Advisory Services Pty Ltd v Augustin
[2017] VCC 1195
•29 August 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-16-03200
| ADVISORY SERVICES PTY LTD (TRADING AS RAY WHITE ST ALBANS) (ABN 63 053 790 971) | Plaintiff |
| v | |
| STELLA AUGUSTIN and CAROLINE AUGUSTIN | First Second Defendant |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 & 8 June 2017 | |
DATE OF JUDGMENT: | 29 August 2017 | |
CASE MAY BE CITED AS: | Advisory Services Pty Ltd v Augustin & Anor | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1195 | |
REASONS FOR JUDGMENT
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STATUTORY INTERPRETATION – Real estate agent appointed to sell property under an exclusive sales authority – agent sued clients for commission – whether exclusive sales authority omitted statement required by s49A(4)(c) of the Estate Agents Act 1980 (Vic) – whether strict or substantial compliance required.
JUDGMENT – For the defendants.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Ravech | Alderuccio Solicitors |
| For the Defendants | Mr I Upjohn QC with Mr W F Rimmer | Webb Korfiatis Family Law |
HER HONOUR:
1 Advisory Services Pty Ltd (Advisory) operates as a Ray White Real Estate Agency in St Albans. Stella and Caroline Augustin (the vendors) wanted to sell their property. They signed an exclusive sale authority (the Authority) appointing Advisory as their real estate agent for the sale. Advisory sold the property for them. It sues them for its commission.
2 The vendors say that under s50 of the Estate Agents Act 1980 (Vic) (the Act), Advisory is not entitled to sue the vendors for commission because it has not complied with s49A(1) of the Act. The reason the vendors say there has not been compliance with s49A(1) is because the Authority does not contain a statement, required under s49A(4)(c) of the Act, that the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses (the rebate prohibition statement).
3 The Authority does not contain a statement in precisely the words set out in s49A(4)(c). Advisory says the Authority nonetheless complies with the Act for various reasons which I deal with below. Advisory has not made any claim for rectification of the Authority, nor made any claim relying on estoppel or quantum meruit or any remedy which might circumvent the strict application of s50 of the Act.
CENTRAL ISSUE
4 The central issue for determination in this judgment is whether Advisory has complied with s49A(1). In particular, the question is whether it is necessary, on a proper construction of s49A of the Act, for an exclusive sale authority to contain the rebate prohibition statement in circumstances where the relevant exclusive sale authority makes clear that the real estate agent is not in that case charging any expenses to the client.
5 For the reasons that follow, I find that it was necessary for the Authority to convey the message required by the rebate prohibition statement in order to be enforceable, and it did not. Accordingly, I will give judgment for the vendors.
CONDUCT OF TRIAL
6 The proceeding involves a number of claims and defences. However, at the outset of the trial I determined it was appropriate to deal with the central issue as a preliminary question. If it were determined in favour of the vendors, that would be the end of the case. If it were not determined in favour of the vendors, the trial would then proceed on a further date to deal with the other issues in dispute between the parties.
7 Relevant facts and documents were agreed between the parties. No witnesses were called.
8 Subsequent to the trial being concluded, further written submissions were filed by the parties. In deciding this matter I have had regard to all the matters raised in the hearing and the further written submissions.
THE EVIDENCE
9 There are two forms of exclusive sales authority approved by the Director and available for download by real estate agents, one which contains the rebate prohibition statement and one which does not.
10 The approved form on which the Authority in this case is based does not contain the rebate prohibition statement. That form sets out the following information at the top:
“Rebate Statement -no rebate will be received.
Instructions
This statement is approved by the Director of Consumer Affairs Victoria for the purposes of section 49A(4) of the Estate Agents Act 1980. It may only be included in an agency authority if an agent is not entitled to any rebate. It should not be used if there is a possibility that an agent may receive a rebate.”
11 In a rectangular box and in bold the following is stated:
“The agent will not be, or is not likely to be, entitled to any rebates. A rebate includes any discount, commission, or other benefit, and includes non-monetary benefits.”
12 The Authority in question contains on the first page the usual details pertaining to the agent, address of property, vendor and commission payable. It includes the following (where the Authority states words in bold formatting that is replicated below):
“Marketing Expenses (including GST). Advertising $ – Other Expenses $– Total $ – .”
