Lewisham Estates Pty Ltd v LMW Advisory Group Pty Limited
[2014] NSWCATCD 65
•06 May 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Lewisham Estates Pty Ltd v LMW Advisory Group Pty Limited [2014] NSWCATCD 65 Hearing dates: 20 and 21 March 2014 Decision date: 06 May 2014 Before: S Thode, Senior Member Decision: The Tribunal declares that the commission in the amount of $533,500.00 is not due or owing by the applicant to the respondent.
The parties are to liaise and approach the Tribunal if a hearing on the question of costs is required. If a hearing is required the parties must inform the Tribunal within seven days of the making of these orders.
If a hearing on the question of costs is not required, the applicant shall provide to the Tribunal and the respondent written submissions on the question of costs of no more than three pages in length within 7 days of the making of these orders.
The respondent shall provide to the Tribunal and the applicant written submission on the question of costs of no more than three pages in length within 14 days of the making of these orders.
Catchwords: Principal Agent -Commission-Contract Formation-Agreement in Writing Legislation Cited: Property Stock and Business Agents Act 2002 (NSW) Category: Principal judgment Parties: Lewisham Estates Pty Ltd (applicant)
LMW Advisory Group Pty Limited (respondent)Representation: Mr A Henskens SC and Mr P Folino-Gallo for the applicant
Mr D Pritchard SC for the respondent
File Number(s): COM 12/50563
reasons for decision
APPLICATION
The applicant sought declaratory relief pursuant to section 8 of the Consumer Claims Act 1998 that it did not have to pay commission in the sum of $533,500.00 to the respondent.
In the alternative the applicant claimed that the agency fee was unreasonable and ought to be substituted for a lesser, reasonable amount.
PROCEEDINGS IN THE TRIBUNAL
The proceedings were commenced in the District Court and by consent of the parties and by order of the Court the proceedings were transferred to the Tribunal.
FACTS
The applicant was a property developer (Lewisham). It owned a large plot of land at Old Canterbury Road, Lewisham (the property). On 13 August 2012 the applicant agreed to sell the land to Kerimbla (No 23) Pty Limited, a subsidiary of Meriton (the purchaser) for $48,500,000.00. The purchaser wished to develop the land into a series of commercial and residential allotments.
At all material times the respondent was a licensed real estate agent claiming commission of $533,500.00 (the respondent).
The dispute arose because Lewisham entered into an agency agreement with the respondent. The applicant disputed that the document constituted a binding agreement. It was not in dispute that a document entitled "Commercial/Industrial Sales Inspection Report and Open Selling Agency Agreement" was signed by both parties, albeit not in each other's presence (the agency agreement). Pursuant to the agency agreement, the principal promised a fee of 1.1% inclusive of GST to the agent if "during the agency period they effectively introduce a purchaser to the Principal or the Property who subsequently enters into a binding contract". The estimated price range stated in the agency agreement is set out as $42,000,000.00 to $50,000,000.00.
The agency agreement was first handed to the applicant at a meeting dated 17 December 2010. The respondent had arranged a meeting between Mr Demian, a director of Lewisham, and Mr Triguboff, a director of Meriton (the purchaser). On or about 17 December 2010 the afternoon meeting took place at Meriton's offices. At that meeting the vendor and the purchaser agreed to a price of $48,500,000.00. Present at the meeting also were a representative of the respondent, Mr Wilson, Mr Adams, then an employee of Meriton and Mr Spira also an employee of Meriton.
On or about 19 January 2011 Lewisham entered into a put and call option deed (the option) with the purchaser. The terms of the option are referred to later in these reasons. On 15 February 2012 the purchaser notified Lewisham of its election not to exercise the option.
On 19 February 2012 the option expired.
On 23 April 2012 Lewisham entered into a new Selling Agency Agreement with Colliers International (NSW) Pty Limited (Colliers). Mr Younes as the agent employed by Colliers was predominantly involved in the sale. The following notation is prominently displayed on the new agency agreement:
"Important: this is an Exclusive Agency Agreement in relation to the Purchasers stipulated in Annexure A. This means you may have to pay the Agent's Commission even if another agent (or you) sell the Property or introduce a Purchaser who later buys the Property.
