Hyder v McGrath Sales Pty Ltd appealed: buyer loses appeal and the agent wins their cross appeal concluding the agent was not liable for 'misleading and deceptive' conduct.

Published 01 Nov 2018
Dominic Maley

On 30 November 2018, the NSW Supreme Court held that McGrath Sales Pty Ltd ("McGraths") engaged in "misleading and deceptive conduct" by representing that a property for sale in Bellevue Hill had 4 additional car spaces in tandem along the eastern side of the communal driveway. No such car spaces existed and the area in question was subject to a right of carriageway enjoyed by other neighbouring lots.

The buyer, however, still lost the case.

The Supreme Court held that while the absence of the 4 additional car spaces meant the property was worth $9.25m rather than the $9.4m Mrs Hyder ended up paying (or rather, what Mr Hyder ended up paying; putting the property in Mrs Hyder's name only), the court felt Mrs Hyder would still have paid the higher price even without the car spaces as she "loved the property". Accordingly, Mrs Hyder lost on the issue of 'causation'.

Please see our prior article on that decision:

http://www.maclarens.com.au/News-1424-Misleading-and-Deceptive-Conduct-by-a-Real-Estate-Agent--e2-80-93-but-the-Buyer-still-loses-the-Case.aspx

• Both parties appeal

Mrs Hyder appealed the decision, maintaining the primary judge was in error on the issue of causation. She also appealed the value attributed to the parking spaces, and the finding that she was contributory in negligence to a 2/3 extent in any event (which would have reduced the damages claim by 2/3 had Mrs Hyder not already failed on the issue of causation).

Whilst the agent was successful in defending the first case, they were only successful because the primary judge decided in their favour on the issue of causation. The agent wanted to be further cleared of the finding that they would otherwise have been liable for 'misleading and deceptive conduct'.

Whilst the agent was successful in defending the first case, they were only successful because the primary judge decided in their favour on the issue of causation. The agent wanted to be further cleared of the finding that they would otherwise have been liable for 'misleading and deceptive conduct'.

The agent accordingly cross-appealed the primary judge's decision, arguing that they were the "mere conduit" of the misleading and deceptive information and that they should accordingly not be responsible for that information.

• NSW Court of Appeal: Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223

Mrs Hyder accepted the trial judge had the correct basic application of law, when applying the legal 'but for' test. More specifically, the test being "whether, had McGrath not engaged in the conduct which I have found to be misleading or deceptive, Mr Hyder would have ended up purchasing the property in Mrs Hyder’s name".

The focus of the appeal by Mrs Hyder was instead on the finding that Mr Hyder was the real decision maker in the purchase, and the finding that Mr Hyder's evidence was no reliable and of limited utlity.

The Court of Appeal ultimately found against here in that regard, and the Court of Appeal was not persuaded that "the primary judge erred in failing to be satisfied that, but for the misleading and deceptive conduct, [Mrs Hyder] would not have proceeded with the purchase, or at least would not have offered $9.4 million for the property."

The other grounds of appeal also failed.

• The agent's cross-appeal: the "mere conduit" argument

The court went on to hold that the primary judge was wrong to conclude that “there was nothing in the representations to suggest that they came from a third party and McGrath was merely passing them on for what they were worth”. The representations should have been looked at as a whole, and a reasonable person should have seen the information was provided by a third party.

McGrath argued that they were a 'mere conduit' of the information, and relied on Yorke v Lucas (1985) 158 CLR 661 at 666, where the High Court said:

“If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.”

Importantly, Mrs Hyder's husband confirmed in evidence that he accepted the information about the parking would have come from the vendor as the original source.

And the court felt that for such an expensive property a reasonable person would expect buyers to maintain due diligence on matters they considered important, and applied the reasonable person test on whether the information should have been relied on.

Perhaps most importantly, the diagram in question given by the agent did have a general disclaimer about its accuracy.

Accordingly, even if Mrs Hyder succeeded in her appeal on the ground of causation, she would still have failed overall as the NSWCA held that the agent was a mere conduit of the misleading information and could not be held responsible at law.

For expert property law advice, contact Maclarens Lawyers on 96823777