Commissioner for Fair Trading v Bowes Street Developments Pty Ltd

Those two parties were also found to have engaged in misleading conduct in breach of s 18 of the ACL in representing that the light rail to Woden Town Centre had received planning approval or such approval as was required by law (the Approval Representation). However, that conduct is not subject to the penalty provisions in the ACL and so is not the subject of this judgment other than in relation to the orders I make at the end of this judgment.

The Light Rail Location Representations were conveyed by way of six media (the Billboards, Brochure, Flyer, Promotional Video, Promotional Emails and Real Estate Website Advertising), the Travel Times Representations by one media (the Promotional Video) and the Rental Yield Representation by three media (the Billboards, Brochure and Flyer).

Each media was active for different periods of time and varied in the number of potential consumers exposed to the representations contained within them. Some media, such as the Brochure, contained much additional information in addition to the Representations whilst others, such as the Billboards, did not.

The Representations were made during the following periods and via the various media as follows: (a) the Light Rail Location Representations via: (i) the Billboards (between about 19 March 2018 and about 10 September 2018); (ii) the Brochure (between about 22 March 2018 and at least October 2019); (iii) the Flyer (between at least March 2018 and November 2018); (iv) the Promotional Video (between about 22 March 2018 and November 2020); (v) the Real Estate Websites (between about July 2017 and up until (at least) about November 2020); and (vi) the Promotional Emails, sent on 31 January, 8 February, 15 February, 28 February, 1 March, 12 April and 24 May 2018. (b) the Rental Yield Representation via: (i) the Billboards (between about 19 March 2018 and about 10 September 2018); (ii) the Brochure (between about 22 March 2018 and at least October 2019); and (iii) the Flyer (between at least March 2018 and November 2018). (c) the Travel Times Representations via the Promotional Video (between about 22 March 2018 and November 2020).

Some of the Representations were conveyed after 1 September 2018. The significance of that date was that the maximum penalty for a contravention was increased from the previous $1.1m per contravention to the greater of $10m, three times the benefit derived directly or indirectly by the corporation involved that was found to be reasonably attributable to the relevant conduct, or, if the court cannot determine the value of that benefit, then ten percent of the annual turnover of the corporation in the preceding 12 months ending at the end of the month in which the conduct occurred or started to occur.

A contravention occurs each time a representation is made to a person: Australian Securities and Investments Commission v Mercer Superannuation (Australia) Ltd [2024] FCA 850 at [105]; Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [12]– [18]; Australian Securities and Investments Commission v La Trobe Financial Asset Management Ltd [2021] FCA 1417 at [90]-[91].

No party contended that the evidence allowed for a calculation of any direct or indirect benefit reasonably attributable to the relevant conduct, and it was not in issue that ten percent of the annual turnover of both GRE and GZ was less than the monetary penalty of $10m for each act or omission constituting the contravention.

The result is that the relevant penalty for each contravention was $1.1m for those contraventions which occurred before 1 September 2018, and $10m for those that occurred after that date.

It was common ground that if I applied those maximum monetary penalties to each contravention found to have occurred, the resultant total penalty would be some billions of dollars, a result which, the Commissioner submitted, would far exceed the appropriate total penalty. For example, there was evidence that the contravening Promotional Emails were sent to some 46,320 recipients.

The real point of that observation is that, in the circumstances of this case, it is not necessary for me to determine what contraventions occurred before or after 1 September 2018 and therefore the theoretical maximum penalties applicable to the contravening conduct either side of that date. That is because the total penalty sought by the Commissioner against either defendant, and which would be justifiable in this case, is vastly less than the theoretical maximum that could be applied under either maximum penalty.

The better approach in this case, and one which the parties considered the correct approach, would be to view the contraventions in their totality having regard to the fact that the differing maximum penalties were vastly greater than the appropriate penalties I should impose.

This approach, which is a combination of the “course of conduct” and “totality” principles referred to in the authorities and which the Commissioner, GZ and GRE all agreed should be applied, seems appropriate to apply in this case.

The “course of conduct” principle was described in Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243 at 296 [234] as follows: The “course of conduct” or “one transaction" principle means that consideration should be given to whether the contraventions arise out of the same course of conduct or the one transaction, to determine whether it is appropriate that a “concurrent” or single penalty should be imposed for the contraventions. The principle was explained by Middleton and Gordon JJ in Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461; 269 ALR 1 at [39]: The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality" and that is necessarily a factually specific enquiry.

This does not mean that a number of contraventions become one contravention, but that in appropriate circumstances a number of contraventions may be subject to the one penalty.

The “totality” principle operates to guard against absurd penalties. It requires that the total penalty for related offences not exceed what is proper for the entire contravening conduct involved, taking into account all factors.

