Canberra South Real Estate Pty Ltd v 3 Property Group 5 Pty
[2022] ACTSC 217
•25 August 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Canberra South Real Estate Pty Ltd v 3 Property Group 5 Pty Ltd |
Citation: | [2022] ACTSC 217 |
Hearing Dates: | 16 July and 13 August 2021 |
DecisionDate: | 25 August 2022 |
Before: | McWilliam AsJ |
Decision: | (1) The separate questions be answered as follows: (i) Does Part 6 of the Agents Act apply to the Agreement between the plaintiff and the defendant? Answer: Yes. (ii) If the answer to question 1 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming for commission and expenses under the Agreement? Answer: Yes. (iii) If the answer to question 2 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming payment for services provided to, or for the benefit of, the defendant on a quantum meruit basis? Answer: No. (2) Costs be reserved. (3) The matter be listed for directions on 12 September 2022 at 9:30am. |
Catchwords: | STATUTORY INTERPRETATION – Agents Act 2003 (ACT), s 99 – where agency agreement concerns sale of residential townhouses – whether Part 6 of the Agents Act applies – whether the land in question was “not used or intended to be used only or mainly for commercial, business or industrial purposes” STATUTORY INTERPRETATION – Agents Act 2003 (ACT), s 100 – whether “commission or expenses” means all remuneration for services provided by an agent – whether s 100 of Agents Act prevents a claim for payment on a quantum meruit basis |
Legislation Cited: | Agents Act 2003 (ACT) ss 6, 99, 100 Agents Bill 2003 (ACT) Property, Stock and Business Agents Amendment Bill 2013 (NSW) |
Cases Cited: | Abbhall Pty Ltd v Canberra Land Developments Pty Ltd [2009] ACTSC 120 ACQ Pty Ltd v Cook [2008] NSWCA 161; 72 NSWLR 318 Upjay Pty Ltd v MJK Pty Ltd (2001) 79 SASR 32 |
Texts Cited: | Australian Capital Territory, Parliamentary Debates, Legislative Assembly, 13 March 2003, 997 (Chief Minister Jon Stanhope) Explanatory Statement, Agents Bill 2003 (ACT) New South Wales, Parliamentary Debates, Legislative Assembly, 14 November 2012, 16832 (Minister Anthony Roberts) |
Parties: | Canberra South Real Estate Pty Ltd (Plaintiff) 3 Property Group 5 Pty Ltd (ACN 616 338 562) (Defendant) |
Representation: | Counsel B Buckland (Plaintiff) D Robens (Defendant) |
| Solicitors Mills Oakley (Plaintiff) Lexmerca Lawyers (Defendant) | |
File Number: | SC 401 of 2020 |
McWilliam AsJ
A property developer in Canberra (3 Property Group 5 Pty Ltd (ACN 616 338 562)) has sold a number of residential units in Greenway. There was an exclusive agency agreement between the developer and Canberra South Real Estate Pty Ltd or CSRE, under which that agent now claims an entitlement to commission in the amount of $668,759.00. The developer resists paying any of the said amount because it claims the agreement did not comply with certain requirements of Part 6 of the Agents Act 2003 (ACT) (Agents Act). That statute provides that unless the requirements and procedures there specified are followed, any claim for commission and expenses is not recoverable by the agent.
The present proceeding is brought pursuant to r 1521 of the Court Procedures Rules 2006 (ACT) (Rules) for the determination of three separate questions that have been settled by the Registrar, with a separate hearing of those questions ordered on 16 July 2021. The questions are to be determined based on a statement of agreed facts helpfully prepared by the parties.
Essentially the parties want to know:
(a) Whether Part 6 of the Agents Act applies to their agreement;
(b) If it does, were the requirements of the statute complied with; and
(c) If the agreement did not comply, is there any scope for recovery of remuneration on a quantum meruit basis for work done notwithstanding the failure to comply with the statute.
Determination of those questions will largely (and potentially, completely) resolve the dispute between them. In the substantive proceeding, from which these separate questions originate, the developer puts two further claims in the alternative. The first is for breach of contract, alleging a failure to perform the services required under the agreement, and the second is an asserted entitlement to termination of any agreement, based on the agent’s failures and alleged repudiatory conduct in not facilitating sales.
Both of those alternative cases only arise if it is found that there is a contractual right to claim commission or expenses. They are not relevant to the application before the Court but provide context to the application itself and the reason why the parties have proceeded down the path of having separate questions determined.
Summary of findings on the Separate Questions
As will be seen in the reasons that follow, the separate questions have been answered as follows:
(1)Does Part 6 of the Agents Act apply to the Agreement between the plaintiff and the defendant? Answer: Yes.
(2) If the answer to question 1 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming for commission and expenses under the Agreement? Answer: Yes.
(3) If the answer to question 2 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming payment for services provided to, or for the benefit of, the defendant on a quantum meruit basis? Answer: No.
Agreed facts giving rise to the dispute
What appears below are the facts that have either been agreed between the parties or were otherwise stated to be uncontroversial.
In December of 2016, the developer purchased Block 5 Section 13 Greenway (Land). The developer purchased the Land with the intention of lodging a development application (DA) to change the prescribed use of the land, develop residential townhouses on it, and then sell those houses individually.
At the time the land was purchased, the Crown lease stated the purpose of the land was for “offices and store and purposes ancillary thereto,” and further that “the use of the premises for store is permitted only for the purposes of the National Archives of Australia”.
On 3 May 2017, the parties entered into the agreement, with the intention that the agent would sell individual residential dwellings “off the plan”. The relevant terms of the agreement provide:
6. REMUNERATION
6.1 Commission
(a) The Seller will pay CSRE a commission for the sale of each Property.
(b) The agreed commission rate is 1.5% of the sale price for each Property.
(c) The agreed commission rate for the sale of each Property is inclusive of GST.
(d) Upon reaching the presale target of 90 sales for each sale thereafter the agent will be paid an additional performance bonus of $1,000.
6.2 Payment of commission
(a) The agreed commission will be due on Settlement [defined through a combination of definitions in cl 1.1 to mean “completion of a Contract for Sale, prepared in accordance with Civil Law (Sale of Residential Property) Act 2003 (ACT) in respect of a Property] of each Property.
On 24 July 2017, the developer submitted a DA to vary the Crown lease for the Land to permit multi-unit housing and the construction of not more than 154 dwellings. This application was approved on 26 October 2017.
What is clear is that the Land was purchased with an intention of developing the site and then selling individual residential townhouses, and the agent was engaged to market those properties.
Question 1: Does Part 6 of the Agents Act apply to the Agreement?
Part 6 only contains two sections: ss 99 and 100. Whether the part applies to the agreement here turns on whether the agency services in the agreement fall within the terms of s 99 of the Agents Act. That section provides (emphasis added):
99 Application of pt 6
This part applies to services provided in relation to––
(a) rural land; and
(b) other land not used or intended to be used only or mainly for commercial, business or industrial purposes.