WARNING: Have you signed an Agency Agreement for the sale of this Property with another Agent? If you have, you have to pay 2 commissions (if this Agreement or the other agreement you have signed is a Sole of Exclusive Agency Agreement)."
It was not in dispute that the Colliers agreement was an exclusive agency agreement and Meriton Apartments was listed in Annexure A, as one of the named potential purchasers.
A contract for the sale of land concerning the property was eventually exchanged between Lewisham and Karimbla on or about 13 July 2012. The purchase price was and remained, as previously agreed by the parties on 17 December 2010, $48,500,000.00. Colliers, as agent, received the commission of $533,500.00.
On 1 August 2012 the respondent commenced separate proceedings in the District Court for recovery of commission in the sum of $533,500.00. This and the separate proceedings were transferred to the Tribunal by consent of the parties. The separate proceedings are not relevant for current purposes and were dismissed.
JURISDICTION
The matter was transferred from the District Court by consent of the parties. I am satisfied the Tribunal has the requisite jurisdiction to hear and determine the issues between the parties. The Tribunal has jurisdiction to determine claims against property stock and business agents as claims under the Consumer Claims Act 1998 provided the jurisdictional requirements are met. I have had particular regard to section 4 of the Consumer Claims Act 1998. A person who claims to be a consumer is presumed to be one until the contrary is proved and the onus is on the party who seeks to establish that contrary fact. No application in respect of jurisdiction was brought at the commencement of the hearing. Jurisdiction is conferred pursuant to section 36 of the Property Stock and Business Agents Act 2002 which provides the Tribunal has jurisdiction to hear and determine any such consumer claim despite the amount being more or less than the maximum amount of remuneration to which a licensee is entitled under the Act.
The monetary limit imposed under the Consumer Claims Act 1998 does not apply to commission cases and there is no jurisdictional limit imposed. (A&M Short Investments P/L v Richardson and Wrench Commercial Sutherland Shire (Commercial) [2005] NSWCTTT 220.)
The transitional provisions of the Civil and Administrative Tribunal Act 2013 apply.
ISSUES
The substantive issues to be determined in this matter are:
(1) Did the parties enter into a binding agency agreement?
(2) If the answer to question one is in the affirmative, did the agent comply with the legislative framework as set out in the Property Stock and Business Agents Act 2002 (NSW) (the Act)?
(3) If the answers to questions one and two are in the affirmative, was the agent the effective cause of sale?
(4) Was the commission reasonable?
The Evidence
The parties tendered the agreed bundle, exhibit B. The applicant relied on the statement of Mr Ray Younes of 5 October 2012; the statement of Anthony Khoury of 10 October 2013; the statements of Charbel Demian and the expert report of Michael Krivohlavy of 6 February 2013.
The respondent tendered the statement of Mr Robert Wilson, a Director of Lewisham Estates Pty Ltd (Lewisham); the statement of Mr Tyrone Hodge as former managing state director of LMW Advisory Pty Ltd; the statement of Alex Adams, a former employee of Meriton and the expert report of Mr Antonas.
The applicant submitted that by the time the respondent became involved in the sale, the property was already introduced to Meriton by another agent, Mr Khoury. It was not the applicant's case that Mr Khoury was the "effective cause of sale" and Mr Khoury did not make a separate claim for commission.
Mr Khoury had discussed the marketing of the property with Meriton as early as May 2010. It was the evidence of Mr Khoury that he attended a meeting at Meriton on or about 7 September 2010 and that Meriton confirmed at that meeting that the property had not been introduced to Meriton at that stage. Mr Khoury recalled meeting with Mr Triguboff and being shown a register in the form of a spread sheet with all sites introduced to Meriton, including details such as address description site size and DA process. The property was not on that spreadsheet as at May 2010.
It was not controversial that sometime after this meeting, Mr Khoury was informed by Mr Demian to "but out" as the respondent had now taken over the sale of the property. Mr Khoury was disappointed. However, as he was promised half a commission if the deal progressed to finality, he was content to withdraw from the sale. He felt that Mr Demian was an 'honourable man' and that he would be paid a share of any commission if the negotiations progressed to a sale.
