Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA

File No : BUN 4589 of 2012, BUN 4592 of 2012, BUN 4593 of 2012, BUN 4598 of 2012, BUN 4603 of 2012, BUN 4608 of 2012, BUN 4661 of 2012, BUN 4667 of 2012, BUN 4671 of 2012, BUN 4676 of 2012, BUN 4677 of 2012

Appeal - Application for leave to appeal magistrate's verdicts of acquittal - Australian Consumer Law s 152 - Whether representations in online advertisements were false and misleading - Turns on own facts

Criminal Appeals Act 2004 (WA), s 14

Fair Trading Act 2010 (WA), s 32, s 95

Appellant : Consumer & Employment Protection Legal Services Unit

1 ALLANSON J: Barr and Standley is a real estate agency which operates from Bunbury.

2 Between 7 December 2011 and 3 January 2012, Barr and Standley placed an advertisement on a real estate website, www.realestate.com.au for a property at '47 Hardwick Street, Harvey, WA 6220'. The property is in Cookernup, a town in the Shire of Harvey. Five of the respondents to the appeal, all of whom are associated with Barr and Standley, were charged with making of a false or misleading representation concerning the location of the land by giving the address as 47 Hardwick Street, Harvey.

3 Between 6 January 2012 and 3 April 2012, Barr and Standley placed an advertisement on realestate.com.au for a property in Pelican Point, a suburb of Bunbury. Part of the information provided on the web page is the price. The advertisement showed '$1,500,000 $2,500,000'. The owner of the land was not prepared to sell it for as little as $1.5 million. The six respondents were charged with a making a false or misleading representation concerning the price payable for the land.

4 The charges were heard together on 20 and 21 February 2013 in the Magistrates Court at Bunbury. The magistrate entered verdicts of acquittal on all charges. The appellant seeks leave to appeal those verdicts on two grounds:

1. For the charge concerning the Pelican Point land, the learned magistrate erred in law, or a miscarriage of justice was occasioned, by failing to consider or properly consider the prosecution case that the respondents made a false or misleading representation concerning the price payable for the land.
2. For the charge concerning the Hardwick Street land, the learned magistrate erred in law and fact in concluding that the prosecution had failed to prove beyond reasonable doubt that the respondents had made a false or misleading representation concerning the location of the land.

5 The offences are created by s 32 of the Fair Trading Act 2010 (WA), by which a person who commits or is involved in the commission of an offence against the Australian Consumer Law (WA) commits a crime. The charges alleged contravention of s 152 of the Australian Consumer Law. Section 95 of the Fair Trading Act provides for the liability of directors and other officers of corporations, and the liability of employers and principals.

6 Jaymal Pty Ltd and the Standley Group Pty Ltd and Graham Standley are three members of a partnership that operate Barr and Standley. Lees Standley and Rhys Standley were acting as agents of Barr and Standley at all times. Jay Standley and Rhys Standley are the directors of Jaymal and the Standley Group. Lees Standley was charged only in relation to the Pelican Point land. It is unnecessary, for the purposes of this appeal, to consider the different bases upon which various respondents were charged by reference to s 32 and s 95 of the Fair Trading Act. The question on appeal is whether the two advertisements on realestate.com.au were proved to contravene s 152 of the Australian Consumer Law.

(1) A person commits an offence if the person, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion by any means of the sale or grant of an interest in land:

...

(c) makes a false or misleading representation concerning the price payable for the land; or

(d) makes a false or misleading representation concerning the location of the land...

9 The conduct of the respondents was in trade or commerce, and in connection with the promotion of the sale of an interest in land. That was not in issue at trial or on appeal.

10 The prosecutor opened by outlining the way in which realestate.com.au operated. She said:

Consumers wishing to find a property online to buy use search terms to narrow the field, and in particular they use search terms such as 'location' and 'price'. Once a property is displayed on the website by the agency, any member of the public can locate the advertisement while searching online for properties to purchase under the search terms of 'price' and 'location'. It is the content entered by Barr and Standley in relation to a particular property that dictates the content of the online advertisement seen by the consumer. Price and location are specific fields on the web page that require data entry at the time the property listing is created by Barr and Standley. A property advertisement on the web page will have the location in prominent font at the top of the first page with the price underneath and it is then possible to scroll down to read a more detailed description of the property features or characteristics.

