The High Court in Auckland has found Auckland real estate company Premium Real Estate engaged in misleading and deceptive conduct and breached its fiduciary duty to an Auckland couple over the sale of their multi-million dollar Milford cliff-top home.
Friday, December 8th 2006, 10:04AM
by The Landlord
Premium has been ordered to pay the couple $675,000 in recompense for the financial loss they suffered, and to refund the $67,050 in commission. Interest and costs were also awarded, giving a total amount due of approximately $900,000.
Simpson Grierson litigation partner William Akel and associate Natasha Alley represented the couple, who sold their home at 23D Beach Road through Premium in April 2004 for $2.575 million. Premium sold the property again approximately six months later for almost $1 million dollars more ($3.555 million).
The couple sued Premium, believing their property had been undersold and raising concerns about the Premium agent’s relationship with the buyer. The buyer was a property developer for whom the agent was already acting on other property transactions. The buyer also employed the agent’s daughter.
The court found that the property was sold below its market value. The judgment puts the value at the time of the initial sale at $3.250 million, compared to the sale price of $2.575. The court has also ruled that Premium’s failure to disclose the agent’s relationship to the buyer was misleading and deceptive conduct and a breach of the company’s fiduciary duty to them.
Akel says, “This judgment will have significant implications for the real estate industry. It shows that real estate agents must make full disclosure of any potential conflicts of interest. Failure to do so will be very costly”.
Premium is actively investigating grounds for appealing the High Court decision.
Premium’s CEO Brian Guy said that the Court decision has come as a total surprise and that all the legal advice provided to Premium had indicated there was no case to answer.
“We are floored by this decision since we believe we sold the property at the then prevailing market price and do not believe we can be held responsible for what someone subsequently was prepared to pay for it.”
Guy said he was discussing an appeal with his solicitors and expected that an appeal would take place because of the ramifications for the real estate industry.
