Property Law Table of Contents
In this chapter- Sale of Goods Act, 1923 (NSW).
- (a) Generally
- (b) Terms of Contracts
- (c) Remedies for Breach of Contract
- (d) Exclusion of Provisions of Act
- (b) Terms of Contracts
- (a) Generally
- Trade Practices Act, 1974 (Cwth).
- (a) Generally
- (b) Constitutional Limits
- (c) Prohibited Practices
- (d) Misrepresentations Relating to Land
- (e) Misleading or Deceptive Conduct
- (f) Unconscionable Conduct
- (g) False Representations & Misleading or Offensive Conduct in Relation to Land
- (h) Remedies under the Act
- (b) Constitutional Limits
- (a) Generally
- Fair Trading Act, 1987 (NSW)
- (a) Generally
- (b) No Constitutional Limits
- (c) Prohibited Conduct
- (d) Remedies
- (b) No Constitutional Limits
- (a) Generally
- Consumer Claims Tribunal Act, 1974 (NSW)
- (a) Generally
- (b) Jurisdiction
- (c) Operation
- (b) Jurisdiction
- (a) Generally
(a) Generally. This Act codifies the old case law on the sale of goods. The general law of contract still applies too. Section 6(1) provides that a contract of sale of goods is "a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for money consideration called the price". There must be "goods" which can include things attached to land provided that it is agreed they are to be severed from the land. Choses in action e.g. a debt, negotiable instruments and company shares are not goods. There is money consideration as long as there is a promise to pay some money. Gifts, barter and exchange are outside the provisions of the Act. The contract may set out the price or the manner in which it is to be ascertained or it may be determined by a course of dealing. Otherwise a reasonable price will be payable. The Act covers sales and agreements to sell. A contract is a sale when the property in the goods is by the transaction transferred from seller to buyer. Where the passing of the property in the goods is not to take place at a future time or is subject to the fulfilment of some condition, it is an agreement to sell. Where there has been a sale the seller may be able to sue in debt for the price or the buyer for damages for conversion. But where there is an agreement to sell the seller may only sue for damages for refusal to take delivery. The buyer can sue for breach of contract but not for conversion. The Act does not apply to a contract for work and labour. The difference is that a contract for work and materials involves the hiring of skill and the delivery of the resulting goods being of a subsidiary nature. Whereas delivery is the substance of a sale of goods. For example, contrast a contract to paint a portrait and a sale of a completed portrait; or a contract for work and materials as opposed to a contract for the supply and installation of a fixture. In each example the latter is a sale of goods. Section 9 2 formerly provided that a sale of goods with a value of $ 20.00 or more, although valid, it would not be enforceable unless:- (a) there is some note or memorandum of the contract in writing signed by the party charged; (b) the buyer has accepted part of the goods and received them; or (c) the buyer has given something in earnest to bind the contract or in part payment. When a contract for the sale of goods is made the buyer may give something as an earnest or token of good faith. If he defaults, the earnest will be forfeited, but if the contract goes ahead the thing is returned or deducted from the price. Distinguish, a part payment, which may be claimed by a buyer if a contract goes off even if through the buyer's default. However, the the seller may be able to sue for damages arising from the breach of contract. (b) Terms of Contracts. (i) Generally. The distinction between conditions and warranties is preserved in the Sale of Goods Act. Both must be distinguished from mere words or "puffery" which have no legal consequences and "mere representations" leading to but not forming part of the contact. A breach of a condition gives the injured party a right to rescind as well as to sue for damages. A breach of warranty gives the injured party only a right to recover damages. The Act provides that in some circumstances a buyer is bound to treat a breach of condition as a breach of warranty. (ii) Title. The Act implies conditions that the seller has a right to sell the goods or will have the right at a time when the property is to pass. Warranties are implied that the buyer shall have and enjoy quiet possession of the goods and they shall be free of encumbrance. (iii) Description. Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description i.e. the buyer cannot be compelled to accept something of a description from that nominated in the contract. (iv) Fitness for Purpose. Under the common law there were no implied conditions or warranties as to quality or their fitness for any particular purpose. The maxim is "caveat emptor" (let the buyer beware). However the exceptions given effect by the Act imply conditions. Where the buyer makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill and the goods are of a description which it is in the course of the seller's business to supply there is an implied condition that the goods shall be reasonably fit for such purpose (s. 19(1)). (v) Merchantable Quality. Where goods are brought by description, from a seller who deals in goods of that description, whether he be a manufacturer or not, there is an implied condition that the goods shall be of merchantable quality. However, if the buyer has examined the goods there is no implied condition as regards defects which such examination ought to have revealed (s. 19(2)). The Act also provides that a condition or warranty as to quality or fitness may be imported into the contract by the usage of trade. Third persons may also be liable to buyers in tort for negligence or negligent misstatement. (vi) Transfer of Property from Seller to Buyer. There is difference between the "property" in and the "possession" of goods. Property relates to ownership or title, while"possession" refers to the custody or control of goods. One person may have the possession of goods while another may have the property in or ownership of the goods. The Act sets out, in the absence of a contrary intention, the rules for ascertaining the intention of the parties as to the time at which the property in the goods passes to the buyer. In the case of unascertained goods, i.e. goods defined by description and not identified and agreed upon when the contract is made, the property is not transferred unless and until the goods are ascertained (s. 21). Specific goods, i.e. goods agreed upon and identified at the time of the contract, or goods which have become ascertained since the contract was made, the property in the goods passes from seller to buyer when the parties intend it to pass (s. 22). If no intention is clear s. 23 sets out five prima facie rules. The importance of when the property passes is that:- * It indicates when the risk passes. * It indicates when the buyer can pass a good title to third parties. * Generally, once the property passes the buyer can no longer reject the goods for breach of condition but can only treat the sellers breach as a breach of warranty and sue the seller for damages. (vii) Transfer of