11 That description is not controversial. The advertisements contained other information regarding each property. Each had a Google map as part of the web page.

12 The prosecution asserted that the location of the land at 47 Hardwick Street was falsely represented as being Harvey, and the advertisement was likely to mislead potential purchasers for that reason. The prosecution alleged that Cookernup is a separate township, located 12 km from the township of Harvey, and Cookernup and Harvey are distinct localities.

13 The prosecution alleged that the property was initially advertised as 47 Hardwick Street, Cookernup, for about three weeks, but then, at the direction of Rhys Standley, the location was changed to Harvey.

14 Mark Edward William Riddell, a senior compliance officer at the Consumer Protection Department, gave evidence that he received complaints regarding the two advertisements, and obtained copies of printouts from www.realestate.com.au. In crossexamination Mr Riddell agreed that the advertisement for 47 Hardwick Street contained a map, and that if the user double clicked on the map it showed the location of 47 Hardwick Street in Cookernup. He agreed that the size of the area shown on the map could be expanded to show all surrounding town sites, or even further. He agreed that, with the legend to the map, the user could identify exactly how far the property for sale was from the Harvey town site. This question and answer followed:

So you're under no doubt at all where 47 Hardwick Street was, were you?

No doubt where you are. That's exactly right, yes.

15 Mr Riddell further agreed that Cookernup is in the Shire of Harvey, the rate notices for the land are from the Shire of Harvey, and all the 'utilities' issue in the Shire of Harvey.

16 In reexamination, Mr Riddell was asked by the prosecutor what result a search on realestate.com.au gave when 'Harvey' was entered into the location field. He said that such a search brought up all advertisements that are currently listed for Harvey and surrounding townships (including Cookernup) within a 20 km radius.

17 Duncan Ian Rutherford is a licensed valuer employed by Landgate in Bunbury. Mr Rutherford testified that Harvey is 47 km north east of Bunbury. He described Cookernup as a different 'locality', 12 km north of Harvey, with the same local government area but a different township. No major towns lie between Harvey and Cookernup, but a locality known as Warawarrup is between them. Mr Rutherford said that Harvey has a range of commercial shops, bank facilities, a school and a range of other services. Cookernup does not have commercial facilities apart from a general store.

18 Rhys Standley gave evidence. He said that the Hardwick Street property had been changed in the listing from Cookernup to Harvey because 'Cookernup was a little known locality and, generally speaking, people would refer to it as being near Harvey'. Mr Standley also gave evidence regarding the map which appears on the advertisement. He said that such a map automatically appears when you load an entry on realestate.com.au, and that was something he would rely on. He said that the map showed the property to be in Cookernup.

19 The primary facts were not in dispute. On 2 March 2011, Lees Standley obtained a nonexclusive listing with the vendors, Robert John Repacholi and Michelle Repacholi, with a listing authority for an initial listing price of $2.2 million to $2.5 million. The property was advertised at that price range for about a month. From 12 April 2011, the advertisement was changed to call for 'expressions of interest'. Then on 6 January 2012, the price field was changed again so that it displayed the range of $ 1.5 million to $2.5 million. Mr Repacholi agreed to the change, but his asking price remained at $2.2 million to $2.5 million. The prosecution alleged that, in these circumstances, the price field was likely to mislead a potential buyer about the price the seller would accept, or even consider, and was a false or misleading representation concerning the price payable for the property.

20 Mr Riddell gave evidence about the various methods of advertising prices, and agreed that there is no universal practice: some advertisements give ranges, some say 'from' a stated price, some ask for expressions of interest, some ask for 'offers over'.

21 Jay Standley gave evidence about why the Pelican Point property was listed between $1.5 million and $2.5 million:

I think they would put a range on it where the bottom end would be market value and you would endeavour to get as much as we can.

22 He said, from his experience, that every seller will say that he will never take under a certain amount and every buyer will say he will never pay more than a certain amount. But that is not the reality. He saw the agent's job as to get offers, and put them in front of the seller.

23 Lees Standley said in his evidence that he could not remember exactly what Mr Repacholi said to him, but 'certainly the 2.2 did stick out to me. Whether it was "at 2.2" or "around 2.2" ...'

24 No evidence was led of consumer reaction to either representation, except for the uncontradicted evidence that there was no response to the listing of the Pelican Point land in the new price range. The complaint to the regulatory authority was made by another agent.

