Another property development JV goes wrong
Updated: Feb 20, 2021
In Lawrence v Ciantar  NSWCA 89, the NSW Court of Appeal dealt with yet another property development joint venture turned sour.
PC and AS are the registered proprietors of a property in Forestville. In 2013 Warringah Council approved an application to subdivide the property into three lots. In 2014 the proprietors advertised the property for sale, identifying that there was development application approval to subdivide the land whilst retaining the main residence. WL, a licensed builder, proposed to purchase Lot 3 in consideration of carrying out the works to complete the subdivision. Negotiations resulted in various agreements between the proprietors and WL, culminating in a written agreement in November 2014, whereby WL would carry out certain works. There was a delay in the completion of the subdivision works to be carried out by WL. The proprietors purported to rescind the contract under the Home Building Act 1989 (NSW).
WL brought proceedings, seeking declarations that he held a one-third interest in the property and an unregistered mortgage or charge over the property; that the agreements had not been validly terminated by the proprietors; and an order for specific performance or damages. WL’s claims were dismissed. WL brought an appeal. Held: dismissing the appeal.
The agreements did not state whether WL was to undertake or to fund the subdivision: . However, the surrounding circumstances made it clear that the parties intended WL to perform the construction work, and was not acting as a funder: .
Taking into account both its context and purpose, the November Agreement required WL to undertake the subdivision as distinct from funding a third party builder: . Therefore, ss 7D and 10 of the Home Building Act had the effect of denying WL any interest in the property and rendering the contract void: .
There is nothing to suggest that the contract was varied by conduct such that WL’s obligation to act as funder was replaced by an obligation to act as builder. WL always had the obligation to act as the builder: .
WL’s failure to complete the works showed a clear intention not to be bound by the contract or to perform it in a manner substantially inconsistent with his obligations: . The proprietors were entitled to terminate for repudiation and WL was not entitled to an order for specific performance: - .