Johnson v Noosa Beach Real Estate Pty Ltd
[2013] QCAT 5
•2 January 2013
| CITATION: | Johnson v Noosa Beach Real Estate Pty Ltd and Anor [2013] QCAT 005 |
| Kristine Johnson |
| v |
| Noosa Beach Real Estate Pty Ltd James Robert Grant |
| APPLICATION NUMBER: | OCL078-12 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe, Acting Deputy President |
| DELIVERED ON: | 2 January 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The claim against the fund by Kristine Johnson is refused. 2. The application is dismissed. |
| CATCHWORDS: | PROPERTY AGENT – where appointment to act signed by only one of two clients – where special condition in contract of sale allowing early commission when contract unconditional – whether contract unconditional – whether agent entitled to commission – whether claimant suffered loss because of an event Property Agents and Motor Dealers Act 2000, ss 140, 142, 470, 488, 490(2) Phillips & Anor v Scotdale P/L [2008] QCA 127 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
Together with her late husband, Mrs Johnson owned a house at Noosaville that they wanted to sell. Mr Grant, principal of Noosa Beach Real Estate Pty Ltd, attended at the Noosaville home to discuss the listing of the property. According to Mr Grant, Mr Johnson was not well and he appeared to be asleep throughout the conversation. Mr Grant says that Mrs Johnson told him that she had control of her husband’s affairs and that Mr Johnson would approve her decision.
On 24 March 2010, Mrs Johnson signed a Form 22a appointment of agent as client, even though the client details listed both Mr and Mrs Johnson. Mr Johnson did not sign the appointment. Noosa Beach Real Estate Pty Ltd was nominated as the agent. On 2 July 201, Mrs Johnson signed a form 24a – appointment to act as auctioneer. Mr Johnson did not sign that appointment. Mr Grant was nominated as the agent.
Mrs Johnson signed a contract for sale on 18 August 2010. The contract listed the sellers as both Mr and Mrs Johnson but, again, only Mrs Johnson signed it.
The contract contained the usual condition about termite and building inspections, to be completed by 17 August 2010. It was not, however, subject to finance. Settlement was to be within 180 days.
The contract also contained this special condition:
The vendor and the purchaser authorise the stakeholder to release the commission and GST payable on this sale to the selling agent from the deposit when the contract becomes unconditional.
The buyers defaulted on settlement. Mr and Mrs Johnson elected to terminate the contract. They sought forfeiture of the deposit. In accordance with the special condition of the contract, Mr Grant had transferred his commission from the deposit some time in August 2010.
Mr and Mrs Johnson re-listed the property for sale. This time, on 4 April 2011, Mrs Johnson signed the Form 22a in her own capacity and as Mr Johnson’s power of attorney. On 27 July 2011, Mrs Johnson signed a contract for sale. She signed it in her own capacity and as attorney for Mr Johnson.
Mrs Johnson made a claim on the statutory claim fund for $37,382.13 “taken from the trust account”, $5,909.70 for “Andrew Morris” and solicitors costs on the claim. Mr Grant received notice of the claim.
In considering a claim against the fund, I must be satisfied[1] that an event as mentioned in section 470(1) happened and that Mrs Johnson suffered financial loss because of the event.
[1] Section 488(2) Property Agents and Motor Dealers Act 2000.
I must also take into account any amount Mrs Johnson might reasonably have received or recovered if not for her neglect or default and any amount ordered to be paid to Mrs Johnson as compensation to the claimant under sections 530A, 572D or 592A of PAMDA[2].
[2] Section 488(3)(a).
Finally, in allowing a claim I must decide the amount of Mrs Johnson’s financial loss and name the person who is liable for the loss[3].
[3] Section 488(3)(b) and (c).
The event
The stealing, misappropriation or misapplication by an agent of property entrusted to that person as agent for someone else in their capacity as agent is an “event” under s 470(1)(e).
Section 140 of PAMDA provides that a person is not entitled to retain a reward or expense for the performance of an activity as a real estate agent unless the agent has been properly appointed. Section 141 provides that, if there is no valid appointment, an agent cannot sue for, recover or retain commission or expenses.
