Paul Arena has a dream to open a five star hotel/motel in the heart of Fantasia Valley, approximately 50 kilometres north-east of Melbourne. Paul stumbles across this advertisement, which appears in the Fantasia Valley News: "A wonderful opportunity is just waiting to happen. Chateau Royale is a luxurious hotel consisting of 10 double bedrooms with spa ensuites, restaurant and living quarters for the owners. Situated at the heart of Fantasia Valley, this place is heaven on earth. It is for private sale only. Contact the vendor direct. Price is $7.5 million with terms negotiable. David Gooroo Pty Ltd." Paul is very interested and excited at reading this advertisement. He meets with David Gooroo (director of David Gooroo Pty Ltd) on 1 March 2013. At this meeting, Paul explains to David that he is looking for a five star hotel/motel in the Fantasia Valley, where guests can stay in luxurious accommodation and wine and dine on local organic produce. He informs David that he needs a hotel/motel complex that, with his hard work, will return him a profit of at least $30,000 per month. David responds enthusiastically that Chateau Royale is a "real little goldmine" and that with hard work, will return at least twice the amount mentioned by Paul. Paul likes what he hears and is anxious to view Chateau Royale straight away. Both Paul and David meet the following day at the Chateau Royale and an inspection of the complex is undertaken by Paul. He loves it. He is impressed with the architectural features of the complex and the magnificent rolling hills and organic vegetable garden and vineyard surrounding it. Paul is also impressed with the private living quarters as well as the 10 double bedrooms with spa ensuites and the tastefulness with which the rooms have been decorated. Paul is even more impressed when David informs him that he (David) did most of the decorations himself and that four of the double bedrooms are only 2 years old. David realises that Paul is very impressed with the physical beauty of the entire hotel/motel complex. He is moved to tell Paul that "it is a great business as well". When Paul enquires as to the takings from this "great business", David informs Paul that he is "making about $25,000 per month" but adds that "not much effort in promoting the business" had been made over the last 12 – 18 months. David in fact reiterates that the business can earn significantly more with proper promotion. David would have been happy to show Paul the "book of accounts" regarding the business, but unfortunately, they are no longer available due to a large fire at the office of David's accountant. Paul is very excited at the whole prospect of a business venture in the Fantasia Valley. Soon after the meeting with David, he researches the tourist industry in the Fantasia Valley via the internet and gathers information from the Department of Tourism, the Major Project Office and the Fantasia Valley Shire Council. He carefully makes the necessary calculations and concludes that the complex could easily achieve the targeted profit of $30,000 per month. Paul and David enter into a contract for the sale and purchase of Chateau Royale for the sum of $6.5 million. The date of the contract is 2 April 2013 with final settlement occurring on 2 July 2013 whereupon Paul took possession of the complex and settlement monies paid. Paul's bubble was about to burst. Shortly after taking possession, Paul notices a vile, nauseating smell wafting over the Chateau Royale at least one or two days per week. On each occasion that this occurs, at least one set of guests make a complaint and leave. Upon enquires, Paul learns that there is a large abattoir only 2 kilometres from the complex, and that when there is a northerly wind, the smell from the abattoir travels in the direction of the Chateau Royale. But problems for Paul don't end there. He receives a visit from the Fantasia Valley Shire Council's building inspector. He informs Paul that unless the "4 double bedrooms" are demolished within 7 days, Paul will be fined $1000 per day for the period that those 4 double bedrooms remain erected. It seems that the council had refused to grant David a "satisfactory" completion certificate for the works carried out at the complex. Apparently, the building of the 4 double bedrooms had been carried out without David obtaining the necessary permits and in any event, the work did not comply with proper building standards and is contrary to uniform building regulations that applied to works of that type. Paul is horrified at this news. The building inspector is extremely surprised that David did not mention to Paul that there was no completion certificate issued. The building inspector informs Paul that this issue about the buildings "was common knowledge" in the Fantasia Valley. It will cost Paul $750,000 to demolish the existing 4 double bedrooms and construct new ones in