Sunset in the Sunshine State – A salutary lesson for developers

A recent decision of the Supreme Court of Queensland highlights the importance of developers exercising caution when relying on sunset date clauses in off the plan apartment contracts.

In JYP Jiang Pty Ltd v CAV Gasworks Pty Ltd [2025] QSC 134, the court found that the developer had wrongfully terminated a contract using a sunset clause and was liable to compensate the buyer to the tune of $6.1 million in damages.

Background

In 2017, JYP Jiang Pty Ltd (the plaintiff/buyer) entered into a contract to purchase two sub-penthouses in the “Luminare” development in Newstead, QLD from CAV Gasworks Pty Ltd (the defendant/developer) for $4.2 million.

The contract provided for settlement would occur 14 days after the developer gave notice that the survey plan for the development had registered and titles had issued. If a certificate of occupancy had not been issued by then, settlement was to be postponed to 3 business days after the developer gives notice of its issuance.

Clause 8.1 stated that the developer must give notice once it becomes aware that the title conditions have been satisfied. However, the clause went on to say that the developer did not have to give the notice until it was satisfied that it could comply with all of its contractual obligations before settlement.

Although titles were issued in November 2022, the apartments were still less than 50% complete, and no certificate of occupancy had issued, meaning the developer could not lawfully provide possession.

The contract also included a ‘sunset clause’ entitling either party to terminate “if the seller cannot give [notice of issue of title] within 5.5 years of the contract date” (making the sunset date 30 December 2022).

The developer did not give notice of issue of title issuance but instead terminated the contract in April 2023, relying on the sunset clause. The certificate of occupancy had still not issued at that date. The developer subsequently sold the apartments for $8.8 million.

The buyer sued and won, with the court awarding $6.1 million in damages, being the difference between the contract price and the assessed market value of the apartments at the $10.3 million at the time the contract should have settled.

Key legal findings

The decision was based on an interpretation of the sunset clause and the notice clause.

The court found that the word “cannot” in the sunset clause meant that the developer could only rely on the clause if it was impossible to give the notice (i.e, the title condition had not been satisfied).

To interpret the sunset clause as granting the developer “an untrammelled and extremely wide power … to end the contract and deprive the buyer of the benefit of their bargain” would, the court said, not make commercial sense.

This was the case even though, under the notice clause, the developer had the right to defer giving the notice.  It was noted that even if the notice had been given, settlement would not have been due until the certificate of occupancy had issued as provided for in the settlement clause.

Key takeaways for property developers

• Think twice before relying on a sunset clause: While this decision turns on its specific facts, it reinforces that sunset clauses (regardless of how they are drafted) do not give developers an unfettered right to walk away from contracts. Courts will interpret them in the context of entire contract, including the developer’s contractual obligations (whether set out in the contract or implied) to carry out the development. Failure to comply with these obligations will invariably disqualify the developer from relying on sunset clauses, or, if it does so, exposes it to significant claims.
• There’s serious financial risk in misusing sunset clauses: In this case, the developer’s wrongful termination led to a multi-million-dollar award in damages.
• Seek legal advice early: If a project is delayed or approaching its sunset date, legal advice should be sought early – as permitted delays or termination rights that are frequently drafted in favour of the developer (including a right of a developer to terminate the contract anytime up to the settlement date for any reason) may not necessarily allow the developer to terminate the contract. There are often many facts to consider before simply relying on the sunset date to terminate the contract.

Authored by: 

Gary Ko, Partner
Oo Hyun Park, Graduate