In my view it is appropriate to apply those principles as tools of analysis useful in determining the appropriate penalties in this case. The contraventions arose out of the marketing of one residential development, albeit consisting of 430 separate units, and in that sense the contraventions arose out of the same course of conduct, namely marketing the development.

In arriving at a penalty, s 224(2) of the ACL provides that I must have regard to all relevant matters including the nature and extent of the contraventions, any loss or damage suffered as a result of the contraventions, the circumstances in which the contraventions took place and whether GRE and GZ have previously been found by a court to have engaged in any similar conduct. I have taken those matters into account as explained further below.

Other matters I have taken into account are what are referred to as the French factors, being the matters identified by French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (CSR) at 52,152-52,153 and added to in later cases. In Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761, Perram J listed those factors at [11] as follows: (a) the size of the contravening companies; (b) the deliberateness of the contraventions and the period over which they extended; (c) whether the contraventions arose out of the conduct of senior management or at a lower level; (d) whether the companies have a corporate culture conducive to compliance with the ACL as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; (e) whether the companies have shown a disposition to cooperate with the authorities responsible for the enforcement of the ACL in relation to the contravention; (f) whether the contravener has engaged in similar conduct in the past; (g) the financial position of the contravener; and (h) whether the contravening conduct was systematic, deliberate or covert.

In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson) the High Court quoted the French factors with apparent approval, and noted at 460 [19] that this list of factors included matters pertaining both to the character of the contravening conduct and to the character of the contravener. Their Honours went on to say that those factors were not a rigid catalogue of matters for consideration as if it were a legal checklist. Rather, the primary task of the Court is to determine appropriate penalties in the circumstances. Nevertheless, I shall consider those matters together with other considerations.

As to previous contraventions, neither GRE nor GZ have been found by a court to have engaged in similar conduct.

As to loss or damage, there was no evidence of any particular loss or damage suffered by one or more consumers. The Commissioner submitted there would have been some loss suffered by way of inflated purchase prices. GRE submitted to the contrary and tendered an expert valuer’s report in which the opinion was expressed that the capital value of units in the GCT development had not only increased over time but had increased in line with the increase in capital values of units in other Geocon developments.

I do not consider the valuer’s opinion to be relevant in this case. The measure of damages in a case such as this, if brought by a consumer, would ordinarily be the difference (if any) between the price paid and the market or true value of the unit had the Representations not been made. That measure of damages would prima facie establish the fact and extent of any loss or damage, although loss and damage in a civil claim is not restricted to that measure. As was observed in Ackers v Austcorp International Ltd [2009] FCA 432 (Ackers) at [444]: The applicants seek damages for their capital loss assessed as the difference between the price paid for their units and their true value at the time of the transaction. This is a common measure of damage in claims under s 82 of the Act where land has been acquired in consequence of a contravention of s 52: see HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 656 [35]. However, the rule is not inflexible or rigid and, as Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ went on to point out, the test depends on the difference between price and the real or fair or intrinsic value of the asset, as opposed to its market value: Astonland 217 CLR at 656–657 [35]–[36].

The fact that the Units held their value, or increased their value, in line with or exceeding the value of units in other allegedly comparable developments, does not address the fundamental question whether the original purchasers of the Units paid more than the true, fair or intrinsic value of the Units had the Representations not been made.

To take a hypothetical, if there were evidence that a particular consumer had paid $10,000 more for the purchase of their Unit than the true market value (the value had the Representations not been made), then their profit on a resale would have been reduced by $10,000 even if, on the valuer’s evidence, they made a profit of $30,000 on the price they paid for their Unit. In other words, but for the representation their profit would have been $40,000 and not $30,000.

Whilst Ms Byrne’s evidence suggested purchasers made a profit when re-selling the Units subsequently, they possibly did not make as much profit as they would have made had the Representations not been made. Ms Byrne’s evidence did not address the critical measure of damages in a misleading representation case such as this, and thus her evidence, as acceptable as it was, did not address the correct question. That was not her fault, her report being the product of the questions she was asked to address, and those questions did not address the correct measure of damages.

In my view it is more probable than not that some loss and damage was occasioned to some consumers, applying the correct measure of damages, although the evidence does not allow me to say how much. Given the lack of evidence of the extent of the damage, the weight I give to the occasioning of loss and damage is toward the minor end of the spectrum.

The reasons why I find that, on the balance of probabilities, some financial loss was occasioned to at least some purchasers of Units are as follows.

As I said in Bowes St (No 3) at [13], the underlying premise of the Commissioner’s case was that the Representations allowed higher prices to be obtained from the sale of the Units than if the Representations had not been made.

The two men behind the development, Messrs Skepev and Georgalis, were experienced residential property developers.

