Page 3935 - Week 13 - Wednesday, 1 December 2021
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that buyers are appropriately protected from the concerning contract rescissions that we have seen exercised in the ACT recently.
The government has listened to the important feedback we have received from stakeholders that regulating sunset clauses alone would not adequately capture the rescission clauses that have been relied on in these recent ACT cases. These clauses were more general-delay clauses which allowed the seller to rescind off-the-plan contracts in circumstances where an event delaying or preventing the completion of the contract had occurred. These clauses are not always dependent on a particular milestone or sunset date having been missed. Such clauses are just as susceptible to misuse as sunset clauses.
Under the bill, a delay event is any event delaying or preventing completion of the contract. A delay event includes an event delaying or preventing the construction of a building and other related works. A delay event also includes a delay in obtaining any approval, registration, permission, exemption, insurance or other thing necessary for completion of the contract.
The bill does not cover situations where the buyer has caused, or significantly contributed to, the delay event. A delay event also does not include an event prescribed by regulation.
I just draw that distinction out, and I think it is worth reflecting on, because I did note Mr Cain’s remarks about New South Wales legislating on this in 2015 and Victoria in 2019. If the ACT government had followed, or copied, those provisions earlier, to my best understanding of the analysis that the agency has undertaken, unfortunately, the circumstances we have seen in the ACT in recent times would not have been covered.
A key distinction between the government’s bill and Mr Cain’s bill is that, under Mr Cain’s bill, the recent circumstances in the ACT would not have been covered. This is, I think, a credit both to the work of the advocates who have come forward and identified the circumstances that they have faced and to the analysis of the Justice and Community Safety Directorate in looking very closely at these measures and the consultation that they have undertaken in developing this bill over an extended period of time.
The bill establishes a new process for using sunset and delay clauses. If the seller wants to rescind due to a delay event or sunset event, the seller must provide the relevant buyer, or buyers, with 28 days written notice of the proposed rescission. The seller must seek the buyer’s consent to the proposed rescission or, if consent is not given, seek an order from the ACT Supreme Court permitting the rescission of the contract.
The notice to the buyer should specify why the seller wants to rescind the contract, the reasons for the delay, and that there is no obligation to consent to the proposed rescission. However, the notice must also advise the buyer that if they refuse consent to the rescission the seller may apply to the Supreme Court for an order permitting rescission and that, if the Supreme Court finds that their consent was withheld unreasonably, then the court may order costs against the buyer. The Supreme Court
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