Supreme Court provides guidance on new protections for off-the-plan purchasers

by Dentons


In its first substantive decision on recently-introduced protections afforded to purchasers of off-the-plan developments, the Supreme Court of NSW has provided valuable guidance on when, and on what terms, it will permit rescission of an off-the-plan contract where a sunset date has passed.

DGF Property Holdings Pty Ltd v Butros & Ors [2018] NSWSC 344 sends a strong signal to developers that the Supreme Court will hesitate to permit rescission of off-the-plan contracts under section 66ZL, even where the vendor’s conduct cannot be said to be in bad faith or unreasonable.

Section 66ZL – Rescission under sunset clauses

Most contracts for the purchase of lots in a proposed plan of subdivision contain clauses which entitle each party to rescind if the subject lot is not created by a date set in the contract (commonly termed ‘sunset clauses’). Section 66ZL of the Conveyancing Act 1919 varies that contractual right.

Section 66ZL was introduced by the Conveyancing Amendment (Sunset Clauses) Act 2015 and applies to off-the-plan contracts regardless of when the contract was entered into. Section 66ZL restricts a vendor’s right to rescind an off-the-plan contract under a sunset clause if the subject lot has not been created by the sunset date, but only if:

  1. each purchaser under the contracts consents to the rescission; or
  2. the vendor has obtained an order of the Supreme Court under section 66ZL permitting it to rescind the contract under the sunset clause.[1]

Even if a sunset clause explicitly provides for automatic rescission, it is to be read as if it instead permits the contract to be rescinded in accordance with section 66ZL.[2] As a result, rather than requiring purchasers to commence proceedings against vendors to enforce a contract where a sunset date has passed, the burden is shifted to the vendor.

To be successful in an application to permit it to rescind the contract under a sunset clause, a developer must satisfy the Court that making such an order ‘is just and equitable in all the circumstances’.[3] This requires the Court to take into account, inter alia:

  1. whether the vendor has acted unreasonably or in bad faith;
  2. the reason for the delay in creating the subject lot;
  3. the likely date on which the subject lot will be created;
  4. whether the subject lot has increased in value;
  5. the effect of the rescission on each purchaser; and
  6. any other matter that the Court considers to be relevant.[4]

Parliament made clear that section 66ZL was introduced to protect purchasers. In the second reading speech for the amendment, it was noted that it would ‘counter the conduct of some developers using the sunset clause in off-the-plan contracts to disadvantage purchasers’ and to obtain ‘an unjust enrichment at the expense of home buyers’ by reselling lots at a higher price, with the purchasers (after having their deposit tied up for a long period of time) missing out on any capital appreciation of their lot.

In order to even the balance of power between vendors and purchasers further, 66ZL also requires the vendor to pay the costs of a purchaser in relation to proceedings for rescission of a contract under that section, unless the vendor satisfies the Court that the purchaser unreasonably withheld consent to the rescission of the contract.[5]

Factual background

In July 2010, Fairfield City Council approved a development application permitting the subdivision of three lots to create 12 residential lots. The three lots were the subject of a joint venture agreement between various parties – including the plaintiff, DGF Property Holdings (DGF), which owned one of the lots, and Mr and Mrs Di Federico (Di Federicos), who owned another. Throughout 2014, DGF entered into contracts for the sale of eight of the 12 proposed lots (Contracts) with various persons (Purchasers). Each of the Contracts contained a special condition to the effect that if the proposed plan of subdivision was not registered within (variously) 6 or 12 months of the date of the Contract, either party had a right to rescind.

There was a dispute between the Di Federicos and DGF in relation to various events (primarily, the brining of unauthorised fill onto the Di Federicos’ land) which, it was said by DGF, delayed the registration of the plan of subdivision and creation of the lots that the Purchasers had contracted to buy. That conduct was the subject of a stop work order issued by Fairfield City Council on 3 July 2015.

The sunset dates passed and DGF commenced proceedings under section 66ZL, seeking an order from the Court permitting it to rescind the Contracts. The Purchasers opposed that order on the basis that rescission would not be just and equitable in all the circumstances. It was common ground between the parties that the subject lots had increased significantly since the dates of the respective Contracts (from $725,000 - $880,000 per lot to $1.25 million - $1.35 million per lot).

