Property buyers will receive refunds following an Australian Competition and Consumer Commission investigation of a property development.
The former and current directors of the property developer Hill End Recreation Park Pty Ltd (trading as Hill End Property Group) have given the ACCC court-enforceable undertakings following alleged misleading or deceptive conduct in the sale of land at Hill End, in central New South Wales.
Between December 2003 and February 2004 the company, in advertisements in Sydney newspapers, in brochures, and via its website, promoted the sale of various sized blocks of land ranging from 80 square metres for $1,290 to one acre for $50,000. The company implied that freehold title to blocks would be provided, that the land was suitable for the building of dwellings, and a development application for building permits was to be submitted to the local council.
The ACCC's investigations revealed that individual buyers would not have received freehold title to any block but rather 1/100,000 share of the 12.5 hectares under subdivision. Further, the company did not own the land proposed for the subdivision, rather the company held an option to buy it, however that option was not exercised. Consequently purchasers could not obtain title to a share of the land. The ACCC also ascertained that local government restrictions would prevent approval of subdivision of the land and its use for the building of multiple dwellings.
The company's directors, Mr Brendon Davenport and Mr Michael Braithwaite, have acknowledged that consumers were misled by the actions of the company and its representatives. They have given personal undertakings to the ACCC to ensure all purchasers receive refunds. At least $60,000 in deposits and payments, representing purchases exceeding $160,000, were made by more than 30 consumers. Payments by other purchasers are yet to be ascertained.
The company's representative, Mr Chris Sharp, has had his authority to sell land on the company's behalf revoked, and no longer acts for the company. An Administrator has been appointed to the company.
Purchasers whose details are held by the company will be contacted to arrange refunds and the directors are still awaiting details of some consumers' purchases from sales agents. The directors will also place corrective notices in relevant press seeking direct contact from certain consumers.
Consumers who do not hear from the directors may seek a refund by providing proof of payment to the company's solicitor Mr Joseph Kotowicz, Konstan Lawyers, (02) 9558 3344.
The ACCC acknowledges the cooperation of the company's directors in taking action to satisfactorily resolve the ACCC's concerns.
"This is a very satisfactory result for consumers who were misled when buying the Hill End land", ACCC Chairman, Mr Graeme Samuel, said today. "The ACCC has been conducting a successful crackdown on misleading and deceptive conduct in the realty area.
"Today's announcement is an important step in this campaign and indicates that the high priority the ACCC places on consumer redress".
Section 52 of the Trade Practices Act 1974 prohibits businesses from engaging in conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive. Section 53A of the Act prohibits businesses from making misleading representations concerning the nature of the interest in the land or the use to which the land is capable of being put or may lawfully be put.