An agent who assured his buyer he would personally create a third car space for her use in Brisbane’s luxurious Riparian Plaza, has been ordered to pay compensation representing the value of the car park he ultimately could not deliver.
Philip Waight – a team owner within the Hadgelias Ray White franchise – made the guarantee in closing buyer Imogen Seirlis in a $2.5 million contract, in April 2010.
The franchise was instructed by the owners to market the unit in brochures and on the internet as having three car spaces when the development approval for the building limited its number of car spaces to two.
Other owners had removed a concrete plinth in the space next to the two approved parking bays – which acted as a physical barrier to prevent vehicle parking – to allow a third car to be parked.
Although the body corporate refused consent for any such alterations, evidence suggested it allowed such practice “informally”.
In negotiation, the buyer and her husband showed concern about the third car space and she resisted signing a contract until a verbal assurance from Waight that the plinth would be removed was forthcoming.
“I will remove it before settlement” he volunteered before Seirlis signed and that afternoon he sent an e-mail as promised, confirming “the concrete will be removed prior to settlement to create three car spaces”.
Seirlis refused to settle on the due date in July as – although her solicitors had clearly pointed out the obligations on the part of the seller to remove the plinth, obtain body corporate consent and get BCC town planning approval – none of this had been done.
Shortly after, the seller’s solicitors threatened specific performance action.
Settlement occurred on 27 September 2010 and thereafter the buyer issued proceedings against the Hadgelias franchise, Waight and the vendors for misleading and deceptive conduct alleging a $400,000 value differential between a Riparian unit with three car spaces and one with only two.
The action was defended in the first instance on the basis that the buyer would have purchased anyway i.e. that the inclusion of a third car bay had no effect on the decision to buy.
The court noted the buyer and her husband had been tenants in the building for a number of years and must have observed the concrete plinths in numerous car park spaces.
What had previously gone through their minds as to the purpose of those structures?
How did that register with Mr Seirlis – who after all was a property developer – in the context of a claim that he and his wife were misled about their significance?
The court ultimately decided that – although aware that the physical alteration and change of use would require body corporate approval – the buyer and her husband were probably unaware of the impediment to that course by the terms of the building’s development approval.
After five days of evidence and submissions, the court upheld their claim they would not have entered into the contract had they known of that town planning impediment.
Aiding such a finding, was that the contrary had simply not been put to them in cross examination.
That the buyer proceeded to settlement did not “break the chain of causation” and could not be relied on to defeat the claim. A buyer has, after all, no contractual right to terminate a contract induced by misleading or deceptive conduct; only an entitlement to terminate upon an order having been made, for example under TPA section 87.
As to worth, the court attributed the value of the undeliverable car space to be $250,000 to which was added $15,000 for additional conveyancing expenses, stamp duty etc. the total award including interest was $312,000.
But who should be liable and in what proportions?
Although not liable in negligence – agents owe no duty to make their own independent inquiries of lawful town planning usage – the Ray White advertisements were unquestionably misleading and hence the franchise was caught under the TPA.
Waight was separately liable for his promise that removal the slab would allow the space to be used as a car park, but his liability was under the Fair Trading Act as not being a corporation, he wasn’t caught by the TPA.
The owners, although also individuals, were held the parties to the franchisee’s corporate TPA breaches and also liable for TPA misleading or deceptive conduct.
As “concurrent wrongdoers” there was no scope for apportionment of shares of liability among them, rather they were each liable “severally”, meaning that the buyer can recover 100% of her judgment against any defendant.
Because there were no cross claims between the defendants, they must agree their respective contributions or failing that, litigate that issue separately.
An appeal lodged by Waight and Hadgelias and is expected to be heard in mid 2014.
For more information, go to: Conveyancing