Facts: The respondents contracted with the appellants to purchase real property for the purpose of building home units. While the respondents inspected the site with the appellant’s agent, they asked him about access to the property and the agent only showed them a plan of the development attached to the contract which confirmed a driveway coming from the road. In fact, the driveway was a public road and the licence belonged to the appellant. The appellant had been silent as to the necessity of a grant of a licence by a statutory authority (failed to say anything about the licence). When the respondents found out, they rescinded the contract and initiated the proceedings. The appellant cross-claimed seeking specific performance and, in lieu thereof, damages for breach of contract.
Held: Generally a failure to disclose will not be misleading "conduct" under s 18, Australian Consumer Law unless the circumstances are such as to give rise to a reasonable expectation of disclosure.
Issue: Was the silence here “misleading”?
Held: The appellant’s silence constituted misleading or deceptive conduct, and accordingly, the contract should be set aside. The Court found that the positive misrepresentation as to vehicular access as well as misleading conduct from failing to say anything about the licence created 'the clear but erroneous impression that there was nothing unusual concerning access to the site'.
Held (Spender J at [70]): Whether silence constitutes conduct which is misleading or deceptive of course depends upon the circumstances. Here the circumstances were special and out of the ordinary. Moreover, the express representations by Demagogue were such as to indicate that there was nothing unusual at all about this aspect of the development. In this case, there was both a positive misrepresentation, and a misrepresentation conveyed by a failure to say anything about a road licence. In the opinion I hold of the circumstances, Demagogue through Mr Miller and the draft contract created a clear but erroneous impression that there was nothing unusual concerning the access to this site and, in particular, there was no suggestion that a road licence from the Lands Administration Commission was necessary to provide such access. The vendor was silent as to conditions which might affect the continued existence of the licence and as to the fact that a small but not trivial financial contribution would be required.