Mr Wilson first met Mr Demian in his capacity as a valuer employed by Landmark White. Mr Wilson subsequently became a director of the respondent, a separate entity. Mr Wilson became aware of the property in or about 30 June 2010 after Mr Demian asked him to prepare a valuation of the property. In or about July August 2010 Mr Wilson asked Mr Demian "if he was doing anything with the property". Mr Wilsons mentioned a recent successful sale to Meriton. Mr Wilson and Mr Hodge were both valuers. Both were keen to expand the respondent's budding real estate business. Following the conversation, Mr Wilson offered the respondent's services as a real estate agent to Mr Demian. If permitted to sell the property, he was hopeful that he could achieve a price between $47,000,000 and $48,000,000. During this process Mr Wilson reported to Mr Hodge as his superior and in his capacity as the respondent's licence holder and signatory. Mr Hodge also held a real estate license.
Following the discussion with Mr Wilson, Mr Demian agreed to a meeting with Meriton. He also continued to speak to Mr Khoury about the property and potential interest from Meriton.
Shortly after this discussion in or about August 2010 Mr Wilson spoke to his contact at Meriton, Mr Adams. At some stage in or around September 2010 Mr Wilson performed a property valuation on a carpark for Meriton. He made mention of the property. Soon thereafter Mr Adams, an employee of Meriton, contacted Mr Wilson to inform him that Mr Triguboff would like a meeting to "understand more about the property". The meeting was scheduled for 17 December 2010.
On or about 15 December 2010 Mr Wilson sent an email to Mr Demian: "Before the introduction and discussions take place on Friday afternoon with Meriton, would you be prepared to enter into a confidential non exclusive agency agreement with Landmark White Advisory with success fee of 1.5% plus GST should a successful sale of the site be facilitated".
Mr Wilson offered 1.5% commission on behalf of the respondent. Mr Demian, on behalf of the applicant, counters with an offer of 1.1%.
Mr Wilson first showed the agency agreement to Mr Demian on 15 December 2010 in preparation for the 17 December 2010 meeting. On or about 16 December 2010 Mr Wilson provided a copy of the agreement to his principal, the more senior Mr Hodge. Mr Hodge was a signatory on behalf of the respondent, Mr Wilson was not. As at 15 December 2010 stage Mr Wilson was not a licensed real estate agent
After reviewing the agreement and amending the agreement to a commission of 1.1.%, Mr Hodge, on behalf of the respondent, signed the agreement and emailed it to Mr Wilson. Mr Wilson met with Mr Demian to present the amended agreement and for Mr Demian to sign it, in preparation of the highly anticipated meeting with Mr Triguboff.
There was considerable dispute about whether or not Mr Hodge was present at the 17 December 2010 meeting with Meriton. Mr Hodge claimed he was present, Mr Demian denied Mr Hodge's presence. I have had careful regard to the demeanour of both witnesses. Mr Hodge was cross examined at length about his presence at the meeting. It was put to him that he may have received a report from Mr Wilson, and that the report may have prompted him, years after the event, to think he was present when he was not. Mr Hodge recalls the intricacies of the meeting, and a discussion about purchase prices up to $50,000,000.00. He recalls there a lengthy discussion about the retail component of the property. I prefer Mr Hodge's recollection on this issue and am satisfied that he was at the meeting and that his memory of the events leading up to the meeting are to be preferred.
Three versions of the agreement
Three versions of the agency agreement were tendered. Each version contained only one signature of Mr Demian and Mr Hodge respectively. The first version presented to Mr Demian did not contain any handwriting in the margins. Once he received the first version Mr Demian added the following words:
" NB.B: should the sale be made to Meriton, then the Agent's remuneration will be shared with Khoury & Partners."
