Sting in the tail

I have previously posted about the decision of Justice Stevenson in relation to the apartments at Wolli Creek sold off the plan and then unsold pursuant to a sunset clause by Kaymet Corporation and associated parties.

There is now a judgment about costs.  This also refers to an interlocutory decision in the course of the trial rejecting an expert report tendered by the defendants which seems to have been directed to whether delays because of a need to comply with conditions imposed by the State Rail (or whatever the authority then was) were foreseeable or not.

I have previously posted on the difficulties developers can have if they are building anywhere near a railway.

What is odd is that the question of whether delays because of difficulties dealing with State Rail did not really emerge as an issue in the final judgment at all because in the end his Honour only considered whether endeavours by the builders were reasonable or not going forward from the date of the contracts.  I doubt the defendants’ legal advisers were starting at hares in trying to put on this evidence: there must have been an argument about what reasonable endeavours involved which they were attempting to meet but which somehow fell by the wayside.

But the sting in the tail is that to preserve their spanking new apartments to be sold to them in the event they won, the purchasers obtained (by consent) an injunction preventing the defendants from selling or letting the apartments.  Naturally, they had to give an undertaking as to damages for this: that is, an undertaking to pay the developers what they lost if it turned out that the plaintiffs were wrong, as has come to pass.

Reportage of this case has from time to time quoted the developers as complaining that they had lost $2 million rent.  That is what they have been talking about: the money they could have made (they say) by renting out the apartments in the intervening period.

At first I had thought (thinking mainly of the injunction preventing sale): “No matter, the defendants will have suffered no loss.  The properties have appreciated in value well over any holding costs and they can still sell them new.”

Now I am not so sure.  But I am beginning to wonder if the hitherto mysterious failure of the defendants to register the strata plan may not be associated with a plan on their part to claim loss of rent pursuant to the undertaking for damages (because until the strata plan is registered they cannot sell anything) AND to sell the apartments for their present value – inevitably more than that for which they were “sold” off the plan in 2009-2010 or even sellable for in 2013 when the injunction was granted or in  mid-2014 when the apartments were probably habitable and lettable.

That is going to excite a lot of wailing and gnashing of teeth indeed.

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