Author: baron + associates

In 5 Ridge Pty Limited v Tryname Pty Limited [2017] NSWSC 371, the purchaser was induced into a contract of sale by a misrepresentation by vendor regarding the exercise of an option. The contract was later terminated, and the deposit paid by the purchaser forfeited.

Under s 55(2A) of the Conveyancing Act, the NSW Supreme Court has a statutory discretion to order the return of a forfeited deposit. In this case, the Court chose to exercise that discretion. Two key factors taken into account by the Court were that misrepresentation occurred prior to entry into contract, and was significant to the purchaser’s decision. The Court also endorsed a wide interpretation of s 55(2A) and the Court’s statutory discretion, indicating it may be willing to use the discretion in similar future cases.

In The Motel Group Pty Ltd v Strathfield Council [2017] NSWLEC 1227, a developer sought to build three medium-density apartment buildings in a low-density residential area. The local community protested strongly against the development, signed a petition and wrote letters opposing construction to the Council.

Although the development was non-compliant with height restrictions, the Court was asked to apply development standards flexibly and allow construction to begin. After considering the many objections raised by community members, the Court found that such objections were insufficient to bar the development.

In coming to this conclusion, the Court was aided by the fact that the developer considered the concerns of the objectors and offered suitable solutions by amending the plans. When this was taken into account, the public interest in increasing affordable housing out-weighed the objections of the local community.

The NSW Court of Appeal recently heard the case of Ratewave Pty Limited v BJ Illingby [2017] NSWCA 103, which concerned the duty of an occupier to warn of risk of injury. The occupier was the owner of a hotel. In the lobby of the hotel there was a low raised wooden platform, on which a statue was placed. The respondent tripped over the platform, and successfully claimed damages in negligence.

On appeal, the Court upheld the finding of negligence. The Court found that the risk was foreseeable, and was not obvious, meaning the occupier had a duty to warn others of the raised platform. The Court emphasised that a hotel lobby is not a place where people would expect to find a trip hazard of this kind. The Court also indicated that a warning sign would have been sufficient to meet the occupier’s duty of care to the respondent.

In Innovate Architects v Sutherland Shire Council [2017] NSWLEC 1067, developers sought to modify their development proposal to build a 6 storey residential building. The area in which the development was to be built contained both residential apartment buildings and new developments. The developer sought to amend their proposal to create an additional unit on level 4, thereby increasing the floor space sought.

The amendment was contested because an increase in floor space would reduce the separation between the building and the boundary with two adjoining properties. One of the adjoining properties was a residential apartment building, and the other a new development site.

The modification to the development plans was refused by the Court because the requested amendment would materially impact the amenity of adjoining land. The Court noted that it would not only reduce the privacy and outlook of the existing residential apartment building, but could also constrain the use of nearby land for new developments.

The Knight Frank City Wealth Index has ranked Sydney as one of the most appealing cities in the world in which to invest. Sydney was ranked 4^th in the world as an investment location, after London, New York, and Los Angeles.

Upcoming large-scale property development in Sydney, particularly the Crown Sydney, One Sydney, and One Sydney Harbour, are likely to attract increasing global investment in the coming decade. Additionally, investors have become more interested in the stability of their capital, as opposed to high returns. The Australian market is appealing globally because the economy is relatively wealthy, and investments here are perceived to be safer than in other locations.

Rising foreign investment in the property market will impact on domestic investors. According to the Property Council of Australia, global investment could impact positively on the Australian property market, if a healthy balance between domestic and foreign investment is maintained.

The Land and Environment Court has issued the new Practice Note to increase the speed and efficiency of proceedings. It also shows that the Court wants to ensure that parties engage in conciliation conferences with the genuine purpose of reaching an agreement.

The key changes in the new Practice Note are the:

• incorporation of the Court’s policy on agent’s obligations when appearing on behalf of another
• expansion of the directions that can be sought through the Online Court
• widening of the Court’s power to order costs
• introduction of stricter requirements for a s 34AA conciliation conference and hearing
  • Amended plans must be presented 14 days before the conference date
  • Response to amended plans by Respondent and drafts of conditions of consent must be provided 7 days prior to the conference date
  • Expert evidence at a s 34AA conference and hearing is no longer allowed as an automatic right

These changes require that both parties are prepared for conciliation conferences and hearings, and that they, or their agents, have the power and intention to genuinely negotiate.

In the recent case of Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217, the Federal Court of Australia ordered Lucky Homes to pay compensatory damages to Henley Arch for copyright infringement of house plans that had been provided to a client.

The clients, Mr and Mrs Mistry, engaged Henley Arch to draw up plans for the development of a project home. The Mistrys then engaged Lucky Home to build the homes at a lower price. Lucky Homes made 15-20 alterations to the plans, advising the clients that this would prevent any risk of copyright infringement.

The Mistrys raised the defence of innocent infringement, arguing that they lacked subjective awareness that their acts constituted an infringement of the copyright and that they had no reasonable grounds for suspecting that the acts constituted an infringement. Lucky Homes denied copyright infringement altogether. Both these arguments failed.

Lucky Homes was ordered to pay compensatory damages of $34,400 to Henley Arch, and an additional order of $25,000 was made against its managing director and sole shareholder, for copyright infringement of house plans that had been provided to a client. Mr Mistry was ordered to pay $10,000 to Henley Arch, and Lucky Homes was ordered to compensate half this amount to Mr Mistry for misleading and deceptive conduct. This case serves as a forceful reminder to builders and landowners to ensure compliance with copyright laws.

The new State Revenue Legislation Amendment Act 2017 amends the Duties Act 1997 (Duties Act), the Land Tax Management Act 1956, and the Payroll Tax Act 2007. The important amendments to the Duties Act include:

• s 149(1B) now stipulates six circumstances to considered when deciding whether acquisitions are one arrangement
• s 158A provides that a constructive trust can be held by a linked entity, even if the interest to which the entity is entitled is less than 50%
• s 159A(2) now includes land holdings which have been either transferred, or agreed to be transferred, in the 12 months before the acquisition
• s 160 specifies that where both a put and call option is included in in agreement, it is to be treated as an uncompleted agreement for landholder duty purposes

These amendments are effective from April 11, 2017.

In Hallmark Construction Pty Ltd v Strathfield Municipal Council [2016] NSWLEC 170, the Land and Environment Court encountered the novel argument that s 124 of the Environmental Planning and Assessment Act 1979 gives the Court power to modify development consent. Hallmark was attempting to use s 124 to seek an urgent order, rather than lodge a formal modification application.

During construction, Hallmark had begun pouring concrete, and sought an order from the court that the pouring could be continued beyond the hours stipulated in the development consent. Hallmark argued that the power given to the Court by s 124 to ‘prevent’ a breach should be read widely, so as to include the power to modify the condition which would be breached.

This argument was rejected by the Court as it would be inconsistent with the aims of the Environmental Planning and Assessment Act 1979. 

Amidst rumours regarding raising the capital gains tax, the Property Council of Australia has warned the Government to proceed with caution and carefully consider the long-term consequences of such harsh reforms. Such actions discourage investors and damage confidence, a potentially disastrous combination during a time when Australia needs to invest in new residential developments to accommodate the increasing population.

The Property Council also submitted:

1. adjusting the discount may have undesirable repercussions: potentially inflating housing prices, constricting housing supply, and threatening the livelihoods and financial security of those who work in the industry, particularly in construction.
2. while the property sector remains sympathetic to the fact that maintaining Australia’s AAA rating and regulating the Budget is essential, this should not be done at the expense of the housing industry and those who depend on it.