Gettens v XFar Homes Pty Ltd
[2012] QCAT 150
•11 April 2012
| CITATION: | Gettens v XFar Homes Pty Ltd & Anor [2012] QCAT 150 |
| PARTIES: | Mr Justin Gettens |
| v | |
| XFar Homes Pty Ltd Alexander Hamid Dariush-Far also known as Alex Far |
| APPLICATION NUMBER: | GAR302-11 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe, Senior Member Jeremy Gordon, Member |
| DELIVERED ON: | 11 April 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Pursuant to s 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $35,541.07. 2. Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period the Chief Executive must pay to Mr Gettens the sum of $35,541.07 from the Claim Fund, and if there is an appeal, payment must not be made until after the appeal is finally decided. 3. Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the Respondents XFar Homes Pty Ltd and Alexander Hamid Dariush-Far are named as the persons liable for the financial loss of Mr Gettens. 4. Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, XFar Homes Pty Ltd and Alexander Hamid Dariush-Far are liable jointly and severally to reimburse the Claim Fund by paying the sum of $35,541.07 to the Chief Executive, Department of Justice and Attorney General. |
| CATCHWORDS: | REAL ESTATE AGENT – agent receiving deposit money from buyer – contract of sale going off – deposit money not returned to buyer – whether a claim on the fund – whether interest can be recovered as part of “financial loss” Property Agents and Motor Dealers Act 2000, ss 378, 379, 385(4), 388, 488, 489, 492(5) Cook v Bullard Smith Motor Company [2009] QCCTPAMD 37 followed |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Background
Mr Gettens made a claim against the statutory fund (the Claim Fund) established under the Property Agents and Motor Dealers Act 2000 (“the Act”) for financial loss when XFar Homes Pty Ltd (“XFar”) failed to return his deposit in full.
XFar is licensed as a real estate agent under the Act (licence number 3095614). Alex Hamid Dariush-Far is secretary, sole director and shareholder of that company.
On 16 April 2010 by a written contract, Mr Gettens agreed to purchase an “off-the-plan” property known as “Proposed Unit 16 on Lot 506 East Quay Drive, Harbour Quays, Biggera Waters, Queensland 4216” from Kiana Bay Harbour Town Pty Ltd. A search of the ASIC register reveals that this company does not exist. The closest match is Kiana Bay Pty Ltd ACN 140 923 315 of which company Mr Dariush-Far is a sole director and shareholder.
The contract contained special conditions and incorporated the standard terms and conditions as approved by the REIQ and Queensland Law Society.
Upon signing the contract Mr Gettens paid a deposit of $60,500 to XFar as agent and deposit holder. This represented 10% of the purchase price of $605,000.
The intention of the contract was that Kiana was to arrange for development of the site including construction of the unit that Mr Gettens was buying. Settlement was due 21 days after notice of registration of the plan, establishment of the Scheme and issue of a separate title for the proposed lot.
By letter dated 5 October 2010 Mr Dariush-Far (using the name Far) informed Mr Gettens that Kiana had sold the site to another company. It is not in dispute that this sale did occur. The letter gave Mr Gettens the option of signing a new contract with the purchasing company by 15 October 2010 failing which the existing contract “is terminated and your deposit money will be refunded”.
Mr Gettens elected not to sign a new contract and on 15 October 2010 indicated to Mr Dariush-Far in a telephone conversation that he wished to have his deposit returned.
There followed discussions and correspondence between the parties in which Mr Dariush-Far offered Mr Gettens 20% less than the return of the full deposit to cover “costs”. This was not accepted by Mr Gettens. This was followed by various unfulfilled promises by Mr Dariush-Far to return the deposit money in full.
[10] On 1 April 2011 Mr Gettens received $20,500 from Mr Dariush-Far and on 29 April 2011 he received a further $10,000. These payments left $30,000 outstanding from the original deposit money.
