Can you claim “deceit & misrepresentation” for a leaky home sale?

The High Court’s recent decision in Vanifatova v Wang [2025] NZHC 1532 provides an illustration of the risks of non-disclosure, misrepresentation and deceit in the context of a leaky home sale.

Background

In 2021, first-home buyer Angelina Vanifatova purchased a townhouse in Onehunga. The agreement for sale and purchase included standard vendor warranties and a due diligence clause requiring the vendor to provide “any information held” which was relevant to the purchaser’s investigations. 

The vendor, Mr Weiguo Wang, lived in China and relied on his daughter Crystal Wang and son-in-law Wilson Wang to act as his agents[SD1]  in New Zealand.

History

From 2014, previous tenants living in the property reported musty odours and leaks in the bedrooms below a deck. In 2015, significant remedial work including replacing timber framing and sealing the deck was carried out – without building consent. The lack of building consent when one is required by law can be problematic when it comes to resale. Leaks still persisted.

In 2020, a potential purchaser commissioned a report which showed elevated moisture and recommended invasive testing take place. The sale fell through, but the Wangs obtained the report and did not disclose it to Ms Vanifatova. Before re-listing the property for sale, they undertook cosmetic repairs and further sealing work.

Due diligence

During due diligence, Ms Vanifatova’s independent building inspection found no issues, but she repeatedly sought assurances about weathertightness. The defendants provided only a short list of “deck deep clean” and “waterproofing” works, omitting the timber replacement and the true extent of prior repairs.

Settlement occurred in February 2021. Inevitably, within months, the property leaked again. A 2022 expert report concluded that the damage would have been obvious to the previous owner but was superficially remediated.

Court’s findings

• The first defendant, Weiguo Wang was liable, as the principal, for the misrepresentations of his agents, Wilson and Crystal Wang and those of the real estate agent, a Mr David Wang. Omissions and “half-truths” were found which created a false impression that there were no significant weathertightness issues. The 2020 report and the full nature of the 2015 works should have been disclosed.

• There was a breach of warranty as the work in 2015 required building consent, which had not been obtained. Liability under the warranty is strict.

• Crystal and Wilson Wang were liable in their own right through the “tort of deceit”. They knew of the history of leaks, prior failed repairs and the 2020 report, yet provided incomplete and misleading information to the plaintiff. The omissions were deliberate and intended to reassure the purchaser.

• Crystal and Wilson Wang’s conduct also breached the Fair Trading Act 1986 (FTA), which prohibits “misleading and deceptive conduct in trade”. Weiguo Wang was not “in trade”, but Crystal and Wilson Wang were.

• The plaintiff was awarded $495,190 in remedial costs (less $75,000 from an earlier settlement), $35,000 in general damages, and consequential losses for lost rent and income. 

Why would a claimant plead fraudulent misrepresentation/deceit?

In a nutshell, deceit allows a claimant to recover damages caused by fraud or false representation by the defendant of  matter within his or her knowledge.

There is another route to achieving damages for misrepresentation – and it is an easier route for a claimant to pursue.

That is the Contract and Commercial Law Act 2017 (CCLA). The CCLA entitles claimants to damages for innocent and fraudulent misrepresentations. To succeed in such a claim, a plaintiff does not need to prove knowledge of a fact or matter or intent to deceive, as they do in deceit. Rather, it is the defendant who must prove that they had reasonable grounds for thinking the representation was true.

So why bring a claim for deceit if it’s harder?

It often comes down to enforceability risks. Weiguo Wang lived in China. So enforcement of any judgment against him would depend on if he had other assets in New Zealand – or, indeed, in China. Crystal and Wilson Wang were a hedge against that risk.

Additionally, a claim under the CCLA can only be brought if the plaintiff and defendant have entered into a contract after the misrepresentation. That of course was not the position here where the only contract was with Weiguo Wang.

Claims in deceit, however, are not so restricted. No contract or indeed any duty of care between the parties is required. Nor is it necessary that the defendant be “in trade”, as under the FTA. A deceit claim exists wherever a person’s representation (express or implied) induces another to act (or refrain from acting), provided the representor knew or was reckless as to the truth of the representation and intended the representee to act or refrain from acting in reliance on the false representation.

Crystal and Wilson Wang were not parties to the agreement for sale and purchase, but they acted as the vendor’s agents in New Zealand and were closely involved in communications with the purchaser. The Court accepted that where a person makes a false representation knowing it to be untrue, or being reckless as to its truth, and intends the other party to rely on it, liability in deceit can arise regardless of contractual privity.

Establishing knowledge and intent is not easy. A defendant accused of fraud is unlikely to confess. And alleging fraud involves specific legal requirements given the seriousness of the allegation. But the more unreasonable the defendant’s stated belief, the less likely it will be that the court will accept his / her evidence. A finding of fraud also means that the claimant can recover losses which would be too remote in a contractual or negligence-based case.

This is a reminder that individuals involved in the sale process, including family members or agents, can face liability if they actively mislead or deceive a purchaser.

Key lessons

• Apartment sale legal obligations differ somewhat from selling other types of property and apartment vendors need to be fastidious about copmplying with the rules. Usually, vendors must disclose all relevant information they hold, not just what they choose to share.

• The knowledge of agents is imputed to the vendor.

• Cosmetic or superficial repairs can amount to fraudulent concealment and be considered “a misrepresentation of the true condition of the dwelling.”

• Non-contracting parties involved in misleading or deceptive conduct can face personal liability.

By Partner Stuart Dalzell and Law Clerk Laura Howell