Brett Woods v Independence Realty Pty Ltd
[2014] NSWCATCD 131
•07 February 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Brett Woods and ORS v Independence Realty Pty Ltd [2014] NSWCATCD 131 Hearing dates: 29 May 2013 and 15 October 2013 Decision date: 07 February 2014 Before: R Buckley, Senior Member Decision: The application is dismissed
Catchwords: Construction of contract term Legislation Cited: Consumer Claims Act 1998
Property, Stock and Business Agents Act 2002
Consumer Trader and Tenancy Tribunal Act 2001(repealed)
Home Building Act 1989
Civil and Administration Tribunal Act 2013Cases Cited: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
York Air Conditioning and Refrigeration (Australasia)Pty Ltd v Commonwealth (1949) 80 CLR 11Category: Principal judgment Parties: Brett Woods and ORS (Applicants) File Number(s): COM 12/29274 COM 12/30308 COM 12/31370 and others
reasons for decision
BACKGROUND
The fourteen applications referred to above were heard concurrently. All of the applicants are lot owners of a strata scheme premises, known as either Nelson Bay Breeze Apartments or Nelson Bay Breeze Resort, situated at Trafalgar Street, Nelson Bay, New South Wales.
All applications when filed, sought the same relief. The applications were ostensibly filed pursuant to s 36 of the Property Stock and Business Agents Act 2002. The relief sought was in the following terms:-
(i) Reimbursement of management fees from 26 May 2011 to 10 December 2011.
(ii) Reimbursement of management fees from 10 December 2011 to date.
The reasons stipulated for requesting the relevant orders were:-
(i) The property manager, the respondent in these proceedings, with whom each applicant had signed an Exclusive Management Agency Agreement, was alleged to have not been the holder of a licence issued in accordance with the provisions of s 9 of the Property Stock and Business Agents Act 2002 for the period from 26 May 2011 to 10 December 2011.
(ii) The applicants each allege that they had not been informed of changes to the relevant licence.
Subsequent to the original lodgment of the applications, the relief sought by the applicants evolved, such that by the time the applications came on for hearing, further relief was sought with respect to the following:-
(i) The respondent was alleged to have failed, in its duties as a property manager, to maintain and keep in good repair the common property including the gardens and pool of the relevant strata scheme, to the detriment of each of the owners.
(ii) That from approximately October 2009 the respondent had misinterpreted the provisions of the standard Exclusive Management Agency Agreement and charged to each of the applicants an excessive amount for marketing expenses, allegedly beyond that which was prescribed by the said agreement.
Although originally commenced, ostensibly pursuant to the Tribunal's limited jurisdiction under s 36 of the Property Stock and Business Agents Act 2002 (PSBAA), that section did not form the basis of the Tribunal's jurisdiction to grant the relief sought. Section 36 of the PSBAA is in the following terms:-
36 Review of commission and fees
(1) An action or other proceedings cannot be commenced by a licensee for the recovery of remuneration or any sum as reimbursement for expenses until the expiration of 28 days after a statement of claim has been served personally or by post on the person to be charged with the remuneration or expenses.
(2) The statement of claim must be in writing, set out the amount claimed and contain details of the services performed by the licensee in respect of which the remuneration or expenses are claimed.
(3) If money has been paid to or is or has been retained by a licensee (out of money received by or paid to the licensee) in respect of any transaction by or with the licensee as a licensee and has been so paid or retained as remuneration or as reimbursement for expenses in connection with the transaction, the person paying the money or the person who would be entitled to the money had the money not been retained, may require the licensee to furnish the person with an itemised account of the transaction in accordance with the regulations.
(4) A person who is served with a statement of claim under this section or is provided with an itemised account of a transaction as provided by this section may apply to the Tribunal for the determination of a consumer claim within the meaning of Consumer Claims Act 1998 in relation to:
(a) the entitlement of the licensee to the whole or any part of the amount specified in the statement of claim or the itemised account, or
(b) whether the whole or any part of the amount is reasonable, or both.
(5) For the purpose of the application of the Consumer Claims Act 1998 to that person, a reference in that Act to a
"consumer" is taken to include a reference to that person.
(6) The Tribunal has jurisdiction to hear and determine any such consumer claim despite:
(a) the terms or conditions of any agreement or contract entered into between the licensee and the applicant, and
(b) the amount being more or less than the maximum amount (if any) of remuneration to which a licensee is entitled under this Act.