Considerations
[11] This decision assumes that despite the non-existence of the company Kiana Bay Harbour Town Pty Ltd, the contract is valid. It could be valid if there was a mistake over the name of the contracting company (which in this decision is called “Kiana”). It has not been suggested by either party that the contract is not valid because the named company does not exist, so it seems reasonable to make this assumption. If this assumption is wrong and the contract is void, then the deposit money would be returnable in any case, although at an earlier date than found in this decision.
[12] In this contract, Kiana agreed to sell the completed unit to Mr Gettens. The contract made no provision for that obligation to be given to another party.
[13] The mere act of Kiana selling the site to another was not a breach of its contract with Mr Gettens. This is because Kiana might have had arrangements in place with the purchaser of the site which would have enabled it to fulfil its obligation to Mr Gettens to sell the completed unit to him.
[14] There is no evidence of any such arrangements however, and the letter written by Mr Dariush-Far to Mr Gettens on 5 October 2010 strongly suggests that there were no such arrangements, because it encouraged Mr Gettens to enter a new contract of sale to replace the old, and stated that the old contract would terminate some 10 days later if this was not done. There is no suggestion that Kiana had any further involvement in the project at all or that, from the time of that letter, Kiana was ready, willing and able to sell the completed unit to Mr Gettens. Further, the fact that the deposit has been partially refunded to Mr Gettens strongly indicates that Kiana was not in a position to fulfil its obligation under the contract it made with Mr Gettens by selling him the completed unit.
[15] On this basis we find that the contract terminated on 15 October 2010 which was the deadline given to Mr Gettens in the letter of 5 October 2010. It is also the date when he telephoned Mr Dariush-Far and agreed that the contract would be terminated and that he would have his deposit returned to him.
[16] The terms of conditions of the REIQ Residential Lots in a Community Titles Scheme as approved by the Law Society were incorporated into the contract. The relevant part of clause 2.4 of these terms provided:
2.4 Entitlement to Deposit and Interest
(1) The party entitled to receive the Deposit is:(a) if this contract settles, the Seller;
(b) if this contract is terminated without default by the Buyer, the Buyer; and
(c) if this contract is terminated owing to the Buyer’s default, the Seller.
(2) The interest on the Deposit must be paid to the person who is entitled to the Deposit.
(3) If this contract is terminated, the Buyer has no further claim once it receives the Deposit and interest (if any), unless the termination is due to the Seller’s default, misrepresentation or breach of warranty.
[17] It is clear that the circumstance of this claim falls into the terms of clause 2.4(1)(b). This means that Mr Gettens was entitled on 15 October 2010 to return of his deposit in full and interest.
Deposit was held on trust, and contravention
[18] The combined effect of sections 378 and 379 of the Act means that money received by a licensee as a deposit must be paid into the licensee’s general trust account. Section 411 of the Act describes such money as “trust money”. There is a “Trust Account Receipt” in the evidence number C050873 which shows that the deposit of $60,500 was received by XFar on that basis.
[19] Section 385(4) of the Act provides that a licensee must pay money out of the general trust account to the person entitled to it, and the relevant provision in this case is that such payment should be made within 42 days after the person first had a right to the balance. Under this provision XFar should have paid to Mr Gettens his entitlement to the money in the general trust fund by 26 November 2010 (42 days after the termination of the contract). That entitlement is the amount established by the formula in section 385(2)(b), which in this case is the full amount of $60,500 since there were no deductions as referred to in that subsection.
[20] Section 470 sets out the circumstances in which a person can make a claim against the fund and one of those is if there is a contravention of the trust account provisions set out above. It is clear that there was a contravention of section 385(2)(b) when the trust money was not paid to Mr Gettens by 26 November 2010, so the requirement of section 470 is satisfied. In turn, this means that the tribunal can make an order allowing the claim under section 488 of the Act because Mr Gettens suffered financial loss by reason of the contravention.
[21] There is a comment in an email from Mr Dariush-Far dated 13 February 2012 that, as there is a dispute about the deposit, the tribunal has no jurisdiction to entertain the application.
