It’s not my business! Liability of domestic property vendors under the Australian Consumer Law: When is it “in trade or commerce”?
It is a threshold requirement in order to bring a claim under the Australian Consumer Law against a vendor of real estate for misleading or deceptive conduct, or for misrepresentation, that the conduct or misrepresentation must have occurred “in trade or commerce”. A recent decision of the Court of Appeal of the Supreme Court of New South Wales in Williams v Pisano  NSWCA 177 (“the Williams case”) has provided a very illuminating and helpful analysis of the expression “in trade or commerce”, in the context of the sale of a residential dwelling by an ordinary householder using the services of an estate agent. In this case, the Court of Appeal held that a number of major actions and activities taken by the vendors to enhance the property, and consequently to increase its sale price, did not amount to the sale being conduct “in trade or commerce”.
The Australian Consumer Law (being Schedule 2 of the Competition and Consumer Act 2010) (Commonwealth) (“the Law”) commenced operation as from 1 January 2011, and contains the following provisions (insofar as are relevant to the present discussion) –
(i) Section 18: prohibits a person, in trade or commerce, from engaging in misleading and deceptive conduct;
(ii) Section 30 (1): prohibits a person, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion of the sale or grant of an interest in land, from making a false or misleading representation regarding sponsorship, approval of affiliation, or concerning the nature of the interest in the land, or concerning the price payable for the land, or concerning the location of the land, or concerning the characteristics of the land, or concerning the use to which the land is capable of being put or may lawfully be put, or concerning the existence or availability of facilities associated with the land..
The first thing to note is that these provisions of the Law apply to “a person”, which includes a corporation as well as a natural person.
It is commonly accepted that the statutory claims can be made where the vendor is a corporation or a natural person and the sale is made in trade or commerce, that is, it is of a commercial or business character, for example the sale of a house, or an apartment or land by a developer or a sale by a “spec” builder, or the sale of commercial or business premises.
In contrast, it has long been held that the sale of a house by a private owner is not conduct in trade or commerce, as regards the vendor: Argy v Blunts and Lane Cove Real Estate Pty Ltd and Others (1990) 26 FCR 112.
In its simplest form, this refers to a “garden variety” sale of residential property by a vendor who has been residing in the property. However, in certain circumstances the issue could become blurred, as will emerge from the facts of the Williams case, which I will come to shortly.
As regards a selling agent, in contrast to a domestic vendor, even in relation to a conventional domestic sale, there is ample authority that an estate agent is always acting in trade or commerce in handling the sale, even where the vendor is not acting in trade or commerce:
Eighth SRJ Pty Ltd v Merity (Unreported, NSWSC, Young J, 25.03.97); BC9701110;
 ANZ ConvR 522
Walker v Masillamani  VSC 172 Cavanough J
However this article will not focus on claims against an estate agent. Obviously, wherever the facts and circumstances permit, the selling agent should be joined in the proceeding. However, in some situations that may not be possible, so that the liability of the private vendor is crucial.
The advantages of being able to make a claim against the vendor under the Law (rather than at common law) are that there is no need to prove that the vendor had the intention to mislead or deceive, or that there was a failure to take reasonable care. These are not elements of the cause of action. Additionally, silence as to a matter may constitute misleading and deceptive conduct.
The Williams case
This case was decided on 29 June 2015 by Bathurst CJ, McColl JA, and Emmett JA. The leading Judgment was that of Emmett JA, with whom the remaining members of the Court concurred (on the issues relevant to this article). All extracts from the Judgment set out in this article are from the Judgment of Emmett JA.
The case was an appeal from the decision of Hammerschlag J by one of the two vendors of a residence.
In the proceeding below, the selling agent had also been sued, but by the time the matter came on for trial the agent was insolvent and without insurance. At the commencement of the trial, the claim against the agent was dismissed with no order as to costs. The case proceeded against the two Vendors, who were a husband and wife.
Both Vendors were held liable at trial, but only the husband, Mr Williams, appealed.
On the appeal, at paragraph  the Court summarised the issue:
 The principal question in this appeal is whether misleading representations (the Representations) made in connection with the sale of residential premises situated in Blake Street, Dover Heights, New South Wales (the Property) constituted conduct in trade or commerce within the meaning of that phrase when used in the Australian Consumer Law (the Law), which is Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Consumer Act). The respondents, Mr Bruno Pisano and Ms Sia Pisano (together, the Purchasers) relied on the Representations in deciding to buy the Property from the appellant, Mr Patrick Williams, and his wife, Ms Georgia Dandris (together, the Vendors).