(7) This section does not limit the Consumer Claims Act 1998.
(8) In this section:
"expenses" means expenses or charges incurred in connection with services performed by a licensee in his or her capacity as a licensee.
"remuneration" means remuneration by way of commission, fee, gain or reward for services performed by a licensee in his or her capacity as a licensee.
"Tribunal" means the Tribunal under the Consumer Claims Act 1998.
The section set out above, particularly section 1, refers to proceedings commenced by a licensee, that is by an agent whose fees are challenged by an owner or client of the agent. This section does not allow a recovery by a client of fees already paid. In any event, within the terms of the Consumer Claims Act 1998, in each of the applications the applicant or applicants are consumers who entered into a contract with the respondent for the provision of goods or services and accordingly each of the claims is properly construed as a consumer claim within the meaning of s 3A(1) of the Consumer Claims Act 1998 (the "CCA"). Within the terms of s 8(1)(a) of the CCA the Tribunal has the power to order a respondent to pay to an applicant a specified amount of money arising out of a successful consumer claim. The Tribunal is not limited in granting the former order originally sought in the application, reliant on the powers granted by ss 28(3) of the Consumer, Trader and Tenancy Tribunal Act 2001 (the CTTTA now repealed), see transitional provisions, Civil and Administrative Tribunal Act 2013 - Schedule 1, clause 7.
The applications were first heard on 29 May 2013, and were part-heard on that day pending, either agreement between the parties as to any entitlements, or the presentation of further evidence. Although certain findings were made on an interim basis, the Tribunal did not on the first day of the hearing, make any orders or decision in accordance with s 49 of the CTTTA. The matter was thereafter stood over on the 29 May 2013 to a date to be fixed on a part-heard basis. The respondent, in the intervening period, gave notice to each of the applicants that it would seek to adduce further evidence at the resumed hearing, and on a contingent basis provided to each of the applicants, the evidentiary material it would seek to rely upon.
The sections of the CTTTA relevant to the admission of further evidence in the particular circumstances, are ss 28(2) and (3) and s 35. Each of the sections are set out below:-
28 Procedure of Tribunal generally
(2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of procedural fairness.
(3) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
35 Opportunity for parties to present case
The Tribunal must ensure that each party in any proceedings is given a reasonable opportunity:
(a) to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise), and
(b) to make submissions in relation to the issues in the proceedings.
The applications were relisted on 15 October 2013. On that date Mr McAllister on behalf of the respondent sought to adduce further evidence on the issue of the interpretation of clause 5 of the Common Exclusive Management Agency Agreement. He had provided a statement to the Tribunal, a copy of which had been given to each of the applicants. There was no objection from the representatives of the applicants to Mr McAllister reopening the respondent's case. He did so on two bases, one to provide the information previously requested, and secondly to provide further evidence as to the substantive interpretation of the relevant contract term. Within the terms of ss 28(2) and (3) as set out above, the leave sought by the respondent was granted noting that the respondent had the right under s 35, and the Tribunal had the obligation to ensure that the respondent had the opportunity to present its case.
I shall now deal with the separate claims made by each of the applicants.
SEPARATE CLAIMS
The first claim as noted above relates to the allegation by the applicants that the respondent was not licensed under s 9 of the PSBAA during the period from 26 May 2011 to 9 December 2011. Mr McAllister gave evidence in relation to this allegation and conceded the allegation and that, through inadvertence the respondent had not renewed its licence until 10 December 2011. He said that irrespective of the respondent's breach of its obligations under the PSBAA to remain licenced, it, in its ignorance, continued to perform its management tasks for and on behalf of each of the applicants during the relevant period.
Relevantly s.9 of the PSBAA is in the following terms:-
9 Corporations require corporation licence
(1) A corporation must not act as or carry on the business of (or advertise, notify or state that the corporation acts as or carries on the business of or is willing to act as or carry on the business of) an agent unless the corporation holds a corporation licence.
Maximum penalty: 200 penalty units.
(2) A corporation is not entitled to bring any proceeding in any court to recover any commission, fee, gain or reward for any service performed by the corporation as an agent unless the corporation was the holder of a corporation licence at the time of performing the service.
Whereas ss 9(2) would deny the respondent the right to recover its commissions and fees during the relevant unlicensed period, if they had not been paid by the applicants, neither this section nor any other section of this Act gives a similar right of recovery to the applicants for a right of reimbursement of fees and commissions paid to the respondent under a mistake of fact and law, that is that during the relevant period the respondent was not a licensed entity.
