The Duty of Care of Conveyancers

Patterson & Anor v Mamou (t/as De Novo Conveyancing) (2024) NSWDC 47

A recent case in the District Court of NSW Patterson & Anor v Mamou (t/as De Novo Conveyancing)[1] explored the duty of care obligations owed by a conveyancer to a purchaser of property. In addition the case emphasised the importance for building inspectors to carry out a thorough and complete inspection of the entire property.

The Case

The plaintiffs purchased a property that contained works which had taken place without council approval. Prior to the expiry of the cooling off period under the contract for sale of the property (Contract), the conveyancer’s attention was drawn to Special Condition 14 of the Contract. Special Condition 14 disclosed the conversion of a garage to living area, a conversion of a rear awning and the construction of a sunroom that had been carried out without council approval, and that the purchaser accepted the Property including these works and “shall not make any objection, requisition claim for compensation or purport to rescind this Contract due to this disclosure.”[2]

The main issues before the court were:

1. whether the conveyancer disclosed to the purchaser the details of Special Condition 14 of the Contract:- the vendor had carried out building works to the property without council approval ('Special Condition 14'); 
   

2. if not, whether the conveyancer had advised the plaintiff to obtain a building inspection report; and  

3. if so, whether there was any proportionate liability attributed to the building inspector.

Findings

The Court in making its decisions considered the plaintiffs being first home buyers and determined that the conveyancer had failed to disclose Special Condition 14 to the plaintiff. If the purchasers had been informed by the conveyancer that the house contained illegal structures they would not have proceeded with the sale[3].

The Court further identified that if they were to accept that the conveyancer had advised the plaintiffs about the illegal structure during a telephone call on 20 July 2018, that conversation was inadequate as it did not adequately disclose the risk of purchasing a property with unapproved structures.

Regarding the proportionate liability of the building inspector, the Court held that the building inspector ‘had overlooked defects which someone in their position would have discerned’[4]. As a result, the builder inspection was a ‘concurrent wrongdoer’[5]. The Courts allocated 70% of the responsibility to the building inspector, but only 30% for the conveyancer, as the building inspector was in a ‘superior position to advise the purchasers on the real condition of the Property’[6].

The Court ordered damages to the amount of $43,800 to the plaintiffs[7].

Key Takeaways:

The case highlights the extent to which the duty of care obligations for a conveyancer extend to a purchaser of property. It is imperative for a conveyancer to disclose all material risks associated with the contract and the property to the purchaser. It is recommended that a conveyancer keep detailed notes and records of what advice is provided to clients.

The case also demonstrates the importance for building inspectors to exercise care and diligence when making a report about a property, especially to fully investigate the site and whether any additions have been made with/without prior council approval.

If you require assistance with your property purchase, please contact our people.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202

[1] Patterson & Anor v Mamou (t/as De Novo Conveyancing) [2024] NSWDC 47

[2] Ibid 31.

[3] Ibid 118.

[4] Ibid 144.

[5] Ibid 149.

[6] Ibid 157.

[7] Ibid 196.