Title by Non-Owner. The general rule is that a transferee cannot obtain a better title than that of his transferor: "nemo dat quod non habet". However, the owner may by his words or conduct be precluded from denying the sellers authority to sell and the buyer obtains a valid title (s. 26(1)). Mercantile agents may in certain circumstances pass a valid title. (viii) Delivery. It is the duty of the seller to deliver goods conforming to the contract and that of the buyer to accept them and pay for them in accordance with the contract (s. 30). Unless otherwise agreed delivery and payment are concurrent conditions. The Act sets out various rules for delivery. (c) Remedies for Breach of Contract. (i) Rights of Unpaid Seller Against Buyer. Where ownership has passed to the buyer and the buyer refuses or neglects to pay for the goods the seller may sue the buyer for the price of the goods as a debt. Where ownership has not yet passed and the buyer wrongfully refuses to accept and pay for the goods the seller may sue for damages for non-acceptance. The seller owns the goods and can resell them. (ii) Rights of Unpaid Seller Against Goods. Notwithstanding that the property in the goods may have passed to the buyer the unpaid seller has the following rights:- * a lien i.e. the right to retain possession until payment. * a right to withhold delivery in certain cases. * a right of stopping the goods in transit in certain cases. * a right of resale in certain cases. (iii) Rights of Buyer. Where a seller wrongfully fails to deliver in conformity with the contract the buyer is entitled to damages for non-delivery (s. 53(1)). However, a buyer must mitigate his loss, i.e. he must do everything reasonable to minimise his loss in accordance with what an ordinary prudent man would do and he is not entitled to damages for loss which is due to his failure to take reasonable steps to this end. If there is a failure to deliver the goods the Court may on the application of the buyer direct that the contract be specifically performed. But it would only be ordered in rare cases where payment of damages to the buyer or seller would not be an adequate remedy e.g. antique furniture. If the buyer has already paid for the goods and the seller does not deliver the goods the buyer is entitled to repayment of the price. Remedies for breach of conditions or warranties have already been discussed. Where there is a breach of warranty, or breach of condition treated as a breach of warranty, the buyer can set up the breach in diminuation of the price or maintain an action for damages for breach of warranty. The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the breach. (d) Exclusion of Provisions of Act. Generally, parties may contract out of the provisions of the Act. Implied conditions and warranties are frequently negatived or varied by express or implied agreement between the parties. This is recognised by s. 57 None the less s. 19(4) provides:- "An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith." The condition or warranty given in the contract must therefore be clearly inconsistent with a condition or warranty implied by the Act to override the Act. In some cases the condition or warranty in the contract may only supplement the Act. A statement int he contract that the buyer in purchasing the goods has depended entirely upon his own judgement is not inconsistent with an implied condition as to fitness. A clause that may exclude the Act is:- "All conditions, warranties and liabilities implied by statute, common law or otherwise are excluded." The use of exclusion clauses to exclude in whole or in part the conditions and warranties implied by the Act may be unfair where the buyer has little or no bargaining power. Section 64 of the Act avoids attempts to contract out of the Act in the case of "consumer sales". Section 62 defines consumer sales as sales of goods other than by auction by a seller in the course of a business where the goods are of a kind commonly brought for private use or consumption and are sold to a person who does not buy or hold himself out as buying them in the course of a business. This section of the Act does not alter the content of the conditions and warranties. 2. Trade Practices Act, 1974 (Cwth). (a) Generally. The Trade Practices Act came into effect on the 1st October, 1974. It was introduced to provide a new code of conduct for the business community, encouraging fair trading at all levels from manufacturer through to the consumer. It provides for regulation of anti-competitive and deceptive trading practices, and for protection not only of consumers but of their sources of supply. (b) Constitutional Limits. The Trade Practices Act has strict constitutional limitations. The Act applies to the activities of corporations and to other persons in particular circumstances. With the exception of s. 55 each section in Part V Division 1 commences with "A corporation shall not ..." and relies for its constitutional validity on the corporations power. Section 6 extends the operation of the Act to persons not being corporations. It is suggested that until judicial decisions confirm that the Act does no extend to persons its effective operation in respect of persons in all circumstances should be assumed. The Act specifically applies to Commonwealth Government Departments and instrumentalities (s. 2A). However, it may not apply to State Government Departments and instrumentalities. (c) Prohibited Practices. The types of restrictive conduct prohibited by Part IV of the Act are:- * Contracts affecting competition: s. 45. * Price fixing: s. 45A. * covenants running with land: s. 45B. * Primary boycotts: s. 45D, 45(2). * Secondary boycotts: 45D, 45E. * Misuse of market power: s. 46. * Exclusive dealing: s. 47. * Resale price maintenance: s. 48. * Price discrimination: s. 49. * Mergers and acquisitions: s. 50. Sections 45-45C of the Act contain complicated provisions prohibiting various types of anti-competitive arrangements. These sections catch contracts which have the effect of substantially lessening competition, price fixing contained in those contracts and exclusionary provisions. Covenants running with land, including covenants in leases other than those which amount to exclusive dealing, are treated in essentially the same way by s. 45B as provisions in contracts, arrangements or understandings which substantially lessen competition in the relevant market. In its clearance application a real estate developer proposed to insert a clause in its contracts of sale which stipulated that subdivision land buyers agree not to display any "for sale" sign for three years and before building on the land. The clause also contained a proviso "that this restriction shall not operate to prevent buyers from selling or otherwise disposing of land without recourse to the display of such sign." The Trade Practices Commission refused to grant clearance, stating that:- "The object of the restraint is to affect the ability of parties to re-sell unless they build on the block. In competition terms, this may mean that one source of competition to the applicant in selling the remaining blocks in the subdivision is foreclosed. A purchaser of one vacant block may be prepared to re-sell at prices lower than those offered by the applicant for remaining blocks. The ability of the applicant to control all prices in the subdivision may thus be eroded. 