Mr Wilson contacted to Mr Hodge as his superior. On the morning of 17 December 2010 Mr Hodge and Mr Wilson had a lengthy discussion about whether or not Mr Khoury should receive any part of the commission. Mr Hodge advised Mr Wilson that the respondent was not minded to share the commission with Mr Khoury. He made a decision to unilaterally amend the agreement and deposed "I'll guess we'll worry about Khoury if it becomes a problem rather than at the moment". Neither Mr Wilson nor Mr Hodge involved Mr Demian in their discussion.
Mr Hodge took no steps to call off the meeting in light of the fact that no agreement had been reached on the commission.
Mr Hodge then added the handwritten words: "This amount is to be at the discretion of the LMW Advisory" on page 3 of the Agency agreement.
I am satisfied that this version of the agreement was not handed to Mr Demian until about one month after the 17 December 2010 meeting.
It was the applicant's case that the second version, bearing the words, "this amount is to at the discretion of LMW Advisory" was never signed by Mr Demian.
The Tribunal is satisfied that Mr Demian attended the meeting not being aware that there was a dispute about the commission that may be due to Mr Khoury. On his evidence, Mr Demian received this second version as late as 14 January 2011. Upon perusing the words "this amount is at the discretion of LMW Advisory" he had a discussion with Mr Wilson. He expressed his discontent and the additional words "at the discretion of LMW" were crossed out by Mr Demian.
Section 55 of the Property Stock and Business Agents Act 2002 (NSW) (the Act) is set out further below. It provides that a licensee is not entitled to any commission or expenses ..." unless the services were performed pursuant to (emphasis added) an agreement in writing." The primary contention of the applicant is that there is no agreement in writing.
It was the submission of the applicant that there were a series of counter offers with no acceptance by either party and that the agency agreement did not constitute a binding agreement. The applicant submitted that "for the Tribunal to hold that there is a contract it must find that there has been an offer and acceptance".
In the alternative, if a binding agreement was entered into, the agreement was defective and the statutory requirements as to service were not complied with, disentitling the agent to commission. Further and in the alternative, the respondent is not entitled to commission because it was not the "effective cause of the sale".
The commission claimed was not, in all of the circumstances, fair and reasonable.
The respondent led evidence from Mr Wilson, Mr Adams and Mr Hodge. I accept all as forthright and believable witnesses.
The respondent tendered the statement of Mr Wilson dated 5 June 2013. The statement was silent on the issue of service. He gave lengthy evidence about his involvement in "brokering" a deal between Meriton and the applicant. He deposed that Mr Demian insisted any commission be shared with Mr Khoury on the morning of 17 December 2010, at the very time the agreement was presented to Mr Demian for his signature. He gave no evidence at all about service of the further amended agreement on Mr Demian. He deposed that "any final discussion surrounding the agency agreement and its terms were had prior to the 3 pm meeting at Mr Demian's office." None of these discussions alluded to Mr Hodge's insistence that Mr Khoury would be paid at the discretion of the respondent.
Mr Hodge's evidence was equally silent on the issue of formation of the contract and service of the agency agreement. He spoke at length to Mr Wilson about Mr Khoury's commission, but at no stage negotiated with Mr Demian directly. He deposed "I instructed my administrative assistant to scan and send by way of an internal email to Mr Wilson the executed copy of the Agency Agreement...That was the last time I saw or discussed the Agency Agreement."
Mr Adams was a compelling witness. He deposed that the "LMW, acting as an agent of Lewisham Estates was as the introducer of the property...". His evidence supported the proposition that the respondent was the introducer of the property and that there were no significant differences between the original put and call option deed and the ultimate sale agreement.
FINDINGS AND REASONS
Did the parties enter into a binding agreement?
As the claim arose from an Agency Agreement, the Property Stock and Business Agents Act 2002 (NSW) ("the Act") applies and must be considered when determining this dispute.
The section has since been amended. For convenience section 55, as it was at the relevant time, is set out in full:
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.
(2) The regulations may make provision for or with respect to regulating the form of agency agreements and the terms, conditions and other provisions that an agency agreement must or must not contain. Without limiting this subsection, the regulations may prescribe one or more standard forms of agency agreement.
(3)Without limiting the means by which a copy of the agency agreement may be served on a person, it may be served by means of facsimile transmission or by such other means as the regulations may allow.
