Engineers’ seismic assessments included in real estate marketing material are a professional opinion as to potential earthquake risk, not a statement of fact potentially leading to damages for misrepresentation, the Court of Appeal ruled, overturning a High Court ruling that a Wellington family trust pay $592,000 damages on sale of a Lower Hutt commercial building.
In 2017, Tadd Management Ltd paid $1.4 million at auction to purchase a three-storey building on Queens Drive from the Ruth Weine Family Trust.
Marketing material made available to potential buyers included a seismic report assessing the building at sixty per cent of New Building Standard (NBS).
After its purchase, Tadd Management obtained its own seismic report in readiness for a planned refurbishment. This report put Queens Park’s NBS rating at time of sale between ten per cent and thirty per cent.
Tadd Management sued, claiming it paid too much.
The Court of Appeal said engineers’ seismic reports are in the same category as property valuations and legal opinions; provided factual assumptions underpinning the report are correct, the concluded professional assessment is no more than a statement of opinion. Opinions can vary. Differing opinions can be equally valid.
A reasonably prepared professional opinion does not amount to a misrepresentation, even should it differ from another professional opinion, the Court ruled.
The seismic report at time of the 2017 sale describing Queens Park as having a sixty per cent NBS rating was not a misrepresentation, the Court ruled.
Ruth Weine Family Trust v. Tadd Management Ltd – Court of Appeal (17.07.24)
24.175