Kannane v Demian Developments Pty Ltd

In the matter of Kannane v Demian Developments Pty Ltd, the dispute concerned the sale of units within an unregistered strata plan. The purchaser, Kannane, alleged that the area of the units stated in the contract differed from that in the registered plan due to the inclusion of wallspace in the contract plan. The purchaser sought to rescind the sale, claiming that this discrepancy amounted to a substantial and detrimental alteration of the property that triggered a right of rescission under a special condition of the contract. The respondent, Demian Developments Pty Ltd, contended that any right of rescission had lapsed, and the special condition implicitly excluded standard condition 28. Additionally, it was argued that the difference in the area statements did not constitute a minor alteration and that the purchaser had not suffered a misdescription or error that would justify rescission.

The court had to determine whether the discrepancy in the area statements constituted a substantial and detrimental alteration of the property that triggered a right of rescission. The court also needed to assess if the right of rescission had lapsed and whether the special condition implicitly excluded standard condition 28. Furthermore, the court had to decide if the difference in area statements was an alteration to the plan that was other than minor, and whether there was a misdescription or error in the contract that affected the subject matter to the extent that the purchaser might not have contracted at all. Finally, the court had to consider if there was evidence of reliance on the part of the purchaser and whether damages should be awarded.

The court found that there was a substantial and detrimental alteration to the property as the discrepancy in area statements was not minor. The court held that the right of rescission had not lapsed, and that the special condition did not implicitly exclude standard condition 28. The court concluded that the purchaser had suffered a misdescription or error in the contract that affected the subject matter, as the discrepancy in area statements was significant. However, the court determined that there was no evidence of reliance on the part of the purchaser. Consequently, the court found that damages were not awarded as they did not exceed the deposits for which the vendor must give credit, and the circumstances did not indicate that it would be unjust or inequitable to permit the vendor to retain the forfeited deposits.

The court ordered that the contracts for sale be rescinded, and each party bear their own costs of the proceedings. The court also ordered that the vendor forfeit the deposit paid by the purchaser, which was to be credited against any amount owing by the purchaser to the vendor.