(4)A court or tribunal before which proceedings are taken by a licensee for the recovery of commission or expenses from a person, or before which a licensee is a respondent to a consumer claim relating to commission or expenses (as referred to in section 36), may order that the commission or expenses concerned 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.
Mr Demian deposed that he signed the first version of the agreement on 20 December 2010. Mr Wilson insisted the document was signed on 17 December 2010. On balance, I am persuaded it is more likely that Mr Demian signed on 17 December 2010 when the parties met for this very purpose in a coffee shop. The agreement, not yet signed by Mr Hodge, included the words "NB.B: should the sale be made to Meriton , then the Agent's remuneration will be shared with Khoury & Partners." This agreement was first signed by Mr Demian and then emailed to Mr Hodge.
Mr Hodge saw the handwriting in the margin on 17 December 2010 after receiving an email copy. He further amended the copy and added the words "at the discretion of LMW". He signed and dated this second version. It is agreed on the evidence that Mr Hodge added the date 17 December 2010 next to each signature panel.
Neither Mr Hodge not Mr Wilson gave evidence to the effect that this further amended agreement, or counter offer, signed and dated 17 December 2010 adding the words "at the discretion of LMW" reached Mr Demian before the 3pm meeting with Meriton.
I am satisfied on the uncontested evidence of both parties that Mr Demian entered the meeting unaware that the agreement was amended materially. On Mr Demian's offer, Mr Khoury would stand to gain commission exceeding $250,000. On Mr Hodge's offer, Mr Khoury may obtain commission only at the discretion of the respondent, if at all. Mr Demian, on any version of his evidence, was adamant that the commission was to be shared. This is further supported by the oral evidence of both Mr Demian and Mr Wilson during cross-examination.
After the meeting with Meriton, perhaps as late as 14 January 2011, Mr Demian saw the words "at the discretion of LMW" for the first time. He expressed his discontent to Mr Wilson, and the words were crossed out. Mr Hodge never saw this final and third version of the purported agreement.
The 14 January 2011 amendment
Mr Demian deposed he did not see the version as amended by Mr Hodge as he was not served with it until 14 January 2011. There is considerable dispute about when Mr Demian came to be in possession of a countersigned agreement dated 17 December 2010. Importantly, it is not the evidence of either Mr Hodge or Mr Wilson that the agreement was re-served on Mr Demian before the meeting.
There was sparse evidence from Mr Hodge about the formation of the agreement. He deposed that he sent the 17 December 2010 agreement to Mr Wilson and did not "see the agreement again".
No commission may be payable unless the agency agreement is in writing. Section 55 (1), as set out above, prescribes
"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 the services were performed "pursuant to" (emphasis added) an agreement in writing".
The gateway question that must therefore primarily be answered is whether the parties entered into a binding agreement. I have had regard to the written submissions of both counsel and the case law referred to in relation to formation of contracts.
I am not satisfied that there has been an offer and acceptance on the same terms. One party remained adamant that the commission needed to be shared, the other party rejected those terms not once but twice. The effect of the respondent's counteroffer, as framed by Mr Hodge, was to reject Mr Demian's original offer (Baker v Taylor (1906) 6 SR NSW 500; Mooney v Williams (1905) 3 CLR 1). Where the agreements are exchanged, the parties must be identical in terms or at least in material respects (Sindel v Georgiou (1984) 154 CLR 661). The "material respect" of the agency agreement were the terms concerning the commission. Whilst 1.1 % was agreed after negotiation, the terms imposed by Mr Hodge, to award Mr Khoury at LMW's discretion, were clearly rejected. The terms offered by Mr Demian, in turn, were also rejected. I am therefore not satisfied that the parties had a "meeting of the minds" and am not satisfied that "an agreement in writing" was formed to satisfy the terms of section 55(1).
