'Common' sales ploy goes to court

Advertising a house as being a mortgagee sale was a common strategy to sell properties, a court witness said he was told.

John Grace, an electrical contractor, told the North Shore District Court that when he saw the sign outside his home he complained it was dishonest because he was not in default of the mortgage and therefore it was not a mortgagee sale.

He said he was told by his business partner in the property, builder Jeffrey Harnish, that the sign was only a ploy and would not bring a low price for the property at Lucas Way, Albany.

Mr Grace claimed the sales agent and auctioneer for Peter Moule Real Estate, Robin White, assured him it was a common marketing strategy.

Mr White sold the property at auction in February 14, 1998, to the highest bidder at $326,000.

But Mr Grace said he learned a week later from Mr Harnish that the buyer had changed her mind.

Mr Grace said his solicitor told him Mr White's actions meant the sale agreement could not be enforced because of misrepresentation.

The $32,600 deposit cheque was stopped.

Mr Grace was defending a claim for $13,522 unpaid commission brought by Peter Moule Real Estate.

He believed that if no deposit was received then no sale had occurred and therefore no commission was payable.

He did not believe the agency ought to be able to claim a commission when its actions had killed the sale.

He believed the agency was liable to pay the deposit and he was bringing a counter claim.

Counsel for Peter Moule Real Estate, John Waymouth, said the sale was a direct result of his client's work.

This was carried out in accordance with its obligations and the company was entitled to commission.

Mr Harnish, who had sold his share of the property to Mr Grace, had not defended the action.

Robin White said in his evidence that he knew Mr Harnish was going to be stretched over the next few months when mortgage payments were due to be made.

"I suggested that we use this financial pressure to market the property as a mortgagee-sale-type situation to reflect the reality of his position."

Mr White said the solicitor and first mortgage holder for the partners had not opposed the idea.

But the quarterly mortgage payment was made.

Mr White said he had advised all the interested bidders that the sale of the property was no longer a mortgagee sale.

Judge Bruce Buckton halted the hearing after nearly four hours and invited Mr Waymouth and Mr Grace's lawyer, Alison MacMillan, to discuss settling the case.

They later said settlement had been reached and claims and counter claims withdrawn.

Settlement details were yet to be worked out.

Outside the court, Mr Grace said he was bitter about the case.

It had cost him $20,000 in legal fees and he sold the Albany property to pay to defend himself. He failed with a claim of unethical conduct to the Real Estate Institute.

National president Rex Hadley said yesterday that the public could take at face value a sign that said "mortgagee sale."

Auctioneers risked ending up with egg on their faces when they advertised a mortgagee sale and the mortgage arrears were paid "at the 11th hour."

The chief executive of the Consumers Institute, David Russell, said the Fair Trading Act called for real estate agents not to do anything that was likely to mislead or deceive in trade.

He said the institute had not received any complaints from people who had bought properties at mortgagee sales and later found out they were not.