Were the purchasers entitled to rescind?
20 The purchasers contend that they were entitled to rescind pursuant to additional condition 2.3.4, or alternatively pursuant to standard condition 28, or alternatively at common law pursuant to the rule in Flight v Booth.
21 Mr Swan, the surveyor who prepared the registered plan, has explained that his calculations (and those in the registered plan) measure each unit as constructed taking the far perimeter to be the internal faces of the walls. Thus the areas measured by him and included in the registered plan do not include the areas occupied by external or dividing walls. He also analysed how the areas in the contract plan had been calculated, and concluded that they had been calculated by measuring the area which had as its far perimeter the centre line of each dividing wall and the external face of any external wall. He found that there were no variations to the footprint of the individual units between the contract plan and the registered plan which could not be explained by normal construction tolerances, and that (comparing like with like so far as methods of measurements were concerned) in none of the units did the area differ by more than 5%. These conclusions were not challenged, and I accept them. In other words, the areas stated in the Contract Plan included wallspace, being the whole of the floor space occupied by external walls and that occupied by the closer half of each internal dividing wall; whereas the areas stated in the Registered Plan did not. The difference between the statements of area in the Contract Plan and those in the registered plan was that wallspace.
22 In considering whether the plaintiffs were entitled to rescind on any of the bases that they advance, it is important to understand the role of the references to "area" in the Contract Plan. In turn, this directs attention to the subject matter of the sale, and its description in the contract.
23 The subject matter of the sale was the proposed strata lot described in the contract plan, more or less and with such variations and amendments which the vendor might make, provided that if the variations and amendments were substantial and detrimental there was a right of rescission, but the permitted variations not giving rise to a right of rescission included a variation of area by not more than 5%.
24 The subject matter of the sale was a proposed strata lot. A strata lot comprises one or more cubic spaces, the base of each being designated as one lot or part of one lot on the floor plan forming part of the strata plan, and being cubic space the base of whose vertical boundaries is as delineated on the sheet of the floor plan and which has horizontal boundaries as ascertained under Strata Schemes (Freehold Development) Act 1973, s 5(2). By virtue of s 5(2), if the base of any wall corresponds substantially with a line on a floor plan, the boundary of the relevant cubic space is the "inner surface" of that wall. Generally speaking, walls which coincide with the boundaries of a strata lot are common property, and the lot boundaries are their inner (from the perspective of the relevant lot) surfaces are [Symes v Proprietors of Strata Plan No 31731 [2001] NSWSC 527, [25]-[26]]. It follows that the wallspace which accounts for the difference in the statements of area between the contract plan and the registered plan would not in any event form part of the strata lot.
Additional condition 2
25 Additional condition 2.3.2 authorised the vendor in its reasonable discretion and without reference to the purchaser to vary or amend the strata plan, although additional condition 2.3.3 restricted the vendor's discretion to variations or amendments which did not substantially and detrimentally directly affect the property to an extent which is other than minor (unless required or made by the Council or the Registrar General).
26 The right of rescission under clause 2.3.4 arises only if on registration of the plan there are any variations or amendments which substantially and detrimentally affect the property to an extent which is other than minor. In each case, the only relevant amendment was that the stated area was changed. However, the actual area was not changed. The unit boundaries according to the plan were not moved or adjusted at all. The only difference was that area stated was calculated by excluding rather than including wallspace. To my mind, this discrepancy in the stated area was not a variation or amendment of the plan which substantially and detrimentally affected any of the relevant units. The contract plan stated the area including wallspace, and the registered plan stated the area excluding wallspace. That is not an amendment or variation of the plan. The basis on which area was measured in the contract plan (as including external walls) was disclosed in the annotation to that plan. In my opinion the plan was unamended, and the units remained quite unchanged. Accordingly, in my opinion, no right of rescission under clause 2.3.4 arose.
27 If any right of rescission arose under clause 2.3.4, it had to be exercised within fourteen days of receipt of notice that the strata plan had been registered. It was purportedly exercised on the fifteenth day. When it had not been exercised by the fourteenth day, pursuant to clause 2.3.6, the right of rescission lapsed and the contract remained binding in all respects. Accordingly, any right to rescind under clause 2.3.4 had lapsed before it was purportedly exercised.
28 It is beside the point that when originally refuting the purported exercise of the right of rescission, the vendor did not rely on its being out of time. There is no suggestion of any waiver or estoppel, and in those circumstances it matters not that the circumstance that the right of rescission had lapsed was not raised at the outset.
