BresicWhitney underquoting loophole let-off to trigger legislative amendment review
The magistrate of Blacktown Local Court has handed down judgement dismissing all charges against BresicWhitney Estate Agents Pty Ltd for falsely understating the estimated selling prices when marketing properties in 2014.
After a considerably delayed trial, the dismissal came on a technicality concerning the term ‘employee’ in the Property Stock and Business Agents Act 2002 (the Act).
In this case the ‘operating’ arm of the business was the licence holder and undertook the business of a real estate agent.
A subsidiary company ‘employed’ the employees.
As a result the court found the ‘employees’ who made the statements about price, which were less than the estimated selling price in the agency agreement, were not technically employed by the licensed agent.
"This is not the policy intent of the provisions and in his findings the Magistrate acknowledged the likelihood that the business was structured in a way that would insulate it to some degree against liability in the event of such matters," a department spokesperson advised.
While the prosecution was taken under the old laws, the Government is now seeking urgent legal advice.
"Consumers can be assured any legal loopholes will be closed," the spokesperson advised.
No legislative timetable has been yet offered on the prospect of a BresicWhitney amendment.
Fair Trading is also still considering its position in relation to any appeal.
The consumer watchdog advised the more serious price discrepancy alleged was at Double Bay, where the publicly published price guidance reputedly did not match the private agency agreement documentation in the office paperwork.
The Murilla apartment at 62/543-545 New South Head Road had a reported price guide of over $1.5 million last November, but Fair Trading investigations revealed the selling price estimate in the agency agreement at the low end of $1.6 million.
The late 1950s, A.M. Bolot-designed, company title apartment (below) was reported in the Wentworth Courier as sold for $1.79 million (and at $1.76 million by the Sunday Telegraph) through agent Walter Burfitt-Williams. The three bedroom sub-penthouse had 176 square metres space in the eight storey block above Redleaf Pool at the corner of New South Head and Victoria roads. The previous time it was marketed for sale was in 1989.
When contacted by The Sunday Telegraph cost of living editor, John Rolfe, before its front page splash, Walter Burfitt-Williams said: “The owner gave us instructions.”
At Surry Hills an 1890s terrace house at 14 Collins Street was advertised last November with a price guide of over $1.05 million, but the estimate in the agency agreement was $1.1 to $1.2 million. The guidance was lifted from $1,025,000 during the marketing campaign.
The two bedroom terrace (below) actually sold for $1.07 million through Nic Krasnostein, so it appears, with benefit of hindsight, he may have been overly ambitious in his pitch to the vendor. It sold to an investor who sought to rent it out at $850 a week. It had previously sold at $610,000 in 2005.
The prosecutions were only the third in a decade.
“We believe we’ve found evidence to prove the agent has under quoted,” Commissioner Rod Stowe told The Sunday Telegraph who published a Warren cartoon too.
Source: Sunday Telegraph
Property Observer had previously reported possible underquoting activity from an undisclosed agency was under investigation.
Operation Balaya, an investigation specifically developed to look at real estate compliance, was launched on agencies operating in the inner-city.
Officers were also checking licences, certificates, current continuing professional development, professional indemnity insurance and current and past financial year qualified audits.
“During its inspections, NSW Fair Trading identified certain information that requires further investigation to establish Whether or not representations made by a real estate agency in relation to a number of recent sales were misleading,” the then Minister for Fair Trading Matthew Mason-Cox said.
“Agents who engaged in this illegal practice could face a maximum penalty of $22,000 or depending on the severity of the breaches an agency could have its licence cancelled.”
The NSW Premier Mike Baird elevated the issue into an election policy.
The department has until June 3 to make a decision on any appeal.
“While the prosecution was taken under the old laws, the government is seeking urgent legal advice and consumers can be assured any legal loopholes will be closed,” it said.
