Federal Court finds elements of property scheme misleading

In a lengthy judgment handed down today, Justice Kiefel of the Federal Court declared that companies which represented between 1997 and 1998 that residential units at the Gold Coast would increase in value over a ten year period by approximately eight per cent per annum, when they had no reasonable basis for doing so, had engaged in misleading conduct.

Justice Kiefel also found that Mr Christopher Bilborough, Mr Shane Andrews, and Mr Michael Byrom were knowingly concerned in the misleading conduct of Oceana Commercial Pty Ltd and Markfair Pty Ltd (trading as Investlend (Aust)).

Further, Justice Kiefel found that Mr Dudley Quinlivan (to 9 September 1998) was knowingly concerned in the misleading conduct and that Mr Bilborough and Mr Quinlivan conspired with Oceana Commercial and Investlend (Aust) to effect the contraventions.

The ACCC acted on a complaint received from a couple in Cairns who attended an investment seminar conducted by National Asset Planning Corporation Pty Ltd and were subsequently flown to the Gold Coast to view investment properties and visit a finance consultant, Investlend (Aust). The couple purchased a unit within a marketed development on that day. 

Justice Kiefel further declared that a representation to the couple that Investlend (Aust) was a qualified financial adviser who would act in the couple’s interests was also misleading. 

The court did not find however that the conduct of the Commonwealth Bank, utilised to finance the couple’s purchase of the unit, was unconscionable. Further, the court did not find that the conduct of the lawyers involved in the conveyancing of the property for the couple or that of the property developers, had been shown to contravene the Trade Practices Act 1974. 

It appears Justice Kiefel considered that the ACCC did not establish that the prices paid were above the fair market value.  Justice Kiefel also apparently considered, contrary to the ACCC's case, that the whole marketing scheme could not, as a matter of law, constitute misleading conduct. Justice Kiefel also did not consider a number of the alleged elements of the scheme to be either proved, or if proved, misleading. The ACCC is still considering the judgment and the reasons for Justice Kiefel's findings.

Justice Kiefel also noted, in a summary provided with the judgment, that there had not been evidence at the hearing, that there was a "two-tier" market on the Gold Coast under which property purchasers who were not from the Gold Coast paid higher prices.

ACCC Chairman, Mr Graeme Samuel expressed disappointment at the findings in relation to the bank and the lawyers, but welcomed the court's findings regarding the representations made to potential purchasers of investment property.