D.C.A.M Holdings P/L v Official Trustee in Bankruptcy
[1994] FCA 1022
•18 Nov 1994
1022 9~
| JUDGMENT No. ........ ........ .. | I ........ .... |
| IN THE FEDERAL COURT OF AUSTRALIA | 1 |
| 1 | |
| BANKRUPTCY DISTRICT OF THE | ) No NG 426 of 1986 |
| ) | |
| STATE OF NEW SOUTH WALES | 1 1 |
| GENERAL DIVISION | 1 |
BETWEEN: D.C.A.M. HOLDINGS PTY LIMITED
ACN 002 707 600 tla
CENTURY 21 TONY MOSES
2 2 DEC 1994
Applicant
AUSTRALIA
| m: | OFFICIAL TRUSTEE IN BANKRUPTCY |
Respondent
| m: | Davies J |
| Date: | 18 November 1994 |
| U: | Sydney |
REASONS FOR JUDGMENT
These are proceedings by way of an appeal from the trustee's declsion rejecting proofs of debt lodged by DCAM Holdlngs Pty Limited ("DCAM"), real estate agents, of which Mr Anthony Moses was the principal. The trustee is respondent to the appeal and the two bankrupts, Ernest Arthur Wllson and Patricia Lorralne Williams, have been permitted to intervene and to call evidence.
The amount of the proofs was $6873.61, whlch is claimed by way of agent's
commission. A further sum 1s related. That is a sum of $2526.36 which has been paid
to DCAM by way of agent's commlsslon and has been retained by DCAM. The trustee
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| may wish to claim that sum. | Nothing that I will say today is intended to make any |
| determination in relation to that claim, should it ever be made. | I am concerned solely |
with the sum of $6873.61, which is the subject of the proofs of debt.
At a time before their financial affairs deteriorated, Mr Ernest Arthur Wilson and
his wife Patricia Lorraine Williams together with two friends, Willlam Richard Fagan and
his wife Cathy Fagan, purchased a property known as Lot 1, The Entrance Road,
Berkeley Vale, near Wyong. The property had apparently been used for horse training
and it was thought that it would shortly be rezoned for residential usage. It was thought that the property had a potential for improvement, as retirement villages were being built in the area.
| The bankrupts have s a d that they purchased the property as an investment. | After |
purchase, it was not occupied in the sense of being lived in by the four owners. It was
used brlefly by a trainer for horse traming, there being a tra~ning track and sheds on the property. This trainer paid nothing for the privilege. Ultimately, the property became
overgrown and, in 1984, the only dwelling on it was gutted by fire.
At this stage, I should say that the evidence suggests to me that there was an
| investment by the four persons. | I do not see any element of partnership m the true |
sense. I do not see any indication that the four parties were carrying on a business on or with respect tb the property. Thls seems to me to be a case of the purchase of a property with a view to its ultimate resale at a profit. It was, in that sense, a joint
venture between the four owners.
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By October 1985, Mr Wllson and MS Wilhams were suffering financial problems.
It was recognised by all the owners that, it the property could be sold for a satisfactory
price, it should be sold. On a visit to Sydney from his house at Wok, Mr Wilson
happened to meet Mr Moses, whose company DCAM had recently come to be the
proprietor of the real estate agency "Bradfield & Pnchard" at Bondi Junction. Mr Wilson
and Mr Moses had known each other for some time. Mr Moses had vlsited or stayed more than once at the Wolli home of Mr Wilson and MS Wllllams. At one time Mr Wllson held a key to Mr Moses' flat in Sydney and had made considerable use of the flat.
