Misrepresentation and undisclosed property restrictions: buyers' rights after settlement

The first task is to identify the legal basis of the claim. The right to rescind for a defective section 32 statement has a statutory endpoint, while other remedies have their own requirements. A claim against a private vendor may also rest on different grounds from a claim against an estate agent.

Restrictions can exist beyond the registered title

A title search is an essential starting point, but it does not provide a complete account of every restriction affecting a property. Unregistered rights, authority notices and statutory controls may require separate investigation. Planning documents, water authority information, historical instruments and correspondence can each reveal different aspects of the land's legal and practical position.

The Victorian decisions in Payne v Morrison [1991] VicSC 166 and Fifty-Eighth Highwire Pty Ltd v Cohen [1996] 2 VR 64 illustrate the significance of undisclosed drainage infrastructure. Both concerned drains running beneath houses and failures of vendor disclosure. Both involved purchasers seeking to avoid their contracts before completion; they should not be treated as authorities establishing a general right to rescind after settlement.

The broader lesson is that the legal position may extend beyond the entries on the title. Equally, an authority's involvement does not establish that every statutory power has been exercised over the land. The particular right, restriction or obligation must be identified and its effect established.

What did the vendor have to disclose?

The Sale of Land Act 1962 (Vic) prescribes the contents of a section 32 vendor statement. Section 32C addresses easements and similar restrictions, whether registered or unregistered. Section 32D addresses specified authority notices and other matters directly and currently affecting the land that the vendor might reasonably be expected to know about.

The enquiry is whether the particular information falls within a statutory requirement. A vendor statement is not a comprehensive report on the property's physical condition or suitability for the buyer's plans.

The Act also addresses conduct beyond the prescribed statement. Section 12(d), read with the opening words of section 12, makes it an offence knowingly to conceal a material fact with the intention of inducing a person to buy land. From 1 March 2020, section 14(1) of the Sale of Land Amendment Act 2019 (Vic) replaced “fraudulently” with “knowingly” before “conceals”; material facts were already covered. The offence requires knowing concealment with the intention of inducing a purchase, not mere non-disclosure. It can apply to vendors and agents; an innocent omission is different from knowing concealment with the required intention.

The Consumer Affairs Victoria Material Fact Guidelines, made under section 12A, explain the concept. A fact may matter to an ordinary purchaser or be known to matter to a particular purchaser. Relevant evidence includes what was known, what was said or withheld and the context of the sale.

In Long Forest Estate Pty Ltd v Singh [2020] VSC 604, the dispute concerned a purchase that had not been completed. The purchasers failed to settle; the vendor validly terminated the contract and retained the $400,000 deposit. The purchasers' reliance on non-disclosure of environmental matters and alleged misrepresentations did not establish a right to avoid the contract. The decision illustrates the need to establish the particular disclosure breach or representation and the requirements for the remedy sought.

The Court also rejected the vendor's claim for compensation under section 118 of the Transfer of Land Act 1958 in relation to the purchasers' caveats. Despite the purchasers' failure on the contract issues, Mr Singh had an honest belief, based on reasonable grounds, in the interest claimed. An unsuccessful claim does not automatically establish that a caveat was lodged without reasonable cause. See our guide to caveat removal and compensation in Victoria.

Different rights apply before and after settlement

Section 32K permits rescission for specified disclosure failures. The right in subsections (2) and (3) must be exercised “before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits”. This is ordinarily reached at settlement, but the statutory test must be applied to the actual transaction, including any early-possession arrangements.

Section 32K(4) provides an exception where the vendor acted honestly and reasonably, ought fairly to be excused, and the purchaser is substantially in as good a position as proper disclosure would have provided.

If information is corrected after the contract is signed, its effect requires assessment against the timing, the breach and the statutory exception. Supplying a late certificate does not necessarily erase the consequences of an earlier failure.

See our guide to section 32 vendor statements in Victoria.

Section 48A remedies after settlement

Section 48A of the Sale of Land Act applies Part 8.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (other than section 213), with necessary modifications, to Sale of Land Act contraventions.

