Urban House v Purnell Bros

Urban House Pty Ltd, the vendor, brought an action against Purnell Bros, the purchasers, seeking rescission of a contract for the sale of land on which a building was situated. The building was substantially damaged by fire before the contract was completed. The dispute came before the Supreme Court of New South Wales. The key issues for the court were whether the damage to the building was such that the land was substantially damaged and materially different from that which the purchasers contracted to buy under sections 66L and 66J of the Conveyancing Act 1919. Additionally, the court had to consider whether the purchasers' change of plans due to the property market downturn and decision to lease the land and buildings was relevant to the outcome.

The court held that the damage to the building did not substantially impair the land. The damage was repairable and did not make the land substantially different from the state in which the purchasers contracted to buy it. The court found that the damage was not so severe that it amounted to a substantial change in the nature of the land. The court further held that the purchasers' change of plans due to the property market conditions was not relevant to the assessment of the damage. The court analogised the situation to the case of Flight v Booth, where compensation for error or misdescription was considered. The court concluded that the purchasers were not entitled to rescind the contract on the basis of the damage to the building.

The court's decision was that the contract for the sale of the land was not rescinded. The purchasers were required to complete the purchase and the vendor was entitled to compensation for the loss of the bargain. The court ordered that the contract be completed and that the purchasers pay compensation to the vendor. The court found that the damage to the building did not substantially impair the land and did not amount to a substantial change in the nature of the land. The court also found that the purchasers' change of plans due to the property market conditions was not relevant to the outcome of the case. The court's decision was that the contract was not rescinded and the purchasers were required to complete the purchase and pay compensation to the vendor.