Written by The New South Wales Court of Appeal has recently provided important guidance on contamination disclosure obligations in property transactions, confirming that buyers cannot assume sellers are required to volunteer all information that may be relevant to a purchaser’s investigations.
The decision in 191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd [2024] NSWCA 221 considered a question that regularly arises in property transactions: can a seller’s failure to disclose known contamination amount to misleading or deceptive conduct under the Australian Consumer Law (ACL)?
The dispute arose from a proposed acquisition of land at Meroo Meadow, NSW. Before the transaction proceeded, the purchaser was given an opportunity to undertake due diligence enquiries and investigations in relation to the property. The parties’ arrangements required the seller to provide access to information, facilitate inspections and assist the purchaser with its due diligence efforts ‘as far as possible’.
During the course of the proposed acquisition, environmental assessments revealed significant contamination on the property, including buried waste and asbestos-containing materials. The purchaser argued that the seller was aware of at least some of these issues and that its obligation to assist ‘as far as possible’ required it to disclose that information. On that basis, the purchaser alleged that the seller’s conduct was misleading or deceptive.
The Court rejected those arguments. It held that an obligation to support or facilitate a purchaser’s due diligence process is not equivalent to a contractual duty to identify and disclose every matter that may be relevant to the purchaser’s investigations. The Court found that the seller’s obligation was one of cooperation, not proactive disclosure.
The decision is a timely reminder that disclosure obligations are determined by the terms of the parties’ agreement. If purchasers expect to receive information about contamination, environmental risks or other adverse property conditions, those expectations should be reflected in express disclosure provisions, warranties or representations. The case also reinforces the importance of thorough due diligence. Purchasers should ensure that appropriate enquiries are made, expert advice is obtained where necessary and contractual protections are negotiated before committing to a transaction. In the absence of clear contractual language, courts may be reluctant to impose disclosure obligations that the parties themselves did not include.