The emphasised words direct attention to the dispute between the parties. If the Land in relation to which agency services were provided was “used or intended to be used only or mainly for commercial, business or industrial purposes”, then the requirements and consequences of s 100 of the Agents Act (set out below) do not apply.
The parties disagree on how to interpret the emphasised words. In particular, they disagree on the point at which ‘use’ is assessed, and how the use of the Land should be assessed.
In relation to how to characterise use, the agent submitted there are two possible ways this can be assessed, being either:
(a)The purpose to which the land can lawfully be put, as stated in the Crown lease.
(b)The use or intended use of the relevant land in the hands of the owner.
The agent further argued that the time for assessment was when the relevant agreement was executed.
The agent contended that the ambiguity in what is meant by ‘use or intended use’ may be resolved by interpreting the provision so as to best achieve the purpose of the provision: Legislation Act 2001 (ACT) s 139.
Recourse may be had to the following from the Presentation Speech when the Agents Act was introduced (Australian Capital Territory, Parliamentary Debates, Legislative Assembly, 13 March 2003, 997 (Chief Minister Jon Stanhope)):
Agency agreements between agents and sellers must now be in writing; oral agreements will no longer be acceptable. Sellers of properties will be protected from being disadvantaged by unscrupulous agents. This measure will also afford protection in some cases for agents where instructions might not be entirely clear cut. This measure will enable home owners to better understand their rights and obligations under agency agreements.
The Explanatory Statement for the Agents Bill 2003 (ACT) (Explanatory Statement, Agents Bill 2003 (ACT) 3) (Explanatory Statement) is to similar effect. It includes the following:
… Agents’ agreements between agents and sellers must now be in writing. Oral agreements will no longer be acceptable. Sellers of properties will be protected from being disadvantaged by unscrupulous agents. This measure will enable homeowners to better understand their rights and obligations under agency agreements.
The agent submitted that from those statements, the legislative intention behind part 6 of the Agency Act was to protect homeowners when selling their homes. It was not intended to apply to sophisticated commercial parties. Nor was it intended to apply to circumstances where the land was being developed for profit, which is a commercial purpose.
The agent argued that at the time the agreement was signed, the Land was being used for a commercial or business purpose. In May 2017, it was still being used for office purposes, and was intended to be redeveloped as part of the defendant’s business, being the development and sale of residential units for profit. The consequence contended for by the agent is that, whether the use is characterised by reference to what was permitted by the Crown lease or by reference to the development use of the land by the developer, part 6 does not apply.
The developer contended that the primary intended purpose of the Land was residential, not “only or mainly… commercial, business, or industrial” purposes. Accordingly, part 6 applied on the plain words in s 99(b).
In support of that construction, the developer relied on judicial consideration of a similar provision in NSW legislation, being the Property, Stock and Business Agents Act 1941 (NSW) (1941 NSW Act), in Investmentsource Corporation Pty Ltd v Knox Street Apartments Pty Ltd [2002] NSWSC 710; 56 NSWLR 27 (Investmentsource), specifically at [35] of the reasons of Barrett J. The developer argued that the purpose of the Land is tied to the “character of the premises”. That is, “use” of the land is ascertained by reference to the nature of the activity that is or will be conducted by those who occupy the land. In the present case, that was residential units and therefore part 6 was applicable.
Determination
Much of the approach submitted by the plaintiff (the agent) was based on the now orthodox approach to the statutory interpretation of legislation, broadly captured in a three-word slogan of text, context and purpose, but articulated more elegantly in cases such as Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [78] and Thiess v Collector of Customs [2014] HCA 12; 250 CLR 664 at [22]-[23]. The meaning of the statutory text itself is informed by the context in which it sits, and that context includes the statutory purpose. However, in applying that approach, I have arrived at a different conclusion from the agent.
First, an interpretation of “use” of the land as depending upon the motive of the individual selling the real estate asset rather than the end use of the land is not supported by the text. The words are “other land not used or intended to be used only or mainly for commercial, business or industrial purposes.” The subject in that subsection is “land”; the purposes specified are tied to the land, not the purposes of the owner.
Second, any such distinction is difficult to draw from the context. In working out the meaning of the Act, the provisions must be read in the context of the statute as a whole: Legislation Act s 140. Context should be taken in its “widest sense”, including the other provisions of the statute and its legislative history: see SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 262 CLR 362 per Kiefel CJ, Nettle and Gordon JJ at [14].
The Agents Act deals with more than just real estate agents. The intention behind enacting the Agents Act was driven by a perceived need to protect sellers from unscrupulous agents in general. The same intention has been discussed in cases where equivalent legislation was introduced in other jurisdictions: see Terry Pfeiffer Real Estate Pty Ltd v Connors [2000] NSWSC 452 at [18] and Houston v Dewi Thomas Pty Ltd [1967] VR 300 at 302. Such intention is consistent with the statements made in the Legislative Assembly and Explanatory Statement, extracts of which are set out above.
There is no distinction made in the Agents Act carving out any category of agency agreement based on the business acumen or level of commercial sophistication of the principal who engages the agent. The exclusions are set out in s 6 of the Agents Act and reg 5C of the Agents Regulation 2003 (ACT) (Agents Regulation). They are directed to agents whose services are comprehensively regulated by other legislation, such as executors, trustees, liquidators and lawyers.
There is also no distinction made anywhere in the Agents Act differentiating between whether the agent’s services are engaged in the course of conducting a business or privately. A property developer undertaking a large-scale apartment block development and an individual who buys a single house, renovates it and then sells it for profit in quick succession (or what is colloquially known as a ‘flipper’) are each equally in the business of developing residential property for profit.
Third, while I accept that the Presentation Speech may be considered as one of the permissible tools (Legislation Act s 142) in working out the meaning of the text, it is appropriate to remember the various statements of caution as to the distinction between subjective intention and the meaning of the words actually used. In Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 Brennan J referred to the following statement of Lord Reid in Black-Clawson Ltd v Papierwerke AG [1975] AC 591, 613 at 321-322 (reference omitted):
We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used. We are seeking not what Parliament meant but the true meaning of what they said.
Similarly, as part of the statutory context, although explanatory statements are permissibly considered when interpreting a legislative provision in a way that best achieves its purpose (ss 141 and 142 of the Legislation Act), such statements cannot be used as a substitute for the text itself: Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518.
Thus, while unsophisticated homeowners may have been the class of persons to which the protections contained in part 6 of the Agents Act were directed as arguably what was meant by the reference to “homeowners” in the extrinsic materials, the legislative drafters did not seek to distinguish between categories of owners in either the applicability of the statute as a whole, or part 6 specifically. The provisions of the Agents Act are broad enough to encompass the protection of any seller of residential (in this case) real estate, whether they be labelled first homeowner, down-sizer, investor, developer, or ‘flipper’.
