A buyer who snapped up an off-the-plan buy of the prestigious four-floor penthouse atop Soul in April 2006 claimed he only agreed to the $16.85 mil price tag in reliance on the selling agent’s representation that an inferior property had gotten its developer $3 mil more.
Carmelo Caltabiano’s first encounter with the unit was a meeting with Justin Daniels at the developer’s Cavill Ave sales office.
That’s when he notified the agent – on his account – that any offer he might make would be conditional on the developer, Juniper, satisfying him that the ask price was “reasonable value”.
Two days later Daniels is said to have told Caltabiano by phone that the penthouse at Jade – a smaller beachfront development about 300 m to the South “flanked by two buildings that impacted on the view” – had been sold for $20 mil.
Daniels is also claimed to have spruiked the Q1 penthouse – nearby too, but with only “half the floor area” of that at Soul – as having been sold in 2002 for $7.8 mil.
Without thinking to confirm those representations in writing or doing his own research, Caltabiano – “an experienced and astute businessman who had built up a $100 million business” – signed an offer to purchase which was converted to a contract in July.
Caltabiano failed to complete as settlement came due in August 2012 and again in March 2014 when Juniper – by then in receivership – forfeited the $1.68 mil deposit and made its final demand for the delinquent purchaser to stump up with the balance.
The 1043 m² penthouse was finally re-sold in April 2015 for just $7 mil with both sides alleging they were entitled to terminate the deal by reason of the other’s misconduct.
Had Daniels made the representations as claimed? Were they untrue? And if so, had the buyer relied on any of them?
Those were the issues that came before Justice David Jackson in Queensland’s Supreme Court as the receivers pursued the buyer for its re-sale loss of $8.817 mil (after crediting the forfeited deposit) plus interest totalling a whopping $5.315 mil.
As it happened, the Jade penthouse hadn’t fetched $20 mil. Its sale didn’t even occur until 2012 and then only at a far more modest $7 mil. And the floor area of the Q1 penthouse was 951 m², far greater than “half the floor area” of that at Soul.
Daniels denied he made any representation about the relative floor areas at Soul and Q1. That was enough to sink the buyer’s case on the Q1 representation he alleged.
But under oath, Daniels admitted to having been of the understanding in 2006 that the Jade property had been sold for $20 mil and that he had told the purchaser of it “being–going for $20 mil” and of its smaller size and being flanked by other buildings.
Despite his QC urging this evidence was a patent admission of the buyer’s contentions, the court was not prepared to accept that all this added up to Daniels supporting Caltabiano’s own sworn evidence about what he had been told.
Rather, Justice Jackson deferred to “contemporaneous notes” of a meeting between the receivers’ solicitors and Daniels 12 months earlier that suggested Daniels “can’t have told him that the Jade penthouse was sold and must have [only] told him it was on the market”.
He thought it remarkable that Catalbiano only raised the misrepresentation issues when he filed his defence and counterclaim in 2014.
“That seems a remarkably long period from when the contract was entered into. The global financial crisis both came and went in the meantime”.
His case wasn’t helped by an email he sent to his solicitors in 2012 stating that “the strategy is to have a smoking gun to pressure the receivers” to reduce the price.
Even if the misrepresentations had been made as claimed, Justice Jackson ruled that “it is commercially illogical and inherently improbable that in deciding upon a $16.85 mil purchase, the buyer would not have obtained external advice as to the value of the penthouse” but rather relied upon the sales consultant’s comparisons with properties that he knew nothing about.
“This is where the defendant’s story is incredible,” he wrote.
Judgment was entered in favour of the receivers for $14.132 mil plus costs – more than twice the 2015 value of the property – with the hapless buyer not getting a single brick from the property in exchange!