Can you be liable for misrepresentations when selling your home?
Williams v Pisano  NSWCA 177
The NSW Court of Appeal looked at whether the vendor of a private home, who had admitted misrepresenting the quality of the home, could be liable for a breach of the misleading and deceptive conduct provisions of the Australian Consumer Law. The Court also looked at the proportionate liability regime in Part VIA.
While this decision is not strictly a building and construction law case, it is relevant because the vendor of the property was an owner-builder and so was responsible for the defective building work carried out by her.
The vendor and his wife had owned the home for several years when they decided to renovate. Ms Dandris (the wife) obtained an owner builder permit and she engaged consultants to prepare the plans and a builder on a cost plus basis. During 2010 and 2011, renovations of the Property were carried out by the builder, substantially under the supervision of Dandris but without the benefit of detailed architectural plans or architectural supervision. The vendors advertised it for sale. A real estate agent was engaged to assist with the sale. Dandris also held herself out as being an interior designer. The vendors and their agent represented to the purchasers that the property had been meticulously renovated without any expense being spared.
After the property was sold it became apparent the vendors had taken a number of shortcuts during the renovations which led to significant defects, including water major penetration problems. The trial judge (Hammerschlag J) found that the cost to rectify was $1.2 million.
The trial judge had no difficulties in finding Dandris liable for breach of the warranties given by her as owner-builder. The purchasers also pursued Mr Williams (the husband) under the ACL, since he was not caught by the warranties. The trial judge decided that Williams had made the representations ‘in trade and commerce’ and entered judgment against him for around $1.17 million. He held that each of the vendors was jointly liable.
Williams appealed, raising three arguments:
- The vendors’ representations were not made “in trade or commerce”, and so the ACL did not apply;
- Because Williams was a “concurrent wrongdoer” with Dandris pursuant to Pt VIA of the Competition and Consumer Act 2010, the liability of the vendors should be apportioned such that his share is no more than 50%;
- The primary judge erred in the way that His Honour calculated the measure of damages.
The Court of Appeal held that the vendors’ representations were not made “in trade or commerce”, with the consequence that they could not be in breach of s 18 or s 30 of the ACL. The mere fact that an owner of a residential property, having lived in it for several years, renovates the property with a view to selling it at a profit does not mean that conduct in connection with the sale of the property is conduct “in trade or commerce”. On that basis, Williams’ appeal was allowed.
Emmett JA commented that in his view the proportionate liability regime in Pt VIA of the ACL should apply only to s18, not s30. Bathurst CJ and McColl JA reserved their opinion on the issues relating to concurrent wrongdoers and apportionment until the need to decide those issues arises.
The appeal succeeded, fundamentally, on the issue of statutory construction. The position may well have been different if the sale was, for example, by a property developer and was one of many units in a large apartment building. In that situation the vendor (the property developer) very arguably was acting “in trade or commerce” and therefore any misrepresentation it made as to quality of the unit may well have been a breach of the ACL.