Property Law

This case concerns the sale of land in Toorak road. The purchasers, Dr Moss and his wife Ms John, wanted to purchase 502A and 502B Toorak Road used as a extension of them practice. The Mosses conducted their practice at 504 and 506 Toorak Road, which was next door to the auction property. They are worried it would diminish the amenity of their property if property developer bought the object property. In order to disguise their interest, Mosses arranged for two people to assist in purchasing the property. They were Mr J Breeze and Mr C Carbonaro.

Before the auction, Mr A Rohan who is a valuer told Dr Moss a quick valuation of property of $2. 6 to $2. 7 million on where property developers made bids, and $2. 1 to $2. 2 million when no property developer made a bid. The property consisted of two apartments. Ms Kendra Abay owned 502B and Mr M Abay Snr bought 502A but not register. Ms K Fleetwood was the administrator of 502 A. Ms K Abay decided to sell the property as a whole. She asked Mr Herman, her twin brother and also the director of R T Edgar Toorak Pty Ltd, as the agent for selling the property.

About 30 people attended auction including The Mosses, Mr Tom Kartel, Mr Breeze, Mr Carbonaro. The auctioneer was Mr J Fox. He announced that the property was to be offered as a whole and if not sold, the two properties would be offered separately. The property was passed in to Mr Breeze for $2. 11 million and Mr Kartel was the underbidder with $2. 1 million. During the discussions, agent and auctioneer told Mr Breeze the vendors’ reserve price was $2. 6 million. Mr Breeze offered final offer of $2. 4 million authorized by Dr Moss was rejected. During the discussion, Mr Herman had a conversation with Mr Kartel.

When Mr Kartel acknowledged the offer of $2. 35 million from top bidder he gave it up and left. Meanwhile, Mr Fleetwood told Mr Herman that $2. 6 million was too cheap and he will buy it at this price. He meant to buy his mother-in-law share out not to purchase the whole property. After top bidder and underbidder both left. Mr Carbonaro negotiated with the agent and passed the offer of $1. 25 million for 502A. After that, Dr Moss went to the property and talked to Mr Herman. Mr Herman made a representation that a property developer called “Tom” who is the underbidder drove the sliver Mercedes had offered $2. million. Dr Moss offered $2. 7 million based on this representation. After the contract was signed, the Mosses found Tom did not offer that price and considered Mr Herman misled them. Judge Ginnane made decision that plaintiff should get compensation of the loss of $200,000 from the second, third, fourth and sixth defendants. The Judge took the evidence that Mr Herman made the pleaded representation, which could mislead the Mosses before signed the contract. And R T Edgar Toorak is liable for Mr Herman’s conduct. Third and forth defendants have vicarious liability for the agents’ actions.

And since the fifth defendant acted as administrator when signed the agent’s authority, she has no separate liability additional to her grandfathers. Peachbulk suffer loss and damage by the agent’s misleading and deceptive conduct and deceit. Although the damage appealed by plaintiff was reduced to $200,000 under the consideration by the judge. In terms of recognizing if Mr Herman made the representations pleaded in two conversations, the judge made a point firstly that Mr Herman accepted in evidence that Dr Moss had only made a bid of $2. million after he told him that he had received a bid of $2. 6 million from “a guy in a sliver Mercedes”. It is very important to decide if the representation made influence the decision of purchasers. In my opinion, it is not important to recognize if the misleading representation presented in the first conversation. Mr Herman did not take Mr Fleetwood’s word so serious only after the land is not gonna sold to potential purchasers at a better price. And he also had economic motivation that let him go rather to sell the land to get commitment.

It does not matter if he mentioned “Tom” in the first conversation, which caused the inconsistence of evidence between the plaintiff and the defendant. Mr Herman just thought he can use this statement to get a better offer from someone who desperate in obtaining the property. It is supported by the fact that there are a lot of chances Mr Herman have to declare the misunderstood because he knew what he said was wrong and can induce the Mosses to offer a higher price based on that. However he did not. In this reason, I go with the decision of the judge that Mr Herman’s statements were misleading and deceptive.

In consideration of if the loss and damage caused by misleading and deception conduct and deceit, judge mentioned that it is sufficient if misleading plays a part in plaintiff’s loss or damage in misleading conduct cases. That is clear to find if there is no representation made by Mr Herman the purchaser would not offer a higher bid to compete with the “property developer”. For the damage amount plaintiff pleaded, judge mentioned there should be mitigation of damage as the plaintiff had a chance to prevent the loss and damage by rescinding the contract.

However, it would remove Peachbulk’s right to take disciplinary action against Mr Herman if doing so. I agree the decision about the mitigation of damage made by the judge. Conduct is misleading and deceptive if it induces people to act upon it and is beneficial to the conductor. This kind of conduct could influence the original decision of the object individuals which in most cases would cause the incorrect reaction be made. The word giver must be aware the words given are not true and would cause the damage or loss for the object individual.

In this case, it is not that complicated as the statement made by the second defendant is false and the goal is clear to get a better offer from the purchaser. The defendant has motivation to do that cause higher price would let him get higher commission. Especially, the plaintiff in this case made the final offer only based on the statement Mr Herman made. Vicarious liability is a secondary liability assigned to person who did not actually conduct themselves but who have particular legal relationship to the person who did act illegally.

It is rooted from the negligence. Legal relationship can impose negligence between the relationship such as the vendor and agent in this case. Although there is an exception that Ms Fleetwood who signed the agent contract had no vicarious liability because she just acted as administrator not the owner. There are 2 rules auctioneer should comply with in regards to the sale of land in Victoria by public auction. First is auctioneer should act in interest of vendors. And should solve any dispute between vendors and purchasers.

Auctioneer is employed by the vendor and should act in the interest of his principal. He can sell the land on behalf of the vendors but should not sell the land on the price under the reserve price set by the vendor. In other word is the auctioneer must conduct the sale in accordance with the instructions of his principal. Auctioneer should announce whether the sale is with reserve, without reserve or absolute, or minimum bid required at the beginning of the auction. And should conduct the auction process in order.

Reject price on his own discretion. The auctioneer have obligation to solve the dispute between the vendor and purchaser. If an auctioneer accepts a complaint that requires a matter to be rectified, the auctioneer must rectify the matter. This case puts a question on the table. How to protect the interest of purchaser under the circumstance of agent and auctioneer are all in the interest of vendors? Even there are Acts including provision that prohibits false representations, it still only is a remedy.

What we need is to prevent this kind of case happens. In this case, we can find that bidders identities and offers given personally cannot be known by other bidder except from the agent or auctioneer. It gives them chances to take advantage of it. I think it is necessary to disclose the basis information of the bidders to each other. Before the auction starts, bidders can register their identity to auctioneer and this information should be open for top bidder and other potential purchasers in the position of negotiation about price.

They have right to seek confirmation when the agent or auctioneer makes some statements as to other offer had made. On the one hand, it can improve the transparent of post auction environment to protect the interest of purchasers. On the other hand, it can also prevent agents from using other bidder’s identity to make false representation to mislead purchasers. Although, it may have some side effects, such as decreasing the confidential of personal detail to strangers.

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