Through direct shareholdings or via other corporate vehicles, BSD and Zapari are ultimately owned by Mr Skepev. Geocon Bowes and GRE are ultimately owned by Mr Nick Georgalis. GZ, the special purpose development vehicle utilised on the project, had two issued shares. One was owned by BSD and the other was owned by Geocon Bowes.

As experienced developers, and obviously astute businessmen, Messrs Skepev and Georgalis desired to maximise the profit from the GCT development. Doing so involved many factors but also included effective marketing in terms of reach and appeal.

Many representations were made in an endeavour to entice consumers to not only purchase the Units offered for sale, but to purchase them at the prices offered, and this marketing included the Representations the subject of this case. The various Representations involved in this case involved aspects of the development which the developers thought would appeal to prospective purchasers and be part of the persuasive matrix which would cause them to pay the prices offered. It is logical that positive attributes of a new residential development would be reflected in higher sales prices than would be the case if the development did not contain those positive attributes.

One obvious positive attribute to an investor purchaser would be the gross rental return a Unit may achieve. The evidence established that GRE and GZ’s internal calculations of gross rental return were less than seven percent for most of the Units, yet GZ and GRE represented that all Units would achieve seven percent. Clearly enough, the market value of a Unit in the development would have been greater if the expected gross rental return were, to take an extreme example, 20 percent rather than 2 percent. Thus, I infer the true market value of the Units sold, and in respect of which the defendants calculated a lesser rental return than seven percent, was less than the prices paid.

Location was also a positive attribute which affected value, and most particularly the proximity of the light rail terminus (as it was represented). Proximity to public transport is not an attractant to every consumer, but it is to many, and probably so to investor purchasers seeking to maximise the appeal of their investment Unit to private renters. In cross-examination GRE’s expert valuer gave the following commonsensical evidence: And just with your reference there to public transport, you'd agree that the proximity to public transport ordinarily increases the value of apartments in residential complexes that you value? ---I wouldn't - I wouldn't say it ordinarily does. It can depend on the demographic of the purchasers. So in a high-end luxury development, you may not be expecting a lot of the purchasers to be frequent users of public transport, although it is very fair to say that generally considered, proximity to public transport is a positive attribute. And as a positive attribute, it can increase the value of the unit? ---It can, amongst a number of other considerations which, all sort of considered a bundle of advantages, disadvantages. Some elements may be more important or less important, depending on the product itself.

I also refer to and rely on what I said in Bowes St (No 3) at [400]-[408] and, in particular, the evidence of Mr Nick Georgalis as to the benefits of location and the proximity of public transport hubs.

GRE submitted that the represented light rail terminus located proximate to GCT would not have affected the value of Units because there was an existing major transport hub nearby, namely the large bus interchange. That is, since there was an existing major transport hub, a light rail terminus would not be seen as value-adding in terms of proximity of public transport. I do not accept that submission for two reasons. First, no evidence to support it was led from GRE’s expert valuer. If the submission were correct, I would have expected GRE to lead evidence to support it from its expert. Second, I do not think it logically true, or at least completely so. Some reasonable consumers would have thought buses were sufficient, but some may have considered light rail to be superior to buses and thus placed value on that option.

In my view it is open to me to draw an inference that the Representations in this case which I have found contravened the ACL probably caused some financial loss and damage, in a general sense, to some purchasers in terms of paying above market prices (had the Representations not been made). The evidence does not allow me to say how small or large those inflated prices would have been, but it defies ordinary experience to say that if these Representations had not been made the market prices of all the Units sold would have been the same.

In the result, I take into account the probability that at least some consumers paid more for their Units than the true market price. In the absence of evidence as to the extent of those losses, I think it appropriate that whilst I give this matter some weight, that weight should not be significant.

GRE submitted that the offering of the rental guarantee by GRE to some purchasers was a mitigating factor. Perhaps so, but only in a very small way. It was only offered to selective purchasers, was not offered until November 2018 and was only offered on commercial terms. As I said in Bowes St (No 3) at [140]: Importantly, as GRE properly and fairly admitted in opening submissions, and as Mr Stephens said, the Property Management Agreements were offered to some but not all prospective purchasers, and, of course, could only be taken advantage of by those willing to contract with GRE on the terms offered in the Agreements. Such terms included an obligation to pay a letting fee of two weeks’ rent, a management fee of 8.7 percent of achieved rent, a lease negotiation/renewal fee, a customer care, IT support and administrative fee, fees for ACAT mediations and hearings “at cost”, and fees for overseeing maintenance and repairs at cost. Needless to say, some purchasers may not have considered those terms financially advantageous.

No financial loss or damage other than capital loss was alleged by the Commissioner. However, the Commissioner submitted, and I accept and take into account, that consumers probably suffered some non-financial loss in that what was represented to them as a certainty is now known to them to be only a possibility or probability.

