The Federal Court has made orders, by consent, against property investment seminar promoter Morgan Pacific Pty Ltd and its directors Paul Hanna and Danny Hanna Assabgy for misleading and deceptive conduct in the promotion of property investment seminars through advertisements entitled "YOU! A Property Millionaire".
Morgan Pacific was responsible for advertisements which appeared in a number of Australian newspapers and on the Internet in late 2003, promoting three-hour property investment seminars presented by self-described "multi-millionaire property investors and developers, Danny and Paul Hanna" ('the Hannas'). The seminars were held in a number of capital cities during October and November 2003 and cost $65 a ticket.
The Australian Competition and Consumer Commission instituted proceedings against Morgan Pacific, Paul Hanna and Danny Hanna Assabgy in October 2004, alleging that in the newspaper and Internet advertisements, Morgan Pacific had made a number of misleading or deceptive representations, and that the Hannas had aided, abetted, counselled or procured; and been directly or indirectly knowingly concerned in or a party to Morgan Pacific's alleged misleading and deceptive conduct in promoting the seminars.
The Federal Court has declared, by consent, that Morgan Pacific engaged in conduct that was likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 by making representations in the newspaper and Internet advertisements as follows:
- the principles and strategies concerning property investment practiced by the Hannas and taught at the seminars advertised in the advertisements ("the property investment strategies") were capable of implementation by participants in the seminars to substantially the same effect as they were implemented by the Hannas; whereas in fact the strategies were not likely to be implemented to that effect
- persons who implemented the property investment strategies would be likely to become wealthy by investing in property and engaging in property development, when Morgan Pacific did not have reasonable grounds for making that representation, and in fact the possibility of becoming wealthy by implementing those strategies was not likely
- persons who implemented the property investment strategies would be likely to build multi-million dollar property portfolios, when Morgan Pacific did not have reasonable grounds for making that representation; and in fact the possibility of building a multi-million dollar property portfolio by implementing those strategies was not likely, and
- persons who implemented the property investment strategies would be likely to acquire property valued at hundreds of thousands of dollars using none of their own money and with zero debt; when Morgan Pacific did not have reasonable grounds for making that representation, and in fact successful implementation of the property investment strategies was in practice not likely and the possibility of persons who implemented them acquiring property valued at hundreds of thousands of dollars without using any of their own money and with zero debt, was not likely.
The Federal Court declared by consent that the Hannas, by participating in the preparation and publication of the advertisements, were directly or indirectly a party to the contraventions of the Act by Morgan Pacific.
The Federal Court also ordered by consent that the Hannas make a contribution toward the ACCC's costs in the proceedings to the amount of $17,600.*
Further, Morgan Pacific and the Hannas made undertakings to the Court that they will not directly or indirectly be in any way involved in publishing the advertisements or any advertisements substantially the same as them; or make the representations or any representations to substantially the same effect as those made in the advertisements.
"This is another successful outcome of the ACCC's campaign against misleading conduct by wealth-creation seminar promoters", ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC will be relentless in its work to protect consumers from advertisements designed to lure them to property investment seminars by exaggerated claims about potential riches".
* Note: no pecuniary penalty or fine is available for proceedings brought under section 52 of the Trade Practices Act 1974.