Developers face $10m fines for alleged false marketing

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An impression of Grand Central Towers, Woden.

FOUR developers will face charges of false and misleading conduct after the Fair Trading commissioner today (August 23) instituted proceedings in the ACT Supreme Court.

Commissioner David Snowden said the allegations relate to advertisements and marketing for the Geocon Grand Central Towers development in the Woden Town Centre.

He said the action was taken to protect the rights of consumers from false and misleading marketing practices. If proven, penalties of up to $10 million could apply.

“We allege that the claims in the marketing material for this development were false and misleading for consumers,” he said.

The proceedings relate to alleged contraventions of the Australian Consumer Law by Geocon Bowes Street JV Pty Ltd, Zapari Property Bowes Street Pty Ltd, Bowes Street Developments Pty Ltd and GZ Developments Pty Ltd.

The commissioner alleges that from March 2018 the parties made false and misleading representations when advertising the development including:

  • that Stage 2 of the Canberra Metro Light Rail would stop at, adjacent to or proximate to the Grand Central Towers development.
  • that the travel time from Woden Town Centre to Civic on the Canberra Metro Light Rail would be under 10 minutes and that services would run every
    5 minutes.
  • that purchasers would be able to rent out a unit in the development at market and obtain a seven per cent gross rental yield from a lessee.

He said the alleged representations were made on billboards at the development site, in a promotional brochure and video.

At the time, Stage 2 of the Canberra Metro Light Rail had not been approved by ACT government or Commonwealth entities and the route and location of stops had not been finalised.

The estimated travel time between Woden Town Centre and Canberra City on the Canberra Metro Light Rail was 25 to 30 minutes and the frequency of services had not been determined.

It is alleged that a seven per cent gross rental yield was not achievable for all units in the development, a “rental guarantee” was not offered to all purchasers and where it was offered, the guarantee was subject to terms and conditions that were not disclosed on the billboards or the brochure.

It is also alleged that a “no reliance term” contained in the standard form contract for sale was unfair and should be voided under the Australian Consumer Law. The “no reliance term” requires the parties to agree that they entered into the sale contract without reliance upon any representation, statement or warranty (including sales and marketing material and preliminary art work), other than as set out in the sale contract.

“We know that the purchase of a residential property is one of the largest investments a consumer can make and truth in advertising is critical to inform consumers so they are able to make informed and accurate decisions when purchasing goods and services,” Mr Jones said.

“False and misleading representations undermine the level playing field and disadvantage others in the industry who may be doing the right thing when it comes to their marketing and promotions.”

The commissioner is seeking declarations, pecuniary penalties, injunctions, an adverse publicity order, an order for a compliance program and costs.

“This action sends a clear signal that we are actively scanning the market to ensure that representations made to consumers are accurate and not misleading,” he said.

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