Implied Duty to Co-operate: A Landmark Decision in Property Contracts

In a recent Queensland Supreme Court decision, Brightman & Ors v Royal Pines Projects Pty Ltd [2024] QSC 149, the issue of an implied duty to co-operate with the other party in property contracts has come to light. This case is particularly significant for both property developers and off-the-plan buyers, as it clarifies the obligations of sellers in facilitating buyer inspections for valuation purposes.

The Case at a Glance

The dispute arose when multiple buyers who had entered into contracts to purchase apartments “off the plan” from Royal Pines Projects Pty Ltd requested access to the properties for valuation purposes. The developer’s solicitors delayed in responding to requests, and then also delayed granting access, citing ongoing construction work. This delay effectively reduced the buyers’ preparation time for settlement, potentially hampering them from being able to settle in the timeframe the Contract provided for and the Seller had set, arising out of a delay caused in no small part by the Seller.

Key Legal Principles

The court’s decision hinged on several important legal principles:

1. Implied Duty to Co-operate: This duty requires each party to do all that is ”reasonably necessary” to enable the other party to have the benefit of the contract.
2. Prevention Principle: A party cannot take advantage of a situation that its own breach or failure to perform has created.
3. Contractual Interpretation: The court considered the commercial purpose of the contract’s notice period and the implicit understanding that buyers would likely need finance.

No Finance Clause, but Implied Financiers

The court found that despite the absence of a “subject to finance” clause, the developer had breached the implied duty to co-operate by delaying access for valuations. Key points in the court’s reasoning included:

• The commercial reality that most buyers would require finance was implicit in the contract and considered common knowledge that the Seller should have been aware of.
• The 14-day notice period was intended to allow buyers sufficient time to prepare for settlement, including finalising their finance application and working with their financier on being ready to settle, including organising a valuation.
• By delaying access, the developer effectively denied buyers the full benefit of this notice period.

Implications for Property Developers and Buyers

This decision has significant implications for the property industry:

1. For Developers: Even without explicit “subject to finance” clauses, developers may be obligated to facilitate reasonable requests for property access for valuation purposes.
2. For Buyers: This ruling strengthens the position of off-the-plan buyers, providing clearer rights regarding property access for finance-related purposes.
3. Contract Drafting: Both parties should consider explicitly addressing access for valuation in off-the-plan contracts to avoid potential disputes.

Key Takeaways

The Brightman case underscores the importance of good faith and cooperation in property transactions. It serves as a reminder that contractual obligations extend beyond the written terms to include implied duties that facilitate the smooth execution of the agreement.

For property developers, this decision highlights the need for careful consideration of buyer requests, even when not explicitly covered in the contract. For buyers, it reinforces the importance of timely communication and asserting their rights under the implied duty to co-operate.

As the property market continues to evolve, this case sets a significant precedent that may influence future contract negotiations and dispute resolutions in off-the-plan property sales.

Need assistance?

For expert legal advice for property developers who need assistance drafting contracts, or for buyers who need assistance navigating them, contact our skilled Commercial Law and Conveyancing teams today.