The recent Supreme Court of Victoria decision of Lockwood v PSP Investments Pty Ltd [2013] VSC 10 concerned a purchaser who had entered into 8 contracts of sale with the vendor in a new development, being:

  • 4 related to apartments to be constructed; and
  • 4 related to car parks to be located on the ground floor.

Subsequently, in early 2012, the City of Port Phillip required the deletion of the car park lots and another lot from the Plan of Subdivision thereby merging them into ‘common property’. These amendments were not disclosed to the purchaser and only discovered when the purchaser’s solicitors made enquiries with the vendor’s solicitors.

The purchaser sought to rely on section 9AC(2) of the Sale of Land Act 1962, which provides that a purchaser may rescind a contract within 14 days after being advised of an amendment to the plan of subdivision which will materially affect the lot to which the contract relates.

The Court found that:

  • the transaction should be viewed as a whole, being 4 packages consisting of an apartment and a car park, such that the removal of all the car park lots materially and adversely affected each apartment lot; and
  • in any case, even if the contracts were considered separately, the amendments would have materially affected each apartment lot because the common property was increased as a result of the amendments – which would not necessarily have been beneficial to a purchaser because the special conditions gave the vendor a right to demand a signage lease of any common property.

Accordingly, the Court declared that each of the 4 apartment contracts were validly rescinded and ordered that the deposits be returned to the purchaser.

The Court also noted that an amendment to the plan of subdivision could materially affect a lot even if it actually improved the purchaser’s rights.

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