Plastic surgeon Chris Moss and his wife, Andrea John, the former television journalist, have won their legal battle with Toorak real estate agent RT Edgar in the Victorian County Court over deceptive selling tactics.
Judge Tim Ginnane found that the couple were deceived in post-auction negotiations over a Toorak property sale.
The couple paid $2.7 million for the property but Ginnane ruled it was only worth $2.5 million and he awarded them the $200,000 difference. They had claimed damages of $475,000.
The purchasers sued the selling agents claiming that they were misled and deceived into bidding $2.7 million by a representation that a person identified as “Tom” had made a post-auction offer of $2.6 million, when in fact that was not the case.
The judge noted it was an irony of the case that the purchasers of the property went to elaborate lengths to mislead the vendors and the agents as to their interest in the property. They also failed to disclose the fact that they recorded a number of important conversations that they relied on at trial.
“However, under the law applicable to the issues in this case, it is the conduct of the vendors and their agents that calls for consideration,” Ginnane noted during the 14-day trial.
The agents and the vendors were said to be liable for the misleading or deceptive conduct in contravention of the Trade Practices Act 1974 and the Fair Trading Act 1999 and to have accessorial liability for those breaches.
The agency denied that the agent Greg Herman had engaged in any misleading or deceptive conduct claiming the statements about “Tom” were made to placate Andrea John, who had behaved in an aggressive and inappropriate manner.
The agents described the plaintiff’s case as an instance of buyers’ remorse.
The purchaser of the Toorak property was the trustee of the superannuation funds of a plastic surgeon who practised in a building next door. The agent was the twin brother of one of the vendors.
The doctor’s case was that he wished to buy the property to give privacy to his high-profile plastic surgery patients, including those he said were “celebrities”. The doctor and his wife developed an elaborate strategy to purchase the property. The property was passed in at $2.1 million and negotiations commenced. A bid was made on behalf of the doctor at $2.4 million and then bids were made on the separate apartments. The agent said that he had already received an offer of $2.6 million, on his version, from a man driving a silver Mercedes. The doctor offered $2.7 million, which was accepted.
By chance, the doctor’s wife saw the underbidder, who was a man named “Tom”, driving past the property in a silver Mercedes a short time after the contracts had been signed. She flagged him down. He told her that he had not offered $2.7 million but $2.1 million. The doctor considers that he was duped and claims the difference between the true value of the property and the $2.7 million.
The RT Edgar agents and vendors denied any misleading or deceptive conduct or misrepresentations, but Ginnane says estate agents, in selling properties, may not engage in misleading, deceptive or fraudulent conduct. This law has general application to all commercial activity, including estate agents’ actions in selling residential property.
Ginnane added the law does not cease to apply because, as was the case in this proceeding, the purchasers themselves engage in conduct to attempt to disguise their interest in the property.
He ruled there was an entitlement to damages calculated by the difference between that price and the real, true or fair price of the property on auction day. The real, true or fair value of the property was $2.5 million.
The case for deceit was that the representations made by selling agent Herman were made fraudulently, in that R T Edgar Toorak knew the representation to be false, or alternatively, did not have a genuine or honestly held belief in the truth of the representations at the time it was made.
The buyer was induced to act upon the statements, and did so and had thereby suffered loss and damage.
The court heard Herman agreed to act for a low commission of 0.55% plus advertising costs of $15,000. R T Edgar Toorak was retained by an exclusive auction authority that stated an estimate of selling price of between $2 million and $2.2 million.
It was advertised at $2 million plus in the newspaper and appeared in the $1.5 million and $2 million section on the websites.
Moss and John arranged for two people to assist in purchasing the property at auction so that their interest would be disguised.
Tom Kartel was also interested in purchasing the property. He intended to use the property as his family home. Kartel made bids for the property and was the auction underbidder, although Herman did not consider that Kartel was a serious purchaser, as he had not sought copies of the contract documents.
RT Edgar Toorak office said there would be no comment.
Greg Herman, a company director, remains selling property with the agency including property in Toorak and South Yarra.
This article first appeared on Property Observer.
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