McCormack & Anor v. Von Pein & Ors

[2007] QDC 330

DISTRICT COURT OF QUEENSLAND

CITATION:

McCormack & Anor v Von Pein & Ors [2007] QDC 330

PARTIES:

GERALD DAMIAN McCORMACK
First Appellant
and
JED McCORMACK PTY LTD
Second Appellant
v
RUTH JOY VON PEIN (NEE KRONK)
First Respondent
and
GEORGE WILLIAM VON PEIN and RUTH JOY VON PEIN
Second Respondents
and
PAUL CHRISTOPHER KRONK
Third Respondent
and
ERIC NELSON KRONK and HAZEL JANE KRONK

Fourth Respondents

FILE NO:

2883 of 2007

DIVISION:

Civil

PROCEEDING:

ORIGINATING COURT:

DELIVERED ON:

12 December 2007

DELIVERED AT:

Brisbane

HEARING DATE:

4 December 2007

JUDGE:

Skoien SJDC

ORDER:

Decision of Commercial and Consumer Tribunal confirmed.

CATCHWORDS:

Appointment of agent for sale of real property.  Effect of handwritten alterations to the agency agreement (Property and Motor Dealers Act 2000, form 22a)

COUNSEL:

Mr P Looney for the appellants

Mr J Baulch for the respondents

SOLICITORS:

Home Wilkinson Lowry for the appellants

Macrossan & Aimet for the respondents

1. The appellants seek leave to appeal and, if granted, they appeal against a decision of the Commercial and Consumer Tribunal made on 4 September 2007 on claims made by the respondents on the ground of error of law as set out in the Notice of Appeal filed on 8 October 2007.

1. Those claims were made pursuant to s.470 of the Property Agents and Motor Dealers Act 2000 (PAMDA) by which the respondents claimed that financial loss had been suffered by each of them by the actions of the appellants.

Background

1. The second appellant trades as LJ Hooker Caloundra and holds a real estate agents corporation license.  The first appellant is an executive officer of LJ Hooker.  For convenience I will refer to them collectively as LJ Hooker.

1. Contracts of sale were entered into between the respondents as vendors and Fair Meade Pty Ltd as purchaser for the sale of various lots of land owned by the respondents in Caloundra.  Each of the contracts appeared to provide for a separate deposit but it is common ground that there was to be the one deposit ($780,000) which applied to all of the contracts.  Each of the contracts contained Special Conditions which provided for the timing of the release of the deposit to the vendors in 3 tranches:

(a)        $200,000 payable on signing the contracts (“the first instalment”) to be released on 7 April 2003;

(b)        $200,000 payable on 2 May 2003 (“the second instalment”) to be released on 2 May 2003;

(c)        $380,000 payable on 2 June 2003 (“the third instalment”) to be released after settlement of the contracts if not paid at settlement.

1. On 7 March 2007 Eric and Hazel Kronk by written agreement appointed LJ Hooker as their agent to sell.  This agreement comprised the relevant PAMDA/form 22a, an Items Schedule and a schedule of terms and conditions.

1. Only the contract of Eric and Hazel Kronk, for the sale of their property (Lots 3, 7 and 9 on RP 100432 and Lots 1 & 2 on RP 119328) provided for LJ Hooker to act as agent.  However nothing was argued to turn on this and both before the Tribunal and before me all of the respondents were treated as having identical interests.  For convenience I will refer to the respondents as “the Kronks”.

1. By clause 6 of the PAMDA form 22a, commission of $290,000 (including GST) was to be payable to LJ Hooker in 3 tranches, at the same times that tranches of the deposit were to be released:

(i)        $10,000 to be paid on 7 April 2003;

(ii)       $20,000 to be paid on 2 May 2003;

(iii)      $260,000 to be paid on completion of sale.

It is the third tranche which is the subject of dispute in this appeal.

1. The deposit was paid by Fair Meade as provided in the contracts.  The first and second instalments of the deposit were released to the Kronks in accordance with the terms of the contract after deduction from the tranches of commission to LJ Hooker.  The third instalment was paid but not released to the Kronks.  It was retained by LJ Hooker in its trust account.

1. On 3 June 2003 after default by Fair Meade in one of the special conditions of the contracts, the Kronks terminated the contracts, following which on 26 June 2003 Fair Meade brought proceedings for specific performance in the Supreme Court.  On 5 August 2004, those proceedings were resolved by judgment on the basis that the contracts had been effectively terminated and the deposit lawfully forfeited to the Kronks.

1. On 15 December 2003, in breach of certain provisions of Chapter 12, Part 1 of PAMDA, LJ Hooker transferred the third tranche of $260,000 from its trust account to its general account in payment of commission it claimed was due.

Reference to Tribunal

1. On about 3 March 2006, each of the respondents brought a claim pursuant to s.470 of PAMDA by which they claimed financial loss had been suffered by each of them by virtue of the actions of LJ Hooker.

1. The argument of LJ Hooker was that (ignoring their breach of PAMDA) under the terms of their appointment, that is, the PAMDA form 22a, they were entitled to the sum of $260,000. They relied on clause 2 of the terms and conditions of their appointment which, relevantly, stated:

“2.      Entitlement to commission

2.1       The client agrees to pay the agent commission as specified in the appointment if a contract of sale of the property is entered into with a buyer … provided that:

(1)    the contract of sale is completed, or

(2)    the client defaults under the contract of sale and that contract is terminated by reason of or following that default, or

(3)    the contract of sale is not completed and the whole or part of the deposit paid is liable to be forfeited (my emphasis) or,

(4)    the contract of sale is terminated by mutual agreement of the client and the buyer.”

