‘Who Do I Sue?’
Have you ever found yourself in the position where you have suffered loss or damage as a result of another party or parties’ negligence or default? If so, it’s highly important to consider against whom you should enforce your claim when suing for damages as this can often determine the success or failure of your claim.
At Green & Associates, we recently acted for a property developer who purchased a residential property with the intention to subdivide and redevelop for re-sale. Our client was wrongly advised by his conveyancer that the land was over the threshold size allowing him to subdivide. He was also advised by the vendor’s agent (through their marketing materials) that the land was over the threshold size for subdivision.
Our client suffered loss of opportunity damages and incurred costs in engaging surveyors and architects to develop concept plans he was not able to action. Our client thus had a claim against his conveyancer, in negligence. In addition he had a claim against the vendor and the vendor’s agent, including but not limited to for misleading and deceptive conduct and/or deceit and/or negligent misrepresentation.
The question then became, against whom should our client bring his claim? The conveyancer, the vendor or the real estate agent?
The first issue to consider was the apportionment of the claim. Who was liable for our client’s loss from a legal perspective and in what proportion? This is a crucial consideration that will turn on the particular facts and circumstances of each case.
Secondly, other principles such as agency are often at play. Here, the real estate agent’s acts would have been imputed to their client. Therefore, if the agent did not act outside of the scope of their instructions and/or authority, in some cases, it may be that suing them as opposed to the vendor directly would have increased our client’s exposure to a costs order.
A client should also consider which entity would have the money to pay out his claim. Whilst our client had a strong claim against the vendor (who was a natural person) for misleading and deceptive conduct, it was unlikely that the vendor was well-resourced enough to pay out any claim against them. This was particularly of note given they had used the proceed of sale to purchase another property. Also, they were not otherwise insured as a conveyancer is obliged to be.
In such cases, asset searches can come in handy as they reveal whether an individual person own property or multiple properties in Australia. This is often a good indication as to whether they would have the money to pay out a claim. Even if a matter goes to court and a judge finds against a defendant who is a natural person, it may not result in a settlement. If the defendant does not have the money to pay, attempting to enforce the judgement against the person’s assets or other income (i.e. by way of garnishee order) becomes a whole other battle in and of itself.
Moving Into Litigation
These considerations are important even in pre-litigation steps, such as sending letters of demand to one party over the other. In this case, our chosen strategy was to send a letter of demand to the conveyancer in which we outlined our client’s claim for professional negligence. We requested that they bring our letter to the attention of their insurer. Sure enough, by employing these tactics, we were able to secure a quick and substantial offer of settlement from the conveyancing firm’s insurer.
The conveyancing firm was obviously keen to avoid the reputation damage that would have arisen if a claim had been brought against them. The existence of their professional indemnity insurance (which they are obliged to hold) gave us confidence in bringing our client’s claim against them. Our strategy also left open the option for our client to also pursue the vendor and/or the agent for further damages, having regarding to the apportionment issue noted above.
At Green & Associates, not only are we well-versed in the legal arguments to deploy when bringing a claim against another party but we also have the necessary litigation experience to determine against which entity to enforce a claim to improve our client’s chances of success. Should you find yourself in a similar situation to the one described in this article, contact our firm so that we can discuss your options with you.
