Lessons for Vendors following the High Court decision in Sole v Hutton

Selling a property with known leaks or other defects? Make sure you carefully disclose all issues during the sale process, otherwise you could be responsible for the entire repair bill, even though you didn’t create the defects.

This is what happened to the Huttons in Sole v Hutton [2025] NZHC 430 (7 March 2025)

 The High Court Case

In this case, the purchasers of a Mount Maunganui apartment (the Soles) brought a claim against the vendors (the Huttons) for misrepresentation and breach of contractual warranty, for failing to tell them that the apartment was known to be a leaky building and needed significant repairs. This is despite this information being contained in Body Corporate meeting minutes that the Soles could have easily accessed and read as part of their due diligence, prior to committing to the purchase.

The Huttons warranted, in the standard terms of the Agreement for Sale and Purchase, that they had no knowledge of any facts that might give rise to liability under the Unit Titles Act (such as the requirement to contribute towards the cost of rectifying defects) or any proceedings involving the body corporate. They had also filled out a form with their real estate agent, declaring there were no known issues.

The reason the Huttons didn’t declare the weathertightness issues and building defects, even though they were at a Body Corporate meeting four years earlier where they were discussed? They had forgotten.

However, the High Court found that they did have knowledge of the building’s issues at the time of sale and that their failure to disclose this information constituted a breach of contractual warranty and misrepresentation. The Huttons were ordered to pay the Soles $926,806.48 in damages, representing the cost of repairs, reduced by 30% to account for betterment (i.e., improvements beyond mere restoration).

 Why wasn’t anyone else found responsible?

You might wonder why the Huttons had to foot the entire bill, when they did not create the defects.

The apartment building in question was constructed in the 1990s, and the Council issued the Code Compliance Certificate in 1999. Various limitation periods apply, and the Soles were clearly out of time to claim against the Council or any building parties that caused the defects.

As this was a claim for breach of contract (rather than a claim for negligence), the Court was unable to give a deduction for the contributory negligence of the Soles, who could have discovered the defects themselves before committing to the purchase if they had read the Body Corporate minutes as part of their due diligence.

 Lessons for Vendors

This decision highlights the courts’ willingness to hold vendors accountable for omissions, even if claimed to be due to forgetfulness, and reinforces the obligations of vendors to disclose known defects. Vendors cannot rely on purchasers having an obligation to carry out their own due diligence before committing to the purchase.

Notably since 2023 there has been more comprehensive disclosure for unit titles, via a pre-contract disclosure statement, to require vendors of unit title properties to turn their mind to these issues before agreements are signed.

If you are worried about what you need to disclose when you sell your property, or have concerns about the vendor warranties in the Agreement for Sale and Purchase, fill out the form below to become a client and make an appointment with a member of our Property Team.