In short
In Fuller Road West v LVL Transport a developer validly ended off-the-plan contracts for industrial lots to keep a rise in land value. The clause let it end the contracts by reference to its own commercial interests, the Court read the words as written, and the statutory sunset protections in Victoria, NSW and the ACT apply only to residential contracts.
- A broad discretion to terminate is read in its ordinary meaning.
- Repetitive drafting defeats the argument that a wide clause must be read down to leave the other clauses work to do.
- Unfair contract terms were not raised and remain open for newer contracts.
What happened
A developer sold industrial lots off the plan in 2020, ended the contracts in 2022 once the land had risen in value, and the Victorian Court of Appeal held that it was entitled to. Fuller Road West Pty Ltd (Fuller Road) owned about 20.8 hectares of undeveloped land zoned for industrial use at Ravenhall, Victoria. In 2020 it contracted to sell 21 of the 45 lots on a proposed plan of subdivision. Each contract was conditional on the plan being registered within two years of the contract date.
The council issued a planning permit in June 2021 and certified the plan in June 2022, but imposed requirements that had to be met before registration. The plan was not registered until 26 July 2024. As the Court of Appeal put it, “In the meantime, the value of the land increased substantially.”
On 16 August 2022, when it was clear the two-year date would be missed, Fuller Road gave notice ending all 21 contracts. Its solicitors wrote that “market conditions have changed considerably since the Contract of Sale was signed (including interest rates, construction costs, authority delays, etc)”. According to the trial judge, 18 purchasers “appear to have acquiesced in this cancellation”. Three sued for specific performance, an order compelling Fuller Road to complete the sales, and won at trial.
HeldOrr P, Richards and Kenny JJA. Special condition 8.4 gave Fuller Road discretion to cancel the contracts at any time by reference to its own commercial interests, and nothing in the context required the words to be read down. Fuller Road was entitled to end the contracts to take the benefit of the increase in the value of the land. Leave to appeal granted, appeal allowed, orders for specific performance set aside and the proceedings dismissed.
The County Court trial judgment was given on 9 April 2025. The Court of Appeal heard the appeal on 27 August 2026.
Law current at 14 November 2026. This article describes one Victorian Court of Appeal decision on the wording of one set of contracts, and the sunset clause legislation of Victoria, New South Wales and the ACT. It does not consider the law of any other state or territory. As at that date, no application for special leave to appeal to the High Court had been identified.
The clause
The clause let Fuller Road decide when to seek registration of the plan and, “given those considerations”, end the contract. In special condition (SC) 8.4 the purchaser acknowledged and agreed that:
(a) the Vendor will determine, at its sole discretion, when to seek Registration of the Plan of Subdivision having regard to, amongst other things, market demand, its financial position, ability to obtain finance, and planning, commercial, practical and other similar considerations and, given those considerations, the Vendor may end this Contract by giving notice to the Purchaser;
[2026] VSCA 266 [12].
Paragraph (b) added that ending the contract under paragraph (a) “is not a ‘sunset clause’ for the purpose of the SLA”, meaning the Sale of Land Act 1962 (Vic). The clause sat among several other rights to end the contract, all leading to the same result for the purchaser: the deposit back and nothing more.
| Clause | Who | When |
|---|---|---|
| SC 8.2 | Purchaser | The plan is not registered by the Registration Date, 24 months after the contract |
| SC 8.3 | Developer | The same event, following the procedure in the Sale of Land Act |
| SC 8.4 | Developer | Having regard to market demand, its financial position and ability to obtain finance, and planning, commercial, practical and similar considerations |
| SC 8.5 | Developer | An authority's requirement is too onerous in its opinion, registration is refused, or no acceptable planning permit |
| SC 17.2 | Developer | Planning permit conditions, or required changes to the plans, are not satisfactory to it in its absolute discretion |
| Result (SC 8.6, SC 17.3) | Either | Deposit refunded in full; no damages or compensation |
What the trial judge decided
The trial judge read the clause broadly but held that it could not be used only to capture a rise in the value of the land. He found that the factor which acted on the mind of Fuller Road's decision-maker was “whether the benefit in the increase in value of the land should accrue to Fuller Road or to the plaintiffs”. Fuller Road's counsel accepted at trial that terminating for that reason would be a proper exercise of the power.
The judge accepted that clause 8.4 was a separate right, not cut down by clause 8.3, and that its listed considerations were very wide. But he held that reading it as Fuller Road contended would “reduce the contracts of sale to mere put options granted by the purchasers to Fuller Road”, which “would not be a businesslike outcome or the bargain which businesspeople would be likely to make”. The heading, which referred to an “Inability to complete”, reinforced that view. He ordered specific performance of all three contracts.
