protect off-the-plan buyers were foreseeable.

So, which case won?

Cast your judgment below to find out
Case A Case B

Case B won. You were right!

How people voted
a31%
b69%

Expert commentary on the court's decision

Peter FrankeDirector
“This case is a warning to developers to look carefully at the new laws.”
Supreme Court dismisses developer’s application to terminate the contracts

In deciding to dismiss the developer’s application to terminate the contracts, the court took several factors into account. One was that while the developer claimed that construction costs and property prices had both increased significantly since the contracts were entered into, it did not present any substantive evidence to support these claims.

Legislative change a “foreseeable risk of business activity”

The court was unmoved by the developer’s argument that the new law introduced by section 66ZL of the Conveyancing Act was not in force at the time the contracts were signed and that the developer could not have foreseen its introduction.

The judge was not convinced that the introduction of new laws to protect buyers of off-the-plan units was unforeseeable – presumably because the possibility of introducing such laws had been publicly debated for some time – and noted that in any case, legislative change generally is a foreseeable risk of business activity.

Some sunset dates extended while others were not

It did not help the developer’s case that it had extended the sunset date on some buyers’ contracts but not others. The judge described this process as “selective and unexplained”, leading to the conclusion that the developer’s application to terminate the contracts should be dismissed.

To read more about the case, visit Jobema Developments Pty Limited v Zhu & Ors.

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