It is artificial to examine in the circumstances of this case who was offeror and who offeree. I have had regard to the discussion concerning formation of contracts in Contract Law in Australia, Carter, Peden Tolhurst, Fifth edition, pages 38 and 39 and following:
"...where a contract is formed by both parties signing a written document it may sometimes be possible to regard the party who signs first as being the offeror and yet it will usually be a matter of chance which party happens to put pen to paper first. ...Contracts for the sale of land are very commonly formed by the parties ... exchanging duplicate copies of the agreement, so that each party possesses a copy signed by the other. In such a case it seems pointless as well as artificial to attempt analyse the formation of agreement in terms of succession offer and acceptance.." ... The true situation is that that a binding agreement can be found without identifying an offer and acceptance.... ."
On the facts as outlined above, I cannot be satisfied that a binding agreement can be found.
I have also had regard to the authority of Butler Machine Tool Co Ltd v Ex Cell -O Corporation AELR [1979] 1All ER. Lord Denning MR refers to the "battle of forms". The case, analogous with the current facts, turned on a concluded contract but of varying terms. It was found that terms and conditions of both parties must be construed together:
"In many of these cases our traditional analysis of offer, counter- offer, rejection and acceptance and so forth is out-of-date. ... The better way is to look at all the documents passing between the parties and glean from them or from the conduct of the parties, whether they have reached agreement on all material points, even though there may be differences between the forms and conditions printed on the back of them.... In some cases the battle is won by the man who fires the last shot. He is the man who puts forward the latest term and conditions: and if they are not objected to by the other party, he may be taken to have agreed to them".
I am satisfied, on the respondent's own evidence, that Mr Demian "put forward the latest terms and conditions" on or about 14 January 2011 but there is no evidence before the Tribunal that agreement had been reached before this time, or that the respondent was aware of the latest terms or had agreed to them. On balance, I am therefore not persuaded that the parties "reached agreement on all material points".
Even if the 14 January 2011 meeting had produced a binding agreement, and I find it did not, the meeting on 17 December 2010 was the primary "service" performed by the licensee, in the words of the section. The introduction of the vendor and the agreement as to price took place on 17 December 2010 and on any view of the matter the services were not performed "pursuant to an agreement in writing" if that agreement was formed one month later.
Neither Mr Hodge nor Mr Wilson stated they gave a copy of the agreement to Mr Demian before the meeting. I am not satisfied that the "services" namely the introduction of the purchaser and the formation of a sale price, were performed "pursuant to" a binding agreement if that agreement was not formed before the introductory meeting.
If I have erred on that issue and it was sufficient for the written agency agreement to be in place prior to the sale of the property and not prior to the introduction, (see Investmentsource v Knox [2002] NSWSC 170) another evidentiary problem presents itself. Mr Hodge gives no evidence at all as to when he became aware that Mr Demian had again insisted half the commission be given to Mr Khoury. There was simply no evidence before the Tribunal that the last offer as it stood on 14 January 2011 was ever accepted by the respondent. I therefore reject the respondent's submission that the agency agreement contained at page 240 of Exhibit B "is a written contract able to be relied upon by LMW".
Inadvertence
In light of my findings that section 55(1) were not satisfied, it is not necessary for me to reach a conclusion on the effects of section 55(4) and (5).
However, if I have erred and a binding agreement was formed, it think it prudent to address the evidence and make findings concerning the licensee's failure to serve the document and whether or not it was "inadvertent" within the meaning of section 55(5).
Mr Hodge gave evidence to the Tribunal that he emailed a copy of the agreement, bearing the words "at the discretion of LMW" to Robert Wilson on 17 December 2010. Senior counsel for the respondent in its submissions asked the Tribunal to infer that the documents dated 17 December 2010 were served on the applicant and submitted that "it caused the Agency agreement to be sent but cannot prove that Mr Demian physically received it".
I have concluded and arrived at findings earlier in these reasons that the amended agreement was not brought to Mr Demian's attention until 14 January 2011. The issue of inadvertence was ventilated by both senior counsel during the hearing. Mr Hodge, as a director of the respondent and as its relevant license holder, was asked in cross-examination: "What do you know happened to that document?" Mr Hodge answered: "I don't know". I am satisfied that Mr Hodge made no attempts to ensure service of the agreement.