The provision is not unlike s 4 of the Home Building Act 1989 which requires a builder to hold the appropriate licence before conducting building work on residential dwellings. Section 10 of the Home Building Act denies an unlicensed contractor the right to recover, or enforce a claim for unpaid contract fees for work carried out by the contractor. No right of recovery of fees paid is given under this statute for the customer of an unlicensed contractor.
In David Securities Pty Ltd v Commonwealth Bank of Australia Limited (1991) 175 CLR 353, the High Court considered a claim by a plaintiff to recover amounts paid to the bank on the basis that they had been paid under a mistake of law. In that case, the plaintiff could prove a loss, a situation that has not been advanced by any evidence provided by any of the applicants of loss related only to the respondent's unlicensed status. The High Court went on to say that the bank could avoid any liability, if it could establish that it had changed its position, reliant upon the wrongly held belief in the faith of the payment. In the case presently put by each of the applicants, the respondent has received the commissions, and carried out its managerial services on the mistaken belief that it was licensed. There is no evidence that the applicants failed to obtain the benefit of the relevant managerial services during the subject period.
The applicants have not established in each of the claims that any loss has been sustained and accordingly I reject both parts of the initial claims lodged by the applicants, that is the failure of the respondent to be licensed and any alleged failure to provide information. Neither technical statutory breach has caused loss.
The applicants adduced evidence of an alleged failure by the respondent to properly maintain the common property of the strata scheme, including the surrounding gardens and pool. Each of the applicants, as owners of a short term rentable strata unit situated in a tourist area, have a valid interest in the continued high level of presentation of the strata building and its surrounds. They are neither the owners of the common property, nor under the terms of each of the common Exclusive Management Agency Agreements, does the respondent have any contractual obligation to each applicant to maintain the common property. The Owners Corporation of the relevant strata scheme is not a party to the proceedings. The individual lot owners cannot pursue any alleged default of any contractual obligation that may or may not have been due to the Owners Corporation of the Nelson Bay Breeze Resort by the respondent.
The most contentious part of the individual claims by the applicants relates to the form of common Exclusive Management Agency Agreement referred to hereinafter as "the agreement". The relevant clauses are set out below.
Agent's Remuneration
4. The agent shall be entitled to the following fees: (GST incl.)
(a) NA
as a letting fee upon effecting any letting of the premises;
(b) NA
as a Tenancy/Agreement preparation fee; and
(c)for the provision of all ongoing usual property management services in respect of the premises:
(i)a manangement fee of 17% of all monies collected on behalf of the landlord; and
(ii)an administration fee of $ NA per
(iii)other - postage $10
Marketing
5. The premises are to be marketed and/or promoted as per the attached schedule
Yes No X and/or as follows Web Sites.
the fees for each letting are 3% and are due and payable ---------
The evidence is that from October 2009, with respect to each individual short term letting arrangement, the respondent has charged a combined management fee and marketing fee of 20% of all monies collected on behalf of the landlord, i.e. each of the applicants.
Evidence was provided by Mrs G Bradshaw, an applicant/owner, both in written and oral form as to certain representations made by Mr McAllister at an Annual General Meeting of the lot owners which occurred in about May 2012. In evidence given on the 29 May 2013 Mrs Bradshaw confirmed the contents of her statement that at the relevant meeting Mr McAllister provided figures to those present as to the following:-
Total rent revenue for the entire resort
$515,216.00
Management fee
$104,154.00
3% marketing
$3,125.00
Mrs Bradshaw went on to state, incorrectly in her belief that Mr McAllister said that he had proof of 8% of the fees received being spent on marketing and not 3%.
In his statement of 4 August 2013, as confirmed in his oral evidence of 15 October 2013, Mr McAllister stated that for the entire period from 9 October 2009 to 26 July 2013, the total rent received was $2,372,272.83 and that by his calculation 3% of the total rent amounted to $71,168.84. He went on to state that the actual marketing spend both for wages for internal marketing represented 5.3% of the total rent for the period and not 3%.
In his earlier evidence given in May 2013, Mr McAllister conceded that the figures provided by Mrs Bradshaw were correct.
The nub of the issue surrounds the interpretation of clause 5 of the agreement as noted above, and not how or what is spent on marketing the resort complex. There is an obvious element of ambiguity within the terms of clause 5.
