Butcher v Lachlan Elder Realty Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Gleeson CJ,Hayne,Heydon JJ.,McHugh J.,Kirby J.
• Judgment Date: 02 December 2004
• Neutral Citation: 2004-1202 HCA A,[2004] HCA 60
• Court: High Court
• Docket Number: S548/2003
• Date: 02 December 2004

Jeffrey Gordon Butcher & Anor

Appellants

and

Lachlan Elder Realty Pty Limited

Respondent

[2004] HCA 60

Gleeson CJ, McHugh, Kirby, Hayne AND Heydon JJ

S548/2003

HIGH COURT OF AUSTRALIA

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.

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)

1 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.

2 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.

3 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.

Background

4 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.

5 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.

6 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.

7 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.’

8 The bulk of the front of the brochure consisted of a photograph of the rear of the land, taken from Pittwater, showing boats moored at a jetty, then a lawn, then a metal picket fence with a gate, then the house. Two smaller photographs were inset on the bottom left quarter of the page. The second photograph, taken from the verandah of the house, showed part of a swimming pool, lawn, the metal picket fence and gate, more lawn, the jetty and Pittwater. The third photograph was of a large billiard room. The photographs conveyed an impression of some opulence.

9 On the back of the brochure, which was headed ‘10 Rednal Street Mona Vale’, there appeared the following prose. In the top left quarter the document said:

‘Set in the best position in Rednal Street, closer to the water than any other home, your privacy is guaranteed. Featuring a grand full brick residence with high ceilings, full size billiard room and a large outdoor entertaining balcony lapping up the year round sunshine and sensational views.

Offering scope for renovation or redecoration, rarely do you find deep waterfronts with six car garaging, jetty and pontoon with flexible berthing arrangements for two large vessels, visitor boats and runabouts, easy access, low maintenance grounds and level lawns to the waters [sic] edge.

A must see for the serious boating enthusiast.’

10 The bottom half of the page was headed ‘North East Facing Deep Waterfront’ and gave details of land area, council rates, water rates and permissive occupancy fee. It also gave the place and date (18 February 1997) of an auction and the contact number of Mr Lachlan Elder, a director and the principal of the agent. The third last line contained further references to L J Hooker Mona Vale. The last two lines were set in black type smaller than the equivalent material at the bottom of the front of the brochure but against a white background:

‘All information contained herein is gathered from sources we deem to be reliable. However we cannot guarantee it's [sic] accuracy and interested persons should rely on their own enquiries. Williams Design Associates ph (02) 9905 7372.’

11 The top right hand quarter of the page showed a survey diagram. Although it was partly illegible, it showed dimensions for the southern, western and eastern sides. It also showed, starting at the south end of the block and moving north towards Pittwater, a garage, a brick house, a pool, a line marked ‘MHWM’ and a ‘reclaimed area’. The trial judge found that a reader who compared the diagram with the photographs on the other side would conclude that the ‘MHWM’ line was approximately the line of the fence. The number ‘14’ was plainly visible, and the adjoining blocks were plainly numbered ‘13’ and ‘15’. The diagram bore other dimensions, and was dated ‘4.8.80’.

12 To anticipate events, on 17 February 1997 the solicitor for the purchasers received a draft contract for the Rednal land. Annexed to it was a survey by Mr F W Hannagan dated 4 August 1980. The survey had annexed to it a survey diagram identical to that appearing on the reverse of the brochure.

13 The provenance of the survey diagram in relation to the brochure was that the vendor provided the survey report to his solicitors for inclusion in the draft contract; the agent obtained a copy of the draft contract from the solicitors; and the agent took its reproduction of the diagram from the survey report included with the draft contract.

14 As a result of their visit to the Rednal land on 6 February 1997, the purchasers became interested in it. On 14 February 1997, accompanied by an architectural designer whom they had retained, Paul Gillmer, they inspected the Rednal land again, this time with Mr Elder. The trial judge found that on that occasion Mr Butcher told Mr Elder that he planned ‘to turn the pool around and have it [placed] by the side boundary’, in order to ‘open up space for entertaining’ 4. Mr Elder said that the pool would ‘encroach [on] the mean high water mark’. Mr Gillmer advised Mr Butcher that ‘the idea of “moving” the pool was feasible, based on the position of the high water mark indicated by Mr Butcher, in reliance on the diagram in the brochure’.

15 On 15 February 1997, Mr Butcher inspected the Rednal land with a builder, Scott Hindmarch. He was shown the brochure by Mr Butcher. After taking advice from Mr Hindmarch, the purchasers formed the view that they could carry out the proposed restructuring of the swimming pool area, provided that the development did not go beyond the side...