Brian Cannan: Today I'm with Lisa Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good afternoon Lisa.

Lisa Jemmeson: Hello.

Brian: Our subject is disclaimers.

Lisa: Yes.

Brian: What are they, and do they work?

Lisa: Well....

Brian: That's a question!

Lisa: It is indeed! A very quick wrap up, so a disclaimer is something that agents are putting on their marketing material to seek to protect the agent against liability for anything that is misleading contained within the document that the agent is going to disseminate.

Brian: Unknowingly, misleading? Would we put it that way?

Lisa: In some circumstances. As an insurance lawyer we have to qualify that. So when we look at information that can be contained within the brochure that's misleading, when the court looks at that particular document they're looking at it as a whole so they're looking at all your text they're looking at your photos they're looking at a floor plan they're looking at the surrounding circumstances a character of the transaction so what type of property it is and also the nature of the parties.

Brian: So if I got information from the owner.

Lisa: Yes

Brian: And you gave it to me in writing and I use that information on my advertising and brochure with a disclaimer. Am I covered?

Lisa: Not necessarily, no. The first thing to say, is that you should be using disclaimers on all your marketing material and I'll go through at the end what should be in the disclaimer and also I want to stress the fact that yes you should be getting your vendors to sign off on all your marketing. Absolutely. Any information that you get from your vendors ideally it is in writing but to answer your question, "Will that save you from being litigated against?" the simple answer and that is "No". And the problem that arises for agents is under the Australian Consumer Law if you're engaged in trade and commerce you cannot mislead or deceive someone, okay, and so this is what happens, with disclaimers they work to assist the agent but it's not a get-out-of-jail-free card, which agents tend to think that it is.

Brian: But you wouldn't market without one?

Lisa: Agents do market without disclaimers and the other thing is that agents market with disclaimers prepared by marketing companies so they put their own disclaimer down the bottom which is standard but no one actually looks at and reads the contents of it and where we where we can have issues is where we see lines and I'll quote one because it's we often see it from the legal perspective where it may say "All information is gathered from sources we believe to be reliable".

Brian: Yeah I read that all the time. That's a good one isn't it?

Lisa: No, so what an agent should be looking to do is to disclaim any belief in the truth or falsity of the information okay so don't endorse it as being yours that we believe it to be reliable okay you don't want to see situations like that. So the other issue that arises is where agents are incorporating what turns out to be erroneous information into their own material and this can come via floor plans where there might be illegal building work for example there might be something on the property that's in the floor plan that isn't approved by council or shouldn't be there.

Brian: How's the agent going to know this?

Lisa: Well, you need to be very very careful you need to make inquiries with your vendors in regard to what's being sold, I mean the classic one is in relation to the ducted air conditioning where agents see vents and put in their advertising that the property is air-conditioned no one checks to see if there's anything behind the vents. So it's very important to take it to the next level and make further enquiries and not just rely on a disclaimer or what a vendor says to you and that may even be reinforced in writing to the agent. So I'll give you a good example while we're here just to talk about how this plays out and this was a matter that was litigated where we acted for the insurer we've got an agent that's very high-profile a very good agent, good systems very well-regarded and a good agent.

Brian: And a good disclaimer?

Lisa: Well yes ultimately a fair disclaimer and so the agent speaks to a vendor there's a process before he list it there are many visits to the property and this particular property has a lift and so it's a three level house the only access to the bottom level of the house the basement level is via the lift so the agent lists the property and of course it comes up in the listing. "What's the story with the lift" because it doesn't operate and the vendor says "Oh look, we don't bother with the lift to get downstairs. A purchaser could enter into a lift maintenance contract and then they just come out and they reconnect it all back up. We just walk around the outside of the property." When the contract comes....

Brian: When you say "walk around", they walk around on their property?

Lisa: On part of their property and then on to a neighbour's property to get to the basement level. So they're actually going onto someone else's property to get to the bottom level of this home.

Brian: That's a concern!

Lisa: When the contract comes it's noted in the contract that there's no access externally to get to this basement, the only way to get to the basement is to use the lift. There's no internal stairwell you'd have to have the lift operational. So the agent shows prospective purchasers through the property walks around the illegal way shows them the bottom level a purchaser makes several enquiries about the property, emails the agent, "I have five questions" of which one of them is "What's the situation with the lift?" the agent gets the email directs it, forwarded it straight on to the vendor. "Can you just give me some answers to this?" The vendor answers and in respect to the lift he says "lift works fine all you need to do is enter into a service contract, they'll reconnect it back up, we don't bother we just walk around, no problem". Sends it back, the agent gets it doesn't add anything to it sends it straight to the purchaser. That buyer doesn't end up buying the property and when he shows through further purchasers, same question arises "What's the story with the lift?" so he provides the information as he has been given that he has in writing.

