Demagogue v Ramensky - Case Summary PDF

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Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15 Introduction At common law there are three situations in which a duty to disclose may arise (half-truth, falsification, fiduciary duty). In the context of the Trade Practises Act 194 (Cth), the scope of the duty to disclose is significantly broader. It should instead be asked whether there is an ‘expectation of disclosure’. This looks to the representee’s (reasonable) expectations. A duty to disclose will arise if, in the circumstances, the representee was entitled to say ‘this should reasonable have been disclosed’. Issues:  Was the failure to disclose relevant costs misleading?  Is there a duty to disclose such information? Facts

Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a ‘strong tenant’ had been organised. The contract proceeded on the grounds that such a tenant had been arranged. Unbeknown to

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

Krakowski, Eurolynx had entered into an addional agreement with the tenant to provide funds for the rst three months rent to ensure the contract went ahead. When the tenant defaulted on the rent and subsequently vacated the premises, Krakowski found out about the addional agreement and rescinded

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

the contract with Eurolynx. It was held that Eurolynx’s failure to disclose all material facts about the ‘strong tenant’ was enough to constute a misrepresentaon and the contract could be rescinded on these grounds. The lease was the misrepresentaon because they

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

didn’t disclose the enre agreement Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a ‘strong tenant’ had been organised. The contract proceeded on the grounds that such a tenant had been arranged. Unbeknown to Krakowski, Eurolynx had entered into an

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

addional agreement with the tenant to provide funds for the rst three months rent to ensure the contract went ahead. When the tenant defaulted on the rent and subsequently vacated the premises, Krakowski found out about the addional agreement and rescinded the contract with Eurolynx. It was held

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

that Eurolynx’s failure to disclose all material facts about the ‘strong tenant’ was enough to constute a misrepresentaon and the contract could be rescinded on these grounds. The lease was the misrepresentaon because they didn’t disclose the enre agreement

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a ‘strong tenant’ had been organised. The contract proceeded on the grounds that such a tenant had been arranged. Unbeknown to Krakowski, Eurolynx had entered into an addional agreement with the tenant to provide funds for the

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

rst three months rent to ensure the contract went ahead. When the tenant defaulted on the rent and subsequently vacated the premises, Krakowski found out about the addional agreement and rescinded the contract with Eurolynx. It was held that Eurolynx’s failure to disclose all material facts

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15

about the ‘strong tenant’ was enough to constute a misrepresentaon and the contract could be rescinded on these grounds. The lease was the misrepresentaon because they didn’t disclose the enre agreement      

Mr and Mrs R entered into a contract with D to purchase an estate. The contract stated that, upon completion, the land and building would be subdivided into lots and common property. Mr and Mrs R had asked about access to the property, and we were told the developer would build a driveway to the road. Later, Mr and Mrs R were shown a plan that showed a driveway coming from the road; they believed this represented the usual situation on whereby this road would run through common property. In fact, the driveway was a public road and the respondents would need to enter into a lease with the Crown D bought a unit off the floor plan, and now wants to escape the contract because of a property bust.

Demagogue Pty Ltd v Ramensky & anor (1992) 110 ALR 15   

The statement, ‘we’ll build an access road [to the property]’ was made by the vendor; however, the road would need to cross over public land, requiring an application to be lodged and granted (retrospectively) Fees would be payable to maintain the access road The buyers (Ds) claim that failure to disclose the costs of upkeep for the public access road was misleading or deceptive, and sought recision of the contract.

Outcome 

Ramensky’s failure to disclose here constitutes misleading or deceptive conduct

Reasons for Deciding 

In relation to the sale of land, a specific doctrine exists that there is only a duty to disclose any defects of title.



No other duties of disclosure are imposed upon a seller (eg, as to the quality of land)



Here, there is no duty to disclose because the defective title doctrine does not apply to misleading conduct



Instead, however, it should be asked whether there is an ‘expectation of disclosure’ o In the circumstances, was the representee entitled to say ‘this should reasonably have been disclosed”?

Rules / Gems / Quotable Quotes 

The general law has developed a distinction between defects in title and defects as to quality of the property sold. The vendor’s duty of disclosure is confined to latent defects intitle. When the complaint of the purchaser is one going to the quality of the land sole or to the use to which it may be put, or that its value will be less than supposed, there is no duty of disclosure.



The case concerns both a positive misrepresentation, as to the provision of vehicular access, and misleading conduct from the failure to say anything about the Road Licence, with the whole of the circumstances creating in the respondents the clear but erroneous impression that there was nothing unusual concerning access to the site. To inquire such a case whether an independent “duty to disclose” has arisen is to digress from the terms of s 52.



In Australia, if a contract is rescinded in equity for some vitiating factor in its formation, it is not sufficient for the defendant to show that the transaction to which the complainant was improperly induced to assent contained terms which, viewed objectively, were not manifestly disadvantageous....