Mrs Johnson argued that Mr Grant was not properly appointed because Mr Johnson had not signed the form 22a, nor had Mrs Johnson signed it on his behalf as attorney. She also argues that the form 22a was incomplete and the form 24a did not entitle a sale other than by auction. Mrs Johnson says that Mr Johnson was following the conversation she had with Mr Grant and could have signed the appointment to act had he been asked.
However, Mrs Johnson took the precaution of having a copy of Mr Johnson’s enduring power of attorney, signed in 2008, certified on 5 August 2010, shortly before her conversation with Mr Grant. It is interesting that Mrs Johnson was prepared to rely on an improperly executed contract of sale to assert her rights but would not allow Mr Grant to rely on an incorrectly executed form 22a to assert his rights. I consider that Mrs Johnson and Mr Grant did have the conversation about her authority to sign and that Mrs Johnson wrongly believed that she could simply sign the contract in her own name.
I suspect the omission of Mr Johnson’s signature was borne of ignorance, both by Mrs Johnson and Mr Grant. But Mr Grant, as a licensed real estate agent, should have been more cautious and better informed. The requirements for a valid appoint are clear[4]. One of the essential requirements is that the appointment is signed by the client. Mr Johnson did not sign the appointment, whether personally or by his power of attorney. I find, therefore, that the appointments to act were invalid.
[4] Property Agents and Motor Dealers Act 2000, s 133.
Mrs Johnson argues that, because the appointment was invalid, Mr Grant had no right to claim commission or expenses. She says that it therefore follows that his retention of commission was a misappropriation or misapplication of funds within s 470(1)(e) of PAMDA.
The former Commercial and Consumer Tribunal considered the connection between s 470(1)(e) and an invalid appointment in Oakhill Property Group Pty Ltd and GB Communications Pty Ltd v Beverley[5]. The member noted that a breach of the failure to secure a valid appointment is not one of the “events” within the contemplation of s 470(1). The member made the point, in relation to a letting agent, that:[6]
The applicants cannot accept the rentals received from the managers and then complain about deductions made by the managers. This would amount to having their cake and eating it. All managing agents charge commission and other fees. It is irrelevant that the managers were not properly appointed under the PAMD Act as letting agents for the applicants and therefore should not have charged commission. Section 117 of the PAMD Act concerns such issues but this is not a section enumerated in section 470 of the PAMD Act for the purposes of claiming financial loss.
[5] [2006] QCCTPAMD 23.
[6] Supra at [11].
There is further support for the member’s view in s 142 of PAMDA. A breach of s 140 is an offence. If a person is convicted of an offence, and the court convicting the person is satisfied that the agent has retained money to which it was not entitled, the court must order the agent to pay the amount to the client. The client may enforce that order as a judgment debt. A “court” in s 142 does not include this tribunal.
Given that s 142 contemplates a specific process for the recovery of losses, it would be surprising if the proper interpretation of the general words of s 141 were to circumvent or contradict the specific words of s 470. I find that the words of s 470(1)(e) do not extend to allow a claim against the fund for a breach of s 140. That approach is consistent with the tribunal’s approach to other statutory regimes where there is both a general right to compensation and a right to compensation on conviction of an offence.[7] The principles apply whether the appointment was invalid because Mr Johnson’s signature was not affixed or the wrong form was employed.
[7] See Elfbest Pty Ltd v Dynan and Anor[2012] QCATA 7.
Mrs Johnson also claims that Mr Grant’s early transfer of commission was a breach of Chapter 12 Part 1 of PAMDA which is an event under s 470.
She says that her solicitor never received notice that the building and pest inspection was satisfactory. The contract contemplates silence. Clause 4.4 of the contract provides that, if the buyer does not terminate the contract by 5pm on the inspection date, it will be treated as being satisfied with the building and pest reports it has obtained. I do not consider the buyers’ silence about building and pest reports as grounds for an argument that Mr Grant misappropriated the commission.
Mrs Johnson further says that the contract was not unconditional when Mr Grant transferred the deposit because the buyer was still entitled to terminate the contract under clauses 7.4 (seller’s warranties), 7.5 (survey and mistake), 7.6 (requirements of authorities), 7.7 (property adversely affected) and 9.1 (buyer’s default).
