Wednesday, January 20, 2016

Failure to settle an off the plan contract was a costly decision

The Queensland Supreme Court recently decided a case involving an off the plan apartment contract in the Soul building at Surfers Paradise.

The case is Juniper Property Holdings No 15 P/L v Caltabiano (No 2) [2016] QSC 005 

Mr Caltabiano purchased the penthouse in Soul in July 2006 for $16.85 million, a lot of money for a 519 sqm apartment.  Mr Caltabiano failed to settle upon completion of the building in 2012.  So the developer forfeited the deposit, and sued Mr Caltabiano for damages.  The developer resold the penthouse in April 2015 for $7M.  So the claim for damages was $8.8M plus interest under the contract for failure to settle for over $3M.

Mr Caltabiano claimed that the sales agent was misleading -- it was claimed that at the request of Mr Caltabiano, the sales agent provided information in an oral discussion regarding supposedly comparable sales in Jade and Q1.  Mr Caltabiano never checked whether this information was correct.

The judge decided that the sales agent did not make the alleged misleading statements.  Even if they were made, they were not relied up by Mr Caltabiano.

  1. "The defendant submits that the fact that he did not obtain external advice as to the value of the Soul penthouse or the prudence of the purchase only serves to emphasise his reliance on the alleged representations. However, in my view, it is commercially illogical and inherently improbable that in deciding upon a $16.85 million purchase the defendant would not have obtained such advice because of reliance on the alleged representations made by the plaintiff’s sales consultant comprising comparisons with properties that the defendant did not know anything about. This is where the defendant’s story is incredible." 

This shows one of the many dangers of buying off the plan.  Values may go down substantially between contract and settlement, but you still have to settle.  And if you don't, then you are in big trouble.

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