The sequence of background facts set out in the Judgment were as follows:
 The Vendors purchased the Property in December 2003. The Property was described as being, at that time, a “modest three-bedroom residence”. At some time thereafter, but before 2005, the Vendors moved into occupation of the Property as their home and lived there until 2010, when they moved out so that renovation work could take place, before returning to the Property in late 2011. On several occasions from 2008 to 2010, they retained real estate agents to endeavour to sell the Property but it was not sold.
 On 25 February 2010, Ms Dandris obtained an owner-builder permit in respect of the Property, pursuant to the Home Building Act 1999 (NSW) (the Building Act). On 13 May 2010, a builder provided a quotation to the Vendors to carry out building work on a “do and charge” basis. That quotation was accepted. In addition, Ms Dandris retained an architect to prepare a development application to Waverley Municipal Council (the Council), including the necessary plans, in connection with the proposed building work. She also retained a consulting structural and hydraulic engineer to prepare structural and stormwater designs. However, she subsequently dispensed with the services of the engineer.
 During 2010 and 2011, renovations of the Property were carried out by the builder, substantially under the supervision of Ms Dandris but without the benefit of detailed architectural plans or architectural supervision. The Property was converted into a double-storey five-bedroom house with a rooftop terrace, which has views of Sydney Harbour, and a swimming pool.
 On 2 November 2011, the Council issued an interim occupation certificate and the Vendors moved back into the Property at some time shortly thereafter. On 14 November 2011, the Council issued a final occupation certificate in respect of the Property. On 15 November 2011, NSW Self-Insurance Corporation issued to Ms Dandris, as owner-builder, a certificate of home warranty insurance complying with s 95 of the Building Act.
 In November or December 2011, the Vendors retained a real estate agent, Angus Levitt Pty Ltd (the Agent), to market the Property on their behalf. The Vendors hired furniture for the Property of the type commonly put in place for the purpose of sale. The Agent advertised the Property for sale on a website known as “Domain” (the Web Advertisement). The Web Advertisement contained statements concerning the Property and the standard of the renovations that had been carried out.
 Mr Pisano accessed the Web Advertisement on 6 December 2011 and, on 19 December 2011, the Purchasers inspected the Property in the presence of a representative of the Agent. During the inspection, they were handed an advertising brochure relating to the Property (the Brochure), which also contained statements concerning the Property and the standard of the renovations that had been carried out. In addition, during the inspection, the Agent’s representative made oral statements to Mr Pisano about the nature of the renovations and the competence of the builder. At about the same time or shortly thereafter, Ms Dandris handed to Mr Pisano a business card describing her as “interior designer”.
Thereafter there were negotiations regarding the sale price, and ultimately the contract of sale was exchanged on 22 December 2011, and completion of the contract took place on 25 January 2012. The Purchasers thereupon moved into occupation of the Property with their infant daughter. Before long, it emerged that there were extensive serious defects in the house, including defects which allowed entry of considerable water into the premises.
The primary Judge heard the claims against the Vendors, which included, inter alia, a claim under the Law based on the proposition that the Vendors had engaged in conduct “in trade or commerce”. His Honour concluded that Ms Dandris was liable to the Purchasers for breach of warranties under the Building Act in the sum of $1,171,124, being the cost of rectification. Mr Williams had no liability under the Building Act as he was not registered as the owner-builder. Furthermore, he was not liable in negligence, as, in the circumstances of the case, he did not owe a duty of care to the Purchasers.
These two bases of “non-liability” of Mr Williams were not challenged by the Purchasers on the appeal.
The Court of Appeal summarised the outcome at trial, of the claim against the Vendors under the Law, as follows:
 In relation to the claim against the Vendors under the Law, the primary judge concluded that the Purchasers were induced to enter into the contract to purchase the Property by the Representations and that the Representations were made with the authority of both Mr Williams and Ms Dandris. The Representations consisted of the statements made in the Web Advertisement and the Brochure concerning the Property and the standard of the renovations that had been carried out and the statements made by the Agent’s representative about the nature of the renovations and the competence of the builder. His Honour found that the Representations were misleading and deceptive.
 The Purchasers’ claim under the Law was based on s 18, s 30(1)(e) and s 236 of the Law. Section 18 relevantly provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 30(1)(e) relevantly provides that a person must not, in trade or commerce, in connection with the sale or the possible sale of an interest in land, or in connection with the promotion by any means of the sale of an interest in land, make a false or misleading representation concerning the characteristics of the land. Section 236(1) relevantly provides that, if a person suffers loss or damage because of the conduct of another person and the conduct contravened Ch 2 (which includes s 18) or Ch 3 (which includes s 30), that first person may recover the amount of the loss or damage by action against that other person.
