McKenzie v McDonald

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Citation: McKenzie v McDonald [1927] VLR 134

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 810-2 [32.55]

Contents

Background facts

  • The Plaintiff retained the service of the Defendant, a real estate agent, in order to sell her property and buy a new one.
  • The Defendant obtained information about the value of her property but gave her a report which values her property below its actual market value.
  • The Defendant suggested to the Plaintiff that she 'trade' her property with one that he owns in the area she wished to move to. The Defendant's property was worth a lot less than the Plaintiff's.

Argument

  • The Plaintiff alleged that she had a special relationship with the Defendant which gave rise to a duty of disclosure. She sought remedies through several causes of action, misrepresentation included.

Legal issues

Judgement

  • Davies v London & Provincial Marine Insurance Co[1] specifies that confidential relationships do require disclosure.
  • This did amount to a confidential relationship:
    • "He assumed the function of advising and assisting a woman in a difficult situation in the acquisition of a residence by means of the disposal or pledging of her property.He was necessarily furnished with an intimate knowledge of her financial position, her obligations, and family needs. He proceeded to advise her upon the wisdom and practicability of raising money by mortgage, and acted for her in an effort to do so. He undertook the sale of her farm, and acquired such information as he could in relation to it, and offered his counsel as to its condition and the price she had asked and in effect should ask. In this circumstance he was, in my opinion, an agent who came within 'the rule of the Court.[2]"
  • Full disclosure if required, and a misrepresentation has indeed occurred.
  • The contract would be rescinded, but there were third parties involved later. Instead, the Defendant owes the Plaintiff damages.

References

  1. (1878) 8 Ch D 469, 474
  2. [1927] VLR 134, 145
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