This case, heard in the Supreme Court of New South Wales, involves a dispute over a property transaction where the buyer, Mr. Jonathan Mark Lewis, claimed the seller, Mr. Paul Jonathan Jones, failed to disclose significant issues with the property, including the presence of a major structural defect and a persistent odour originating from a neighbouring property. The court found that Mr. Jones had breached the sale contract by failing to disclose these material facts, ordering him to pay damages to Mr. Lewis.
Key details of the case
- Case Name: Lewis v Jones NSWSC 1187
- Court: Supreme Court of New South Wales
- Date of Judgment: 10 October 2025
- Parties Involved:
- Plaintiff: Mr. Jonathan Mark Lewis (Buyer)
- Defendant: Mr. Paul Jonathan Jones (Seller)
- Subject Matter: Dispute over a property sale contract, specifically concerning the alleged failure of the seller to disclose material defects.
- Property: A residential property located at 19 Waratah Street, Bondi.
Summary of the judgement
The core of the dispute revolved around the sale of a property at 19 Waratah Street, Bondi. Mr. Lewis agreed to purchase the property from Mr. Jones, but after the sale, he discovered two significant issues. The first was a major structural defect in the building, which Mr. Lewis argued was a material fact that should have been disclosed by Mr. Jones. The second issue was a persistent and unpleasant odour that permeated the property, which Mr. Lewis contended originated from a neighbouring commercial premises and also constituted a material non-disclosure. Mr. Lewis claimed that if he had known about these problems, he would not have proceeded with the purchase, or at least would have offered a significantly lower price. The court examined the contract for sale, which contained standard clauses requiring the seller to disclose certain defects. The judge found that Mr. Jones was aware of both the structural issue and the odour problem before the contract was signed. The court determined that the structural defect was indeed a substantial problem that impacted the property’s value and amenity, and that the odour, while its exact source was debated, was a persistent nuisance affecting the buyer’s enjoyment of the property. Consequently, the court ruled that Mr. Jones had breached his contractual obligations by failing to disclose these material facts. As a result, Mr. Jones was ordered to pay damages to Mr. Lewis to compensate for the diminished value of the property and the costs associated with rectifying the disclosed defects.
Questions and Answers
- Is it illegal to not disclose a known major structural defect when selling a property in NSW? Yes, it is generally considered a breach of contract and potentially misleading or deceptive conduct under consumer law to fail to disclose known major structural defects. This case highlights the importance of such disclosure.
- What constitutes a “material fact” in a property sale? A material fact is something that a reasonable buyer would consider important when deciding whether to buy a property or what price to offer. This can include significant defects, issues with neighbours, or problems with services.
- What if the seller genuinely didn’t know about a defect? If a seller genuinely had no knowledge of a defect, they cannot be held liable for non-disclosure. However, the burden of proof can be on the seller to demonstrate they were unaware.
- Can a buyer pull out of a sale if defects are discovered after signing? Generally, once a contract is unconditional, a buyer cannot simply withdraw. However, they may have grounds for legal action if there was a failure to disclose material facts, as seen in this case.
- What kind of odour would be considered a material non-disclosure? A persistent and unpleasant odour that significantly affects the enjoyment of the property, especially if its source is known or reasonably discoverable by the seller, could be considered material.
- How are damages calculated in such cases? Damages are typically calculated to put the buyer in the position they would have been in had the contract been fulfilled without the breach. This could include the cost of repairs, compensation for reduced value, or loss of amenity.
- What are the seller’s obligations regarding disclosure in NSW? Sellers have a duty to disclose certain prescribed matters and any other material facts that they are aware of and that are not readily apparent upon inspection.
- Does the contract of sale usually specify disclosure requirements? Yes, standard contracts of sale include clauses that outline the seller’s disclosure obligations.
- What is the consequence of breaching a property sale contract? A breach can lead to various legal remedies for the non-breaching party, including damages, specific performance, or in some cases, termination of the contract.
- Where can I find more information on property law in NSW? You can refer to the NSW Fair Trading website or consult legal professionals. You may also find simplified case summaries on websites like SAFLII simplified cases.
- What if the defect was visible but the severity wasn’t obvious? Even if a defect is visible, if its true severity is not apparent and the seller knows it is significant, they may still have a duty to disclose the extent of the problem.
- Can a real estate agent be held responsible for non-disclosure? Yes, real estate agents also have professional obligations and can be held liable if they are aware of material facts and fail to disclose them to potential buyers.
- What is the difference between a patent defect and a latent defect? A patent defect is obvious and discoverable upon reasonable inspection, whereas a latent defect is hidden and not discoverable through reasonable inspection. Sellers have a greater obligation to disclose latent defects.
- What happens if a seller misrepresents the property? Misrepresentation can lead to legal action, including claims for damages or rescission of the contract.
- Is there a time limit to bring a claim for non-disclosure? There are limitation periods for bringing legal claims, which vary depending on the nature of the claim and the specific legislation. It’s advisable to seek legal advice promptly.
The original judgement can be found at: Lewis v Jones NSWSC 1187. For more simplified case summaries, visit SAFLII simplified cases.