3" Section 45B does not apply to a covenant if the "sole or principal purpose" for which the covenant was or is required to be given was or is to prevent the relevant land from being used otherwise than for residential purposes (s. 45B(9)(a). Covenants protecting residential interests are therefore enforceable. (d) Misrepresentations Relating to Land. The provisions dealing with this topic are contained in Part V of the Act, entitled "Consumer Protection", in Division 1, which is entitled "Unfair Practices". A person relying on these provisions need not be a "consumer" within the definition of that term in s. 4B. The provisions relating to land are ss. 52, 52A, 53, and 53A. "Services" include rights in relation to, and interests in, real or personal property and extend to benefits, privileges or facilities being provided, granted or conferred in trade or commerce e.g. the provision of finance (s. 4(1)). "Goods" include minerals, trees, crops, gas and electricity (s. 4(1)). Section 4H deals with the application of the Act in relation to leases and licences of land and buildings. Section 53A has its own internal definition of "interest" to define interests in land. It only applies for the purpose of s. 53A, although the courts may attribute a somewhat similar meaning to it when applying other sections of the Act to land transactions. For the purpose of s. 53A, an interest in land means any legal or equitable estate or interest, including shareholdings in a company (i.e. company title unit) and any right, power or privilege over or in connection with land (including a licence or a profit `a prendre). A precondition to conduct covered by the sections is the term "in trade or commerce". It is unfortunate that the meaning of the phrase in this context is still uncertain. The term "trade or commerce" is defined in s. 4(1), but only in geographical terms and without indicating the nature of the activity. It has been suggested that "in trade or commence" is wider than activity within the conduct of a business and that there is no need to find an element of continuity or regularity which usually forms part of a business. The question is whether some conduct or transaction is trading or commercial in its nature. There is no difficulty with a land transaction involving a party for whom the transaction is part of its business e.g. a builder, developer, land dealer or estate agent - clearly these people deal with land in trade or commerce. The legislation applies to transactions involving the sale or lease of project homes, home units, premises in shopping centres and in office buildings, by a builder or a developer. It is more doubtful whether transactions, such as the sale or lease of a domestic residence by a person who resides in it as his home to another person and intended as his residence, would be covered by the legislation. (e) Misleading or Deceptive Conduct. Section 52 relies on broad concepts, particularly as the terms "misleading" and "deceptive" are not defined. The terms "conduct" or "engaging in conduct" cover wide ranging activities, being more extensive than making a statement or a representation. Misleading or deceptive conduct can include (in particular situations) puffing, promises, predictions, forecasts and expressions of opinion on matters of law. For example, it has been suggested that to describe a motor vehicle as "the most economical" or "the fastest" which would merely be puffing under the general law, might be misleading or deceptive within this legislation. Section 52 covers a range of conduct within the topic of misrepresentation which is much wider than those covered under the general law. It has been held that there is no need to prove that the person responsible for the conduct had an intention to mislead or to deceive 4. The most appropriate description of conduct which is misleading or deceptive, or is likely to mislead or deceive, is conduct which is capable of leading a person into error. The main issue is the objective capacity of the conduct to lead the other party into error. Conduct contravenes s. 52 even if it did not actually mislead the other contracting party or did not even come to his notice. Conduct which contravenes s. 52 does not render the person responsible liable to penal sanctions. Any person may apply for an injunction to restrain another person from engaging in such conduct (s. 80). Any person who suffers loss or damage as a result of conduct contravening s. 52 may recover the amount of loss or damage (s. 82) and the court may make a wide range of orders under s. 87. Where a person seeks civil remedies under the Trade Practices Act, based on conduct which is specifically covered by s. 53 or 53A, it is prudent to rely also on the more general provisions of s. 52. In Trade Practices Commission v. Sterling 5 an injunction was granted to restrain the defendant from aiding, abetting, counselling or procuring any company or person to engage, in trade or commerce, in the conduct of advertising, representing, offering for sale or selling interests in land in a manner that is misleading or deceptive, in contravention of s. 52. It was established that a real estate developer and the defendant, as its director, made false, misleading and deceptive statements and representations. These included: that there was an opportunity for rapid capital gain from rising land values, increasing the value of land in particular subdivisions three or four fold within two to four years; that the company was the legal owner in fee simple of the land (in fact it held title to only a small portion of the estates); that the company had obtained council permission to subdivide the land and to develop it by installing roads, kerbing, guttering, water, electricity, gas, drainage and sewerage (in fact only "in principle" approval had been given); that the zoning of the land would be altered soon to residential A zoning; that the development of the estates was likely to be completed within a maximum period of two years (this was held to be an "utterly unrealistic" estimate); and purchasers only acquired an undivided share as tenants in common although they were led to believe that they would have absolute title to certain parcels of land. Brookhouse v. N.S.W. Mutual Real Estate Fund Ltd. 6 dealt with conduct on the part of the fund and its employees to obtain subscriptions to a mutual fund on the basis of certain representations regarding the prospects of obtaining long term and low interest rate finance. The representations were held to constitute misleading or deceptive conduct, in contravention of s. 52(1). These proceedings were instituted to recover damages under s. 82 for loss or damage sustained by persons who paid money relying on the representations. The Court found misleading and deceptive conduct within the meaning of s. 52 constituted and that the lessee was actually misled by them in Cohen & Anor v. Centrepoint Freeholds Pty. Ltd. 7 The lessor of shops in Centrepoint Mall in Melbourne had given assurances to one of its tenants that it would: take the necessary steps to lease the vacant shops; ensure