published by Hopgood Ganim - November 2008
Brett Bolton, Special Counsel
Kate Williams, Solicitor
A Queensland property developer has been exposed to the unwelcome attention of the ACCC over claims about the progress of construction of a golf course on a residential estate at Arundel on the Gold Coast.
The ACCC alleged that the Ingles Group, and its Managing Director Mr Graeme Ingles, misled residents and potential purchasers about the status of construction of the golf course, which was to be a key selling point of the development. The Ingles Group experienced significant delays in obtaining approval from the Gold Coast City Council to construct the golf course, which was to form part of the Tee Trees Residential Golf Community. The Ingles Group allegedly misled residents and prospective purchasers in relation to the golf course, attributing the delays in construction to the impact of the drought on the construction site, when in fact, the primary cause of the delay was the failure to obtain final council approval.
The Ingles Group also stated that construction of the golf course would soon be well under way and would not be subject to any further delays, and that it had called for tenders for bulk earthworks for the completion of the golf course which would begin once all tenders had been received. The ACCC alleged that the Ingles Group did not have reasonable grounds for the statements, as Council approval had not been obtained, and was unlikely to be obtained in the imminent future.
The Ingles Group admitted to engaging in misleading or deceptive conduct in breach of Section 52 of the Trade Practices Act. Mr Ingles admitted to being knowingly concerned in that conduct and has agreed, in conjunction with the Ingles Group, to place corrective notices in the Gold Coast Bulletin newspaper and its websites, and to send regular mail outs to residents of the estate informing them on the progress regarding construction of the golf course. The Ingles Group and Mr Ingles have also undertaken to establish, implement and maintain a Trade Practices Compliance Program over the next five years.
Lessons From the Case
This case serves as a useful reminder for property developers of the importance of ensuring that there are reasonable grounds for any representation made about a development to purchasers and potential purchasers. ACCC Chairman Mr Graeme Samuel said that the buying of land is a very significant purchase for most Australians, and therefore developers should take very seriously their obligation to make certain that all representations can be substantiated. This case also highlights the importance of remembering that a director can be held personally liable for a breach by his or her company, if they were involved in the conduct – the liability does not fall solely on the corporation itself.
Recommendations
How do you and your company avoid getting into trouble? Remember these useful tips:
If you are making representations about a state of affairs, or a future matter, ensure that you have reasonable grounds for doing so. If you don't have evidence to establish that reasonable grounds existed for making a representation at the time you made it, it will be deemed to be misleading. Bear in mind that just because you may genuinely believe in a particular state of affairs, that does not necessarily mean that there are reasonable grounds for that belief.
You have to show that there were facts or circumstances that existed at the time of the representation that you relied on, which are objectively reasonable and which support the representation made.
Remember that silence can be misleading, especially where the circumstances give rise to an obligation to reveal relevant facts where the other party is entitled to assume that those facts don't exist because you were silent.
Australia's Best Value Professional Services Firm - 2005 and 2006 BRW-St.George Client Choice Awards
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
