The recent decision of Ripani v Century Legend Pty Ltd  FCA 242 is an important reminder to property developers that are selling properties off the plan that they must accurately represent the features of the development in their promotional and marketing materials.
Century Legend Pty Ltd (Century Legend) was the developer of a luxury apartment complex in Melbourne known as the Victoriana. CBRE were engaged to assist with marketing the apartments. By way of an off the plan sales contract, Century Legend agreed to sell and Mr and Mrs Ripani agreed to purchase apartment 14.01 for $9.58 million, subject to a satisfactory floor plan being agreed between the parties (Contract).
Prior to entering into the Contract, Mr and Mrs Ripani visited the display suite established by CBRE. They told Mr Tran, a real estate agent employed by CBRE that they were looking to purchase an apartment where the indoor living space could seamlessly transition with an outdoor entertaining area. Mr and Mrs Ripani were given a marketing brochure which included the below rendered image (Render) and were told that the Render depicted apartment 14.01 (the apartment they subsequently agreed to purchase).
Before the brochure was published, Century Legend was warned, on more than one occasion that the Render was misleading because the large span opening could not be constructed as shown. Despite these warnings, Century Legend proceeded marketing with the Render but included a disclaimer in its marketing martials and added the “artists impression” inscription on the Render.
When Mr and Mrs Ripani found out that apartment 14.01 would not be built in conformity with the Render they sued Century Legend for engaging in misleading and deceptive conduct in contravention of section 18 of the Australian Consumer Law.
The key question in this case was, what reliance (if any) Mr and Mrs Ripani could place on the Render.
Century Living argued they had not engaged in misleading or deceptive conduct because:
The Federal Court rejected Century Legend’s arguments and found that:
The Federal Court was satisfied that Century Legend had engaged in misleading and deceptive conduct and ordered the Contract be rescinded in accordance with section 237 of the Australian Consumer Law. The Court did not make any adverse findings against Mr Tran and noted that he was acting within the scope of his authority when he told Mr and Mrs Ripani that the Render depicted apartment 14.01.
The court’s decision was entirely predictable.
The simple message from this case is – don’t use images that do not accurately reflect the product being sold.
Rebecca Cain, a lawyer in the Lavan Property & Leasing team, provided valuable assistance in the preparation of this publication.