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LAW 1511 Property Law

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Case Study

In 2014, MPP purchased a parcel of land in South Yarra with the intention of developing 295 apartments. MPP obtained a planning permit and completed the building in October 2016. To date 45 apartments have been sold. Of the remaining lots, Lots A, B, C, D and E are to be rented out as residential apartments. Leases have been signed. Jane rented Lot C. She moved into the apartment on 30 February 2018. Jane noticed that the shower head in the bathroom was not working properly, and noted this on the condition report. The shower head began to leak quite badly one month after Jane moved in and she contacted the letting agent, Rogers Rentals, on 26 May 2018 but has not heard back from them regarding how to repair the leak and who should pay. On 5 July 2018 Jane had to urgently fly to London. Her mother was suddenly taken ill and she expected to be away for two months. Jane asked her friend Sim to move in to the apartment. Sim agreed to live in the apartment whilst Jane was away. As Sim was in between homes, Sim agreed to pay rent to Jane whilst Jane was away, and Sim explained that she could only 'housesit' for 5 weeks. Jane was delighted with this arrangement as her lease with MPP set the rent at $400 per week, and Sim's rent would help Jane pay the monthly rent. Jane forgot to tell MPP that Sim had moved in whilst Jane was overseas. A week after Jane left, the gas cooker ceased to operate and Sim had to cook dinner on the BBQ located on the balcony. On a very rainy day in early August, Sim decided to shift the BBQ indoors. Whilst cooking her steak, and whilst Sim was on her mobile, a small coal from the BBQ inadvertently dropped on to the carpet and burnt a large hole in it. Sim contacted Rogers Rentals and asked them to repair the carpet, and to not tell Jane what had happened. Rogers Rentals inspected the property the next day and saw not only the burn mark on the carpet in the lounge, but also smaller burn marks on the carpet in the bedroom. Both Sim and Jane enjoy a good cigar, and often smoked these on Saturday nights. Rogers sends Jane a bill for $1,000 to replace the carpet in the lounge and the bedroom, as well as a copy of Condition 25 in the lease (The apartment is a smoke free zone). Jane opens up her mail in October 2018 and is annoyed to see this bill. She and refuses to pay Rogers Rental because Jane was overseas when the alleged damage occurred. Jane tells Rogers that Sim will pay the bill. 


1: Should MPP pursue Jane or Sim for the $IK? 

Prior to completion of the development, MPP decided to sell Lot 34 off the plan. They approach their solicitors and a contract of sale was drawn up. Sam Sales Pty Ltd was appointed the real estate agency to market the property. Sam Smith sells real estate as a hobby, as he is now retired. Sam commences a sales campaign. Kohn is interested in purchasing a modern apartment and Sam tells him that MPP have on their books ‘a city style pad’ in South Yarra. Kohn was very impressed by the sales pitch put to him by Sam. Kohn, is too busy to inspect the property, and relied on the advertising and sales information provided by MPP and to a lesser extent, the pitch put by Sam. Kohn decided to do his own conveyancing, having obtained a do it yourself kit from the post office. The deal breaker for Kohn to close was the advertising brochure which promised "a beach-like 50M pool on the roof", and as Kohn enjoyed swimming, he knew the place was just right. MPP was never able to secure planning permission for a 50M pool, and placed in all of their advertising material a "subject to planning approval" clause regarding the pool. An arrangement was in fact struck with Council for 3 x rooftop spas, but the advertising material prepared by Sam continued to show pictures of a large rooftop pool. After the development was built, and settlement had gone though, Kohn as the new apartment owner demanded an explanation from Sam as to why there were spas, not a 50M pool, on the roof. Sam told Kohn that MPP had hoped for a large pool to be built, but as this was purely a "sales puff", Kohn had to accept that there was no pool. Kohn is angry and says he would not have purchased the apartment, but for the representations made to him that the 50M pool was going to be on the roof.

2 : (a) Can Kohn return the apartment to MPP? 

(b) Consider what assurances were actually made to Kohn, by whom, and whether they were 'mere puffs' 

(c) What remedies might be available to Kohn against Sam and MPP? 
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