Law firm negligent in Mr Fluffy home sale

A Canberra law firm has been ordered to pay two clients nearly $40,000 after a court found it was negligent while advising the couple in their purchase of a Mr Fluffy home.

The figure was not nearly as high as the $1.83m the couple had claimed by way of damages after the court also that found the government buyback of the home had largely restored their position.

Asbestos had been removed from the Griffith property but a later report found fibres were still present. Photo: Rohan Thomson

Asbestos had been removed from the Griffith property but a later report found fibres were still present. Photo: Rohan Thomson

The ACT Supreme Court judgment published Wednesday said that back in 2009 Karen McLennan and Andrew Spong bought the Griffith home, a four-bedroom, heritage-style house in an established area.

They hired Meyer Vandenberg Lawyers to advise them through the sale, and met with an experienced conveyancing clerk but not a qualified solicitor.

The only discussion the couple had with the clerk about asbestos came from a fact sheet attached to the contract for sale, which the clerk pointed to and asked them to read.

The clerk then pointed to a removal certificate in the contract which the couple skim read.

They knew asbestos had been removed from the property but thought it was "standard asbestos".

In 2013 a tradesman came to replace a skylight and questioned whether the home was a Mr Fluffy, and later said the white spray in the roof suggested it was.

In 2014 the couple received a "dear resident" letter from the government advising they get the home tested.

The report indicated that loose-fill asbestos fibres had been found on the top of the hallway closet, and rated this as high risk.

In a judgment published on Wednesday, Associate Justice Verity McWilliam found the firm had been negligent by failing to properly advise the clients in relation to the contract for sale.

The relevant advice was that which should have been given was advice that sought to guard against the risks that were reasonably forseeable in 2009, the associate justice found.

The asbestos information in the contract required someone to properly explain to the couple exactly what the risks and consequences were to allow them to make an informed decision.

An expert called by the couple gave evidence that the firm should have advised a prospective buyer of the risk of discovery of asbestos, and at the minimum advised that the "stigma" may or may not affect market value.

The expert also said that a competent conveyancer would have raised the fact that while the government believed the loose asbestos had been removed, there was no guarantee and this may be of concern.

"The plaintiffs were simply shown the contract for sale and the pages of the document were turned over, allowing the plaintiffs the opportunity to only skim read each page," Associate Justice McWilliam said.

"That does not amount to the provision of competent legal advice.

"Reading a document and appreciating its consequences are two different things.

"What they were paying the defendants for was a professional legal opinion on the risks and consequences arising from the contents of that particular contract for sale."

Associate Justice McWilliam did not accept the law firm's arguments that the clients would have gone ahead with the purchase anyway regardless of that advice.

She said the woman's evidence was that had there been any doubt about the safety of the house she would not have moved her family into it.

And in fact, the couple and their two children did move out of the home in 2014 when they discovered there was loose-fill asbestos still there.

Associate Justice McWilliam awarded the couple $37,638.34 in damages for asbestos investigation, rent, relocation and holding costs.

But the associate judge also restricted the damages after the ACT government bought back the property at full market value in 2015.

Associate Justice McWilliam said the couple had not established a claim for losses after the buy back, including repurchase and building costs.

At that point, she said, the couple was fully restored to the position they were in before buying the property.

Nor had they established economic loss or disappointment and distress.