That brings me back to the nature and extent of the contraventions, the circumstances in which the contraventions took place, the remaining French factors and any other relevant matters.

Before doing so, I will briefly set out the different penalties the Commissioner, GZ and GRE considered should be imposed. They were: GZ GRE

I did not think that the Light Rail Location Representation was the product of a mistake, or an erroneous belief, and it was more than the product of excessive zeal. Rather, it seemed to me that the authors of the Light Rail Location Representation saw what they wanted to see without due regard to commercial ethics and the need to have objectively reasonable grounds for conveying the certainty that they did.

The same does not apply to the Travel Times Representations. To say that the Representations had a tenuous connection with reasonable grounds for making them would be to overstate the position.

GRE submitted that the Travel Times Representations were a small portion of a long video, they were overwhelmed by the other aspects of the video and would be easily missed and discounted. Whilst the Representations only took seconds, it is mere speculation to say that they would have been easily missed and discounted. The reasonable consumer interested in purchasing a Unit in GCT would, in my view, have been somewhat attentive, and being a video, it was capable of being played back multiple times (such as might happen when consulting a partner or family members about a contemplated purchase). I also think that the length of time the Travel Times Representations took up in the video is not the only factor in terms of impact on consumers. Other matters such as the importance of the subject matter to the consumer would also have been significant.

Even worse was the Rental Yield Representation, which was a short, punchy and enticingly attractive representation aimed at the hip pockets of investor consumers. There was no realistic chance of that Representation being falsifiable and there was a complete absence of reasonable grounds for making it. GZ and GRE were quite happy to tell prospective purchasers that their investment would generate a seven percent gross rental return when their own internal calculations contradicted that statement.

GRE submitted that the Rental Yield Representation was not the sole or dominant feature of the development marketed to purchasers. I do not think it useful to try to make findings of fact as to which representations were dominant or otherwise, or to assess their relative impact. Suffice to say that the Rental Yield Representation went to an important factor in the minds of many reasonable consumers, which is the very reason why it was made.

It is true, as senior counsel for GZ submitted, that the Representations were not the only positive representations made by GZ and GRE, and that the offending Representations must be seen as part of a conglomerate of many other representations which did not contravene the ACL. I have taken that matter into account.

At the same time, not all representations are equal. The features the subject of the Representations related to features of the development which were of a more prominent nature as demonstrated by their prominence in the promotional media utilised.

Thus, whilst I accept the Representations must be examined in context and not in isolation, I do consider the offending Representations to have been prominent amongst the other non-offending representations.

The Commissioner submitted that I should regard GZ and GRE as being part of larger corporate groups, and thus I should have regard to the size of those groups rather than just the size of GZ and GRE.

It is fair to say that GRE is part of the Geocon Group, but not so for GZ.

But there is a little more to it, particularly concerning deterrence and the protection of consumers, and particularly the corrective advertising orders I propose to make. It is convenient to mentions those matters now as the following matters are relevant to the involvement of senior management in the contraventions.

The representations were made by corporate vehicles utilised for the purpose of bringing the development to fruition (GZ), and marketing and selling the development (GRE).

But GZ was a special purpose vehicle whose purpose has now ended, and GRE’s function is now limited to selling other Geocon developments and, on the evidence, is not involved in marketing.

As is clear on the evidence, the moving forces behind the GCT development were not GZ and GRE, and yet those moving forces will, in all probability, continue to undertake more residential property developments in the Australian Capital Territory.

The Units were advertised under what I will call brand names. They were “Geocon” and “Zapari”. “Zapari” is a registered business name owned by Mr Skepev. The word “Geocon” together with an image of the same word is a registered trademark owned by Georgalis Investments Pty Ltd. That company has one issued share, the owner of which is Mr Nick Georgalis.

The two brand names appeared on or in each of the promotional media which conveyed the Representations, with some of those media (and most prominently the Brochure) making positive representations about “Geocon” and “Zapari” as developers of such properties.

Mr Nick Georgalis and Mr Skepev, via other corporate vehicles utilising the brand names “Geocon” and “Zapari”, are prominent developers of residential real estate in the Australian Capital Territory.

Mr Nick Georgalis and Mr Skepev were intimately involved with the Travel Times Representations, although it is fair to say Mr Georgalis was more involved than Mr Skepev. They were less involved, although directly so, with the Light Rail Location Representation. They had less involvement with the Rental Yield Representation, but they knew of its existence.

Thus, the ultimate owners of GZ and GRE were involved in the Representations.

Others involved in the Representations were Mr Stephens and Mr Micalos, both of whom were senior management. Members of the Marketing Team involved in the Representations were more junior.

Taken as a whole, the conduct of GZ, GRE, Messrs Nick Georgalis, Skepev, Stephens and Micalos concerning the Representations was cavalier to say the least, and was disdainful, contemptuous and scornful of consumers and the legal requirement of having reasonable grounds for the making of representations as to future matters.

