The ACT Supreme Court has relied on the territory's unique anti-gazumping laws to order vendors of a unit in the New Acton development to return a deposit to a prospective buyer who opted out of the deal.
Gazumping was not the problem in this case. It was a breach of legislation introduced to avoid gazumping. Although not illegal, gazumping happens in a rising sellers' market where a verbal deal is made, but before legally binding contracts are exchanged, the property 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, by requiring the seller to have all relevant documents, such as certificate of title, physically attached to the contract.
Frank Batticcotto and his family had bought the $1.4 million unit off the plan in 2008, securing the property with 5 per cent of the purchase price ($70,000).
In 2010, when the vendor sought the balance of the deposit to complete the contract, the Batticcottos gave notice they wanted out of the deal and that the certificate of title had not been included in the contract.
The vendor, Acton Investments, would not release the 5 per cent deposit and sought the balance of the 10 per cent deposit and interest on $140,000.
The Batticcottos' counsel, Christopher Erskine, SC, cited 2003 legislation that 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 completed before putting a property on the market.
Counsel for Acton Investments Philip Walker said the case boiled down to whether the certificate of title should have been attached to the contract. He said the title did not have to be attached.
Even if the court found that it did, that would still not render the contract invalid, and there was no doubt about its contractual force.
A cooling-off period could also act 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 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.
Justice Richard Refshauge found that required documents had to be physically part of the contract. He also referred to the presentation speech:
''Sellers of residential property will now be required to have a draft contract of sale prepared prior to listing the 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.''
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