Has the GFC changed how the courts apply PAMDA to contract disputes? Has the GFC changed how the courts apply PAMDA to contract disputes?

Has the GFC changed how the courts apply PAMDA to contract disputes?

10 June 2010 | General
In recent times, plunging property values have prompted many buyers to look for ways to escape their contracts by relying upon technical breaches by sellers of the Property Agents and Motor Dealers Act 2000 (Qld) ('PAMDA').

The rigidity of PAMDA was highlighted last year in Hedley Commercial Property Services Pty Ltd v BRCP Oasis Land Pty Ltd [2008] QSC 261. In that case the court acknowledged that any non-compliance with PAMDA in the contract formation process, no matter how trivial, gave the buyer a right to terminate.

However, the pendulum appears to be swinging back in favour of sellers. There have been a number of recent decisions which suggest that courts are now prepared to adopt a more practical view of PAMDA's highly technical rules, especially in relation to 'off the plan' contracts.

In the recent case of Collins v Currumbin Investments Pty Ltd [2009] QSC 275, the court found that the buyer was not entitled to terminate the contract because the seller's agent failed to expressly draw the buyer's attention to the warning statement. There was no issue as to whether the buyer received the warning statement. Rather the issue was whether the buyer's attention was adequately drawn to the warning statement by way of enclosure under a cover letter. In the end, common sense won the day and the court held that referring to the warning statement in the cover letter was enough to comply with PAMDA.

This decision is a good result for sellers as it indicates that the courts now appear willing to consider the practical reality of these types of transactions.

Having said that, sellers should not be lulled into a false sense of security. Neglecting to comply with PAMDA's strict requirements can have disastrous consequences. For example, earlier this year in Hudpac Corporation Pty Ltd v Voros Investments Pty Ltd [2009] QSC 275, the court held that the buyer validly terminated the contract when the seller failed to provide the buyer with a rectification statement as required by PAMDA.

The moral to the story for sellers is to be aware of your obligations under PAMDA.