The desire to maximise profit would seem to have won out over commercial ethics and legal obligations.

GRE submitted, as a mitigating factor, that those behind the marketing campaign, and in particular Mr Micalos, believed they had reasonable grounds for making the representations. I do not accept that submission. I did not accept any of the reasonable grounds witnesses as being witnesses of credit. Their evidence was replete with demonstrably incorrect facts, internal inconsistencies, inconsistencies with other incontrovertible evidence, generalised and uncorroborated assertions and explanations which appeared for the first time in cross-examination. Their evidence was not supported by any contemporaneous material, objective facts or credible witnesses, was not consistent with inherent probabilities, lacked detail and accuracy in important respects and was, at times, absurd. I do not accept their evidence that they truly believed the Representations.

The Rental Yield Representation was either made knowing it was untrue, or it was made with reckless indifference to the truth. The same could be said about the Travel Times Representations. The Light Rail Location Representations were not quite so deliberate and did not divert so far from available reasonable material but were nevertheless clearly unsupported by the contemporaneous material.

This cavalier, disdainful, contemptuous and scornful attitude was made clear in the lack of any genuine consideration of the concerns raised by, for example, the then Deputy Director-General of Transport Canberra in April 2018 in relation to some of the Representations, and further concerns expressed in a letter dated 31 August 2018 from an investigator appointed by the Commissioner about the Light Rail Location and Rental Yield Representation.

On the evidence before me, little has changed.

Mr Micalos is no longer employed by Geocon, and Mr Stephens is no longer a director of GRE.

But neither of the other two reasonable grounds witnesses, and the driving forces behind the GCT development, being Mr Nick Georgalis (who did give evidence in the penalty hearing) and Mr Skepev (who did not), expressed any contrition or remorse for the contraventions. The lack of remorse or contrition was striking.

Nor, perhaps more importantly, did they give any evidence to the effect that they would do their best to ensure that their corporate development vehicles, and particularly those utilising the brand names “Geocon” and “Zapari”, would not engage in similar conduct in the future. Their silence on that issue was also striking.

I do not lose sight of the fact that it is only GZ and GRE that have contravened the ACL, but the primary objective of civil penalties is deterrence, not only vis-à-vis the parties in the present case, but also as a deterrent to other potential contraveners such as other existing or future corporate vehicles ultimately owned or directed by Messrs Georgalis and Skepev in their property development endeavours, as well as other developers at large.

This corporate entanglement between the various corporate vehicles utilised by Mr Nick Georgalis and Geocon Group Pty Ltd (which employs all the Geocon employees who are then deployed as necessary to perform tasks on behalf of other Geocon entities), and the use of the brand name “Geocon” by special purpose development vehicles such as GZ, is further fortified by the fact that evidence was led on the penalty hearing of purported attempts made at Geocon Group to improve corporate culture so that it would be conducive to compliance with the ACL.

The evidence was to the effect that there was an apparently ad hoc education program regarding the requirements of the ACL, and the appointment of a Marketing and Communications Coordinator, Ms Livanes, in September 2023, whose role includes overseeing and checking all marketing material.

This education program is barely worthy of that description. There was a one-off training session in November 2019 in relation to the “Agents Act”, its “role” and “purpose”, and an online course in “Statutory liability for misleading or deceptive conduct, and contractual risk allocation in construction contracts” which was recently offered via an external provider which some Geocon Group employees undertook in December 2024 and early 2025. What the contents of that online course were was not proved.

There was much other evidence about various purported improvements to Geocon Group’s processes, but none related to the ACL and are not relevant.

Evidence concerning a one-off session conducted by Geocon Group’s general counsel in September 2022 was objected to and not pressed.

I do not think those attempts carry much weight. The lectures and courses seem to be ad-hoc and non-compulsory, and there is no evidence whether the course is comprehensive or cursory so far as it pertains to the ACL. There is no evidence that such education is mandatory for relevant employees, that the program will continue for the foreseeable future or that it has the support of senior management.

Curiously, Ms Livanes, who is Geocon Group’s Marketing and Communications Coordinator, said in her affidavit that she was authorised by Mr Dimitri Georgalis, now the sole director of GRE (I will say more about this later), to depose her affidavit “on behalf of GRE”.

Strictly speaking, her evidence has nothing to do with GRE (or GZ) given GRE has no employees and is not now involved with marketing Geocon properties. Her evidence solely concerned the activities of Geocon Group. GRE is only affected by those activities in that it would be a recipient of marketing material generated by Geocon Group and its contractors. But the fact that GRE called evidence from Geocon employees as to what was happening at Geocon, in an attempt to reduce the penalty to GRE, indicates how, on a practical level, the activities of Geocon Group and other Geocon corporations such as GRE are substantially entangled and intermingled, with the brand name “Geocon” being used as an umbrella brand name for the group’s development activities.

