Repudiation in Off the Plan Contracts: Lessons from the Morgan Apartment Case

Introduction

What happens when a purchaser’s carefully selected white marble finish for her new off-the-plan apartment turns out to be green marble instead?  Well, her disappointment soon turned into a legal battle over whether the developer’s mistake amounted to a repudiation of contract, giving her the right to walk away and reclaim her $120,000 deposit.

In Morgan v RHS Hotel Investments Pty Ltd t/as (rec and man app) as trustee for the Rushcutters Unit Trust [2025] NSWSC 1295, the Supreme Court of New South Wales was asked to decide whether a colour mix-up in interior finishes was serious enough to justify terminating a $1.2 million property contract. The judgment provides a sharp reminder that in off-the-plan sales, not every deviation equals a deal-breaker.

Background

In April 2022, the plaintiff, Ms Morgan, entered into a contract with the vendors (RHS Hotel Investments Pty Ltd as trustee for the Rushcutters Unit Trust) to purchase a one-bedroom apartment (Unit X). The purchase price was A$1.2 million, with a 10% deposit of A$120,000.

Under Item 15 of the contract, the purchaser was given a choice of two interior finish “Style Schemes” for the apartment, either the “Harbour Scheme (White)” or the “Park Scheme (Green)”. Ms Morgan selected the Harbour Scheme (white). Specifically, she chose white marble finishes for the kitchen benchtop and a bathroom wall.

Upon a pre-settlement inspection on 6 September 2024, Ms Morgan observed that the installed finishes were in fact green marble, the Park Scheme, not the white finishes she had specified. Her solicitor wrote to the vendors’ solicitors seeking urgent rectification to the correct (white) scheme, with follow-up requests occurring in September and October 2024.

The vendors’ solicitors acknowledged the selection of the white scheme but advised that the installed green stone “was an inconsequential matter … and will not be undertaking any rectification”. On 19 May 2025 Ms Morgan purported to terminate the contract for repudiation by the vendors and demanded return of her deposit.

In early June 2025 the vendors issued a notice to complete the contract by 17 June 2025. Ms Morgan did not comply and began proceedings for the return of the deposit under section 55(2A) of the Conveyancing Act 1919 (NSW). The vendors demanded specific performance of the contract. The matter was heard on 21 October 2025. The Court concluded that specific performance should be ordered and Ms Morgan’s claim for return of the deposit must be rejected.

Elements the Court Considered

The Court focused on whether the vendor’s substitution of the white marble finishes with green marble amounted to repudiation, conduct showing an intention not to be bound by the contract. Justice Cavanagh applied the principles from Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115, examining if the vendor’s actions indicated a refusal to perform in accordance with its obligations.

Key attention was given to the construction of the contract, particularly Special Conditions 49, 50 and 51, which governed style selections and the vendor’s right to vary finishes of “similar manner and equivalent quality.” The Court also considered the vendor’s readiness and willingness to complete, the materiality of the variation, and its discretion under section 55(2A) of the Conveyancing Act 1919 (NSW) regarding the return of the deposit.

The Court’s Reasons for Judgement

Justice Cavanagh held that the vendor’s conduct did not amount to repudiation. The contract expressly permitted variations to finishes of comparable quality, and the substitution of green marble for white was within that right. The difference in colour did not go to the root of the contract and was not a fundamental breach.

Because the vendors remained ready, willing and able to complete, Ms Morgan’s termination was invalid. The Court therefore ordered specific performance of the contract and dismissed her claim for the return of the deposit under section 55(2A), awarding costs to the vendors.

Key Takeaways 

• A variation in finishes will not amount to repudiation unless it goes to the root of the contract or shows an intention not to perform.
• Clauses allowing substitutions of similar quality give vendors flexibility to alter materials without breaching the contract.
• Readiness and willingness to complete are critical factors when opposing specific performance.
• A purchaser cannot recover a deposit under section 55(2A) if the vendor is entitled to specific performance.
• Off-the-plan buyers should review alteration clauses carefully, as contractual wording often favours the developer.