Brian: From the vendor?

Lisa: From the vendor. Okay. He shows the property, so course of conduct, he shows the property by walking them over the illegal part getting into the bottom of downstairs to have a look and the purchaser says "Oh, so this is the only access at the moment?" "Yeah this is the way the vendor has always used the property." So the purchaser purchases the property with the 66w it all happens very quickly there's no pest or building report he moves in, phones a lift maintenance company to come out to connect the lift up and they say "Oh we can't connect this lift." "Why is that?" "Oh, well the story with this lift is that the vendor's wife fell down the lift shaft she ended up being a paraplegic the lift doesn't comply the whole lift has to come out, we're going to have to take the roof off this is an important lift it's not to the Australian standard." About $200,000 to replace the lift! The purchaser has a falling out with the neighbour, the neighbor says "You're not using my property to get to your bottom level anymore."

Brian: Yeah so that's trespassing now.

Lisa: Yeah that's right. So just looking at it from the agent's point of view, he had all the marketing signed off on by the vendor, he had instructions in writing and he had a disclaimer. The purchaser litigated he didn't litigated against the vendor for breach of contract he went straight after the agent so having a good disclaimer is is very important but it doesn't get you out of a clear misrepresentation or course of conduct and again court will always look at the whole of the misrepresentation.

Brian: But all the agent did was pass on the information the vendor gave him in writing.

Lisa: That's right.

Brian: And they're still liable for that?

Lisa: Yes, because in trade and commerce it's conduct that misleads or deceives.

Brian: So how can an agent reduce their risk?

Lisa: Well have good insurance, first of all. What the agent did was good and it's what we in previous sessions you know we've talked about get everything signed off and get it done in writing but I think we need to consider making further inquiries so if the lift is essential to getting to that bottom level and you're aware of it the contract comes in and you have no other access are we prepared now to take from our vendor's information such as all you need to do is X. Is it now prudent for the agent to say can you go get lift people to come out and get that price so we can pass that on and take a little bit further dig a little bit deeper that would have assisted the agent in this particular matter if they just taken it to the next level.

Brian: So my question is this and I'm sure you're ready for it give me the disclaimer I should be using.

Lisa: Well there's no perfect disclaimer that's important because again you've got a couple of with the Australian Consumer Law and this is where you're going to be brought undone so that you know the nature of the parties are you an experienced they talked about in the high court case with Butcher v Elder about a shrewd property investor that was intelligence of the nature of the the people and what they would have understand that document to be and the disclaimer to mean so there's not a perfect disclaimer. The courts are going to look at the nature of the information and the expertise of the agent. So again this is going back to agents saying I'm a specialist in this. I just do that. If you hang that out there when you get into court the other side says "Oh but they said they are specialists that's all they do they do water fronts they do XYZ" So be careful about raising that level of expertise. Whether the disclaimer and the brochure effectively qualifies the information okay so this is being careful about we deem it to be reliable. No you don't want to be saying that! Whether the agents adopted or endorsed the information for the purpose of selling land and the characteristics of the buyer and their impact on the understanding and the perception so is there a perfect disclaimer? No. What would we like to see? State the source of the information. Okay, this information has come from the vendor. Have the disclaimer on every page, so if you're handing documents out to people at an open house in the High Court case returning back to that, the agent handed that he said here's everything you need as you handed it over and it had a survey on it which turned out to be incorrect and was litigated on so have the disclaimer on every single page of what you're handing out to people.

Brian: The agent wasn't part of that litigation of the survey?

Lisa: In the high court case? Yeah, he was because he incorporated the survey into his document. The agent does not guarantee the accuracy of the information. That's really important. Purchasers need to make their own independent inquiries. Returning back to that High Court case and I mean it's been trained to death, Butcher v Elder, so we won't go into it today, but one of the issues was a survey, that was wrong, put on the agent's brochure. The buyer had three inspections, on the third inspection he turns up his builder and he says I want to build XYZ on the property and he says, he hands the agent's brochure to the builder, there's the survey and the independent enquiries the Builder looks at the survey on the agent's brochure and says based on that you can do XYZ. He bought it and he couldn't because the survey was wrong. So be careful about incorporating other people's information in as your own and be mindful of the font size and the print. Don't have it, and this is in the dissenting judgment by justice Kirby, you know you can't have really small disclaimers at the bottom, you've got to look at the the document as a whole.

Brian: Well there's a lot there Lisa.

Lisa: Yes!

Brian: Very interesting and I think we may need to have our agents listen to the tape a couple of times to take all that in, but we thank you very much for sharing that with us today.