Does a seller really have to tell a buyer about a nuisance neighbour? Understanding seller disclosure laws and buyers' rights

Thillagaratnam v Doan [2022] WASC 185

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Key Takeaways

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1. This case highlights the importance of sellers and agents disclosing all material facts that could impact a buyer’s use and enjoyment of a property.

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2. A ‘material fact’ includes anything that could have an impact on the use and enjoyment of a property and its potential value.

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3. A seller’s knowledge of a nuisance neighbour’s disruptive and anti-social behaviour is a ‘material fact’ that is required to be disclosed to a buyer.

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4. Failure to disclose such information can lead to significant legal consequences, including recission of a contract and compensation for losses.

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5. Material fact obligations vary across different states and territory throughout Australia and sellers and agents should ensure that they understand these disclosure requirements.

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Facts

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In early 2015, Ms Thillagaratnam, the buyer, entered into a contract of sale with Mr Doan and Ms Nguyen, the sellers, for the purchase of a residential strata-titled apartment known as Lot 6, which was located on the ground floor of a unit complex in Perth for $390,000.

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The contract incorporated a general condition that stated:

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“the Seller does not know of anything which will materially affect the Buyer's use or enjoyment of the Strata Lot or of the common property comprised in the Strata Scheme.”

 

The seller did not disclose the existence of a neighbour who lived in Lot 16 located on the first floor of the complex, directly above Lot 6. This neighbour had habitually engaged in anti-social behaviour which affected her use or enjoyment of Lot 6.

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The buyer sought recission of the contract and also damages totalling over $527,000 including on the basis of breach of contract and reckless fraudulent misrepresentation. 
 

The Court found that:

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• the neighbour had “a long history of breaches of violence restraining orders, common assault and disorderly behaviour relating to other occupiers of the strata complex and in particular Lot 6, dating from at least 2001”;

• the previous owners of Lot 6 had “complained about 'an excessive amount of noise' created by 'repeated banging on their ceiling, apparently caused by hammer blows' as well as 'extremely foul language and loud cursing’” by the neighbour;

• a previous tenant of Lot 6 said that “the neighbour made their lives misery because they could not make any noise above a whisper including by turning on the hot water for fear of triggering an ‘angry backlash’ from him”;

• the neighbour was “an obnoxious occupier who overreacted to any noise from Lot 6 by banging on his floor, playing his television and stereo at an excessive noise level and swearing at the other occupiers of the complex…”;

• the minutes of an annual general meeting “refer to the neighbour’s unacceptable behaviour towards owners/tenants and trades people attending the complex and the alleged damage caused to the complex by the neighbour”;

• the neighbour’s behaviour “was completely irrational and unacceptable".

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Judge Curthoys further reasoned;

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• “A ‘normal’ person does not react so adversely to noise, they do not hammer on the floor, they do not abuse their neighbours by swearing and insulting them.”

• “A ‘normal’ person does not scare children with their conduct. A ‘normal’ person does not react to cars and people coming in and out of the complex” in the manner that the neighbour did.

• The neighbour’s “conduct is a matter which falls squarely within ‘anything which will materially affect the Buyer’s use or enjoyment of the Strata Lot".

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Did the seller breach the general condition in the contract?

 

The Court first considered whether the seller breached the general condition in the contract by failing to disclose their knowledge of the neighbour’s behaviour. The Court was satisfied that the general condition contemplated an obligation of disclosure regarding the conduct of other occupants within a strata complex where that conduct will materially affect the buyer's use or enjoyment of a strata lot. The terms of the clause, particularly the reference to 'anything' affecting 'use or enjoyment', were considered to be sufficiently broad to encompass matters relating to the conduct of other occupants. As such, the neighbour’s conduct was found to be a matter that falls squarely within “anything which will materially affect the Buyer's use or enjoyment of the Strata Lot”.

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Was the seller’s failure to disclose sufficient to amount to a fraudulent misrepresentation?

 

The Court was then required to consider whether the seller made a fraudulent misrepresentation by representing that they did not know of anything which could materially affect the buyer’s use or enjoyment of Lot 6. A representation is fraudulent where the maker of the representation lacks belief in the truth of the representation or makes it recklessly, not caring whether it was true or false. 'Recklessness' involves not caring whether the statement is true, that is, an indifference to the truth.