On the day on which they met, 15 October 1985, an agreement appointing
Bradfield & Pnchard as agent for sale was signed by Mr Wilson and, probably also on
the same day, by Mr Fagan. These proceedings turn upon the validity of that agreement. Section 42AA of the Proaertv. Stock and Buslness Aeents Act 1941 (NSW) provldes inter
aha:-
| "A l~ccnsee | slrall no1 bc ent~tled | to: |
| (a) | any remuneration by way of ~omnussion, fee, galn or reward for services | ||
| |||
| (b) | any sum or reimbursement for expenses or charges incurred m connection wth servlces performed by him m his capaclty as hcensee, |
from the person for whom or on whose behalf those services were performed unless:
the agreement pursuanl to whlch thosc servlces wcre performed is in writing and blgned
| (c) | by or on behalf oP |
| ||||
| (d) |
| |||
| (e) | a copy of tlie agreerncnt was servcd by the llccnsee on that person within 48 hours of the agreement bang signed by or on behalf of that person " |
Regulation 71(1) of the Auctioneers and Aeents Reeulations provides inter alia:-
"For the purposes of sectlon 42AA (1) of the Act, thc prcscnbed terms in relatlon to any
| agreement spec~fied | in clauses (2) - (9) are, subject to those clauses - |
| (b) | a term spec91ng |
...
|
(11)
...
| The agreement is a printed form on which handwriting has been written. | It is |
expressed to be an agreement between Ernest Arthur Wilson and Patricia Lorraine Williams and Rlchard and Cathy Fagan as principals, and Messrs Bradfield and Pritchard
as the agent. The agreement is stated to commence on 15 October 1985 and to
terminate at midrught on 31 January 1986.
Under the heading "The agent shall perform the followmg other services in connection with the sale and shall be entitled to remuneration as follows in the event that those services are performed as undertaken," the statement "N/At' (ie. "not applicable") is wrltten in respect of the subheadings for "Service", "Fee" and "When due and payable".
The agreement provlded that the sale of the property was to be advertised and otherwise promoted as deemed necessary by the agent and also provided that, in the event that the agent Incurred expenses or charges in relatlon to the sale, he was not entitled to payment or reimbursement. The items with respect to reimbursement were shown as being not applicable.
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The agreement then provided:-
| "The agent ib granted evcluslve selling r~ghts | and shall be ent~lled | 10 payment of $3100 |
| on the 1st S100,OOO & 2% cent on balance 01 sale prlce on res~dent~al | or 4% of $14,000 |
| or whatever the lcsscr on commercial" |
The agency agreement is dated 15 October 1985, it has the signatures of
h41 Wilson and Mr Fagan and the signature of Mr Moses. Underneath the signature of
Mr Wilson and Mr Fagan are the printed words m brackets "Signature of Princ~pal".
Thereunder, the description of the principal's solicitor is set out. It was originally written in as Peter E. Murphy & CO and was subsequently changed to Davld Baker, Parramatta.
M . Moses gave evidence that the agreement as it now reads was completed on
15 October 1985 and was slgned by Mr Wilson and Mr Fagan when all the other Items
had been entered on it. Mr Wilson gave evidence that, when he signed the form, it was
blank. He signed his name and wrote m the name of his sohc~tor, Peter E. Murphy &
Co. He was then asked to obtain Mr Fagan's signature. He brought Mr Fagan to Mr
Moses' office. Mr Fagan asked that the name of the solicitor be changed to David Baker
of Parrarnatta. The name of the sohcitor was then changed, apparently by Mr Moses.
Mr Fagan then wrote his signature.
| According to Mr Wilson, Mr Moses said: "If I get a buyer I will send it [the agreement] up to the g~rls | to slgn". |
Mr Wilson also gave evldence that, during hls conversations with Mr Moses, Mr
Moses said:
| "I'll see if I can find someone. But I won't charge any commission. | I know you are in |
| trouble. | You'll have to slgn a real estate agenn agrccmcnt, so that if I get a buyer I can |
| sell it." |
| In his evidence Mr Moses denied that he had sa~d | anything to that effect. Mr and Mrs |
| Fagan did not give evidence. |
In December 1985, Mr Moses found a buyer. It appears that by that time
the vendors' solicitors were Messrs Wllliam O'Brien & Co. The sales advice was sent by
| Mr Moses to O'Bnen & Co. The item for agent's comm~ss~on | was left blank. |
In a handwritten draft of that sales advice, which has been tendered from the records of Mr Moses, the sum of $3000 1s written m penc~l along the llne for the agent's commssion, but it 1s not written against the dollar slgn and one assumes that it was not Intended to be written into the final form, or perhaps that it was added later. Either
explanation is equally probable.
| On 20 December 1985 Mr Moses wrote to O'Brien & CO adv~sing | that: |
"We advise that our fee for the salc of the abovcmentioned property is $14,000 as agreed.