13 Each of the dashes set out after “Advertising”, “Other Expenses” and “Total” is in handwriting.
14 At item 6, on the second page of the Authority, the following two sentences from the above approved form appear:
“Item 6: Rebate Statement – No Rebate will be received
*The Agent will not be, or is not likely to be, entitled to any rebate. A rebate includes any discount, commission, or other benefit, and includes non-monetary benefits. (*If entitled to a rebate, complete and attach the rebate statement approved by the Director of Consumer Affairs Victoria, at the time of signing this Authority. The statement can be downloaded at is another form which has been approved by the Director and is also available for download by real estate agents. It was not used by Advisory in this case. This other form contains the rebate prohibition statement. It sets out the following information at the top:
“Rebate statement
Rebate statement form approved by the Director for Sections 48A and 49A of the Estate Agents Act 1980”
16 In a rectangular box and in bold the following is stated:
“Important information for vendors/landlords
A rebate includes any discount, commission, or other benefit, and includes non-monetary benefits. It is illegal for an Agent to keep any rebate they receive for advertising or other outgoings purchased by the Agent on your behalf. Section 48A of the Estate Agents Act 1980 requires the Agent to immediately pay you any rebate they receive in relation to the sale, management or leasing of your property.
The agent is not entitled to retain any rebate and must not charge you an amount for any expenses that is more than the cost of those expenses.”
17 The form then provides for boxes which can be ticked or crossed depending on whether “The agent will not be or is not likely to be, entitled to any rebates” or “The agent will be, or is likely to be, entitled to rebates”. The form includes a table for including details of rebates.
18 It was common ground that agents could choose which of the two approved forms they would use.
LEGISLATION
19 Section 4 of the Act contains the following relevant definitions:
· “commission includes fees charges reward or other remuneration whether monetary or otherwise”;
· “rebate includes any discount, commission or other benefit”;
· “outgoings means any monies spent by an estate agent on his principal’s behalf for which the estate agent is at common law entitled to be reimbursed”;
· “Director means the Director within the meaning of the Australian Consumer Law and Fair Trading Act 2012”.
20 Section 49 is entitled, “Offence not to give certain information about commission”.
21 Section 49A(1) of the Act states:
“(1) An estate agent must not obtain, or seek to obtain, any payment from a person in respect of work done by, or on behalf of, the agent or in respect of any outgoings incurred by the agent unless—
(a)the agent holds a written engagement or appointment that is signed by the person (or the person's representative); and
(b)before obtaining the person's signature to the engagement or appointment, the agent (or an agents’ representative employed by the agent) informed the person (or the person's agent or representative) that the commission to be paid to the agent under the engagement or appointment and any money to be paid by the person in respect of outgoings were subject to negotiation; and
(c)the engagement or appointment contains—
(i)details of the commission and outgoings that have been agreed; and
(ii)if a fee is to be calculated on a percentage basis, a statement of that fee expressed as both a percentage and as the dollar amount that would be payable on the reserve price or any other relevant amount set out in the engagement or appointment; and
(iii)a rebate statement that complies with subsection (4); and
(iv)a statement in a form approved by the Director as to where a complaint concerning any commission or outgoings in the engagement or appointment can be made; and
(v)anything else required by the Director; and
(d)the agent (or an agent’s representative employed by the agent) give the person a copy of the signed engagement or appointment.
Penalty: 100 penalty units”
22 Section 49A(4) states:
“(4) A rebate statement complies with this subsection if it is in a form approved by the Director and it contains—
(a)a statement of whether or not the agent will be, or is likely to be, entitled to any rebate in respect of—
(i)any outgoings; or
(ii)any prepayments made by the person engaging or appointing the agent (the client) in respect of any intended expenditure by the agent on the client's behalf; or
(iii)any payments made by the client to another person in respect of the work; and
(b)if such an entitlement will, or is likely to, occur, details of—
(i)the goods or services to which the rebate relates; and
(iii)the name of the person providing the rebate; and
(iii)the amount of the rebate that will be attributable to the engagement or appointment, or if that amount is not known at the time the statement is made, an estimate (in dollars) of the amount; and
(c)a statement that the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses; and
(d)any other statements or details required by the regulations.”