25 The magistrate dismissed both groups of charges. There was no doubt that the advertisements were placed by Barr and Standley. The issue in each case was whether the prosecution had proved that they contained false or misleading representations.

26 The magistrate reasoned that, location not being defined in the Act, it should be given its ordinary meaning, as 'a place of settlement or residence': Macquarie Dictionary. The word locality (used by Mr Rutherford in his evidence) is defined as 'a place, spot or district, with or without reference to things or persons in it; state or condition of being local or having place'.

27 The magistrate found that the relevant class of consumers wanting to purchase an interest in land and seeing the www.realestate.com.au advertisement to 47 Hardwick Street, Harvey, would not be misled or likely to be misled as to the location of the land. Her Honour gave several reasons: the accompanying map on the web page directs the consumer to the location of the land; Cookernup and Harvey are close and Cookernup is within the Shire of Harvey. The magistrate also referred to Cookernup as in the district of Harvey. She concluded that the address 47 Hardwick Street, Harvey, is not so materially different from 47 Hardwick Street, Cookernup, as to deceive a prospective purchaser, or lead an ordinary or reasonable consumer to labour under an erroneous assumption about the location of the land.

28 The magistrate found that Mr Repacholi had agreed with the listing at $1.5 million to $2.5 million 'notwithstanding his instructions to Lees Standley that he would not sell the property for less than $2.2 million'. On 6 January 2012, the property was advertised on www.realestate.com.au at the range which led to these charges.

29 The magistrate said that it was not disputed that the respondents made a representation concerning the price payable for land in connection with promotion of the sale of an interest in the land at Pelican Point. The magistrate did not, however, make any finding about what was represented.

30 The magistrate gave these reasons for finding the charge under s 152(1)(c) had not been proved:

1. Lees Standley acted on instructions from Mr Repacholi in advertising the price range at $1.5 million to $2.5 million.
2. That price range was reasonable given the evidence before the court as to pricing practices of real estate agents in Bunbury.
3. The price was based on market value. The lower price in the range advertised was reasonably based on the fair market price and cannot be said to be false or misleading.

31 The expression 'false or misleading representation' is a composite phrase describing the character of a representation that breaches the section. While s 152 concerns representations that are 'false or misleading', rather than 'misleading or deceptive conduct', many of the principles are the same. In Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) [2012] VSC 239 [368], Croft J commented that the vast majority of cases under the Trade Practices Act 1974 (Cth) that discuss alleged breaches of the s 53 provisions (false or misleading representations) coupled with alleged breaches of s 52 (misleading or deceptive conduct) deal with both aspects of the conduct without relevant distinction.

32 The nature of the representation conveyed by words or conduct is a question of fact to be determined having regard to what was said or done considered against the background of all the surrounding circumstances: Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177, 202. A representation will be false or misleading if it induces, or is capable of inducing, error: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564 [63]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [15]. A statement that is literally true is, by definition, not false. It may still be misleading if it carries with it a false representation: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216, 227 228.

33 Whether a representation is false or misleading is a question of fact to be determined in the context of the impugned conduct and the relevant surrounding facts and circumstances. The context may include the target audience for the representation, including the relevant knowledge the members of that group might have. It is necessary to identify an 'ordinary' or 'reasonable' member of the relevant target audience for the purpose of determining the effect of the words or conduct: Campomar Sociedad Limitada v Nike International Limited [ 2000] HCA 12; (2000) 202 CLR 45 [105].

34 The circumstances in which the target audience receives the information may be relevant. For example, in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 [46] [47] the majority distinguished the case of a consumer whose attention is arrested by an unbidden intrusion, from that of a consumer considering a substantial purchase in the calm of a showroom, with the opportunity, acting reasonably, to pay attention to matters affecting their interests. The majority referred also to the importance of the way in which the information may be presented, including the selective emphasis on some information, with other matters confined to relative obscurity [51].

35 Evidence from members of the relevant target audience is not essential. But in some cases, the reaction of a consumer to a particular advertisement may be generally unknown, so that the party making the allegation may fail in the absence of evidence of consumer behaviour or reactions: WEA International Inc v Hanimex Corporation Ltd [1987] FCA 379; (1987) 17 FCR 274, 280; The Jewellery Group Pty Ltd v Australian Competition & Consumer Commission [2013] FCAFC 144 [35].

