Professional Liability Guide

CHAPTER 1 – DUTIES

The applicants argued that, nevertheless, the statement of an incorrect opinion is misleading or deceptive or likely to mislead or deceive merely because it misinforms or is likely to misinform. An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing.’ 136

However, as noted above, an expression of opinion may carry with it an implied representation that the opinion expressed is honestly held or there is a reasonable basis for the opinion, or both.

In such a case, the focus of the inquiry is not on whether the statement would ultimately prove to be accurate but on whether there were reasonable grounds for the representation. Whether reasonable grounds exist is to be determined by the facts and circumstances at the time the statement was made. An opinion that was either not held at the time it was expressed, or lacked adequate foundation, may be considered misleading. For example, in Bateman v Slatyer, 137 the seller of a business made a representation regarding the profitability of the business that was held to be misleading because no serious attempt had beenmade to establish a proper basis for the cash flow projection represented. In light of the information then available, the seller could not have believed that the figures were soundly based. Similarly, in Kumar v Sydney Western Realty Pty Ltd & Anor (No 2) , 138 a real estate agent advertised that a property with a granny flat was ‘ a fantastic opportunity for an astute investor to secure a dual income property investment’, despite having a notice that the granny flat was not permitted for habitable use. The Court found this to be a statement of fact. The second defendant, being the conveyancing solicitor for the buyer, also failed to flag the notice, and a claim was made against the solicitor in negligence. The Court found that the advertisement was misleading or deceptive and that the solicitor was negligent, and apportioned damages at 25% to the agent and 75% to the solicitor, with a 15% reduction being made to the award for contributory negligence. The question of whether there are reasonable grounds for making a particular representation is an objective one. A genuine or honest belief on the part of the representor is relevant but not sufficient to show reasonable grounds. 139 For there to be reasonable grounds for a representation there must exist facts that are sufficient to make the representation reasonable. 140

Representations with respect to future matters In Ting v Blanche , Hill J said:

‘It will be readily apparent that a representation as to future conduct or a future event will generally imply (and sometimes explicitly state) that the maker of the representation was of a particular state of mind as to the future conduct or event as at the time the representation was made. A representation that a particular occupancy rate for a hotel might in the future be achieved, or, as alleged here, that a particular rent for nominated premises could be achieved in a future letting, impliedly involves a representation that the maker of the representation believed that the occupancy rate or rental could be achieved. It would be no less a representation as to the future by virtue of this implication.

136 (1984) 2 FCR 82 [31]. 137 (1987) 71 ALR 553. 138 [2021] NSWDC 446. 139 Cummings v Rundle (1993) 41 FCR 559, 565. 140 Grande Enterprises Ltd v Pramoko [2014] WASC 294 [63] affirmed on appeal in Pramoko v Grande Enterprises Ltd (2015) 108 ACSR 469.

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