I have had regard to the Shorter Oxford English Dictionary definition of inadvertence: "the fact or habit of being inadvertent; failure to observe of pay attention, inattention as an act or fault of inattention; an oversight."
Sections 55(4) and 55(5) of the Act cannot be engaged as a means of overcoming absence of a written agreement. If an agreement was formed it must be served promptly within 48 hours after being signed. If the Agreement was not served, the Act offers a cure. Section 55(5) requires the Tribunal to be satisfied that the failure to serve a copy of the agreement within the required time was occasioned by inadvertence. The evidence on the issue of service was minimal. Mr Hodge simply states he does not know what happened to the agreement after he amended it. Mr Wilson was silent altogether. Mr Demian denied seeing it again until well after the meeting. The submissions filed on behalf of the respondent did not shed light on the issue. It is submitted that the "issue in relation to section 55(4) falls away", and section 55(5) is not addressed.
On the evidence before it, the Tribunal is entitled to conclude that the agreement was not served, certainly not within 48 hours of any amendment. I am satisfied that Section 55(4) has not been complied with.
I am not satisfied that the failure by Mr Hodge to make further enquiries as to service (after he emailed the document to the relatively inexperienced Mr Wilson) amounts to "inadvertence" of the licensee for the purpose of section 55(5). Hodge deposed he never saw the document again. Mr Wilson gave no evidence as to service. I am not satisfied, on balance that the evidence of both witnesses is sufficient to discharge the onus that rests with the respondent to establish "inadvertence" as required by section 55(5).
I have had regard to the decision in Investmentsource v Knox [2002] NSWSC his Honour Barrett (as he then was) dealing with the predecessor to section 55 namely section 42 AA of the Property Stock and Business Agents Act 1941 (NSW). His Honour said: "These are protective provisions intended to safeguard clients by imposing certain standards of conduct upon licensees. ... protection is intended to exist for the benefit of all members of the community who entrust business to real estate agents, however commercially astute or commercially naïve they may be".
The provisions of section 55 are to be strictly applied. On my reading of the provision there is no discretion for a Tribunal to nevertheless order payment of expenses and commission if the agency agreement has not been served and in the absence of evidence as to inadvertence.
I accept Mr Demian's version of events concerning the exchange of the second version of the agreement insofar that it was never served on him until about 14 January 2011. I do not accept that he was provided with a copy entailing all relevant terms on 17 December 2010 and with all relevant amendments by Mr Hodge. I am further satisfied that the failure to serve a copy on the respondent within 48 hours fails to provide the "protection" referred to by his Honour in Investmentsource.
Notice of motion seeking leave to re-open
On 13 March 2014, after the case had closed and the Tribunal had reserved its decision, the respondent sought leave of the Tribunal to re-open to adduce fresh evidence.
The motion was listed for hearing on 20 March 2014 and both counsel prepared oral and written submissions. Senior counsel for the respondent submitted that additional evidence of Mr Hodge and Mr Wilson ought to be admitted because the respondent was ambushed during closing submissions. Reliance was placed on the decision of 'Ferrcom', taking the respondent by surprise.
The respondent alleged it had been deprived of its opportunity to call evidence from either Mr Wilson or Mr Hodge on the issue of inadvertence. The applicant invited the Tribunal to draw a "Ferrcom" inference: in light of Mr Hodge's and Mr Wilsons's silence on the issue of service and subsequent inadvertence, the Tribunal is entitled to infer that such evidence, had it been called, would not have been favourable to the witnesses (Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389).
The applicant submitted Mr Wilson's evidence on the issue of "inadvertence" is of no utility, as he was not a licensed real estate agent, not an employee of the respondent at the relevant time and not a signatory to the agency agreement.
