Mark Sewell was ordered to pay $524,500 damages for negligence after telling a Lower Hutt purchaser that her intended purchase was ‘definitely not a leaky home’ when it was.
Described as a trade-qualified experienced inspector, Mr Sewell was hired by vendor Alex Sim to provide a building report prior to sale of a two-storey townhouse at McBain Grove, Lower Hutt. His contract with Mr Sim contained a detailed disclaimer stating it would be a visual inspection only with no invasive testing and that the report could not ‘100% guarantee no moisture ingress issues.’ His subsequent report was neutral; describing the property’s overall condition as reasonable, with only minor maintenance issues. Purchaser Rosemary MacFarlane was to later find there was extensive damage and decay to framing caused by water ingress with the possibility thirty per cent of timber framing would need replacement.
The High Court was told a real estate agent gave Ms MacFarlane a copy of the building report prior to her purchase, but not a copy of the initial contract with Mr Sim which severely limited the extent of the then promised inspection. After receiving the report, Ms MacFarlane contacted Mr Sewell direct. He told her McBain Grove was ‘structurally sound’ and ‘definitely not a leaky home.’ Mr Sewell was to later say he had no recollection of this conversation.
Justice McQueen ruled both Mr Sewell and his company Informed House Inspections Ltd liable for negligent misstatement and also liable under the Fair Trading Act.
The building report stated it was prepared for the sole benefit of the vendor. The Fair Trading Act is a consumer protection statute and those in trade cannot contract out of the Act, Justice McQueen ruled. Building inspectors preparing building reports solely for vendors can expect these will be shown to prospective purchasers, she said.
Mr Sewell and his company were held jointly liable to pay $524,500: remediation costs ($414,000); cost of alternative accommodation during repairs ($18,700); general damages for stress and anxiety ($30,000) and legal fees ($61,700).
Mr Sewell was present in court but not permitted to defend the claim. Justice McQueen ruled that his late compliance in lodging a defence and failure to pay a court filing fee on time plus his failure to comply with court orders requiring production of named documents meant the case would proceed without him. Mr Sewell has to bear the cost of challenging the order to pay $524,500 damages should he claim there was a miscarriage of justice, Justice McQueen said.
MacFarlane v. Sewell – High Court (26.04.23)
23.057