Two other rulings were not challenged on appeal. The judge declined to imply a duty of good faith. He did imply a duty on Fuller Road to take reasonable steps to achieve registration at the earliest possible date, and found that it had done so: when it ended the contracts, “all the ducks were in a row” and it was progressing towards registration.
The words gave two separate powers
The Court of Appeal read special condition 8.4 as conferring two separate powers, each exercisable by reference to the same broad list of considerations. The first was to decide when to seek registration. The second was to end the contract. The Court started from the settled approach: a commercial contract is construed objectively, by its text, context and commercial purpose, and while a commercially sensible result is preferred, “the authorities caution judges against allowing their own notions of commerciality to displace the words of the contract”.
The purchasers argued that the termination power was tied to the timing decision, so that Fuller Road could end a contract only for the reasons that had shaped when it sought registration. The Court rejected that on the text: “The words used are ‘given those considerations’ and not ‘given that determination’”. It accepted that the purchasers' reading was open, but described it as “not the most natural reading of that text”, and turned to whether context or commercial purpose justified it.
Repetition did not narrow the clause
The presumption that every clause has work to do did not help the purchasers, because the contracts were drafted to leave nothing out. The purchasers argued that a broad clause 8.4 would swallow clauses 8.3, 8.5 and 17.2, leaving them redundant. The Court, adopting the Western Australian Court of Appeal’s words, described the presumption against surplusage as “a starting point, or preference, not an absolute rule”, with little or no operation where a contract repeats itself out of abundant caution.
“The contracts in this case are prime examples of this style of drafting.” Five clauses allowed termination if the plan was not registered within two years or if conditions on the development were not satisfactory to Fuller Road. Read together, they showed that completion depended on the development proceeding on terms satisfactory to Fuller Road, and that each party could walk away without consequence if the plan was not registered within the agreed two years.
The heading did not change the result. The Court said it bore no clear relationship to the text, and that “Inability to complete” more likely meant an inability to complete the contract by registering the plan within two years. The contracts also lacked the usual clause providing that headings do not affect interpretation, an absence the trial judge noted as perhaps significant.
The bargain the parties made
The trial judge's view that the clause was unbusinesslike was, the Court held, a substitution of his own idea of commerciality for the contract. “The purchasers accepted that this was a bargain that the law would countenance.” The judge had nonetheless concluded that it was not a bargain businesspeople would be likely to make, and in doing so “fell into the error of substituting the judge’s own views of commerciality for the words of the contract and the bargain the parties had in fact made”. The Court explained the commercial logic it saw:
Contrary to the judge’s conclusion, that bargain was not inherently uncommercial or inconvenient. It served a clear commercial purpose for Fuller Road, enabling it to obtain finance for the development while retaining control over the conditions under which the development would proceed. It gave each of the purchasers a low risk opportunity to purchase a lot in a convenient location, if the development went ahead and the plan of subdivision was registered within two years. If that did not occur, the purchasers’ deposits would be refunded in full and they would lose nothing but an opportunity.
[2026] VSCA 266 [64].
Its conclusion on the clause was this:
On its terms, SC 8.4 has an extremely broad operation, giving Fuller Road discretion to cancel the contracts at any time by reference to its own commercial interests — having regard, ‘amongst other things’, to the considerations listed.
[2026] VSCA 266 [65].
It followed that Fuller Road could end the contracts for the reason the trial judge had found: to take the benefit of the increase in the value of the land. The Court did not need to decide Fuller Road's challenge to that finding, or its alternative reliance on clauses 8.1 and 8.3. Earlier, LVL had pleaded that the clause, read this way, would “render illusory” Fuller Road's obligations, but that argument was not pressed.
Why the sunset clause protections did not apply
The statutory sunset clause protections in Victoria, NSW and the ACT apply only to residential contracts, so none of them restrained Fuller Road, and none would restrain a developer selling land that is not residential as each Act defines it. For a residential lot, each regime stops a vendor ending an off-the-plan contract under a sunset clause unless every purchaser consents in writing after at least 28 days' notice, the Supreme Court orders that rescission is just and equitable, or, in NSW and the ACT, the regulations permit it.
In deciding that, each court must consider whether the lot has increased in value, which is the very gain Fuller Road kept. The vendor pays the purchaser's costs of the application unless consent was unreasonably withheld, and a court that permits rescission may also order the vendor to compensate the purchaser. In Victoria the protection attaches to a contract “where the lot is proposed to be used for residential purposes”. The trial judge held that clause 8.3, which invoked that procedure, could not operate in an industrial contract; the Court of Appeal did not revisit the point.
