TLRbwIn a recent Supreme Court of Queensland decision, the Court held that the real estate agent was liable for the representations it had made to a purchaser which were found to be false.

The Court proceedings related to the sale of a shopping centre. The purchaser alleged that the information provided about the financial performance of the shopping centre was misleading and false

The purchaser requested information regarding the shopping centre. The agent sent a number of emails together with an Information Memorandum to the purchaser containing information about the net rentals for the centre, the rent payable under each lease and estimates of outgoings. The agent also made additional verbal representations to the purchaser during the sale process.

In reality the shopping centre was not performing well and this was not disclosed.

The purchaser claimed that it relied upon the information in the Information Memorandum and the additional representations made by the agent to induce it to purchase the shopping centre.

Interestingly, the Information Memorandum contained a formal disclaimer indicating that the information in the Information Memorandum had been provided by the seller and the agent had not independently checked the information and had merely passed it on and as a consequence the purchaser should rely on their own enquiries.

It was relevant that this disclaimer was at page 39 of the document.

The general rule is that an agent will not have engaged in misleading or deceptive conduct where it has merely passed on information from the seller without adopting or endorsing it.

In this recent Queensland decision, the Court found that the real estate agent had clearly adopted the information and represented it as its own and in this regard had displayed its logo on each and every page of the Information Memorandum.

Further in discussions with the purchaser, the real estate agent made statements which went well beyond the information in the documents and endorsed and amplified the financial information which was in fact false.

The Court found that the agent had made certain representations itself rather than simply passing on the information supplied by the seller.

The disclaimer clauses were not effective to alert a reasonable person in the purchaser’s position that the information in the document was simply being passed on.

Judgment was awarded against the agent for $1.6 million plus costs.

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