A five-year dispute over the botched sale of Albert Park's Beach Hotel has ended in a new legal precedent that apparently limits what information vendors are compelled to disclose about tenancy agreements when marketing a property.
Businessman Steven Vouzas refused to settle on the $11 million Beaconsfield Parade property, alleging he had been deceived about Collingwood Football Club's plans to continue to run the hotel.
But the Supreme Court found it was not misleading to advertise the Beach Hotel with "a long lease to a AAA tenant" even though owners Bleake House Hotel Pty Ltd knew the club had already entered an agreement to sell their leasehold to a new operator.
"A reasonable buyer in Vouzas' position would appreciate that there could be no certainty Collingwood would always remain tenant," Justice Cameron Macaulay said.
The hotel was put on the market in September 2008, with the lease to the Pies due to expire in 2021. Not disclosed in the vendor's statement or marketing materials was that a "heads of agreement" had already been signed to transfer the leasehold to well-known hospitality operator Ricky Munday.
Mr Vouzas, claiming he was enticed into the deal based on a verbal and written "classic half-truth" about the leasing arrangements, sued Bleake House and estate agents Kelemen Commercial to recover the deposit and costs.
But the court ruled there was no legal obligation for a vendor to disclose what amounted to only a "conditional" lease assignment.
Justice Macaulay also found that Mr Vouzas was "aware of the possibility" that Collingwood might transfer the lease due to discussions he had with the estate agent, his own solicitors and media reports at the time.
"Whether he knew that possibility existed because a conditional agreement had been signed, or on some other basis, makes little practical difference," the judge said.
"Bleake House correctly represented the existing lease position which, of itself, did not and would not have conveyed anything to a reasonable purchaser about the prospect of Collingwood continuing to be the tenant of the premises."
Justice Macaulay also found Mr Vouzas' "probable reason" for seeking to avoid settlement was his inability to obtain finance rather than his allegations about deceptive conduct. He was ordered to pay $500,000 in damages. Ricky Munday never completed the leasehold transaction with Collingwood and his pub group collapsed in early 2010.