Shading The Truth

A recent High Court decision Douglas v Jules Consultancy Limited (CIV-2017-485-130[2019] NZHC555) has brought home the significant importance of transparency when dealing with issues affecting the building’s condition.  This is spelt out in a recent High Court decision of a professional secretary minimising to a prospective purchaser the potential extent of leaks within a building. 

Liability has been awarded against the Secretary under the Fair Trading Act, which included a reference to “misleading by omission”.  In that instance the Secretary chose to minimise the extent of issues and to omit references to correspondence that she should have known would have been extremely relevant to a prospective purchaser.  When asked about a specific notation on the LIM report, the Secretary was deemed to be “guilty of misleading conduct by being silent on the other weathertightness issues of which the Secretary was aware”.

In terms of representations actually made, these must be honestly held and there must be a reasonable basis for them.  The Court was satisfied there was no reasonable basis for the opinion that the complex did not suffer from weathertightness issues except in relation to the walkways.  This statement had not been supported by fact.

BBCL’s policy has always been to be transparent regarding construction issues and it is clear the Courts impose a high level of responsibility in terms of this.  Owners may have similar responsibilities with warranty obligations under standard sale and purchase agreements.  If you are in any doubt on these issues, we suggest you obtain independent legal advice.