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Unconscionable conduct finding against real estate agent

13 May 2020

The Supreme Court has upheld an appeal made by South Australia's consumer watchdog, finding that a Grange-based real estate agent engaged in unconscionable conduct in his dealings with a vulnerable aged pensioner seeking to sell his property. 

The Commissioner for Consumer Affairs launched civil penalty action under the Australian Consumer Law in the Magistrates Court against Zane Pitt alleging he took advantage of an elderly homeowner with a gambling problem who needed to sell his property. 

The Magistrates Court dismissed the complaint following a trial in 2018 and the Commissioner subsequently appealed to the Supreme Court. 

Pitt, a real estate agent, undertook a business advertised as "We Buy Houses" where he sought to buy properties from people who were struggling to sell, by entering into an option agreement to enable Pitt to purchase the property at a fixed price sometime in the future. 

The Court was told that Pitt entered into an Option Agreement with the homeowner, a 70 year old man in receipt of the age pension, to buy his home at any time over a four year period for $200,000. 

The homeowner, the court heard, had used a redundancy payment to feed a gambling habit and needed to sell the property urgently to relieve mortgage stress and relocate to a nearby retirement village. 

After an unsuccessful attempt to sell the property, Pitt told the homeowner that the property would need a "massive amount of work" before it could be rented out or sold, getting him to lower the purchase price to $175,000. Valuation evidence showed it was worth $260,000. 

Pitt obtained approval to subdivide the property and build two homes on it shortly before settlement. The property was then transferred to Pitt's daughter who subsequently sold the two properties for a total of $765,000. 

The Supreme Court found the elderly homeowner was "in a totally vulnerable position of disadvantage" to which Pitt benefited from, that the option agreement did not protect the homeowner's best interests and that Pitt's conduct was unconscionable. 

The matter will return to the Magistrates Court at a later date to determine compensation to the homeowner and penalty. 

Pitt faces a maximum penalty of $200,000 under the Australian Consumer Law.