that there was a good mix of tenants in the basement; require the cleaning staff to work such hours necessary to ensure a high standard of cleanliness and hygiene in the basement; have the air-conditioning problem rectified; and use its best endeavours to promote the interests of the Mall in association with the tenants and in the interests of the public. In C.G. Smith Pty. Limited 8 the Trade Practices Commission obtained from the Federal Court an injunction restraining the company and two individuals associated with it, from advertising, offering for sale or selling interests in certain land without disclosing the nature of the interests in the land or prohibitions and restrictions upon the erection of dwellings on the land. The court also directed an order to the company and the individuals requiring them to show cause why they should not be restrained from engaging in misleading or deceptive conduct in contravention of s. 52. The conduct alleged to be in contravention of s. 52 consisted of the publication of advertisements for 1 acre blocks in newspapers in four States and the A.C.T.. Investigations traced consumers who had acted on the advertisements and who gave evidence that the advertisements, and oral representations in follow-up interview, led them to the mistaken belief that they could obtain freehold title and build on the land whereas the Commission alleged that all that a purchaser received was a 1/9,000 interest in a 9,000 acre property on which he could not build. (f) Unconscionable Conduct. Section 52A prohibits unconscionable conduct by corporations in consumer-type transactions but it only applies to the supply or possible supply of goods or services to a person. It may apply in particular circumstances to the provision of credit, including by way of secured loan, but otherwise its impact in land transactions is likely to be minimal. The scope of s. 52A is confined to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption (s. 52A(5)). Section 52A is directed at conduct which, while it may not be misleading or deceptive, is clearly unfair or unreasonable. Unconscionable conduct by corporations is prohibited on a civil basis under s. 52A. The key word in s. 52A is "unconscionable" and it is well recognised that it is a difficult term to define. A "want of probity", "oppression", "abuse", or "injustice" has been put forward as descriptive of unconscionability. It is clear, however, that those terms provide a better description taken together than they do singularly. The court may have regard to the following factors in determining unconscionability: relative strengths of the bargaining positions of the corporation and the consumer; degree of understanding of any documents relating to the supply of goods or services; undue influence, pressure or unfair tactics used against a consumer; and comparison of the price of equivalent goods or services from a person other than the corporation. Enforcement and remedies in relation to s. 52A are injunction and other orders. Damages are not available under s. 87. (g) False Representations & Misleading or Offensive Conduct in Relation to Land. Section 53A specifically covers land but it should not be overlooked that most of the conduct contravening s. 53A also contravenes some part of s. 53. There is considerable overlap between ss. 52, 52A, 53 and 53A. The Trade Practices Commission issued real estate guidelines 9 on the 6th July, 1976. These were revised on the 16th July, 1982 and are now entitled Real Estate Guide to Consumer Protection Provisions. The 1982 revision takes into account s. 53A and the judicial decisions affecting land transactions relating to ss. 52, 53 and 53A. The guidelines express the views of the Trade Practices Commission as to the law and is not an authoritative exposition of the law. Nevertheless, they are a useful indication of the types of conduct which might contravene ss. 52, 53 and 53A. The general principles contained in the following excerpts from the real estate guidelines cover some basic concepts relevant to land transactions:- "2.2 The provisions apply to media advertising, catalogues, brochures or pamphlets, billboards and posters, point of sale materials and signs, and sales talk. They also apply to persons on whose behalf an advertisement or representation is made, to persons who prepare an advertisement or make a representation, to persons who print, broadcast or telecast an advertisement or arrange for that to be done and to persons who display a poster or sign. 2.3 The application of the law to representations means that the provisions transcend the contract itself and apply equally from pre- contractual negotiations through statements made concerning post- contractual obligations, e.g. in relation to services supplied within a maintenance period on a new home. 2.5 Section 53A specifically prohibits false representations and other misleading or offensive conduct ..."in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connexion with the promotion by any means of the sale or grant of an interest in land." It should be noted that there is no need for a sale or non-gratuitous transfer to take place for the section to apply; false or misleading statements or representations made in an attempt to sell or grant an interest in land could be sufficient to constitute a contravention. 2.6 The section speaks of "land", which is not defined in the Act. However, it follows from the general legal principle that land includes what is fixed to it, that buildings fall within the meaning of "land". Therefore, any misleading statements estate agents, developers or others make in relation to building plus land deals or in relation to existing buildings would be caught by s. 53A. However, the section would not apply where the statements relate to a building to be erected on the buyer's land; such statements would relate to the provisions of services and would come within the scope of other consumer protection provisions. 2.8 An "interest" in land includes references to a proprietary interest (e.g. a lease, life estate, easement or a restrictive covenant); company or strata title; or rights in the nature of licences (i.e. rights to enter and use land without committing trespass). 2.9 Advertisements for land shares of other property sharing schemes should state clearly the nature of the interest or title that is being offered. If a potential purchaser is not able to secure exclusive title to an individual block or unit but is offered: * a tenancy in common with others in one large undivided area of land; or * other types of interests which are restricted in some way, for example a shareholding in a corporation which which owns the land, advertising and promotional literature should set out the position clearly. Schemes which envisaged the allocation of exclusive occupancy of individual blocks or units by arrangement among purchasers should not be promoted in such a manner as to encourage the assumption that participants will obtain individual titles or that the scheme is the usual type of "sub- division" or strata title. For example in the absence of further explanations, the use of the term "legal title" in such circumstances could be misleading, Furthermore, promotional literature should disclose any conditions applicable to, and procedures for exercising the rights of occupancy and enjoyment of the property and facilities. For example, where such rights are to be determined by an owners' association or company, that should be made clear to potential purchasers. 