Access West Development Pty Ltd v Grand International Pty Ltd
[2006] WADC 174
•2 NOVEMBER 2006
ACCESS WEST DEVELOPMENT PTY LTD -v- GRAND INTERNATIONAL PTY LTD [2006] WADC 174
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WADC 174 | |
| Case No: | CIV:722/2005 | 27 SEPTEMBER 2006 | |
| Coram: | MULLER DCJ | 2/11/06 | |
| PERTH | |||
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's claim dismissed Defendant's counterclaim allowed | ||
| PDF Version |
| Parties: | ACCESS WEST DEVELOPMENT PTY LTD GRAND INTERNATIONAL PTY LTD |
Catchwords: | Real Estate Agents Act 1978 Definition of agent Plaintiff paid commission for introducing potential purchasers to defendant Refusal by defendant to pay plaintiff agreed commission in respect of sale of four properties where prospective purchasers were introduced by plaintiff Whether plaintiff carried on business as real estate agent Counterclaim by defendant for refund by plaintiff of the commissions previously paid |
Legislation: | Real Estate Agents Act 1978 |
Case References: | Colbron v St Bees Island Pty Ltd (1995) 56 FCR 303 Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418 Hellier v Hinton, unreported; SCt of WA; Library No 980712; 14 December 1998 Hope v Bathurst City Council (1980) 144 CLR 1 Redman v Instant Nominees Pty Ltd [1987] WAR 277 Nil |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
GRAND INTERNATIONAL PTY LTD
Defendant
Catchwords:
Real Estate Agents Act 1978 - Definition of agent - Plaintiff paid commission for introducing potential purchasers to defendant - Refusal by defendant to pay plaintiff agreed commission in respect of sale of four properties where prospective purchasers were introduced by plaintiff - Whether plaintiff carried on business as real estate agent - Counterclaim by defendant for refund by plaintiff of the commissions previously paid
Legislation:
Real Estate Agents Act 1978
(Page 2)
Result:
Plaintiff's claim dismissed
Defendant's counterclaim allowed
Representation:
Counsel:
Plaintiff : Mr M D Cuerden
Defendant : Mr D K Barker
Solicitors:
Plaintiff : Fiocco's Lawyers
Defendant : Chalmers & Partners
Case(s) referred to in judgment(s):
Colbron v St Bees Island Pty Ltd (1995) 56 FCR 303
Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418
Hellier v Hinton, unreported; SCt of WA; Library No 980712; 14 December 1998
Hope v Bathurst City Council (1980) 144 CLR 1
Redman v Instant Nominees Pty Ltd [1987] WAR 277
Case(s) also cited:
Nil
(Page 3)
1 MULLER DCJ: In 2002 the defendant, a company carrying on business as a property developer, was in the process of redeveloping and marketing a number of properties in Nile Street in East Perth. In September 2002 the defendant entered into an agreement with the plaintiff, a company in the business of undertaking and managing realty developments and investments, requiring the plaintiff to find potential purchasers for the Nile Street properties in return for the payment of $10,000 upon the purchase of each property that was sold to a purchaser who had been introduced to the defendant by the plaintiff and who executed an option to purchase the property. Pursuant to this agreement the plaintiff introduced three purchasers to the defendant who exercised options to purchase three of the Nile Street properties. In accordance with the agreement the defendant paid the plaintiff a total of $30,000 in respect of the three completed sales. The plaintiff also introduced to the defendant four other purchasers who exercised options to purchase properties in the Nile Street development. The defendant did not pay the plaintiff the agreed amount of $10,000 in respect of the sale of each of those four properties and the plaintiff brought an action in this Court claiming a total payment of $40,000 from the defendant. The defendant admitted it had agreed to pay the plaintiff $10,000 in consideration of the purchase of any of the Nile Street properties by a potential purchaser introduced to the defendant by the plaintiff. The defendant also agreed it had paid the plaintiff a sum of $30,000 in respect of three of the properties which had been sold to purchasers introduced by the plaintiff. The defendant also agreed that four other properties in the development had been sold to purchasers introduced by the plaintiff but that the defendant had not paid the plaintiff the agreed amount for any of those sales. The defendant pleaded that the plaintiff was precluded from recovering the alleged debt of $40,000 and was liable to repay the $30,000 already paid because it had acted as a real estate agent when it was not licensed under the Real Estate and Business Agents Act 1978.
