Supreme Court of WA|2014-02-27|Before: Mr J, Beech J

COMMISSIONER FOR CONSUMER PROTECTION -v- SUSILO [2014] WASC 50 (27 February 2014)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMMISSIONER FOR CONSUMER PROTECTION -v- SUSILO [2014] WASC 50

Consumer and Competition Law - Admitted misleading conduct in promotion of renttobuy transactions - Appropriate pecuniary penalty

Pecuniary penalty of $17,500 for first defendant and $12,000 for second defendant

First Defendant : Not applicable (pro bono counsel)

Second Defendant : Not applicable (pro bono counsel)

1 The defendants are brother and sister. They ran a business that promoted and facilitated transactions known as 'rent to buy'.

2 In this action the plaintiff (the Commissioner) claims that by their conduct in the business, the defendants engaged in misleading and deceptive conduct; the first defendant (Ms Susilo) carried on business as a real estate agent without a real estate business agent's licence; and the second defendant (Mr Susilo) was knowingly concerned in that contravention.

3 In the lead up to the trial, the defendants admitted the facts now alleged against them by the Commissioner, and admitted their contraventions.

4 These reasons concern the penalties and other remedies that should be given in relation to those contraventions.

5 For the reasons that follow, the declarations and injunctions in the form (ultimately) sought by the Commissioner should be granted, and pecuniary penalties in the sum of $17,500 and $12,000 should be imposed against Ms Susilo and Mr Susilo respectively.

7 At all material times, namely from late 2010 to early 2013, Ms Susilo and Mr Susilo have carried on a business of promoting and facilitating rent to buy real estate transactions. The basic elements of the transactions the subject of that business were set out in the statement of claim, and admitted in the defence as follows:[1]

At all material times the First and Second Defendants have carried on a business of promoting and facilitating 'Rent to Buy' real estate transactions which were arranged as follows (Option Rent to Buy Arrangement):

5.1. the First Defendant publicises her interest in acquiring houses or apartments (Property) from potential vendors;

5.2. the First Defendant offers to buy from a potential vendor:

5.2.1. a call option to buy the potential vendor's Property within a fixed period of time for a fixed price (Vendor Option);

5.2.2. the right to occupy the Property under a residential tenancy agreement (Vendor Tenancy);

5.3. if the potential vendor enters into the Vendor Option, the express terms of that agreement provide, in effect, that:

5.3.1. the potential vendor grants the First Defendant an option to purchase the potential vendor's property for a specified purchase price in consideration of an option fee;

5.3.2. the option fee comprises an upfront payment and ongoing instalments, which would be credited against the purchase price on exercise of the option;

5.3.3. the option expires on a specified date but may be renewed or extended at the request of the First Defendant; and

5.3.4. if the option expired or was terminated before the expiry date, the First Defendant forfeits any option fees paid to the vendor;

5.4. if the potential vendor is willing to enter into the Vendor Option and Vendor Tenancy, the First and Second Defendants market the Property for sale to potential purchasers;

5.5. the First Defendant offers to sell to potential purchasers:

5.5.1. a call option to buy the Property within a fixed period of time for a fixed price (Purchaser Option); and

5.5.2. the right to occupy the Property under a residential tenancy agreement (Purchaser Tenancy);

5.6. if a potential purchaser enters into the Purchaser Option, the express terms of that agreement provide, if effect, that:

5.6.1. the First Defendant grants a potential purchaser an option to purchase the property for a specified purchase price in consideration of an option fee;

5.6.2. the option fee comprised an upfront payment and ongoing instalments, which would be credited against the purchase price on exercise of the option;

5.6.3. the option expired on a specified date but might be renewed or extended at the request of the potential purchaser; and

5.6.4. if the option expired or was terminated before the expiry date, the purchaser forfeited any option fees paid to the First Defendant;

5.7. If a potential purchaser enters into the Purchaser Tenancy, the express terms of that agreement provide, in effect, that:

5.7.1. the First Defendant, purporting to be the owner of the property the subject of the Vendor Option, grants the potential purchaser either:

5.8. the First Defendant derives revenue from the difference between:

5.8.1. the payments made by the potential purchaser to the First Defendant under the Purchaser Option and Purchaser Tenancy; and

5.8.2. the payments made by the First Defendant to the potential vendor under the Vendor Option and Vendor Tenancy.