The same observation may be made about the evidence of the other witnesses called by GRE, namely Mr Magee, Mr Chandra and Ms Davis-Burn.

Neither GZ nor GRE has any employees, and so they have not introduced any compliance program or similar to prevent any similar occurrences in the future.

GZ was a special purpose development vehicle whose only function was to effect this development. It has no Australian Business Number and no Tax File Number. It has not filed any income tax return. As Mr Nick Georgalis described it: GZ has never had, and is not intended to have in the future, any other purpose than to be a special purpose vehicle company for the Participants.

In terms of the sizes of GZ and GRE, GZ received and disbursed substantial sums whilst performing its purpose. It filed no tax returns, but its shareholders filed a number of partnership returns which disclosed total sales of about $240m, being the sales of the Units.

That substantial revenue has now been disbursed and GZ has about $65,000 in cash, but otherwise has no assets.

As for GRE, at the time of the events in question it had two directors, Messrs Nick Georgalis and Stephens. In Bowes St (No 3) I found that Mr Stephens was a director in name only. He was needed because at least one director of GRE was required to hold a real estate agent’s licence. By the time of this penalty hearing Mr Stephens had been replaced by Mr Dimitri Georgalis, a licensed real estate agent and brother of Mr Nick Georgalis. Mr Nick Georgalis resigned as director of GRE on 7 September 2023.

GRE is a substantial trading enterprise, but with little in the form of non-current assets. In the seven financial years ended June 2024 its gross revenue totalled a little over $75m (or a little over $10m per year). Its profit for the year ended June 2022 was some $2.5m, in 2023 it was a little under $900,000 (but having paid out a little over $3m in Management Fees) and its draft financial statements for 2024 indicate a similar profit in 2024 (but having paid out a little under $1m in Management Fees).

GRE submitted that it made a loss in many years, but the financial information it tendered was opaque and did not explain its financial position with any transparency (especially the “Management Fees” expense), and it has substantial inter-company loan accounts with at least one other Geocon company. It was open to GRE to be fully transparent with its financial affairs and it chose not to be so. In those circumstances I cannot place any weight on its submissions as to impecuniosity. The short point left to me is that it has had substantial revenue.

It was apparent from the evidence and cross-examination of Mr Dimitri Georgalis that, whilst he undertakes some functions as a director of GRE in terms of “facilitating the sales”, he does little else. He became a director, he said, because he was asked to do so by the general manager of Geocon, and was told nothing about Geocon’s intentions for GRE. He is not remunerated for acting as a director of GRE. Financial matters were and are handled by the accounts department of Geocon Group. All other substantive functions are handled by Geocon Group.

It is readily apparent that Mr Dimitri Georgalis is a replacement for Mr Stephens and it is not intended that he play any real role as a director. The inescapable inference is that Mr Nick Georgalis operates as a shadow director of GRE, and that GRE operates according to his dictates as delivered through the employees of Geocon Group.

Returning to financial matters, it is useful to roughly calculate the difference between what gross rental yield investor purchasers may have received compared to what was represented that they would receive.

GRE’s valuer, Ms Byrne, said in her evidence that the average sales prices of one-bedroom Units was $367,840, for two-bedroom Units it was $492,200 and for three-bedroom Units it was $744,420.

As I mentioned in Bowes St (No 3) at [876] and following, the internal rental yield calculations presented in evidence calculated that many Units would return less than seven percent gross rental return. Mr Micalos’s calculations showed that some Units would only return as little as 5.6 percent.

Assuming an investor would have received a gross rental return of six percent rather than seven percent, on the sales prices I have mentioned a few paragraphs above, the annual difference in gross rental return would have been about $3,678 for a one-bedroom Unit, $4,922 for a two-bedroom Unit and $7,444 for a three-bedroom Unit.

Those figures are, of course, rough, but they do provide some indication of the possible scale of one form of economic harm possibly suffered by purchaser consumers and provides some perspective for the penalty-per-property figures set out in the table at [50] above. Of course, many Units were projected to return more than six percent, and so those calculations cannot be applied to all Units, but around 73 percent of all Units were projected to return less than seven percent on Mr Micalos’s most relevant calculation.

If I assume a 6.5 percent annual gross rental return (rather than seven percent) and apply that to 73 percent of the Units, the calculated loss of gross annual rental return for the development (from that represented) would be in the vicinity of $250,000 for the one-bedroom Units, a little over $300,000 for the two-bedroom Units and a little over $80,000 for the three-bedroom Units. In total, $630,000 per annum for the development or $6.3m over ten years.

