A €350,000 award to a property investor who, after paying €2.3 million for a commercial property in Dublin, discovered it was 20 per cent or 1,800 sq ft smaller than described by the auctioneer’s brochure has been overturned.
By a majority of three to two, the Supreme Court ruled auctioneers Jones Lang LaSalle Ltd (JLL) did not owe a duty of care to David Walsh and was therefore not liable to him over the error in its two page brochure.
Mr Walsh had sued JLL, alleging he suffered rental income loss as a result of the incorrect description of the size of the property at Upper Gardiner Street which he bought in 2000.
He said he relied on the property size figures in the brochure for calculating potential income and estimated his loss at some €590,000.
After the High Court ruled in his favour in 2007 and awarded €350,000 compensation, JLL appealed the finding of liability.
On Thursday, Mr Justice Donal O’Donnell, Ms Justice Mary Laffoy and Ms Justice Iseult O’Malley agreed the appeal should be allowed while Mr Justice William McKechnie and Mr Justice John MacMenamin dismissed it.
The case centred on the two-page JLL brochure which contained the incorrect size of the property but also a disclaimer in smaller print stating “every care” was taken in preparation of the brochure but intending purchasers should “satisfy themselves as to the correctness of the information given”.
Disclaimer
Mr Walsh said he saw the disclaimer but considered it dealt with minor matters. The disclaimer was crucial to the court’s analysis of whether the relationship between the parties was sufficient to create a duty of care.
Mr Justice O’Donnell and Ms Justice Laffoy, in separate judgments with which Ms Justice O’Malley agreed, concluded JLL did not owe a duty of care to Mr Walsh in respect of the internal measurements of the property as shown in the brochure.
Ms Justice Laffoy said her “fundamental disagreement” with the High Court finding was its failure to recognise there was no assumption of responsibility on JLL’s part in relation to the task of providing accurate internal measurements to Mr Walsh.
Mr Justice O’Donnell said the case should be analysed as one of negligent misstatement and not of liability for a negligent act. He disagreed cases of negligent misstatement do not require considering whether there has been an assumption of risk by the maker of that statement or, more broadly, whether the circumstances give rise to a duty of care.
On the basis of the established legal test for negligent misstatement, Mr Walsh should not have won in the High Court, he ruled.
This case was ultimately about “allocation of risk” in the context of a transaction where all involved are buying or selling something, he said.
Dissenting, Mr Justice McKechnie noted the High Court had found the practice of purchasers in 2000 was to rely on brochure measurements without independent verification and assuming only minor variations and that practice must be regarded as having been known to agents.
The law, in the circumstances of this case, terms of the disclaimer and findings of fact, should impose a duty of care on JLL, he found. The facts as found by the High Court showed the standard of care slipped below what was required.
Also dissenting, Mr Justice MacMenamin said the waiver carried with it a representation from a firm “of the highest integrity” “every care” had been taken in preparing the brochure.
