MISREPRESENTATION REGARDING NUMBER OF CAR PARKING SPACES

A dispute over the number of car parks sold with the property.  There were only two car parking spaces and a storage area.  The storage area could be converted into a third car parking space.  However the Council prohibited the storage space being used for car parking.  The real estate agent was not aware of this restriction.  The Vendors apparently were. 

The Agent had advertised the apartment on three occasions as having three car parks.  At an inspection of the property , the Agent had told the Purchaser that there were two parking spaces with a third area containing a plinth or platform on which a storage shed could be constructed; many apartment owners had removed the plinth and used the space for parking.  At a later meeting, the Agent had assured her that he would personally see to the removal of the plinth, paying for it himself, upon which she committed to the contract by initialling changes made by the vendors on a contract .  

The advertisements, statement and promise were likely to have caused the Purchaser to believe that all that was required for her to have the use of three parking spaces was the physical removal of the plinth.  Had she known the legal impediment, in the form of the development approval which precluded use of the storage space for parking, she would not have entered into the contract.

On the settlement day the Purchaser unsuccessfully sought confirmation that the necessary body corporate and planning consents for the third car park had been provided.  Some days later the Vendors’ solicitors responded by advising that the body corporate would not consent to the use of the storage area as a car park because that would breach the development approval.  Ultimately, while maintaining that she had been induced to enter the contract by misrepresentation, the Purchaser settled in order to avert specific performance proceedings commenced by the Vendors.

The Court held that the Vendors, but not the Agent, was responsible for the Purchaser’s damages on the basis of misrepresentation under the former Trade Practices Act (now the Australian Consumer Law).  Damages were assessed at the difference between the price the Purchaser had paid for the apartment of $2.5 million and the actual value of the apartment at $2.25 million.