It is common for property to be put up for sale prior to an apartment block having been constructed. This is referred to as purchasing property ‘off-the-plan’.
The Federal Court of Australia, in the case of Ripani v Century Legend Pty Ltd [2022] FCA 242, recently provided insight as to how developers can advertise apartments that they intend to sell off-the-plan.
Background
Mr and Mrs Ripani (the Ripanis) entered into a contract with Century Legend Pty Limited (Century Legend) to purchase an apartment off-the-plan for $9.58 million. In their decision to enter into the contract, the Ripanis relied on the promotional material that Century Legend had utilised for marketing purposes. This included a brochure of various images which demonstrated what the development would look like once complete. These images were used by Century Legend to promote the apartment, even though they knew it would be impossible to construct the Ripanis apartment in this way.
The Ripanis commenced legal proceedings in the Federal Court of Australia and alleged that Century Legend had engaged in misleading and deceptive conduct under section 18 of the Australian Consumer Law (the ACL).
Century Legend contested this on the basis that they had incorporated an exclusion clause into the contract, provided a disclaimer within the brochure and included the phrase ‘artist impression’ on the images.
Decision
The Court ultimately held that the Ripanis would not have entered into the contract if it weren’t for the belief that the apartment would be constructed in a way which resembled the image.
In relation to Century Legend’s claims, the Court noted that:
- Exclusion clauses are not effective in excluding an action under the ACL;
- The disclaimer was hidden within the promotional material and therefore ineffective in remedying the misleading and deceptive representations that had been made by Century Legend; and
- The phrase ‘artist impression’ does not take away from the materiality of an image and the message it conveys.
How can Marsdens help you?
If you are concerned about the bargain you struck for the purchase of an ‘off-the-plan’ apartment or building, please contact Aaran Johnson or Bharath Balasubramanian (contact details below) to discuss how Marsdens can assist you.
The contents of this publication is for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
