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Contract for Sale
    •  Rescission
        -  Right of rescission
            >  Restrictive covenant created after exchange



Restrictive covenant created after exchange   


The plaintiffs were purchasers of a three-bedroom unit that was part of a large complex. The defendant was the vendor.

After exchange of contracts, but before completion, the vendor created a restrictive covenant binding the land, in order to give effect to an Environmental Management Plan concerning soil contamination management.

The purchasers then purported to rescind the contract. Each party sought an order that they or it had validly rescinded the contract, and also sought other orders including the return or forfeiture of the deposit.

The Supreme Court of New South Wales held that the restriction the vendor had created had detrimentally affected the property to a substantial extent. This enlivened a clause of the contract of sale which gave the purchasers a right to rescind.

The vendor claimed that in certain communications the purchasers had waived their right to rescind the contract. The Court reviewed these communications and held that the purchasers did not waive this right, or elect not to enforce it.

Therefore, the purchasers had been entitled to rescind the contract of sale.

Wu v Statewide Developments Pty Limited [2010] NSWSC 1016