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Butcher v Lachlan Elder Realty Pty Ltd

Butcher v Lachlan Elder Realty Pty Ltd

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Case Copied 2 December 2004 73 min read

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HIGH COURT OF AUSTRALIA
GLEESON CJ,
McHUGH, KIRBY, HAYNE AND HEYDON JJ
JEFFREY GORDON BUTCHER & ANOR  APPELLANTS
AND
LACHLAN ELDER REALTY PTY LIMITED  RESPONDENT
Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60
2 December 2004
S548/2003
ORDER
1.   Appeal and cross-appeal dismissed.
2.   Appellants to pay respondent's costs.
3.   Renewed application by Robert Edward Harkins for special leave to appeal from the judgment of the Court of Appeal of the Supreme Court of New South Wales made on 28 August 2002 dismissed.
On appeal from the Supreme Court of New South Wales
Representation:
R J Ellicott QC with G A Moore for the appellants (instructed by Williams Woolf & Zuur)
L G Foster SC with I R Pike for the respondent (instructed by Murray Stewart & Fogarty)
J McC Ireland QC seeking leave to appear on behalf of Robert Edward Harkins (instructed by Mr Harkins)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS
Butcher v Lachlan Elder Realty Pty Limited
Trade practices - Misleading or deceptive conduct - Sale of waterfront property - Real estate agent published brochure containing survey diagram obtained from vendor's solicitors - Survey diagram alleged to be inaccurate - Brochure contained a disclaimer by the real estate agent as to the reliability of information from other sources - Purchasers intended to develop property in reliance on the survey diagram - Whether real estate agent made a representation - Whether real estate agent engaged in misleading or deceptive conduct or conduct "likely to mislead or deceive".
Words and phrases – "misleading or deceptive conduct", "representation".
Fair Trading Act 1987 (NSW), s 42.
Trade Practices Act 1974 (Cth), ss 52, 82.

GLEESON CJ, HAYNE AND HEYDON JJ. On 18 February 1997, the appellants, Jeffrey Gordon Butcher and Judith Kay Radford ("the purchasers"), agreed to buy 10 Rednal Street, Mona Vale ("the Rednal land") from its then registered proprietor, Robert Edward Harkins ("the vendor"). The Rednal land was at all material times property under the Real Property Act 1900 (NSW). It was lot 14 in Deposited Plan 9500, evidenced by Folio Identifier 14/9500. The Rednal land was a valuable waterfront property on the southern shore of Pittwater, a large bay to the north of Sydney separated from the ocean by a narrow peninsula. The respondent real estate agent, Lachlan Elder Realty Pty Ltd ("the agent"), acted for the vendor in that sale.
The purchasers sued the agent for damages for misleading or deceptive conduct. The purchasers claimed (among other things) that a brochure issued by the agent was misleading because it misrepresented the location of the boundary of the Rednal land abutting Pittwater as being on the Pittwater side of a swimming pool on the land.
In the Supreme Court of New South Wales, Austin J dismissed that claim[1]. The Court of Appeal (Handley, Beazley and Hodgson JJA) dismissed an appeal[2]. By special leave, the purchasers appealed to this Court.
[1]

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] HCA 60
Decision Date: 2 December 2004

CaseChat Overview and Summary

The case of *Butcher v Lachlan Elder Realty Pty Ltd* involved purchasers who alleged they were misled by a real estate agent regarding a waterfront property. The purchasers claimed that a survey diagram included in a brochure published by the agent, Lachlan Elder Realty Pty Ltd, was inaccurate and that they intended to develop the property in reliance on this diagram. The agent argued that the brochure contained a disclaimer regarding the reliability of information obtained from other sources.

The High Court of Australia was required to determine whether the real estate agent had made a representation to the purchasers and, if so, whether that conduct was misleading or deceptive, or likely to mislead or deceive, within the meaning of the relevant trade practices legislation. A key issue was the effect of the disclaimer included in the brochure.

The Court reasoned that the brochure, including the survey diagram, was provided by the agent, but the disclaimer clearly stated that the agent could not guarantee the accuracy of the information and that interested parties should rely on their own enquiries. The High Court held that, in light of the disclaimer and the circumstances in which the brochure was provided, the agent had not made a representation that was misleading or deceptive. The purchasers were sophisticated parties who had the opportunity to make their own inquiries, and the disclaimer served to qualify any information provided.

The High Court dismissed the purchasers' appeal and cross-appeal, ordering them to pay the respondent's costs. Special leave to appeal was also refused for a related application.

Orders

Orders of the court

1. Appeal and cross-appeal dismissed.

2. Appellants to pay respondent's costs.

3. Renewed application by Robert Edward Harkins for special leave to appeal from the judgment of the Court of Appeal of the Supreme Court of New South Wales made on 28 August 2002 dismissed.

Background

Background to the litigation

In the Supreme Court of New South Wales, Austin J dismissed that claim[1]. The Court of Appeal (Handley, Beazley and Hodgson JJA) dismissed an appeal[2]. By special leave, the purchasers appealed to this Court. [1]Butcher v Harkins [2001] NSWSC 15.[2]Harkins v Butcher (2002) 55 NSWLR 558.Background In 1996, the purchasers were living as husband and wife at 41 Calvert Parade, Newport. Newport, like Mona Vale, is a suburb in a prosperous area of Sydney known as the Northern Beaches area, close to the sea. In August 1996, Mr Butcher met his accountant to formulate an investment plan in order to ensure long-term financial security for his family. As a result, the purchasers decided to use the equity in 41 Calvert Parade as security to finance investments in land and shares. They sold their motor yacht in order to reduce their existing debt to a negligible level and to complete major renovations to 41 Calvert Parade. When the renovations were substantially complete, Mr Butcher began making inquiries with real estate agents in the Northern Beaches area about the availability of potential investment properties at a price between about $800,000 and $1 million. His main plan was to acquire a property suitable for immediate redevelopment and on-selling, while continuing to live at 41 Calvert Parade. He had an alternative plan – selling 41 Calvert Parade and renovating a newly purchased property after moving in. During December 1996 and January 1997, Mr Spring, an employee of the agent, showed the purchasers various properties which did not meet their requirements. On 6 February 1997, Mr Spring showed the purchasers the Rednal land. He gave them a glossy coloured brochure. He said words to the effect:"These are all the details for the property. You have a full coloured brochure on the front and all the council outgoings land survey etc on the rear. That is everything you need to know."The trial judge found that, in context, these words conveyed no more than that the brochure "was a very helpful document which conveniently put together in a single place the answer to some questions that purchasers typically asked"[3].[3]Butcher v Harkins [2001] NSWSC 15 at [17]. The brochure consisted of a single sheet of paper with material on each side. The front consisted mainly of three coloured photographs, but there was some writing as follows. The page was headed "Mona Vale". Most of the bottom right hand quarter contained the words "10 REDNAL STREET NORTH EAST FACING DEEP WATERFRONT". At the bottom left appeared a reference to L J Hooker, Mona Vale (the agent's business name). In the left hand margin in small black type against a white background appeared the words "Produced by Williams Design Associates" and a telephone number. Across the bottom in slightly larger black type against a white background appeared the words:"Lachlan Elder Realty Pty Ltd ACN 002 332 247. All information contained herein is gathered from sources we believe to be reliable. However we cannot guarantee it's [sic] accuracy and interested persons should rely on their own enquiries."

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ, HAYNE AND HEYDON JJ HUGH J

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Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ, HAYNE AND HEYDON JJ, HUGH J

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