Introduction

Imagine this, after considering the various housing options you decide you want an apartment in the heart of Auckland City. You want to be close to the action.  It’s central, a perfect base, a long term investment!  The city has many beautiful views so you want to be elevated to take advantage of the opportunity for that. You spy a brochure which covers the key aspects of your search.  The apartments are not built yet but the glossy publication promises classy central city living, and that view.  Once you have signed up and the building has been constructed, you walk in and discover that a roof is obstructing your priceless view!

A Misrepresentation

The key question for the court in the case that followed this disappointing discovery by the purchaser was whether the misrepresentation made in the brochure meant that the agreement to purchase could be cancelled.  Alternatively, would the Court require the purchaser to pay over the purchase price and buy an asset that did not live up to the initial expectations?  The Court in this case said settlement must proceed. 

The Agreement and Plans/Specifications

After the “tease” in the original brochure, came the actual agreement for sale and purchase with detailed plans and specifications. These, when taken as a whole, showed the existence of the roof in front, and fully disclosed the exact situation.  The agreement included the standard provision that once signed, the agreement was the binding and complete legal arrangement between the vendor and purchaser. 

In other words, the brochure was not to be taken into account when finally deciding what the terms of the contract were.  As the purchaser had the opportunity to take any legal or other advice available prior to signing, there was no reason, in the Court’s view, why the contract should not stand.  The Court ruled that the settlement must proceed.

Conclusion and Warning

In the excitement of the purchase, who would have given a thought to the roof next door, particularly as nothing was constructed at the date of signing. In hindsight, the warning is clear and the principle applies to every signed sale and purchase agreement.  Before you sign, obtain all the advice you can, because prior representations will usually not be a relevant factor.  In this instance, not only legal advice was required, but specific architectural advice regarding the plans and specifications was also needed.