Deceptive Toorak auction aftermath - and the silver Mercedes that almost got away

It was like any other Toorak property auction.

Indeed five of the attendees drove off in silver Mercedes.

But as Justice Tim Ginnane noted, the occurrence had considerably greater significance than of merely displaying the buying patterns of particular prestige property consumers.

Bidding had stopped at $2.1 million at the RT Edgar onsite auction, with a $2.6 million vendors' reserve.

The top unsuccessful bid had been placed by an undisclosed associated party of the Toorak plastic surgeon and neighbour Dr Chris Moss and his wife, Andrea John.

The couple also had another undisclosed associated party, who sought to make post-auction offers.

The underbidder who resided opposite on Toorak Road, Tom Kartel, had also hovered after the auction, having had his pre-auction $2 million offer declined.

There was much toing and froing by the agent, Greg Herman, with discussions with interested parties and the vendors.

After the auction, Herman went and spoke to Kartel, who was standing next to his silver Mercedes. Kartel indicated he wasn’t prepared to go higher and at $2.35 million not at all.

A bid was made on behalf of the doctor at $2.4 million.

The agent then advised he had already received an offer of $2.6 million. Pressed, he said it was from the underbidder who'd been seen driving a silver Mercedes.

Herman gave evidence that John asked him many times what the bidder’s name was. She placed him under considerable pressure. He said that he was reluctant to give the bidder’s name, because of privacy considerations. Herman gave evidence that he eventually plucked the name “Tom” at random, because John was screaming. He could have selected “Dick” or “Harry”. He said that Tom was driving a silver Mercedes, because that was a common car in Toorak.

Moss was advised that “Tom” the underbidder wearing a pink shirt, had been through the property many times and was thought to be a property developer. Herman told Moss that he had received the offer from “Tom” after the auction by a telephone call received on his mobile telephone.

Herman stated that if Moss did not buy the property, “Tom” would.

John showed Herman a photograph of Kartel on her iPhone and said, “Is this Tom in the pink shirt?”

Herman said, on his evidence to placate her, either “yes, it could be” or “yes”.

She asked him, “Is this his car”? and again he said, “yes” or “it could be”.

Herman said that he was colour-blind and did not recognise pink.

The doctor then offered $2.7 million, which was accepted.

Moss then attempted to write into the special conditions that “you’ve had an offer from the guy in the silver Mercedes” in the contract, but Herman stopped him, stating “Don’t do that. The lawyers won’t like it that, we can’t alter contracts.”

Moss told the court he said to Herman: “Greg, do you give me your absolute word that you received an offer of $2.6 million.” Herman said that he did.

As Ginnane noted,  "the outcome of the auction may well have ended there had not events intervened."

By chance, the doctor’s wife saw the underbidder driving past the property in a silver Mercedes a short time after the contracts had been signed.

She flagged him down then knocked on the window.

She asked him how much his final offer was, and he told her that it was $2.2 million.

She stated that “we’ve been told that you’re a Greek developer and you offered the property of $2.6 million”.

Kartel denied that that was the case.

And then it was on with proceedings started in March 2010.

It ended up in a 14-day trial in the Victorian County Court with Ginnane ruling the property was only worth $2.5 million and he awarded Moss the $200,000 difference. The couple had claimed damages of $475,000.

The purchasers won their claim that they were misled and deceived into bidding $2.7 million by a representation that a person identified as “Tom” had made a post-auction offer of $2.6 million, when in fact that was not the case.

The vendors submitted that they had not themselves engaged in misleading or deceptive conduct, which Ginnane accepted.