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The couple who successfully held the line against the “Sunset Clawbacks” of an apartment block in Sydney’s Surry Hills won two final victories last week.
In court, they were awarded all costs for their successful legal campaign to reject the imposition of sunset clauses which would have meant the developer of their flats would have been able to put them on the market again for much higher prices.
Then, at the first AGM of their strata scheme, they successfully removed the strata manager who had been appointed by the developer and rejected the reassignment of parking spaces in the building which, they claimed, would have benefitted the developer’s remaining apartments.
Back in September Sue Williams – a freelance writer and regular contributor to the Flat Chat Wrap podcast – reported that off-the-plan buyers had won a massive victory in a landmark Supreme Court judgment and major test of new legislation to protect property purchasers.
It was Sue, writing for Domain in the SMH, who first reported the increasingly commonplace practice of Sunset Clawbacks in 2015, prompting then Fair Trading Minister Victor Dominello to rush through new laws to plug the loophole
A developer had taken a group of buyers of a new building in Surry Hills to court to argue it was entitled to rescind their contracts because problems with the development had pushed the completion beyond a sunset clause date.
However, the buyers argued the developer was merely trying to cancel their contracts so he could resell the apartments for higher prices in the rising market.
And Justice Rowan Darke agreed, ruling that the developer had not acted justly or equitably in trying to rescind the contracts. He dismissed the bid to tear up the contracts, and awarded costs against him.
Mr Dominello, now Finance, Services and Property Minister, said justice had been served.
“You design these changes and rush them through hoping they will be of help to buyers, but you never know until they’re tested rigorously in court,” he said.
“But this verdict has shown that justice has been served, and home-buyers can now make their decisions knowing they aren’t defenceless against developers who try to abuse their power.
“It gives me enormous comfort to know that they now have a lot more protection,” he said.
You can read the full story HERE.
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This legal victory shows that the Sunset Clause Laws introduced in NSW in November 2015 have real teeth and provide real protection for off the plan buyers.
What is particularly interesting from my point of view is the fact that the property developer did a good job at explaining the delays were due to circumstances out of their control, particularly the builder going into administration, resulting in the appointment of a new builder to complete the building. They demonstrated that they were not the type of developer targeted by the Minister when introducing the new laws, i.e. a developer who manipulated events or manufactured delays so as to obtain a commercial advantage to rescind and re-sell at a profit.
However in this case, the deciding factor was the adverse effect on the purchasers if the Contracts were to be rescinded. Not only would they lose the capital gain on the apartment, but they would not be able to purchase equivalent elsewhere. The judge also took into account the social benefits the purchasers gained by what he called “lifestyle” choices: in a society where property ownership is highly valued and affords status to those who attain it.
If you would like to find out more details, click on this link to my case note on the decision Sunset Clause Law bites property developer