This amount IS payable on settlement."
MS Williams has given evidence that, after the sale in late December 1985, a copy of the commission agreement came in the post to the home of herself and Mr Wdson. Mr Wllson opened the letter and froni it took a document which he handed to her and
said that, "Tony wants you to sign this". MS WiU~ams sald that she looked at the document which was the agreement of which I have spoken and said, "Well, I'm not
going to sign it, the deal is no good anyway". MS Williams dld not sign the agreement.
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| On 18 March 1986, Mr Moses wrote again to Willlam O'Br~en | and Co, confirming |
that his fee for transacting the sale was $14,000. He enclosed a copy of the agency agreement. There was a delay in settlement, for it turned out that the purchaser whom Mr Moses had introduced had ~nsufficient funds to purchase the property and that
ultimately the vendors had to proffer some of the finance. These arrangements were made and the sale was finally effected. At the time of the settlement, Willlam O'Brien and CO forwarded the sum of $2526.36 to Mr Moses. It appears that DCAM subsequently instituted proceedings in the District Court for the balance of the comrmss~on but that claun was ultimately discontinued. A proof of debt has been lodged
in the two bankrupt estates.
The posihon as far as Mr and Mrs Fagan are concerned 1s not entirely clear, but
| there has been no suggest~on | that the cla~m | 1s being pursued against them. |
The principal ground upon whlch the proofs of debt were rejected was that the agreement contamed the signatures of Mr Wilson and Mr Fagan only. The question arlses whether the agreement was in writing and signed by or on behalf of the vendors. Counsel for the claimant has contended that Mr Wilson and Mr Fagan were authorised
to sign the agreement on behalf of the other vendors.
In my opinion, a provision in a statute requiring an agreement in writing and requiring that there be a signature by or on behalf of a party to the agreement, requires that it should appear from the face of the executed document that the document has been signed by that person or on behalf of that person. The matter of signature has
been considered in many cases. I need refer only to Deputv Commissioner of Taxat~on
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(Vlcl v Boxshall (1988) 83 ALR 175, where Lockhart, Burchett and Gummow JJ, after reviewing the authorities, described the several ways in which a person may validly sign on behalf of another person. Their Honour expressed the view at 179 that, if an agent signs, it should be in tenns which make it clear that the signature is by a person acting as agent.
The disculty which arises with the present agreement is that there is nothing in the agreement itself which indicates whether it is simply slgned by two out of the four vendors or whether MS Williams' slgnature was a signature by Mr Wllson on hls own behalf and on behalf of MS Wllhams, and llkewise that the slgnature by Mr Fagan, was
on his own behalf and on behalf of Mrs Fagan. Thls is not a case where one person has signed on behalf of all four vendors and it is not a case where there has been added to the signatures a description whlch shows that elther of the persons signing is signlng on behalf of others or, if so, on behalf of whom. There are simply two signatures.
It seems to me that the agreement, as it was signed, does not make it clear that there were signatures on behalf of all four vendors as distinct from there belng merely signatures of two of the vendors. The prlnted words "Signature of Principal" do not assist.
I think on that ground alone, the proofs of debt must be rejected. I would also, however, go on to say that it does not seem to me that it has been established that Mr
W~lson and Mr Fagan had authority to slyn the agreement on behalf of the other
vendors. Certainly there was an understanding between the parties that the property should be sold if an appropnate prlce could be obtained. But the evldence of MS
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Williams was that this particular agreement had not been discussed, that it was something
that h41 Wilson initiated when he happened to meet Mr Moses m Sydney.