accordance with relevant regulations. Paul continues to run the business whilst the demolishment takes place. He struggles to make $5000 per month, a long way from the $25,000 per month David promised Paul that the business would make. Extremely outraged by what has occurred, Paul contacts David demanding answers to all these problems. Paul exclaims: "You cheating liar. Why didn't you tell me that there was no satisfactory completion certificate with respect to those 4 bedrooms? I thought it was a 10 room hotel and then I find out that the capacity is almost half that! All up, I'm making a profit of about $5000 per month, whereas you told me you were making a profit of $25,000. You must have been lying, as it simply would not be possible to have made that much. And that abattoir! Why didn't you tell me about that? My guests have been leaving in droves because of the smell. David responds coolly, telling Paul that he had told him the hotel made about $25,000 a month, which it did. "But of course that is the gross sum, and after payment of tax and overheads, the profit comes to about $4,500. Any fool with a basic knowledge of business would understand that". Soon after this conversation, another council inspector comes to Chateau Royale to carry out a routine test of the soil. The results reveal that the soil has an unacceptable level of lead, making it impossible for Paul to maintain an organic vegetable garden. This is the last straw for Paul. He consults you for advice. During the consultation, Paul produces the Contract of Sale that has been executed by both parties. The relevant terms are, inter alia, as follows: (i) "Vendors: David Gooroo Pty Ltd of 15 Collins St. Fantasia in the State of Victoria (ii) Purchaser: Paul Arena, 1 Aden Court, Fantasia in the said State. (iii) Property: 'Chateau Royale Hotel/Motel' complex,1512 Midlands Highway, Fantasia Valley in the said State and more particularly described in Certificate of Title Volume 51056 Folio 20351 (iv) Erected on the said parcel of land is a hotel/motel complex fully operational and conducted for the purpose of providing "a stress free" environment for guests; (v) The hotel/motel comprises 10 double bedrooms with spa ensuites, restaurant and living quarters for the owner; (vi) The gross takings for the business conducted at the Chateau Royale are not less than $25,000 per month and the net takings (after making allowance for overheads and tax) are not less than $4,500 per month; (vii) Any construction work carried out by the vendor at the Chateau Royale have been carried out in accordance with local planning laws and building regulations of Fantasia Valley Shire Council; (viii) The parties do hereby agree that this written agreement represents the sole repository of the agreement reached by the parties and that no statements, representations or opinion given by the vendor to the purchaser which have not been incorporated in this contract of sale shall have any legal force or effect. (ix) The Purchaser shall make its own enquiries with respect to the gross and net takings of the business conducted at the Chateau Royale and satisfy itself as to the accuracy or otherwise of the stated amounts; further, the purchaser will conduct his own title searches and obtain copies of all planning permits, building inspection reports, soil reports and certificates of completion at his own expense from the relevant Shire Council; (x) The vendor shall not be liable for any loss or damage suffered by the purchaser as a result of the breach or otherwise of this written agreement. The purchaser further releases and forever discharges the vendor from any claims, suits, demands or any other form of legal action whatsoever with respect to this written agreement." Paul contacts you and seeks your advice with a view of possible legal action. REQUIRED TASK (i) Identify, explain/discuss and decide eight (8) issues that affect the rights and obligations of the parties in the factual scenario above. IINSTRUCTIONS FOR STUDENTS IN COMPLETING THE ASSIGNMENT 1. The assignment is to be completed individually; 2. The assignment is to be submitted, in hard copy format, to the unit chair Sam Cusumano no later than Friday the 23rd of January, 2015. No extension is to be granted beyond this date save and except for exceptional circumstances. You are to include in the cover sheet of the assignment the name and address of the person to whom the assignment is to be returned after assessment. 3. The address to which the assignment is to be sent is as follows: Sam Cusumano, Deakin University Law School, 221 Burwood Highway Burwood Victoria, 3125 4. This assignment will have a value of 40% towards your final assessment. 5. The assignment is to be no more than 3000 words in length and is to be presented in the following format: Assignment Style: • Font: Times New Roman/Calibri ; • Font size: 12pt ; • Line spacing: Double spacing.