8 The defendants also carried on a business of promoting and facilitating rent to buy real estate transactions arranged as follows:

At all material times the First and Second Defendants, also carried on a business of promoting and facilitating 'Rent to Buy' real estate transactions which were arranged as follows (Joint Venture Rent to Buy Arrangement):

6.1. the First Defendant and a potential vendor of a Property enter into a 'joint venture' agreement the express terms of which provide, in effect, that:

6.1.1. the potential vendor agrees to contribute their Property to the 'joint venture';

6.1.2. the First Defendant does not contribute any money to the 'joint venture',

6.1.3. the First Defendant agrees to market and sell the Property on behalf of the 'joint venture' under an Instalment Contract as described in paragraph 6.3 below;

6.1.4. the First Defendant is entitled to be paid amounts derived from money paid by the potential purchaser under the Instalment Contract;

6.2 the First and Second Defendants market the Property on behalf of the potential vendor;

6.3 once a potential purchaser is located, the potential vendor and potential purchaser enter into a contract (Instalment Contract) the express terms of which provide, in effect, that:

6.3.1. the potential purchaser agrees to purchase the Property;

6.3.2. the purchase price is paid by way of a deposit and instalment payments, together with interest;

6.3.3. the potential purchaser in entitled to possession of the Property while it performs it obligations under the Instalment Contract;

6.3.4. in the event of a default in the instalment payments and a termination of the Instalment Contract, the potential vendor is entitled to retain the deposit and any instalment payments already made;

6.3.5. the potential purchaser does not become the registered proprietor of the Property until the settlement date;

6.3.6. the settlement date is not fixed but is defined as the date when the purchase price is paid.

9 In the lead up to the trial, the legal representatives of the parties prepared a detailed statement of agreed facts.

10 There are cases in which judges have expressed concern about whether the statement of agreed facts presented to the court provided a suitable, accurate and sufficiently comprehensive framework for determining the appropriate penalty.[2] In such a case, the court can request further information from the parties.[3]

11 No such concerns arise in this case. To the contrary, having examined the documents comprising the proposed trial bundle I am satisfied that the statement of agreed facts is accurate and sufficiently comprehensive to ensure the court is fully informed in fixing the penalty.

The Plaintiff is the regulator for the purposes of the Australian Consumer Law (WA) (ACL) and has standing to bring this matter per s 100(1)(b) Fair Trading Act 2010 (FTA).
The FTA and Real Estate and Business Agents Act 1978 (REBA Act) are both administered by the Minister for Commerce.
The Defendants are brother and sister.
Neither Defendant holds, or has ever held, a real estate agent's licence issued pursuant to the REBA Act.
At all material times:

5.1. the First Defendant carried on a business, in trade or commerce, involving the promotion and sale of residential property in Western Australia (Business);

5.2. the First Defendant was the sole director, secretary and shareholder of the company 700 Dollar Houses.Com Pty Ltd (ACN 147 514 618) (Company);

5.3. the First Defendant through the Company, operated the website www.sellhouseseasy.com.au (Company Website) to promote the Business; and

5.4. the Second Defendant was involved in the carrying on of the Business.

The Second Defendant was born on 21 February 1994 and was a minor until 21 February 2012.
The Company is the registrant of the domain name for the Company Website but does not carry on any other aspect of the Business or receive income from the Business.

The Business involved the First and Second Defendant promoting and facilitating 'Rent to Buy' arrangements in relation to residential properties in Western Australia.

RENT TO BUY TRANSACTIONS

Option Rent to Buy Arrangements

The First Defendant entered into the Option Rent to Buy transactions pleaded in paragraph 11 of the Further ReAmended Statement of Claim.

From September to November 2010, the Defendants promoted and facilitated the entering into of a Rent to Buy Transaction in respect of a property located at 9 Matilda Street, Huntingdale (Huntingdale Property) between Christine and Robert Bransby (prospective vendors) and Michael O'Dea and Kim Crocker (prospective purchasers) (Huntingdale Transaction).
The Huntingdale Transaction was arranged in the form of the Option Rent to Buy Arrangement, in that:

11.1.1. the First Defendant entered into arrangements involving a Vendor Option and Vendor Tenancy pursuant to which the First Defendant was required to pay to the prospective vendors of the Huntingdale Property an option fee of $2,100.00 per month;

11.1.2. the prospective vendors gave to the First Defendant an Irrevocable power of attorney limited to dealings with the Huntingdale Property; (Plaintiff's Trial Bundle (Bundle), 321).