| Victoria | NSW | ACT | |
|---|---|---|---|
| Provisions | Sale of Land Act 1962 ss 10A to 10F | Conveyancing Act 1919 s 66ZS | Civil Law (Sale of Residential Property) Act 2003 ss 19A to 19E |
| Reaches | A lot proposed to be used for residential purposes | A residential lot, as defined by s 66Q | A unit, a residence or vacant land for residential use |
| Vendor may rescind only | With each purchaser's written consent after 28 days' notice, or by Supreme Court order | With each purchaser's written consent after 28 days' notice, by Supreme Court order, or as the regulations permit | With each buyer's written consent after 28 days' notice, by Supreme Court order, or as the regulations permit |
| Court weighs a rise in value | s 10E(3)(e) | s 66ZS(7)(e) | s 19D(3)(f) |
| Inconsistent terms | Of no effect (s 10C) | Of no effect (s 66ZS(10)); exclusion void (s 66ZU(5)) | Exclusion void (s 36(1)); the court considers whether a term is intended to avoid Part 2A (s 19D(3)(a)) |
In NSW the line is drawn by the definition of residential property in section 66Q of the Conveyancing Act 1919 (NSW), which includes vacant land on which the construction of a single place of residence is not prohibited by law, and excludes land “used wholly for non-residential purposes” and land over 2.5 hectares. Whether a lot is inside it turns on that definition and the planning controls, not on how the lot was marketed. The ACT Act reaches only units, residences and vacant land “for residential use”, although it also catches clauses triggered by a stated delay event.
For residential land, those provisions mean a clause's description of itself is not the test. Clause 8.4(b), declaring that the clause was not a sunset clause, would have carried no weight against those provisions. Here the question did not arise, because the land was industrial. Our guide to buying a residential property off the plan covers the ACT protections from the purchaser's side.
What an industrial purchaser in Victoria still has
In Victoria some purchaser protections apply to every off-the-plan contract, industrial included, but none of them restrains a developer's own right to end the contract. The Sale of Land Act 1962 (Vic) requires that the deposit not exceed 10 per cent of the price and be held on trust for the purchaser by the vendor's legal practitioner, conveyancer or licensed estate agent until the plan is registered (s 9AA(1)).
- The contract must carry a conspicuous notice that a substantial period may pass between signing and becoming the registered proprietor, and that “the value of the lot may change” in that time (s 9AA(1A)).
- The purchaser may rescind within 14 days after being told of an amendment to the plan that will materially affect the lot (s 9AC(2)).
- If the plan is amended after the contract in a way that restricts or limits the use of the lot, the purchaser may avoid the sale at any time before registration, unless the amendment results from a public authority’s recommendation (s 10(1)).
- If the plan is not registered within 18 months, or any other period the contract specifies, the purchaser may rescind at any time after that period ends and before the plan is registered (s 9AE(2)).
- An agreement to waive a right under the Act to avoid a contract is void (s 14).
The mandatory warning that the value of the lot may change is usually read as a risk for the purchaser. Fuller Road shows it can run the other way. In NSW and the ACT, the off-the-plan provisions, including the NSW rule that deposits be held in trust, are confined to residential lots, and an industrial purchaser has the general law and its contract.
What still limits the developer
On these contracts the trial judge implied a duty on the developer to take reasonable steps towards registration, and that duty did not stop it ending the contracts under an express power. The trial judge implied the duty because purchasers under such contracts are wholly reliant on the vendor to prosecute the application for registration. It requires reasonable steps, not that the vendor “leave no stone unturned”. The duty protects a purchaser against a vendor who sits on the plan. It did not help purchasers facing a vendor that kept registering while it ended their contracts.
The judge, applying Victorian authority, declined to imply a duty of good faith into these contracts, while noting that the High Court may yet hold that such a duty inheres in all contracts. An argument raised in the purchasers' opening, based on English authority, that the power could not be exercised arbitrarily or capriciously was not pursued in closing; the judge accepted Fuller Road's answer that the principle does not apply where the discretion is vested solely in one party. None of this was appealed. We discuss the limits good faith places on a termination power in our note on terminating on someone else's assessment.
Some arguments were simply not run. As the trial judge recorded, “There is no pleaded allegation of inequality of bargaining power, unconscionable conduct, or anything of that sort.” Both surveyors agreed that a 24-month registration date was unrealistic, one calling it “ambitious given a Planning Permit had not issued for the Subdivision before the Contracts were signed”. Yet no claim was made that Fuller Road had warranted the date or engaged in misleading conduct about it.
Unfair contract terms: the question not asked
Neither court was asked whether clause 8.4 was an unfair contract term, and for contracts made since 9 November 2023 that is a live question for any developer selling lots on standard terms. Under the Australian Consumer Law, a term of a small business contract is void if it is unfair and the contract is a standard form contract (s 23(1)). A contract for the sale of an interest in land is a small business contract if “at least one party” makes it in the course of a business employing fewer than 100 persons, or had turnover under $10 million in its last income year (s 23(4)).
