ACT News


Real estate dispute tests Stanhope law

A Canberra family who bought a $1.4 million unit off the plan, then changed their minds and opted out of the deal, are testing for the first time the ACT's unique anti-gazumping legislation.

Frank Batticcotto and his family bought the three-bedroom unit at NewActon in 2008, putting down a $70,000 bank guarantee for the first instalment of a 10 per cent deposit.

The vendor, Acton Investments, will not release the bond and insists on the second instalment of $70,000 and interest on $140,000.

Supreme Court judge Richard Refshauge has reserved his decision, which could have implications for people selling or buying units off the plan, and other residential property in Canberra.

The Batticcottos' counsel, Christopher Erskine, SC, is citing 2003 legislation then attorney-general and former chief minister Jon Stanhope introduced to discourage gazumping, by requiring a seller to have all their documents, including the title and other documents such as building and pest inspection reports completed before putting a property on the market.

Although not illegal, gazumping often happens in a rising sellers' market where a deal is made, but before legally-binding contracts are exchanged, the owner accepts a higher price from someone else.


In Canberra's heated residential market gazumping became so frequent that the government stepped in with legislation.

It did not outlaw gazumping, but narrowed the opportunity for a seller to dump one offer in favour of a higher one while paper work was being organised.

On Monday in the Supreme Court, counsel for NewActon Philip Walker said the case boiled down to whether the certificate of title should have been attached to the contract. He said the title didn't have to be attached.

Even if Justice Refshauge found that it did, that would still not render the contract invalid, and there was no doubt about its contractual force. There was also a cooling-off period as a remedy, and so there was no need for the court to add anything else.

The certificate of title was issued when the units plan was registered in September 2010, and the Batticcottos or their solicitors could have inspected it from that date.

Mr Walker said if everything had to be attached to a contract, including the vast range of planning documents in an off-the-plan sale, it opened the way for more mischief.

The act did not expressly require that the documents be physically attached to a contract.

Mr Erskine said text in the legislation was unclear, and the act was ambiguous. But Mr Stanhope's presentation speech, and explanatory notes accompanying the legislation, made it clear documents had to be attached.

While the government was not outlawing gazumping, it was thinking laterally and requiring documents to be attached.

The government said its bill aimed to close the window of opportunity that existed in the time it took to conclude an oral agreement to sell a property and signing and exchanging a binding written contract.

Mr Stanhope had said: ''Sellers of residential property will now be required to have a draft contract of sale prepared prior to listing a property on the market.

''Attached to this contract will be a number of due-diligence documents and reports that will provide the buyer with all the information necessary to determine whether this is the property they wish to purchase.''

The explanatory note was equally clear: ''The first reform requires sellers to have a contract of sale prepared prior to listing a property on the market. Attached to this contract will be a number of due-diligence documents and reports.''

According to Mr Erskine, section 10 of the act made it a criminal offence not to have those documents available for inspection at all reasonable times when an offer to buy may be made to the seller, such as at an open house inspection.