2.10 The Trade Practices Commission regards price as central to competition. It is no matter about which there must be no misinformation. Real estate advertisements that feature price should state prices in clear and unequivocal terms. 2.11 Statements or representations of price must not mislead as to what is included in the price. For example, where a project home is represented in an advertisement or by display as having arches, garages, pergolas, chimneys or other features, the price stated should be inclusive of those features or the advertisement should state clearly which of those features are additional to the stated price. More detailed promotional literature such as brochures or pamphlets should state clearly the additional cost of any such features depicted and any additional extras that may be necessary e.g. paths or fences, whether depicted or not. 2.12 Statements or representations of price in relation to a number of units or blocks of land should not mislead as to the average price of the units or blocks; for example, "43 blocks from $ 10,000" when in fact there is only one block at that price, and the next lowest price is, say $ 18,000. Where an advertiser is offering such a number of units or blocks it would be more informative to state the price of each. If, however, the advertiser chooses to express the prices generally, e.g. "from $ 19,000 to $ 28,000" it would be desirable to also express the approximate price at which the majority are offered. Advertisers expressing a price range would need to take care to ensure that their advertising is up-dated as sales occur, e.g. it would be misleading to continue to advertise "from $ 19,000 to $ 28,000 - most at about $ 22,000" after the cheaper ones had been sold. Advertisers should up-date advertising with a continuing life, such as billboards, within a reasonable period. Pamphlets or brochures should be up-dated when given to a potential purchaser. 2.13 Statements about the availability of finance or methods of financing a real estate transaction might be interpreted as being about the price payable for the land in terms of s. 53A(1)(b). For example, the Court held [Henderson v. Pioneer Homes Pty. Ltd. (1980) ATPR ¶40-159; (1980) TPRS 314.1] that advertisements of houses and land for sale at $ 100 deposit and payments of $ X per week were statements setting out the way in which the price was to be paid and therefore were statements "with respect to" the price. 2.14 Statements and other forms of representations about the availability of finance should be cast in terms that will not mislead the average member of the class of persons to whom they are directed. For example, a statement "low interest finance readily available" in an advertisement aimed at lower- income home buyers might be misleading if the average person responding to the advertisement could not qualify for the low interest finance and is consistently "sold-up" to higher interest finance by the advertiser. In such circumstances the addition of words such as "to approved purchasers" might not of itself correct the misleading nature of the advertisement. 2.15 It would be desirable for advertisements which make a feature of finance to disclose the nature of such finance, its source and its terms. Advertisers should ensure that advertisements offering finance comply with the provisions of any relevant State consumer credit law and include as full particulars of the nature of the finance as is permissible and practical. Such advertisements should at least convey in a broad way the sort of transaction that the advertiser had in mind. Certainly persons responding to such advertisements should not be led into error of thinking that one sort of transaction (e.g. a building society loan) is available when it is not. The Court [Henderson v. Pioneer Homes Pty. Ltd. (1980) ATPR ¶40-159; (1980) TPRS 314.1] has rules, that advertisements of houses and land for sale on $ 100 deposit and weekly payments were to be greatly in excess of the $ X per week mentioned in the advertisements. The Court was of this view despite the reference, in small print, in some of the advertisements, to: "Bridging finance as above for 12 months. A further 12 months temporary finance can be arranged, if required, to approved clients from ..." 2.16 Finance should not be featured in an advertisement unless the advertiser has taken reasonable precautions and exercised due diligence to ensure that finance of the nature featured is available. Also, whenever finance is being arranged for a purchaser, no part of the transaction should proceed until the consumer has been informed of the total commitment which he must must accept in order to complete the transaction and the nature and terms of the securities the consumer must offer. 2.17 Advertisements that are factually informative as to the location of the land or the distance of a property from shops, schools or transport etc. are less likely to mislead than subjective assessments of those matters. Statements such as "Shops approx. 1.5 km", "Primary/Secondary Schools (as the case may be) 5 km" are to be preferred to "near shops", "Walking distance to schools" or "10 minutes to City". 2.18 Any sketch maps, diagrams, artists' impressions or photographs that are used must not mislead as to the proximity of the subject property to any particular [see Videon v. Beneficial Finance Corporation & Ors. (1981) ATPR ¶40-246] features depicted in the advertisement. 2.19 Although self-evident exaggerations and statements of opinion about the land would not normally contravene the Act, great care should be taken to ensure that any factual statements about the characteristics of the land and of any building on it can be substantiated. For example, a statement such as "can never be built out" is a question of fact which should be capable of substantiation. 2.21 Statements concerning the characteristics of the land include claims relating to: (g) area or dimensions of the land or buildings erected on the land. In general, the actual dimensions of the subject land or rooms in a building are less likely to mislead than expressions such as "large" or "spacious"; and (h) the physical condition or state of repair of buildings or other objects attached to the land. For example particular problems may arise if buildings are described as "new". Generally, a building that has not been occupied may be described as "new", provided the building has not been on the market for such a period as to require repairs, although it might be preferable if the actual age of the building were given. If a dwelling has been used as an exhibition home it would be desirable to disclose that fact to potential purchasers. 