The proper construction of the text employed is simply the use or intended use of the land itself at the time the agency agreement is signed. In the case where the site is an office block or industrial site, if the agency agreement in question is to sell the land without a change of that use, part 6 will not apply. If the agency agreement is signed in advance of such a site being developed, but the services of the agent are to sell the residential townhouses or units that will exist on the land once they are built or developed from an existing block, then the intended “use” of the land to which the services of the agent relate is a residential use.
Applying that construction to the present agreement between the developer and agent, although the contract was signed at a time that the use of the land named in the Crown lease was commercial, business or industrial (storage), the services of the agent related to the future sale of residential townhouses. The intended use is therefore caught by s 99(b).
Investmentsource
To the extent that there is authority in other jurisdictions that may assist in working out the meaning of s 99(b), it is consistent with the above construction.
In Investmentsource, Barrett J considered the meaning of the same phrase “used or intended to be used solely or principally for commercial, business or industrial purposes”, as it applied to the now repealed 1941 NSW Act.
The matter before Barrett J concerned the owner of a home unit building (Knox), and a real estate agent (Investmentsource) who performed services in relation to the marketing of the home units. The agent sought to recover a sum it alleged Knox held on trust for it, pursuant to the written agreement between the parties. Knox resisted the claim on the basis that the agent could not recover the amount, pursuant to provisions of the 1941 NSW Act.In similar fashion to the separate questions under consideration here, the parties in Investmentsource sought the Court’s determination of a series of questions, relevantly including (at [5]):
Whether performance by [Investmentsource] under the 24 May 2001 agreement involved acts on its part within the purview of s42AA and s42A of the [1941 NSW Act].
The requirements of ss 42AA and 42A are set out below in the context of considering Question 3 in the present case. The part of Barrett J’s decision that is relevant to Question 1 concerns whether s 42AA applied to the agreement there in issue. Regulation 10 of the (now repealed) Property, Stock and Business Agents (General) Regulation1993 (NSW) (1993 NSW Agents Regulation) provided, in summary, that s 42AA did not apply if (emphasis added):
…
(2) …
(a)the agreement is solely for the performance of services that relate only to:
• commercial land, being land used or intended to be used solely or principally for commercial, business or industrial purposes, or
• land used or intended to be used solely or principally for agricultural or pastoral purposes…
…
Barrett J rejected a submission by the agent in that case that the units were used “solely or principally for a commercial [or] business purpose” because they were the subject of a commercial venture by the parties. His Honour discussed the wording of reg 10(2)(a) at [35]-[36] (emphasis added):
The provision in question pays attention to the use or intended use of the land in the sense of the nature of the activity that is or will be conducted by those who occupy it. It is concerned with what Badgery-Parker J called, in New South Wales Land and Housing Corporation v Toufic (1992) NSW Conv R 55-625 (59,554), “the character of the premises”. The following observations of the High Court in Barnard v Gorlin (1955) 95 CLR 35 are also in point:
“… A person may lease premises as premises in which people may dwell, and the number of lettings and other attendant circumstances may suffice to indicate that he is engaged in a business of letting premises for that purpose. But the premises are nevertheless used solely as a ‘dwelling house’ where that is the sole use to which they are put by their occupants.”
It is common ground that the Chippendale development was a residential development in that it involved the construction of home units so configured and fitted out as to be dwellings for human habitation, with kitchens, bathrooms and other rooms which one would expect to be used for living and sleeping. Although the applicable facts do not extend this far, I assume that the local government permitted use is for residential purposes. In these circumstances, the only correct conclusion as to the use or intended use of the property is that it was not solely or principally for commercial, business or industrial purposes.
The agent in the present case submitted that Investmentsource ought not be followed without independent analysis of the ACT legislation (which I have undertaken above) and further, that the analysis in NSW relied upon two cases that concerned residential tenancies legislation, namely New South Wales Land and Housing Corporation v Toufic (1992) NSW Conv R 55-625 (59,554) (Toufic) and Barnard v Gorlin (1955) 95 CLR 35 (Barnard).
I accept that the meaning of “[use] for commercial purposes” in a statute dealing with agency agreements cannot be determined by reference to how the word “use” was construed in the different statutory context of residential tenancies legislation. But it does not follow that the construction given to the words by his Honour was wrong. The underlying reasoning in Investmentsource was that the use of the land focused on the activity that is or will be conducted on the land, rather than the business motives of the owner of the land.
Whether the statute, so construed, has unreasonable consequences or absurdity arises
The agent contended that a construction excluding the development of residential properties for profit from the ambit of “commercial… purposes” would create the absurd result of rendering compliance with part 6 of the Agents Act impossible in the context of most residential developments.
In the discussion that follows, I have assumed there may be considerable business inconvenience visited upon agents who are engaged by property developers at an early stage. Although it was not a specific agreed fact, the agent here was retained following a commercial tender process, which occurred before development approval was formally obtained. I have otherwise decided the point by what is apparent on the face of the statute and the statutory scheme created by the Agents Act and the Agents Regulation.
Where an agency agreement concerns a prospective development which has yet to be approved and whose design is not yet known with certainty, much of the detail required by s 100 and the Agents Regulation is unavailable to both the agent and the principal.
In order to properly understand the agent’s submission, it is necessary to understand what s 100(1) of the Agents Act requires (sub-sections 100(2) and 100(3) deal with the court’s power to order recovery of commission or expenses in limited circumstances and are set out below). It is in the following terms:
100 No commission or expenses without agency agreement
(1) A licensed property agent is not entitled to commission or expenses from a principal for services provided by the agent for the principal unless—
(a)the services were carried out under a written agreement signed by the principal and the agent (an agency agreement); and
(b)the agency agreement––
(i)identifies the rebates, discounts, commissions and expenses that the agent may receive; and
(ii)estimates the amount of any rebates, discounts, commissions and expenses; and
(c)the agency agreement complies with the regulations; and
(d)a copy of the agency agreement signed by the agent was given to the principal within 48 hours after the agreement was signed by the principal.
Note If a form is approved under s 177 for an agreement, the form must be used.
Regulation 15 and schedules 3-7 of the Agents Regulation contain further detailed requirements of the contents of particular categories of agreement, including specific additional requirements in Schedule 4 where the agent acts for the seller of residential property. Schedule 4 concerns “Terms specific to agency agreements for sale of residential property”. It contains the following regulation:
4.1 Exclusive agency and sole agency agreements
(1) If the agency agreement is an exclusive agency agreement the agreement must include the following statement:
IMPORTANT: This is an exclusive agency agreement. This means you may have to pay the agent commission even if another agent (or you) sells the property or introduces a buyer who later buys the property.
(2) If the agency agreement is a sole agency agreement the agreement must include the following statement:
IMPORTANT: This is a sole agency agreement. This means you may have to pay the agent commission even if another agent sells the property or introduces a buyer who later buys the property.
