A developer who defaulted on the purchase of a $25m condominium project at the historic Albion Flour Mill site has been ordered to pay the vendor millions in compensation for the collapsed deal.
Fridcorp Group – operated by developers Paul Fridman and Chris Roche – signed up to buy the 12 lot FKP site in July 2015.
The company’s $400m “Odyssey” development was to consist of two 20-storey buildings totalling 634 residential units.
Council approval was received in August 2016, but in December the deal was pulled.
Fridcorp alleged FKP failed to disclose all required information, which, by their claim, breached statutory environmental protection rules.
But all necessary reports were available via a virtual “data room” that both parties had access to prior to signing the contract.
FKP sued in Brisbane’s Supreme Court for the difference between the sale price and the site’s diminished value as at the due date for settlement.
Justice David Jackson had no difficulty in ruling that notice had been duly given, because Fridcorp had specifically consented to documents being disclosed by way of the mutually accessible “data room”.
Justice Jackson said the use of the online platform satisfied all legal requirements and dismissed Fridcorp’s attempts to justify its withdrawal from the deal.
It was irrelevant, he reasoned, that the requisite contamination notice was one of scores of documents deposited into the data room because it was clearly titled and easily available.
Valuer Troy Linnane, head of residential development at Jones Lang LaSalle, argued by comparison with other developments in Bowen Hills and Newstead that the site’s value in December 2016 had dropped from $25m to $17m.
He then reasoned that by March 2017 the value had collapsed further to $15.75m.
Justice Jackson thought that to be too much of a stretch as such a conclusion was “unsatisfactory” and “inconsistent”.
There were also unresolved questions as to why the valuer rated an inferior comparison site at a far higher dollar rate per square metre than the Albion Mills site.
That said, the value drop to $17m was taken as reasonable conclusion, yielding a value collapse over just 18 months of $8m or 32%.
Given that a deposit of $2.75 mil had already been paid, the Fridcorp Group was ordered to pay $5.25m plus interest – a total of $5.46m – for what was ruled to be a serious contract breach.
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