In particular, section 217 of the Australian Consumer Law and Fair Trading Act provides for recovery of loss caused by a contravention. Section 216 allows the court to make any order it considers fair where it finds a contravention and that another person has suffered or may suffer loss or damage as a result; the orders can include orders affecting a contract, repayment and compensation.

This is an important potential route for a buyer who has completed the purchase. It does not depend on establishing that the vendor acted in trade or commerce. A private vendor can therefore face a claim based on a Sale of Land Act contravention even where the Australian Consumer Law's trade or commerce requirement is not satisfied.

The buyer still needs to establish the underlying contravention and the causal connection to the loss claimed. Where the allegation is knowing concealment under section 12(d), its knowledge and intention requirements must be proved. A loss claim might concern a reduction in market value or expenditure caused by the breach, depending on the evidence and the appropriate measure of recovery.

These remedies require separate analysis from section 32K rescission. The expiry of that rescission right does not, by itself, determine whether compensation or another statutory order is available.

Can a completed purchase be unwound?

Rescission seeks to undo a transaction and restore the parties substantially to their former positions. It is a different remedy from keeping the property and claiming compensation.

Fraud is particularly important after conveyance. In Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, purchasers acquired a commercial property on the basis of representations about its tenancy and rental return. A separate agreement with the tenant, which materially altered the arrangement, had not been disclosed. The High Court found fraudulent and misleading conduct and remitted the issues of effective rescission and consequential relief for determination.

The Court distinguished rescission for fraud after conveyance from innocent misrepresentation. Under the ordinary equitable rule applicable to completed land sales, innocent misrepresentation alone does not permit rescission after conveyance. This distinction is often discussed by reference to the rule in Seddon’s case. Fraud requires proof of the necessary dishonest state of mind. Statutory relief may remain available without fraud where the relevant requirements are established.

Australian Consumer Law: who can be liable

Sections 18 and 30 of the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth), address misleading conduct and specified false representations concerning land in trade or commerce. Where applicable, the remedies can include damages and orders affecting a contract or transfer.

The trade or commerce requirement must be assessed. A private homeowner's conduct cannot simply be assumed to satisfy it because an estate agent handled the sale. An agent's own business conduct requires separate analysis. A claim against a vendor and a claim against an agent may therefore depend on different legal grounds. The section 48A route described above remains a separate enquiry and carries no equivalent trade or commerce requirement.

What must the buyer prove?

For a misrepresentation claim, identifying a false statement is only part of the enquiry. The buyer must establish the relevant connection between the representation, the decision to transact and, where compensation is claimed, the loss.

Evidence may include the advertisement, answers to enquiries, emails, messages, file notes and what the buyer told advisers about the intended use of the property. Documents created before the dispute often provide stronger support than a later assertion that the buyer would never have proceeded.

Long Forest Estate demonstrates the importance of this distinction. The purchasers' misrepresentation claims failed because the Court found that the alleged conduct had not induced the purchase. The existence of a regulatory issue and proof of reliance are separate questions.

The buyer's own investigations also matter. They may show what was known, what remained unknown and which assurances influenced the decision. The relevance of that evidence differs between statutory disclosure rights, misrepresentation and contractual remedies.

The contract must be read as a whole

A claim may also arise under an express contractual warranty. Its scope depends on the actual contract, including qualifications, disclosures, special conditions and provisions allocating particular risks.

In Wollert Epping Developments Pty Ltd v Batten [2019] VSC 618; (2019) 60 VR 92, a purchaser discovered a boundary encroachment before completion and relied on warranties concerning possession, title and vacant possession. The Court considered those warranties together with the contract's identity clause and found no actionable breach in the circumstances. Its relevance here is the interpretation of the contract; it was not a decision granting relief after a completed purchase.

A warranty cannot safely be read in isolation. Nor should every restriction on land use be labelled an encumbrance without examining its legal character and the wording of the promise.

Conduct after discovery can affect the remedy

A buyer considering rescission should obtain advice promptly about both the proposed notice and what to do in the meantime. Delay, affirmation, changes to the property and intervening third-party rights may affect the availability of relief.

