Buyers’ agent in court
Realcover recently represented a buyers’ agent in the Supreme Court of NSW. The judgment was delivered in December 2016.* The buyers’ agent was alleged to have breached the Australian Consumer Law and to have engaged in misleading and deceptive conduct.
The vendor, who filed the claim, had entered into a put and call option deed with the purchaser, who was a property developer and the client of the buyers’ agent.
The sale price of the house on the North Shore of Sydney was agreed at $2.2 million and an agreement was reached that made the funds payable up to 19.5 months after the date of exchange. But after a neighbour’s property sold for $3.430 million less than a week after signing the deed, the vendor alleged the property was worth far in excess of the agreed $2.2 million. The vendor also claimed they were misled about the value of their property, saying they hadn’t been given enough time to obtain legal advice and therefore the sale was unjust, unfair and void.
The judge found that the buyers’ agent hadn’t contravened the Australian Consumer Law, nor were his actions unconscionable. However, it was found that the vendor had relied on the buyers’ agent when determining the value of his home. The judge said that while the vendor was naive and didn’t know his property was worth well over $2.2 million, both the buyers’ agent and developer had pressured the vendor causing him to sign the put and call option deed. The judge also held that the property developer’s lawyers should have given the vendor a cooling off period in the put and call option deed.
The judge ruled that the deed was unjust, unfair and void. As a result, both the buyers’ agent and property developer were ordered to pay the vendor’s costs – which could prove to be costly!
Fortunately Realcover’s professional indemnity insurance policy covered the liability of the buyers’ agent, including his own defence costs.
Since the judgment, the matter is now destined to end up in the Court of Appeal as the developer has filed their intention to appeal. As a result, the buyers’ agent will most likely be caught up in a costly and lengthy appeal process with expensive costs, emphasising the importance of always taking out professional indemnity insurance.
* A formal order for a stay of the judgment was granted following the handing down of the judgment and an appeal is now likely.
DISCLAIMER
While care has been taken in preparing this article, and the information in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.
Let Realcover protect your business with professional indemnity insurance designed with your needs in mind. When it is time to renew your policy, contact Realcover on 1800 990 312 for a quote. REINSW members are eligible for a substantial discount off Realcover’s standard professional indemnity insurance premium (excluding charges).