Ever wondered what happens when a developer is incapable of delivering a purchaser’s dream apartment it has already purchased?
 
Last week in the Federal Court, Justice Anastassiou found that a developer had been “deliberately” misleading and deceptive when it informed the purchasers their off-plan apartment was impossible to build….. 2 years into construction.  
 
Zervos Lawyers, led by Principal, Nicolas Zervos and Senior Associate, Anthony Ghabrial acted for the successful applicants in this case where the court ruled that the $9.58 million purchase contract be revoked on the basis the developer had mislead the Purchasers.
 
The case involved purchasers entering into a contract to purchase an off the plan apartment in Melbourne for nearly $10 million.
 
The ‘hero render’ of the apartment, which was pitched by the developer to the purchasers, included breath-taking renderings showing a large opening connecting indoor and outdoor space. Representations were also found to have been made by the Agent on behalf of the developer with respect to the artist impressions of the apartment prior to the purchasers entering into the contract of sale.  
 
It was not until 2 years into the construction when the developer delivered the bad news, construction of the purchasers’ dream apartment was actually impossible. The ‘hero render’ could not be constructed for design and engineering reasons. 
 
After a lengthy 12 day hearing in the Federal Court in early 2021, it was last week when judgement was finally delivered by the court.
 
The court ruled in the purchasers’ favour, deciding the developer has engaged in misleading and deceptive conduct in respect of the purchasers’ reliance on the developer’s representation in respect of the ‘hero render’, which ultimately led them to enter into the contract of sale.
 
The court found that the developer has previously received advice from its architects, however had failed to inform the purchasers, that the ‘hero render’ was impossible to construct. 
 
The decision of the court is a timely reminder for developers and agents to ensure they refrain from any misleading representations to entice purchasers.
 
The developer has subsequently lodged an appeal which shall be heard in court at a later date.  We shall keep you informed of any further developments.