11.2. on 10 November 2010, the First Defendant entered into arrangements involving a Purchaser Option and a Purchaser Tenancy pursuant to which the prospective purchasers were required to pay an upfront option fee of $1,000.00 plus an ongoing option fee of $148.00 per week and rent of $1,160.00 per fortnight; (Bundle, 1 and 4)

11.3.1. the First Defendant varied the arrangement with the prospective vendors by entering into another Vendor Option and Vendor Tenancy. This Vendor Option and Vendor Tenancy superseded the earlier Vendor Option and Vendor Tenancy, both dated 17 September 2010. Pursuant to the Vendor Option the First Defendant was required to pay to the prospective vendors of the Huntingdale Property an option fee of: $1 upfront; $533.52 per month; and $20,000 on or before 25 November 2012. Pursuant to the Vendor Tenancy the First Defendant was required to pay to the prospective vendors $1,722.89 per month (Bundle, 6 and 16);

11.3.2. the prospective vendors gave to the First Defendant another power of attorney limited to dealings with the Huntingdale Property (power of attorney provided for under s 143 of the Transfer of Land Act 1893 (WA)); (Bundle, 22);

11.3.3. the First Defendant paid the prospective vendors $2,500, being part payment of the $20,000 referred to in 11.3.1.

11.4. on or about either 7 March 2011, the First Defendant varied the arrangement with the prospective purchasers by entering into another Purchaser Option and Purchaser Tenancy pursuant to which the prospective purchasers were required to pay a lump sum option fee of $2,456.00 plus an ongoing option fee of $696.00 per fortnight and rent of $800.00 per fortnight; (Bundle, 34 and 41). This Purchaser Option and Purchaser Tenancy superseded the earlier Purchaser Option and Purchaser Tenancy, both dated 10 November 2010; and

11.5. on 26 June 2011, the First Defendant entered into amended or varied arrangements involving a further Purchaser Option and a further Purchaser Tenancy. (Bundle, 54 and 59)

The First Defendant did not occupy or seek to occupy the Huntingdale Property pursuant to the Vendor Tenancy.

In or about July 2011, the Defendants promoted and facilitated the entering into of a Rent to Buy Transaction in respect of a property located at 3 Paul Way, Orelia (Orelia Property) from Tania Louise Smith (nee De Abreu) and Mathew David Smith (prospective vendors) to Wi David Hokai and Andrea Toru (prospective purchasers) (Orelia Transaction).
The Orelia Transaction was arranged in the form of the Option Rent to Buy Arrangement, in that:

14.1. on 18 July 2011, the prospective vendors gave the First Defendant an enduring power of attorney restricted to dealings with the Orelia Property; (Bundle, 64 and 71);

14.2. on or about 21 July 2011, the First Defendant entered into an arrangement with the prospective vendors for a Vendor Option pursuant to which the First Defendant was required to pay to Mr and Mrs Smith an upfront option fee of $2.00 and an ongoing option fee of at least $2,221.00 per month plus council rates, water rates, land tax and insurances. Rent paid under the Vendor Tenancy constituted part payment of the option fee; (Bundle, 45);

14.3. on 28 July 2011, the First Defendant entered into arrangements involving a Purchaser Option and a Purchaser Tenancy pursuant to which the prospective purchasers were required to pay an upfront option fee of $15,000.00, payable in weekly instalments of $358, plus an ongoing option fee of $342.00 per week and rent of $300 per week; (Bundle, 86 and 82);

14.4. on or about 6 August 2011, the First Defendant entered into a Vendor Tenancy with the prospective vendors pursuant to which the First Defendant was required to pay to Mr and Mrs Smith rent of $240.00 per week; (Bundle, 198); and

14.5. on or about 1 March 2012, the First Defendant entered into amended or varied arrangements involving a further Purchaser Option. The option fee comprised:

14.5.1. $10,584 that the prospective purchasers had already paid to the First Defendant; and

14.5.2. an ongoing payment of $342.00 per week. (Bundle, 329).

The First Defendant did not occupy or seek to occupy to Orelia Property pursuant to the Vendor Tenancy.

