Mirvac loses Tennyson Reach apartment sale on disclosure statement family security slip-up

In a decision that went against its impressive run of recent wins, Mirvac failed last week to successfully appeal a termination of a 2007 off-the-plan apartment sale in its Tennyson Reach development.  At the time of sale Mirvac had provided a BCCMA disclosure statement which among other things listed out the proposed assets of the body corporate.

For reasons that are not clear in the judgment, in August 2009, it issued – as required pursuant to s  214 of the BCCM Act –  a further disclosure statement to rectify inaccuracies in the original statement.

The second disclosure statement mistakenly omitted to include the CCTV security system as a body corporate asset.

Within the 14 days allowed, the buyer terminated the contract on the basis that she had been materially prejudiced because the absence of the security system in her apartment which was adjacent to a public road and the Queensland Tennis Centre. This, she asserted, gave her and her family a “heightened sense of vulnerability to unlawful attack”.

Mirvac’s solicitors promptly notified the buyer that there had been “an oversight” in the second disclosure statement and that the CCTV system was indeed to be included as a body corporate asset.

Mirvac sued for specific performance on the basis that, because the CCTV was a body corporate asset all along, there had never been any inaccuracy in this respect regarding the original BCCM disclosure and therefore the buyer had no entitlement to terminate pursuant to s 214 (1).

The Court of Appeal ruled that the buyer was entitled to regard the most recent statement as the “warranted information” (even though it was erroneous) and was permitted to act on it.

The evidence established that the existence of the security system was important to this particular buyer and could, on an objective basis,  be seen to be very important for herself and her family. Mirvac had also highlighted the security system as part of its marketing effort.

Thus the Appeal Court upheld the first instance decision that the buyer was entitled to consider the stated absence of the security system as a “material prejudice” entitling her to terminate. The fact that the buyer could not prove exactly how the lack of the security equipment could constitute a material prejudice was irrelevant.

Mirvac Queensland P/L v Wilson [ 2010] QCA 322