DGF also commenced proceeds against the Di Federicos seeking damages for breach of various agreements relating to the proposed subdivision, which was heard with the proceedings against the Purchasers. At trial, those damages were limited to holding charges incurred during the times when DGF asserted that it would have received the proceeds under the Contracts but for the Di Federicos’ conduct.

Commenced proceedings

In his Honour’s judgment, Emmett AJA held:

  • The conduct of the Di Federicos constituted a breach of the agreements between them and DGF and such conduct caused delay in the completion of the subdivision.But for that conduct, DGF would have completed the requirements for the subdivision certificate.
  • However, there was no reason why the subdivision could not have proceeded after 16 May 2017 (when the Council approved the unauthorised fill brought onto the Di Federicos’ land).On that basis, DGF was entitled to damages from the Di Federicos to compensate it for holding charged incurred during the period 3 July 2015 to 16 May 2017.
  • DGF must satisfy the Court that making orders permitting rescission of any one of the Contracts under section 66ZL would be just and equitable in all of the circumstances.However, the effect of refusing or of permitting rescission could be arbitrary or unfair.Accordingly, ‘in many circumstances, the making or refusing of an order permitting rescission would be just and equitable only if the making or refusing of the order were to be on terms or conditions’.[6]For example, if may be just and equitable where there is a mechanism for the price of a subject lot to be increased, such that, if the purchaser failed to pay that price, it would be just and equitable to permit the vendor to rescind.
  • While the records as to DGF’s financial position from commencement of the development up to the hearing were unclear, his Honour accepted the evidence of DGF’s sole director that investor loans were the sole source of funding for the development and that investors were to be rewarded by the payment of interest at the rate of 8% per annum.
  • DGF’s conduct of the development generally was less than entirely sufficient and competent, but fell short of it acting in bad faith or unreasonably.However, none of the Purchasers were informed of the possible risks that the disputes between DGF and the Di Federicos would bear upon whether or not the proposed plan of subdivision was registered before the sunset dates.
  • It would be just and equitable to permit DGF to rescind each of the Contracts, only if it proffered an undertaking along the following lines:
    • ­DGF will, as soon as reasonably practicable (and, in any event, no later than 60 calendar days) do all such acts and things as may be necessary to procure the registration of the proposed plan of subdivision.
    • ­At the same time as giving notice of rescission of any of the Contracts, DGF must make an offer to the relevant Purchaser/s to enter into a new contract for the sale and purchase of the proposed lot on the same terms as the rescinded Contract, save that:
      • The purchase price will be the price payable under the rescinded Contract, plus a sum calculated on the balance of the purchase price payable under the rescinded Contract from 16 May 2017 until the making of a new contract at an appropriate rate (for example, DGF’s ‘investor rate’ of 8% per annum – equating to approximately $60,000 per lot);
      • Any provision relating to rescission of the contract by reason of the proposed plan of subdivision not being registered will be deleted; and
      • The amount of the deposit payable under any new contract will be the amount paid under the rescinded Contract.

Take away

This decision, which represents a very favourable outcome to the Purchasers, is significant in sending a strong signal to developers that the Supreme Court will hesitate to permit rescission of off-the-plan contracts under section 66ZL. This is the case even where the vendor’s conduct cannot be said to be in bad faith or unreasonable. If the Court is prepared to allow rescission, there is considerable flexibility in the terms which may apply to such an order in reaching an outcome that is ‘just and equitable in all the circumstances’.

A developer must be in a position to demonstrate, with precision, the effect that the Court’s refusal to permit rescission will have on it – particularly the financial detriment that has been, and will continue to be, suffered by the developer (which was described by Emmett AJA as ‘an important, and perhaps necessary, component of [DGF’s] case’). [7] A developer should also turn its mind to the question of whether any third party is (wholly or partly) to blame for any delay in registration of a proposed plan of subdivision, as the Court may consider it appropriate that the third party bear primary responsibility for compensating the developer for any detriment suffered by it – rather than purchasers.

[1] Conveyancing Act 1919 (NSW), section 66ZL(3)(a) and (b). Section 66ZL(3)(c) also allows a vendor to rescind if the regulations otherwise permit; however, at the time of writing, no such regulations are in force.

[2] Section 66ZL(5).

[3] Section 66ZL(6).

[4] Section 66ZL(7).

[5] Section 66ZL(8).

[6] Judgment at [378].

[7] Judgment at [377].


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dentons | Attorney Advertising

Written by:


Dentons on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.