A recent Supreme Court of Queensland decision is a timely
reminder of the serious consequences of making misleading or
deceptive representations during pre-contractual negotiations.
In a tight property market where it can be a struggle to sell
properties off-the-plan, it's important that if developers
express opinions or make predictions or forecasts about future
events, they have reasonable grounds for doing so.
Here, special counsel Brett Bolton and solicitor Peter Travers
review the facts of Nifsan Developments v Buskey &
Anor and outline what developers and their agents can learn
from this case.
In Nifsan Developments Pty Ltd v Buskey & Anor
 QSC 314, the court found that the developer was guilty of
misleading and deceptive conduct after its agent confirmed that the
buyers of a unit would have unrestricted views from that unit, when
in fact the developer had applied for approval to build another
development which would restrict those views.
This case confirms that a buyer will not be denied a remedy
under Australian Consumer Law (ACL) merely because they failed to
check the accuracy of a representation. Buyers are entitled to a
full refund of all deposits paid if a contract is declared void,
and developers may also be liable to pay compensation for any loss
suffered as a result of the misleading or deceptive conduct.
Nifsan Developments v Buskey & Anor
In January 2008, buyers Mr Buskey and Ms Tuominen visited
developer Nifsan Developments' sales centre to enquire about
property that Nifsan was advertising off-the-plan. During the
initial negotiations, the buyers told Nifsan's agent that they
wanted unrestricted views from their unit, with privacy from other
units looking in. The agent took the buyers to one of their other
units and made certain representations about the views that the
buyers could expect, including confirmation that their views would
be unrestricted. The buyers signed a contract for the purchase of
the penthouse unit in February 2008.
In September 2008, the buyers learned that Nifsan had applied in
October 2007 for approval to build the Porto Grande building,
which, if built, would restrict the views from their unit. The
agent who sold the buyers the unit, however, was not aware of
Nifsan's application. After the buyers terminated the contract,
Nifsan sued for specific performance. In court, the buyers argued
that the contract should be set aside on the basis of misleading
and deceptive conduct.
The court's decision
The court found that the agent's representations, for which
the developer was responsible, were misleading, and in breach of
the Trade Practices Act 1974 (as it then was). The court
declared the contract void.
The Competition and Consumer Act 2010, which
encompasses the ACL, commenced on 1 January 2011. It superseded the
Trade Practices Act 1974, and carries over the provisions
relating to misleading and deceptive conduct.
When determining whether representations are misleading, the
court will consider whether the developer had reasonable grounds to
make the representation, and whether there was reliance by the
The question is not whether the reliance was reasonable, but
whether there was reliance in fact. In this case,
although the court felt that the buyers were probably naďve
and could have taken steps to protect their interests, they did in
fact trust and rely on the representations of the developer's
agent. The court's decision confirms that conduct of an agent,
if they act within their actual or apparent authority, will bind
This legal update is an overview of existing eligible project activities and new project types proposed to be developed.
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