Rick has been interested in developing a chain of gymnasiums in Perth's Western Suburbs as the location offered both the potential for a business opportunity and the lifestyle he was accustomed to. He had previously owned a small gymnasium in Shenton Park which had appealed to local people in particular due to the quiet ambience and small size rather than larger, busier gymnasiums that are far more common. Rick very much enjoyed the experience of owning a gymnasium and interacting with members. In particular, he enjoyed observing them improve their fitness and conditioning.

After contacting several prominent Western Suburbs real estate companies, Rick has decided to engage prominent local estate agent, Renzo Angelotti who has built up a formidable reputation for success and is a multiple industry award recipient. He enquired of Renzo whether he knew of any suitable building sites listed for sale where Rick's preferred gymnasium developments could take place. Rick required each site to be at least 300 square metres in size for construction purposes and he also needed to ensure that there would not be any significant zoning or approval restrictions on the sites which would add expense and time delays to the process. Rick was confident that Renzo is the right agent to streamline the purchasing process and sent him an email outlining his requirements.

Later that day, Renzo emailed Rick and said that once he located the right sites, the construction would be a formality as he was an expert in the local area zoning and other council requirements and there would be no delays or added costs to be concerned about. He sent a follow up email later that day with 3 recommended sites in Rick's preferred area. As the purchase cost would be significant, Rick advised his accountant, Cliff, to proceed and buy the sites Renzo had recommended in Subiaco, Wembley and Mt Claremont which were all sized at between 320 and 350 square metres.

Within six months however, Rick found himself in severe financial distress due to a series of legal actions he was forced to commence against the local area council in each of the three suburbs due to zoning complications and other administrative obstacles. Unfortunately, 6 months later, Rick is now at risk of bankruptcy due to the resulting delays and legal expenses that have occurred.

Question:

Using the 4 step process, advise Rick on whether he can sue the estate agent for negligent misstatement for his comments about the sites and whether you think he can succeed.

Note: Consider this question using the common law. There is no need to examine statutory law such as theAustralian Consumer Law.