23 Section 50 states:
“(1) An estate agent is not entitled to sue for or recover or retain any commission or money in respect of any outgoings for or in respect of any transaction unless—
…
(b) the agent has complied with section 49A(1) with respect to the engagement or appointment to undertake the transaction and is not in breach of section 49A(2) with respect to the engagement or appointment…”
ANALYSIS
24 In construing s49A, it is necessary to bear in mind that the Act is consumer protection legislation.
25 In the second reading speech of the Estate Agents and Sale of Land Acts (Amendment) Bill, the then Attorney General Mr Hulls said amongst other things that:
“The bill amends the Estate Agents Act 1980 and the Sale of Land Act 1962 to deliver substantial improvements in the protection afforded to consumers when purchasing real estate and in their dealings with estate agents generally.
…
“For most Victorians, purchasing a home is the largest and most significant financial commitment they will make. Home buyers, and indeed other investors in the Victorian real estate market, are entitled to approach purchasing property with confidence, particularly when buying at auction. For this reason, the government is committed to ensuring that the auction process is fair and transparent.
…
…
“The bill also introduces new requirements regarding advertising rebates and other payments received by some estate agents in relation to outgoings purchased on behalf of their clients. The bill requires that these payments be passed on to the agent’s client. It will be an offence for an estate agent to fail to pass on a rebate to the client or to charge their client more for the supply of goods or services than the estate agent paid to the supplier.
…
“The bill will also enable the regulations to specify consumer protection information that must be given by estate agents to consumers of estate agency services. This information will cover matters such as negotiating the agent’s commission, entering into a contract with an agent to sell or manage a property, warnings about engaging in prohibited auction practices, and advice on underquoting and overquoting, rebates and dispute avoidance and resolution processes. It is hoped that through the provisions of this information, consumers will be better informed of their rights and responsibilities when engaging the services of an estate agent.
…
“The bill will provide increased protection to consumers, will increase consumer confidence in the market and, as a result, will ensure that Victoria has a healthy and vibrant real estate market.”
[Underlining added for emphasis]
26 The consumer protection objectives were set out expressly in the Estate Agents and Sale of Land (Amendment) Act 2003 (Vic) (the Amendment Act), which introduced ss48A to 48E and amended ss49A and 50. The Amendment Act sets out its purposes in s1. They include amending the Act “to ensure that estate agents do not retain any rebates or discounts attributable to work they do for clients” (s1(b)(ii)) and “to generally improve the operation of [the] Act” (s1(b)(v)).
27 The purpose of the legislation is to protect consumers of estate agents’ services by ensuring they are provided with information Parliament considers is necessary to ensure they are not adversely affected by the perceived imbalance of bargaining power between estate agents and vendors of land.
28 Whilst neither the second reading speech nor the Amendment Act specifically refer to reasons for requiring the rebate prohibition statement to be made prior to any contract entered into between agent and vendor, it seems to me consistent with Parliament’s overall intention that consumers be better informed of their rights when engaging the services of a real estate agent, and that this include being advised of the rebate prohibition statement when they negotiate with their agent.
29 The necessity of complying with s49A in order for a real estate agent to be able to sue for, recover, or retain commission is clearly set out in the Act, and has been considered by the Supreme Court and Court of Appeal in other contexts.
30 In Icon Property Pty Ltd & Anor v Wood & Anor [2008] VSCA 123, the Court of Appeal considered the question as to whether an estate agent’s authority under which a property had already been sold once would constitute sufficient compliance with the s49A(1) requirement that the agent hold a written engagement or appointment that is signed by the vendor in respect of a second sale. The Court stated at [73]:
“Section 49A supports the view that the agent must hold an unequivocal written engagement containing information making clear the obligations which may follow from it, and signed by the vendors, before the agent may seek payment in respect of work done. Section 50 buttresses this position by precluding a claim of the type that is now in issue.”
