When construction defects emerged just months after the January 2012 settlement of a $3.35 million upmarket “entertainer’s home” promoted as having been renovated with “no detail or expense spared”, complaints flooded in from the buyers.

Renovation on an upmarket Sydney shouldn't cut cornersAgent David Sloane had told buyer Bruno Pisano that the renovation in Sydney’s eastern suburbs “was built above and beyond standard; the builder was a real professional and meticulous; and it had been master-built”.

Similar statements also appeared in the agent’s Domain web ad and in a printed brochure. It quickly emerged that Georgina Dandris and husband Patrick Williams had “cut a number of corners” in their luxury renovation – that included a new rooftop terrace with pool and views of Sydney Harbour – “for financial reasons”.

By June, water penetration had become so serious that carpets were saturated and had to be pulled up; electrical components and power points were drenched; windows and doors leaked; joinery and fittings required replacement.

Dandris at first offered to buy the home back but quickly reversed her position. After she failed to come good with a promised ratification timeline, Bruno and wife Sia commenced misleading and deceptive conduct claims against the sellers and agency, Angus Levitt.

It appears as though the claims against the agency were settled as the ultimate court fight was against the sellers solely.

The sellers claimed to be immune from liability because of a “rely on your own enquiries” disclaimer in the promotional material and the buyer’s election not to conduct their own professional pre-purchase inspection.

The court was satisfied that the agent’s web advertisement, brochure and on-site representations were attributable to the seller’s who had no reasonable basis for making them.

But had the resulting “misleading and deceptive conduct” occurred in the course of “trade or commerce” so as to entitle the buyers to compensation?

While that conclusion may have been clear as against the agency who sold the home in the course of its business, it was a more difficult question to decide whether the sale of the family home met the compensation pre-requisite.

Trial judge Bill Hammerschlag held that the “sellers’ intention was to improve the property for resale for financial gain and that the sale and its advertising, was carrying into effect of an investment strategy” flavoured also by Ms Dandris’ oversight of the “project” through her interiors business.

He ruled that the deal had the necessary commercial character and the only appropriate remedy was for the sellers to pay total rectification costs of $1.17 million.

The New South Wales Court of Appeal took a different view.

It was irrelevant, it said, that commercial means – a website brochure and a real estate agent – had been used to effect the sale. Use of such means did not alter the character of the underlying domestic transaction.

Likewise any intention on the part of the sellers – for their “next project” – to renovate the home into which they had subsequently moved.

And, so ruled the appeal judges, “the mere fact that a residential owner, having lived in it for several years, renovates with a view to selling it at a profit does not mean that conduct is in connection with trade or commerce”.

Ruling the transaction lacked the requisite commercial or business character, the appeal court reversed the decision.

The Pisanos won’t get their $1.17 million leaving their only recourse being that they may have already obtained or abandoned by way of settlement against the agent who in any event was only relying on information provided to it by the owners.

Williams v Pisano [2015] NSWCA 177 Bathurst CJ, McColl JA and Emmett JA 29/06/2015
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