‘We have a big problem’: Couple’s shock over purchase of $6.2m home

When high-profile real estate agent Alexander Phillips put a four-bedroom semi in Bronte up for sale earlier this year, he made much of its sweeping ocean views from upstairs.

The construction site next door might have been a turn-off, but Filda Keci and Steven Wallace bought it anyway after Phillips reassured them that it was approved as a row of nine townhouses only, no higher than the low-rise block of apartments there previously.

What the star agent didn’t say was that those plans had been shelved, and the site was instead proposed to be a block of 100 to 120 apartments. Nor did he mention that the project had already been designated a state significant development, allowing it to be fast-tracked for approval by the Housing Delivery Authority.

By the time Keci and Wallace discovered that those ocean views could potentially be replaced by a nine-storey tower, it was too late. They had exchanged to buy it, secured with a 5 per cent deposit, and were on the hook for the $6.2 million purchase.

That sale was rescinded on Thursday, and the $310,000 deposit was ordered to be refunded in a NSW Supreme Court judgment handed down by Justice Kate Williams in which Phillips was said to have misrepresented the property.

Justice Williams also found that Phillips’ co-agent, Thomas Fuller, had also misrepresented the property at a second inspection when he also failed to mention the SSD declaration.

“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,” said Keci, operations manager of environmental consultancy Environmental Group Australia. “For me, the view was a major selling point of the property.”

Keci and Wallace’s lawyer, Nathan Weinberger, of Weinberger Lawyers, welcomed the judgment on Thursday. “Let this be a warning to agents everywhere. What you say at open home inspections should be honest.”

Barrister Nicolas Kirby, acting for the home’s sellers Anna Beck and Lewis Barnes, had argued there is nothing definite about the HDA’s designation of the site as a state significance development and the only approved plans for the site are the nine townhouses.

“It’s not a fait accompli,” said Kirby of the proposed block of apartments. “An issue affecting the property is something that affects the actual property.”

Justice Williams found that the argument only holds for the conveyancer acting on behalf of the sellers, but not the real estate agents.

It’s a point echoed by Real Estate Institute of NSW chief executive Tim McKibbin. “The material fact legislation tends to apply to any latent issue, or stigma, the agent is aware of, and in such cases the agent is obliged to disclose that to buyers.”

Keci and Wallace, managing director of Environmental Group Australia, were not the only ones outraged by the proposal by developer Fortis to build a block of 120 apartments.

In the few months since the site was declared a state significant development by Planning Minister Paul Scully, a grassroots organisation called the Bronte Community Association has formed to fight it.

It is a familiar story across large swaths of Sydney after the state government rolled out new planning rules to make way for up to 377,000 new dwellings by 2029, opening up some of the wealthiest, low-density neighbourhoods to large-scale redevelopment.

To that end, the Housing Delivery Authority was established 18 months ago to help fast-track developments. Of more than 1000 expressions of interest lodged under the HDA scheme in its first year, 325 projects have been designated state significant developments, including Fortis’ proposal in Bronte. The SSD is not a guarantee that the project will be approved, but it is fast-tracked through the process and bypasses a council veto in the process.

Fortis’ initial interest in the Bronte site was in 2022 when a block of 22 apartments was purchased for $44 million, and later demolished to make way for nine townhouses, known as the Bronte Collection.

Phillips was one of the agents enlisted to sell the townhouses on behalf of Fortis, but when none of them sold, construction was halted, and Fortis turned to the HDA to upscale the works.

Within weeks of the SSD declaration, Bronte local D’Leanne Lewis, also a real estate agent, joined with other locals to form the Bronte Community Association. Since then, it has signed up more than 400 members and raised a fighting fund of $130,000.

Among their concerns are increased traffic on a narrow one-way street, a lack of infrastructure and the scale, given current height limits of 9.5 metres could blow out to allow for a block of up to 30 metres.

Fortis’ plans for the townhouses were already before Waverley Council in 2023 when Beck and Barnes bought the house for $5.55 million.

Barnes, who last year became co-owner of The Lord Roberts Hotel in Darlinghurst, said he first became aware of the proposed block of apartments in January via social media. “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.

Later that month Barnes found a four-bedroom house in Coogee for sale that was close to friends. He and Beck purchased it for $7.015 million.

Given the purchase, the couple moved quickly to sell their Bronte home, signing up Phillips for the job.

Barnes told the court he discussed with the Phillips a recent bank valuation for his property of $7 million, as well as the state significant development next door and how that might impact on the price guide.

“Alex [Phillips] 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 said.

Keci and Wallace were among four interested parties.

Keci’s affidavit detailed how one of their first questions to Phillips was why the owners were selling, and was told: “the vendors were moving to Melbourne, where one of them had a job and that they had already purchased a house in Melbourne”.

The couple are not moving to Melbourne.

When asked about the construction site, Phillips told them it was approved to be nine townhouses and what had been approved was very similar to what had been there previously, Keci said.

Keci detailed for the court how Phillips’ offsider Thomas Fuller repeated the story at the second inspection, adding that the council was very strict about those height rules.

Keci and Wallace also checked with the sellers’ lawyer – a point confirmed by Barnes.

Barnes said in discussing the proposed apartment block with his lawyer he was advised that because the question only asked about DAs he did not need to include the information about the site being declared a state significant development.

Two months later, and just weeks before the property was due to be completed, Wallace sent his wife a link to a recent story in The Australian Financial Review about the proposed apartment block. “We have a big problem,” he texted her.

“I could not believe that a development of the magnitude discussed in the post could be happening right next to the property. It was not just one or two storeys but a major development,” Keci said.

Expert evidence by town planner David Rippingill said, if approved, the proposed block would “obliterate the available views” from the house.

The hearing before Justice Williams was heard on an urgent basis given Barnes and Beck were not only seeking to enforce the sales contract, but also pursuing the costs incurred by a delay in their own purchase in Coogee.

Those costs included a daily interest rate of 7 per cent, totalling more than $12,780 as of Monday.

Phillips was subpoenaed to appear before the court, but was not called. A spokesman for him said that he could not comment on the court’s judgment in circumstances where he was not a party to the proceedings and was not called by either the vendor or purchaser to give evidence.

He is a renowned figure among Sydney’s eastern suburbs agents. Industry website Real Estate Business has ranked him Australia’s top agent every year for the past decade, and in 2021 he became the first real estate agent to clock up more than $1 billion worth of real estate deals.

Early this year, he listed a Clovelly house long owned by the late scientist, researcher and cardiologist Dr Karen Duggan, which had been bequeathed to The Smith Family.

In marketing for the sale, Phillips said he would not charge a commission, thereby further bolstering the endowment to Australia’s largest education charity. At that point, a necessary $25,000 management fee had already been charged for his executive assistant, Pru Kelly, in preparing the house for sale.

More recently, Phillips has announced he is leaving the PPD agency he co-founded 13 years ago to join the Ray White network in the coming months.