31 In Maxwell v Moorabool Developments Pty Ltd [2004] VSC 392 at [210], Habersberger J summarised the defendants’ submissions with evident approval (though they were not accepted in the case before him by reason of his finding that the agent in that case was not acting as an estate agent but rather was a joint venturer):
“It was submitted on behalf of the defendants that, although there was no dispute that it had been agreed that MrMaxwell would be paid $2,000 for every lot sold by him, the provisions of the Estate Agents Act were quite explicit in preventing an estate agent from suing for, recovering or retaining any commission when s.49A(1) had not been complied with. The wording of the prohibition could not have been wider or stronger. Mr Northrop referred to the decision of Beach J in Sevastopoulos v Spanos by way of analogy in submitting that Mr Maxwell could not even make a claim based on the well known principles concerning restitution and unjust enrichment outlined by the High Court of Australia in Pavey & Matthews Pty Ltd v Paul ("Pavey"). In the former case, his Honour rejected the submission that the plaintiffs had brought their action in indebitatus assumpsit rather than pursuant to a domestic building work contract. However, his Honour went on to consider whether Pavey would have been applicable if the action had been based in indebitatus assumpsit. Beach J held that it would not, because of the difference in wording between the two statutory provisions. In Pavey there was s.45 of the Builders Licensing Act 1971 (NSW) which made the contract in question "not enforceable against any other party to the contract." In Sevastopoulos there was s.19(1) of the House Contracts Guarantee Act 1987 which provided that "the builder is not entitled to recover in any court the cost of any work performed or materials supplied under the variation." His Honour held that the latter provision was "far wider" and that it "specifically exclude[d] any claim whether founded on contract or otherwise." [Citations omitted]
32 In Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd [2015] VSC 77 (the Oliver Hume No 1 case), an agent sought to recover and/or retain commission it had been paid under a sales authority which omitted the rebate prohibition statement required by s49A(4)(c) of the Act. Cameron J, in deciding an interlocutory application as to whether leave should be granted to the agent to amend its statement of claim to seek rectification of the sales authority to include the omitted statement, said:
“It is clear from the plain and ordinary meaning of the words of the Estate Agents Act that the legislation is intended to have a strict operation. There is no scope, on that plain reading, for distinguishing between sophisticated parties or those who may be commercially inexperienced. Given the construct of the legislation, harsh consequences may follow from a failure to comply with its terms.
The authorities have construed such provisions strictly. They stand for the proposition that it is not for litigants to seek the aid of equity to nullify what Parliament has decreed, nor to permit parties to recover remuneration or commission in clear circumvention of Acts of Parliament.” [38-39]
“The legislation is clear, in its plain and ordinary terms. It operates strictly. So, if on the proper construction of the Sale Agreements (in a rectified form or otherwise), the formal requirements of the Estate Agents Act are not met, then Oliver Hume is not entitled to charge for or retain its commission.” [48]
33 A party to a related case, Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd & Ors (No 2) [2016] VSC 72 (the Oliver Hume No 2 case), appealed to the Court of Appeal on issues including those that were raised in the Oliver Hume No 1 case. The Court of Appeal judgment from the appeal in the Oliver Hume No 2 case does not contain any adverse comment or qualification expressed by the Court of Appeal regarding the dicta of Cameron J referred to above.
34 The Court of Appeal upheld Cameron J’s decision to grant leave to amend in CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd [2017] VSCA 11. The Court of Appeal did not comment on the merits of the principal claim in the proceeding (that the agent was not entitled to commission because of the non-compliance with s49A(1) of the Act, including the failure to include the rebate prohibition statement required by s49A(4)(c)). It did not express any disapproval of Cameron J’s comments on the law that would apply to the unrectified sales authority.
35 Section 49A must be complied with in order for a real estate agent to be able to retain or recover its commission.
36 It is clear that the Authority does not contain the precise words set out in s49A(4) of the Act. However, Advisory submits that the Authority nonetheless complies with the requirements of s49A(1). Firstly it says that it strictly complied with the requirements. Alternatively, it says that substantial compliance is all that is required, and that it substantially complied.
37 The difference between strictly complying and substantially complying is illustrated by the case of Equipment Investments Pty Ltd v M J Dowthwaite & Co Pty Ltd (1969) 16 FLR 23, which involved the interpretation of the Hire Purchase Act 1960 (NSW). There Gibbs J, as he then was, sitting as the Supreme Court of the ACT, considered various questions as to whether the form of a hire purchase agreement before him complied with a number of different requirements of that Act. The first requirement was that a statement had to be given “in accordance with the form” in that Act. His Honour noted at [31] that:
“…a statement is ‘in accordance’ with the form [within the meaning of that Act] if it is substantially in accordance with it and does not depart from it in any material respect. A divergence from the form would be substantial or material if it caused the statement to convey less information than the form requires or to confuse or mislead the prospective hirer as to the matters which the form is designed to bring to his notice.”
38 The second question before his Honour related to the fact that the hire purchase agreement was required to specify the date on which the agreement was deemed to have commenced. At [37], his Honour determined that on the proper construction of the agreement, the intention of the parties was that the hiring was to commence on the date of the agreement at [57]. However, his Honour held that the fact that the agreement contained terms from which the date required to be specified could be determined by implication, or by interpreting the agreement, was not sufficient compliance with the Act. The date had to be specified. Anything less was not sufficient compliance. There, strict compliance was required.
