A first-home buyer has been awarded more than $500,000 in damages and costs after a judge ruled the previous owner had deceived her into buying a rot-infested, leaky house.
The case is described as one of “misrepresentation by concealment, omission and half-truths”, with the vendors deliberately withholding crucial information about the state of the property to induce a sale.
One of the defendants used a dehumidifier before an open home, telling the real estate agent he had only extracted one litre of water in the previous 24 hours and the house was “relatively dry”.
In a just-released decision, Justice Peter Andrew described the vendors’ actions as “deliberate and dishonest”, amounting to deceit.
He also found it was highly likely their professional advisers were “alive” to the compromised state of the property during the sale.
The plaintiff, Angelina Vanifatova, purchased the Onehunga property in January 2021 as her first home.
After viewing the house, she made a written offer for $773,000, subject to three days’ due diligence.
A clause in the purchase contract said the vendor committed to “provide to the purchaser any information held relating to the property relevant to the due diligence investigation”.
The judge found Vanifatova made “unrelenting” inquiries about potential weathertightness issues before the contract went unconditional.
This included seeking body corporate reports and asking the vendors to provide any relevant details about whether the building leaked.
Prior to purchase, Vanifatova also commissioned a building inspection report, which gave the property a clean bill of health.
However, six months after she moved in, she discovered the house was leaking.
Expert reports later revealed extensive “weathertightness failure” and “decay damage”.
The reports said the damage “would have been apparent” to the previous owner and had been “remediated on a superficial level only prior to the sale”.
Vanifatova launched legal proceedings in April the following year, and later reached a $75,000 settlement with the building inspection company over its “flawed” report.
In a bid to settle the dispute in October last year, Vanifatova offered to sell the property back to the defendants for the original purchase price but received no response.
The vendor and first defendant in the case was Weiguo Wang, who the decision said lives in China and doesn’t speak English. He had owned the property for seven years as a rental.
Wang’s daughter Xiaoyue (Crystal) Wang and her husband He (Wilson) Wang, acted as his agents, overseeing the property on Wang snr’s behalf and arranging the 2021 sale.
The decision outlines multiple complaints from tenants about leaks, dampness and mould over several years leading up to the purchase. It also outlines various work undertaken by Wilson to address the moisture issues, without obtaining necessary building consents.
The property was first listed for sale in 2020 with Bayleys.
In about June 2020, prospective buyer Dillon Sue signed a purchase agreement but cancelled the contract after a pre-purchase building report that found “elevated moisture levels” and moisture damage to parts of the property, recommending further investigation.
Bayleys advised the defendants of the report and a copy was sent to the vendors’ solicitors on June 19, 2020.
Bayleys withdrew as selling agents a few months later. Barfoot & Thompson relisted the property in December 2020.
When signing the agency agreement, the vendor ticked “No” next to the seller’s acknowledgment, which read: ”Is the client aware of any past or present water penetration issue(s) affecting the property and/or complex?”
Shortly before the property was relisted, the interior was repainted and the downstairs recarpeted, which the decision refers to as “concealment works” undertaken to mask the true state of the house.
On January 13, 2021, Wilson sent a text message to Blockhouse Bay Barfoot agent David Wang ahead of a house viewing, asking him to arrive early to help move a dehumidifier to the garage “to avoid any misunderstandings from the potential buyers”.
Wilson then texted: “I extracted for a whole day and night and only extracted 1 litre of water, the house is now relatively dry.”
The decision says the agent added a clause to the sale contract saying the purchaser “acknowledges and accepts” that neither the vendor nor agent “hold themselves out to have any expertise” about the property’s weathertightness.
It also emerged that David Wang decided not to include the line, “We are not aware of any weathertightness issue [sic] of the property” in an email to Vanifatova.
The judge ruled it was “highly likely that the defendants’ advisers were very alive to weathertightness issues” during the sale process.
Vanifatova declined to comment when approached by the Herald. The court decision says she now lives in Australia, having moved there to earn a higher salary in order to pay litigation and repair costs.
At trial, her lawyers claimed the defendants had made “fraudulent misrepresentations”, acting with deceit and in breach of contract.
The defendants denied the claims, saying the property had never leaked, except after a 2019 storm, and that they honestly believed it was sound and weathertight.
The judge ruled the defendants knew there were significant water ingress problems with the dwelling and had known for “some considerable time”.
Wilson had tried to blame his tenants for dampness issues, citing “poor ventilation”.
“His explanation about the dehumidifier being put there for paint fumes is at best half-true,” the judge said.
The judge said Wilson and Crystal had been trying to help Crystal’s elderly father. They knew the sale was important for his retirement and were under some pressure.
Their “partial and limited disclosure” of information about the property was “deliberate and dishonest”, the judge said.
“I find this is very much a case of half-truths, where the incomplete nature of the disclosure gave a false impression about the state of the building.”
The judge ordered the defendants to pay more than $500,000 in repair costs, general damages and consequential losses.
The defendants did not respond to requests for comment. It is understood they plan to appeal the judgment.
Barfoot’s David Wang told the Herald the vendors did not tell him the property was leaky.
“We just put it on the market. We did not know the history of the property.”
He said he advised the purchaser to carry out a building inspection report and obtain legal advice, and stressed that he acted in accordance with applicable real estate laws.
Barfoot & Thompson said it was not appropriate for the firm to comment on allegations in the judgment as it was not party to the proceedings.
“However, we take our disclosure obligations seriously and will consider whether any further internal review is required once we have had the opportunity to understand the judgment in detail.”
An unrelated Barfoot agent by the same name works at the Remuera office and had no involvement in this sale or subsequent court finding.
Lane Nichols is a senior journalist and Auckland desk editor for the New Zealand Herald with more than 20 years’ experience in the industry.
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