(3) An agency agreement is an exclusive agency agreementif the agreement provides for the agent to be entitled to commission on the happening of an event whether or not the agent or the client, or both, is or are the effective cause of the happening of the event.
(4) An agency agreement is a sole agency agreementif the agreement provides for the agent to be entitled to commission on the happening of an event (whether or not the agent is the effective cause of the happening of the event) unless the client is the effective cause of the happening of the event.
(5) The statement under subsection (1) or (2) must follow immediately after the term required by schedule 3, section 3.9 (Remuneration) and be no less prominent than that term.
4.2 Warning about other agency agreements
(1) The agency agreement must include the following statement
WARNING: Have you signed an agency agreement for the sale of this property with another agent? If you have you may have to pay 2 commissions (if this agreement or the other agreement you have signed is a sole or exclusive agency agreement).
(2) The warning statement under subsection (1) must follow immediately after the term required by schedule 3, section 3.9 (Remuneration) and be no less prominent than that term.
4.3 Fixed term agency agreements
(1) If the agreement is for a fixed term that is longer than 90 days, the agreement must include a term that entitles the principal to end the agreement (without penalty) by giving 30 days written notice to the agent at any time after the end of the first 90 days of the term.
(2) This section does not apply to an agency agreement in relation to the sale of residential property if the contract for sale provides for the construction by the seller of a dwelling on the land.
4.4 Price at which property is to be offered
If the agreement provides for the property to be offered for sale by private treaty, the agreement must state the price at which the property is to be offered.
4.5 Sales inspection report to form part of agreement
The agreement must include a copy of any sales inspection report prepared by the agent and given to the principal under schedule 8, section 8.21 (Sales inspection report required for property).
The agent argued it would be absurd for part 6 to apply to residential developments and simultaneously penalise agents where there is a failure to include in the agreement information which is inherently unknown at the time the agreement is made. An example is the sale price for each unit.
For that reason, the agent argued for the application of the common law presumption against absurdity, or “unreasonable consequences” as it has more recently been known, as a matter speaking against the construction of part 6 as applying to residential developments, when an alternate construction avoiding this result is open: Prentice v Nugan Packing Co Pty Ltd (1950) 81 CLR 558, 564-565 (Latham CJ; McTiernan, Williams, Webb, Fullagar and Kitto JJ agreeing); Legal Services Board v Gillespie-Jones [2013] HCA 35; 249 CLR 493 at [48] (French CJ, Hayne, Crennan and Kiefel JJ); Uelese v Minister for Immigration and Border Protection [2015] HCA 15; 256 CLR 203 [45] (French CJ, Kiefel, Bell and Keane JJ), [100] (Nettle J).
The developer submitted that the absurdity alleged would only arise in circumstances where, as occurred in the present case, a developer entered into an agency agreement prior to completing the DA process in relation to the land. This was submitted to be a highly unusual commercial practice, as the agent party to the agreement could not market the development while it was still an “intangible idea” subject to lodgement of a DA, let alone a development approval.
It would be impracticable in these circumstances to enter into the kind of agreement regulated by part 6 of the Agents Act before knowing the outcome of a DA, as that agreement could have no effect until approval was given. It follows that any absurdity flowing from a construction of s 99 as to what constituted use for a commercial purpose was easily cured by the agent waiting to enter into an agency agreement until any necessary DA process had occurred.
In my view, any potential difficulties only arise from the contents of the Agents Regulation, not the requirements of the statute itself, and I do not accept that the problems identified are unreasonable consequences such as to warrant labels of the kind discussed in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 321 per Mason and Wilson JJ. While I accept the requirements of the Agency Act may cause practical difficulties, where they arise those difficulties do not amount to irrational, absurd, or extraordinary consequences.
In ACQ Pty Ltd v Cook [2008] NSWCA 161; 72 NSWLR 318, Campbell JA (with whom Beazley JA, as her Excellency then was, and Giles JA agreed), quoting Ganter v Whalland [2001] NSWSC 1101; 54 NSWLR 122 at [35]–[36], said of the absurdity or irrationality principle (at [127]) that where one construction otherwise seems correct based upon a reading of the words in context, the unreasonableness of its consequences must be “very serious” before it will cause a court to reject that construction. Special leave was granted in relation to that proceeding but the appeal was dismissed: see ACQ Pty Ltd v Cook [2009] HCA 28; 237 CLR 656.
Where a development is at a preliminary stage, the consequence of the Agents Act may be that those who wish to enter into statutorily compliant agency agreements will be prevented from doing so until the information required to be included is available. That consequence does not equate to irrationality on the part of the Legislative Assembly. Indeed, it is arguable that those kinds of early and uncertain arrangements are precisely the type of agreement where the protections brought about by the Agents Act are needed.
Those who wish to establish a contractual relationship before the specific requirements of the Agents Regulation can be included in the agreement are not prevented from conducting their affairs by other means, such as through agreements to agree (that is, an agreement to enter into an agency agreement, which is conditional upon or triggered by the happening of a particular event).
I draw further comfort in the view I have reached from the decision of Al Maha Pty Ltd v Liu [2020] NSWCA 108 (Al Maha v Liu). That case also concerned a property developer and an agent, who had entered into an agency agreement in relation to the sale of apartments off the plan, under which commission was payable to the agent. Basten JA (with whom Macfarlan JA agreed) considered precisely the types of anomalies that were the subject of the agent’s submission here, stating at [3]-[5] (emphasis added).
[3] The scheme of the Property, Stock and Business Agents Act 2002 (NSW), as in force in 2014, was to ensure transparency in relation to necessary terms of agency agreements. It may be described as consumer protection legislation, and it will certainly protect individuals who employ agents, for example, to sell a home or other property. However, the Act sets a template for procedures in entering agency agreements, and for the content of such agreements, in circumstances which might involve a single sale or an ongoing management arrangement. Further, as this case illustrates, it is not limited to services supplied to an individual consumer, but will cover services provided by an agent operating a sole person business to a large property developer.
[4] In these circumstances it is inevitable that prescribed terms will not readily fit every situation to which the regulatory regime applies them. To take but one example, Sch 7, cl 9(2) requires that an agreement relating to the sale or purchase of residential property and providing for payment by commission calculated by reference to the sale or purchase price must specify the amount of remuneration to which the licensee will be entitled calculated on the basis of a specified estimated sale or purchase price for “the property”. The inclusion of such a calculation will tell the large and experienced property developer nothing it does not already know. Indeed, the reference to “the property” suggests that the provision was not drafted with the circumstances of the present case, involving a selling operation of multiple units off a plan, in mind. It is also tolerably clear that the provisions envisage an agreement prepared and presented by the agent to the principal, rather than, as in this case, the reverse.
[5] The fact that the apparent purpose of the legislation will not be promoted by compliance in particular circumstances is likely to be an important factor in exercising the discretion to excuse non-compliance when the power to do so is engaged.
