Ena Holdings Limited v Admiralty Lodge Motel (2016) Limited

The case of Ena Holdings Limited v Admiralty Lodge Motel (2016) Limited was heard by the New Zealand Supreme Court. The dispute arose out of the sale of a unit in a motel complex where the buyer alleged that certain information provided during the sale process was misleading and deceptive, contravening section 9 of the Fair Trading Act 1986. Admiralty Lodge, the seller, argued that the information provided was accurate and that the buyer, who was experienced in the accommodation industry, could not have been misled. The core issue before the court was whether the information provided to the buyer was misleading or deceptive, and if so, whether it breached section 9 of the Act.

The Supreme Court examined the contents of the information memorandum (IM) provided to the buyer, Dr Sharma, by the real estate agent Bayleys. The IM included a Certificate of Title with a Consent Notice prohibiting the units from being used for anything other than travellers’ accommodation. It also noted a recent review of the Body Corporate’s Operational Rules and a variation to the Resource Consent, allowing the units to be used for both visitor and permanent accommodation. Admiralty Lodge argued that these details were clearly highlighted in the IM, making it apparent to a reasonable person that there had been recent changes in the use consents. They further argued that Dr Sharma, being an experienced investor in the accommodation sector, should have understood the implications of this information. The court considered whether a reasonable person in Dr Sharma’s position would have been misled by the information provided.

The court found that the information memorandum did contain relevant details about the changes in the use consents, which were highlighted and thus likely to be noticed by a reader. However, the court also noted that Dr Sharma’s experience and expertise in the industry meant he was not an ordinary consumer. Nevertheless, the court held that the key question was whether the information could objectively mislead or deceive a reasonable person in Dr Sharma’s position. The court concluded that the information, taken as a whole, did not clearly convey the extent of the changes or their implications, and thus had the capacity to mislead. Consequently, the court found that the information provided did breach section 9 of the Fair Trading Act.

The Supreme Court ordered that Admiralty Lodge was liable for the breach of section 9 of the Fair Trading Act and required them to compensate Ena Holdings for the loss suffered as a result of the misleading information.