[22] The dispute about the deposit appears to be a reference to Mr Dariush-Far’s email of 30 November 2010 which was sent Mr Gettens and was in these words:
In regards of cancelling your contract and your obligations under terms of your contract we offer the following:
1. We deduct 20% from your deposit to cover our costs ($12,100)
2. You will rescind your contract by way of written letter form your lawyers agreeing with above.
3. We will return the balance of your deposit by way of TT…
This offer is open for acceptance till 5pm Wednesday 1 Dec 2010
[23] Section 388 of the Act provides that a licensee must not pay out trust money in dispute unless the licensee receives written notice from all parties to the transaction confirming the person who is entitled to the money or there is a determination from a court.
[24] Section 388 and the provisions about disputes over trust money in the Act only apply to disputes between parties who may be entitled to the trust money. They do not apply to a dispute between a party entitled to the trust money and the licensee itself[1]. Therefore there is nothing in the point made by Mr Dariush-Far in his email of 30 November 2010 which prevents us from making an order in relation to this trust money.
[1] See definition of “party” in s 387(2).
The correct order to make
[25] Turning now to the correct order for the Tribunal to make, this must be informed by those matters set out in section 488(2) of the Act. The Tribunal must decide the amount of the financial loss suffered by Mr Gettens because of the contravention. This is the amount which can be ordered to be paid to him from the fund.
[26] In assessing the financial loss the Tribunal must take into account any amount that the claimant might reasonably have received or recovered if not for the claimant’s own neglect or default. There is no deduction in this case to be made for neglect or default of Mr Gettens. In particular it can be seen from the chronology provided by him that he continued to press for the return of his deposit and received a number of unfulfilled promises and two part payments. He made a claim against the fund at a time when he reasonably considered he had no choice.
[27] Mr Gettens claims a proportion of his solicitor’s bill which he says was incurred in trying to recover the monies from XFar. He also claims a number of expenses such as consumables (printer cartridges, paper etc), postage, parking and travelling costs. He also claims his time used in pursuing XFar for 55 hours at $100 per hour. He also claims compound interest at a rate of 18.5% which, he says he has been paying on his credit card.
[28] As for the solicitor’s bill, Mr Gettens has limited his claim to half of the legal fees he has paid to date. We assume that the reduction is recognition that the fee note included fees involved in the transaction as a whole as well as in attempts to recover the deposit. There is clear authority in the former Commercial and Consumer Tribunal[2] and in this tribunal[3] that a party can recover legal fees reasonably incurred in pursuing recovery of a financial loss. The detail of the statement of account recites that Mr Gettens’ lawyers did a lot of work for Mr Gettens as buyer including: perusal of the draft contract; recommending substantial amendments; correspondence with the seller’s lawyer regarding the amendments and special conditions; usual correspondence for the initial phase of the contract; and correspondence about the change of the selling entity. It is apparent that a very small proportion of the cost was expended on trying to recover the deposit. We are prepared to allow an amount of $150 in that regard.
[2] Cook v Bullard Smith Motor Company [2009] QCCTPAMD 37.
[3]Level Investments Pty Ltd v Daynes Developments Pty Ltd (Externally Administered) & Anor [2011] QCAT 399.
[29] Mr Gettens has claimed $390.04 for consumables such as printing and stationery. We accept that Mr Gettens has produced a quantity of paper in relation to this application but much of it is unnecessary or unnecessarily duplicated. We are prepared, however, to allow the cost of having material externally printed and bound at a cost of $231.26 plus the costs of registered post at $16.50.
[30] Mr Gettens has claimed $255.00 for travel costs. The Tribunal allows attendance at directions hearings by telephone but prefers that parties attend compulsory conferences personally. Mr Gettens did attend a compulsory conference in Brisbane and it is reasonable to allow the costs of that attendance at $105.
The claim for interest
[31] Section 492(5) of the Act states
(5)Interest is not payable from the fund in relation to a claim allowed against the fund.