2.22 Statements about the use of land should have regard to all existing legal restrictions which may affect the land, including town and country planning requirements, restrictive covenants, easements, and other orders affecting the land such as injunctions. It should be noted that any restrictions on the use of buildings on the land are also within the scope of this section, for example a restriction on the use of a building for other than residential purposes. Particular care should be taken when statements are made as to permitted use under anticipated future regulations not to mislead potential purchasers into believing that these regulations have already been enacted [see Given v. E.A. Pryor (1979) ATPR ¶40-109; (1980) TPRS 304.333]. 2.24 Claims that ancillary services such as sewerage, water, gas, electricity will be connected to land should be made only after approval for the connection has been given by the relevant authority and funds are available to bring the ancillary services into existence. Claims of ancillary services or amenities such as schools or recreational facilities which may be provided in the future should not be made in such a way as to create the impression that they exist in the present. For example, it would be misleading to describe land as "sewered" if the system is only in the planning stage or to refer to community buildings or community facilities which have not received appropriate planning approvals. In addition, reference to proposed facilities such as shopping centres, sports grounds golf centres etc. should not be such as to mislead as to the actual progress made towards their provision. Any facilities depicted in pictorial representations should be in existence or reference to them should be suitably qualified as to their proposed development state. 2.34 Not only what is said but what is left unsaid may constitute misleading or deceptive conduct. For example, it may be misleading or deceptive for a vendor to fail to disclose (as required in some States and Territories) that he reserves the right to bid or that the auctioneer may accept a bid from the vendor. Also matters known to a vendor or agent which a reasonable physical examination of the property would not reveal and which would be relevant to a potential purchaser's decision may need to be disclosed before the purchaser is committed. For example, future development orders affecting the subject land or that the subject land has recently been filled and there is a possibility of subsidence. 2.35 The onus to make disclosure is high where a potential purchaser, reasonably relying on the vendor's or agent's skill or judgement, makes known, expressly or by implication, a particular purpose for which a property would be acquired. Each case of course, depends on its own facts and circumstances but where, for example, a potential purchaser makes known a particular use and there is a failure to disclose matters (such as a local government regulation or a restrictive covenant) that the vendor or agent knew or should have known which would preclude that use, then the failure may constitute misleading or deceptive conduct. 2.36 Similarly the onus will be high when the property being sold is interstate or in a location which precludes reasonable inspection by the consumer." (h) Remedies under the Act. The major advantage in relying on the provision of the Trade Practices Act rather than (or in addition to) remedies under the general law is that the statutory provisions also cover conduct which would confer no cause of action under the general law. Sections 52, 53, and 53A have a wider application than conduct constituting misrepresentation under the general law. "Conduct" is much wider than a misrepresentation of fact and may embrace options, promises, predictions, forecasts and representations of law. There is no need to establish any intention to mislead or deceive. There is no need to prove that the conduct was "material" or an "inducement'. Sections 52, 52A, 53, and 53A may be contravened even if the other party was unaware of the conduct. In comparison with negligent misrepresentation, under these statutory provisions there is no need to prove: a special relationship; that the maker of the statement conducted a business or profession calling for special skill or competence; that he held himself out as capable of furnishing information or advice; and that the information or advice was furnished negligently. Damages may be awarded under s. 82 for conduct which would constitute innocent misrepresentation under the general law. Under general law usually only the contracting parties have rights and obligations and may sue or be sued. That may render ineffective proceedings against an insolvent corporation. Under the Trade Practices Act the directors, servants and agents of a corporation may be rendered liable to orders for damages, as persons involved in the contravention (s. 84). The court is not bound to refuse relief under this legislation, if the conduct contravenes ss. 52, 53 and 53A, because of an exclusion clause in the contract dealing with there being no statements or representations on behalf of the vendor or lessor 10.The main enforcement provisions of injunction (s. 80), damages (s. 82) and other orders including rescission (s. 87), are available in a wider range of situations than under the general law. In addition, there is the difficult questions of whether contravention of s. 52, 52A, 53 or 53A, renders contracts illegal. The court has not given a conclusive opinion but statutory illegality is raised as a strong possibility 11. This would substantially increase the potential impact of the Trade Practices Act, as the defence of illegality could be raised in the Supreme Court in proceedings seeking to enforce a contract or dealing with a concluded land transaction. The following are extracts from the real estate guidelines:- "2.43 ...in Mister Figgens v. Centrepoint Freeholds [(1981) ATPR ¶40- 226; (1980) TPRS 314.202], the Court found that in entering into leases for three shops in a shopping mall the applicant had relied upon misleading representations by the leasing company's agent as to the number of shops already leased, the tenant mix, the standard of particular areas within the mall, and that closed circuit televisions would be installed in the mall. The Court made orders reducing the rent from $ 109,750 a year to $ 60,480 a year for the initial two years of the leases, thereby ordering a total reduction in rent of $ 98,540. The Court also varied the leases to allow for possible reduction of rent on review, and to relieve the applicant of its liability to make contributions towards the common area outgoings of the shopping mall. In Brown & Anor. v. Jam Factory & Anor. [(1981) NSW ConvR ¶55-019; (1981) ANZ ConvR 1156; (1980) TPRS 314.145] the applicants sought damages under s. 82 alleging that statements made by the leasing agent concerning the number of shops that had been let or would be open in a shopping centre were false or misleading in terms of the Act. The Court found that the statements constituted breaches of s. 52 and awarded the applicants $ 17,000 as damages and issued an injunction restraining further proceedings by the lessor for recovery of rent from the applicants. 2.44 Contraventions of the specific prohibitions of false or misleading statements or representations (including s. 53A) may be the subject of criminal proceedings. Penalties of up to $ 50,000 for companies and $ 10,000 for individuals may be imposed by the Court in such proceedings. Contravention of these specific provisions can also give rise to the civil proceedings set out above. 