The recognition of the issue did not mean that the statute did not apply to sophisticated property developers. Even if I had found unreasonableness or an anomaly, where there is debate about whether a statutory consequence is anomalous, it has been said that a court should be careful that arguments based on the anomaly are not permitted to obscure the real intention, and choice, of the legislature: see ConnectEast Management Ltd v Federal Commissioner of Taxation [2009] FCAFC 22; 175 FCR 110 at [41] and the authorities there-cited.
Applying that caution here, the concerns raised by the agent are not of sufficient foundation to disturb what would otherwise be the proper construction of land used “for commercial… purposes” as meaning the character of the activity being conducted on the land.
Accordingly, Part 6 of the Agents Act applies to the agreement between the parties. The answer to Question 1 is: yes.
Question 2: Does s 100 of Agents Act prevent the plaintiff from claiming for commission and expenses under the Agreement?
The requirements of s 100 of the Agents Act have been set out above. As seen above, one of the agent’s arguments in Question One was the impossibility of compliance with those formalities in the context of a residential developer, as opposed to a private, individual homeowner. Understandably then, during the hearing, the agent accepted that if part 6 of the Agents Act were found to apply to the agreement, then there had not been compliance with all the necessary requirements, such that the agent was precluded from claiming commission and expenses. The breaches discussed below are set out for completeness in dealing with the separate questions.
The developer submitted that the agreement failed to comply with the requirements of s 100 in that it:
(a)Does not estimate the amount of any rebates, discounts, commissions and expenses to which CSRE may be entitled, contrary to s 100(1)(b)(ii);
(b)Does not comply with the Agents Regulation, contrary to s 100(1)(c); and
(c)A copy of the document that was signed by CSRE was not given to the developer within 48 hours after the document was signed by the developer, as required by s 100(1)(d) of the Agency Act.
In respect of the failure to comply with the Agents Regulation, the developer drew attention to:
(a)The omission of a description of each unit being sold, to clearly identify each property being sold, as required by schedule 3, cl 3.1(1);
(b)A failure to properly identify the parties to the agreement, because of an incorrect A.C.N. for the developer (contrary to s 153 of the Corporations Act 2001 (Cth) and schedule 3, cl 3.2);
(c)A failure to state the amount of the remuneration to which the agent will be entitled, worked out on the basis of a stated estimated sale of purchase price for the property (as required by schedule 3, cl 3.9(2));
(d)The omission of the required statement for a sole agency agreement (as required by schedule 4,schedule 3, cl 4.1(2) and (4));
(e)The omission of the required statement immediately after the term regarding remuneration (as required by schedule 4, cl 4.1(5));
(f)The lack of a warning about other agency agreements immediately after the term regarding remuneration (as required by schedule 4, cl 4.2(2));
(g)The inclusion of a document entitled “Sales Inspection Report” which does not comply with the requirements of a valid sales inspection report due to it not containing the required description of the property (as required by schedule 8, cl 8.21(d));
In light of the agent’s position communicated in the course of hearing, I accept that there was a failure to comply with the formalities in s 100 as alleged by the developer. As such, pursuant to s 100(1), the agent is not entitled to the $668,759 sum claimed in commissions under the agreement. The answer to Question 2 is: yes.
Does s 100 of the Agents Act prevent the plaintiff from claiming payment for services provided to, or for the benefit of, the defendant on a quantum meruit basis?
65. The remaining question is whether the above finding that the agent has no entitlement to commission or expenses by reason of the operation of s 100 of the Agency Act prevents the agent from recovering any payment for services at all, not under the agreement but in equity, on a quantum meruit basis.
66. The task, then, is to construe the text in s 100 of the Agents Act, and in particular the meaning of the words “commission or expenses”, to determine whether such an action is unavailable as a result of the operation of the statute.
67. In doing so, it is helpful to have some understanding of the equitable relief concerned. Restitution on a quantum meruit basis is a remedy against the unjust enrichment of a defendant where the plaintiff has performed work for which a contractual right to payment is not enforceable. Unjust enrichment is a label or a unifying concept, rather than a legal principle applied as a direct source of liability or a cause of action: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 (Pavey & Matthews) at 256-257 per Deane J; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-379, per Mason CJ, Deane, Toohey, Gaudron, McHugh JJ, and 401 per Dawson J.
68. The relevant underlying principles for when a claim in quantum meruit may arise are discussed in Pavey & Matthews at 263 and in Lumbers v W Cook Builders Pty Ltd (in Liquidation) [2008] HCA 27; 232 CLR 635 (Lumbers) at [79] and [89]. As the task here is limited to construing a statute to see if the remedy remains available at an abstract level, it suffices to refer to what was said in Lumbers by Gummow, Hayne, Crennan and Kiefel JJ at [79]:
The doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a “benefit” at the “expense” of another which the recipient “accepts” and which it would be unconscionable for the recipient to retain without payment. And as is well apparent from this Court’s decision in Steele v Tardiani [(1946) 72 CLR 386], an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made. …
69. As will be apparent from the reasons below, I have concluded that as it currently stands, where the requirements of s 100 of the Agents Act have not been complied with, the statute does not operate to prevent a claim being made in equity for restitution based on quantum meruit. The reasoning process founding that conclusion is essentially as follows:
(a)The ordinary meaning of the words “commission or expenses” in s 100 does not capture every form of remuneration.
(b)The statute does not expressly preclude recovery of some form of remuneration.
(c)Nor is that result achieved impliedly, as it is not plainly the objective intention or purpose of the legislation to deprive an agent who honestly (as opposed to unscrupulously) provides services from recovering any payment at all. The statute is directed to transparency and certainty in dealings between agents and principals. In the dispute concerned here, that is reflected in agency agreements having specified contents and requirements, such as being in writing and being provided within 48 hours of execution.
(d)Before the Court would construe the section to remove an equitable right available, the legislation would need to be clear in its intention to do this: Potter v Minahan (1908) 7 CLR 277 at 304 (Potter v Minahan). In this case, as it is not clear, the right remains available.
Submissions of the parties
70. The agent contended that s 100 was confined only to “commission” and “expenses” and was not to be construed so as to prevent any form of remuneration at all. The inability to enforce an agreement to perform work does not necessarily preclude the ordinary common law right (as opposed to any rights under statute) to bring proceedings to recover fair and reasonable remuneration for work or services which have actually been done and which were accepted by the other party to the agreement.
71. The words “commission or expenses” were submitted by the agent to be construed as specific types of payment, the former being payment quantified by reference to the achievement of a specified result, irrespective of the work performed in the course of achieving that result. That is to be distinguished from remuneration for work actually performed, which is the basis of a quantum meruit claim: see Abbhall Pty Ltd v Canberra Land Developments Pty Ltd [2009] ACTSC 120 at [33].
72. The developer argued that the phrase should be read as meaning any remuneration at all. It relied upon the Explanatory Statement (at 21):
The purpose of [section 100] is to remove, as far as possible, any uncertainty about the nature of the transaction between the agent and the principal and provide for full disclosure in the agency agreement with the principal, of any financial benefits the agent may receive from the transaction.
