A narrow escape: the Luminare appeal and the cost of ending an off-the-plan contract

What this means for you

If you are a developer with off-the-plan contracts nearing their sunset date, this decision matters. The Court of Appeal has confirmed that, under some contracts, a developer can end the contract if the apartment is not ready to settle by the sunset date. But the developer in this case came within one judge of a $6 million loss. Check your contract wording, record your progress and get advice before you send a termination notice.

What happened

In 2017, a buyer agreed to pay $4.2 million for two sub-penthouses off the plan in the Luminare building at Newstead, Brisbane. It paid a $420,000 deposit. The contract set a sunset date of 30 December 2022. If the developer ‘cannot’ give the buyer notice to settle by then, either side may end the contract and the deposit is refunded. The developer did not have to give that notice until it was satisfied it could complete what the contract required of it within 14 days.

Separate titles were created by 14 November 2022. Even so, the developer gave no notice. Nor did it extend the sunset date. On 13 April 2023, it ended the contract, saying it could not hand over the apartments without an occupancy certificate. Its director said they were then less than half finished. The occupancy certificate issued on 20 January 2024.

The buyer’s lawyers rejected the termination. There was then no further correspondence for about nine months. During that time, the developer sold the two apartments to other buyers for $3.5 million and $5.3 million. By early 2024, the apartments were worth about $10.3 million. The buyer sued for the difference.

Why the developer won

At trial, in JYP Jiang Pty Ltd v CAV Gasworks Pty Ltd [2025] QSC 134, Chief Justice Bowskill found for the buyer. Once titles existed, the developer was able to give the notice. It therefore had no right to walk away. The buyer was awarded about $6.1 million, plus costs.

On appeal, in CAV Gasworks Pty Ltd v JYP Jiang Pty Ltd [2026] QCA 221, decided on 30 October 2026, Justice Crow and Justice Hindman found for the developer, each for different reasons. Justice Bradley agreed with the trial judge. The majority held that the developer had to give notice only once the apartments were finished in accordance with the contract and the disclosure documents given to the buyer. Titles, or even an occupancy certificate, were not enough. Because the apartments were not finished by the sunset date, the developer was entitled to end the contract.

The buyer gets its deposit back but must pay the developer’s legal costs of the trial and the appeal. The developer had also relied on a second right: to end the contract if it formed the ‘opinion’ that the sunset clause would apply. All three appeal judges held that this right could not justify the termination, having regard to the circumstances at the time.

In my view, the narrow margin deserves attention. It was a narrow escape for the developer. The trial judge and one appeal judge read the clause the other way. Justice Hindman himself called the question ‘finely balanced’.

What developers should do now

• Review your sunset and notice clauses. The developer won on the wording of its contract, which the trial judge and the appeal majority read differently. A clause tied only to title would likely have produced the opposite result, as it did on the readings of the trial judge and the dissenting appeal judge.
• List contracts with sunset dates in the next 12 to 18 months. Know where you stand before each date arrives.
• Act honestly and reasonably. The majority said a developer can hold back its notice only while it is genuinely not ready to settle. Once ready, it must give the notice. Slowing works or holding back notice to run down the clock is not acceptable.
• Keep records. Document construction progress and the reasons for any delay. If the sunset date is disputed, those records will matter.
• Use extension rights properly. The developer here did not extend the sunset date. Doing so would have required an architect’s certificate. Other contracts may set different requirements.
• Use ‘opinion’ exit rights on time. A right to end a contract based on your opinion must be used before the sunset date, not to justify a termination afterwards.
• Get advice before you send a termination notice. Ending a contract on the wrong basis can leave you paying the buyer the rise in value, plus interest and costs. Here, that was about $6.1 million.
• Apply the same thinking when buying sites. Exit rights based on your ‘satisfaction’ or ‘opinion’ are likely to be held to an honest and reasonable standard. Draft your own conditions clearly. Tie any seller’s exit rights to fixed dates and objective events.

A word for buyers and investors

The sunset clause in this case worked both ways, meaning either party could end the contract. In a falling market, a buyer may be able to walk away with its deposit if the property is not finished to the agreed standard by the sunset date. Buyers also have a separate right under Queensland law to end the contract if the seller has not settled within 5.5 years (similar rights exist in other states). Investors buying off the plan should read the sunset clause closely before signing. So should their advisers.

Talk to us

If you have off-the-plan contracts approaching a sunset date, or are thinking about ending one, contact Dave Cheng for a contract review before you act.