What happens to buyers if the land purchased is smaller than shown on the plan? A 2023 Court of Appeal Case provides an insight

Ausbao (286 Sussex St Pty Limited) v RG NSW [2023] NSWCA18(“Ausbao”) related to the purchase of land at 286 Sussex St, Sydney for $55 million by Ausbao (286 Sussex Street) Pty Ltd. The deposited plans of the Land kept by the Registrar General indicated a total area of 1,337.4m². This area was also included in an Information Memorandum provided to the purchaser (although it included a disclaimer that the figures and calculations had not been verified in any way). The purchaser did not take any steps to verify the Land independently as they considered it reasonable to rely on the statement in the deposited plan, given it was a government record.

After completion of the purchase, it was discovered by the purchaser that the area of the land was 85.7m² smaller than shown in the deposited plan.  This occurred because of successive transposition errors by the Registrar General. The purchaser then commenced proceedings against the Registrar General claiming from the Torrens Assurance Fund that they had suffered loss or damage due to the Respondent omitting to execute its functions or duties under the Real Property Act 1900 (NSW) (“RP Act”).

The Torrens Assurance Fund is a scheme that provides compensation to people who suffer loss or damage due to the operation of the RP Act, at no fault of their own. If a claim for compensation is sought, a two-step process must be satisfied:

1. The claimant must establish it suffered loss or damage pursuant to section 129(1) of the RP Act which must be caused by:
   • an act or omission of the Registrar-General in the execution or performance of their functions under the Act; or
   • the registration of a different party as the owner of the land or having an interest in the land;
   • an error, misdescription or omission in the Register;
   • the land being converted to Torrens title;
   • fraud;
   • an error or omission in an official search;
   • an error in recording details supplied in a Notice of Sale.
2. The claimant’s actions do not fall under the exceptions provided in section 129(2) of the RP Act being:
   • that their own conduct contributed to the loss suffered;
   • the loss was caused by a solicitor, licensed conveyancer, real estate agent, or broker;
   • the person failed to mitigate the loss; and
   • the loss was offset by a benefit

amongst other reasons as listed in the section.

The Supreme Court found that an error in stating the area of the Land did not entitle the purchaser to claim compensation from the Torrens Assurance Fund. The purchaser appealed this decision to the Court of Appeal, however its Appeal was dismissed.

The Court found the purchaser did not meet the second of the requirements of the two-step process under section 129 of the RP Act. The following factors were considered relevant by the Court to its decision:

1. The purchaser was a “sophisticated developer of commercial property”;
2. The land purchased was of “considerable value”;
3. The area of the land was critical to the purchaser in formulating the purchase price.  The cost of obtaining an independent survey for verification was minimal in light of the significance of the area of the land; and
4. The failure to verify the area constitutes a failure to take reasonable care in protecting one’s own interests.

The case highlights the importance of undertaking a survey to verify the area of a property. The importance is magnified where development is proposed, and the area of the land is of great significance.

If you have queries regarding your property, are looking to undertake a development or buying or selling, contact us at [email protected] today!

To read the full judgment visit the NSW Case Law website!

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