73. The developer submitted that the legislative intent behind s 100 of the Agents Act was to remove any uncertainty about the financial benefits an agent may receive, and therefore the section should be interpreted to cover any financial benefits the agent may receive from the transaction. The developer drew a comparison with the statutory regime in NSW, which it submitted had an “overarching emphasis on controlling an agent’s remuneration”. The Agents Act was said to evince a legislative intent to mirror the effect of the NSW regulations.
74. If the words “commission or expenses” were interpreted narrowly, the developer argued that this would leave open the possibility of an agent seeking a fee for the sale of a property under a non-compliant agreement. Such a result would defeat the purpose of several of the requisite formalities in s 100 (including the requirement for the agent to provide an up-front estimate).
75. The developer further relied on Investmentsource, where Barrett J gave consideration to the same issue. An important distinction in that case (and one to which I will return) is that the relevant provision in the 1941 NSW Act referred to the term “remuneration”, not “commission or expenses”. Section 42AA(1) of the now-repealed 1941 NSW Act relevantly provided (emphasis added):
42AAAgency agreements to be in writing
(1) A licensee shall not be entitled to:
(a) any remuneration by way of commission, fee, gain or reward for services performed by the licensee in his or her capacity as licensee, or
(b) any sum or reimbursement for expenses or charges incurred in connection with services performed by the licensee in his or her capacity as licensee,
from the person for whom or on whose behalf those services were performed unless:
(c) the agreement pursuant to which those services were performed is in writing and signed by or on behalf of:
(i) the licensee, and
(ii) that person,
(d) the agreement contains such terms (if any) as may be prescribed, and
(e) a copy of the agreement was served by the licensee on that person within 48 hours of the agreement being signed by or on behalf of that person.
…
76. Barrett J considered the words emphasised and ultimately found that an agent could not rely on equity to circumvent the explicit prohibition on achieving ‘remuneration’. In particular, the developer drew attention to Barrett J’s statement at [68]:
Whether an action based on restitutionary principles of the kind authoritatively established in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 would lead to any different result, so far as the impact of ss.42AA and 42A is concerned, depends on whether the fruits of the success of such an action would properly be regarded as “remuneration by way of commission, fee gain or reward for” the services rendered. If the fruits are of that character, s.42AA deprives the licensee of entitlement to them and s.42A precludes the recovery action.
77. His Honour then addressed two authorities in other jurisdictions, namely Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 and Upjay Pty Ltd v MJK Pty Ltd (2001) 79 SASR 32, before finding at [78]-[79] (emphasis in original):
[78] Neither of these cases provides any guidance here. The crucial words in the Property, Stock and Business Agents Act are, as I have said, “any remuneration by way of ... gain or reward for services performed ...”. The proceeds of a claim upon a quantum meruit for work done seem to me unquestionably and of their very nature to be of that description.
[79] This view is consistent with the approach taken by Bryson J in Multo Pty Ltd v Craddock (unreported, NSWSC, 11 March 1988), a case arising unders.42AA:
“It is also to be observed thats.42AA deals not only with entitlement to remuneration under express or implied contracts, but deals also with any remuneration by way of gain or reward for services performed; it does not limit itself to disentitling parties from enforcing their contracts and the disentitlement which it enacts is irrespective of the legal basis of a claim for remuneration by way of or for services. Section 42AA goes to the substance of entitlement and speaks as law to annihilate what would otherwise be rights.”
78. The developer also drew support for a broad construction of “commission or expenses” to mean any form of remuneration from the words in schedule 3, r 3.9(2) of the Agents Regulation. Schedule 3 is set out in full as I consider the context to be necessary to understand and consider the developer’s point.
Schedule 3 Terms applying to all agency agreements
3.1 (see s 15) Identification of property
(1) The agreement must state the address of the property to which the agreement applies or must contain a description of the property that clearly identifies it.
(2) This section does not apply to an agency agreement to act for the buyer of land.
3.2 Names of parties to agreement
The agreement must state the names of each of the parties to the agreement (including the licensee).
3.3 Information identifying parties
The agreement must state the principal's address, the licensee's licence number and any business name under which the licensee conducts business.
3.4 Principal's authority to enter into agreement
The agreement must contain a statement to the effect that the principal warrants that the principal has authority to enter into the agreement.
3.5 Authorisation for licensee to act on behalf of principal
The agreement must contain a term stating particulars of the extent of the authority of the licensee to act as agent on behalf of the principal in providing services under the agreement.
3.6 Duration of the agreement
The agreement must contain a term stating the period for which the agreement remains in force or stating that the agreement remains in force until terminated.
3.7 Termination of the agreement
If the agreement provides for its termination by a party to the agreement, the agreement must state how and when it can be terminated.
3.8 Reimbursement of licensee
If the licensee is to be entitled to any sum or reimbursement for expenses or charges incurred by the licensee in relation to services provided under the agency agreement, the agreement must include a term that:
(a)states that the licensee is so entitled; and
(b)describes the services; and
(c)states the amount that the licensee is entitled to and when it is payable; and
(d)states that the services and amounts can be varied only with the agreement in writing of the principal.
3.9 Remuneration
(1) The agreement must include a term stating—
(a) the circumstances in which the licensee is entitled to remuneration (by way of commission or otherwise) for services performed under the agreement; and
(b) the amount of the remuneration or how it is to be worked out; and
(c) when the remuneration is payable.
(2) If the agreement relates to the sale or purchase of residential property and provides for payment of commission to the agent worked out as a percentage of the sale or purchase price, the term must also state the amount of the remuneration to which the licensee will be entitled worked out on the basis of a stated estimated sale or purchase price for the property.
79. By reference to schedule 3, cl 3.9(2) above, it was submitted that the legislation seeks to create certainty about the remuneration that might be claimed and refers to commission as remuneration. Drawing upon what was said in Investmentsource, the developer submitted that remuneration, commission, expenses or some other reward for services, however categorised, were fruits of the same character in the ACT statutory scheme. The developer submitted that where the true effect and meaning of the statute (referencing language used in Investmentsource at [63]) prohibits payment, then restitution on a quantum meruit basis, or any equitable basis, should be denied.
The proper construction of s 100 of the Agents Act
80. The terms “commission” and “expenses” are not defined in the Agents Act.The ordinary and natural meaning of the word “commission” can be found in the Macquarie Dictionary (Pan Macmillan Australia, 8th ed, 2020). Of the various meanings listed, the one relevant to the present task defines “commission” as:
a sum or percentage allowed to an agent, salesperson, etc., for services.
81. So defined, commission is payment for services, either in a specified sum or percentage. I accept that remuneration is also characterised as payment for services, but I agree with the agent that a commission is a specific type of remuneration, and that it does not follow that a reference to commission includes other types of remuneration.