I would not draw a conclusion that authority had been given to Mr Wilson and Mr
Fagan to sign any agent's authority whch they wshed. The evldence certainly shows that they had authority to lnltlate mquiries, because that was one of the matters that the four parties were concerned to do. But an authority to enter an agreement and to sign that
agreement seems to me to be a matter of a d~fferent character. Havlng regard to MS Williams' evldence, I th~nk that I should draw the conclusion that Mr Wllson was not authorised to sign on her behalf and that Mr Fagan was not authorised to sign on his wife's behalf.
I should say that MS Will~ams gave her evldence well and I have no reason to
doubt it. Her evidence indeed confirms Mr Wilson's evidence that there had been the
arrangement, of whlch Mr Wilson gave ev~dence, that, if the property was sold, Mr Moses would send the agreement to MS Willianis and Mrs Fagan for signature. If
there is any other explanation for why the agreement was posted to MS Wilhams' home
in December 1985, it has not been glven in evidence.
In the light of these matters, it is not necessary for me to form any concluded view as to Mr Wilson's evidence that there was an agreement that no commission would be charged. I do not propose to form a concluded view on that point and, I th~nk that the preferable course 1s not to make any further observations on that matter.
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I draw the conclusion from the findings of fact that I have made that coples of the agreement were not served on MS Williams and Mrs Fagan as required by the Act. That
IS not to say that a service on a husband would not very often be treated as sufficient
semce upon the wife or that service on the d e may not be sufficient service on the husband. Very often that will be the case. But if one accepts the evidence to which I
have already referred that it was m mind that, if the sale was effected, then MS Williams
& Mrs Fagan would be asked to sign, a seems to me that what occurred was simply a
dealing as between Mr Moses, Mr Wilson and Mr Fagan and not one as between Mr
Moses and the four vendors.
I do not think that L need deal w t h the arguments put by counsel for the apphcant with respect to lssues of ostensible authority, ratification and estoppel. This 1s a case where there is a statutory requirement which has elther been met or not met. In my opinion, there was a fallure to comply wth the statutory provisions.
Counsel for Mr Wilson and MS Williams submtted that the agreement dld not specify the amount of the remuneration or the way m which it was to be calculated as required by reg 71(l)(b)(li). However, it seems to me that there was sufficient certainty about the clause for it to be a valld clause m this context. Counsel also submitted that the agreement failed in that it dld not comply wlth reg 71(4)(d) whlch provides:-
| "(4) For the purposes of qectlon 42AA(1) of the Act, m add~l~on | to the lcrms prescribed |
| by clausc (l), | the prescr~bed | tcrms m rclal~on | to an agreement m respect of the sale of |
| land (othcnvse than by auct~on) | are - |
| (d) | ~f the l ~ ~ e n s e c | has underlaken to perform any othcr servlces m connecllon w~th | thc sale, |
| a term spec~fylng | that the l~ccnsee | has so undertakcn and part~culars | or those servlces; ... |
Counsel submitted that the words "N/A1' were not sufficient to comply wth this provision.
I have not gven ths matter sufficient attention to form any concluded view and I say no
more about it.
In my opinion the appeal against the trustee's rejection of the proofs must be
dismissed. I would order that the applicant, DCAM Holdings Pty Lunited should pay the
costs of the trustee. As I Indicated at the commencement of the hearing, I am of the
view that the interveners should pay their own costs of the proceedings.
I certify that this and the 10 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justice Davies.
I
| Associate: k | Date: | 18 November 1994 |
| Counsel for the applicant: | P G Mahony |
| Solicitors for the applicant: | M Peoples & CO |
| Counsel for the respondent: | B J Skinner |
| Solicitors for the respondent: | Lobban, McNally & Harney |
| Counsel for the bankrupt: | S J Burchett |
| Sohcitors for the bankrupt: | Whitfields |
| Date of hearing: | 18 November 1994 |
| Date of judgment: | 18 November 1994 |
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