Lucy Cole Prestige Properties Broadbeach Pty Ltd ATF Gaindri Ft Trust t/as Lucy Cole Prestige Properties Broadbeach Pty Ltd v Kastrissios - [2013] QCAT 653

CITATION:

Lucy Cole Prestige Properties Broadbeach Pty Ltd ATF Gaindri FT Trust t/as Lucy Cole Prestige Properties Broadbeach Pty Ltd & Anor v Kastrissios [2013] QCAT 653

PARTIES:	Lucy Cole Prestige Properties Broadbeach Pty Ltd ATF Gaindri FT Trust t/as Lucy Cole Prestige Properties Broadbeach Pty Ltd (First Applicant) Mr Harry Kastrissios (Second Applicant) Mrs Barbara Kastrissios (Third Applicant)
v
Mr William Nichol First Respondent) Mrs Valma Morton (Second Respondent)

APPLICATION NUMBER:

MCDO51605/12

MATTER TYPE:

Other minor civil dispute matters

HEARING DATE:

26 August 2013

HEARD AT:

Southport

DECISION OF:

Adjudicator Trueman

DELIVERED ON:

31 October 2013

DELIVERED AT:

Southport

ORDERS MADE:

1. THAT the Respondents pay to the First Applicant Lucy Cole Prestige Properties the sum of $5068.75 within seven days.

CATCHWORDS:

Minor Civil Debt – Contract for sale of property – termination of contract during “cooling-off period” – liability for termination penalty – jurisdiction – whether there is a debt owed – standing to bring claim

Property Agents and Motor Dealers Act 2000 Queensland Civil and Administrative Tribunal Act 2009

APPEARANCES and REPRESENTATION (if any):

APPLICANT:	Mrs Lucy Cole Mr John Cole (on behalf of Lucy Cole Prestige Properties Broadbeach and obo Mr and Mrs Harry Kastrissios)
RESPONDENT:	Mr William Nichol Mrs Valma Morton

REASONS FOR DECISION

The issues

The issues to be determined are whether the purchasers Mr William Nichol and Mrs Valma Morton are liable to pay a termination penalty to the Applicants and calculated in the sum of $5,362.50 for terminating a contract during the “cooling-off period” under contract for the purchase of a property at 13 Garfield Terrace in Surfers Paradise. Mr Nichol and Mrs Morton allege that the cancelling of a personal cheque deem that a deposit was ever paid and therefore they are not required to pay a termination penalty from a deposit. They also contend that Lucy Cole Prestige Properties does not have standing to bring a claim against them as a debt owed to the Agency.

Background to the Dispute

Lucy Cole Prestige Properties Broadbeach Pty Ltd (the Agents) were appointed by the Sellers, Mr and Mrs Kastrissios to sell their property known as Unit 2003, 13 Garfield Terrace Surfers Paradise (the Unit) pursuant to a Form 22A Exclusive Appointment of Property Agent agreement.[1]
[1]Pursuant to section 133 and 134 of the Property Agents and Motor Dealers Act 2000.
The Agents introduced and showed the Unit to potential purchasers, Mr Nichol and Mrs Morton. On or around 29 January 2012 Mr Nichol and Mrs Morton signed an REIQ Contract of Sale[2] for the purchase of the Unit at a purchase price of $1,950,000.00.
[2]Annexure “B” to Affidavit of Alesya Rapisarda, Financial Controller, Lucy Cole Prestige Properties Broadbeach, sworn 14 January 2013.
The Agents allege that Mr Nichol and Mrs Morton delivered a personal cheque in the sum of $195,000.00 on 29 January 2012 which represented the deposit payable under the contract. The cheque was dated 31 January 2012 and deposited into the Agents trust account on the same date.
The Agents allege that Mr Nichol and Mrs Morton terminated the contract on or about 31 January 2012 under the “cooling off” period pursuant to section 370A of the Property Agents and Motor Dealers Act 2000 (PAMDA). The Agents stated that Mr Nichol and Mrs Morton cancelled the personal cheque prior to it being deposited into the Agents trust account on behalf of the sellers.
The Agents contend that due to the fact that Mr Nichol and Mrs Morton cancelled their personal cheque that was paid as a deposit as the explanation as to the fact that there was no deposit retained by them with which to deduct the termination penalty fee. The Agents provided evidence of their trust account statement[3] and proof that the cheque was processed on 1 February 2012 and that transaction was reversed due to cheque dishonour on 3 February 2012.
[3]Annexure “E” to Affidavit of Alesya Rapisarda, Financial Controller, Lucy Cole Prestige Properties Broadbeach, sworn 14 January 2013.
Mr Nichol and Mrs Morton allege that the agents are only entitled to recover a termination penalty from them if they had paid a deposit. They claim that as they did not pay a deposit they are not required to have to make payment of any termination penalty to the Agents.
Mr Nichol and Mrs Morton also claim that they did not have an agreement or contract with the Agents, either written, oral or other wise regarding payment of the termination penalty and as there is no contractual relationship between them that they should not be required to make any payment to the Agents.

