Estate Agents and Negligent Misstatement
Walsh v Jones Lang Lasalle Limited
With the return of confidence to the Irish property market, increased activity in purchasing and rising prices, it could be said that the Supreme Court has issued a timely reminder about the dangers of relying on information from estate agents which has been provided for promotional purposes.
The decision of Mr Justice O’Donnell in the case of Walsh v Jones Lang Lasalle Limited [2017] IESC 38 was handed down on the 1st of June 2017 and serves as a stark reminder of the pitfalls a purchaser can fall into when relying on information from a particular source, who does not assume liability for such statement.
Facts
In January 2007 the High Court awarded the plaintiff €350,000.00 in general damages for the loss he suffered by relying on details contained in a sales brochure prepared by the defendant estate agent.
The details, which the High Court found amounted to a misstatement, were such that it stated the property’s measurements were 23,057 sq. ft. with a site area of 0.31 Acres. At the end of the page there was a disclaimer stating:-
“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 measurement of the property was in fact 1,809 sq. ft. smaller than the sales brochure had stated, standing at 21,248 sq. ft. Only a survey as to the condition of the premises was carried out. The purchaser had made approximate calculations of £20.00 per square foot in his valuation and development plan.
The plaintiff purchaser claimed a significant loss due to the price paid, and the calculations he carried out on a price per square foot basis. The price paid in 2000 was £2.342m.
The High Court found in favour of the plaintiff purchaser by reasoning that there was a relationship between the purchaser and estate agent which was sufficiently proximate to give rise to a special relationship, which in turn satisfied the High Court legal test laid down in the case of Wildgust & Another v Bank of Ireland & Another [2006] 1 IR 570.
Supreme Court Decision
The Supreme Court in rejecting the finding of the High Court said that the test in Wildgust was not appropriate in all cases.
The Supreme Court more particularly said the statement on which the plaintiff purchaser relied, was generally available to anyone who wished to see it. In other words, the estate agent did not make this statement to just the plaintiff purchaser but rather to the world at large.
The Supreme Court found that this case came down to the allocation of risk – weighing up the interests of the estate agent to reasonably limit its liability versus assuming risk and charging substantially more in fees for its services.
The Supreme Court concluded by saying that if a purchaser has a particular interest in the square footage of a property, then they should contract for that, whether it be with the vendor, the vendor’s agent or his/her own expert.
Conclusion
This case illustrates the dangers in relying on information from a party who can reasonably limit their liability for a statement made by them. In such transactions, if a purchaser has a specific interest in the square footage, or other measurement, of a property then they need to contract with an appropriate party to provide a warranty for such information.
With the renewed activity in the Irish property market, this case shows the value and security that can be obtained in engaging the relevant expert and in turn allowing a purchaser to rely on an appropriate source of information.
J.W. O’Donovan advises Irish and International clients on an extensive range of property law matters. We offer services to large institutional and private investors, developers and major retailers in the Irish market. Our property service comprises three distinct practice areas – commercial property, construction and residential property.
Should you have any property related query, please do not hesitate to contact Jerome O’Sullivan the Head of our Property Department.
Jerome O’Sullivan
Head of Property
Email: josullivan@jwod.ie
Tel No: +353 21 7300200