That might be the meaning that Mrs Johnson wants to place on the word “unconditional” now but I do not accept that this was the meaning given to it when Mrs Johnson executed the contract. It is an accepted turn of phrase in conveyancing parlance that a contract is unconditional when the buyer has finance approved and the building and pest inspection is satisfactory.
It seems that Mrs Johnson is interpreting the special condition with the benefit of hindsight, rather than a clear recollection. She was very happy with Mr Grant’s handling of the sale. In October 2010, she wrote in glowing terms of how Mr Grant had secured a sale, when she and her husband were experiencing difficulties[8]. When she first heard that the contract would not settle, Mrs Johnson did not blame Mr Grant but shared his frustration[9].
[8] Email Johnson to Grant dated 31 October 2010.
[9] Email Johnson to Grant dated 3 March 2011.
In an email to Mr Grant dated 14 March 2011, Mrs Johnson wrote:
It was seven months ago that we were all so sure that this contract was “unconditional”. Not subject to finance!
In an email to her lawyers dated 6 March 2011, Mrs Johnson wrote:
This agent added a clause on the special conditions saying we agreed to early release of the commission…but it was understood that if it was not settled we would be refunded.
Mr Grant tells of the extra effort he employed to get the house ready for sale. Mrs Johnson acknowledged his efforts. It would be natural to reward that extra effort with the early release of Mr Grant’s commission. I am satisfied that Mrs Johnson knew and understood that the effect of the special condition was that Mr Grant was entitled to his commission when the buyers notified that they were satisfied with the building and pest inspection.
I suspect that Mrs Johnson is now better informed about the terms of an appointment of agent; rather than accepting the normal clauses relating to commission (where commission is payable if a buyer is introduced), Mrs Johnson restricted the right to commission to settlement when she signed the form 22a in July 2011.
Mrs Johnson argues that the special condition was not a written direction for the use of trust money as contemplated by s 378(1)(b) of PAMDA. I disagree and respectfully adopt the reasoning of Keane JA[10] as he then was:
So far as the provisions of s 384(2) of the PAMDA is concerned, while no provision of the Act expressly authorises for the payment by a licensee in accordance with the direction of all those with a claim to the moneys, that does not mean that the Act does not permit such a payment. Section 384(2) must, I think, be understood as recognising that compliance with a written direction as to the use of money expressly referred to in s 378(1)(b) is permitted by the PAMDA. There is nothing in the Act to prohibit compliance with a written direction of the kind contemplated by s 378(1)(b) which, as I have said, takes its legal force from the general law. Compliance by a licensee with a written direction is thus permitted by the Act.
[10] Phillips & Anor v Scotdale P/L [2008] QCA 127 at [35].
I see no difference between a written direction to release money to one of the parties and a written direction to release commission. I also see no difference between a written direction that operates once a transaction is finalised and a written direction that operates at an earlier date. Indeed, Keane JA made the comment that an agent’s entitlement to commission arises when the transaction is completed or at the written direction of the parties[11]. It follows, therefore, that completion of a transaction is not a pre-condition to the effectiveness of a written direction.
[11] Supra at [33].
I am not persuaded that there is an “event” within s 470(1).
Financial loss
If I had been satisfied that there was an event within s 470, I would then have to be satisfied that Mrs Johnson suffered a financial loss because of Mr Grant’s breach.
The comments of the member in Oakhill Property Group Pty Ltd and GB Communications Pty Ltd v Beverley are apt. Mrs Johnson cannot have her cake and eat it. She engaged Mr Grant to find a buyer and he did. The contract was unconditional. The buyers’ failure to settle was not within Mr Grant’s control. Mrs Johnson was obviously prepared to pay Mr Grant commission for finding the original purchaser because the appointment to act she signed in July 2011 states that commission is payable to the new agent on settlement of a contract of sale other than a contract of sale to the original buyers.
If there had been a valid appointment, Mr Grant would have been entitled to commission. Mrs Johnson has not suffered any loss.
Orders
Mrs Johnson’s claim against the fund is refused. Her application is dismissed.
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