The relevant Legislation

If Mr Nichol and Mrs Morton have not waived the cooling-off period for a relevant contract under section 369A, they are able to terminate the contract at any time during that cooling-off period.[4]
[4]PAMDA s 370A.
Once Mr Nichol and Mrs Morton had terminated the contract the Seller was entitled to deduct from any deposit paid under the relevant contract an amount not greater than the termination penalty.[5]
[5]PAMDA s 370A(3).
The termination penalty is calculated at an amount equal to 0.25% of the purchase price under the relevant contract[6] and in this case is alleged to be the sum of $5,362.50.

Do the Applicants have standing to bring the claim?
[6]PAMDA s 364.

Mr and Mrs Kastrissios have standing to bring a claim as they were the sellers to a contract signed by Mr Nichol and Mrs Morton on 29 January 2012 for the sale of their unit and such contract provides in the Form 30c Warning statement the relevant provision relating to termination of the contract during the cooling off period. That provision states:
If you want to terminate the contract at any time before the end of the five (5) day cooling-off period…..The seller may deduct a termination penalty of up to 0.25% of the purchase price.
The warning statement attached to the contract clearly informed Mr Nichol and Mrs Morton of the ramifications of terminating the contract during the cooling off period.
Mr Nichol and Mrs Morton allege that the Agents do not have standing to bring the claim. The Agents stated that they act as Agents on behalf of the owners Mr and Mrs Kastrissios and are entitled to receive a percentage of the termination penalty. The Agents produced a copy of the Form 22a[7] which was signed by Mr and Mrs Kastrissios on 28 October 2011 and provides at Clause 12 the Agents entitlement to the termination penalty. I am satisfied that the Agents were entitled to half of any termination penalty.
[7]Annexure “A” to Affidavit of Alesya Rapisarda, Financial Controller, Lucy Cole Prestige Properties Broadbeach, sworn 14 January 2013.
I find that Lucy Cole Prestige Properties were instructed to act on behalf of Mr and Mrs Kastrissios and that they had a contract with the Agents that related to the sale of the property and the termination penalty. I accept that Mr Nichol and Mrs Morton were not privy to the content of the agreement. I am satisfied that the evidence would persuade me to make a finding that the Agents have an entitlement to any termination penalty. In the circumstances the Agents not only act on behalf of Mr and Mrs Kastrissios in recovering the termination penalty but they are also entitled to retain 50% of the termination penalty if recovered.
The evidence supports a finding that Mr and Mrs Kastrissios authorised in writing[8] for the Agents to act on their behalf at the hearing and to pursue the recovery of the termination penalty fee from Mr Nichol and Mrs Morton on their behalf and stated that they were overseas and could not attend the hearing in person.
[8]Annexure “I” to Affidavit of Alesya Rapisarda, Financial Controller, Lucy Cole Prestige Properties Broadbeach, sworn 14 January 2013.
I find therefore that the Applicant Lucy Cole Prestige Properties does have standing to pursue the claim and act on behalf of the owners, Mr and Mrs Kastrissios.

Does the cancellation of the Deposit Cheque distinguish a deposit being paid?