39 Dowthwaite is authority for the following:
· It is a question of construction of legislation whether particular requirements to include statements or other information in certain agreements must be strictly complied with, or whether substantial compliance will suffice; and
· Where substantial compliance is sufficient, the statement or information in fact provided must not depart from the wording or form required by the legislation in any material respect, and any divergence which causes the statement or form to convey less information than the legislation requires or to confuse or mislead the class of persons the legislation is intended to protect as to matters required to be brought to their notice will not comply.
40 In a recent decision on compliance with the formal requirements of s88 of the National Consumer Code, contained within Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth), Lansdowne J, in Westpac Banking Corporation v Tesoro [2012] VSC 182, commented at [27]-[28]:
“In Equipment Investments Pty Ltd v MJ Dowthwaite and Co, (Equipment Investments) Justice Gibbs, as he then was, sitting in the ACT Supreme Court held, in relation to compliance with a statutory form of notice in a hire purchase context, that:
A divergence from the form would be substantial or material if it caused the statement to convey less information than the form requires or to confuse or mislead the prospective hirer as to the matters which the form is designed to bring to his notice.
This test was adopted by Patten AJ in Permanent Mortgages Pty Ltd v Cook and Anor (Cook) in relation to a default notice under the State Code precursor to s 88 (s 80 of the State Code). The test was formulated differently, without reference to Equipment Investments or Cook, by the New South Wales Court of Appeal in Monas v Perpetual Trustees Victoria Ltd (Monas). In that case, the court dismissed an appeal from Hoeben J at first instance who had held that the default notice sufficiently complied with the legislative requirements. Young JA, with whom Beazley and McColl JJA agreed, held that, in accordance with prior authority on default notices under conveyancing legislation, default notices “are valid so long as they reasonably convey to the recipient the message that the section intends the borrower to receive and the borrower is not misled.” It may be that in truth this is not a different test, if a notice cannot be said to “reasonably convey” the intended message if it contains less information than the form or section requires.” [Citations omitted]
41 Advisory first argues that s49A(4)(c) has been strictly complied with by the wording of the Authority. It says in construing s49A(4)(c), it should be read in its context: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. It says that a rebate is only relevant if there are expenses which the agent is requiring the vendors to pay. It says that the question of an estate agent retaining a rebate could only arise if the real estate agent were passing on to a client an expense it purportedly incurred to a third party on the client’s behalf, but where it had received a rebate from the third party so the real cost of the expense to the real estate agent was reduced by the amount of the rebate. Since the Authority states that there are no amounts payable to Advisory by the vendors for advertising or other expenses, Advisory says that the rebate prohibition statement would be otiose or redundant. It says that s49A(4) should be read in such a way that the rebate prohibition statement is not required to be made where there are no amounts payable for advertising or other expenses.
42 It says any rebate that the agent gets the benefit of can only be relevant if there are expenses that it is seeking to pass on to the client, and there are no such expenses in this case as is apparent from the Authority. Further, the Authority expressly states at item 6, both “No rebate will be received”, and “The agent will not be, or is not likely to be, entitled to any rebate”. It says that when the Authority as a whole is read, it is apparent there are no expenses being passed on in this particular case by Advisory to the vendors. Advisory submits that there was strict compliance with the requirements of s49A because, on a literal reading of the section, there was no rebate applicable in this case.
43 I reject this submission. Firstly, this argument deals only with the entitlement to the rebate as a result of an outgoing paid by the agent and then passed on to the client, referred to in s49A(4)(i). Sections 49A(4)(a)(ii) and (iii) set up alternate ways an agent might receive a rebate, neither of them involving outgoings being paid by the agent. It is not apparent from reading the Authority as a whole that no rebate could arise from these.
44 Secondly, the Authority clearly does not state the words set out in s49A(4)(c) that “the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses”.
45 Whether there was in fact a rebate applicable or not on the facts of this case does not affect the fact that strictly, the words set out in s49A(4)(c) have not been included in the Authority.
