Goldblaze Nominees Pty Ltd v Positive Property Solutions (WA) Pty Ltd

[2017] WADC 105

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   GOLDBLAZE NOMINEES PTY LTD -v- POSITIVE PROPERTY SOLUTIONS (WA) PTY LTD [2017] WADC 105

CORAM:   REGISTRAR KINGSLEY

HEARD:   12 MAY 2017

DELIVERED          :   18 AUGUST 2017

FILE NO/S:   CIV 4022 of 2016

BETWEEN:   GOLDBLAZE NOMINEES PTY LTD

Plaintiff

AND

POSITIVE PROPERTY SOLUTIONS (WA) PTY LTD
First Defendant

JORDAN NIVEN
Second Defendant

OLIVIA HASLAM
Third Defendant

Catchwords:

Practice - Application for summary judgment - Turns on own facts - No new principles

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff:     Mr S Penglis

First Defendant             :     Mr J C Benari

Second Defendant         :     Mr J C Benari

Third Defendant           :     Mr J C Benari

Solicitors:

Plaintiff:     Mony De Kerloy

First Defendant             :     Benari & Co

Second Defendant         :     Benari & Co

Third Defendant           :     Benari & Co

Case(s) referred to in judgment(s):

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Morgan v Pallister [2004] WASC 188

1. REGISTRAR KINGSLEY:  The plaintiff has brought an application for summary judgment.  The power to order summary judgment is one that should be exercised with great care.  The principles of summary judgment are well known – they can be briefly stated:

   (a)summary judgment will only be granted when there is no real question to be tried and no fairly arguable point;

   (b)it is only in the clearest of cases, where there is a high degree of certainty about the ultimate outcome if the case went to trial that summary judgment ought properly be granted;

   (c)whilst the burden of persuasion lies with the plaintiff, the party showing cause assumes an evidentiary burden; and

   (d)difficult questions of law may be determined on a summary judgment application, but it will often be appropriate to leave such questions for trial.

   (see Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Morgan v Pallister [2004] WASC 188).

2. In this action, what is not in contention is that the sum of $82,500, inclusive of GST, (the moneys) moved from the plaintiff to the defendants.  What is in contention is how it came about those monies moved from the plaintiff to the defendants.  As there is no pleaded cause against the third defendant, any reference to the defendants means the first and second defendants only.

3. The plaintiff pleads three causes of action;

   1.there has been a breach of s 60 of the Real Estate and Business Agents Act 1978 (the Act) in that the defendants were not licensed real estate agents at the relevant time;

   2.there was misleading and deceptive conduct on the part of the defendants in allegedly holding themselves out as being licensed real estate agents; and

   3.if there was no breach of s 60 of the Act, then the moneys can be categorised as a loan, and the defendants have repudiated the loan agreement – this plea arises from the defendants defence, and the plaintiff, unusually, amended its statement of claim to plead the response.

4. The plaintiff pleads that it proposed to offer for sale houses prior to and during development and construction. Believing the first defendant was a licensed real estate agent, the plaintiff, in March 2015, engaged the first defendant as real estate agent to market and sell the proposed houses. The plaintiff pleads that there has never been a valid written appointment as required by s 60 of the Act.

5. The plaintiff goes on to plead that on 25 March 2015 the first defendant issued the plaintiff with an invoice in the amount of $50,000 plus GST and the invoice read 'Advance Commission for three houses on Lot 12 (number 326) Shepperton Road, East Victoria Park'.  On 26 March 2015 the plaintiff paid the first defendant $50,000 plus GST.  On 12 May 2015 the first defendant issued the plaintiff with a second invoice in the amount of $25,000 plus GST.  That invoice was paid by the plaintiff on 13 May 2015.

6. Further, the plaintiff pleads the first defendant's conduct was misleading and deceptive in that by issuing the invoices and acknowledging payment that constituted representations by the first defendant it was a licensed real estate agent and was lawfully able to market and sell the houses.  The claim against the second defendant is that as the director of the first defendant, the second defendant was knowingly concerned in the conduct.

7. The defendants have filed a defence which, in essence, contends the monies paid by the plaintiff were a loan to establish the first defendant's real estate business in Perth, and thus to sell the plaintiff's properties.  In the amended statement of claim, whilst denying the loan agreement, the plaintiff pleads that if there was such a loan, the first defendant breached and repudiated the loan in a letter dated 6 October 2016 where the first defendant refused to sell or continue to sell the plaintiff's properties.  The plaintiff further pleads there has been a total failure of consideration on the part of the first defendant.

8. The first and second defendant's defence pleads that as between 3 March 2015 and 10 December 2015 it was not a licensed real estate agent and the plaintiff has never appointed the first defendant as its real estate agent.

9. The first and second defendants plead an agreement entered in between the plaintiff and first defendant in or about March 2015.  The agreement was that the plaintiff would loan to the first defendant the sum of $100,000 to establish the first defendant's real estate agent's business in Perth and to sell the plaintiff's properties.  It was further agreed that the first defendant would repay the loan by setting off the first defendant's commission upon the properties being sold and settled.

10. The defendants plead that pursuant to the agreement the plaintiff paid $55,000 on 26 March 2015 and $27,500 on 26 May 2015 as part payment of the loan.