82. The words of schedule 3, cl 3.9 do not support a construction whereby the prevention of recovery of commission is to be read as preventing recovery of any remuneration. First, as a general rule, the words of a statute are not to be construed by reference to the regulations made under it: Plaintiff M47-2012 v Director-General of Security [2012] HCA 46; 251 CLR 1 at [56] per French CJ. To do so is to engage in a misguided “bottom up” interpretation: Commissioner of Taxation v Macoun [2014] FCAFC 162, 227 FCR 265 at [40]. Second, insofar as the Agents Regulation may be permissibly taken into account, the words in schedule 3, cl 3.9(1) refer to remuneration “by way of commission or otherwise”. That is a distinction made between remuneration and commission, recognising that agents may be remunerated for their services in ways other than by payment of commission. Accordingly, I do not accept that the language of the Agents Regulation is of any assistance at all, let alone that it indicates support for a construction of “commission and expenses” that would include claims in quantum meruit.
83. The word “remuneration” is used in the Agents Act, albeit only once at s 143, which deals with the remuneration of administrators. There is an established principle that where the legislature could have used the same word but chose to use a different word, the intention was to change the meaning: see the discussion in Dennis Pearce, Statutory Interpretation in Australia (Lexis Nexis Australia, 9th ed, 2019) (Statutory Interpretation in Australia) at [4.6] and [4.8]. In s 100, the legislature could have used “remuneration” instead of “commission”, and the fact that it did not is another (admittedly small) indicator that remuneration as a whole was not what was meant by the use of the word “commission”.
84. The consideration given by Barrett J in Investmentsource is of assistance in the construction task here. However, it is actually more helpful in drawing attention to the legislative scheme in NSW as a means of demonstrating the clarity of words that are required in order to take away rights at common law; words that are missing from the Agents Act.
85. In Investmentsource, the legislative expression used was “any remuneration by way of commission, fee, gain or reward for services”. The words “any remuneration …for services” are plainly more expansive than the specific categories used of “commission” and “expenses” in s 100 of the Agents Act. What Barrett J said at [78]-[79] cannot be divorced from the breadth of the words used in the statute his Honour was there considering, including the specific reference to “any remuneration”.
86. The 1941 NSW Act was subsequently repealed and replaced with the Property, Stock and Business Agents Act 2002 (NSW) (now known as the Property and Stock Agents Act 2002 (NSW) (2002 NSW Act). The successor to s 42AA was s 55, which is relevantly in the following terms (emphasis added, italics in original):
55 No entitlement to commission or expenses without agency agreement
(1) A licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless—
(a) the services were performed pursuant to an agreement in writing (an agency agreement) signed by or on behalf of—
(i) the person, and
(ii) the licensee, and
(b) the agency agreement complies with any applicable requirements of the regulations, and
(c) a copy of the agency agreement signed by or on behalf of the licensee was served by the licensee on that person within 48 hours after the agreement was signed by or on behalf of the person.
…
(4) A court or tribunal before which proceedings are taken by a licensee for the recovery of commission or expenses from a person may order that the commission or expenses are wholly or partly recoverable despite a failure by the licensee to serve a copy of the relevant agency agreement on the person within 48 hours after it was signed by or on behalf of the person.
(5) A court or tribunal is not to make such an order unless satisfied that:
(a) the failure to serve a copy of the agreement within the required time was occasioned by inadvertence or other cause beyond the control of the licensee, and
(b) the commission or expenses that will be recoverable if the order is made are in all the circumstances fair and reasonable, and
(c) failure to make the order would be unjust.
87. The 2002 NSW Act also includes the following definitions in s 54:
54 Definitions
In this Division:
commission means remuneration by way of commission, fee, gain or reward for services performed by a licensee in the capacity of licensee.
expenses means any sum or reimbursement for expenses or charges incurred in connection with services performed by a licensee in the capacity of licensee.
88. The NSW statutory scheme was previously the subject of judicial commentary, described as operating in a “harsh and unfair” or an “absolute and unforgiving way” (see Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd [2003] NSWCA 305 at [16]; Kukolovski v Georges [2011] NSWSC 359 at [34]-[35] respectively). The reference to the severity of the statute was to the wide range of non-compliance that would preclude an agent from recovering remuneration. The criticisms were not specifically directed to the breadth of what constitutes “commission”, but such a definition contributed to the harshness. The developer relied on the results in those cases as confirming the denial of an entitlement to any remuneration in the 2002 NSW Act and accordingly in its equivalent in the ACT. However, since those decisions, it is important to record for completeness that s 55A has been introduced to the 2002 NSW Act (via an amendment in 2013). It provides:
55A Relief from disentitlement to commission and expenses
(1) A court or tribunal before which relevant proceedings are taken may order that commission or expenses are wholly or partly recoverable by a licensee who would otherwise not be entitled to the commission or expenses (under section 55) because of--
(a)a failure by the licensee to serve a copy of the relevant agency agreement on the person within 48 hours after it was signed by or on behalf of the person, or
(b)a failure of the relevant agency agreement to comply with the requirements of the regulations.
(2) A court or tribunal is not to make such an order in circumstances of a failure to serve a copy of the agency agreement within the required time unless satisfied that--
(a)the failure was occasioned by inadvertence or other cause beyond the control of the licensee, and
(b)the commission or expenses that will be recoverable if the order is made are in all the circumstances fair and reasonable, and
(c)failure to make the order would be unjust.
(3) A court or tribunal is not to make such an order in circumstances of a failure of the agency agreement to comply with the requirements of the regulations unless satisfied that—
(a)the failure is a minor failure, and
(b)no loss has been suffered as a result of the failure by the person for whom or on whose behalf the services concerned were performed, and
(c)failure to make the order would be unjust.
(4) Proceedings are relevant proceedings if they are proceedings taken by a licensee for the recovery of commission or expenses from a person or proceedings on a consumer claim relating to commission or expenses (as referred to in section 36) in relation to which a licensee is a respondent.
89. The second reading speech made by Minister Anthony Roberts to the Property, Stock and Business Agents Amendment Bill 2012 (NSW), records that this amendment was expressly intended to address “an anomaly where the court or tribunal does not have any discretion to award commission or expenses to an agent for work that has been performed properly in good faith if the agency agreement has a minor inconsequential error”: New South Wales, Parliamentary Debates, Legislative Assembly, 14 November 2012, 16832 (Minister Anthony Roberts).
90. Under the current 2002 NSW Act, an agent may now recover commission at the Court’s discretion, exercised in accordance with the requirements of s 55A, and cases such as Al Maha v Liu demonstrate this. There, the property developer involved appealed against the NSW Supreme Court’s decision to grant relief to a real estate agent under s 55A, in respect of the agent’s non-compliance with an agency agreement. The NSW Court of Appeal dismissed the appeal, holding that the agent’s failures to comply with s 55 were “minor failures” occasioned by inadvertence, which came about as a result of the developer’s own drafting of the agreement. Where the agent in that case did the work and there was no prejudice to the client, and the commission was not suggested to be anything other than fair and reasonable, it was found that the discretion in s 55A(1) should be exercised in favour of the agent.