[32] The question arises whether these words mean that where the claimant’s financial loss includes an element in the nature of interest, that element can not be recovered from the fund. In some cases heard by the former Commercial and Consumer Tribunal and in some heard by QCAT itself, the words have been given a strict meaning and the answer to that question has been “no”. In those cases, interest has not been allowed. In other cases heard in the former Commercial and Consumer Tribunal, the answer has been “yes”, and interest has been allowed.
[33] This claim provides an opportunity to revisit this question in the light of the authorities.
[34] In Hungerfords v Walker (1989) 84 ALR 125 the High Court considered the general rule in English common law (which applied in a simple debt claim not involving a breach of trust) that the court had no power to award interest for the late payment of a debt or damages unless:
(a)there was an agreement between the parties to that effect; or
(b)the claim was recoverable as special damages in a contract claim because such recovery was in the reasonable contemplation of the parties; or
(c)there was a statutory provision for the payment of interest which applied.
[35] Then at 129 Mason CJ and Wilson J stated:
“Incurred expense and opportunity cost arising from paying money away or the withholding of moneys due to the defendant's wrong are something more than the late payment of damages. They are pecuniary losses suffered by the plaintiff as a result of the defendant's wrong and therefore constitute an integral element of the loss for which he is entitled to be compensated by an award of damages.”
[36] And at 135 Brennan and Deane JJ stated:
“.. there is no acceptable reason why the ordinary principles governing the recovery of common law damages should not, in an appropriate case, apply to entitle a plaintiff to an actual award of damages as compensation for a wrongfully and foreseeably caused loss of the use of money. To the extent that the reported cases support the proposition that damages cannot be awarded as compensation for the loss of the use of a specific sum of money which the wrongful act of a defendant has caused to be paid away or withheld, they are contrary to principle and commercial reality and should not be followed.”
[37] The above principles were considered in relation to section 492(5) of the Act by Britton SC, DCJ in Chief Executive, Department of Tourism, Racing and Fair Trading v Robert Hunter [2002] QDC 272 which was an appeal to the Queensland District Court from the Property Agents and Motor Dealers list of the former Commercial and Consumer Tribunal. The Tribunal had decided that s 492(5) only referred to interest on the amount ordered to be paid from the fund along the lines of interest payable on court judgments and did not preclude damages for lost opportunity. At [38] the learned judge stated:
“I am satisfied that the Tribunal’s conclusion in relation to s492(5) of PAMDA was correct. It is a prohibition on the payment of interest from the fund in relation to a claim allowed against the fund. In other words what is prohibited is payment of an amount representing interest on the amount of financial loss assessed by the Tribunal. There is no prohibition on the Tribunal making an assessment of interest in the nature of damages for lost opportunity on the principle enunciated in Hungerfords v Walker (1989) 171 CLR 125 which is then one head of the overall assessment of financial loss. The assessment of interest was merely a way of quantifying one aspect of financial loss.”
[38] As is clear from Hungerfords’ case the above principles apply in cases of tort, but also in a case where monies are withheld from the person entitled to them, as in this case. It follows that Mr Gettens’ financial loss may include an element for loss of opportunity to earn interest on the money in his hands.
[39] A trustee who withholds money from a beneficiary may also be obliged to pay compensation in the nature of interest to the beneficiary. This is on the basis that a trustee must account for any benefit or gain obtained or received by reason of or by use of trust monies[4]. And it has long been established that there is an equitable right to interest which may be awarded where money is withheld or misapplied by a trustee[5]. However it seems to us that these principles do not apply in this particular case because on the available evidence it appears that XFar placed the trust money in a general trust account and therefore derived no benefit from it. If it had been invested in a special trust account[6] then it would be clear that someone other than the person entitled to the trust money (Mr Gettens) would have been unjustly enriched by the interest accrued after the date when it should have been paid to him (26 November 2010).
[4] Kak Loui Chan v Zacharia (1984) 154 CLR 178 at 198-9.
[5] President of India v La Pintada Compania Navigacion SA [1985] AC 104 at 116.
