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What happens when the real-estate brochure doesn't tell the truth. |
Inaccurate information in a real-estate agency brochure advertising a residential property for sale thwarted the purchasers' plans to develop. But the agency was protected by its disclaimer clause. |
The purchasers who bid at the auction of a substantial waterfront property in Sydney's northern beaches, after completing inspections with expert advisers, were in for a nasty shock. They had decided that the property could be developed as an investment property, with plans which included realigning the swimming pool at the rear of the property and constructing a substantial entertainment area. |
The real estate agency had prepared a glossy brochure for the sale, based on information from the vendor. It included a survey diagram obtained from the vendor's solicitors which appeared to show a rear boundary fence on the water side of the swimming pool, and the highwater mark beyond. |
However, the diagram was inaccurate, and the purchasers were subsequently advised that they would not be permitted to realign the swimming pool. |
Ultimately, they obtained a court order for the return of their deposit plus interest from the vendor, and sued the real estate agency for misleading or deceptive conduct. |
The agency argued that it was simply passing on information about the property from the vendor, and specifically pointed out its disclaimer. This appeared on the front and back of the brochure and read, "All information contained herein is gathered from sources we deem to be reliable. However, we cannot guarantee its accuracy and interested persons should rely on their own enquiries". |
The judges observed that the purchasers were "intelligent, shrewd and self-reliant", and had engaged "appropriate professional advisers"; with that, and the words of the disclaimer, they considered it would have been plain to a reasonable purchaser that the agent was not the source of the information said to be misleading. |
Situations where a company will not contravene the law when it passes on wrong information are:
- where the circumstances make it apparent that the company is not the source of the information and is merely passing it on;
- where the company, while believing the information, disclaims personal responsibility, for example by disclaiming personal knowledge; and
- where the company, while believing the information, ensures that its name is not used in association with the information.
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