In Queensland conveyancing, special conditions are commonly incorporated into property contracts to address matters specific to the parties or the property itself.
These may include finance approvals, building and pest inspections, repairs and maintenance obligations, due diligence investigations, development or council approvals, pool safety requirements, settlement arrangements, access rights, the sale of another property, and a range of other transaction-specific conditions.
While these conditions may appear straightforward, unclear wording can create ambiguity and may give rise to disputes.
As our conveyancing solicitors on Gold Coast explains, The decision in Latimore Pty Ltd v Lloyd [2020] QSC 136 (“Latimore v Lloyd”) serves as an important reminder that the timing and drafting of special conditions can have significant consequences in Queensland property transactions.
In particular, the case emphasises the importance for special conditions to be drafted with precision and clarity, and underscores the importance of exercising caution before seeking to terminate a contract.
Overview of Latimore Pty Ltd v Lloyd [2020] QSC 136
In Latimore v Lloyd, the buyer and seller entered into a contract for the sale and purchase of a residential property in Queensland.
The contract contained a special condition requiring the seller to provide a Pool Safety Certificate to the buyer seven days prior to the settlement date.
Both parties agreed that this special condition constituted an essential term of the contract.
By designating this special condition as an essential term, the seller agreed that non-performance of this special condition by the seller gives the buyer the right to terminate the contract
Settlement was due to occur on 22 April 2020.
This meant that the Pool Safety Certificate was required to be provided on 15 April 2020.
At 5:03pm on 15 April 2020, the buyer terminated the contract on the basis that the seller had failed to provide the Pool Safety Certificate.
Later that same evening, at 6:31pm, the seller’s solicitor provided the Pool Safety Certificate to the buyer’s solicitor.
Even though the Pool Safety Certificate was provided on 15 April 2020, the buyer argued that the seller had failed to comply with the special condition by failing to provide the Pool Safety Certificate before 5:00pm on the day.
The buyer relied on a general condition in the contract which dealt with the timing for service of notices.
The general condition states that any notice that is served after 5:00pm on a day is treated as being served on the following business day.
On that basis, the buyer argued that the Pool Safety Certificate was provided by the seller on 16 April 2020 and not as required on 15 April 2020.
Therefore, the key issue before the Court was whether the provision of the Pool Safety Certificate constituted a “notice” under the contract.
The Court’s Ruling in Latimore v Lloyd
The Supreme Court of Queensland ruled in favour of the seller.
The Court found that providing a Pool Safety Certificate was not the same as giving a notice under the contract.
A notice is generally used to communicate information between the parties.
The Pool Safety Certificate, however, was a specific document required to be provided under the special condition.
As a result, the 5:00pm notice rule did not apply.
Because the special condition only required the Pool Safety Certificate to be provided “seven days prior to settlement”, and did not state a specific time of day, the seller had until the end of 15 April 2020 to provide the certificate.
This meant that the seller could provide the Pool Safety Certificate any time before midnight on that date.
As the certificate was provided at 6:31pm, the seller was considered to have had complied with the contract.
The buyer’s attempted termination at 5:03pm was therefore premature and invalid.
Key Legal Findings
1. Special conditions must be drafted clearly:
If the parties intend for an obligation to be completed by a particular time, that time should be expressly stated in the contract.
For example, if a Pool Safety Certificate must be provided by 5:00pm on a particular date, the special condition should clearly say so, otherwise general legal principles will apply to allow compliance at any time before midnight
This is particularly important where a special condition is an essential term of the contract.
A breach of an essential term may allow a party to terminate the contract.
Therefore, any timing requirement should be clear, precise and easy to understand.
Poorly drafted special conditions can create uncertainty, delay settlement and lead to avoidable disputes between buyers and sellers.
2. Terminating a contract too early can be risky :
In this case, the buyer attempted to terminate the contract at 5:03pm on 15 April 2020.
However, because the seller still had until midnight to provide the Pool Safety Certificate, the buyer’s termination was premature and is therefore invalid.
The buyer then relied on that invalid termination to refuse to complete settlement, which placed by the buyer in breach of the contract.
Terminating a contract without valid legal basis can have serious consequences.
The termination may be ineffective and may expose the terminating party to further legal costs, delay and potential liability.
Key Takeaways
The decision in Latimore v Lloyd provides practical guidance for buyers, sellers and agents involved in Queensland property transactions.
Firstly, special conditions should be drafted carefully. If a condition must be satisfied by a specific time, the contract should clearly state that time.
General wording such as “prior to settlement” or “seven days before settlement” may not be enough if the parties intend to impose a strict cut-off time.
Second, parties must differentiate between what constitutes a notice and what constitutes performance of an obligation.
Third, contract termination should never be treated lightly.
Before issuing a termination notice, a party should ensure that there is a valid legal basis to do so.
Lastly and more importantly, legal advice should always be obtained before signing a contract, with or without any special conditions.
What Should You Do If You Are Unsure About Your Property Contract?
Property contracts often contain strict deadlines and important legal obligations.
Even where a term appears simple, the wording of the contract can affect whether a party has complied with their obligations or whether another party has a right to terminate.
If you are buying or selling property in Queensland, it is important to understand your rights and obligations before signing or terminating a contract.
At HTW Legal Group, our property lawyers can assist buyers and sellers with reviewing property contracts, drafting special conditions, advising on settlement obligations and protecting their legal interests.
📞 Contact HTW Legal Group today for a consultation and safeguard your property interests in Australia.