36 It is not to the point that the consumer would discover the true situation before entering a contract. Representations in an advertisement may be misleading if they are apt to bring prospective buyers into negotiation with the respondents by the erroneous belief they create: TPG Internet Pty Ltd [48], [50]. Section 152 applies to a representation in connection with the possible sale or grant of an interest in land, or in connection with the promotion by any means of such a sale or grant.

37 Finally, the issue arises in the context of the criminal law. Section 32 of the Fair Trading Act makes a contravention of s 152 of the Australian Consumer Law a crime.

(1) the advertisement contained a representation that the seller was prepared to sell, or to at least negotiate the sale of, the property at a price that fell within the range '$1,500,000 $2,500,000';

(2) the representation was false or misleading because the seller was not prepared to sell, or consider selling, at a price less than $2,200,000;

(3) the magistrate failed to consider whether that representation had been made, and, if so, whether it was false or misleading.

39 The appellant submits that the findings made by the magistrate, set out at par 30 above, whether considered alone or in combination, are not relevant to the issues her Honour was required to decide.

40 The respondents did not directly defend the way in which the magistrate decided this issue. Rather, they argued that the result was correct on several bases:

1. A certain amount of 'puffery' is to be expected to attract potential purchasers in the real estate market.
2. The result is consistent with common sense. The price range at which the land was listed took account of the real world in which Mr Repacholi may have said he would not accept less than $2.2 million, but may have changed his mind when an offer was on the table.

41 In my opinion, the appellant has made out its contention that the magistrate failed to make the necessary findings. The matters on which she relied are not legally relevant to whether the advertisement contained the representation alleged and whether it had the tendency to lead a consumer into error.

42 The powers of the court on appeal are wide. Under s 14(1) of the Criminal Appeals Act 2004 (WA) the court may set aside the decision of magistrate and substitute the decision that should have been made, or may order the case to be dealt with again by the Magistrates Court, with or without orders to that court:

43 The court may dismiss the appeal if it considers that no substantial miscarriage of justice has occurred: s 14(2).

44 The application of s 14(2) in the case of a prosecution appeal has not often arisen. This is not a case like The State of Western Australia v Burke [2011] WASCA 190; (2011) 42 WAR 124, where the error of law by the magistrate had the result that all of the evidence was not presented. Johnson J considered the application of s 14(2) in Gaunt v Hooft [2009] WASC 36. Her Honour held, where there had been an error of law by the magistrate, that the court may draw the conclusion that there has been no substantial miscarriage of justice if it considers that the same outcome would result even if the matter were remitted to the summary court to be dealt with in accordance with the ruling of the appellate court.

45 The section itself makes no distinction between an appeal against conviction and an appeal against acquittal. The principles for the application of s 14(2) should be no different from those in s 30(4), and set out in Bevan v The State of Western Australia [2012] WASCA 153; [2012] WASCA 153; (2012) 43 WAR 233 [84], citing Baiada Poultry Pty Ltd v The Queen [2012] HCA 14; (2012) 246 CLR 92.

46 There being no real dispute about the primary facts, little of the evidence was contested, this court would normally be in a position to make all the necessary findings and to substitute a verdict of guilty, or to affirm the verdict of the magistrate if satisfied that no substantial miscarriage has occurred. The appellant submitted that the acquittal should be set aside, and a verdict of guilty entered.

47 The first crucial question is what representation is conveyed by the 'price field' in the internet advertisement. The prosecution asserted, first, that it is a representation concerning price payable. In this, they rely on ACCC v Gary Peer and Associates Pty Ltd [2005] FCA 404; (2005) 142 FCR 506, where Sundberg J held that the legislature did not intend, by the term 'price payable', to restrict the ambit of the equivalent provision in the Trade Practices Act 'to binding contracts under which the price agreed to be paid for the land is either currently payable or due at some time in the future, or to what the respondent called 'future contracts' or contracts that are 'to be entered into' [101]. See also Australian Equity Investors, An Arizona Limited Partnership v Colliers International (NSW) Pty Ltd (No 4) [2011] FCA 442. The respondents did not submit that Gary Peer was wrongly decided.