I decline leave to re-open to adduce fresh evidence. The issues between the parties have been well ventilated since the filing of the points of claim and points of defence. Paragraph 21 of the points of claim filed on 12 December 2012 squarely raised the respondent's "failure to comply with the formal requirements of section 55 and the regulations referred to therein." The issues of service and inadvertence as framed in ss 55(4) and 55(5) are at the centre of the dispute. The statutory framework to be considered by the Tribunal was of relatively small compass. Section 55(5)'s primary purpose is to offer relief to the licensee who fails to serve the agency agreement. The points of claim sought relief from payment on the basis that "the agreement was not served by LMW Advisory within 48 hours after the agreement was signed". It could not be said that the licensee's failure to offer evidence on the issue of inadvertence, ceased upon by the applicant in closing submissions, is "trial by ambush" when the section itself calls for a consideration of the issue.
Mr Hodge gave evidence that he never saw the agreement again. The evidence of the licensee was not sufficient to satisfy the Tribunal that the failure to serve the agreement was occasioned by inadvertence. I am not certain that the applicant requires the inference to be drawn. With or without the inference the Tribunal would have arrived at the same finding.
There are multiple cases concerning the necessity of finality in commercial litigation. His Honour Hammershlag J in The Owners Strata Plan No 64622 v Australand Constructions Pty Ltd [2009] NSWSC 1083 found: "the plaintiff has had ample opportunity ... to place before the Referee such evidence as it desired ... the plaintiff had the benefit of significant resources to do so.it had the right to be heard and it was heard.. It does not have the right to be heard twice." The respondent in the instant case has had the opportunity to ventilate all the issues and call all the evidence in the case. I have also had regard to the well known principles enunciated in Aon Risk Services v ANU (2009) 239 CLR 175. In the exercise of my discretion, I am not persuaded that the interests of the parties and the Tribunal are best served by allowing leave to re-open.
Further, in light of my primary finding that there was no binding agreement between the parties, it would be otiose to allow a re-opening on the issue of inadvertence and I dismiss the motion.
Other defects in the agency agreement
I note that 55(4) appears only to be available in cases where s 55(1)(c) has not been complied with and not in cases where there has been non-compliance with section 55(1)(b), that the agency agreement complies with any applicable requirements of the regulations. It is therefore necessary, for completeness, to briefly address the issues of irregularity raised by the applicant.
It was submitted on behalf of Lewisham that there are other defects in the agreement that give rise to a non-compliance with the regulatory framework. In particular it was alleged the wrong licence number is displayed on the face of the agreement. Schedule 7 of the Property Stock and Business Regulation 2003 (NSW) states as follows:
1 Identification of property, business or professional practice
The agreement must specify the address of the property, business or professional practice to which the agreement applies or must contain such other description of the property, business or professional practice as clearly identifies it. ....
Sometime between the agreement being executed and the sale of the property, the licence expired and the licensee was issued with a new number. No evidence was led whether upon renewal the licensing authority routinely allocates a new number or whether there is some other significance that attaches to a different number being issued. It is submitted by the applicant that the licence number as stated on the agreement is not current, and "upon expiry of the licence number it was encumbered upon LMW advisory to enter into a new agency agreement that accurately reflected its license number. It failed to so act and is not entitled to a commission as a consequence".
I am not persuaded by this submission. Senior counsel for the applicant did not advance any case law that would support the proposition that any agency agreement, if not renewed when licence numbers are renewed, are void or disentitle the agent to commission. The principles enunciated in Kolukovski v Georges (2011) NSWSC 359 are distinguishable and that case turns on its very distinct facts not analogous with the instant case. Schedule 7 calls for clear identifiers to be provided. I am satisfied that on the face of the agency agreement the necessary information is provided that would "clearly identify" the business or professional practice entering into the agreement.
Effective cause of sale?
In the absence of a finding that the parties entered into a binding agreement, there is no utility in examining whether the respondent was the "effective cause of the sale" and I have not arrived at a finding on the issue.
CONCLUSION
In summary then the questions posed by the parties must be answered as follows.
The answer to question 1 is in the negative.
The answer to question 2 is in the negative.
In light of my findings on questions 1 and 2 is not necessary to come to a concluded view on questions 3 and 4.
The notice of motion seeking leave to re-open the case to adduce fresh evidence is dismissed.
In order to give effect to my findings I make the orders in paragraphs one to four above.
S Thode
Senior Member
Civil and Administrative Tribunal
6 May 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 31 July 2014
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