A recent decision in the Victorian Civil and Administrative Tribunal (VCAT) may give purchasers some disquiet.
The facts of the case were that the purchasers engaged a property inspection company to inspect the property and prepare a pre-purchase inspection report. The house on the property was a 100 year old timber house and the purchase price was $172,000. At the time of the inspection the house was tenanted and heavily furnished.
After settlement the purchaser found termites in the house and structural problems which a building report said could not be remedied and the only outcome was for the house to be demolished. The purchasers instituted proceedings against the property inspection company and its director on the basis of:
misleading and deceptive conduct, and
that the inspection services were not conducted with due care and skill as required by s60 of the Australian Consumer Law (ACL).
The cost of the pre-purchase inspection report was $500.00.
The purchasers claimed $344,528 for the demolition of the house and the construction of the new house alternatively, the inspection company repair the house to a fit and proper condition. The evidence before VCAT was that the purchasers had engaged the property inspection company after looking at its website which promoted its services as:
being “road test the property before you buy it”;
using high-level technology and the latest equipment to inspect areas that were difficult to access;
highlighting the company’s expertise over its competitors.
VCAT determined that the inspection report was not misleading or deceptive as it set out in detail the limitations of the inspection and the scope of the report. In particular the inspection report stated that the property was heavily furnished and that the inspector had limited access to the rooms and no access to the sub-floor. The report stated that the inspector conducted a visual inspection only and did not move items nor did he have access to all the property. There was no evidence before VCAT as to what was standard industry practice when carrying out such inspections.
Whilst VCAT found that the website was misleading and deceptive, there was no evidence that the purchasers had relied on the website in purchasing the property so that the purchasers were only entitled to loss and damage equal to the fee of $500.00 that they paid for the inspection company’s services.
The result was that the purchasers substantially failed in the claim and were left with a very unsatisfactory purchase.