Gold Coast Real Estate Agency Ordered to Pay Compensation to Buyer Reliable
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GOLD COAST REAL ESTATE AGENCY ORDERED TO PAY DAMAGES TO BUYER FOR FALSE AND MISLEADING REPRESENTATIONS

On the 19th May 2017, the Supreme Court of Queensland in the matter of Makings Custodian Pty Ltd v CBRE (C) Pty Ltd (2017) QSC 80 handed down a decision in which it found that a leading Gold Coast Real Estate agency was responsible for false and misleading representations contained in an Information Memorandum (IM) prepared by the agency on behalf of their vendor client in respect to the sale of a shopping centre.

The plaintiff Makings contracted to purchase a shopping centre managed by CBRE and sold by a separate real estate agency. The plaintiff argued that he relied on representations contained in the IM prepared by the selling agents, on information provided to the selling agents by the managing agents. The case involved the making of representations, in person, via email and through an IM, as to rental income and expenses which representations were found to be false and misleading.

The IM contained a disclaimer which provided that (i) the information was given “without responsibility”, and (ii) that the purchaser should not rely on the information but satisfy themselves as to it and any conclusions, and (iii) that the agency gave no representation, warranty or undertaking as to the accuracy of the information.

The selling agents attempted to rely on this disclaimer in its defence, however Dalton J of the Qld Supreme Court noted that the clauses were located in an annexure at page 38 of 39 of the IM were “not effective to alert a reasonable person in the buyer’s position that the information in the IM was merely being passed on from the vendors”. The Judge made the finding that the disclaimer was insufficient to “erase the effect of the representations made”.

Her Honour went on to say that this was particularly so given that the selling agent prepared the document and their branding was on the IM and appeared frequently and regularly throughout the document. Her Honour further noted that the selling agent was a large and extremely experienced agency.

The judge also dismissed the claim by the selling agent that the managing agent was to be held partly liable as they had supplied the figures. Her Honour dismissed the claim that the Vendor was also partly liable and further dismissed the defence that the buyer had contributed to his own loss in failing to undertake due diligence on the figures.

Her Honour Dalton J found that the buyer relied on the representations in the IM, that the representations were false and that had the buyer been aware of the true state of affairs, he would not have proceeded with the purchase and the judge made an award of damages against the selling agent in the amount of $1.6m being the diminution in the value of the property between what the buyer paid and what it was worth given the true financials.

For more information on the details of this case please contact Gerry Epstein on (07) 5570 9530 or gepstein@steindls.com.au.

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