2.45 Strict liability under the Act is only excused in criminal proceedings if the defendant can show that the contraventions was due to a reasonable mistake; or to reasonable reliance on information supplied by another person; or to the act or default of another person, to an accident or some other cause beyond the defendant's control and the defendant took reasonable precautions and exercised due diligence to avoid the contravention. These defences will not, however, defeat civil action, e.g. an action by a person seeking damages. Additional defences are also available (in both criminal and civil proceedings) to persons whose business it is to publish or arrange for the publication of advertisements. 2.46 It should always be kept in mind that a contravention of the Act may be given rise to proceedings by the Minister, the Commission or any other person. Thus, even if conduct is not made known to the Commission, or if the Commission decides against taking action, others may bring the matter before the Court. There are numerous instances of private litigation under the Act (see for example Mister Figgens v. Centrepoint Freeholds and Brown & Anor. v. Jam Factory & Anor. in para. 2.43 above] " There are some practical issues in seeking relief under the Trade Practices Act. First, the remedies under ss. 80, 82 and 87 have only been available in the Federal Court of Australia. This may involve parties in conducting two sets of proceedings at the same time, in the Supreme Court and in the Federal Court, relying on different substantive law and different remedies. Secondly, it may be tactically important to one or both of the parties to have the matter determined in the Federal Court, in preference to the Supreme Court, because of the differences in substantive law and remedies. Thirdly, the State courts are able to consider the provisions of the Act in two respects. Where the consequences of a contravention of s. 52, 53 or 53A is statutory illegality that may be raised by way of a defence to proceedings in the Supreme Court when the other party seeks to enforce or to rely on the contract. It is also possible to rely on s. 163A and seek a declaration in State courts. For example, it is possible, in addition to other relief, to seek a declaration in the Supreme Court that the plaintiff's (or defendant's) conduct contravened s. 52 and to rely on this statutory illegality. There a numerous decisions dealing with these issues but the issues may have been resolved somewhat as a result of the cross-vesting legislation. 3. Fair Trading Act, 1987 (NSW). (a) Generally. In 1983 the Federal and State consumer affairs Ministers agreed that there should be developed a uniform fair trading law in Australia and that the consumer provisions of the Trade Practices Act provide the preferred basis for achieving uniformity. The Consumer Protection Act, 1969 (NSW) was repealed and replaced by the Fair Trading Act, 1987. The Fair Trading Act (NSW) came into operation on 1st September, 1987. (b) No Constitutional Limits. Unlike the Trade Practices Act, there are no constitutional problems in the application of this Act to individuals. The term "consumer" extends to a person who acquires an interest in land, other than land used, or intended to be used, for industrial or commercial purposes (s. 5(1)). (c) Prohibited Conduct. The Fair Trading Act provisions (Part 5 of the Act) are not confined to conduct involving consumers. Rather, the provisions in Part 5 mirror the provisions of the Trade Practices Act as follows:- Trade Practices Act Fair Trading Act s. 52(1) s. 42(1) s. 52A(1) s. 43 s. 53 s. 44 s. 53A(1) s. 45(1) s. 53A(2) s. 45(2) Whilst the Trade Practices Act provisions are confined to conduct "in trade or commerce", the similar limitation in the New South Wales legislation is defined as including "any business or professional activity" (definition of "trade or commerce" in s. 4(1)). "Interest" in land is defined in an identical way as is contained in s. 53A(3) of the Trade Practices Act. (d) Remedies. The benefits flowing from this legislation include, in the case of land transactions, the ability to rely on identical provisions as exist under the Trade Practices Act in litigation relating to such transactions, with substantive and procedural benefits. Similar remedies are available as under the Trade Practices Act e.g. ss. 65, 68, 70, 72 and 73. Those benefits are amplified with the cross-vesting legislation. 4. Consumer Claims Tribunal Act, 1974 (NSW). (a) Generally. Consumer access to the legal system may be impeded by a number of factors. The high cost of litigation will clearly bar the poor from access to the court system. Costs can equally act as a disincentive for a middle income earner. Many consumer complaints involve large institutional defendants e.g. retailers, manufacturers, insurance companies and other parties who are familiar with the legal system and experienced in its operation. The typical consumer has no first hand experience, and is easily intimidated by an opponent who is authoritative and appears to have all the answers. Consumer rights are also of little assistance to a consumer unaware of those rights. In an attempt to redress some of these matters the small claims tribunals have developed as a substitute to the formal court system. The Consumer Claims Tribunal, as it is called in New South Wales, is a practical avenue of consumer recourse. While complaints based on any statutory or common law prohibitions may be argued there, the tribunal is intended to operate as a problem solving, rather than a legal, forum. The tribunal determines the dispute according to the substantial merits of the case and while having regard to the law is not bound to give effect to legal technicalities. Flexibility and informality is the essence of the tribunal. The tribunal is made up of a referee and a desk. A courtroom is not used and informality is given priority. Costs are not awarded against either party, so that the party losing is not faced with the prospect of perhaps hundreds of dollars of the other party's legal fees. The Tribunal sits in Sydney, Parramatta, Newcastle and Wollongong. It also sits on Monday and Tuesday evenings for people who cannot go to them during the day. The time lag between the time the claim is lodged and the time it is heard is between two to four months. (b) Jurisdiction. The Tribunal can deal with any consumer claim lodged within three years of the date on which the goods or services subject to the claim were supplied or should have been supplied. The major limitation is that the legislation only covers a dispute where one party is a "consumer" and the other a "person engaged in business activity". A consumer is any person or any of a number of types of organisations to whom a supplier has supplied or agreed to supply goods or services, or who has entered into a contract collateral to or related to a contract for the supply of goods or services. The organisations covered in the definition of consumer include a firm (i.e. partnership), an incorporated or unincorporated association, an exempt proprietary company, a body corporate under the