Professional Liability Guide

CHAPTER 3 – DEFENCES

Conduit defence In circumstances where an allegation of misleading or deceptive conduct is made against a person who has unknowingly passed on misleading or false information given to it by another, the conduit defence may be raised. The defence is so called because the person making the representation is said to be the mere conduit of the source of the information.

In Yorke v Lucas, 263 the High Court said:

‘If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.’ 264 When, however, a representation is conveyed in circumstances in which the person making the representation does not disclaim the information as being sourced from another, then that person will be considered to have made the representation. It will be a question of fact in each case. 265 In Butcher v Lachlan Elder Realty Pty Ltd, 266 it was alleged that a real estate agent misrepresented the location of the high-water mark when marketing a waterfront property by including in the marketing brochure an inaccurate survey diagram provided by the seller. The marketing material said to be misleading or deceptive contained a disclaimer that: ‘All information contained herein is gathered from sources we believe to be reliable. However we cannot guarantee it’s [sic] accuracy and interested persons should rely on their own enquiries.’ 267 Finding in favour of the real estate agent, the High Court said that whatever representation the seller made to the buyers by authorising the agent to issue the marketing material, it was not made by the real estate agent. The agent did no more than communicate what the seller was representing without adopting or endorsing it. 268 Similarly, in Hyder v McGrath Sales Pty Ltd, 269 a buyer of a $9.4 million Sydney property alleged that the real estate agent for the property engaged in misleading or deceptive conduct by advertising private and driveway parking to which the property was not entitled. The Court agreed with the agent, relying on Butcher v Lachlan Elder Realty Pty Ltd 270 in finding that: ƒ the buyers were purchasing an expensive residential property and would be expected to verify matters of importance; ƒ the information in question (entitlement to an exclusive parking strip) was not to be within the real estate agent’s own knowledge but was likely to have been obtained from the vendor; and ƒ all marketing material contained a disclaimer. ƒ the buyers here were wealthy and intelligent;

263 (1985) 158 CLR 661. 264 Ibid 666. 265 Gardam v George Wills & Co Ltd [No 1] (1988) 82 ALR 415, 427. 266 (2004) 218 CLR 592. 267 Ibid 596–597. 268 Ibid 605.

269 [2018] NSWCA 223. 270 (2004) 218 CLR 592.

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