Merost Pty Ltd v CPT Custodian Pty Ltd

Merost Pty Ltd brought an action against CPT Custodian Pty Ltd in the Federal Court of Australia, alleging misleading or deceptive conduct under section 18 of the Australian Consumer Law. The claim arose from the sale of a shopping centre in Launceston, Tasmania, where the vendor provided an incorrect breakeven figure for the calculation of percentage rent in a sales information memorandum. Merost argued that this misrepresentation misled them into purchasing the shopping centre at a price that did not reflect its true value. CPT Custodian denied the allegations, asserting that the misrepresentation was not misleading, that Merost did not rely on it, and that any loss incurred was due to Merost's own contributory negligence. Additionally, CPT Custodian contended that Merost's solicitors were concurrent wrongdoers, which would reduce CPT Custodian's liability.

The court needed to determine if the incorrect breakeven figure constituted misleading or deceptive conduct under section 18. This required examining whether the misrepresentation was misleading or deceptive in all the circumstances and whether Merost relied on it. Furthermore, the court had to assess if Merost was indifferent to the representation and if CPT Custodian's liability should be reduced due to the actions of Merost's solicitors. In assessing damages, the court considered whether they should follow the principles applicable to deceit, and if so, how contributory negligence should be treated. The court also needed to decide if Merost's solicitors were concurrent wrongdoers.

The court found that the information memorandum was misleading or deceptive because it did not accurately reflect the breakeven figure required for calculating the percentage rent, which was a critical aspect of the shopping centre's financial performance. The detailed nature of the information memorandum and the reliance of potential purchasers on the professionals involved lent weight to the argument that the misrepresentation was misleading. The court also held that Merost relied on the information memorandum in making their offer to purchase the shopping centre. The court rejected the argument that Merost was indifferent to the breakeven figure and found that Merost's reliance on the information memorandum was reasonable given the circumstances. The court determined that Merost's solicitors were not concurrent wrongdoers as their role was limited to the negotiation and conveyance of the sale, and they were not involved in the title search. Regarding damages, the court awarded Merost the difference between the real value of the shopping centre and the price paid, considering the contributory negligence of Merost by reducing the damages by 20 per cent. The court made no reduction for the conduct of Merost's solicitors.

The court ordered CPT Custodian to pay Merost $260,000 in damages. The question of any consequential orders, including costs, was reserved.