In a recent decision bound to have widespread ramifications, a developer has been found to have given a notice of contract termination which was “unlawful, invalid and of no effect”.
During the case (JYP Jiang Pty Ltd V CAV Gasworks Pty Ltd [2025] QSC 134), the court found the developer had wrongfully terminated an off-the-plan contract under a sunset clause and had to compensate the buyer $6.1 million.
The $6.1 million was the difference between the contract price and the market value of the apartments at the time the contract should have settled.
In 2017, the buyer, JYP Jiang Pty Ltd, entered an off-the-plan contract with the developer, CAV Gasworks Pty Ltd, for two proposed sub-penthouse apartments in Newstead for $4.2 million.
One of the clauses of the contract was a sunset clause, which allowed either side to end the contract, if CAV could not give notice of issue of title within five and a half years of the contract date.
Another clause required CAV to give notice of issue of title once it became aware that title conditions had been satisfied. Under that clause, CAV could delay providing this notice until it was satisfied it could comply with all its contractual obligations before settlement.
Titles were issued in November 2022, when the apartments were still less than 50 per cent complete and no certificate of occupancy had been issued.
CAV did not give notice of issue of title and instead relied upon the sunset clause to terminate the contract with JYP in April 2023. CAV later sold the apartments to new buyers for more than double the original sale price.
In handing down her decision, Chief Justice Bowskill said CAV did not have the right to terminate the contract under the sunset clause, and that CAV could have given the notice of issue of title but had chosen not to.
“I do not accept that a reasonable businessperson, in the position of the parties, would have understood clause 8.3 to permit the [developer] to end the contract in circumstances where the separate title conditions had all been met prior to the sunset date, but the [developer] had chosen, unilaterally, to delay giving the notice required by clause 8.1,” she said.
The decision turns on the express wording of specific terms in the off-the-plan contract and the timing of the notice of termination that was given to the buyers.
Courts are increasingly willing to scrutinise the termination of off-the-plan contracts under sunset clauses, particularly in circumstances where the properties are re-sold at higher prices to new (or even existing) buyers.
The case is an example of how terminating a contract can be fraught with legal danger, and the costs of making a mistake can be significant.
CAV has appealed the decision.
If you need help with contracts, sunset clauses, buying, selling, or any other aspect of property law, the experts at GLG Legal are here to help. Make an appointment today by calling: (07) 3161 9555 or email: info@glglegal.com.au