 The Purchasers contended that the Representations contravened s 18 because they were misleading and deceptive and that they contravened s 30(1)(e) because they were false or misleading representations concerning the characteristics of the Property. Mr Williams accepts that the Representations were misleading or deceptive, that they concerned characteristics of the Property and that they were made with the authority of both himself and Ms Dandris. In the light of those concessions, it is not necessary for this Court to express a view about those matters. (emphasis added)
 For present purposes, Mr Williams resisted the claim made under the Law on the basis that the Representations were not made in trade or commerce. (emphasis added)
(RG: There were other issues raised on the appeal which are not relevant to the present discussion)
 The primary judge was satisfied that the sale of the Property by the Vendors to the Purchasers was a transaction in trade or commerce. His Honour was also satisfied that the advertising of the sale, at least by way of the Web Advertisement, was conduct engaged in by the Vendors in trade or commerce.
 The primary judge concluded that the sale of the Property was in trade or commerce because, in all of the circumstances in which it occurred, it disclosed a commercial or business character. That, his Honour said, was a question of fact involving characterisation of the particular conduct in question. His Honour was satisfied that the Vendors renovated the Property because they viewed it as an investment property and not to create a house for their personal use. His Honour found that the Vendors never intended to live in the Property for any meaningful period of time after renovation, and certainly not permanently. His Honour found that their intention was to improve the Property for resale for financial gain and that the sale, including its advertising, was the carrying into effect of their investment strategy.
 The primary judge was also satisfied that the Vendors embarked on a project that was part of an interior design business that Ms Dandris wanted to develop and that the sale of the Property, by both of Ms Dandris and Mr Williams, was in furtherance of that endeavour. His Honour considered that that, on its own, was sufficient to conclude that the conduct in question was in trade or commerce.
 The primary judge also found that the representations made by the Vendors in the Web Advertisement were made by means of a commercial website to which the world at large, including those who could read it in their trade or business, had access. His Honour considered that that was conduct in trade or commerce irrespective of the fact that those who were attracted by the advertisement did not read it or rely on it in the course of any trade or business of their own.
 The primary judge concluded that the conduct about which the Purchasers complain, namely, the making of the Representations by the Vendors, was conduct in trade or commerce and contravened s 18. For reasons that have not been explained, his Honour was not asked to deal with the claim that the Representations contravened s 30(1)(e). However, that claim was not abandoned by the Purchasers before the primary judge and the matter has been raised by them in this Court by notice of contention.
 The primary judge found that the Representations played a significant part in inducing the Purchasers to buy the Property. His Honour found that the Purchasers bought the Property to live in and intended to continue living in it and that, but for the defects in Property…..they could have done so…..
The appeal was brought by Mr Williams alone. The Court of Appeal noted that it had emerged that Ms Dandris was unlikely to be able to satisfy the judgment against her.
There were three distinct questions raised by the appeal:
- whether the Representations constituted conduct “in trade or commerce” within the meaning of section 18 and section 30 of the Law;
- if the Representations constituted conduct in trade or commerce, whether the liability of Mr Williams should be reduced under Part VIA (which deals with apportionment of liability for misleading and deceptive conduct), having regard to his responsibility for the making of the Representations, as against the responsibility of Ms Dandris.
- If the Representations constituted conduct in trade or commerce, had the Purchasers adduced appropriate evidence as to the loss and damage to which they were entitled under section 236 of the Law as a consequence of the contravention of section 18 or section 30, as distinct from the cost of rectifying the breaches of warranty under the Building Act.
(RG: In future articles, I propose to deal with the decision in the Williams case in relation to questions (2) and (3).
The Court of Appeal then proceeded to set out a very careful analysis of what constitutes conduct “in trade or commerce”. I would not be able summarise that analysis without detracting from what the Court said, so I will set it out in full with my emphasis shown in those parts which I consider to be particularly significant:
 In order to attract s 18 or s 30, the conduct in question must either be conduct in trade or conduct in commerce. At one stage in the course of oral argument, counsel for the Purchasers suggested that any sale would be in trade or in commerce. Such a construction would render the phrase “in trade or commerce” when used on numerous occasions in Ch 3 of the Law quite otiose. For example, s 30 provides that a person must not, in trade or commerce, in connection with the sale of an interest in land make false or misleading representations concerning various matters. If any sale was conduct in trade or commerce, there would be no need for the phrase to be included in the preamble to s 30. The same observation can be made in relation to several provisions of Ch 3. The contention must be rejected.