In or around August 2011 the Defendants promoted and facilitated the entering into of a Rent to Buy Transaction in respect of a property located at 3 Banchory Way, The Vines (Vines Property) from Sebastian Wildley (prospective vendor) to SarahJane Oliveri and Colin Clark (prospective purchasers) (Vines Transaction).
The Vines Transaction was arranged in the form of the Option Rent to Buy Arrangement, in that:

17.1. on a date unknown, the prospective vendors gave to the First Defendant a power of attorney limited to dealings with the Vines Property; (Bundle, 217);

17.2. on or about 24 July 2011 the First Defendant entered into an arrangement with the prospective vendor for a Vendor Option; (Bundle, 76);

17.3. on or about 7 August 2011 the First Defendant varied the arrangement with the prospective vendor by entering into another Vendor Option pursuant to which the First Defendant was required to pay to Mr Wildey an upfront option fee of $1.00 plus an ongoing option fee of approximately $1,125.00 per week; (Bundle, 204);

17.4. on 4 August 2011, the First Defendant entered into arrangements involving a Purchaser Option and a Purchaser Tenancy pursuant to which the prospective purchasers were required to pay an upfront option fee of $10,000.00, payable in two instalments of $2,000 and one instalment of $6,000.00 on various dates, plus an ongoing option fee of $787.00 per week and rent of $600.00 per week; (Bundle, 142 and 150);

17.5. on 7 August 2011, the First Defendant entered into a Vendor Tenancy with the prospective vendors pursuant to which the First Defendant was required to pay to the prospective vendor rent of $550.00 per week. (Bundle, 213);

The Vines Transaction did not proceed further after the prospective purchasers withdrew from the arrangement shortly after 7 August 2011.

Common features of Option Rent to Buy Arrangements

In respect of the Option Rent to Buy Arrangements for the Orelia Property and the Huntingdale Property, the First Defendant:

19.1. paid to the prospective vendors the option fee due under the Vendor Option;

19.2. received from the prospective purchasers of the subject property:

19.2.1. the option fee due under the Purchaser Option; and

19.2.2. the rent due under the Purchaser Tenancy; and

19.3. retained, for her use and benefit, the difference between the sums paid to the First Defendant by the prospective purchasers and the sum paid by the First Defendant to the prospective vendors.

The Calista Property - Joint Venture Rent to Buy Arrangement

In or about February and March 2012, the Defendants promoted and facilitated the purported sale of the property located at 19 Sawyer Road, Calista (Calista Property) from Rita Chilla, Steven Anthony Mansueto, Rosanna Mansueto, Francesca Maria Blogna and Giuseppe Blogna (prospective vendors) to Trevor and Debbie Pettigrove (prospective purchasers).
This transaction was arranged in the form of a Joint Venture Rent to Buy Arrangement.
On or about 16 February 2012, the prospective vendors and the First Defendant entered into a Joint Venture Agreement, the express terms of which provided, in effect, that (Bundle, 323):

22.1. the prospective vendors agreed to contribute the Calista Property to the joint venture valued at $280,000; and

22.2. the First Defendant contributes her skill in selling the Calista Property by using a vendor finance arrangement (by option and lease or instalment contract) or by standard sale.

On or about 6 March 2012, the prospective vendors entered into a contract of sale by instalment with the prospective purchasers whereby the payment of the purchase price was to be made in weekly instalments of a variable sum over a period of 25 years. (Bundle, 335).

STATEMENTS MADE IN ADVERTISING MATERIAL

Orelia advertisements

24.1. the Second Defendant published an advertisement on the internet website www.gumtree.com.au (Gum Tree Website) for the Orelia Property (First Orelia Advertisement). (Bundle, 75); and

24.2. the First Defendant was knowingly concerned in the publication of the First Orelia Advertisement.

The First Orelia Advertisement contained the following written statements:

25.2. 'Take my 3x1 home in Orelia! Must sell! Move straight into this home.'

26.1. the Second Defendant published an advertisement on the internet website www.renttoownhome.com.au (Rent to Own Website) for the Orelia Property (Second Orelia Advertisement). (Bundle, 154); and

26.2. the Second Defendant was knowingly concerned in the publication of the Second Orelia Advertisement.

The Second Orelia Advertisement contained the following written statements:

27.3. 'STUFF THE BANKS! Move in today. No Banks Needed'.