In terms of characterising the conduct, GZ submitted that the contraventions were done in public, there was nothing secret about the Representations, the published statements were based on a public infrastructure project which was the subject of major public discussion and thus there was a reference point against which the Representations could be judged. Whilst there is some substance to that submission in relation to the Light Rail Location Representations, I do not accept it in relation to the Travel Times and Rental Yield Representations.

The Commissioner submitted that GZ and GRE had not cooperated with the regulator. There is some force to that submission. The answers to various of the Commissioner’s requests for information were somewhat short of being wholly upfront and cooperative.

GZ opposed the making of any adverse publicity orders on the same grounds it advanced against the making of declarations. For similar reasons I do not accept those submissions.

GRE opposed the making of any adverse publicity orders and submitted that it was unable or incapable of publishing any corrective notice, although it never explained why other than saying that it had no website. GRE also submitted that a notice in the Canberra Times would be “pointless and redundant” in circumstances where the Commissioner was seeking declaratory relief.

I reject that submission. In this case I think a notification in the Canberra Times and letters to original purchasers are more likely to have the required deterrent effect than the financial penalties, and thus are not redundant nor pointless.

GZ also submitted that notifying each original purchaser was not an appropriate order to be made because over 60 Units have already been sold for a profit by the original purchasers (with two exceptions). It was said that the original purchasers are unlikely to be interested in what is now a matter of history and a notification would likely only cause confusion.

I do not accept the submission. In my view, the original purchasers are entitled to be told the true position, since GZ did not do so. Whether that is of interest to the purchasers is a matter for them, but I would not take that decision away from them. I also do not see what confusion the notification would cause.

GZ submitted that notifying original purchasers who still hold their Units would serve no useful purpose and may produce significant confusion. GZ submitted that it will not have escaped any purchaser’s attention that a light rail has not yet been built to Woden and the recipients will now have formed their own independent view about the prospects of light rail going to Woden based upon more contemporary information. Likewise, the owners of the Units will know exactly what yields they achieved if they rented their Unit.

With respect, I disagree. The useful purpose served is to inform consumers who were misled of the true position. That is unlikely to create confusion. Whatever those purchasers may think about light rail now, the fact is that they were told it was a certainty at a past point in time when it was not. Likewise with the rental yield. It is not to the point that they know their present rental yield. Consumers were misled. They are entitled to be told of the true position.

I think it appropriate to mention the brand names “Geocon” and “Zapari” in the notifications so that the public is properly informed and to aid enforcement of the primary orders and to prevent repetition of contravening conduct.

The owners of the business name “Zapari”, and the trademark “Geocon” were the two central players in the case. They ultimately owned in one way or another all five defendants, they will continue to undertake similar developments in the Australian Capital Territory utilising special purpose companies that, if they contravene the ACL, may not pay any penalties and because those brand names were provided to GZ and GRE as part of the marketing campaign.

The facts in Ackers were very different, but the following passage captures my general thinking about the relationship between ultimate owners, brand names, responsibility and deterrence: [152] … Austcorp conducted itself in trade and commerce as a promoter of the resort. It did so in clear language using its exact name. It also associated itself by the use of the logo on the promotional material. The logo was not used in a legal document by lawyers. It was used in trade or commerce by Austcorp to convey its association with the project, whatever may have been the legal formalities and structures in which subsidiaries of Austcorp may have participated. The message which Austcorp wished to pass to the public was, that it, as the ultimate owner of the brand, was responsible for the development. It cannot accept the credit and refuse to take responsibility under the Trade Practices Act for its conduct … As Keane JA observed the presence of a logo and name in a brochure or similar material can mean that a reader will be entitled to conclude that the contents of the brochure state the reasons for the involvement of the person whose logo and name were used.

I shall order that a full-page corrective notice in the form annexed to this judgment and marked “A” be published in the Canberra Times for seven consecutive days on either pages 3, 5, 7 or 9.

I shall also order that a communication be sent to the last known email or postal address of each purchaser or purchasers of every Unit in the GCT development. Compliance Programs

The Commissioner also sought orders pursuant to s 246(2)(b) of the ACL that GZ and GRE undertake a compliance and education program.

I do not see any utility in making such orders.

Neither GRE nor GZ have any employees, although they do have directors.

The present director of GRE was not the director at the time of the contraventions, and it is apparent that he is all but a director in name only, only exercising the most limited functions. The real authority directing GRE is Mr Nick Georgalis, and he is no longer a director of GRE.

GZ has no employees, although Mr Nick Georgalis and Mr Skepev remain as its directors. However, GZ was a special purpose vehicle whose purpose has now ended. It seems to me more probable than not that if GZ remains in existence, which I doubt, it will not undertake any commercial activity.

I decline to make any orders about compliance programs.