[6]This would have been required by section 380 if both parties had directed this and completion of the sale was going to be more than 60 days after the money had been received.
[40] What is the correct calculation of Mr Gettens’ financial loss for loss of opportunity to earn interest on the monies withheld from him as from 26 November 2010?
[41] Mr Gettens claims the cost of actual interest he has paid on his credit card. We do not think it is reasonable for Mr Gettens to recover interest at credit card rates. Mr Gettens has a responsibility to mitigate his loss. It would have been reasonable for him to attempt to pay down the credit card balance or refinance the debt at a more reasonable rate, and there is no evidence that this was attempted or could not be done.
[42] Further, the evidence from Mr Gettens about the amount of interest he has paid is not as good as it should be. Although his material recites that he can provide copies of statements to show his interest payments, he has not in fact provided those documents. His failure to do so is in the face of a direction of the tribunal dated 17 November 2011 that he file “all material” and further directions on 2 February and 8 February 2012 allowing him the opportunity to file further material.
[43] Further on the question of mitigation of loss, in an email of 23 February 2012 Mr Dariush-Far invited Mr Gettens to agree that the money be paid into an interest bearing account pending the resolution of his claim. Mr Gettens did not agree, saying that he wanted the funds to remain “in trust as per the contract and the law”. This was a misunderstanding of the position. The money would still have been held in trust even if invested in this way. Had Mr Gettens taken up this suggestion, it would have reduced the impact of the delay and reduced his loss. We think it was unreasonable for him not to agree to this proposal. It follows that he is not entitled to any claim for interest from this point. Allowing say, 7 days for the paperwork to be completed to complete this investment, we do not allow any interest beyond 1 March 2012.
[44] In all the circumstances, a reasonable assessment of the loss of opportunity to earn interest on the monies withheld is based on simple interest at the Supreme Court Act rate of 10%. This should start on 27 November 2010 which is the day after the money should have been paid. The total interest payable on the amounts owing from time to time is:
Interest on $65,000 for 125 days $2,226.03 Interest on $40,000 for 27 days 295.89 Interest on $30,000 for 307 days 2,516.39 $5,038.31
[45] Finally, Mr Gettens claims compensation for the hours he has spent on this claim which he could have spent on his business. There is simply no evidence to support a claim for $100 per hour or the amount of hours involved. We do not accept this claim.
[46] As a licensed real estate agent, XFar is clearly liable to reimburse the fund.
[47] Section 490(2) provides that a person is also liable to reimburse the fund if the person is:
(a)A responsible person;
(b)If the responsible person was a corporation, each person who was an executive officer of the corporation.
[48] Mr Dariush-Far is an executive officer of the company. He is also a person liable to reimburse the fund.
Conclusion
[49] Mr Dariush-Far has breached s 385(4) of the Act by failing to pay trust money to Mr Gettens at the time Mr Gettens became entitled to receive it. The failure to pay the trust money is an event which entitles Mr Gettens to claim on the fund.
[50] XFar Homes Pty Ltd and Mr Dariush-Far are the persons liable for Mr Gettens’ financial loss. That loss is calculated as follows:
Balance deposit not paid $30,000.00 Part of solicitor’s bill 150.00 Printing and stationery 231.26 Postage 16.50 Travel 105.00 Interest 5,038.31 $35,541.07
[51] Pursuant to s 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $35,541.07.
[52] Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period the Chief Executive must pay to Mr Gettens the sum of $35,541.07 from the Claim Fund, and if there is an appeal, payment must not be made until after the appeal is finally decided.
[53] Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the Respondents XFar Homes Pty Ltd and Alexander Hamid Dariush-Far are named as the persons liable for the financial loss of Mr Gettens.
[54] Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, XFar Homes Pty Ltd and Alexander Hamid Dariush-Far are liable jointly and severally to reimburse the Claim Fund by paying the sum of $35,541.07 to the Chief Executive, Department of Justice and Attorney General.
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