91. From the above extracts of ss 54, 55 and 55A of the 2002 NSW Act, it can be seen that:
(a)The words “commission” and “expenses” are each legally defined terms;
(b)The definition of commission is broader than the ordinary meaning set out above and continues to extend to all remuneration; and
(c)The severe result in s 55 has been softened, by allowing for the recovery of fair and reasonable commission or expenses by an agent in certain circumstances specified in s 55A.
92. It is important to recognise that what has been said in construing one statute does not necessarily control the construction of another: McNamara (McGrath) v Consumer Trader and Tenancy Tribunal [2005] HCA 55; 221 CLR 646 at [40].
93. Careful consideration has been given to the regime in NSW for two reasons. First, the developer heavily relied on Investmentsource and the subsequent authorities as to how the legislation operated. Second, the Agents Act was enacted approximately one year after the 2002 NSW Act and there are a number of marked similarities which suggest that the drafters of the Agents Act paid careful consideration to the position in NSW. The terms of s 100 of the Agents Act itself is one example. It is to near identical effect to s 55 in the 2002 NSW Act, albeit in slightly different terms. Schedules 3 and 4 of the Agents Regulations also mirror the contents of Schedule 7 in the 2002 NSW Act. However, the ACT legislation does not replicate either the reference to “any remuneration” that led to Barrett J’s finding that the section prevented recovery of any payment for services on a quantum meruit basis. Nor does the Agents Act replicate “commission” or “expenses” as defined terms, or the ameliorative measures that were thought necessary in response to the effect of a provision that continued to operate (by virtue of the defined term) with respect to “any remuneration”.
94. Because of those differences, what has been said and held in construing the NSW statutory regime does not control the position in the ACT. The intention of the ACT legislation was directed to transparency of rights and obligations and the protection of sellers of properties from being disadvantaged by unscrupulous agents. It was neither expressly nor impliedly directed to preventing any fair and reasonable remuneration at all (assuming the agent has done the work).
95. There is some contextual support for the developer’s construction derived from s 100(2) and 100(3) which are as follows:
100No commission or expenses without agency agreement
(1)…
(2) A court in which a proceeding is taken by the licensed property agent to recover commission or expenses from the principal may order that the commission or expenses be completely or partly recovered even though the agent has failed to comply with subsection (1) (d).
(3) However, the court may make the order only if satisfied that—
(a) the licensed property agent’s failure to give a copy of the agency agreement to the principal within the 48 hours was either inadvertent or caused by something beyond the agent’s control; and
(b) the commission or expenses to be recovered if the order is made are fair and reasonable; and
(c) failure to make the order would be unjust.
The existence of those provisions may have been intended to preclude the court from having any discretion to order any payment of remuneration at all, save as to the limited circumstances referred to in s 100(3). But equally, those provisions may mean that where the contractual recovery of commission and expenses is concerned, the court’s power is limited to the circumstances set out above. On the second interpretation, where there were failures that were not limited to a failure to serve the agreement within 48 hours, an agent could not claim commission or expenses, but a claim for fair and reasonable payment for the services provided could still be brought before the Court.
97. Absent unmistakeable clarity that the legislature intended to remove an agent’s entitlement to all remuneration in circumstances where the requirements of the Agents Act have not been met, the Court should not favour a construction that interferes with common law rights, in this case, a claimed entitlement to restitutionary relief: see Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [2007] NSWSC 318 (Lionsgate) where Austin J applied Potter v Minahan and helpfully cited a number of consistent High Court authorities at [23]-[25].
98. I accept that construing s 100 of the Agents Act so that it leaves space for claims for restitutionary relief in favour of agents who have failed to comply with the statutory requirements is not entirely consistent with furthering the legislative purpose of certainty and transparency, as it exposes a principal to uncertainty about the remuneration to be paid if the agreement that is signed is unenforceable.
99. That perhaps requires an acknowledgment of s 139 of the Legislation Act, which, as stated above, requires the Court to work out the meaning of an Act in the manner that “would best achieve the purpose of the Act”. This case does not require a separate discussion of what those words mean. It is usefully discussed by the learned author in Statutory Interpretation in Australia at [2.15] and [2.26]. It is sufficient to explain that I do not understand s 139 to require that the legislative purpose is to be pursued at any cost, but rather that where there are two equally clear meanings on the face of a provision, the meaning that best achieves the statutory purpose is to be preferred.
In the present case, not only is the meaning for which the developer contends not clear on the face of the provision, it is inconsistent with the plain words used. Further, to construe the words “commission and expenses” in the manner for which the developer contended, where the Agents Act does not include any statutory discretion of the type that now appears in s 55A of the 2002NSW Act, would produce draconian results. When that was the statutory position in NSW, Windeyer J in Terry Pfeiffer v Connors [2000] NSWSC 452 stated at [18] (emphasis added):
The reasons for what would appear to be the harsh provisions of s42AA of the Act are of course perfectly clear. Parliament has decided that vendors should be protected from improper claims of unscrupulous agents and that there should be certainty of agency terms. Nevertheless, reasonable agents ought to be protected from what would be thought to be quite unconscionable claims by vendors, which can only result in unjust enrichment of vendors, who have, without that enrichment, obtained all the benefits which they contracted to get as a result of their agreement with the agent. It is extraordinary to think that a party who has suffered no loss can bring a claim such as the one brought here at any time up to the expiration of six years after the agency agreement was entered into. Urgent consideration should be given by the appropriate authorities to amending legislation to bring a reasonable balance between the rights of honest agents and the requirement to protect vendors from improper claims for commission by agents. At the very least there ought to be some limited time in which any claim for recovery can be made.
I am not minded to impute to the drafters of the Agents Act here an intention to create what would be a similarly unreasonable position in the ACT.
For these reasons, the answer to Question 3 is: no.
Conclusion and orders
During the hearing, it was agreed that any consequences of the questions answered will not be reflected in orders, but that the parties would address the further conduct of the matter at a directions hearing, including any filing of an amended originating claim and statement of claim, following the determination of the questions.
The Court orders that:
(1)The separate questions be answered as follows:
(i)Does Part 6 of the Agents Act apply to the Agreement between the plaintiff and the defendant? Answer: Yes.
(ii)If the answer to question 1 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming for commission and expenses under the Agreement? Answer: Yes.
(iii)If the answer to question 2 is “yes”, does s 100 of the Agents Act prevent the plaintiff from claiming payment for services provided to, or for the benefit of, the defendant on a quantum meruit basis? Answer: No.
(2)Costs be reserved.
(3)The matter be listed for directions on 12 September 2022 at 9:30am.
| I certify that the preceding one hundred and four [104] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam.................. Associate: Aislinn Grimley Date: 25 August 2022 |
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