by Jackie Buckley October-04-2017 in Property
In June 2017, the Supreme Court overturned the decision of the High Court in David Walsh v Jones Lang Lasalle Limited which will be of interest to purchasers, property investors, agents and lawyers as it reaffirms the principle of “let the buyer beware” in respect of errors and disclaimers in property sale brochures. The Supreme Court decided a property agent did not owe a duty of care to a buyer, so was not liable to the buyer in respect of errors and misstatements in the sales brochure. The error in the sales brochure resulted in the size of the property being overstated by approximately 1,890 sq. feet.
Mr. Walsh, a property developer, was interested in the property and received the sales brochure on a visit to the property from Jones Lang Lasalle. Within the brochure, it was stated that the property measured 23,057 sq. ft. and it also contained the following disclaimer “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 purchasers /lessees should satisfy themselves as to the correctness of the information given." The case surrounded the fact the statement of measurement of the first floor area was incorrect and whether the agent owed a duty of care to the buyer.
Mr. Walsh commissioned a survey of the condition of the property which did not involve any measurement of the premises and proceeded to purchase the property. The error in the misstated measurement only came to light 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.
In 2007, the case came before the High Court which upheld Mr. Walsh’s claim and awarded him €350,000 in compensation against Jones Lang Lasalle which was the amount by which it was determined Mr Walsh overpaid for the property in reliance of the misstated floor area measurement. The Court decided the disclaimer in the brochure did not operate to protect the agent and this decision was appealed to the Supreme Court.
The Supreme Court in interpreting the disclaimer stated the most reasonable interpretation of the disclaimer used was that while Jones Lang Lasalle had asserted that “whilst every care has been taken in the preparation of these particulars…” they did not accept responsibility. 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 chose not to do so, they should bear the risk of any misstatement or inaccuracy unless the agent has clearly assumed the risk.
The Supreme Court held that a properly worded disclaimer of liability meant that there is no the maker of the statement will not have a responsibility to third parties and therefore, no duty of care should be found to exist.
Of particular importance to the Court was the fact that the purchaser intended to lease a portion of the property to a third party, and held that it was misguided of him, given the importance of the rental value of the property, not to have made pre-contract enquiries to determine the floor area, or to have secured appropriate warranties under the contract relating to the floor area of the premises. The Court noted that other prospective buyers may not have placed the same reliance on the floor area.
Implications for various parties to a transaction
Buyers are reminded of the buyer beware principle and should ensure to carry out detailed due diligence and measure all floor areas before buying property to confirm the accuracy of any information in the sale brochure if reliance is placed on it, and in appropriate cases contractual warranties 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 property contracts. These clauses confirm under contract 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.
And finally for agents their priority is to ensure that all promotional material is correct and accurate, however they continue to rely on the protection of a clear disclaimer and should ensure the disclaimer is included in all documentation. The judgement did outline circumstances where an agent could be found to have assumed such a duty of care and in particular where dealings between the agent and a prospective purchaser create a special relationship imposing a duty of care on the agent in giving the information. Agents must ensure not to negate the value of the disclaimer in their dealings with prospective purchasers.
For further information, please contact Jackie Buckley jbuckley@hayes-solicitors.ie at Hayes solicitors.
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About the Author
Jackie Buckley
Jackie is Head of the Property team at Hayes solicitors. She is a highly experienced adviser to clients in the banking, public and retail sectors on all aspects of the sale, purchase, leasing, development and financing of properties. She has extensive experience of advising landlords and tenants in insolvency situations and has advised in recent high profile examinerships.