In this day and age, it is common to purchase units “off the plan”, meaning a unit in a building which has not been finalized, or even commenced. As most of these kinds of units are in apartment complexes or like buildings, car parking is often an essential aspect of the property being acquired. There are however inherent significant risks for a Purchaser in entering into these kinds of arrangements. As you are purchasing property not yet constructed, it may be that certain elements of the property are not exactly as pictured, or as agreed. The location of car spaces or storage units may also be different to initially described, if described at all. The recent case of Smogurzewski v AIT Investment Group Pty Limited [2020] NSWSC 490 highlights this inherent risk, but also the importance for solicitors to ensure the merits of a case before commencing proceedings.
Facts
In 2015, the Purchaser entered into a Contract for the Sale of Land for an “off the plan” unit described as proposed Lot 107. Included in the sale were improvements described as a “home unit” and a “car space”. At the time of entering in the Contract, the car space for the unit was not yet allocated and included in the Contract was a clause allowing the Vendor to allocate the final car space “at their absolute discretion.”
When a development consent was eventually issued for the building in late 2015, it was a requirement of Ryde City Council that a certain number of the units in the building be “adaptable units” within the terms of Australian Standard AS4299-1995. Furthermore, it was a requirement an “adaptable car space” be allocated to any “adaptable unit.” An “adaptable car space” generally requires a certain level of width which would enable the unloading of a wheelchair. However, prior to amendments to the Australian Standard in 2009, an “adaptable” car space also required an “International Symbol of Access” (ISA) be painted on the car space, which identifies that the space is intended for use by a person with a disability.
Lot 107, the unit to be acquired by the Purchaser, was ultimately allocated as an “adaptable unit”, and the car space to be allocated to the Purchaser an “adaptable car space”. Despite the requirement for an ISA not ultimately being required due to amendments to the Australian Standard, the Vendor painted an ISA on the car space for Lot 107 on the mistaken belief it was still required by law.
In February 2019, when it came time for settlement of the Contract, the Purchaser attended the property for an inspection and identified that the ISA symbol was painted on his car space. He otherwise had no issues with the “adaptable unit” or the car space generally. The Purchaser’s concerns were that a holder of a disability permit would mistakenly assume the ISA symbol indicated that they could use the car space freely, despite it being dedicated to Lot 107 exclusively, and as such the Vendor could not convey “free exclusive title” to the car space as required under the Contract.
Various correspondence was sent back and forth between the solicitor’s for the Vendor and the Purchaser, with no agreement being reached. Notwithstanding the Purchaser’s argument, the Vendor held that the car space was exclusively for the Purchaser and would be marked clearly with the unit number. In addition, there was specific visitors parking which was designated for use by holders of disability permits.
The intended date for settlement came and passed, and ultimately the Purchaser served a notice of rescission which required the Vendor return the deposit. The Vendor disputed that the Purchaser had a right to do so, and the matter proceeded to Court.
Decision of the Court
Justice Darke of the Supreme Court of New South Wales ultimately found in favour of the Vendor. He found that, upon settlement, the Purchaser would have become the “exclusive” owner of Lot 107, which included the “adaptable car space.” No other person would therefore have the legal right to occupy the car space. Whilst acknowledging that there was a risk holders of a disability permit may mistakenly use the car space, Justice Darke ultimately found that as the car park was controlled by a security system (i.e. not open to the general public) and was marked with the unit number, this risk was only small. However, crucial to the finding, and ultimately a decision that the Purchaser be required to pay the legal costs of the Vendor, was that there was no legal requirement for the ISA symbol to be painted on the space at all. In fact, if the Purchaser chose, they could have painted over the symbol after settlement.
This case therefore highlights two important issues for Purchaser’s and practitioners alike:
- As a purchaser, acquiring property “off the plan” comes with inherent risks as you are not able to see the property in its entirely before entering into the Contract; and
- As a practitioner, you should ensure proper due diligence is undertaken prior to commencing proceedings. This case could ultimately have been avoided if the solicitor for the Purchaser undertook proper due diligence in relation to the requirement for an ISA symbol on the “adaptable car space” at all.
If you require more information on the above please contact Ben Wong on bwong@marsdens.net.au or by phoning 02 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
