Butcher v Lachlan Elder Realty Pty Ltd

What happened?

The brochure for a $1.36 million Pittwater waterfront property reproduced a survey diagram dated 1980 showing the swimming pool inside the property's boundary. The mean high water mark plotted from the registered plan's measurements ran through the pool instead — whether accretion had since carried the true boundary beyond it was never resolved, because the majority found the agent had made no relevant representation ([21], [35]). The purchasers took advice from a solicitor and a builder, bought at auction, and sued the agent under s 52 of the Trade Practices Act 1974 (Cth). The brochure carried two disclaimers in small type: information was gathered from sources believed reliable, accuracy could not be guaranteed, and interested persons should rely on their own enquiries.

What did the Court decide?

The appeal was dismissed, three to two. The reason was not that a disclaimer excused the agent. "The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it" — a conclusion the majority (Gleeson CJ, Hayne and Heydon JJ) drew from "the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself" ([40]). The conduct had to be viewed as a whole; it was "not right" to analyse its effect "divorced from 'disclaimers' about that 'conduct'" ([39]). As for the disclaimers themselves, they were not decisive — they "do have some significance", and although they were in small type "the brochure was a short document, there was very little written on it, and the disclaimers were there to be read" ([49]–[50]).

The majority also settled how the question is framed. Conduct directed at a class in a general sense is analysed through a representative member; but where a plaintiff alleges a particular misrepresentation made to identified persons and seeks monetary relief, that approach is "inappropriate" and the individual one "inevitable", because causation depends on analysing the defendant's conduct in relation to that plaintiff alone ([36]–[37]).

McHugh J and Kirby J would have allowed the appeal.

Why does this case matter?

It is most often cited for something it does not hold — that a clear disclaimer defeats a misleading conduct claim. The Court of Appeal had declined to give these disclaimers "decisive significance", and the majority did not disturb that; it said only that they "do have some significance" ([50]). Small print that neither purchaser noticed did not win the case on its own, and an answer that leads with the disclaimer has taken the smallest part of the reasoning for the whole of it.

That is also why the Court divided three to two, and why the case is a poor source of portable rules. McHugh J and Kirby J read the same brochure, the same small type and the same purchasers and would have allowed the appeal. When the outcome depends on evaluating particular conduct between particular people, reasoning from Butcher straight to a general proposition about brochures skips the step the majority insisted on.

Exam and application relevance

Start with who is complaining and what they say was represented to them. If a particular misrepresentation to identified persons is alleged and damages are sought, do not reach for the reasonable member of a class — the majority called that approach inappropriate in exactly that situation ([37]). Then assemble the whole dealing: how long the document was and what it said, what each side knew about the other, what the transaction was, whether advisers were engaged and what they were working from. Put the disclaimer in that pile rather than at the top of it, and be ready to say what the defendant's part in the transaction actually was.

Check your understanding

Neither purchaser noticed either disclaimer. Why did that not decide the case in their favour?