Affirmation involves electing to maintain the transaction despite a right to avoid it. Whether conduct amounts to that election depends on the relevant knowledge, authority and circumstances. Remaining in occupation is not, by itself, a universal answer either for or against rescission.

ZX Group Pty Ltd v LPD Corporation Pty Ltd [2013] VSC 542 also concerned an uncompleted purchase. It illustrates the consequences of choosing and communicating remedies: although the vendor had made a fraudulent misrepresentation, the purchaser's conduct prevented effective rescission on that ground. Statutory relief nevertheless remained available. The case assists on election and the coordination of remedies, rather than establishing a right to unwind a completed conveyance.

The English High Court decision in Patarkatsishvili v Woodward-Fisher [2025] EWHC 265 (Ch) provides an illustration involving a completed purchase. It upheld rescission following fraudulent answers about a serious moth infestation. A delay of about seven and a half months after the buyers probably knew of their rescission right did not bar relief on the facts. Their continued occupation did not establish affirmation, and the benefit of living in the house could be addressed by a financial adjustment in the rescission account. The decision illustrates how occupation and substantial restoration can be addressed together. It does not establish a safe waiting period and is not binding Victorian authority.

Sending a notice does not establish that the buyer had the entitlement asserted. Where the vendor disputes rescission, court proceedings may be necessary to determine its validity and obtain consequential orders.

Restoration involves more than returning the purchase price

In Alati v Kruger (1955) 94 CLR 216, the High Court explained that precise restoration is not always necessary. Equity can use accounts and monetary adjustments to achieve substantial restoration and practical justice between the parties.

For a property transaction, the proposed account may need to address the purchase money, reconveyance, mortgage discharge, occupation or rental benefits, deterioration and expenditure. Lenders' interests and other third-party rights must also be addressed. The account depends on the remedy and the facts; it is not a standard refund of every expense associated with ownership.

Brown v Smitt (1924) 34 CLR 160 provides an important distinction concerning improvements. The majority allowed compensation by reference to the value added by qualifying permanent improvements made before knowledge of the matters justifying rescission. Necessary repairs were treated separately. The decision does not establish that renovation invoices are automatically recoverable in full, or that every consequential expense forms part of the rescission account.

Keeping the property and claiming compensation

Compensation may be available where the buyer retains the property, whether by choice or because unwinding the transaction is unavailable. The measure of loss depends on the cause of action. Contractual damages, damages for deceit, statutory compensation and adjustments following rescission should not be treated as interchangeable.

Where a restriction is said to reduce market value, a properly instructed valuer may be needed. The instructions should identify the relevant date, the established restriction and the assumptions for comparison. They should distinguish the disputed burden from existing physical characteristics and other controls already affecting the property.

The percentage of land affected does not automatically equal the percentage loss in the property's value. Restricted land may retain amenity or other value; a restriction may also affect the usefulness of land outside its immediate footprint. The relevant assessment must examine the property as a whole and the legal basis of the claim.

Responsibility of vendors and professional advisers

The involvement of an agent, solicitor or conveyancer does not resolve responsibility automatically. Separate questions arise about who made or authorised a representation, what each person knew, the scope of any professional retainer and what caused the loss.

Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727 was the sequel to Krakowski. Trenorth, formerly Eurolynx Properties Ltd, was the vendor that sought recovery from its solicitors after the purchasers succeeded. The Court of Appeal held that establishing negligent work did not allow the vendor to transfer the consequences of its own fraud to the solicitors. The vendor's deliberate conduct caused the relevant loss, or broke the causal chain, while limited damages were allowed in accordance with a concession made by the solicitors.

For buyers, the practical task is to identify each proposed claim and the evidence supporting it. Neither the presence of several participants nor proof of an error establishes liability against all of them.

Where can a claim be brought?

Section 217 permits a proceeding in VCAT or a court of competent jurisdiction. The appropriate forum depends on the causes of action, parties, relief sought and applicable jurisdictional limits. VCAT can be available for a statutory compensation claim, but should not be assumed to have jurisdiction over every property dispute.

