A $6.2 million deal for a home in the affluent Sydney suburb of Bronte has been quashed after a court found that real estate agents failed to inform potential buyers about a nine-storey tower that would 'obliterate' their ocean views.
Couple Filda Keci and Steven Wallace were excited to sign the paperwork on their dream home after star real estate agent Alexander Phillips impressed them with a sales pitch highlighting the property's 'sweeping ocean views'. Keci and Wallace paid a $310,000 deposit after Phillips, named Australia's top real estate agent for over a decade and the first to surpass $1 billion in sales, assured the couple that a construction site next door was of no concern.
Phillips told the purchasers that the site was being redeveloped with nine townhouses, which would be no higher than the previous block of apartments that had been demolished. However, the high-profile agent did not inform the couple that the townhouse project, known as the Bronte Collection, had been abandoned and that a nine-storey tower with 100 to 120 apartments was slated to be built instead. Phillips also failed to mention that the tower project had been designated a 'state significant development', allowing it to be fast-tracked for approval by the Housing Delivery Authority.
Keci and Wallace discovered the tower scheme through an article published by the Australian Financial Review, but by that time, they had already signed contracts and handed over the five per cent deposit. The couple, who run Environmental Group Australia, launched legal action against the Bronte property sellers Anna Beck and Lewis Barnes, rather than Phillips or his agency.
They took the matter to the NSW Supreme Court after they were at risk of losing the $6.2 million Bronte property without the sweeping ocean views. On Thursday, Justice Kate Williams rescinded the sale and ordered the $310,000 deposit to be refunded to the couple. Justice Williams reached her verdict after the court heard allegations that Phillips 'misrepresented the property'. She also found that his co-agent, Thomas Fuller, misrepresented the property during a second inspection when he also failed to mention the state significant development declaration to Keci and Wallace.
'If I had known about the existence of the application for the development before signing the contract to purchase the property, I would not have signed it. For me, the view was a major selling point of the property,' Keci told the court. In her affidavit, Keci said one of their first questions to Phillips was why the owners were selling, and he claimed it was because they were moving to Melbourne. However, Beck and Barnes were not moving to Melbourne.
Keci said Fuller told the couple during the second inspection that the 'council was very strict about those height rules' regarding the development. However, just two weeks before the property deal was due to be finalised, Wallace sent his wife a link to the AFR article about the proposed apartment block. 'We have a big problem,' Wallace texted Keci. 'I could not believe that a development of the magnitude discussed in the post could be happening right next to the property,' Keci told the court. 'It was not just one or two storeys but a major development.'
Town planner David Rippingill, who gave expert evidence, said that if approved, the proposed block would 'obliterate the available views' from the house. Lawyer Nathan Weinberger, representing Keci and Wallace, said the ruling was a 'warning to agents everywhere'. 'What you say at open home inspections should be honest,' he said.
Beck and Barnes argued in court that there was 'nothing definite about the HDA's designation of the site as a state significance development'. 'It was merely a declaration and a lengthy process would need to be undertaken by the developer on the road to any approval,' Barnes told the court. The respondents also submitted that the 'only approved plans for the site are the nine townhouses'. 'It's not a fait accompli [that the nine-storey tower will go ahead],' barrister Nicolas Kirby for Beck and Barnes submitted. 'An issue affecting the property is something that affects the actual property.' But Justice Williams found that argument only holds for the conveyancer acting on behalf of the sellers, not the real estate agents.
Barnes, who last year became the co-owner of The Lord Roberts Hotel in Darlinghurst, said he first became aware of the proposed apartment block in January via social media. In the same month, Barnes found a four-bedroom house in Coogee for sale that was close to friends, which he and Beck purchased for just over $7 million. As a result, the couple signed up Phillips to sell their Bronte home. Barnes told the court that he and Phillips discussed the state significant development next door and how that might impact the price guide. 'Alex also discussed with us that the unknowns, along with the market conditions, would lower the buyer pool, as well as reduce the overall value, and the price of $6.5 million to $6.7 million could be a realistic good result,' Barnes told the court.
The Supreme Court battle was heard on an urgent basis because Barnes and Beck were seeking to enforce the sales contract and pursuing costs incurred by a delay in the purchase of their Coogee home. The court heard the costs included a daily interest rate of seven per cent, which had totalled almost $13,000 at the start of this week. The troublesome development site was purchased by developer Fortis in 2022, who bought the then-existing 22 apartments for $44 million. Phillips was one of the agents enlisted to sell the planned townhouses on behalf of Fortis, but when none sold, construction ceased. Fortis then drew up plans to build the nine-storey tower.
Phillips, who was subpoenaed to appear before the court but was not called, is a renowned figure among Sydney's eastern suburbs agents. Industry website Real Estate Business has ranked Phillips Australia's top agent every year for the past decade. In 2021, Phillips became the first real estate agent to rack up more than $1 billion in real estate deals. Phillips recently announced he will be leaving the PPD agency he co-founded 13 years ago to join the Ray White network.