46 Advisory submits that another interpretation of s49A is possible if strict compliance is required. That necessitates reading the word “and” as if it were “or” in sub-s(4) so that it instead reads:
“A rebate statement complies with this subsection if it is in a form approved by the Director or it contains…”. [Emphasis added]
47 Advisory says it is permissible when interpreting a statute to read “and” disjunctively, as if it were “or” if the underlying purpose or object and context of the provision suggests such an interpretation: Smith v Papamilhail (1998) 88 FCR at 88 to 89. It says that the purposive approach to interpretation is that the intended purpose of a statute could not be to produce an absurd or irrational consequence includes reading “or” for “and” where the purpose of the legislation suggests such an interpretation: Re Peat Resources Australia Pty Ltd (2004) 181 FLR 454 at 460. It says this interpretation is desirous because it assumes the Director who is charged with the task of approving the form under the Act knows what he is doing, so the estate agent can rest assured he or she has complied with his or her obligations if he or she elects to use that form, or alternatively, if the agent elects to use his or her own form then a list of statements and information must be contained as prescribed in s49A.
48 However, the purposive approach referred to, by reading “or” for “and”, is only relevant if an absurd or irrational consequence would otherwise result. That is not so in this case. If Parliament had not required the rebate prohibition statement to be made regardless of whether any rebate was applicable on the fact of a proposed exclusive sales authority, it would have made s49A(4)(c) instead appear as s49A(4)(b)(iv), so that the rebate prohibition statement was only required where there were expenses it could be applied to.
49 Where unambiguous words are used in a statute, words cannot be implied to avoid an inconvenient result. In Ottedin Investments v Portbury Developments [2011] VSC 222, Dixon J considered similar arguments to those put by Advisory in this case, that the definition of “deposit” in s29A(2) of the Sale of Land Act 1962 (Vic), if construed literally, led to the inconvenient result that instalment contracts were not terms contracts for the purposes of the Sale of Land Act and that therefore s29A(1)(b) of the definition of terms contract would be redundant. His Honour stated at [72] that there was no occasion to imply words into the section to arrive at the result that the contract before him was a terms contact. His Honour continued at [75]:
“In Project Blue Sky Inc v Australian Broadcasting Authority the High Court explained that the duty of the court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have which, ordinarily, will correspond with the grammatical meaning of the provision. Here, there is no difficulty in undertaking that assessment.”
50 I find that strict compliance with s49A(c) did not occur in this case. However, I also find that is not required. This is not a situation where a particular date, for example, was required to be specified, but is a situation where a message was required to be conveyed. What is required here is substantial compliance with s49A(4)(c), or, put another way, that the intended message of s49A(4)(c) is to be reasonably conveyed in exclusive sales authorities. So an exclusive sales authority that used slightly different wording to s49A(4)(c) but put the necessary message across would substantially comply with s49A(4)(c).
51 Advisory submits that the Authority substantially complies with the requirements of s49A(4)(c). It says the Authority as a whole conveys the message required by the section, and that this amounts to the necessary compliance.
52 Advisory submits that the reference to “rebate” in s49A(4)(c) needs to be interpreted in the light of the reference in s49A(4)(a), which requires the making of a statement of whether or not the agent will be, or is likely to be, entitled to any rebate in respect of any outgoings, prepayments made by the client in respect of intended expenditure by the agent on the client’s behalf, or payments made by the client to another person in respect of the work. It says that if the statement required by s49A(4)(a) provides no rebate will be received, then s49A(4) has been complied with and that is the end of the matter. It says s49A(4)(c) does not require an additional statement to be provided in its terms, because the statement provided under s49A(4)(a) has already made it abundantly clear that for the purposes of s49A(4)(c) there is no rebate for the agent to retain, and there are no expenses in respect of which the agent could charge the client an amount more than the cost of those expenses. It says that in circumstances where no expenses were being passed on, no question of the agent obtaining a rebate arose and it was obvious on a reading of the Authority by the vendors that no rebate could be retained. It says that in circumstances like the one in this case where the Authority makes it plain there is no amount from which the agent could or would receive any rebate, and no expenses for which the client could or would be charged any amount at all, a reproduction of the words contained in s49A(4)(c) would only serve to confuse or mislead the client. The client would be at a loss as to what rebate or expenses could be referred to by the inclusion of the rebate prohibition statement.