It is submitted on behalf of the applicants, on the basis of the information provided by Mrs Bradshaw concerning the figures presented by Mr McAllister at the May 2012 meeting, that a 3% marketing fee was calculated as being 3% of a total management fee of 20%. If this construction of clause 5 of the agreement is correct, and that approach were applied to the correct management fee, that is a 17% management fee, then there has been a quite substantial overcharge with regard to the marketing element of the agreement.
The respondent submits that the 3% is a percentage of the total rental income and since October 2009 that has been the practice and process of the respondent in charging management fees. It should be noted that in all statements provided to the applicants by the respondent each periodic statement contains an amount for a total management fee that is not split up into components of management and marketing fees.
In the interpretation of a contract term, a court or in this case, the Tribunal will apply a principle that it is better for an agreement to have validity, rather than to be found void. A Tribunal can and does fill in the gaps and interpret the meaning of the words used. (See York Air Conditioning and Refrigeration (Australasia) Pty Ltd v Commonwealth (1949) 80 CLR 11 at 26).
There is little doubt that the figures presented by Mr McAllister in the May 2012 meeting are entirely inconsistent with the statements issued by the respondent from October 2009. Mr McAllister's statements are not and cannot be instructive as to the proper construction of a contract term. The evidence presented in October by Mr McAllister, in my view, points to the source of the confusion. Clause 5 does not require the respondent to spend the percentage marketing fees that it collects. In accordance with clause 7(b) of the agreement the respondent is not contractually obliged to refer to the applicant/owner, "for instructions concerning reletting and marketing/promotion." By virtue of this clause the respondent does not have to seek approval from individual owners for its marketing operations (as long as they fall generally within the description of web sites), nor can it claim a reimbursement of any fees for marketing expenditure incurred above the 3% contribution, nor for that matter reimburse to owners any minor under-expenditure. However, pursuant to sections 125 and 171 of the PSBAA the respondent is under an obligation to account for all rental income received and management fees, and other disbursements incurred, including marketing expenses paid from the letting marketing percentage. Although not an issue, in my view it is misleading to account to applicants by aggregating the management fees and marketing percentage together - the former is an amount received by way of general application, including profit whereas the latter percentage of letting fees received is dedicated to one purpose - marketing/promotion.
The management fees described as 17% "of all monies collected on behalf of the landlord". The meaning of this statement relates to payments, not made by the landlord, but payments made to the agent on behalf of the landlord in the form of rental income.
Clause 5 provides an alternative of a specific letting fee of a fixed sum or some other basis. The character of the lettings are short-term, usually of days only.
In a number of earlier agreements executed in October 2009, see for example exhibit B, the marketing fee was incorrectly stipulated at $30.00 per letting. By way of example for a letting of one day at $150.00, the marketing fee would represent 20% of the entire rental income for that letting. The mistake was quickly noted and each of the agreements now is as set out above as being 3% for each letting. The issue then comes down to 3% of what? A letting may be for one day, it may be a number of days or weeks. The percentage must and can only relate to a sum of money.
The structure of the agreement separates the agent's remuneration and marketing fees. The only thing that relevant clauses ostensibly have in common, is that they set out a percentage which is referable to lettings of the applicants' properties. The contract is not in my view, void for uncertainty. It should be noted that the additional evidence of Mr McAllister was largely off point, as it did not address the crux of the dispute, and that is the meaning of clause 5 of the agreement.
I interpret clause 5 as meaning that the 3% should be read as a percentage of the income derived from each letting and that such fee is due and payable by the landlord/applicant to the agent/respondent. The operative words are, "...the fees for each letting are 3% and are due and payable..." There is a link between the marketing percentage and the letting. This separation of marketing fee and agent's remuneration is consistent with clause 7(b) which provides the agent certain independence with regard to re-letting and marketing functions.
Acceptance of the applicants' submission would mean an interpretation consistent with the insertion of the words, "...of all management fees" after the percentage number, "3%" where it appears in clause 5. The structure of the agreement in separating Agent's Remuneration and Marketing is also not consistent with the applicants' submission.
I also refer to [7] of my orders of 29 May 2013, and note that I accept the assurances of Mr McAllister that the two isolated occurrences of alleged failure to account for individual lettings either have been or will be corrected immediately in accordance with the respondent's statutory obligations.
ORDERS
The applications are dismissed.
(Signed)
Richard F Buckley
Senior Member
NSW Civil and Administrative Tribunal
7 February 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 11 September 2014
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