Photograph: Paul Miller/AAP
A developer has won the right to rescind the contracts of 37 first-home buyers after the apartments on which they signed contracts five years before more than doubled in value before the building was finished.
Thirty-four buyers took the Sydney development company Kaymet Corporation to the supreme court after it used a “sunset clawback” clause to rescind contracts signed between 2009-10 for between $370,000 and $600,000.
The clause is supposed to protect the buyers in the event the development does not go ahead and strata documents are not finalised by the “sunset” date. But the buyers argued the developer had delayed completion on purpose so the date would pass.
The Wolli Creek apartments cost an average of $500,000 in 2009-10 and are estimated to be worth an average of about $900,000 today. The developer stands to make $13m – a further $6m.
Justice Stevenson in the supreme court found in favour of Kaymet in a judgment handed down on Tuesday, saying it had not breached the terms of the contract by rescinding the contracts and refunding buyers their deposits.
“It is common ground that the apartments are now worth more than the contract price,” Stevenson said. “However, it is no longer any part of the plaintiffs’ case that the defendants deliberately delayed work on the project so as to be in a position to rescind the contracts and sell into the rising market.”
Stevenson did not take into account the discrepancies in the values of the apartments between initial purchase and now, instead focusing solely on whether Kaymet took reasonable actions to try to ensure the development was complete before the sunset date.
A member of the class action who did not wish to be named said she felt she had lost her only chance to get into Sydney’s notoriously tough housing market.
“It took me seven years to save that deposit and I could not believe my luck when I bought that apartment,” she said. “Now the money is not really worth anything in Sydney and I’ve lost most of it through this court case.
“I just can’t see how I could ever save the deposit for today’s prices. It’s scary how much they have jumped since I first signed that contract.”
The woman said the group still may appeal against the judgment and the buyers were meeting on Friday afternoon to discuss it.
She declined to put a figure on the cost of the court case but it has been estimated to be in the hundreds of thousands.
Another buyer told the Australian Financial Review their lives were ruined. “All we are thinking is, ‘Where we are going to live?’” she said.
“The 34 of us have become a big family. We are workers with average salaries who have saved up all that money. To save another three times for a deposit, it will take a lifetime.”
Phone calls to Kaymet went unanswered on Friday afternoon but a spokesman told news.com.au the buyers were “cruel” for going through with the court action and it was a straightforward contract.
“We tried to give them $2m to settle the matter with them and they didn’t want to settle,” he said. “They said, ‘No, we want everything.’ We said OK, let the court decide.
“They were very cruel people to make a class action. We lost over $2m in rent.
“There is justice in this country, once the judge sees.”
