Barry Nilsson Lawyers Insurance & Health Associate Chris discusses the decision in Hyder v McGrath Sales Pty Ltd  NSWCA 223 which found that the respondent real estate agent did not engage in misleading or deceptive conduct in relation to the availability of parking on a battle axe block. Potential buyers should ensure that all necessary investigations and due diligence be undertaken to a level that would be expected of a reasonable person in the circumstances, he writes.
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.
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.
Chris Evans is an associate in the Barry Nilsson Insurance & Health team. He joined the Adelaide office in May 2017, having spent over four years practising at other leading insurance firms in Sydney. Chris says: “What’s great about Barry.Nilsson. is that it has a really strong ‘one firm’ culture; providing support and guidance across all offices. Everyone is approachable and willing to assist.” At Barry.Nilsson., Chris acts for both domestic and international insurers and specialises in claims relating to: Public liability, Personal injury, Professional indemnity, Property damage. Chris adds: “I enjoy working in the insurance sphere due to the wide variety of work. Each and every claim has its own distinct factual circumstances. It is always rewarding when a favourable, cost-effective outcome is achieved for the client as a result of the thorough investigation into the circumstances of the claim. I enjoy working with insurers as they are typically highly sophisticated clients with exceptional working knowledge of legal principles.” Chris has a Bachelor of Environmental Management with Bachelor of Laws (Honours). Contact Chris at firstname.lastname@example.org or connect via LinkedIn