A court proceeding will generally be required where the claim seeks equitable rescission and reconveyance after completion, or pursues deceit outside a statutory jurisdiction. Federal jurisdiction issues can also prevent VCAT hearing an otherwise eligible claim, including some disputes between individuals resident in different States. See our guide to going to VCAT.

Time limits for bringing a claim

Ordinary claims founded on simple contract or tort are generally subject to six years from accrual of the cause of action under section 5 of the Limitation of Actions Act 1958 (Vic). The accrual date depends on the claim; it should not be assumed to be the date of discovery.

A damages proceeding under section 217(1) of the Australian Consumer Law and Fair Trading Act must not be commenced more than six years after the date on which the cause of action accrued (s 217(4)). Under the Australian Consumer Law, a damages action under section 236 may be commenced within six years after the day on which the cause of action that relates to the conduct accrued (s 236(2)), and an application for compensation orders under section 237 may be made before the end of six years from the day on which the cause of action relating to the conduct accrued (s 237(3)). These periods run from accrual, not from discovery.

Where section 27 of the Limitation of Actions Act applies to fraud or fraudulent concealment, it can postpone the commencement of a limitation period until discovery, or when discovery should have occurred with reasonable diligence. That provision should not be assumed to extend every statutory deadline.

Rescission also raises separate questions of affirmation, delay and equitable relief. A buyer may lose a particular remedy before an ordinary damages limitation period expires. Prompt advice is important even where six years appears to be available.

Steps to take after discovering a problem

Preserve the complete contract and vendor statement, including every attachment, along with advertisements, correspondence, inspection reports and notes of conversations. Record when the problem was first discovered and when its significance became apparent. Obtain the relevant authority records and evidence of the restriction's actual effect.

Seek advice before issuing a rescission notice, agreeing to vary the transaction, undertaking substantial discretionary works or selling the property. Necessary protective work may still be appropriate, but its purpose, cost and timing should be documented. Ordinary obligations to lenders and public authorities continue unless lawfully changed.

Early assessment should establish the available causes of action, the evidence still needed, any urgent steps to preserve remedies and the financial consequences of each option.

Frequently Asked Questions

How Parke Lawyers can assist

Parke Lawyers advises purchasers and vendors on property disclosure disputes, misrepresentation, contractual warranties and claims arising after settlement. We can review the sale documents and supporting evidence, assess the available remedies and advise on the steps needed to pursue or respond to a claim.

Contact Parke Lawyers on 134 134. For broader background, see our guide to property law in Victoria.

This article provides general information about Victorian law. Advice depends on the transaction, the evidence and the law applicable at the relevant time.

Sources

Legislation and official guidance

• Sale of Land Act 1962 (Vic), ss 12, 12A, 32C, 32D, 32K and 48A.
• Australian Consumer Law and Fair Trading Act 2012 (Vic), ss 216 and 217.
• Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth), ss 18, 30, 236, 237 and 243.
• Limitation of Actions Act 1958 (Vic), ss 5 and 27.
• Sale of Land Amendment Act 2019 (Vic), s 14(1).
• Consumer Affairs Victoria Material Fact Guidelines.

Cases

• Payne v Morrison [1991] VicSC 166 (O'Bryan J, 18 April 1991), especially judgment pp 9–15.
• Fifty-Eighth Highwire Pty Ltd v Cohen [1996] 2 VR 64.
• Long Forest Estate Pty Ltd v Singh [2020] VSC 604, especially [8]–[18] and [184]–[205].
• Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, especially [43]–[45].
• Patarkatsishvili v Woodward-Fisher [2025] EWHC 265 (Ch), especially [172]–[180] and [194]–[214].
• Wollert Epping Developments Pty Ltd v Batten [2019] VSC 618; (2019) 60 VR 92, especially [73]–[89].
• ZX Group Pty Ltd v LPD Corporation Pty Ltd [2013] VSC 542, especially [12] and [120]–[123].
• Alati v Kruger (1955) 94 CLR 216 at 223–225.
• Brown v Smitt (1924) 34 CLR 160 at 163–166.
• Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727.