The First Defendant was knowingly concerned in the publication of the First Orelia Advertisement and the Second Orelia Advertisement because:

28.1. she knew that the Second Defendant published the advertisements;

28.2. she knew the kind of statements that the Second Defendant would use in the advertisements;

28.3. she acquiesced in the publication of the advertisement; and

28.4. she facilitated the publication of the advertisement by assisting the Second Defendant to establish an account with Gum Tree.

In or around July 2011 the Defendants placed two signs at the front of the Orelia Property (Bundle, 318).
The first sign contained the following written statements:

The second sign contained the following written statements:

32.1. the Second Defendant published an advertisement on the Gum Tree Website for the Vines Property (First Vines Advertisement). (Bundle, 155); and

32.2. the First Defendant was knowingly concerned in the publication of the First Vines Advertisement.

The First Vines Advertisement contained the following written statements:

33.2. 'Get in Straight away! No Bank Qualifying!'

34.1. the Second Defendant published an advertisement on the Rent to Own Website for the Vines Property (Second Vines Advertisement). (Bundle, 157); and

34.2. the First Defendant was knowingly concerned in the publication of the Second Vines Advertisement

The Second Vines Advertisement contained the following written statements:

The First Defendant was knowingly concerned in the publication of the First Vines Advertisement and the Second Vines Advertisement because:

36.1. she knew that the Second Defendant published the advertisements;

36.2. she knew the kind of statements that the Second Defendant would use in the advertisements;

36.3. she acquiesced in the publication of the advertisement; and

36.4. she facilitated the publication of the advertisement by assisting the Second Defendant to establish an account with Gum Tree.

REPRESENTATIONS MADE IN ADVERTISING MATERIAL

My Home Representations

In publishing the First Orelia Advertisement, in particular the words 'OWN MY HOME - No Banks Needed!' and 'Take my 3x1 home in Orelia! Must sell! Move straight into this home.', the Defendants represented to potential purchasers of properties that they were, either solely or jointly, the owners of the freehold title of the Orelia Property.
In publishing the Second Orelia Advertisement, in particular the words 'OWN MY HOME! Must Sell' and 'Contact Bryan Property Owner/Consultant', the Defendants represented to potential purchasers of properties that they were, either solely or jointly, the owners of the freehold title of the Orelia Property.
In publishing the First Vines Advertisement, in particular the words 'BUY MY HOME', 'For Rent By Owner' and 'Take my 4x2 home in the Vines! MUST SELL!', the Defendants represented to potential purchasers of properties that they were, either solely or jointly, the owners of the freehold title of the Vines Property.
In publishing the Second Vines Advertisement, in particular the words 'Contact Bryan'. 'Property Owner/Consultant' and 'TAKE MY HOME! Must sell!', the Defendants represented to potential purchasers of properties that they were, either solely or jointly, the owners of the freehold title of the Vines Property.
The First and Second Defendants were not, at any time, the owners, whether solely or jointly, of the freehold title to the Orelia Property or the Vines Property.

42.1. the First Orelia Advertisement, in particular the words 'OWN MY HOME - No Banks Needed!';

42.2. the Second Orelia Advertisement, in particular the words 'STUFF THE BANKS! Move in today. No Banks Needed.';

42.3. the First Vines Advertisement, in particular the words 'Get in straight away! No Bank Qualifying!'; and

42.4. the Second Vines Advertisement, in particular the words 'No Banks Home!';

the Defendants represented to potential purchasers of properties that those purchasers could purchase the advertised property without obtaining a bank loan.

Each of these representations was a representation as to a future matter, namely, the future ability of a potential purchaser to purchase a property without a bank loan.
The Defendants did not have reasonable grounds for making these representations because:

44.1. The Defendants have never promoted or participated in any Rent to Buy arrangement in which a prospective purchaser acquired the freehold title to the relevant property without arranging finance from a bank or similar financial institution; and

44.2. the nature of the Rent to Buy arrangements that they promoted was such that the prospective purchaser would not become the registered proprietor of the property until they paid the full purchase price for the property and there was a significant risk that a potential purchaser would not be able to buy the property without arranging finance from a bank or similar institution.

