It was an innocently misleading statement which resulted in Wellington property manager Jules Leloir being held liable for Michael Roberts’ losses when overpaying for a leaky apartment, but the Court of Appeal reduced damages by forty per cent for Mr Roberts’ failure to carry out his own proper due diligence.
In 2014, Mr Roberts signed up to buy a three-bedroom apartment in Wellington’s Sirocco Apartments for $397,000. The building was then managed by Ms Leloir’s Jules Consultancy Ltd. She responded to a phone query from Mr Robert’s lawyers stating that Sirocco’s weather tightness issues related only to walkways and that had been rectified. His lawyers were following up on Council records suggesting Sirocco had potential weather tightness issues. Minor works carried out on the building exterior a few months after Mr Roberts’ purchase led to suspicions there were serious weather tightness problems. As it turned out, the eleven story Sirocco building proved to need major rectification.
In the High Court, Ms Leloir was ordered to pay Mr Roberts $93,500 damages for breaching the Fair Trading Act. Mr Roberts challenged the calculation of damages; estimated repair costs for Sirocco had more than doubled to $22.7 million between the date of his Sirocco purchase and the High Court hearing. Damages of $671,000 better reflected his loss, Mr Roberts said.
Damages required a calculation of the difference between what Mr Roberts agreed to pay and the value of what he got, assessed at the date of purchase, the Court of Appeal ruled. This difference was calculated by the trial judge as being $110,000 taking into account Sirocco apartment sales around the time of Mr Roberts’ purchase. Ms Leloir had no legal responsibility for Mr Roberts’ share of ongoing Sirocco repair costs.
Ms Leloir said Mr Roberts should shoulder a greater share of responsibility for his losses than the fifteen per cent contributory negligence fixed by the trial judge. The Court of Appeal increased Mr Roberts’ responsibility to forty per cent. The Council LIM report raised a red flag; Mr Roberts should have obtained a specialised building report. Such a report would have identified Sirocco design features led to a high probability that it was a leaky building, the Court of Appeal ruled. Mr Roberts’ purchase was conditional on his being entirely satisfied with Sirocco body corporate records. He did not ask for copies. Committee minutes at that time showed minor leaks in a number of apartments, believed at the time to be plumbing issues from apartments above.
Increasing Mr Roberts’ liability to forty per cent meant Ms Leloir was ordered to pay $66,000 for her misleading statement about Sirocco’s weathertightness.
Roberts v. Jules Consultancy Ltd – Court of Appeal (9.07.21)
21.118