Purchasing a Residence with a Pool

It is common for Contracts in Queensland to be amended (by special condition) to place an obligation on a Seller to provide a pool safety certificate (‘PSC’) to a Buyer prior to a particular date. Usually such a special condition would go on to state that if the PSC was not provided to the Buyer by the relevant date, a Buyer could terminate the Contract.

Great care should be taken when drafting such a special condition as, if no time is specified in the special condition by which the PSC is to be provided, the Seller will have until midnight on the relevant date to provide the PSC to the Buyer. This issue was addressed in the recent case of Latimore Pty Ltd v Lloyd [2020] QSC 136.

In this case the Buyer purchased a residence at auction which had a pool. A Special Condition was inserted into the Contract requiring the Seller to provide a PSC to the Buyer “7 days prior to Settlement”. It did not prescribe a time of day for compliance. The Settlement date was 22 April 2020.

Both parties agreed that the PSC was to be provided by the Seller on 15 April 2020. At 5:03 pm on 15 April 2020 the Buyer emailed the Seller terminating the Contract as the PSC had not (at that time) been provided. At 6:31 pm on 15 April 2020 the Seller provided the PSC to the Buyer.

The question for the Court: was the Buyer entitled to terminate the Contract due to the Seller failing to provide a PSC by 5:00pm on the Special Condition date?

The Law

The Buyer sought to argue that the Contract required the PSC to be provided by the Seller by 5:00pm on the Special Condition date.

The Buyer relied on standard term 10.4 of the REIQ Contract (a general provision dealing with “Notices” which states that a notice given after 5:00 pm on a Business Day will be treated as given at 9:00 am on the next Business day.

Therefore, the Buyer argued that due to the PSC being provided after 5:00 pm on 15 April 2020, the PSC should be deemed to have been provided at 9:00 am the following day which is less than 7 days prior to Settlement and a breach of the Special Condition.

The Judge held:

1. The Seller’s obligation to provide a PSC to the Buyer was not a Notice under the Contract.
2. The Special Condition did not have to be complied with by 5:00 pm on 15 April 2020.
3. Where a Contract specifies a day but not a time of day for performance of an obligation, the obliged party has until the end of that day to perform it (until midnight) and the law takes no account of fractions of a day.
4. The Seller complied with its obligation under the Special Condition.

The Verdict

The Judge ruled that the Buyer’s notice of termination sent at 5:03 pm on 15 April 2020 was invalid and of no effect. The Buyer was ordered to specifically perform the Contract by 4:00 pm on 2 June 2020, or any earlier time as may be agreed between the parties, by:

1. Paying the Balance Purchase Price, together with any adjustments; and
2. Paying interest on the Purchase Price for the period 22 April 2020 to the date of completion at a rate of 8.96% p.a.
3. The deposit being released to the Seller.
4. The Buyer paying the Seller’s costs of the proceedings on an indemnity basis.

The Lesson

This case highlights the importance of carefully drafting and executing special conditions in contracts. If you require assistance in drafting or understanding a special condition in a contract or conveyancing in general, please do not hesitate to contact one of our experienced property lawyers at our Townsville or Sunshine Coast offices.

Article co-authored by Thomas Conn, Solicitor