by Associate Professor Tammy Johnson
When one Word Costs Millions: The High Price of Flawed Contract Drafting
Twenty Gold Coast purchasers are the latest buyers to find themselves in a legal battle over a sunset clause after contracts for townhouses at the Urbana Residences development in Coomera were terminated years after they were signed. The dispute has reignited debate about the use of sunset clauses in off-the-plan property developments and the vulnerability of buyers when projects are delayed.
Whatever the eventual outcome of the Coomera litigation, one thing is already clear: courts across Australia are increasingly being asked to resolve disputes that turn not on broad questions of fairness, but on the precise words used in property contracts.
Recent Queensland Supreme Court cases demonstrate that a single word can determine whether a party receives a property, loses a property, or pays millions of dollars in damages.
Why Sunset Clauses Matter
Sunset clauses are common in off-the-plan contracts. They typically allow one or both parties to terminate the agreement if a development has not reached a specified milestone by a particular date.
In principle, they serve an important purpose. They protect both developers and purchasers when unforeseen events prevent a development from proceeding as expected.
The difficulty arises when property values increase significantly during the development period. A contract entered into years earlier at a lower price may become far less attractive to a developer in a rapidly rising market. Conversely, a purchaser who has been waiting years for completion may stand to lose substantial value if the contract is terminated and the property is later resold at a higher price.
It is in these circumstances that courts are increasingly being asked to determine whether a developer's reliance on a sunset clause is lawful.
The Importance of Careful Drafting
A recurring theme in the recent cases is that courts are focusing very carefully on the language chosen by the parties themselves. In two recent Queensland Supreme Court decisions, the dispute turned on a single word in the off-the-plan contracts.
In JYP Jiang Pty Ltd v CAV Gasworks Pty Ltd [2025] QSC 134 (‘CAV Gasworks’), the dispute turned on the meaning of the word "cannot”. A purchaser had contracted to buy two luxury sub-penthouses in the Luminare development in Brisbane for a combined purchase price of $4.2 million. The developer argued it was entitled to terminate because it could not give a particular contractual notice before the sunset date. The Supreme Court rejected that argument, finding that the developer was capable of giving the notice and had simply chosen not to do so. By the time the dispute reached court, however, the developer had already sold both sub-penthouses to third parties, making specific performance impossible. Instead, the purchaser was awarded damages for loss of bargain. The Court found that the two apartments had a combined market value of $10.3 million when the contract should have completed, resulting in damages of $6.1 million, being the difference between the contractual purchase price and the market value of the properties. At the time of writing, the decision is under appeal, although the appeal has not yet been heard.
More recently, in Malligan v Chevron Apartments Pty Ltd; Cantavenera v Chevron Apartments Pty Ltd [2026] QSC 195 (‘Malligan’), the Supreme Court of Queensland considered two off-the-plan contracts for apartments in the Chevron One development on the Gold Coast. One purchaser had agreed to buy a proposed apartment for $760,000 and another couple had contracted to purchase a proposed apartment for $840,000. After the relevant sunset dates passed, the developer purported to terminate the contracts, relying on contractual and statutory provisions that it argued gave it a reciprocal right to terminate.
The dispute centred on a clause stating that the developer "must establish the Scheme, register the Plan and effect Settlement” by the Sunset Date. The developer argued that the clause should not be read literally when the contract was viewed as a whole. Justice Freeburn rejected that argument. His Honour held that the clause was "unambiguous and is susceptible of only one meaning" and that a reasonable businessperson reading the contract would understand it as imposing an obligation on the developer to establish the scheme, register the plan and effect settlement by the sunset date. [31].
In reaching that conclusion, Freeburn J drew heavily upon orthodox principles of contractual interpretation, including the High Court's approach in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104. Highlighting what Kirby P described as the "fundamental rule" of interpretation, his Honour emphasised the primacy of unambiguous contractual language, quoting the well-known observation that: "The first place where you look for the intention of the parties is in the language which they themselves used. And it is very often the last place too." [32]-[33].
Justice Freeburn also emphasised that courts are not concerned with improving contracts after the event, stating that "the process of interpretation does not allow a court to force upon a provision of a private legal document a meaning that the words of the provision cannot fairly or reasonably bear, and to substitute for the bargain actually made one which the court believes could better have been made."
Having concluded that the developer had assumed an obligation to establish the Scheme, register the Plan and effect settlement by the sunset date, the Court held that it could not rely on its own failure to fulfil those obligations as a basis for terminating the contracts. As such, the Court declared that both contracts remained valid and binding.
The lesson from both decisions is clear: when disputes arise, courts will usually enforce the words the parties chose, not the words one party later wishes had been chosen. In these cases, the meaning of "cannot" and "must" determined whether the contracts survived and whether the purchasers retained the benefit of their bargains.
Two Longstanding Legal Principles
These decisions are also consistent with two well-established principles of contract law. The first is that where contractual language is clear and unambiguous, courts will generally give effect to the ordinary meaning of the words the parties have chosen.
The second is that a party to a contract should not ordinarily be permitted to benefit from its own breach. The Queensland Court of Appeal reiterated this longstanding legal principle in Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315, observing that, unless a contract clearly provides otherwise, courts generally presume that parties did not intend one party to gain an advantage through its own failure to perform its contractual obligations.
That principle continues to influence modern sunset clause litigation.
The question is often not simply whether a sunset date has passed. The real question is whether the party seeking to rely on that date is attempting to take advantage of circumstances for which it bears contractual responsibility.
Not Every Purchaser Wins
While the Queensland Supreme Court found in favour of the purchasers in the CAV Gasworks and Malligan cases, the courts have not adopted a blanket rule against developers.
In Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459, purchasers argued that a developer had deliberately delayed a project so that it could terminate contracts and resell apartments in a stronger market. The New South Wales Supreme Court was not persuaded. Although it identified some shortcomings in the developer's conduct, the purchasers could not establish that those shortcomings caused the relevant delay and the developer's termination rights were upheld.
The lesson from Wang is equally important: courts will not rewrite commercial bargains merely because one outcome appears harsh.
The Real Lesson: Drafting Matters
The growing body of sunset clause litigation reveals a broader truth about commercial contracting.
Many of these disputes are worth millions of dollars. Yet they often turn on apparently ordinary words such as "must", "may", "cannot", or "reasonable endeavours". Those words determine who bears the risk of delay, who controls the timing of completion, and who ultimately benefits if circumstances change.
For lawyers, developers, and purchasers alike, the message is straightforward.
Careful drafting is not simply a technical exercise. It is one of the most important forms of risk management available in any commercial transaction.
The current Urbana Residences, Coomera dispute may ultimately produce another chapter in Australia's evolving sunset clause jurisprudence. Whatever its outcome, the recent cases already provide a powerful reminder that contracts must be drafted with great care.
Because when markets move and relationships break down, courts will usually enforce the contract that was written, not the contract one party later wishes had been written.