Questions Raised Over Dummy Bidding Allegation

Posted on August 29, 2008 by | 17 Comments

Peter Mericka B.A., LL.B OPINION
by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

View Peter Mericka's profile on LinkedIn

Peter Francis is a high-flying legal-eagle with the high-powered law firm Maddocks Lawyers of Melbourne. Peter Francis wrote a letter to a vendor of real estate on behalf of a very well known real Melbourne estate agent, accusing the vendor of “dummy bidding”. It is highly unusual for a lawyer to make a direct allegation of such a serious nature, and so I decided to investigate the matter.Peter Francis - Partner Commercial - Maddocks Lawyers

Why did Francis write to the vendor?

Here is the letter written by Peter Francis of Maddocks Lawyers to the vendor. Details of the vendor and the estate agent have been blanked out because at this stage I want to focus on the letter, rather than the parties involved.

What is of particular interest is the following:

“…our client subsequently discovered that the person to whom the property was knocked down was a ‘dummy bidder’ and that he made the bid on your behalf within the meaning of section 38 of the Sale of Land Act 1962.

Of course, our client did not know and had no way of knowing that any of the bids which it accepted from the ‘dummy bidder’ were made on your behalf and were not genuine.”

Given that the estate agent did not initially know that the bidder was a ‘dummy bidder’, something must have happened to bring this to the attention of the estate agent. What was the “smoking gun” that caused the estate agent to realise that he had a dummy bidding situation on his hands? In other words, what was the evidence?

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  • Austin says:

    You think buyers are using false allegations of dummy bidding to ‘opt out’ of an auction that they bid too much for?

  • Hi Austin,

    I’m not aware of that having happened, but this posting is about a different situation. Here we have an estate agent pointing the finger at his own vendor client and accusing him of dummy bidding, and then ending the relationship on the spot.

    Accusing someone of a crime and relying on that as a reason to end the relationship, and reserving the right to claim costs etc. is an extremely serious matter.

  • http:// says:

    Love your work, Maddog!

  • Hi Tim,

    This will be particularly interesting as the estate agent concerned is very well known in Melbourne. I think he even has his own segment on a popular radio station! But we’ll just take things one step at a time.

  • http:// says:

    I know who this dude is and I can tell you that your just scratching the tip of the iceberg with him because he thinks he is the king of estate agents but he is not and he is probly just using this legal guy as well

  • http:// says:

    Hi Peter,
    I would just lilke to say that you clearly read the letter poorly and you didn’t copmprehend the letter well at all. I would also like to say that being a fellow colleague of Peter Francis he is definitily a more capable lawyer then you, so mind your own buisness!

  • Hi Imogen,

    The questions raised relate to the fact that the letter was written at all. What was the purpose of the letter?

    I am sure you mean well by standing up for a colleague, but I am also sure that Peter Francis is capable of responding on his own behalf.

  • http:// says:

    A lawyer has discovered a crime on behalf of his client, and he has written to the person who committed that crime and told that person that he has been caught out. What is wrong with that?

  • Hi Gim,

    The problem is that the involvement a lawyer suggests to the vendor that the lawyer has examined the facts, and has used his legal expertise to determine that a crime has been committed.

    The question I raise is this:

    Had the lawyer concluded for himself that a crime had been committed?

    Alternatively, was the lawyer simply acting as a conduit for an estate agent who wanted to accuse a vendor client?

    It all comes down to evidence, and I do not believe that Peter Francis had anything more than the word of the estate agent.

  • http:// says:

    If I am understanding this right I can decide to spoil someone’s day by accusing him of being a pedaphile and getting a lawyer to write it in a letter to give it some clout?

  • Hi Kurioz,

    I must say that I do not believe that Peter Francis or any other lawyer would knowingly be a party to anything like that.

    I do believe, however, that it is important to have very good evidence before accusing a person of a crime of dishonesty.

  • Austin says:

    Hi Peter,

    A question – what did the real estate agents do with the commission they received from the sale?

  • Hi Austin,

    There was no commission, as there was no sale.

    You see, the highest bidder (HB) wanted an unusually long settlement and the vendor had refused an earlier pre-auction offer because of this. But one of the estate agents assisting at the auction told the HB to put in a bid because the vendor would probably accept.

    When the HB’s offer, with the long settlement, was put to the vendor he rejected it. The estate agent then spat the dummy (poor choice of terms, I know) and accused the vendor of dummy bidding.

    Now, here’s the interesting part. If there was no sale, there would be no commission. But what if a crime had been committed, and the estate agent had suffered loss as a result?

    Can the accusation of dummy bidding be sustained? This is where evidence becomes important.

  • Austin says:

    Hi Peter,

    Isn’t this a crazy thing for the real estate agent to do? At auction, does negotiation only go to the highest bidder? Don’t they approach any of the other bidders? What normally happens in this situation?

  • As I understand the situation, the estate agents “negotiated” with the HB for another 45 minutes, but the long settlement period remained a deal-breaker, also the HB’s bid was well below the reserve.

    After the dummy-spit and accusation of dummy bidding, the angry agent stormed off and the vendor heard nothing further until a couple of days later when he received the letter from Peter Francis.

  • http:// says:

    Did the estate agent get any money out of the seller?

  • Yes, after receiving the letter from Peter Francis the vendor paid up.

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