53 Advisory says that s49A(4) should be interpreted on the basis that s49A(4)(c) applies only where s49A(4)(b) first applies. It says if no rebate is received, s49A(4)(c) has no work to do and is superfluous. It says that if s49A(4)(b) applies, s49A(4)(c) is required in order to indicate that the agent is not entitled to keep the rebate and is not to charge the client an amount for expenses that is more than the cost of them. It submits that s49A(4) should be read as follows—
· Section 49A(4)(a) requires a statement as to whether a rebate will be, or is likely to be, received in respect of the matters in s49A(4)(i), (ii) or (iii);
· If there is a rebate, s49A(4)(b) requires details be provided of the goods or services affected by the rebate, the provider and the amount of the rebate; and the statement in s49A(4)(c) is only then required to be included, as a warning to the agent's client; and
· Section 49A(4)(d) is a stand-alone requirement. It only applies if there are "other statement or details required by the regulations”.
54 However, the Authority does not substantially comply with s49A(4)(c). It does not convey the information that the estate agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses. The information required to be conveyed by s49A(4)(c) is the agent is prohibited from retaining any rebate or charging the client more than the amount charged to the agent for any expenses, and that it must not do so. This is different from a statement (whether express or implied) that it is not in fact retaining any rebate in circumstances where no outgoings have been paid by the agent to which a rebate relates. (As mentioned in paragraph 43 above, an agent might receive a rebate in another way in any event.)
55 The fact that agents must not retain any rebates and on receiving any relevant rebate must immediately pay that amount to the client is dealt with in s48A. Section 48B provides that an agent must not seek to obtain from the client an amount for any outgoings or proposed outgoings that is more than the amount paid or payable by the agent for those expenses. Section 48B(2) provides that in determining the amount paid or payable by the agent any amount of rebate received or receivable by the agent in respect of the expenses must be taken into account. Section 48C deals with the treatment of non-monetary rebates where a rebate is, or is to be, obtained as a benefit rather than as a payment of money. Section 48E provides that a person who is entitled to be in paid an amount in respect of a rebate under s48A or s48B may recover that amount as a debt due by the agent if the agent fails to pay it.
56 It is in the context of those preceding sections that ss49A and 50 occur. Section 49A deals with the requirement of there being a written engagement or appointment signed by a person the agent obtains or seeks to obtain payment from in relation to work done or outgoings incurred, and with the requirement for the engagement or appointment to contain certain information including the rebate prohibition statement complies with s49A(4).
57 As beneficial legislation, this Act is to be strictly construed in favour of consumers in order to enhance consumer protection objectives. It is consistent with the requirement that consumers be advised of their rights up front and that this include being advised that agents are not entitled to retain any rebate or profit margin on expenses. The rebate prohibition statement gives information to the consumer of the estate agent’s services that the agent is prohibited from retaining rebates or margins.
58 The protection for consumers that Parliament intended by requiring a rebate prohibition statement to be made up front, before consumers sign contracts with estate agents, can only be speculated on, given that it is not specifically referred to in the second reading speech or in the Amendment Act which introduced ss49A and 50 into the Act.
59 It is possible that after signing an exclusive sale authority, things could change so that outgoings were then charged by the agent, and the issue of a rebate being received from those outgoings, and whether or not the agent was prohibited from retaining any rebate or charging the client more than the amount charged to the agent for any expenses, became relevant.
60 It is not an answer to say, as Advisory did, that in those circumstances (where later a rebate became applicable) if the rebate prohibition statement were not then made the contract would be unenforceable and that no commission would then be able to be charged or retained. That is a different issue to giving the consumer information about their rights up front as they negotiate contracts, and for them to have in mind when possible issues of variation of those contracts arise. They might not know the contract was unenforceable or be put on a track of enquiring about it without that information being included upfront. The example Mr Upjohn QC, for the vendors, offered at trial was that an Authority might be sought to be amended later to include marketing expenses. This might occur if, after initially considering commission was sufficient to cover the effective marketing of the property, the agents subsequently advised the vendor that a marketing budget had been found to be required. On the facts here, in a letter sent by Advisory’s director to the vendors’ solicitors dated 6 April 2016 (well after the Authority was entered into), Advisory pressed for an agreement by the vendors to pay marketing expenses of $10,000 that had not previously been required nor referred to in the Authority.
61 As stated above, it is not to the point that if the Authority were in fact amended to include marketing expenses without the rebate prohibition statement being made, that commission would then not be payable. It seems to me that what Parliament seeks to do by requiring this statement up front is to ensure that at all times consumers know what their rights are regarding rebates.
62 Advisory further relies on the fact that the Authority is in a form approved by the Director, who is charged with administering the Act. It says that s49A(1) requires either the Authority to be in a form approved by the Director or for it to contain the rebate prohibition statement (but both are not required).