The s 60 of the Act claim

1. Sharon Niven, in her affidavit sworn 23 November 2016, deposes that in or about March 2015, Mr Carey, for the plaintiff, asked her to create an invoice in the name of Positive Property Solutions (WA) Pty Ltd for the sum of $100,000 addressed to Dale Grove Holdings Pty Ltd with the description 'marketing fee'.  That invoice was created by Ms Niven and given to Mr Carey.  Ms Niven goes on to depose that Mr Carey came back to her requesting her to change the invoice by addressing it to the plaintiff, to change the amount to $50,000 plus $5,000 GST and change the description to 'Advance Commission'.  Ms Niven goes on to say that in or about May 2015, Mr Carey asked her to create a second invoice for $25,000 plus $2,500 GST addressed to the plaintiff, with the description 'Advance Commission'.

2. Unless an agent is licensed and holds a current triennial certificate, and has a valid appointment in writing signed by the party for whom the services are to be rendered, then pursuant to s 60(1) of the Act,

   An agent is not entitled to receive any commission, reward or other valuable consideration in respect of his services in that capacity.

3. The prohibition in s 60 of the Act is that an agent, in the capacity of agent, is not entitled to receive any commission, reward or other valuable consideration. Agent is defined at s 4 of the Act as,

   a person who is a real estate agent or a business agent, or both a real estate agent and a business agent.

4. At the time of the purported invoices from the first defendant to the plaintiff, and at the time the moneys were paid by the plaintiff to the first defendant, the defendants were not an agent as defined.  The second defendant only became an agent in July 2015.  The first defendant was granted a triennial license on December 2015. 

5. It is arguable that the moneys received were not received by the defendants in their capacity as agent and, there is an arguable issue as to whether the provisions of s 60 of the Act would apply to the defendants.

Misleading and deceptive conduct

1. The plaintiff pleads that by issuing the invoices referred to the first defendant engaged in misleading and deceptive conduct, and that the second defendant, as a director of the first defendant, was knowingly concerned in the conduct of the first defendant.

2. Sean Niven, in an affidavit sworn 10 April 2017, on behalf of the second defendant, deposes that between March 2015 and 10 December 2015 he had a number of conversations with Mr Carey about the progress of his son's (the second defendant) transfer of a real estate agents license from Queensland to Western Australia.

3. There is some evidence that Mr Carey was aware of this.  In an email dated 16 February 2015 from Mr Carey to Sean Niven, Mr Carey states,

   You need to be careful with Jordan getting his licence for the first time as there may be time delays with the current timing in the order of 3 months.

4. It would appear that the plaintiff, through Mr Carey, knew the second defendant, at least, was not licensed, and the earliest any license could be granted would sometime in May 2015.  In fact the license was transferred on 8 July 2015 (par 9 Sean Niven affidavit).  From the defence at par 4, the first defendant only became a licensed real estate agent and the holder of a current triennial certificate on 10 December 2015.

5. In my opinion there is an arguable issue as to whether the plaintiff was in any way deceived.

The loan

1. The defendants plead the moneys were paid pursuant to an agreement made in March 2015 between the plaintiff and defendants.  The defendants plead the plaintiff would lend to the first defendant the sum of $100,000 for the purpose of setting up the first defendant's real estate business in Western Australia.  The loan would be repaid by setting off commissions due to the first defendant from the sales of the plaintiff's properties.

2. In the amended statement of claim the plaintiff denies the loan, but in any event pleads the first defendant breached and repudiated the loan by a letter dated 6 October 2016 by the first defendant refusing to sell the plaintiff's properties.

3. The letter of 6 October 2016 is marked 'without prejudice', and there was an objection to its production by the defendants.  Through conferral between the parties' solicitors the letter was admitted into evidence with parts being redacted.

4. The letter of 6 October 2016 states that the discussions which preceded the payment were based on budgets, the result of which Mr Carey agreed to lend $80,000 to the first defendant to set up a real estate business.  The 6 October 2016 letter goes to suggest a term of the loan agreement,

   Whatever the merits of those invoices to Goldblaze they evidence the true agreement which was that the money paid over was an advance against the payment of commissions, which required you to give us properties we could market and sell for realistic prices.

5. The 6 October 2016 letter goes on to state that whilst demand was made on 22 August 2016, it was only on 29 August 2016 that the plaintiff provided marketing and selling material.  Further, in that letter Sean Niven complains to Mr Carey that their market research indicates market prices for the properties were between $640,000 ‑ $690,000 whereas the plaintiff sought to market the properties for prices between $850,000 to $1 million.

6. The plaintiff submits by reason of the 6 October letter the first defendant cannot rely on the fact the properties have not been sold, as justification for not paying back the loan.  However in my opinion there is some evidence to suggest there was a term of the agreement that the plaintiff was to set realistic sale prices. 

7. There would appear to be a dispute over the terms of the contract.  If there is a bona fide insistence on an interpretation of the contract, then, even if it is contentious, it may not constitute repudiation (see DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432).

8. In my opinion the issues raised in the 6 October 2016 letter raise doubt as to the appropriateness of this matter being determined by way of summary judgment.

9. For the sake of completeness, the plaintiff submitted there was no consideration for the loan.  If the agreement was that the moneys were paid to enable the first defendant to establish a real estate business, and that business was established, then in my opinion there has been no failure of consideration.

Conclusion

1. For these reason the plaintiff application for summary judgment is dismissed.  I will hear counsel on the issue of costs, and the future conduct of the action.