The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court alleging misleading or deceptive conduct against a number of respondents who are alleged to have been involved in property marketing on the Gold Coast.
The proceedings also involve two lawyers and allege unconscionable conduct by the bank that was approached to finance the purchase of a marketed unit.
It is alleged that marketers induce people from other locations to buy residential properties at prices that are inflated by marketing fees of tens of thousands of dollars. It is alleged the purchasers are induced to believe that this price is the fair market value.
The respondents include:
- Marketer: Oceana Commercial Pty Ltd (at the relevant time named Coral Reef Group Pty Ltd) and its director Christopher Bilborough;
- Finance Consultant: Markfair Pty Ltd (at the relevant time trading as Investlend(Aust)) and its manager Dudley James Quinlivan;
- Developer: Advanced Commercial Developments Pty Ltd (at the relevant time named Redwind Pty Ltd) and its directors Dean Cornish and John Grounds;
- The Commonwealth Bank of Australia; and
- Lawyers: Gregory Pointon and Rodney Johanson.
The ACCC alleges that Oceana Commercial Pty Ltd entered into a marketing arrangement with a developer, Advanced Commercial Developments Pty Ltd for a particular unit complex on the Gold Coast and then engaged National Asset Planning Corporation (in liquidation) to market the units. Alleged agents of NAPC Michael Byrom and Peter Eggenhuizen have also been joined in the proceeding.
The ACCC has acted on a complaint received from a couple from Cairns who attended an investment seminar conducted by NAPC 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.
It is alleged that the price paid by the purchasers on that day was in the order of $60,000 greater than the fair market value. This comprised substantial and hidden marketing fees as well as additional profit for the developer.
The ACCC alleges that NAPC and Investlend(Aust) made false or misleading statements regarding the fair market value of the property and the capital growth achievable for the unit. It is further alleged that Investlend(Aust) did not act in the interests of the purchasers, but in fact acted in their own interest and in the interest of the other marketing participants.
The purchasers sought finance for the unit from the Commonwealth Bank which in turn sought its own valuation for the property. The Bank's valuation was considerably less than the purchase price. Although the Bank was not directly involved in the two- tier marketing to the purchasers, it is alleged that the Bank acted unconscionably in proceeding to provide the loan despite having reason to believe that their customers had been misled.
Solicitors Gregory Pointon from Perrin Pointon Solicitors (who acted for the purchasers) and Rodney Johanson from Short Punch & Greatorix (who acted for the developer) have also been joined in this action. It is alleged that both Mr Pointon and Mr Johanson, when acting for purchasers who had been referred to their firms by NAPC, failed to tell their clients of the marketing fees and inflated prices. It is further alleged that Mr Pointon did this when acting for the couple from Cairns.
The ACCC is seeking court orders including:
- compensation for the purchasers;
- findings of fact;
- a declaration that the parties have breached the relevant provisions of the Act;
- injunctions restraining the parties from engaging in similar conduct in the future;
- orders that the parties implement a trade practices compliance program; and
- costs.
A directions hearing is set down for 3 December 2001.
This media release has been amended pursuant to the order of Keifel J made on 3 February 2004.