Mr Nichol and Mrs Morton rely on the fact that as they cancelled their personal cheque, it follows that they had not paid a deposit and therefore are not required to make a payment of any termination penalty.
The High Court has held that payment by cheque applies from the time the cheque is given, albeit conditional on the cheque being subsequently honoured. The Court said[9]:
Generally speaking, when a cheque is given in payment of a debt, it operates as a conditional payment. The payment is subject to a condition that the cheque be paid on presentation. If it is dishonoured the debt revives. Although it is sometimes said that the remedy for the primary debt is suspended, the suspension is no more than a consequence of the conditional nature of the payment.
[9]Mason CJ, Brenna, Deane, Dawson and Toohey JJ in National Australia Bank Limited v KDS Construction Services Pty Ltd [1987] HCA 65, at [13].
I find that Mr Nichol and Mrs Morton paid the deposit by personal cheque and intended at that time when writing out the personal cheque and giving it to the Agents that they intended to pay a deposit for a Unit that they intended to purchase. They gave evidence that they signed the contract on a Saturday being 29 January 2012. They dated the cheque 30 January 2012 and it was delivered to the Agents. There was confusion as to the date the cheque was given to the Agent, although nothing falls from that point. The agent claims the cheque was given to them on 29 January, the same day the contract was signed. If that is the case, it appears that the cheque must have been post dated which meant that effectively the Agents could not bank the cheque at the earliest, until the date of the cheque. It seems the cheque was banked on 31 January after Mr Nichol and Mrs Morton allegedly terminated the contract on 30 January. The date of termination is confusing as the letter[10] that Mr Nichol and Mrs Morton wrote to the Agent to terminate the contract was dated 31 January 2012. It was not clear if the fact that the contract was terminated was not conveyed to the Agent’s account department as the cheque was not banked until the following day. In any event the date of the termination, whether the 30 or 31 of January has no bearing on whether the Contract was terminated during the cooling of period as both dates fall within the relevant “cooling off” period.
[10]Annexure “F” to Affidavit of Alesya Rapisarda, Financial Controller, Lucy Cole Prestige Properties Broadbeach, sworn 14 January 2013.
It is a fact and undisputed that the personal cheque was cancelled and a couple of days after it was deposited the funds were reversed out of the Agents trust account.
I find that it was the intention of Mr Nichol and Mrs Morton that when they paid the cheque they intended those funds to be the deposit for the unit they were to purchase under the contract. For what ever reason, they gave evidence and said that after they signed the contract, they thought carefully about the purchase, ‘got cold feet’ and in a very short period of time had ‘changed their mind’. While they are entitled to change their mind, and are entitled to terminate the contract during the cooling off period, I cannot rely upon any evidence that would persuade me that they were discharged from their obligation to pay a termination penalty. I find that they paid the deposit, and did sign the contract with the appropriate warning statement attached. I find that the mere cancellation of the personal cheque that they gave as payment of that deposit does not remove their liability to pay a termination penalty.
It could not be construed that section 370A of PAMDA would be to limit the implementation of a termination penalty only if a deposit was held at the date of the termination of a contract during a “cooling off” period. In this case a deposit was paid, the cheque was written out and given to the Agents in good faith of a deposit being paid. The Contract was signed by the purchasers and the Agents on 29 January 2012. The cheque was deposited by the Agent despite the termination of the contract. I find that the mere cancellation of a cheque does not render a finding that a deposit had not been paid and therefore that liability for a termination penalty does not arise merely because a penalty fee could not be deducted.
Mr Nichol and Mrs Morton claim that due to the termination of the contract and the fact a deposit was never received by the Sellers that they are not liable for any termination penalty. I disagree with that proposition. A contract was signed and a deposit was paid. Mr Nichol and Mrs Morton terminated the contract during the cooling off period. They rely on the fact that the cancellation of the deposit cheque means that the deposit was never “received”. I do not agree with them on that point. The mere fact of the payment of a deposit or not does not of itself incurs liability for a termination penalty. In my view it merely suggests that a seller may recover the termination penalty from a deposit, if held.
I find that the cancellation of the Deposit Cheque does not distinguish the liability for a termination penalty. While it might be the case that the Seller ‘may’ deduct a termination penalty which suggests the Seller has discretion as to whether to seek payment of the termination penalty, in this case the Seller has elected to do so. I find that it is entirely reasonable for the Seller to make that election and decision to recover the termination penalty.
I am persuaded that a termination penalty sum is owed by Mr Nichol and Mrs Morton as a result of terminating the contract during the “cooling-off” period. The amount is calculated of a sum of 0.25% of the purchase price which I am satisfied was $1,950,000.00. The amount sought by the First Applicants is $5,362.50 is incorrect and I calculate the sum of the termination penalty to be $4,875.00.
The evidence is that the Agents and Mr and Mrs Kastrissios had agreed and in fact had signed a contract that the parties would share equally any termination penalty fees. In the circumstances I will make an order that directs the payment to Lucy Cole Prestige Properties on behalf of the Mr and Mrs Kastrissios and the parties can resolve the distribution of the funds themselves.
I find that Mr Nichol and Mrs Morton are liable to pay the termination penalty fee of $4,875.00, the filing fee of $98.00, the bailiff’s service fee of $82.00 and the CITEC transaction fee of $13.75. The total amount is $5,068.75.

Order

THAT the Respondents pay to the First Applicant Lucy Cole Prestige Properties the sum of $5,068.75 within seven days.