Body Corporate and Community Management Act - a decision resulting in urgent changes

A recent decision of the Supreme Court of Queensland has led to the State Government enacting emergency reforms to the Body Corporate and Community Management Act 1997 ("BCCMA").  The decision in Bossichix Pty Ltd v Martinek Holdings Pty Ltd interpreted section 212 of the BCCMA strictly giving the purchaser scope for terminating the contract of sale, based on inadequate wording in the contract.

The Bossichix Decision

The former section 212(1) of the BCCMA provided for settlement no sooner than 14 days after notice is given to the buyer that the community title scheme has been established.  Prior to the decision in Bossichix, some "off the plan" contracts did not strictly comply with section 212 instead connecting  the completion date  to the date of registration of the plan rather than establishment of the scheme. 

In this decidtion the Court  held that strict compliance with section 212 was required, or else the buyer had the opportunity to cancel the contract.  Whilst the Court stopped short of requiring the exact words of section 212 be used, it was clear that an attempt to comply  would not be acceptable.  The contract, the subject of the decision, provided that settlement would occur 14 days after notice to the buyer that the relevant plan of subdivision was registered.  Whilst the contract read as a whole might have given the effect intended by section 212, the Court held that this was not sufficient compliance.

Under the interpretation in Bossichix, it is likely that many current "off the plan" contracts would fail to comply with the former section 212.  In response to the decision, the Queensland Government took steps to nullify the potential consequences by amending section 212 of the BCCMA.

The Amendments

Section 212 of the BCCMA was amended and deems a contract to contain a term, that settlement must not take place earlier than 14 days after notice is given to the buyer that the scheme has been established or changed.  The effect of this deeming provision removes the onus from the seller to include a compliant term in the contract.

A new section 362A was also included to give retrospective effect to the new section 212, such that it applies to contracts entered into both before and after the commencement date of the amending Act ie 5 June 2009.  However, the amendments do not apply to contracts already terminated under the old provision or relevant legal proceedings which concluded before the commencement. 

In the prevailing global economic climate, it seems that the State Government is prepared to act quickly to prevent the opportunistic exploitation of a technicality in the real estate industry.