BENCROSS PTY LTD and OTHERS v MUNSAMI [1998] NSWCA 36

BENCROSS PTY LTD v MUNSAMI SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MASON P, SHELLER and POWELL JJA 24 September 1998

[1998] NSWCA 36

Mason P The respondent engaged the services of the first appellant, a real estate agent, to sell the respondent's semi-detached cottage at Bondi by auction. The second and third appellants, Mr Weinberg and Mr Kotowicz, were employees in the business.

The property was advertised. Many people inspected it. There is no suggestion that the property was inadequately promoted by the appellants.

On the day of the auction in October 1991, the respondent placed a reserve price of $250,000. The bidding at the auction stopped at $195,000. Mr Kotowicz came over to the respondent and, in Mr Weinberg's presence, said:

"Put the house on the market, it will fetch its reserve." Mr Weinberg said: "Put it on the market, it will pour with offers, it will rain with offers." To which the respondent replied: "What do you mean?" Mr Weinberg said: "You'll get a bigger price for it", and continued to exhort the respondent to put the house on the market.

The respondent accepted this advice. The property was put on the market but bidding only rose to $201,000. It was knocked down at this price. Initially the respondent declined to sign the contract but, after taking legal advice, he did so.

In the District Court, Judge Herron QC found the appellants liable in contract, tort and for breaches of the Trade Practices and Fair Trading Acts. The essence of their liability was negligence and misleading conduct in that the respondent was induced to abandon his reserve price and submit his property to "the market". This advice lacked a reasonable basis and caused the respondent to act to his detriment. To me it is somewhat unclear how liability for misleading conduct was established, but the detail does not matter. The findings of liability and the consequential obligation in each appellant to pay damages assessed on a compensatory basis is no longer in dispute.