This article is from the Australian Property Journal archive
THE Queensland Office of Fair Trading (OFT) has successfully prosecuted a Gold Coast real estate company which has been ordered to pay $1.5 million in compensation after it was found to have scammed 18 customers in a dodgy property scheme.
Attorney-General and Minister for Justice Shannon Fentiman said this matter and its outcome are a reminder to all businesses that operate in the property sector of their obligations and duty to act honestly with consumers.
“Consumers have every right to expect that representations made to them are not false, misleading or deceptive,” the minister said. “If real estate agents breach consumer protection laws the OFT will not hesitate to investigate them and take appropriate enforcement action if required.”
The company, which traded as a real estate agent, financial advisor, auctioneer, and mortgage broker was ordered to pay the compensation following an investigation and charges being laid by the OFT for breaches of the Australian Consumer Law (ACL).
In the Southport Magistrates Court this month, Key to Australia Pty Ltd, and sole director Graham Scarrott pleaded guilty to 18 breaches of the ACL for making false and misleading representations about land.
Scarrott and Key to Australia were conjointly charged and ordered to pay $1,573,601.98 in compensation to the 18 affected consumers and were fined $250,000. A conviction was not recorded.
The court heard that between 9 May 2018 and the 12 June 2020, Scarrott and Key to Australia marketed residential housing lots located in Pimpama Village as investment opportunities for people in New Zealand and Victoria.
These consumers were told that the lots had Gold Coast City Council (GCCC) approval to be subdivided into three, on which three separate townhouses could be built. They were also told that they would make between 150% and 300% profit on their initial investment, and they would be able to sell their newly zoned lots as three separate lots long before they would have to settle the full amount of their initial purchase.
Furthermore they were guaranteed that, should the investment scheme not proceed as promised, they would receive their deposit back in full.
According to the OFT, despite telling the consumers he had, or would shortly be receiving, council approval, at no time prior to or after he commenced marketing the lots did Scarrott or his company have approval for them to be subdivided. When he finally sought approval to subdivide the lots, the request was rejected, on several occasions, by the GCCC.
Although the affected consumers who had invested in this scheme had been guaranteed a refund of their deposit if it fell through, Scarrott and Key to Australia were unable to fulfill this promise.
Scarrott and Key to Australia had used a total of $1,712,244 of the consumers’ deposits for their own personal use and for business expenses respectively, expenses that were not related to Pimpama Village.
