Inaccurate Render Used in Off-the-Plan Sale Found to Be Misleading or Deceptive Conduct
April 14, 2022
The recent Federal Court decision Ripani v Century Legend Pty Ltd  FCA 242 highlights the requirement for disclaimers to be clear and particular if they are to cure the misleading effect of a party’s conduct.
Mr and Mrs Ripani (‘the Ripanis’) purchased an apartment off-the-plan from Century Legend Pty Ltd (‘the Developer’). The Ripanis relied upon the Developer’s marketing materials when entering into the contract to purchase the apartment. Relevantly, these materials included a brochure and display suite containing computer generated images which sought to depict how the apartment would look when constructed. One such ‘render’ conveyed the misleading representation that the apartment would have a large ‘free span opening and seamless transition between the internal living areas and the terrace’. It featured prominently in the marketing materials even though their architect had warned the Developer that it was impossible to construct the apartment in a way that would reasonably resemble the render.
The Ripanis alleged that the representations conveyed by the render were misleading or deceptive within the meaning of section 18 of the Australian Consumer Law (Cth) (‘ACL’). In response, the Developer argued (in summary) that:
- The render was mere puffery that did not convey any meaningful representation nor did it specify particular details or dimensions about the apartment.
- The render contained the inscription ‘artist impression’ meaning it could not be relied upon. On this basis, it sought to avoid responsibility for misrepresenting a salient design feature of the apartment.
- The sale brochure contained a disclaimer that had the effect of curing the misleading representations conveyed by the render.
- The exclusion clause in the contract of sale meant that the Ripanis could not rely upon the precontractual representations.
In relation to each of the above, Anastassiou J found that:
- The render was a selling document and in effect, a ‘proxy’ for an inspection of the apartment. It sought to depict the apartment and although it did not include dimensions, it was sufficiently clear and precise to convey the representation of the ‘scale of the free span opening’. Indeed, it led the Ripanis to notifying the agent that they were attracted to the apartment’s open features. This demonstrates they relied upon the misleading representation, as the Court held the Developer knew it could not be constructed in a way reasonably resembling the render. Accordingly, his Honour considered the Developer’s conduct to be deliberately misleading.
- The words ‘artist impression’ were not akin to a disclaimer or exclusion clause nor capable of qualifying the representations conveyed by the render. That is, the inscription did not detract from the materiality of the image and the representation it conveyed. It follows that it could not be relied upon to qualify the misleading representation.
- Disclaimers must be particularised and clear to have the effect of ‘neutralising’ or ‘dispelling’ otherwise misleading conduct. In this case, the disclaimer was ineffective as it was drafted in general and ambiguous language that did not correct the misleading impression created by the render. Further, the Developer did not draw the Ripanis’ attention to it — a necessary requirement given the stark disparity between the representation and the true state of affairs.
- It is settled law that disclaimers and exclusion clauses cannot exclude the ACL. However, they remain relevant to determining whether the conduct caused the victim to enter into the contract. This is because exclusion clauses are a subsequent disclaimer of reliance. In the circumstances, his Honour found that it needed to be expressed in terms that notified the Ripanis the render was not a depiction of what the apartment would look like; or at least be drafted in language that was ‘objectively capable of correcting the impression’. The exclusion clause in the contract did not do this. Rather, it was a boilerplate clause that was inapplicable to an off-the-plan sale, including the fact it stated that the Ripanis acknowledged that they entered into the contract ‘as a result of their own inspection’.
Accordingly, Anastassiou J concluded that the Developer’s conduct constituted misleading or deceptive conduct under section 18 of the ACL. His Honour ordered that the contract be rescinded, the bank guarantee be returned to the Ripanis and that the Developer pay damages, pre-judgment interest and costs of the proceeding. The Developer has filed a notice of appeal. As at the date of this publication, no date has been set for the hearing. This decision confirms that disclaimers and exclusion clauses cannot exclude the operation of the ACL but remain relevant in determining whether the relevant conduct or misrepresentation was in fact misleading and caused the victim to enter into the contract.
The full decision can be found here.