Strata Titles Act, and corporations holding buildings under what is commonly called "company title". The Tribunal now covers small businesses and farmers. Apart from the supply of goods, a wide range of items is included within the Act's definition of services: * The performance of work, including work of a professional nature such as that of doctors and lawyers; * The provision of or enjoyment of facilities for amusement, entertainment, recreation or instruction; * Rights or privileges which are given in return for a royalty, tribute, levy or other form of payment; * The provision of gas, electricity or other forms of energy; * Insurance (excluding life assurance); * Disputes with financial institutions about deposits, cheque accounts and electronic funds transfers (EFTs); and * The provision of credit in some circumstances. There are a wide range of actions which the tribunals can determine: an action for the payment of money not exceeding the statutory limit; a claim for relief from payment of such amounts; claims for the performance of work valued at no more than the statutory limit, a claim for the supply of specified services, or the delivery, return or replacement of specified goods, a claim by a person for relief from an obligation to pay money or a claim for a combination of any of these 12. The Tribunal also deals with disputes about bonds held by the Rental Bond Board. A few examples of matters which come before the Tribunal are: * Where a consumer has bought an electrical appliance (e.g. a television receiver, vacuum cleaner, washing machine, etc) which breaks down immediately and the store refuses to fix it, replace the parts or refund the money. * Where a consumer has purchased something in a store but the goods delivered to them are not exactly what they ordered and the store refuses to give them what they agreed to buy. * Where a consumer has been charged interest on death duties because their solicitor was negligent and did not pay the death duties within the required time. The Tribunal could order the solicitor to refund the interest payment. The Tribunal cannot hear and decide disputes over accounts for any business done by a solicitor under the Family Law Act because that Act provides machinery for the Family Court to make such decisions 13. (c) Operation. To make a claim the consumer must fill out a form and lodge it after the payment of $ 10.00 with the registrar of the Tribunal or any Clerk of the Local Court. It is the duty of the registrar of the Tribunal and every Clerk of the Local Court to give assistance to the claimant in completing the claim form. The registrar must give notice of the claim and its particulars as soon as practicable, to the respondent and to everyone who appears from the claim form to have a sufficient interest. They must also arrange a time and place for initial proceedings of the Tribunal and must give notice of that time and place to the claimant, to the respondent, and to every other person to whom notice of the claim was given. The Tribunal may at any time make an amendment to the claim, either at the request of the claimant or of its own motion with the approval of the claimant 14.The Tribunal may adjourn a proceedings as it considers necessary or desirable, particularly if it wants more material before it 15.Proceedings before the Tribunal are in private and are given orally or in writing and under oath. The Tribunal is not bound by the rules of evidence 16. If a party does not appear at the proceedings, the Tribunal can decide the issue in dispute on whatever evidence is produced before it. Where an issue in dispute is resolved in the absence of a party, the party may apply, within fourteen days of receiving notice of an order, to have the claim rehear. If it appears to the referee that there was sufficient reason for the party's absence they may order that the claim be reheard 18. The Tribu;na will not make an order until it has brought or attempted to bring the parties to a settlement18. There is no provision in the Act for the subpoena of witnesses. However, witnesses can be called by either party to give evidence. If a witness is unable or unwilling to come, their evidence can be given by statutory declaration. The Tribunal can make an order against a supplier for the payment of money up to the statutory limit 19. In addition or as an alternative, the Tribunal can order that work be performed or steps be taken to rectify a defect in goods and services. Orders not enforceable by the Tribunal itself. If a trader refuses to comply with the order, the claimant lodges the order with the Local Court and the orders are deemed to be orders of that Court. If an order to perform work is not complied with, the person in whose favour the order is made may renew the claim and a different order may be made 20. A person can be guilty of contempt of teh Tribunal 21. Proceedings are final and in most jurisdictions there is no right of appeal for the loser 22. However, where the tribunal has acted in excess of its jurisdiction or there has been a denial of natural justice the loser may apply to a court to have the tribunal order set aside 23. Other parties can be joined in the proceedings quite easily, so long as they are given notice or convince the registrar that they have sufficient interest in the resolution of the dispute 24. If the consumer knows that a trader is about to commence court proceedings against the consumer it is possible for the consumer to thwart the trader by making an application to the Consumer Claims Tribunal. Once a claim is lodged with the Tribunal it prevents action being taken in a court. Similarly, the Tribunal may not hear a claim which is already before a court 25. Lawyers are not welcome as advocates 26. Lawyers can only appear the referee decides that the party will be disadvantaged if not represented, or if representation is required as "a matter of necessity". Companies, associations, credit unions and building societies can be represented by an officer of the relevant body. Costs cannot be awarded against the loser 27. Proceedings are in private in most jurisdictions and no publicly available verbatim law report is published. Parties to a contract cannot exclude the jurisdiction of the tribunal 28. There are no technical limits on admissible evidence and opinions, hearsay and all relevant information is admissible 29.
1 William H. Rehnquist speech at Suffolk University Law School, Boston, 17 Apr. 1986. 2 Repealed by Sale of Goods (Amendment) Act, 1988 No. 7 3 Parkes Developments Pty. Ltd. (1976) Reg. C21264. 4 Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd.(1978) ATPR ¶ 40-067; 18A.L.J.R. 639). 5 (1980) ATPR ¶ 40-145. 6 (1978) ATPR ¶ 40-064. 7 (1982) ATPR ¶ 40-289. 8 (1977) 9 Information Circular No. 18. 10 Collins Marrickville Pty. Ltd. v. Henjo Investements Pty. Ltd. (1987) NSW ConvR ¶55-352) 11 Donald & Heydon Trade Practices Law, 1978 p.573. 12 Definition of "consumer claim" s. 4 Consumer Claims Tribunals Act, 1974. 13 Silver v. The Consumer Claims Tribunal and Kasimierz Budziszewki, 5.12.78 Unreported. 14 s. 19. 15 s. 20. 16 s. 23(4). 17 s. 25. 18 s. 29. 19 $ 6,000.00 in 1991. 20 s. 36. 21 s. 38. 22 s. 34. 23 s. 26. 24 s. 16. 25 s. 11. 26 s. 30. 27 s. 33. 28 s. 38. 29 s. 31.