48 The representation in that case was made in the context of advertising for an auction. The respondent had advertised in these terms: 'PRICE GUIDE $600,000 Plus Buyers Should Inspect'. A later advertisement was in the same general terms, with the price increased to $650,000. The second advertisement was published after the vendor had received, and rejected, a genuine offer of $750,000. Sundberg J held the dollar sum to be the representation of a likely selling price. The representation was directed to a group of purchasers whose cardinal characteristic was its spending potential, which is related to the likely selling price of the property. He held the advertisement to represent a price payable, and that it represented that the vendors would sell for a price that was approximately, or was not substantially more than, $600,000 or $650,000, as the case may be.

49 Relevantly, his Honour also said that the price of goods does not have to be a precise figure, and can be stated to be within a range: citing Trade Practices Commission v Penfolds Wines Pty Ltd [1991] FCA 631; (1991) 104 ALR 601, 612.

50 The present appellant's case at trial was that the advertisement contained a representation that the seller was prepared to sell, or to at least negotiate the sale of the property, at a price that fell within the range '$1,500,000 $2,500,000', and that this was false or misleading. It is unnecessary, for present purposes, to determine whether a representation that the seller was prepared to negotiate in a stated range is a representation about price payable. I doubt that it is, but the case can be decided on other grounds.

51 The range in the price field is very wide I cannot say that it is extraordinary because there was no evidence about what is ordinary. But a million dollar range on a $1.5 million 'base' is a huge variation. There was no evidence about the target audience it must be people who are looking to buy properties over $1 million. But it is difficult to be more precise. The limited evidence about the Bunbury market was that there is no 'top end' market, with most sales in the $200,000 to $400,000 range, and perhaps three properties selling for over $1 million in the previous two years.

52 The assumption in the prosecution case is that an ordinary and reasonable person in the target audience of the advertisement would understand it to represent a price range, and to represent that the seller would accept or consider offers in the lower part of the range. It is an assumption, because there was no evidence about the reaction of the target audience, or about any common understanding from advertising practice in the industry, or advertising for properties at this price. The lack of evidence, in my opinion, is fatal where the prosecution alleges a crime.

53 On the evidence before the magistrate, I am not satisfied that the prosecution proved the case it asserted. I am not satisfied that the prosecution established the target audience for that internet advertisement, and what reasonable members of that group would have understood by the price range displayed. As a result, it has not been proved that the price field conveyed the false or misleading meaning alleged.

54 Although the magistrate erred in the way she approached the decision, I consider no substantial miscarriage occurred. On the evidence led at trial, the charges had not been proved. I would grant leave but dismiss ground 1.

55 The appellant's case on ground 2 was that the advertisement for the property at 47 Hardwick Street contained a representation that Hardwick Street was located 'in the township and locality of Harvey'.

56 The appellant alleged that the magistrate erred in law and fact. To some extent, it made similar complaints to those regarding ground 1, alleging that the magistrate failed properly to consider whether the prosecution had proved that the advertisement did contain the alleged representation and whether that representation was false or misleading.

57 The magistrate's first reason for dismissing these charges was that the relevant class of consumer who sees the www.realestate.com.au advertisement would not be misled or likely to be misled because the accompanying map 'directs' the consumer to the location of the land. As Mr Riddell said in his evidence, once he went to the map he knew exactly where he was.

58 The appellant complains about this finding. It complains that the magistrate used the word 'directs' when the evidence was that the map would only show 47 Hardwick Street is in Cookernup after you 'doubleclick' on the map. It is not appropriate to scrutinise the language in an ex tempore decision in this way, searching for error. The website does not direct the consumer to use the map, but the information is all there. The appellant's case is, in my opinion, unrealistic. In determining whether the advertisement was false or misleading, the address cannot be separated from the other information on the page. The advertisement was on an internet site. The prosecutor opened by explaining how a consumer would use search terms, such as the location field, to narrow the search. The appellant's case then assumes that such a user would be incapable of using a Google map, or would need instructions to do so. In my opinion, regard should also be had to the conditions under which the consumer receives this information. Either deliberately, or by happenstance, the consumer has arrived at the particular internet page. The property is advertised at $535,000. It is a substantial investment that he or she can consider at leisure, whenever he or she chooses.

59 The magistrate, in my opinion, was correct to find that such an advertisement, received in these circumstances, was not false or misleading concerning the location of the land because it was unlikely to lead a reasonable consumer to error.

60 The appellant complains about other aspects of her Honour's reasoning. But none of those complaints would affect the decision if the finding that the advertisement did not convey a false or misleading representation was correct.

62 For these reasons, while I would grant leave with regard to each ground I would dismiss the appeal.