"The Australian Competition and Consumer Commission has instituted legal proceedings in the Federal Court, Sydney against Domaine Homes (NSW) Pty Limited ('Domaine') for making misleading representations about the effect of the New Tax System on the construction of new homes and unconscionable conduct", ACCC Chairman, Professor Allan Fels, said today.
"The ACCC has also instituted legal proceedings against Mr Robert Grant, Managing Director and Mr Terry Sofos, Contracts Manager of Domaine for their involvement in the conduct."
"The ACCC has alleged that Domaine promoted "Guaranteed Fixed Price" contracts in 1999 and subsequently sought to charge almost 300 new home buyers a total of approximately $1.9 million in additional GST payments when the homes were not completed prior to 1 July 2000. The average amount of GST which Domaine sought to charge each new home buyer was approximately $6,500, with some charged up to $22,900 in GST.
"The ACCC is also alleging that Domaine sales representatives told a number of new home buyers that their homes would be constructed within a specific time frame, which was prior to the implementation of the GST. When construction was not completed by 1 July 2000 Domaine sought to recover GST from these customers. However, the ACCC alleges that on the true construction of the contract Domaine was not entitled to claim GST from these customers.
"The ACCC is also alleging that Domaine has acted unconscionably towards a number of their new home buyers who refused to pay the additional GST. In particular the ACCC claims that Domaine's insistence upon payment of the additional GST component prior to handing over the keys on completed homes, and claims that consumers were under a legal obligation to pay the additional GST component, when they were not, constituted unconscionable conduct in breach of the Trade Practices Act 1974.
"The ACCC is seeking the following orders from the Court:
- injunctions restraining Domaine from making misleading representations in the future
- declarations that the conduct of Domaine and senior Domaine staff was unlawful
- refunds of a total of approximately $1.9 million paid in GST by 291 Domaine customers
corrective action, including corrective newspaper advertisements and apology letters to Domaine consumers
- consequential damages for a number of Domaine customers to compensate new home buyers for additional expenses such as rental for temporary accommodation
- implementation of a trade practices compliance program
- costs.
"The ACCC has decided to pursue consequential damages in this case for a number of Domaine customers as it believes that these new home buyers have incurred significant additional expenses due to Domaine's failure to respond to their legitimate complaints about being overcharged GST.
"The ACCC is also concerned that Domaine informed its customers that the company used a standard Housing Industry Association contract. The ACCC believes that the contracts used by Domaine so differ from the standard Housing Industry Association contract that Domaine is misleading new home buyers by describing it in those terms. Accordingly the ACCC has sought undertakings from Domaine that it cease referring to the contract as standard Housing Industry Association contract.
"The ACCC is particularly disappointed that Domaine has not taken a more responsible approach in dealing with legitimate customer complaints. As a result many of these new home buyers have had to undergo considerable hardship whilst waiting for their new homes to be completed.
"The ACCC raised its concerns with Domaine in late 2000 on behalf of affected consumers but was unable to reach a satisfactory resolution, thus prompting the ACCC's decision to institute legal proceedings today."