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The Court determined that the execution of the contract despite the sellers knowledge that the neighbour could materially affect the use or enjoyment of her apartment was at the very least, made recklessly, not caring without whether it was true or false. For this reason, it was found that the sellers representation was made fraudulently.

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The Court ultimately held that the sellers had breached the contract and had also engaged in reckless fraudulent misrepresentation by failing to disclose the disruptive and anti-social behaviour of the neighbour. The seller was ordered to refund the purchase price and also pay the buyer for losses that she suffered as a result of entering into the contract.

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What are the ‘material fact’ obligations across Australia?

 

Under the Australian Consumer Law, sellers and agents are prohibited from engaging in misleading and deceptive conduct provided that the conduct occurred ‘in trade or commerce’.

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The ‘material fact’ obligations vary slightly across jurisdictions throughout Australia. There are different disclosure obligations imposed on sellers and or agents depending on the State or Territory that you live in.

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In New South Wales, section 52 of the Property and Stock Agents Act 2002 requires an agent to disclose all known facts. Section 60 of the Property and Stock Agents Regulation 2022 prescribes that flooding, significant health or safety risks, environmental issues, if the property was the scene of a crime of murder or manslaughter or used to manufacture or supply drugs, combustible cladding, and serious defects are material facts.

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In Victoria, section 12(d) of the Sale of Land Act 1962 requires any person (which includes an agent or a vendor) to disclose all material facts that are known or that they ought to reasonably know. Consumer Affairs Victoria has issued Material Fact Guidelines which confirm that building defects, the underlying cause of an obvious physical defect, flood, bushfire, history of pesticide use, restrictions on vehicular access, facts about the neighbourhood surrounding the property, serious crime including a homicide, extreme violence or an event that creates long term risks to health and safety all constitute material facts. 

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In Western Australia, section 24 of the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016 requires agents including buyer’s agents to disclose material facts. While there is no specific definition as to what constitutes a material fact it includes anything that would be considered important to a reasonable person in deciding whether to proceed with a particular purchase.

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Up until recently, in Queensland there was no general statutory obligation to disclose material facts about a property to potential buyers before a contract is signed. However, on 1 August 2025, the Property Law Act 2023 (Qld) will take effect and marks one of the most significant changes to Queensland’s property law which establishes a seller disclosure regime for Queenslanders. Sellers will then be required to disclose prescribed information about a property being sold including encumbrances, zoning information, notices issued by a statutory authority, tree order or dividing fence disputes, environmental issues, building defects, and unsatisfied show cause notices.

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In South Australia, pursuant to section 7 of the Land and Business (Sale and Conveyancing) Act 1994 vendors are required to provide buyers with information including any encumbrances, easements, planning, development or infrastructure related matters including zoning, heritage matters, and restrictive covenants. 

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In the Australian Capital Territory, section 9 of the Civil Law (Sale of Residential Property) Act 2003 mandates that sellers of residential properties disclose certain documents to a buyer including copies of any Crown lease, certificate of title, deposited plan and any encumbrances.

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In Tasmania, sellers and their agents have a limited obligation to disclose material facts about a property, primarily focusing on title defects. This is the case also with the Northern Territory.

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Do you think that there has been a breach of contract or failure by the seller to disclose a material fact?

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The first step is to seek legal advice. If you believe that there has been a breach of contract or a failure in some way by a seller to disclose a material fact about a property that you have purchased, Arida Lawyers can assist you. Knowing whether you can terminate the contract based on the seller’s conduct is essential because termination without proper cause can itself be a breach and open you up to a potential claim for damages being brought against you. 

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At Arida Lawyers, we provide a variety of legal services focused on the Australian Consumer Law and understand the rights available to buyers where there has been a breach of contract. We know that navigating the intricacies of these laws can be challenging, and we are committed to guiding you through every step.

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​If you have a consumer law, property dispute, or contract issue and want clarity about your legal options, we invite you to book a free 10-minute telephone consultation with our team today.​

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This article provides general information relevant to our legal services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.

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