ACCC brings proceedings for misleading property advertisements

Recent proceedings in the Federal Court in Melbourne between the Australian Competition and Consumer Commission and real estate agent Gary Peer & Associates Pty Ltd have potential ramifications for the conduct of real estate agents in Western Australia. The ACCC instituted proceedings against Gary Peer in December 2003, alleging misleading and deceptive conduct, pursuant to sections 52 and 53 of the Trade Practices Act (Cth), in respect to the advertising for sale of a property in Caulfield, Victoria. Gary Peer advertised the property initially at $600,000 and later at $650,000. The ACCC alleged that the vendors were never prepared to sell at that price and that the vendors had told the agent that they were seeking a price between $780,000 and $800,000. The vendors rejected an offer of $805,000 at auction. The agent handling the sale believed that the property would be sold for about $700,000. The matter was heard before Justice Sundberg on March 9, 10 and 11 2005. The ACCC claimed that the advertisements falsely represented the price at which: • the vendors of the property were prepared to sell; • the vendors of the property had instructed the respondent to sell; • the respondent believed and was of the opinion that the property would be sold; and • the market valued the property. The ACCC sought declarations, an injunction restraining Gary Peer from publishing similar advertisements for 4 years, the implementation of a compliance program, and costs. The ACCC led evidence that the vendors were concerned that the advertised price was too low and would not attract the right sort of buyers. The ACCC contended that an ordinary, reasonable person reading the advertisement would believe that the likely sale price for the property was in the $650,000 to $700,000 range. Counsel for the respondent argued that the vendors had not considered the advertisements misleading, as if they had, they would not have approved them. It is, however, irrelevant whether a party believes their conduct to be misleading. The court reserved its decision. Even though the decision has been reserved, real estate agents should be wary of deliberately advertising properties at less than the price which they are instructed the vendors would accept or at which they believe the property will sell to generate greater interest amongst prospective purchasers. It is unlikely that this type of conduct will be the subject of a private action as it is difficult to see who suffers loss as a result of it. However, the ACCC, in its capacity as consumer watchdog, has sent a clear message to the real estate industry that it considers this conduct to contravene the Act and that it will be prepared to commence proceedings against real estate agents who engage in it. For further information contact: Alison Shilkin, solicitor 9288 6847 - Phillips Fox

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