Peter David Roy Lewis v Lisa Adele McKinnon [2011] NSWSC 338

Purchasers entered into a contract for the purchase of a home on the basis of representations as to water views from a potential second storey that could be added to the existing home with photos of the harbour contained in the vendor’s agent’s  brochure. The purchasers employed an architect who found that harbour views could not be obtained from a second storey and the photos were taken from the perimeter of the land where no house could be built. The purchasers rescinded the contract and claimed they were entitled to do so and claimed their deposit. The vendors refused. The purchasers sued for damages for misrepresentation at law or in equity and damages for misrepresentation under section 87 of the Trade Practices Act 1974 (or section 87 of the Competition and Consumer Act 2010) and sought an order from the court restraining the vendors from reselling the property until their claim for final relief for damages could be heard.

The court found a serious question to be tried that the vendors through its agent made misrepresentations as to water views in its brochure statements and photos or engaged in misleading or deceptive conduct on which the purchasers relied. The court noted that the disclaimer in the purchase contract as to no reliance on any representations was no defence to the statutory claim, merely a factor taken into consideration. However it found the balance of convenience did not support the order sought because it amounted to the purchasers “having their cake and eating it too”. Having elected to rescind, the purchasers cannot restrain the vendors from acting upon that rescission even if it puts them in a difficult position. Ultimately if their claim to recission fails, the purchaser may be found liable in damages for wrongful repudiation and in those circumstances would not have elected to rescind and if ultimately their claims succeeds, the purchasers are left with a claim for damages that would be difficult to quantify. The court found that neither are reasons to justify the order sought.

The court also observed that a declaration cannot be sought which declares that a contract can be rescinded at common law as opposed to a statutory order that the contract is rescined because such an order speaks from the time it is made and events may intervene to change its validity. Hence the court will not give declarations that a claimant is entitled to rescind a contract for misrepresentation.

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