False or Misleading Representations in Property Transactions


Section 18 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (ACL) prohibits a person from, in trade or commerce, engaging in conduct that is misleading or deceptive or likely to mislead or deceive.  This section covers an extremely wide variety of conduct within all industries and has been the subject of countless judgments, books and commentary.

This article is focussed on a different but overlapping section, relating specifically to the sale (or possible sale) of an interest in land, and therefore should be of particular interest to real estate agents, property managers, auctioneers, property valuers and developers.

False or misleading representations

Section 30 of the ACL prohibits, in connection with the sale or possible sale or promotion of an interest in land, false or misleading representations in relation to:

  • sponsorship, approval or affiliation of the person making the statement;
  • the nature of the interest in land;
  • the price payable for land;
  • the location of land;
  • the characteristics of land;
  • the use to which land is capable of being put or may lawfully be put; and
  • the existence or availability or facilities associated with land.

This section applies if the representation is made in connection with transactions (or possible transactions, so that a sale of land does not actually have to occur for section 30 to apply) involving the sale of interests in particular parcels of land. Contravention of section 30 may result in civil proceedings for damages, remedial orders, an injunction or a pecuniary penalty.

Representations

What is deemed to be a “false” or “misleading” representation has been thoroughly considered by the courts, as is discussed below. It must first be noted that a representation itself is not just limited to a verbal statement. It can be extended to:[1]

  • a statement, made orally or in writing or by implication from words or conduct;
  • plans and drawings, maps, pictures and photographs; or
  • gestures, demeanour and other conduct.

In addition, silence as to a relevant fact may also constitute a representation – most obviously in circumstances where there is a half-truth, or a representation made which was once true but has now ceased to be.

The representation does not have to be made to the person who ultimately brings a claim (the representee). All that is required is that a false or misleading representation is made and as a consequence, the representee suffers loss or damage.[2]

A “false” representation means a representation that is merely “contrary to fact”.[3] As such, the person making the representation is not required to know that the statement they have made is false – they may believe that statement to be true but this will not protect them from liability.

To determine whether a representation is misleading, the whole of the representation is taken into account including the context in which it was made – neither party can pick and choose particular statements without considering the surrounding discussions and, generally, the context in which the statements were made.[4]

Case examples

Examples of what the courts have considered to be false or misleading representations are as follows:

  • In ACCC v Gary Peer & Associates Pty Ltd [2005] FCA 404, a real estate agent was found to have breached section 53A of the Trade Practices Act 1974 (Cth) (which is now section 30 of the ACL) when he advertised a house for auction with a price guide of $600,000 (and a revised price guide of $650,000) when the price at which the vendors were prepared to sell the house was substantially more.[5]
  • In Pryor v Given (1979) 24 ALR 442, the appellant company was found to have breached the pre-cursor to section 30 of the ACL, when it made misleading statements in relation to the sale of land. An advertisement for the sale of land included pictures of a number of houses and included the words “a wonderful place to live”. The court found that the pictures and words together formed a representation by the appellants that houses could be built on the land. In fact, the land was subject to a planning scheme which required onerous conditions to be met and approved before the land could be built on.
  • In Australian Equity Investors, An Arizona Ltd Partnership v Colliers International (NSW) Pty Ltd (No 4) [2011] FCA 442, it was held that a valuation company breached the pre-cursor to section 30 of the ACL when it made false and misleading statements concerning the price payable for land.
  • In Garvey v Vamamu Pty Ltd (1988) ATPR 41-656, a real estate company was found to have made false and misleading statements under the pre-cursor to section 30 of the ACL when an agent induced the appellants to make an offer which they thought would be accepted by the owners.  Instead, the offer was taken as a bid, the auction continued and the property was sold to another buyer.

For more information on this update or any other matters concerning competition and consumer law disputes, please contact us on (08) 9321 3755.

The information published on this website is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.

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[1] Given v Pryor (1979) 39 FLR 437.

[2] Latella v LJ Hooker Ltd (1985) 5 FCR 146.

[3] Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212.

[4] Taco Co of Australia Inv v Taco Bell Pty Ltd (1982) 2 TPR 48.

[5] Miller, RV 2013, Miller’s Australia Competition and Consumer Law Annotated, 35th ed, Thomson Reuters, Pyrmont, New South Wales.