The case of Merost Pty Ltd v CPT Custodian Pty Ltd involved a conveyancing transaction in which the applicant, Merost, purchased a shopping centre from the respondent, CPT Custodian Pty Ltd (‘Centro’). Prior to the sale, a memorandum was distributed to all prospective purchasers which included details of the shopping centre, and specified the base rent and percentage rent for Kmart (the major tenant) as contained in the lease, but the breakeven figure recorded was erroneous. The contracts for the purchase of the shopping centre were exchanged before the director of Merost learned of the variation of the lease. Merost claimed that Centro had engaged in misleading and deceptive conduct under s 18(1) of the Australian Consumer Law. Centro denied this, and claimed that Merost did not rely on that representation in its decision to purchase the shopping centre.
The Court considered the surrounding circumstances of the transaction, and decided that the representation was misleading and deceptive because the erroneous statement of the break-even figure was provided in the information memorandum and in a document contained in an electronic data room. However, the Court accepted that Merost was contributorily negligent because it did not personal review the relevant title search which would have revealed the variation. Thus, the damages payable by Centro were reduced by 20%. This case demonstrates the importance for vendors to ensure that information disclosed to prospective purchasers are accurate, to preclude claims of misleading and deceptive conduct from arising against them.