Agent’s pre-sale statements about parking availability on battle axe block not misleading Agent’s pre-sale statements about parking availability on battle axe block not misleading

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Agent’s pre-sale statements about parking availability on battle axe block not misleading

23 October 2018 | Real Estate Agents' Negligence

In a unanimous decision, the NSW Court of Appeal has affirmed that the respondent real estate agent did not engage in misleading and deceptive conduct in relation to alleged pre-sale misrepresentations concerning the availability of parking at the applicant’s property.

The Background

In February 2015 the appellant completed the purchase of a residential property in Bellevue Hill, Sydney, for $9.4 million. The property had a shared driveway with a strip which the appellant understood allowed for private parking for her property. A right of way however existed over the strip of driveway in question. Soon after moving in, the appellant became aware that she did not have the exclusive right to park in the driveway.

In April 2016 she commenced proceedings in the Supreme Court of NSW against the respondent, the vendor’s real estate agent, claiming damages for misleading and deceptive conduct in relation to alleged pre-sale misrepresentations concerning the availability of parking on the shared driveway.

The Decision at Trial

The proceedings in the Supreme Court were dismissed by Parker J who concluded that whilst there had been misrepresentations by the respondent that constituted misleading and deceptive conduct, he was not satisfied that the conduct caused the appellant any loss (as there was no evidence to suggest a proper understanding of the parking arrangement would have made a crucial difference to the purchase).

Had the appellant been successful at first instance, the court would have assessed her damages at $150,000 plus the stamp duty paid on the excess purchase price. These damages would have been reduced by two thirds due to the appellant’s contributory negligence in failing to seek specific professional advice regarding the right of way.

The Issues on Appeal

The issues on appeal related to the trial judge’s conclusions on causation, the valuation of the property and contributory negligence.

By a Notice of Contention, the respondent sought dismissal of the proceedings on the alternate ground that a reasonable purchaser in the position of the appellant would have understood that any representations made by the respondent merely amounted to the passing of information provided by the vendor.

The Decision on Appeal

The Notice of Contention was upheld and the appeal dismissed.

The court held that reasonable purchasers in the position of the appellant would have taken from their property inspection, the marketing material and their communications with the respondent that the information provided in respect of parking was obtained from the vendor and that the respondent was merely passing on information obtained from another.

Noting that the appellant and her husband were sophisticated people buying an expensive property to live in, the court considered that the appellant could reasonably have been expected to obtain legal advice rather than relying upon the communications of the respondent in ascertaining the entitlements related to the parking. At no stage did the respondent profess any legal or valuation expertise to allow the appellant to believe otherwise.

As a result the respondent real estate agent did not engage in misleading or deceptive conduct.

Implications for you

This decision reaffirms previous authorities in relation to misleading and deceptive conduct. The court is entitled to consider all relevant factors including the knowledge, experience and education of the aggrieved persons compared to what a reasonable person would do in such circumstances. Prospective purchasers ought to ensure that all necessary investigations and due diligence be undertaken to a level that would be expected of a reasonable person in the circumstances.

The case also reinforces the importance of a plaintiff being able to demonstrate the causative link between the conduct which “in its nature is persuasive to induce” entry into a contract, and the actual loss as a result of that conduct.

Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223

Chris Evans

Chris Evans

Associate