A development company formed for one project may meet that test on its own. Whether a contract is standard form is presumed once alleged, and the court must consider, among other things, whether the party has made other contracts in the same or substantially similar terms and how many (s 27). Fuller Road made 21. Against that, Fuller Road submitted at trial, on a different point, that the contracts were not contracts of adhesion (take-it-or-leave-it contracts), pointing to handwritten alterations and to the purchasers being represented by conveyancers. No court decided whether the contracts were standard form.
A term is unfair if it would cause a significant imbalance in the parties' rights, is not reasonably necessary to protect the legitimate interests of the party it advantages, and would cause detriment if relied on (s 24(1)). The advantaged party bears the onus on the second limb (s 24(4)). The Act's examples include a term permitting “one party (but not another party) to terminate the contract” (s 25(b)).
Both sides of that test have material in this case. Fuller Road's power could be used before the Registration Date, when the purchaser had no right of its own, as Figure 2 shows. Its best answer is the one the Court of Appeal gave: the structure let it obtain finance while keeping control of the development, and every purchaser was entitled to its deposit back in full. Under the current regime, proposing or relying on an unfair term in a standard form small business contract is also a contravention for which a pecuniary penalty may be imposed (s 23(2A), (2C)).
The current form of the regime applies to contracts made on or after 9 November 2023, to older contracts renewed after that date and, where an older contract is varied after that date, to the varied or added terms. Fuller Road's contracts were made in 2020. An earlier and narrower form of the regime was in force then; whether it could have reached these contracts was not raised. Whether a clause like 8.4 is unfair in a particular contract has not been decided by any court we have identified.
What the decision does not decide
The decision settles how this clause works and leaves several neighbouring questions open.
| Question | Position |
|---|---|
| Could clause 8.4 be used to capture a rise in land value? | Yes, decided by the Court of Appeal on this clause |
| Was Fuller Road's reason more than profit? | Not decided; unnecessary |
| Could clause 8.3, invoking the Sale of Land Act procedure, operate for industrial land? | Trial judge: no. Not decided on appeal |
| Implied duty of good faith | Rejected at trial; not appealed |
| Implied duty to take reasonable steps to register | Implied and met at trial; not challenged |
| Unfair contract terms, unconscionable or misleading conduct | Not raised |
| Were the purchasers ready, willing and able to complete? | Yes at trial; not addressed on appeal |
Outside Victoria, the principles of construction the Court applied are the High Court's and apply nationally. The result turned on the words of this clause, read with the rest of this contract and with no evidence of surrounding circumstances relied on by either side. A clause that ties the power to stated events, or ends it at the Registration Date, would be read on its own words.
If you are buying industrial land off the plan
Read every right the developer has to end the contract, not only the sunset date, and negotiate them before you sign. As the trial judge put it, a clause like Fuller Road's turns the contract into something close to a put option: the developer can require the purchaser to buy at the agreed price, or walk away, and the purchaser receives no option fee for granting that choice.
- Count the exits. List every clause that lets the developer end the contract, and the trigger for each. Fuller Road had five.
- Tie the discretion down. Ask that any discretionary right be exercisable only for stated events, or only after the Registration Date, so that it cannot be used while the purchaser has no right of its own.
- Test the Registration Date. Ask where the planning permit stands. In Fuller Road West the trial judge found that both experts agreed a 24-month date was unrealistic where no permit had issued.
- Price the option. If the developer keeps a broad right to walk away, ask for a fee or a share of any increase in value on termination.
- Check the standard form. If either party is a small business and the terms were presented on a take-it-or-leave-it basis, consider the unfair contract terms regime.
- If a termination is disputed, act quickly. Do not take the deposit back, have evidence that you can fund completion, and take advice on lodging a caveat on the title. Two purchasers here waited eighteen months to sue and had to meet a defence of delay, which failed only because the developer could not show it had been prejudiced.
Related: the property law and real estate and construction pages.
If you are the developer
The decision supports a clearly worded discretionary termination right on industrial or commercial land, but it does not reach residential lots and it did not consider unfair contract terms. The Court recognised the commercial purpose the bargain as a whole served for the developer: obtaining finance for the project while keeping control of the conditions under which it proceeds.
- Keep residential and non-residential lots apart. A residential lot brings in the statutory sunset regime, and a clause labelling itself as not a sunset clause will not keep it out.
- Include a clause that headings do not affect interpretation. Its absence gave the purchasers' argument from the heading a footing it would not otherwise have had.
- Set a Registration Date you have reasonable grounds to meet, and record why.
- For contracts made since 9 November 2023, assess whether the contract is a standard form small business contract, and record the legitimate interests the termination right protects, such as presale conditions in a finance facility.
Termination rights in commercial contracts turn on their words, as our analysis of material adverse change clauses also shows. Fuller Road West is a reminder that the words are read as written, including when they favour one side.