 The terms “trade” and “commerce” are ordinary terms that describe the mutual communications, negotiations, verbal and written, bargains and performance that constitute commercial arrangements. The terms are not terms of art, but are expressions of fact and terms of common knowledge. While the particular instances that may fall within them will depend upon the varying phrases of development of trade, commerce and commercial communication, the terms are clearly of the widest import. They are not restricted to dealings or communications that can properly be described as being at arm’s length, in the sense that they are within open markets or between strangers or have a dominant objective of profit making.
 The phrase “in trade or commerce” operates to qualify the prohibitions in s 18 and s 30 against engaging in conduct of the specified kind. Those provisions were not intended to extend to all conduct, regardless of its nature, in which a person might engage in the course of, or for the purpose of, the overall trading or commercial business of that person. Section 18 and s 30 are concerned with the conduct of a person towards other persons, be they consumers or not, with whom the first person has or may have dealings in the course of trading or commercial activities of the first person that, of their nature, bear a trading or commercial character. Such conduct would include promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public. However, the reference to “conduct in trade or commerce” must be construed as referring only to conduct that is itself an aspect or element of activities or transactions that, of their nature, bear a trading or commercial character. The words refer to the central conception of trade or commerce, and not to the immense field of activities in which persons may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.
 In ordinary circumstances, a person who sells his home, whether by private treaty or by auction and whether he conducts the negotiations personally or through a real estate agent, would not be said to be undertaking those activities in the course of a trade or business or in a business context. Whether or not an estate agent is used and whether or not that agent advertises the house, by preparing brochures or other advertisements, and whether or not the agent sells by auction or merely negotiates a private treaty, the sale will normally remain a sale by the vendor of his house and not an act done in a business context. It is relevant to consider the character of the parties involved, which includes whether they are people who have engaged in or are about to engage in commercial activities, whether the transaction is motivated by business, as distinct from personal, reasons and whether the person whose conduct is under attack played an active part in the transaction. The mere use of an estate agent does not bring about the result that the sale of a capital asset by a householder is a transaction occurring in trade or commerce.
 The fact that the Vendors retained the Agent in connection with the sale does not, of itself, make the conduct of the Agent, for which the Vendors were vicariously liable, conduct in trade or commerce, even though the conduct of the Agent may have been conduct in the trade or commerce of the Agent. Section 84(4) of the Consumer Act provides that conduct engaged in on behalf of a person by an agent of the person within the scope of the actual or apparent authority of the agent is deemed to have been engaged in also by the first person, the principal. Thus, in the present circumstances, the conduct of the Agent, in making the Representations, was conduct engaged in by the Agent as the agent of the Vendors and within the scope of the authority of the Agent. Hence, that conduct is deemed to have been engaged in by the Vendors. However, the application of s 84(4) does not impute to the principal the business of the agent. The fact that the actions by an agent are deemed to have been actions by the agent’s principals, albeit that the actions of the agent constituted conduct in that agent’s trade or commerce, does not bring about the result that the deemed actions of the principals constituted conduct in trade or commerce, if all that the principals were doing was selling their home.
 In other words, the element of acting in trade or commerce will not be attributed to owners selling their home merely by reason of their engagement of an estate agent to find a buyer. Clearly enough, principals may be vicariously liable for torts committed by their agent. However, it is not permissible to attribute to the principals an element connected with the agent’s conduct so as to complete a cause of action against the principals, based on his own conduct. The business character of the acts done by an agent cannot be imputed to the acts of the principals.
 It is the character of the act that is the subject of complaint, so far as the person doing the act is concerned, that is critical. Thus, for example, where a municipal council issues a certificate concerning the characteristics of land within the area of the council (as part of its statutory functions), that will not be conduct in trade or commerce by the council, even if the certificate is issued to a prospective purchaser who is engaged in trade or commerce and who has requested the certificate in order to further that activity.
 An employee, who engages in misleading and deceptive conduct in the course of his employment by his employer, engages in that conduct in trade or commerce if the activity of the employer in the pursuit of which the conduct is engaged in is itself in trade or commerce. That is to say, it is not the trade or commerce of the employee but the trade or commerce of the employer in which the conduct takes place. It is not to the point that the employee is not a proprietor of the business or that the employee’s activities were an aspect or element not of his own trade or commerce but of the trade or commerce of his employer. The employee nevertheless engages in conduct in the course of trade or commerce and their conduct constitutes a contravention of s 18 by the employee personally.
