When Conveyanes Go Wrong – Purchaser’s Remedies for Vendor

Breaches

Lecture by:Laina Chan, Barrister Nine Wentworth Chambers,

Sydneywww.ninewentworth.com.auTelephone: (02) 8815 9211For: Television Education Network

Introduction

Vendor obligations and the common law

concept of caveat emptor.

Megarry and Wade – The Law of Real Property (5th edition) at 611-612

“A good title means a title free

from encumbrances. The term

'encumbrances' covers all

subsisting third party rights such

as leases, rentcharges,

mortgages, easements and

restrictive covenants. It also

includes statutory liabilities, if

they are not merely potential or

imposed on all property

generally.”

Flight v Booth“is in a material and substantial

point, so far affecting the subject

matter of the contract that it may

reasonably be supposed, that,

but for such misdescription, the

purchaser might never have

entered into the contract at all.”

– Section 18 of the Australian

Consumer Law states that ‘a person

must not, in trade or commerce,

engage in conduct that is misleading

and deceptive or likely to mislead or

deceive’.

– The terms “misleading” or “deceptive”

are not defined in the Act.

Constraints placed on vendors

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 “Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.”

S55A(2) of the Conveyancing Act provides:

‘A vendor under a contract for the sale of land:

 

(a) shall, before the contract is signed by or on behalf of the purchaser, attach to the contract such documents, or copies of such documents, as may be prescribed, and

 

(b)shall be deemed to have included in the contract such terms, conditions and warranties as may be prescribed.’

Legislative Constraints

• Prescribed documents – Schedule 1• Prescribed warranties – Schedule 3 of the Conveyancing

(Sale of Land)Regulation 2010• Implied warranties

Conveyancing (Sale of Land) Regulations 2010

Remedies• Rescission• Return of deposit• Right to damages for breach of contract

reserved

How the legislation works in practice

Contaminated Land

Vitek v Estate Homes Pty Limited [2010] NSWSC 237

Flood related development controls

Hijazi v Raptis (2002) 11 BPR 20, 487

CH Real Estate Pty Limited (trading as Raine &Horne Commercial Penrith) v Jain Ran Pty Limited (2010) 14 BPR 27, 361

Road Widening

Timanu Pty Limited v Clurstock Pty Limited (1988) 15 NSWLR 338

• Kobol Holdings Pty Limited v Johnson [1987] ANZ ConvR 137

Whether Land reserved for acquisition by a public authority

Other risk to land

Mandalidis v Artline (1999) 47 NSWLR 568

Non disclosure of relevant development

control plan 

The Verman v McLaughlin (1990) 70 LGRA

Argy v Blunts (1990) 94 ALR 719

Incorrect description of zoning of the land

Building without approval

Marinkovic v Pat McGrath Engineering Pty

Limited (2004) 61 NSWLR 150

Incorrect description of vendor’s title

Wongala Holdings Pty Limited v Beynon & Ors (1997) 8 BPR 15, 765

Conclusion