A Buyer of two "off the plan" vacant land lots was recently ordered by the Queensland Supreme Court1 to complete the contracts, despite the Buyer's allegation that the disclosure plans provided by the Seller failed to comply with the Land Sales Act 1984 (the "Act").
FACTS
- In March 2008, the Buyer contracted to purchase two proposed industrial lots "off the plan".
- Title to the lots issued in December 2008 and the Seller called for settlement in accordance with the contracts.
- The Buyer refused to settle, claiming that the disclosure plans did not comply with the requirements of the Act. Allegedly, the disclosure plans failed to set out the contour levels, which are required under the Act.
ISSUES
The Act requires disclosure plans to include a contour map of proposed allotments that show:
- natural surface contours, with appropriate contour intervals; and
- final surface contours specified in the engineering drawings.
In this instance, the Buyer alleged the disclosure plans did not set out the natural surface contours of the lots.
The Seller argued that at the time of signing the contracts all of the earthworks had been completed and the disclosure plans set out the natural contours of the lots existing as of the date of contract. The disclosure plans, therefore, did satisfy the requirements of the Act.
The Court held the actual contour levels of the lots as of the date of contract were not relevant. For the purposes of the Act, the Court interpreted the "natural surface contours" to mean the contours of the lots in their "undisturbed state". In other words, disclosure plan must show the contours existing prior to human intervention.
In this case, it was shown that the contour plans and maps showing the natural surface contours of the lots were held by the local Council and were available to the parties.
After some technical examination of the disclosure plans, the Court was satisfied that the Seller's disclosure plans did sufficiently disclose natural surface contours with appropriate contour intervals.
CONCLUSION
The consequences of non-compliance with the Act can be fatal to a land sale contract.
This decision turned on a fine technical argument concerning the contour levels set out in the disclosure plan. The Court easily have had concluded that the disclosure plans did not satisfy the Act, allowing the Buyer to lawfully avoid settlement with a refund of all deposit money paid.
It is vital for developers and surveyors to ensure that the disclosure plans comply with the Act when preparing contracts for the "off the plan" sale of proposed allotments of land. In particular, surveyors engaged to prepare disclosure plans should confirm that their plans comply with the Act and, in particular, with the requirements of section 9(2) of the Act to show the natural surface contours of the land.
The State Government is currently reviewing the Act. We will keep you posted as the law changes.
1 Treton Pty Ltd v HM Australia Holdings Pty Ltd
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