MISREPRESENTATION – A WARNING TO AGENTS AND VENDORS

A dispute lodged by buyer of a $2.5 million dollar unit in Brisbane’s prestigious Riparian Plaza has landed a real estate agency into an awkward position. After failing to convince the court that 100% of the loss suffered by the buyer, due to the agent’s promises, should be borne by the vendors; the agent and the vendors have been held severally liable for damages.

The agent was instructed by the vendors of the apartment to market and advertise the property as having three car spaces although in actual fact there were only two and a storage space. The agent, in closing the $2.5million purchase deal, personally guaranteed to the buyer that the concrete plinth in the storage area would be removed to create a third parking space. The body corporate refused to allow any such alterations as development approval did not grant the use of the storage space for parking; however evidence showed that the body corporate allowed the works informally.

It was argued that the agent’s promise to personally remove the plinth induced the buyer into the Contract with him sending an email to her confirming that the concrete would be removed prior to settlement to create three car spaces.

The buyer became aware of the issues regarding the removal of concrete plinth to allow a third parking space and delayed settlement noting that the vendors had not removed the plinth prior to settlement as promised. It was only when the vendors threated proceedings against the buyer for specific performance that she settled.

Following which the buyer commenced proceedings against the agency seeking damages for misleading and deceptive conduct and the loss as a result of the property, only have two parking spaces. After hearing evidence and submissions the court upheld the buyers claim that she would not have entered into the Contract had she known approval would not have been granted for removal of the concrete plinth.

The agent asserted that responsibility for any loss suffered by the buyer should be apportioned entirely to the vendors as they had knowledge of the development approval impediment and had forced completion of the Contract. The Contract did not allow a right for the buyer to terminate and the entitlement to terminate fell under Section 87CD of the Trade Practices Act (TPA) (now the Competition and Consumer Act 2010) which deals with proportionate liability for misleading or deceptive conduct. The owners were held by the court to be parties to the breaches under the TPA and were also held to be liable.

The agent was separately liable for his personal guarantee/promise under then section 38 of the Fair Trading Act 1989 (Qld) and he was severally liable for the damages. The court determined the value in the difference of the car space to be $250,000.00 which including stamp duty and costs came to a total of $312,000.00. As “concurrent wrongdoers” there was no apportionment of shares of liability among them, rather the vendors and their agent were each liable severally, meaning that the buyer can recover 100% of her judgment against any defendant.

On appeal the court upheld the finding of the trial judge that there be no apportionment of liability between the vendors and agency.