In publishing the First Orelia Advertisement, in particular the words 'OWN MY HOME - No Banks Needed!' and 'Take my 3x1 home in Orelia! Must sell! Move straight into this home.', the Defendants represented to potential purchasers of properties that the freehold interest in the Orelia Property was offered for immediate sale.
In publishing the Second Orelia Advertisement, in particular the words 'OWN MY HOME! Must Sell' and 'STUFF THE BANKS! Move in today. No Banks Needed.', the Defendants represented to potential purchasers of properties that the freehold interest in the Orelia Property was offered for immediate sale.
In publishing the First Vines Advertisement, in particular the words 'Take my 4x2 home in the Vines! MUST SELL!' and 'Get in straight away! No Bank Qualifying!', the Defendants represented to potential purchasers of properties that the freehold interest in the Vines Property was offered for immediate sale.
In publishing the Second Vines Advertisement, in particular the words 'TAKE MY HOME! Must sell!', the Defendants represented to potential purchasers of properties that the freehold interest in the Vines Property was offered for immediate sale.
At the time of publishing each of the representations in paragraph 45 to 48, the Defendants were not the owners of the freehold interest, whether solely or jointly, in the Orelia and Vines Properties and were not offering the freehold interest for immediate sale.

In publishing the First Orelia Advertisement, in particular the words 'Price $538.00' and '$538 p.wk', the Defendants represented to potential purchasers of that property that they could purchase the Orelia Property for $538 per week.
In publishing the Second Orelia Advertisement, in particular the words 'WA $558 per week' and '$558 p.wk + outgoings', the Defendants represented to potential purchasers of that property that they could purchase the Orelia Property for $558 per week.
In publishing the First Vines Advertisement, in particular the words '$1257 p.wk', the Defendants represented to potential purchasers of that property that they could purchase the Vines Property for $1,257 per week.
In publishing the Second Vines Advertisement, in particular the words 'WA $1,257 per week' and '$1257 p.wk', the Defendants represented to potential purchasers of that property that they could purchase the Vines Property for $1,257 per week.
At the time of publishing each of the representations in paragraphs 50 to 53 a person could not purchase or occupy the advertised property only by the payment of the stated sum per week but could only purchase or occupy the Orelia Property if the purchaser:

54.2. entered into an Option Rent to Buy Arrangement in respect of the Orelia Property;

54.3. exercised the option to purchase the property by the end of the term of the relevant Purchaser Option (or any agreed extension to that term); and

The Gum Tree Website and the Rent to Own Home Website were accessible to any person with access to the internet. Each website, and the representations made on those websites by the Defendants, could be accessed in a number of ways, including, but not limited to:

55.1. directly accessing the website and either browsing through the website to the advertisements or using an internal website search function;

55.2. receiving direct links to the advertisements through email mailing lists established by a user of the website; or

55.3. accessing the websites or individual advertisement directly by means of search terms entered into a third party 'search engine' that would direct the user of that 'search engine' to the website or the individual advertisements.

The target audience of the representations on the Gum Tree Website and the Rent to Own Home Website were people who wanted to purchase a home but had difficulty qualifying for a conventional bank loan.

Since on or about 25 June 2012, the First Defendant caused and has continued to cause the Company to publish the following statements on the Company Website (Bundle, 416 418):

57.1. We buy: Expired Listings, Vacant Houses, Ugly/Smelly Houses, Almost Finished Houses, Debt Ridden Houses \ We Buy Houses Australia Wide - Any Price, Any Condition! If you don't want it, we do!'

57.2. 'We're part of a group of real estate investors who buy houses and units directly from you in any area, any price, and any condition throughout Australia.'

57.3. 'We typically buy 3-4 bedroom houses and units Australia wide. We do not buy vacant blocks of land, farms, or other rural property.'; and

57.4. 'We can buy your house fast. Agents can't.'

On or about 25 June 2012, the First Defendant caused the Company to publish a short animated film on the Company Website (Bundle, 414).
The animated film included the following statements:

59.1. 'Think of us as your friendly real estate pawn shop'.

59.2. 'A place for you to come in and trade your unwanted property for cash. So remember we buy houses Australia wide in any area, condition or price'.

59.4. 'We do not charge any commissions or fees to buy your house'.

REPRESENTATIONS ON THE COMPANY WEBSITE

We Buy Houses Representation

By publishing the statements referred to at paragraphs 57 and 59, the First Defendant represented to potential vendors of houses that she, or the business she operates, buys houses (We Buy Houses Representation).
Contrary to this representation, the Defendants' business:

61.2. used Option Rent to Buy Arrangements or Joint Venture Rent to Buy Arrangements under which:

61.2.1. the First Defendant only acquired an option to purchase the house under a Vendor Option; and

61.2.2. would not exercise that option unless a potential purchaser could be found who would enter into and subsequently exercise a Purchaser Option.