1. To support their argument they relied on clause 2.1(3) above and to the judgment of the Supreme Court (para [9] above).

1. The principal argument of the Kronks was that they had suffered financial loss because they were lawfully entitled to receive and retain the sum of $260,000.  They relied on handwritten alterations to the relevant PAMDA form 22a.  Paragraph 6, which dealt with commission contained a paragraph 6.2 which is headed “when payable”.  In its standard printed form under that heading is the provision “refer to clause 2.1 of the terms and conditions”, that is the terms I have cited in para [12] above.  The sub-clause (3) in its standard printed form obviously entitled LJ Hooker to the $260,000 commission.

1. But in the form 22a by which the Kronks appointed LJ Hooker as agent, the printed “2.1” was crossed out and handwritten notations read:

“$10,000 on clause 1(b(1));

$20,000 on clause 1(b(2))

Balance on completion of sale.”

1. There is also a handwritten notation which reads “clauses relate to contract between EM and HK Kronk and Fair Meade Pty Ltd dated 7/3/03.” These are set out in para [4].

1. These handwritten alterations to PAMDA form 22a are initialled by the Kronks and LJ Hooker.  On their face they are clearly inconsistent with the provisions of clause 2.1. 

1. Another argument put to the Tribunal related to whether the contracts were for the sale of residential land, a matter which affects the quantum of commission payable.

Decision of Tribunal

1. The claims were heard by the Tribunal which gave its decision on 4 September 2007.  The Kronks were successful in that the Tribunal held that:

(a)        lots 1, 2, 3 & 9 of the Kronk’s property are residential property pursuant to PAMDA because they comprise a single parcel of land on which a place of residence is constructed;

(b)        lot 7 of the Kronk’s property is residential property pursuant to PAMDA because it is a single parcel of land on which a place of residence is constructed;

(c)        as a consequence, pursuant to s.141(2) of the Act the maximum commission payable to LJ Hooker for the sale of Lots 1, 2, 3, 7 & 9 was $138,700;

(d)        as the contract was never completed, the “third commission payment” (being the amount of $260,000 after proper deductions) never became payable to LJ Hooker under the appointment agreement;

(e)        the payment to and retention by LJ Hooker of the amount of $260,000 was a collective financial loss to the applicants.

1. Findings (d) and (e) were made because the Tribunal found that the altered clauses cited in paras [14] – [17] above applied.  In para [84] of the decision this appears:-

“The decision of the parties to make the third payment only on completion of sale had the consequence that LJ Hooker Caloundra would only become entitled to the third commission payment if and when the contract of sale was completed.  As the contract never was completed, the third commission payment never became payable to LJ Hooker Caloundra under the second appointment.”

1. Findings (a) and (b) of the Tribunal obviously were concerned with the question whether the property sold was residential.

Arguments on Appeal

1. Appeals under PAMDA (which are by leave only) are limited by s.100(1) to error of law or excess, or want, of jurisdiction.  No question of jurisdiction exists here so the question is whether the Tribunal fell into error of law.

1. Interpretation of a contract, where there are two patently contradictory clauses, concerns a matter of law, because what must be found is the true intention of the contracting parties, measured objectively.

1. The Tribunal referred in its para [84] to “the second appointment”.  That acknowledges that the Kronks and LJ Hooker had signed an earlier PAMDA form 22a on 23 January 2003, an agency which ultimately lapsed.  In that first agency form at clause 6.2 the reference to clause 2.1 is not struck out.

1. In my opinion the fact of the earlier appointment and its terms (relevantly clause 6.2) form part of the objective background, the factual matrix of the transaction, the context in which interpretation of the second appointment is considered.  See Cheshire and Fifoot’s Law of Contract, 7th Aust Ed para [10.34]. The deliberate adoption by the parties of different wording in the clause relating to the point at which the third tranche of commission is to be paid to the agent is to my mind of high significance.

1. In Baumvoll Manufactur Von Schreibler v Gilchrest & Co (1892) 1 QB 233 at 256, Lord Esher MR said:

“We have a right to look at what is written into the printed form and at what is struck out.”

1. In Glynn v Margetson & Co (1893) 337 @ 358 Lord Halsbury L.C. at 358 cited with approval (see 357) this statement by Lord Ellenborough:-

“…. The words superadded in writing ….. are entitled nevertheless, if there should be any reasonable doubt upon the sense and meaning of the whole, to have a greater effect attributed to them than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and the printed words are a general formality adapted equally to their case and that of all other contracting parties upon similar occasions and subjects.”

1. Counsel for LJ Hooker argued that the altered clause 6.2 merely set up the agreed dates on which the three tranches of commission were to be paid to the agent but that the entitlement to that commission is determined by s.2.1.  It seems to me to be straining the language to say that a sum is payable on completion of a contract notwithstanding the fact that the contract is never completed.  But what puts the matter beyond doubt in my opinion is that the parties deliberately struck out the reference to clause 2.1.  In doing so they must be taken to have agreed that clause 2.1 is no longer relevant and that the question is to be resolved by reference to clause 6.2.

1. It follows that I am not satisfied that the Tribunal erred in law on this point.

1. In those circumstances it is unnecessary to turn to the correctness in law of the Tribunal’s findings (a), (b) and (c).  To my mind, in any event, whether property is “residential”, is a question of fact as is each of the essential elements of “residential property” as defined in s.17 of PAMDA.

1. Leave to appeal is granted.  The decision of the Tribunal is confirmed.