Property developer Du Val was yesterday accused in court of casting its net too wide with its online advertising.
Du Val is challenging the Financial Markets Authority's direction to remove online ads the FMA said were misleading or deceiving to investors.
The regulator had previously told Du Val to pull its ads. But the property company said the online ads don’t breach “fair dealing” provisions in the law.
In a one-day hearing, Du Val’s lawyer Davey Salmon appeared opposite Jenny Cooper QC before Justice Ian Gault in the high court at Auckland via video link.
Cooper said the online advertisements had been misleading and it wasn’t obvious the information provided by Du Val was only directed at wholesale investors, which would mean fair dealing provisions applied.
She pointed out that the online advertisements had been placed across social media where they were easily discoverable by “ordinary” people.
Salmon said the FMA shouldn’t link people on social media with being unsophisticated investors.
“Du Val was casting its net as broadly as possible essentially, to get as many contacts as it could,” Cooper said.
“It was essentially seeing what would fall on the deck and then sorting out on the deck if they were keepers or not.”
Lure not drift net
Salmon said he liked Cooper’s metaphor but from his perspective, Du Val had simply lowered “lures” into the water which from a distance might look interesting to many fish – but which were only actually enticing to wholesale fish.
“The Financial Markets Authority has an informed view as an expert body that the information isn’t obvious,” Cooper said.
Salmon said if the FMA were correct about Du Val’s breach on performance fees, it would mean “most banks are routinely breaching the fair trading act because the statement of ‘no fees’ is made by profit-making entities all the time”.
Cooper said wholesale investors having some protection was an “important part” of the Financial Markets Conduct Act and it was “immediately apparent” why Du Val’s investment advertisements were not similar to how a bank worked.
Justice Gault said it was important to distinguish between matters of law and matters of expertise when it came to this case.
“We need to drill below the debate as to whether or not these are matters of law or fact,” he said.
He asked Salmon if Du Val would immediately resume its advertising if the decision was set aside, and Salmon confirmed that was correct.
The judge reserved his decision.
Reference to the nature of the Du Val challenge to the FMA direction in the original version of this story has been corrected.