By publishing the statements referred to at paragraph 57, the First Defendant represented to potential vendors of houses that she was part of a group of real estate investors who buy houses and units (Group of Investors Representation).
Contrary to the Group of Investors Representation, the First Defendant was not at any relevant time, part of a group of real estate investors who buy houses and units.

By publishing the statements referred to at paragraph 57, the First Defendant represented to potential vendors of houses that she could buy their houses fast (We Buy Houses Fast Representation).
Contrary to the We Buy Houses Fast Representation any sale of a property as part of a Rent to Buy Arrangement would not be completed immediately or within a short period of time and the First Defendant was not in a position to purchase a Property immediately or within a short period of time.

By publishing the statement 'We do not charge any commissions or fees to buy your house' on the Company Website the First Defendant represented to potential vendors of houses that she would not charge any commissions or fees to buy a Property (No Commissions or Fees Representation).
The No Commissions or Fees Representation was a representation as to future matters, namely, what the First Defendant would charge a potential vendor for the sale of their property.
The First Defendant did not have reasonable grounds for making the No Commissions or Fees Representation because the nature of the Rent to Buy arrangements that she promoted was such that she would derive fees in the form of the difference between the amounts paid to the First Defendant by a potential purchaser and the amounts paid by the First Defendant to a potential vendor.

The Company Website was accessible to any person with access to the First Defendant, could be accessed in a number of ways, including, but not limited to:

69.2. accessing the websites by means of search terms entered into a third party 'search engine' that would direct the user of that 'search engine' to the website.

The target audience of the representations on the Company Website were people that needed to sell their homes quickly, in particular people under financial stress.

The First Defendant is not, and has never been the holder of a licence or triennial certificate under the REBA Act.

On 18 July 2011, Mr and Mrs Smith gave the First Defendant an enduring power of attorney restricted to dealings with the Orelia Property.

In about mid2011, the Defendants met with Mr Wildey at the Vines Property and discussed:

The Defendants attended the Vines Property on several further occasions for the purpose of estimating the costs of renovation works required to the property.
[In] August 2011, the Defendants met Mr Wildey at a Red Rooster restaurant in Success. At this meeting the Defendants and Mr Wildey spent a considerable amount of time discussing:

At this meeting, Mr Wildey signed an enduring power of attorney in favour of the First Defendant (Bundle, 217).
On or about 1 August 2011, the Defendants met Ms Oliveri and Mr Clark at the Vines Property and showed them around the property, including the renovations that needed to be completed at the property.
During the course of that meeting, Ms Oliveri and Mr Clark completed a 'Request to Own' form.
On or about 4 August 2011, the Defendants met Ms Oliveri and Mr Clark at a Dome cafe in Applecross during which the Defendants and Ms Oliveri and Mr Clark:

79.1. discussed the terms of the contract to be entered into;

79.2. discussed renovations required to the property and the date by which they had to be completed; and

79.3. negotiated an extension to the dates by which the renovations had to be completed.

Approximately a few days after the meeting of 4 August 2011, the Defendants met Ms Oliveri and Mr Clark at a McDonalds restaurant in Applecross during which the Defendants and Ms Oliveri and Mr Clark discussed Ms Oliveri's and Mr Clark's doubts about the transaction.

On 17 September 2011, Mr and Mrs Bransby, the owner of the Huntingdale Property, gave to the First Defendant an Irrevocable Power of Attorney limited to dealings with the Huntingdale Property.

In about February 2012, the Second Defendant had a telephone conversation with Rita Chila, one of the owners of the Calista Property, in which he offered to meet with Ms Chila to explain a method of selling houses.
On or about 16 February 2012, the Defendants met with the owners of the Calista Property at Ms Chila's house. During the meeting, the Defendants told Ms Chila and the other owners about their system, the effect of which was that a person would move into the Calista Property and pay rent which would go straight towards the loan repayments with the aim of reducing the loan enough that after several years the person could afford to purchase the Calista Property.
At that meeting, the Defendants and the owners of the Calista Property signed a document entitled 'Heads of Agreement Joint Venture' (Bundle, 323).
Clause 3 of that agreement provided that the First Defendant 'will contribute to the joint venture project their (sic) skill in selling the Property on behalf of the Joint Venture ...'

