Purchaser Due Diligence: When Poor Drafting Lets Sellers Off the Hook for Contaminated Land

The Case: What Happened?

In this case, 191 Bells Pty Ltd (the Buyer) entered a property deal with WJ & HL Crittle Pty Ltd (the Seller) for land in Meroo Meadow, NSW. Before signing the purchase contract, the Buyer had three weeks for due diligence under an option deed, during which environmental reports were shared.

The Seller agreed to assist the Buyer “as far as possible” with due diligence efforts, which included granting access to documents and the property itself. However, after the deal was signed, final reports revealed significant contamination on the site — including buried asbestos, tyres, and even deceased animals.

The Buyer claimed the Seller had been misleading by not disclosing this contamination. The Seller, however, successfully argued that they had no legal obligation to volunteer this information unless directly asked. The Court ruled that the Buyer had no avenue to exit the purchase.

Key Takeaways for Property Buyers and Sellers

This case serves as a cautionary tale for both sides in a property transaction. Here are some crucial points to remember:

1. Due Diligence is the Buyer’s Responsibility

Buyers should never assume sellers will proactively disclose every potential issue. If you’re purchasing a property, asking direct and detailed questions is essential. This is especially true for environmental risks, contamination, or other hidden concerns.

2. “Assisting” Isn’t the Same as “Disclosing”

In this case, the Seller’s agreement to “assist” with due diligence did not mean they had to volunteer every piece of information. Assistance is not a substitute for a buyer’s obligation to investigate thoroughly.

3. Contracts Need Clear Disclosure Terms

A seller’s obligation to disclose contamination hinges on the transaction documents’ explicit language. Without clear wording requiring disclosure, courts are less likely to impose obligations that aren’t clearly stated. Buyers can protect themselves by negotiating specific clauses that require sellers to disclose known contamination or other significant concerns.

4. Buyers Must Be Proactive

Buyers are ultimately responsible for thoroughly vetting the property. Rigorous and timely due diligence, including environmental assessments, is crucial. Engaging experts early can help identify issues before finalising a transaction.

5. Transparency is Key

While non-disclosure isn’t automatically considered misleading under the Australian Consumer Law, intentional concealment or deception is a different story. Establishing purposeful misrepresentation is essential for a successful claim. Parties should ensure their conduct remains transparent and well-documented throughout the transaction.

Final Thought: Get Contracts Drafted Properly—Every Time

This case is a textbook example of why precise contract drafting is crucial. The wrong wording (or lack of clarity) can mean:

⚠️ Sellers avoid responsibility for key disclosures.
⚠️ Buyers inherit liabilities they didn’t bargain for.
⚠️ Legal disputes arise that could have been easily prevented.

For tailored advice on property transactions, contamination warranties, and disclosure obligations, contact Jaide Law, the best property law firm for guidance in NSW, QLD, and VIC.

Disclaimer: We know most of you get this, but just to be clear, the information above is general and doesn’t consider your unique situation. Please don’t rely on it as a substitute for professional advice. We strongly encourage you to seek appropriate guidance for your specific needs.