The Supreme Court decided that the estate agent did not owe a duty of care to a purchaser, so they were were not liable to pay damages to the buyer in respect of errors and misstatements in the sales brochure. The sales brochure had incorrectly overstated the size of the property by approximately 1,890 sq. feet.
The brochure stated that the property was 23,057 sq. ft., however, it also contained a disclaimer which read:
“Whilst every care has been taken in the preparation of these particulars, and they are believed to be correct, they are not warranted and intending purchaser (sic)/lessees should satisfy themselves as to the correctness of the information given.”
The survey of the condition of the property arranged by the plaintiff did not involve any measurement of the premises, and this proved to be a costly omission for the plaintiff. The discrepancy in the misstated measurement only became apparent when Mr Walsh proceeded to rent the property after the sale completed.
Given that the error was clearly outlined on the brochure, the question for the Court to decide was whether Jones Lang Lasalle had a duty of care to ensure the information in their brochure was accurate and if so, whether they had breached the duty of care owed to the buyer, Mr Walsh.
The majority decision of the Supreme Court was that the disclaimer could not be regarded “as anything other than an assertion, unsurprisingly to anyone in the property market, that Jones Lang Lasalle was not responsible for the accuracy of anything contained in the particulars”. The Court found that if the particulars were of significant importance to a prospective investor or purchaser, the purchaser should verify them independently and where they decided against doing so, that they should bear the risk of any misstatement or inaccuracy unless the agent has clearly assumed the risk. The court found that no duty of care existed.
The Court referred to the decision of Lord Justice Hobhouse in McCullagh v. Lane Fox and Partners Ltd, in which it was stated that a disclaimer:
“Implicitly tells the recipient of the representation that if he chooses to rely upon it he must realise that the maker is not accepting responsibility for the accuracy of the representation.”
The Court took note of the fact that the purchaser intended to let a portion of the property to a third party tenant, and held that it was imprudent of him, given the importance of the rental value of the property, not to have made explicit pre-contract enquiries to determine the floor area, or to have secured appropriate contractual warranties in relation to the floor area of the premises. The Court noted that the floor area may not have had the same significance to other prospective purchasers.
Buyers are reminded of the ‘buyer beware’ principle and should ensure to carry out all necessary due diligence including measuring all floor areas to confirm the accuracy of any information in the sale brochure if reliance is placed on it. In appropriate cases, contractual warranties should be sought to give the buyer a remedy against the seller in respect of that information.
Sellers are reminded of the significance of “entire agreement” clauses in contracts for sale. These clauses confirm that no statement, measurement or calculation contained in any brochure or any other documents in respect of the property, whether issued by or on behalf of the seller, the seller’s agents or the seller’s solicitors constitutes a representation inducing the buyer to enter into the sale and cannot be relied upon.
Agents need to ensure that all promotional material is correct and accurate, however, they should continue to rely on the protection of a clear disclaimer. Agents must ensure that they do not diminish the value of the disclaimer in their dealings with prospective purchasers.
06 February 2018