Relevant statutory provisions
2 Section 60(1) of the Real Estate and Business Agents Act 1978 ("the Act") provides that:
"(1) An agent is not entitled to receive any commission, reward, or other valuable consideration in respect of his services in that capacity unless –
- (a) he is licensed in that capacity and he holds a current triennial certificate in respect of his licence when he renders the services; and
(b) he has a valid appointment to act in that capacity which is in writing signed by the person for whom the services are or are to be rendered or by some other person lawfully authorised to sign on behalf of the person for whom the services are to be rendered."
3 Section 60(2) of the Act sets out the requirements of a valid appointment in writing. Sections 60(3) and (4) provide that:
"(3) A person shall not demand or receive any commission, reward, or other valuable consideration in contravention of subsection (1) or (2), or both.
(4) Any commission, reward, or other valuable consideration received in contravention of subsection (1) or (2), or both, may be recovered as a civil debt recoverable summarily in any court of competent jurisdiction."
4 The expression "real estate agent" is defined in s 4 of the Act as follows:
" 'real estate agent' means a person whose business either alone or as part of or in connection with any other business, is to act as agent for consideration in money or money's worth, as commission, reward or remuneration, in respect of a real estate transaction as defined by this section but does not include a person whose business is to so act by reason that -
(a) he is appointed by a court as a receiver or receiver and manager of the business of another person; or
(b) he is an official receiver or trustee within the meaning of the Bankruptcy Act 1966 of the Commonwealth or any Act in amendment or substitution of that Act."
(Page 5)
- " 'real estate transaction' –
(a) means a sale, exchange, or other disposal and a purchase, exchange, or other acquisition of real estate and any exclusive right whether deriving from the ownership of a share or interest in a body corporate or partnership, or otherwise, to the use or occupation of real estate including the leasing, and letting, and the acquisition under lease or letting of tenancy or occupation of real estate; and
(b) includes any sale, exchange, or other disposal and any purchase, exchange, or other acquisition of goods, chattels or other property relating to a real estate transaction of a kind specified in paragraph (a); and
(ba) includes the collection of rents or other payments for use or occupation; and
(c) also includes an option to enter into a real estate transaction."
Carrying on business as agent
6 The plaintiff did not dispute that the transactions to which it was a party fell within the definition of a "real estate transaction" in s 4 of the Act. The critical issue is whether the plaintiff was a real estate agent within the meaning of s 4(1) of the Act. It was submitted on behalf of the plaintiff that a person is not a real estate agent simply because he acts for consideration as commission, reward or remuneration in respect of a real estate transaction. There is another essential requirement which, it was argued, was missing in this case. It must be the person's "business", or at least part of his "business", to act as agent. (Hellier v Hinton, unreported; SCt of WA; Library No 980712; 14 December 1998 (Miller J at 19); Colbron v St Bees Island Pty Ltd (1995) 56 FCR 303 at 315-316).
7 The onus of proving that the plaintiff was a real estate agent lies on the defendant. In Redman v Instant Nominees Pty Ltd [1987] WAR 277 at 296 Brinsden J, in dealing with this issue, said:
"It seems to me that where a party contends it is not liable to pay the commission it agreed to pay, not because of failure of performance, but because of the provisions of section 60(1) it should produce clear evidence that the commission was earned
(Page 6)
- in respect of a business transaction and that involves proof that there was a sale, exchange or other disposal or a purchase, exchange or acquisition, of a business within the meaning of the definition."
