Latest News

Buyers' agent case appeal allowed

16 January 2018

The NSW Court of Appeal recently overturned a Supreme Court decision which originally found a buyers’ agent had breached the Australian Consumer Law and engaged in misleading and deceptive conduct.

Realcover represented the buyers’ agent in the Supreme Court of NSW in December 2016 when the judge ruled that the put and call option deed the vendor entered into was unjust, unfair and void. As a result they ordered the buyers’ agent and property developer to pay the vendor’s costs. 

However, the developer appealed and the Supreme Court of NSW allowed the appeal on 11 December 2017.

The judge said the agent did not engage in conduct which deprived the owner to take legal advice before the agreement was agreed and exchanged. They added that the matter the owner said caused the option agreement to be “unfair and onerous” was apparent from reading the draft agreement and could have been the subject of advice from their licensed conveyancer. 

For details of the decision in full, please visit here.

What happened at the original court case?

The vendor, who filed the original 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. 

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).