29 Accordingly, the purchasers were not entitled to rescind under clause 2.3.4: there was no such variation or amendment substantially and detrimentally affecting the property as could found a right of rescission, and even if there was, the right had lapsed before it was purportedly exercised.
Standard condition 28
30 As to rescission under standard condition 28, the first question is whether that condition 28 remained part of the contract. In favour of the view that it did is the reference to "clause 28" in the particulars of land sold, and the circumstance that there is no express exclusion of it. However, there are significant contraindications. First, the subject matter of standard condition 28.2 is also addressed by additional conditional 2.2, but excluding the time limit referred to in 28.2 (of six months). Secondly, as clause 2.4 makes clear that the time limit under additional condition 2 is 24 months (rather than the six months referred to in clause 28.2), the reference in clause 28.2 to a period of six months, which is inconsistent with the 24 months referred to in additional condition 2, is supportive of the view that the right to rescind under 28.3 has been excluded by additional condition 2. Thirdly, the right of rescission conferred by clause 28.3 is also the subject of additional condition 2.3.4, but the right is conferred in different terms with different triggering requirements. Fourthly, whereas standard condition 28.4 envisages that either party might serve notice of registration of the plan, additional condition 2.3.5 envisages that it will be the vendor that does so. Fifthly, additional condition 1 makes provision for the "completion date" in terms which cover the field otherwise addressed by standard condition 28.5. Sixthly, clause 2.3.6 provides that if the right of rescission under the additional condition is not exercised, that right shall lapse "and this contract shall remain binding in all respects". This must mean, notwithstanding any matter by reason of which the purchaser might otherwise have been entitled to rescind under clause 2.3.4.
31 Although standard condition 28 has not be explicitly deleted from the contract, it is clear from additional condition 2 that the parties intended the additional condition, and not standard condition 28, to govern the registration of the strata plan and the rights attendant thereon. Additional condition 2, in my opinion, covers that field to the exclusion of standard condition 28. Standard condition 28 has been implicitly excluded.
32 On the assumption, however, that standard condition 28 is not excluded, the next question is whether its requirements are satisfied. It gives the purchaser a right to rescind if the plan is not registered "within that time and in that manner", which by reference back to clause 28.2 means within six months after the contract date, and with or without any minor alteration validly required or made under legislation. By clause 28.6 that right to rescind applies to a plan that is to be registered "before the plan is registered". This seems to mean that the right to rescind applies only up to the time of registration, which is understandable, in the sense that a vendor would not wish to permit a purchaser to wait and see, but then rescind after registration had been achieved. But while this makes sense in respect of the time of registration, it less clearly does so in respect of the manner of registration. A purchaser would ordinarily not discover whether the plan had been registered "with or without any minor alteration", until after the plan has been registered.
33 Clause 28.6 was intended to limit and not to extend the operation of clause 28.3: it refers to clauses 28.2 and 28.3, and clause 28.2 could only conceivably operate before registration. Despite the difficulties with its application to manner as distinct from time of registration, the better view is that clause 28.6 means that the right to rescind under clause 28.3 cannot be exercised after the plan is registered. If what is registered is not the plan (with or without any minor alteration) then the purchaser will still have a right of rescission, because "the plan" will still not have been registered; something else will.
34 Accordingly, if, contrary to my view, clause 28 has not been excluded by additional condition 2, then a right of rescission is available if what has been registered is not "the plan with or without any minor alteration" but something else, namely the plan with an alteration which is other than minor.
35 The last question in respect of standard condition 28 is whether the plan was registered "with or without any minor alteration". Whether a variation is for this purpose "minor" is a question of fact and degree [Edelan Pty Ltd v Forster Pastoral Pty Ltd (1985) 5 BPR 11,196, 11,202]. The test to be applied is analogous to that applied under the rule in Flight v Booth (1834) 1 BingNC 370; 131 ER 1160, namely, is the property materially or substantially different from that contracted to be purchased.
36 In my opinion, for reasons stated in respect of additional condition 2, the change in the stated area was not an alteration to the plan at all; but if it was, it is a minor one. Because no actual change to the area available for occupation is involved, I do not think it can be said to be material or substantial, or so far to affect the subject matter of the contract that it may reasonably be supposed that, but for the misstatement, the purchasers might never have entered into the contract at all.