Australian Competition & Consumer Commission v Oceana Commercial Pty Ltd [2003] FCA 1516

FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Oceana Commercial Pty Ltd [2003] FCA 1516 SUMMARY 1. In accordance with the practice of the Federal Court in some cases of public interest, the following summary has been prepared to accompany the reasons for judgment delivered today. The summary is intended to assist understanding of the decision of the Court. It is not a complete statement of the conclusions reached by the Court or the reasons for those conclusions. The only authoritative statement of the Court's reasons is that contained in the published reasons for judgment. The published reasons for judgment and this summary will be available on the Internet at www.fedcourt.gov.au. 2. These proceedings concern the sale of residential units at the Gold Coast in 1997 and 1998. The principal respondents involved in the marketing in question are Oceana Commercial Pty Ltd and Markfair Pty Ltd, which were then respectively called Coral Reef and Investlend. Coral Reef engaged a company called NAPC to market the properties and Investlend was used to provide financial advice to prospective purchasers. Mr Bilborough, the fifth respondent was associated with both companies and Mr Quinlivan, the sixth respondent, with Investlend. It has been found that these companies through Mr Bilborough and Mr Quinlivan acted in concert to carry out what has been called the 'NAPC Scheme'. The steps the Commission alleged were involved in it appear at[17]of the reasons for judgment and the Court's further comments on it and at [167]. The part the other respondents, apart from the bank, played in it is explained at [6]. 3. The ACCC alleged that the conduct of the scheme as a whole was misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth). That aspect of the case has not been established as a matter of law (see [168] to [179]). 4. It has been established that it was possible that purchasers may have been misled about two matters by the representatives of NAPC and Investlend. They were told that the purchase price was the unit's market value and they were told that the unit would increase in value at the rate of 8 per cent per annum over the following ten years. 5. To establish that the representation about market value was misleading or deceptive it was necessary for the ACCC to prove that the units were sold at a price substantially greater than their true value. The ACCC's evidence did not establish that fact (see at [223] to [238]). 6. The representation about the rate of capital growth which was made by the Investlend representative in the process of undertaking what was called a 'property investment analysis' for purchasers was found to be misleading. (See at [239] to [248]). That was because it was not shown that the companies in question and Mr Bilborough and Mr Quinlivan had any reasonable basis for a belief that the rates were a reliable guide to value. 7. Another aspect of the case involves particular purchasers, Mr and Mrs Gleeson. In connexion with them it has been found that the companies misled them as to the rate of capital growth they could expect and also as to the true role of the Investlend advisor. They were told that that person was a 'qualified financial advisor', implying that they were quasi-professional people who were giving advice to the Gleesons which would be in their interests. The impression conveyed was that they were separate from the marketer NAPC. In fact they were engaged in the process of selling properties with NAPC. There is no suggestion that the advisors were qualified. They were simply trained to present their 'analysis' and apply pressure. 8. Coral Reef and Investlend have been found liable for breach of s 52. Some but not all of the other respondents have been found liable as accessories to the contravention of s 52. They are the fifth and sixth respondents and the seventh and eighth respondents. There are separate findings made with respect to each of the respondents. The developer and the directors, the third, eleventh and twelfth respondents have not been found liable. 9. The two solicitors (the tenth and thirteenth respondents) were joined to the proceedings because they were on a 'panel' of solicitors to whom Investlend referred prospective purchasers at a point when the contract was to be signed. It was alleged that they were guilty of misleading conduct because they did not alert their clients to a number of matters, including the relationship between NAPC and Investlend. It was also alleged that they knew most of the details of the NAPC scheme. This has not been established. With respect to Mr Pointon it was found however that he knew sufficient to have required him to make disclosures to his clients. No orders could however be made because the ACCC is not able to seek orders against him under the Fair Trading Act 1989 (Qld) as it sought to do. It was not shown that he was an accessory to the company's conduct as alleged by the Commission (see [286] to [304]). The case against Mr Johanson was not established. 10. It was not alleged that the bank knew of or participated in the scheme of marketing. Mr and Mrs Gleeson sought a loan from it to enable them to conclude the purchase. The bank's valuer had advised the bank that they may have paid too much for the property and that they may not have understood local market conditions. The ACCC alleged, on various bases, that the bank was obliged to provide them with the content of the valuation or alert them in some way so that they might seek their own advice. To succeed the ACCC needed to establish that the Gleesons were in a position such that their ability to make a judgment as to their best interests was seriously affected, or that the bank behaved unconscionably. This requires a consideration of all the circumstances pertaining to the Gleesons and the bank. They did not establish either proposition (see at [322] to [341]). 11. It is necessary to add that in the publicity attending the proceedings reference was made to 'two tier marketing'. It was said that this involved the sale of units at one price to people who were familiar with the Gold Coast property market and at a much higher figure to people drawn from places distant. There was no evidence tendered at the hearing of such a market (see at [235]).