The recent case of Jin Yi Construction Pty Ltd v Romeciti Eastwood Pty Ltd [2022] NSWSC 56 considered whether it was possible to rescind a contract of sale of land in circumstances where the building constructed on the land was materially different from the draft strata plan attached to the contract.

The applicant paid a deposit for the purchase of land held by the first respondent, which at the time the parties entered into the contract was identified as Lot 3 in a ‘Draft Strata Plan.’ The contract required a 10% deposit, with the balance of the purchase price payable on completion of the contract.

The purchaser later sought to rescind the contract pursuant to a right conferred by a special condition of the contract, and sought a declaration that it had validly rescinded the contract and was entitled to recover the deposit. The respondent disputed the validity of the rescission and served a Notice to Complete on the purchaser, alleging that the plaintiff had repudiated the contract.

The court held that the change in the Strata Plan, which contained a ‘new storage space’ created a ‘substantial, detrimental, and permanent change to the shop,’ and deprived the purchaser of an unobstructed, open area of commercial space and reduced the amount of commercial space from the promised 110 to the available 102.8 square meters.

It was determined that the applicant was only entitled to rescind the contract by reference to a special condition which allowed a right of rescission for a minimum of 5% change in area, and this right carried an entitlement to recover the deposit. This case demonstrates the possibility to unwind a contract by construction of the express terms of a contract.

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