- In that case the Full Court was considering the meaning of the definition of "business transaction" in s 4 of the Act but went on to say that the same considerations applied to the definition of a "real estate transaction". In seeking to discharge this onus the defendant relied upon the decision of the High Court in Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418. In that case the High Court considered the meaning of the definition of "real estate agent" in the equivalent Queensland legislation. The relevant provision defined a "real estate agent" as "any person who is agent for others, and whether on commission or for or in expectation of any fee, gain or reward, and either alone or in connection with any other business, and either generally or in respect of any one transaction, exercises or carries on the business or advertises…". At p 438 of the judgment Walsh J said:
"It was there submitted for the appellant that those provisions could not apply to an isolated transaction by a person who does not carry on business as a real estate agent. The submission was rejected. It was held, and in my opinion correctly held, that a person who does, in respect of one transaction, those things which if repeatedly done would constitute the carrying on of the business of a real estate agent, is to be regarded (because of the terms of the definition), as one who carries on that business.
9 Counsel for the plaintiff submitted that to act as agent meant doing more than simply introducing seven persons to the developer of a single
(Page 7)
- development. In Colbron v St Bees Island Pty Ltd (supra) Lindgren J considered the meaning of the words "as an agent for others" in the Auctioneers and Agents Act (NSW) and commented as follows (at p 316):
"My tentative view is that these words have a meaning related to the meaning of the expression 'real estate agent' as it is commonly understood, and so catch at least a person who is authorised by a landowner to introduce prospective purchasers, who does so and who then participates in the process by which the landowner and prospective purchaser come to terms by conveying offers and counter offers."
" 'developer' means a person whose business either alone or as part of or in connection with any other business is to act on his own behalf in respect of the sale, exchange, or other disposal of real estate;"
11 The expression "business" is also defined in s 4 in the following terms:
" 'business' means the business of an agent…and does not mean the business of a developer;"
- It was argued that by definition the plaintiff's business was not that of a "real estate agent" nor, by extension, that of "an agent" within the meaning of s 60. It was submitted by counsel for the plaintiff that the express exclusion of a "developer" from the definition of "agent" meant the business of the plaintiff could not be characterised as that of a real estate agent.
12 I believe this submission overlooks an essential feature of the definition of "real estate agent" in s 4. The definition is not confined to a person whose sole business is to act as agent for a commission. It expressly includes a person who carries on the business of an agent as part of or in connection with any other business. In the context of this case that means the plaintiff, as a developer, could still act as a real estate agent. I accept that to carry on a "business" denotes undertaking activities "as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and
(Page 8)
- repetitive basis". Hope v Bathurst City Council (1980) 144 CLR 1 at pp 8-9. In that case the question was whether land used over many years for the purposes of agistment could be said to have been used by the occupier wholly or mainly for carrying on the business of grazing. Obviously the element of continuity was very significant. In this case it was submitted that this element of continuity was absent. The plaintiff's principal business was as a developer and the seven introductions he made arose out of a single agreement with the defendant, were for a single principal and were limited to a single development. They were part of an isolated transaction unconnected with the plaintiff's function as a developer. In short, it was submitted that the introduction of the seven purchasers to a developer of a single development as part of a "one off" transaction, without the plaintiff performing any of the other functions normally associated with an agent, did not amount to carrying on business as a "real estate agent" as that term is commonly understood. It was argued that the business of a real estate agent went beyond simply signing up potential buyers for what was really nothing more than a "spotter's fee".
13 In my view the critical factor here is the repetitious nature of the plaintiff's dealings. I do not believe this can be properly described as a "one off" transaction. While there was only one agreement with a single principal the successful introduction of no less than seven purchasers by the plaintiff to the defendant in exchange for substantial payments must necessarily mean that it was carrying on business as an agent either alone or as a part of or in connection with its development business. It is possible that even a single act of introduction may bring a person within the scope of the definition. But I do not have to decide that. The scale of the plaintiff's activities on behalf of the defendant is, in my view, the decisive factor. The completion of seven introductions over what appears to have been a short period of several months for a potential gain of $70,000 seems to me to fit the notion of "carrying on" of a business as a real estate agent over that period of time.
Conclusion
14 Having concluded that the plaintiff did carry on business as a real estate agent within the meaning of the Act without being licensed in that capacity he is precluded by s 60 from receiving any commission or reward for his services and is liable to forfeit to the defendant the amounts already paid for his services.
(Page 9)
15 I would dismiss the plaintiff's claim and allow the defendant's counterclaim.
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