Facts:

Phillip sold a 15 storey commercial building to a Malaysian investor named Sam through real
estate agent Ann. Before selling the property, they convinced Sam by some information which
were revealed incorrect later.

Issues in the Case:

The main issues are- Does Sam has any legal rights under the relevant common law and equity
principles operating in Australia? What are the legal rights under the Competition and Consumer
Act 2010(Cth)?
(a) Rights under Common Law and Equity Principles:
In section 30(1), The Australian Consumer Law describes details about false or misleading
representations regarding the sale or grant of an interest in land.
In the given case, Sam holds some rights against Phillip and Ann. There are differences between
common law rescission and equitable rescission. Common law will applicable when the court
found the existence of fraudulent misrepresentation. On the other hand, equitable rescission will
applicable when the false presentation is found unintentionally. For Sams case, common law
matches, because the misrepresentation was intentional and fraudulent. Hence, Sam holds the
right to proceed further to continue the case.
To continue the rescission under common law, Sam must elect to rescind the contract. According
to the High Court [Alati v Kruger (1955) 94 CLR 216 at 224];
Rescission for misrepresentation is always the act of the party himself The
function of a court in which proceedings for rescission are taken is to adjudicate upon the
validity of a purported disaffirmance as an act avoiding the transaction ab initio, and if it is
valid, to give effect to it and make appropriate consequential orders.
Under common law, besides rescission, Sam still has the right to claim for damages. Here, he has
to prove to the court that the presentation was false.

(b) Rights under Competition and Consumer Act 2010 (Cth)

According to Competition and Consumer Act 2010, Sam is a victim of false representations. A
misrepresentation is a false statement or intentional misstatement used to induce a person to enter
into a contract (Macleod 2016). Here, Phillip along with agent Ann have breached section 30 of
the ACL [which was known as section 53A of the Trade Practices Act 1974 (Cth)]
It can be questioned that there is no prove of misrepresentation because the false presentation
was made by Ann through verbal statement. But misrepresenting via verbal or oral statement
falls under breaching the act of Section 30. Misrepresentation is not just limited to a written
statement it can be extended to oral statement, drawings, gestures etc. (Lethbridge 2016)
Moreover, Sam faced about $20 million according to current market price and $2 million for
every month counting, where Ann told Sam that that property has a very good value as because
its current demand. Here, for the misrepresentation Sam suffered loss. According to Latella v LJ
Hooker Ltd (1985) 5 FCR 146, the representation does not have to be made to the person who
ultimately brings a claim (the representee). All that is required is that a false or misleading
representation is made and as a consequence, the representee suffers loss or damage.
Section 30 of the ACL states that false or misleading representations for land or property will be
determined if those information match with below:

sponsorship, approval or affiliation of the person making the statement;

the nature of the interest in land;

the price payable for land;

the location of land;

the characteristics of land;

the use to which land is capable of being put or may lawfully be put; and

the existence or availability or facilities associated with land. (Lethbridge 2016)

For Sams case two points match perfectly: the characteristics of land and the existence or
availability or facilities associated with land.
To get rid of misrepresentation one can do below steps:

rescind (cancel) the contract or

sue for to compensate for any loss. (Macleod 2016)

According to Competition and Consumer Act 2010 (Cth), Sam can proceed further by rescinding
(cancel) the contract. An alternative to rescission, only another option remains open for him
which is sue for to compensate for the loss he faced. To proceed this particular step, the court
will examine the whole contract and determine whether it is a false representation or not.
Furthermore, if the result becomes in favour for Sam, the court will also identify amount the loss
that Sam is facing. At this point, Philip and Ann may not pay the loss if they can prove either of
the following:

that she or he had logical base to believe and did believe their presentation was fair and

honest.
that another person gave the presentation, for instance, an agent did not familiar with the
information and could not predict and expect to know it; and the representation could cause
the damages.
If Philp and Ann fail to convince the court they may pay penalty fee of $220,000 for
individually. Moreover, they may have to pay the loss that Sam faced.

In conclusion, it can be said that Sam holds legal rights under common law and Competition and
Consumer Act 2010 (Cth), by which he may cancel the purchase agreement or claim for
compensation of present and future damages. For any future transaction, he should not rely only
on sellers presentation and information. He should also analyse and evaluate market information
side by side.

References:

Competition and Consumer Act 2010, s 30.

Lethbridge, T. 2016, False or misleading representations in property transactions - Kott
gunning lawyers, Kott Gunning Lawyers, viewed 1 May 2016,
<http://www.kottgunn.com.au/updates/false-misleading-representations-property-

transactions/>.
Macleod, A. 2016, False or misleading representations, Legal Services Commission of
South Australia, viewed 28 April 2016,

<http://www.lawhandbook.sa.gov.au/ch10s03s03s03.php>.
Misrepresentation 2016 (Legal Services Commission of South Australia).
Real estate guidelines for real estate salespeople price advertising and
underquoting 2012, Consumer Affairs Victoria, viewed 5 May 2016,
<https://www.consumer.vic.gov.au/library/publications/businesses/estateagents/guidelines-for-real-estate-salespeople-price-advertising-and-underquoting.pdf>.

Cases:

Alati v Kruger (1955) 94 CLR 216 at 224

Latella v LJ Hooker Ltd (1985) 5 FCR 146