Commonly, a misrepresentation that is not fraudulent may lead to the avoidance of a contract and a refund of any deposit paid if:

a.     the misrepresentation was material and substantial and,

b.    not for the misrepresentation a purchaser might never had entered into the contract at all.

This is called the Flight v Booth rule and was relied upon in, Fankel and Another v Paterson and Another [2015] NSWSC 1307, a recent case where the plaintiffs argued that there was a misrepresentation in the contract.

The plaintiffs argued that they would have never purchased a strata title unit but for the impression they received upon the site inspection of a garden which formed part of the common property . However, following exchange and prior to completion there were substantial changes to the garden area including the removal of trees and shrubs and, the existence of a large dog that now roamed the garden area.

The Court found that even if there was a misrepresentation, it occurred prior to the exchange therefore, the Flight v Booth rule did not apply in this case. There was nothing in the contract which referred to the use of the garden and the agent never made a representation with respect to the garden which had contractual effect. Furthermore, the court ruled that the actions of a third party in relation to the common property would not deprive the purchasers from enjoyment of the property.

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