Australia: Selling a house does not amount to engaging in trade or commerce

Last Updated: 12 August 2015
Article by Gary Newton and Henry Yuan

In brief - Australian Consumer Law may not extend to selling one's home

On 29 June 2015, the NSW Court of Appeal delivered judgement in Williams v Pisano [2015] NSWCA 177, which considered the application of section 18 and section 30 of Australian Consumer Law, specifically the phrase "trade or commerce" and whether or not the sale of real property amounts to the "trade or commerce" element of the provision.

The court found that the sale must bear a trading or commercial character to be applied to these provisions, narrowing the scope of section 18 and section 30. The sale of a house does not constitute conduct in trade or commerce by the appellant, and thus the previous orders of the primary judge were dismissed.

Vendors make several unsuccessful attempts to sell house

The appellants, Mr Patrick Williams and his wife, Ms Georgia Dandris ("the vendors") purchased a residential premises situated in Blake Street, Dover Heights, New South Wales ("the property") in December 2003. On several occasions from 2008 to 2010, the vendors endeavoured to sell their property, but were unsuccessful.

Vendors engage builder to carry out extensive renovations

In 2010 the vendors began renovations on the property. The renovations were carried out by a builder, substantially under the supervision of Ms Dandris, but without the benefit of detailed architectural plans or architectural supervision. The property was converted from a "modest three-bedroom residence" to a "double-storey, five-bedroom house with a rooftop terrace, a view of Sydney Harbour and a swimming pool".

Vendors engage agent to market property

In November or December 2011, the vendors retained Angus Levitt Pty Ltd ("the agent") to market the property on their behalf. The agent advertised the property on the real estate website www.domain.com.au ("the web advertisement"). The agent also gave the respondents, Mr Bruno Pisano and Ms Sia Pisano ("the purchasers") an advertising brochure in relation to the property ("the brochure").

Both the web advertisement and the brochure contained statements concerning the property and the standard of the renovations that had been carried out. Furthermore, the agent made oral statements to Mr Pisano about the nature of the renovations and the competence of the builder.

Rainy weather causes serious property damage after purchasers move in

The purchasers competed the purchase on 25 January 2012 and moved into occupation of the property with their infant daughter. Problems began to emerge soon after, which Ms Dandris took steps to rectify. However on 16 April 2012, following rainy weather, there was significant water penetration into the property, resulting in serious property damage.

In September 2012, the purchasers began proceedings against the vendors. Their claim under Australian Consumer Law was based on section 18, section 30(1)(e) and section 236.

  • Section 18 provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
  • Section 30(1)(e) provides that a person must not, in trade or commerce, in connection with the sale or the possible sale of an interest in land, or in connection with the promotion by any means of the sale of an interest in land, make a false or misleading representation concerning the characteristics of the land.
  • Section 236(1) provides that if a person suffers loss or damage because of the conduct of another person and the conduct contravened Chapter 2 (which includes section 18) or Chapter 3 (which includes section 30), that first person may recover the amount of the loss or damage by action against that other person.

Primary judge determines that sale of property was a transaction in trade and commerce

The primary judge was satisfied that the sale of the property by the vendors to the purchasers was a transaction in trade and commerce, as in all of the circumstances in which it occurred, it disclosed a commercial or business character. Consequently the vendors were ordered to pay the sum of $1,171,124, which was deemed the reasonable and necessary cost of fixing the defects.

On 23 September 2014, Mr Williams filed a notice of appeal from the orders made by the primary judge.

The Court of Appeal had to determine whether misleading representations made in connection with the sale of the property constituted conduct in trade or commerce within the meaning of the phrase when used in the Australian Consumer Law, which is Schedule 2 of the Competition and Consumer Act 2010 (Cth).

Meaning of "trade or commerce" in Australian Consumer Law

The court scrutinised the phrase "in trade or commerce" in its application in section 18 and section 30 of Australian Consumer Law. Those provisions were not intended to extend to all conduct, regardless of its nature, in which a person might engage in the course of the overall trading or commercial business of that individual.

Thus the reference to "conduct in trade or commerce" must be construed as referring only to conduct that is itself an aspect or element of activities or transactions that, of their nature, bear a trading or commercial character.

Actions of agent also extend to principal (vendor)

Section 84(4) of the Competition and Consumer Act provides that conduct engaged in on behalf of a person by an agent of the person within the scope of the actual or apparent authority of the agent is deemed to have been engaged in also by the principal.

Thus if it can be found that the actions of the estate agent constituted conduct in trade or commerce, the principal, the vendor would also be found to have been involved in conduct in trade or commerce.

Vendors found not to have engaged in trade or commerce

However, the court found that the mere selling of one's home does not constitute conduct in the course of a trade or business or in a business context. Furthermore, the element of acting in trade or commerce will not be attributed to owners selling their home merely by reason of their engagement of an estate agent to find a buyer.

The court found that the primary judge erred in concluding that the representations constituted conduct engaged in by Mr Williams in trade or commerce. It follows that there was no contravention on the part of Mr Williams of either section 18 or section 30 of Australian Consumer Law.

Australian Consumer Law cannot simply be applied to any property sale

Section 30 of Australian Consumer Law provides that a person must not, in trade or commerce, in connection with the sale of an interest in land, make false or misleading representations concerning various matters.

In this case, the court made the observation that if any sale was to be considered conduct in trade or commerce, there would be absolutely no need for the phrase to be included in the preamble to section 30, and that this same observation could be made in relation to several provisions of Chapter 3.

Therefore the phrase "trade or commerce" is highlighted as an integral part of this provision, and the court has established that section 18 and section 30 cannot simply be applied to any situation in which a sale occurs. There must be dealings that bear a trading or commercial character.

For further information, please contact:

Gary Newton
Property acquisition, development and sale
Colin Biggers & Paisley

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.

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