Malligan v Chevron Apartments Pty Ltd; Cantavenera v Chevron Apartments Pty Ltd [2026] QSC 195

Julie Whitehead | Olivia Doonan | Max Rylance

Key takeouts

• Unless the contract clearly provides otherwise, a party cannot rely on its own breach to obtain a contractual benefit, including a right to terminate.
• A court will not read down an unambiguous obligation merely to produce a more harmonious or commercially convenient contract.
• If a developer wishes to retain a termination right where its own failure has caused the sunset date to pass, this must be expressly provided for in the contract.

Facts

In 2021, Chevron Apartments Pty Ltd (Chevron) entered into two off-the-plan contracts for apartments in the Chevron One development on the Gold Coast.

Clause 10.2 provided that, subject to Chevron’s express termination rights under clause 16 and the buyers paying the balance of the purchase price at settlement, Chevron ‘must establish the Scheme, register the Plan and effect Settlement’ by the relevant 5-year sunset date.

Clause 16 gave Chevron wide termination rights, including if it decided not to proceed because of finance, insufficient sales, increased construction costs or other viability concerns.  However, Chevron could only exercise most of its rights if it also terminated every other contract in the scheme.

In 2026, after the sunset date passed without settlement, Chevron purported to terminate the contracts. Under the contracts Chevron had a reciprocal right to terminate during any period in which a buyer was entitled to terminate under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act). Section 271B of the BCCM Act gives a buyer a right to terminate if the seller has not settled by the sunset date.  At the time of the purported termination, construction of the apartments appeared largely complete.

The buyers challenged the terminations, arguing that Chevron could not rely on its own failure to effect settlement by the sunset date under clause 10.2.

Decision

Freeburn J ruled in favour of the buyers and declared both contracts valid and binding. The Court held that clause 10.2 imposed a clear obligation on Chevron to establish the scheme, register the plan and effect settlement by the sunset date, subject only to the qualifications expressed in that clause.

The plain meaning of clause 10.2 prevails

The Court held that the words ‘must establish the Scheme, register the Plan and effect Settlement … by the Sunset Date’ were unambiguous and susceptible of only one meaning. A reasonable businessperson would understand them as imposing an obligation on Chevron to establish the scheme, register the plan and effect settlement by the sunset date.

Chevron argued that clause 10.2 should be read down (at most, to an implied obligation to use reasonable efforts) by harmonising the contracts as a whole and having regard to the statutory context and uncertainty created by the COVID-19 pandemic when the contracts were made. The Court rejected that approach. A search for contractual ‘harmony’ could not displace the ordinary meaning of clear language. The Court doubted that a reasonable-efforts term could be implied from the word ‘must’ used in clause 10.2. The uncertainty of the COVID-19 era did not provide a proper explanation for reading down clause 10.2.

The Court also held that the words ‘subject to clause 16’ in clause 10.2 were significant. Those words preserved Chevron’s extensive termination rights. Chevron could therefore still decide not to proceed with the contracts if, for example, construction costs rose or the project became unviable.

Chevron could not take advantage of its own breach

The Court applied the general rule of construction that, absent a clear provision to the contrary, the parties are presumed not to intend that one party may obtain a contractual benefit from its own breach. The contract did not expressly authorise Chevron to rely on its breach of clause 10.2 to terminate. Because Chevron’s own failure to settle by the sunset date was the event on which it sought to rely, the right to terminate was unavailable. 

No material prejudice under section 214

Separately, Chevron argued that changes to the development materially prejudiced the buyers, giving them termination rights under section 214 of the BCCM Act, which in turn gave Chevron a reciprocal right to terminate. Section 214 of the BCCM Act gives a buyer the right to terminate a contract when variations to a development’s disclosure statement cause material prejudice to the buyer. The buyers denied any prejudice. The Court assessed prejudice objectively, having regard to the particular buyer’s circumstances. The Court noted that there must be a causal and proportionate relationship between the inaccuracy and the prejudice, and the buyer must be disadvantaged substantially or to an important extent.

The evidence did not establish that ongoing construction or increased body corporate contributions materially prejudiced either buyer. A reservation of the right to deliver later stages ‘at any time’ was not evidence that construction would continue for long. An increase in contributions of about 40% (roughly $2,100 to $2,250) was not material in the context of the contracts. The Court admitted the buyer’s evidence comparing levies at a nearby unit as a relevant market reference point. The buyers’ subjective views, and any increase in the market value of the units, were irrelevant to the statutory test.