Similar views were expressed by the NSW Court of Appeal in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. In that case the Court said: [6] Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). [7] As the appellants submit, the commencing position is that costs follow the event so that a successful party is entitled to costs. In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 (at [24]). A similar approach is adopted in the Court of Appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 (at [27]). [8] Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 (at [18]) per Hislop J (with whom Beazley JA and Tobias JJA agreed). [9] … A separable issue for these purposes can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James and Ors v Surf Road Nominees Pty Ltd and Ors [No 2] [2005] NSWCA 296 (at [34]). …

In my view the second tier agency point was clearly separable from the balance of the matters in issue. Or, put another way, the balance of the issues remaining were clearly dominant and separable from the second tier agency point. The issues other than the second tier agency point took up the great majority of the evidence and argument at the hearing.

It is also not to be overlooked that BSD, Geocon Bowes and Zapari were, in different ways, beneficiaries of the contraventions engaged in by GZ and GRE, and the directors (and ultimate owners of) BSD, Geocon Bowes and Zapari were not only involved in the contraventions, but also were two of the three principal reasonable grounds witnesses.

It would be unjust, in my view, for the parties who benefitted from the profits of the development and whatever benefits flowed from the Representations, namely the two shareholders of GZ and the owner of the land (Zapari), to have their costs paid in litigating issues on which they lost, and which took up the vast bulk of the proceedings.

Take for example the costs incurred by BSD, Geocon Bowes and Zapari in relation to the reasonable grounds issue. Those parties incurred costs preparing evidence and arguments on that issue, an issue on which they (and GZ and GRE) failed. That failure led to the judgment against GZ and GRE but was not the cause of the success of BSD, Geocon Bowes and Zapari in the end result.

It is true of course, that BSD, Geocon Bowes and Zapari were entitled to contest all issues which were part of the chain of issues necessary for the Commissioner to establish for them to be held liable. But that is not to say that they could contest all issues at no risk as to costs. It was open to them, for example, to leave the evidence and arguments, for example, on the reasonable grounds issue to GZ and GRE. After all, BSD and Geocon Bowes were the sole shareholders of GZ, Messrs Skepev and Nick Georgalis were the directors of GZ, Mr Nick Georgalis was a director of GRE, and Mr Micalos was a former employee of Geocon Group who could just as well have been called by GZ or GRE.

That is also not to ignore that on some issues there was a board deadlock in relation to GZ, and there was some difference between the Skepev interests and the Georgalis interests as to whether, for example, GRE or Geocon Group made the Representations.

BSD and Zapari adopted the Commissioner’s primary case that GRE made the Representations and did so as agent of GZ. Geocon Bowes’s position was that it did not know whether GRE or Geocon Group made the Representations, but if GRE was found to have done so then it did not do so as agent for GZ.

But in the scheme of things, those were minor matters relative to other issues in the case, at least in terms of evidence and argument.

Had BSD, Geocon Bowes and Zapari limited themselves to the second tier agency point, and the minor issues mentioned above, it is true that they would still have been in court for the duration of the case. But in those circumstances, they would then have been able to say they were only there because of those limited issues and their costs position would have had greater weight.

But they did not limit themselves to those issues. That is not to be critical of them engaging in all other issues, far from it. It is simply to say that by engaging and failing on all other (dominant and separable) issues, they should bear the costs of doing so.

The parties provided a number of schedules which went into some detail as to the respective parties’ involvement in various issues in the hearing. Those documents were useful in a general sense, but I do not think it useful or necessary to make findings at the granular level contained within them. In my view I need only take a broadly evaluative approach to the ultimate allocation of costs.

The evidence on the second tier agency point was limited to the terms of the various agreements mentioned in Bowes St (No 3) at [1356]-[1381]. Disposal of that issue took 25 paragraphs compared to a total judgment length of 1,389 paragraphs. Submissions on that issue were of a similar magnitude compared to submissions on all other issues.

In my view it is appropriate to order that BSD, Geocon Bowes and Zapari pay 90 percent of the Commissioner’s costs of the proceedings. That percentage reflects the percentage of the case devoted to the issues upon which those three defendants failed.

The Commissioner is to pay ten percent of the costs of BSD, Geocon Bowes and Zapari, representing the costs incurred by them on the one substantive issue upon which those defendants succeeded, namely the second tier agency point.

For the avoidance of doubt, those costs orders do not disturb the costs order I made against the Commissioner in relation to the application to file a Fifth Further Amended Statement of Claim (see [1384] of Bowes St (No 3)).

My decision to apportion costs as I have renders it unnecessary that I determine the other costs submissions.

In particular, the result of the costs orders are that none of BSD, Geocon Bowes and Zapari achieved a result that was, in substance, better than the offers they had made. In those circumstances, no special order for costs could flow from their various offers.