63 It also points to the fact that the Director has authorised the form used for the situation where no rebate is required, as evidence of the Director’s view that the statement referred to in s49A(4)(c) is not required where the agent will not be, or is not likely to be, entitled to any rebates. Advisory submits that this is a factor I should take into account in how the section is interpreted. It says it would be an absurd result if real estate agents were liable to a civil penalty and forfeiture of their commission, for following the form approved by the Director who is charged with administering the Act. It says that where a particular interpretation of a statute produces an absurd or irrational consequence, the Court will conclude the legislature could not have intended such an operation and an alternative interpretation must be preferred: Cooper Brookes (Wollongong) Pty Ltd v FCT (1981) 147 CLR 297 at 320-321.
64 However, the effect of s49A(4) is that the Authority must be in a form approved by the Director and contain the matters set out in s49A(1). There are other matters that the Director might decide should be included in an Authority, apart from the matters the Act regulates must be included. For example, the second of the two approved forms which agents can download contains the following matters required to be included by the Director that are not required by s49A:
· A heading at the top of the document titled – “Important Information for vendors/landlords”;
· A statement at beginning of document that it is illegal for agent(s) to retain rebate;
· The following words:
“List of rebates:
·any outgoings; or
·any pre-payments made by the person engaging or appointing the agent (the client) in respect of any intended expenditure by the agent on the client’s behalf; or
·any payments made by the client to another person in respect of the work”
· A table to be completed, which sets out the goods or services to which the rebate relates, the name of the person or organisation providing the rebate and the total amount (including GST), stating “if amount not known, provide an estimate”.
65 The fact that the Director approved the form does not have the effect that therefore it complies with s49A(4)(c). Section 49A requires that an Authority contain the matters set out in s49A(1) as well as being in a form approved by the Director.
66 Advisory also argues that if s49A is ambiguous, any ambiguity should be resolved in favour of Advisory. This is because Advisory could be subject to a civil penalty under s49A(1), which follows in the event on non-compliance with the section. It says if there is a doubt as to the meaning of a provision imposing a pecuniary penalty, that should be resolved in favour of the subject of it, which here is Advisory: R v Adams (1935) 53 CLR 563 at 567-8, Beckwith v R (1976) 135 CLR 569 at 576, and Rich v ASIC (2004) 220 CLR 129.
67 However, the section is not ambiguous. On the contrary, it sets out in clear wording a separate requirement for the rebate prohibition statement. The cases relied on by Advisory in relation to the considerations of the imposition of a pecuniary penalty under s49A(4)(a) are not relevant to the decision I need to make as to what obligations Parliament has imposed under s49A.
68 Advisory also argues that it must be presumed that the legislature did not intend to invade the common law right to payment for work done under a contract or on a quantum meruit basis. Advisory relies on Coco v the Queen (1994) 179 CLR 427 at 437 where the High Court stated:
“The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language.”
69 It argues that the presumption can be overridden by sufficiently clear words, it constitutes a substantial level of protection for what has been termed “the principle of legality”. Advisory refers to ElectroluxHome Products Pty LtdvAustralian Workers Union (2004) 221 CLR 309 at 329 where Gleeson CJ said:
“The presumption is not merely a common sense guide to what Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law.”
70 Advisory says that many exclusive sale authorities issued by real estate agents over many years, incorporating the form approved by the Director when a rebate is to be received, would be nullified if s49A is interpreted to require the rebate prohibition statement an exclusive sale authority. This would mean many real estate agents might be denied commission for work done.
71 However, for reasons already given, this is a case where Parliament has manifested a clear intention to alter the earlier position where real estate agents could sue clients in contract or quantum meruit for work done. Sections 49A and 50 were enacted to make their right now to retain, or sue for, commission conditional on the information set out in s49A being provided.
72 The Authority does not contain the rebate prohibition statement required by s49A(4), and so does not comply with s49A(1).
73 Advisory cannot sue for, or recover, or retain any of the commissions it is seeking to recover in this proceeding under s50 of the Act.
CONCLUSION
74 I will give judgment for the defendants.
75 If the parties are unable to agree on the costs order to follow, I will list the matter for a hearing on those matters. Otherwise, those orders that follow will be made on the basis of an agreed minute of orders provided by the parties.
Certificate
I certify that these 23 pages are a true copy of the reasons for decision of her Honour Judge Marks, delivered on 29 August 2017.
Dated: 29 August 2017
Liz Main
Associate to Her Honour Judge Marks
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