On 18 March 2022, Justice Anastassiou of the Federal Court of Australia handed down the decision in Ripani v Century Legend Pty Ltd [2022] FCA 242 in which purchasers of a luxury ‘off-the plan’ apartment were granted relief on the basis that representations conveyed by a ‘hero render’ were misleading or deceptive within the meaning of s18 of the Australian Consumer Law (ACL).
It was ultimately ordered that the contract of sale for the purchase of the apartment be rescinded and the respondent pay damages and pre-judgment interest to the applicants.
The parties and background to the proceeding
The respondent, Century Legend Pty Ltd (Century Legend) was the developer of a multi-storey apartment building to be constructed in Melbourne and known as “Victoriana“. The applicants, Mr and Mrs Ripani (Ripanis), chose to purchase one of the premium apartments located on level 14 of the development (Apartment 14.01). The purchase price of the apartment was $9.58 million.
In order to market the Victoriana and assist with making ‘off-the plan’ sales, Century Legend prepared promotional materials, including a hard-bound brochure which contained images known as ‘renders’, of what the development, and aspects of it, would look like once constructed. Importantly, being off the plan, the only materials available to inspect were floor plans, a scale model and these renders.
The question at the centre of the dispute was what, if any reliance, the Ripanis could reasonably place on one of the renders, which became known as the ‘hero render’. The ‘hero render’ featured prominently in the marketing materials for the Victoriana and was intended to be used for the purpose of encouraging interest from potential purchases of apartments in the complex.
The ‘hero render’ depicted a large free span opening between the inside living areas and the terrace of Apartment 14.01. It was not until a considerable time after the Ripanis had agreed to purchase Apartment 14.01 that it came to light that it was impossible under the Australian Building Code to construct the wide opening depicted in the render and this was something that had been known to the respondent.
The representations
The Ripanis contended that the ‘hero render’ showed a space “where the indoor and outdoor areas flow seamlessly into each other when the doors are drawn back” and that the image conveyed the representation that Apartment 14.01 when constructed would accord with the render, including the flow-through design depicted.
The Ripanis led evidence that they had told Century Legend’s agent that they were interested in moving to an apartment with an outdoor pool and area for entertaining in which internal and external areas could be seamlessly converted into one space. The agent directed the Ripanis to Apartment 14.01 and said that the render depicted the specific apartment and that it would be constructed as depicted in the render. While the agent referred to the render as an “artist’s impression”, he did not otherwise qualify the impression conveyed by the render.
These statements provided important context relevant to whether the render conveyed the representations upon which the Ripanis could reasonably rely.
It was the connection between the circumstances under which the render came to the attention of the Ripanis and their decision to purchase the apartment specifically because of the particular feature depicted which led Justice Anastassiou to find that the representations contended for were conveyed. His Honour pointed out that if the connection was less direct and proximate, the answer to the question about what representations were reasonably conveyed may have been different.
Century Legend contended that the ‘hero-render’ should not be looked at in isolation and did not convey a misleading representation when regard is had to the fact that it was an ‘artists’ impression only and the relevant contractual and non-contractual disclaimers.
Justice Anastassiou rejected these assertions and found that:
- describing the render as an artists’ impression does not detract from the materiality of the image and representations it conveys, importantly because in the context of an ‘off-the plan’ sale, such renders are a proxy for inspection.
- annotation of the words ‘artists impression’ on the render were not akin to a disclaimer because the words only communicated that the finished apartment may not accord with the image in all its detailed particulars, but not that the key elements of the render would not be constructed.
- the effect of a:
- disclaimer contained inside the hard-bound marketing brochure given to the Ripanis did not absolve Century Legend of liability because the disclaimer was written in general, boilerplate language, appeared on page 96 of the brochure and was not specifically and clearly drawn to the attention of the Ripanis.
- exclusion clause in the contract of sale did not absolve Century Legend of liability because the context in which the Ripanis were given the render meant they were entitled to expect that what was depicted would in substance be constructed.
- to do the work necessary to correct the impression created by the render, the disclaimer or exclusion clause would need to be expressed in so specific and explicit terms such that the purchasers would be aware that the render is not a depiction of what the apartment would look like when constructed.
Justice Anastassiou found that had the Ripanis been told that the apartment would, or could, not be constructed to the design depicted in the render, they would not have contracted to purchase it.
Century Legend has filed a Notice of Appeal in relation to the judgment.
This article was written by Melissa Hanbidge, Partner and Rachel Lake, Senior Associate.
Melissa Hanbidge regularly reviews marketing material for clients and advises on any ACL risks, as well as preparing appropriate disclaimers.
