What's the parking situation like? Important lessons for property purchasers and agents

Monday, 04 Dec 2017

Property purchasers and especially real estate agents should take note of a Supreme Court decision handed down last week in relation to representations made regarding a property’s right of way (aka “easement for carriageway”), and whether the property owners had the right to park on the right of way.

The property

The property in question is located in Bellevue Hill, at the end of a right of way which serviced 2 other properties.  Each of the 3 properties owned a small (2.44 metres wide) strip of the right of way, leading from each of their respective properties down to the street.  Together, the strips made a right of way 7.32 metres wide.

The property’s house, garage and courtyard were behind a gate leading onto the right of way.  On the walls bordering the right of way directly outside the gate were signs saying “private parking”.  It is understood that the owners of the property parked up to 4 cars in that area.

The plaintiff exchanged contracts in October 2014 with a purchase price of $9.4 million, and the sale was completed in February 2015.

The real estate agent’s representations

Based on that information provided by the property owners, the real estate agent made the following representations in the marketing materials and also in discussions with the purchaser prior to exchanging contracts:

·         There was “plentiful parking” available, consisting of “private off street and driveway parking”; and

·         The strip of driveway outside the property’s gate provided 4 extra car parking spaces for the property.

It was a particularly relevant point to make about the property because there was no on-street parking available in this part of Bellevue Hill.  The property's marketing material (including the floor plan showing the off-street parking)  can be seen online here.

The contract

As required by law, the contract included the deposited plan diagram and easement documentation, which clearly showed that the narrow strip of land formed part of the right of way for use by the other 2 property owners.  Likewise, the property in question could use the other parts of the right of way which belonged to the other 2 property owners.

That is, each of the 3 property owners had the right to unfettered access over the entire right of way from their respective properties down to the street.

The contract also contained a special condition that the purchaser could not rely on any representations made to it by anyone (including the real estate agent), and could only rely on the content of the contract.

Interestingly, in his initial pre-purchase review of the contract, the purchaser’s lawyer commented that he had “no major concerns” and then went on to detail various parts of the contract, including the right of way, describing the 3 strips and concluding that there is a common driveway 7.32 metres wide.

However, he did not address whether or not there was parking permissible on the right of way because it was not specifically raised as an issue by the purchaser.

The purchaser’s property valuation referred to “open parking for up to four cars, tandem style.”  The valuer’s statement did not come into issue, however, because it was shown that the purchaser never relied on the statement, but rather was only concerned with the actual valuation figure.

The purchaser’s arguments

The purchaser commenced proceedings in the Supreme Court, claiming that the representations made by the agent regarding the parking were misleading or deceptive, and she suffered loss as a result of those representations because the property was worth less than what she paid for it.

She gave evidence that she had specific conversations with the agent about the parking situation, noting that she required parking for their cars, their housekeeper’s car and their guests’ cars.

The purchaser even argued that because the private parking area was on the property’s land, she is entitled to treat the land as her own except to the extent that it substantially interferes with the rights of carriageway for the other property owners – in which case access could be made for cars to be moved to the extent that was necessary.

The agent’s response

The agent denied that it engaged in misleading or deceptive conduct.  Apart from the fact that there was issues as to what was orally said, the agent also argued that any such alleged conduct on its part did not have a part to play in the purchaser’s decision to purchase the property.  Further, it argued that if it had any liability to the purchaser, then the damages payable should be reduced because of alleged negligence by both the purchaser and the purchaser’s lawyer.

Important facts considered by the Court

The private parking was a positive selling point for the property, but it was not the most important one.  Rather, the property’s most attractive feature was its large area of flat north facing yard, a relatively rare feature in the local area.

Also, the purchaser’s husband is a property developer and should have been aware as to how such rights of way work.

The Court’s decision

The Court dismissed the purchaser’s argument that she had a legal right to park there because it was her land and she could move her cars if so required by the other property owners.  The Court stated:

   “But the difficulty is that [the subject property] has no greater right over the use of the driveway than either of the other lots.  If the owners of [the subject property] were entitled to appropriate one-third of the driveway area to themselves, except where a vehicle which is too wide to pass down the other two-thirds of the area needs to get past, then each of the owners of the other lots should be entitled to do the same with their ‘handle’ strip, and that would be unworkable.”

The Court held that describing the area as “private parking” was misleading and deceptive.

However, it was not a significant reason for the purchaser deciding to purchase the property.  Although it was a “positive factor”, there was no great value attributed to the parking situation, and even if the true legal situation was understood by the purchaser, they would have still purchased the property because of the purchaser’s emotional attachment to it.  As the purchaser’s husband stated – “my wife loved the property.”

Therefore, despite the misleading and deceptive conduct, it was held that the conduct did not have a relationship with the alleged loss.  Rather, the purchaser failed to take reasonable care in her own interests in conducting pre-contractual enquiries and negotiations.  Her lawyer did not have any responsibility in that respect, because he pointed out the legal effect of the easement, but was not made aware of any specific issue regarding the private parking.  As stated by the Court:

“In my opinion, a reasonable purchaser of property, particularly of this value, who was purchasing because of supposed rights to park in the ‘private parking’ area would have sought specific advice on his entitlement to do so … Had they done so, I am satisfied that the correct position would have become clear to them, namely, that although in practice they might use the area for parking, they had no absolute right to park there at any and all times … In my opinion, such a failure by [the purchaser] to take reasonable care for their own interests was a more immediate cause of their loss than the misleading and deceptive conduct of [the agent].”

The Court dismissed the claim, and ordered the purchaser to pay the agent’s costs.

Important lessons from this case

For purchasers – if there is a particular feature of a property that you are interested in, and place significant importance and value on (such as private off-street parking), then you should make specific enquiries with your lawyer regarding that feature, so that you can receive appropriate advice.  Do not rely on statements made by the property owner, or anyone else on behalf of the property owner.

For agents – this decision could have gone either way.  If the purchaser was able to establish that she placed significant weight on the parking situation, then the agent could have been held liable for her loss.  If you are unclear about the true legal situation regarding parking, then make enquiries with the owner’s lawyer.  This applies not only to Torrens title properties, such as this one, but also with strata properties.  We often encounter purchasers who have been told by the agent that they have the exclusive right to park in the area directly outside the townhouse's or villa's garage, when this is often not the case because that area is actually part of common property and not a designated parking space.

Contact Shire Legal if you require any assistance with understanding property contracts.

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