 However, it does not follow from the propositions just formulated that an employer (or principal) is deemed to engage in conduct in trade or commerce merely because the employee, or agent, engages in his own trade or commerce in the course of that employment or agency. Such a result would in effect work backwards the principle stated in Houghton v Arms  HCA 59; 225 CLR 553 at .
(RG: In Houghton v Arms the High Court of Australia upheld the liability of two employees of a web design company who had made misrepresentations to a client of their employer.)
 The mere fact that a joint owner of a residential property engages, jointly with the other joint owner, in the renovation of the property with a view to selling the property at a profit, in circumstances where the joint owners reside in the property as their home for a significant period of time prior to the renovations, does not of itself lead to the conclusion that conduct engaged in connection with the sale of the property is conduct in trade or commerce. It is not uncommon for an owner or joint owners to engage in such activities with respect to more than one property. That of itself, however, does not mean that the conduct engaged in in connection with the sale of each property constituted conduct in trade or commerce where the property is clearly lived in as a home
 The Vendors resided in the Property from before 2005 until 2010. The renovations were carried out over a period of less than two years and the Vendors sold the Property as soon as the renovations were completed. They purchased a nearby property in Dover Heights shortly thereafter. The nearby property was the subject of development consent, which the Vendors applied to augment, for the carrying out of significant renovations and improvements. At one point after the sale of the Property, when Ms Dandris removed a faulty hot water system, she commented that she would use that system “on my next project”, which may have been a reference to the nearby property. However, even if it was the intention of Ms Dandris and Mr Williams to renovate the nearby property with a view to selling it for a profit, that of itself does not have the consequence that the activities engaged in in connection with the sale of the Property constituted conduct in trade or commerce on the part of Mr Williams.
 Further, the fact that Ms Dandris was intending to engage in a business of interior decoration does not alter the position. Interior decoration may well constitute activity in trade or commerce. However, that has nothing to do with the conduct involved in the marketing of the Property, following renovation, even if the renovation was undertaken with the intention of selling at a profit, in circumstances where the Property was, for a significant period of time, lived in as a residence by Mr Williams and Ms Dandris. Finally, as stated above, the fact that a property is advertised prior to its sale (whether the advertisements are published in the print media or on a website) does not, of itself, mean that conduct engaged in in connection with the sale of that property is conduct in trade or commerce.
 The primary judge erred in concluding that the Representations constituted conduct engaged in by Mr Williams in trade or commerce. It follows that there was no contravention on the part of Mr Williams of either s 18 or s 30 of the Law. That is the only basis upon which judgment was entered against Mr Williams. Accordingly, the appeal should be allowed and the orders of the primary judge should be set aside.
Orders were made allowing the appeal and setting aside the orders made below against the second defendant Mr Williams, and Judgment was given in his favour.
On the one hand, it could be said that the case turns on its own specific facts. Nevertheless, the case has provided valuable clarification as to the concept of conduct “in trade or commerce” by private vendors, and has identified a wide range of factors which may exist, and activities which may be undertaken by private domestic vendors, to maximise the sale price of their homes, which would not constitute conduct “in trade or commerce”. The decision makes it clear that conventional steps such as engaging and estate agent who advertises the sale by way of various media, or undertaking major renovations prior to sale, do not result in the sale of a home becoming a sale “in trade or commerce”.
Most importantly, the decision has clarified the fact that although a vendor may, by virtue of section 84(4) of the Competition and Consumer Act 2010, be deemed to have engaged in conduct undertaken by the selling agent, which conduct is “in trade or commerce” as regards the agent, that would not, of itself, have the effect that the vendor has acted “in trade or commerce”. These are issues which frequently become tangled up in litigation.
One fascinating imponderable which emerges from the case, is whether Ms Dandris would also have been successful had she appealed against the finding as to her liability under the Law. In my opinion, it is clear that she would have been successful, as the Judgment effectively disposes of all the activities undertaken by her, and negates them as amounting to trade or commerce in the conduct of the sale. However, it must be borne in mind that such an appeal by her would have been futile in practical terms, because she was also held liable for breaches of warranties as an owner-builder, and the damages for those breaches were assessed at the full cost of rectification, which was a huge sum. Apparently she was not in a position to pay that sum. It would not have benefited her to appeal against the finding based on the Law.
In my future Bulletins I will discuss the other aspects dealt with in the Williams case, namely, if the Representations constituted conduct in trade or commerce by Mr Williams, should there be an apportionment of the responsibility for the Representations between Mr Williams and Ms Dandris, and the quantification of the loss and damage suffered by the Purchasers that was caused by the Representations.