From 11 November 2010 to 31 August 2011, the First Defendant received $29,680 from the prospective purchasers of the Huntingdale Property. In that same period, the First Defendant made payments totalling $26,855 to, or to the benefit of, the prospective vendors of the Huntingdale Property. This amount comprised: a deposit of $5,000; home loan payments totalling $17,417; credit card payments totalling $2,673; local government rates for the property of $1,200; and insurance premiums for the property of $560. The First Defendant made an estimated operating profit of $2,825.
From 4 August 2011 to 10 May 2012, the First Defendant received amounts totalling $37,467.30 from the prospective purchasers of the Orelia Property. In that same period, the First Defendant made payments of $19,791 to, or to the benefit of, the prospective vendors of the Orelia Property. The First Defendant made an estimated operating profit of $17,676.

On 15 November 2011, during the course of the Plaintiff's investigation of the Defendants, an officer of the Plaintiff invited the First Defendant by letter to attend a voluntary interview in respect of allegations contraventions of the ACL and REBA Act.
On 17 November 2011, the First Defendant replied to that officer that she did not wish to attend a voluntary interview.
On 18 June 2012, again during the course of the Plaintiff's investigation of the Defendants, an officer of the Plaintiff invited each Defendant, separately, by letter to attend a voluntary interview in respect of allegations contraventions of the ACL and REBA Act.
The Plaintiff did not receive a response from either Defendant to the letters of 18 June 2012.

13 In the supplementary statement of agreed facts, the defendants admitted that:

At the time of publication of the Company Website Statements, the First Defendant knew:

1.1 by reference to the terms of the Vendor Option, that by entering into a Vendor Option, she would not buy the freehold interest in a property;

1.2 by reference to clause 3 of the Vendor Option, that the acquisition of freehold title to any property under an Option Rent to Buy Arrangement would not occur immediately or in the near future but would occur if and when the Vendor Option was exercised; and

1.3 by reference to the terms of the Vendor Option and the Purchaser Option, specifically the consideration payable under each agreement, that she would derive revenue from the Option Rent to Buy Arrangement.

At the time of publication of the First Orelia Advertisement, Second Orelia Advertisement, First Vines Advertisement and Second Vines Advertisement, the Defendants both knew:

2.1 by reference to the terms of the Vendor Option agreement, that neither of them was the owner of the freehold interest in the advertised property;

2.2 by reference to clause 3 of the Purchaser Option, that the acquisition of freehold title to the advertised properties by prospective buyers under the Option Rent to Buy Arrangement would not occur immediately or in the near future but would occur if and when the Vendor Option was exercised; and

2.3 by reference to clause 2 of the Purchase Option, that the amount stated in the advertisement was not the full consideration that a person would have to pay to purchase the advertised properties under the Option Rent to Buy Arrangement, and that a prospective purchaser would have to pay other amounts such as an upfront option fee, which was negotiable, and the balance of the purchase price, which depended on the amount of the upfront option fee.

14 The following summary outlines matters admitted by the defendants. It is drawn from the Commissioner's helpful written submissions. Its accuracy was not in issue.

15 Ms Susilo published the Company Website Statements.[4]

16 (1) By publishing the Company Website Statements, Ms Susilo represented to potential vendors of houses that she, or the business she operates, buys houses (We Buy Houses Representation);[5]

(2) contrary to the We Buy Houses Representation, the business did not buy houses but instead used Option Rent to Buy Arrangements or Joint Venture Rent to Buy Arrangements;[6] and

(3) by making the We Buy Houses Representation, Ms Susilo engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law (WA) (ACL) and that was liable to mislead the public as to the nature or characteristics of the services provided, or proposed to be provided, by her, in contravention of s 34 of the ACL.[7]

Company website - group of investors representation

17 (1) By publishing the Company Website Statements, Ms Susilo represented to potential vendors of houses that she was part of a group of real estate investors who buy house and units (Group of Investors Representation);[8]

(2) contrary to the Group of Investors Representation, she was not at any relevant time, part of a group of real estate investors who bought houses and units;[9] and

COMMISSIONER FOR CONSUMER PROTECTION -v- SUSILO [2014] WASC 50 (27 February 2014)

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Judgment (464 paragraphs)

COMMISSIONER FOR CONSUMER PROTECTION -v- SUSILO [2014] WASC 50 (27 February 2014)

Legislation Cited (5)

Cases Cited (11)