McGrath v Y Corp Developments Pty Ltd

[2018] NSWCATCD 68

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

McGrath and Ors v Y Corp Developments Pty Ltd [2018] NSWCATCD 68

Hearing dates:

30 October 2018

Date of orders:

07 November 2018

Decision date:

07 November 2018

Jurisdiction:

Consumer and Commercial Division

Before:

J A Ringrose, General Member

Decision:

1. The respondent is to pay to the applicants the sum of $18,063.00 immediately.

 

2. Should the applicants wish to make an application for costs they should file and serve written submissions within 14 days of the date of these orders.

 3. Should the respondent wish to respond to any application of costs that reply should be filed and served within 28 days of the date of these orders where upon any application made will be dealt with on the papers.

Catchwords:

Retention of deposit paid to agents on sale – entitlement to agent’s commission – construction of Real Estate Institute of New South Wales Standard Agency Agreement – whether an agent effectively introduced vendor and purchaser.

Legislation Cited:

Property and Stock Business Agents Act 2002 ss 36, 55

Cases Cited:

Doyle v Mt Kidston Mining and Exploration Pty Ltd [1984] 2 Qd R286
Environment Agency v Empress Car Company Abertillery Ltd [1999] 2 AC 22
Green v Bartlett [1863] 14CB (NS681)
Kalice v Borck and Ors [2017] NSWCATAP 46
Ken Wolf Real Estate Pty Ltd v O’Holloran [2012] NSWSC 993
L J Hooker Ltd v W K Adams Estate Pty Ltd [1977] 13 ALR 161
Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2
Waters v Waghorn [2016] NSWCATAP 247

Category:

Principal judgment

Parties:

Terence Noel McGrath and Jacqueline D’Sylva (Applicants)
Y. Corp Developments Pty Ltd t/as First National Real Estate City Centre (Respondent)

Representation:

Counsel:
Mr F Salama (Applicants)

  Solicitors:
Bull, Son and Schmidt Solicitors (Applicants)
There was no appearance for or on behalf of the respondent.

File Number(s):

COM 18/34632

Publication restriction:

Nil

REASONS FOR DECISION

Application

1. By an application filed on 8 August 2018 the applicant sought an order that a sum of $18,063.00 be returned to the applicants.

2. A short summary of the reasons for the orders claimed that the respondent had no right to the money which belonged to the applicants and that the respondent agency agreement had expired on 23 October 2017 whereas the property was sold on 21 November 2017 and the deposit was inadvertently sent to the respondent. The applicants claimed further that the respondent did not introduce the purchase of the property and that it failed to inform the vendors of its lack of involvement in the sale and failed to release the deposit to the vendor after completion.

3. The matter was listed for the first time before the Tribunal on 20 August 2018 when Mr Foulsham, solicitor appeared on behalf of the applicants and Mr Khosh, solicitor of Altitude Lawyers, appeared for the respondents.

4. On that date the applicants were required to file all documents upon which they intended to rely at the Hearing by 10 September 2018 whilst the respondent was directed to provide all documents upon which it sought to rely by 1 October 2018. In each case the documents were to be filed with the Tribunal and served upon the other party.

5. The directions made incorporated provision to apply for an extension of time if necessary and a notation that where a party failed to provide documents in accordance with the Tribunal orders it may result in that party not being able to rely on documents at the Hearing unless leave was granted to do so. Leave was granted to both parties to be legally represented and they were encouraged to have further settlement discussions.

6. The applicants sought and obtained an extension of time for filing of documents up to 28 September 2018 on the basis that a witness required to swear an affidavit was overseas. The time for compliance with directions by the respondent was thereafter extended to 19 October 2018.

7. The applicants filed material in proper time, although there was a delay in filing the affidavit on behalf of the purchaser John Gerathy. No material has been filed on behalf of the respondent and no application has been made for any extensions of time.

Applicant’s Documents

8. Mr Salama, on behalf of the applicants relied upon an affidavit of the applicant, Terence McGrath, sworn 6 September 2018 and an affidavit of Joanne Blendell sworn 6 September 2018, along with an affidavit of Peter Brennan sworn 25 September 2018 and an affidavit of John Gerathy sworn 9 October 2018. Each of the affidavits comprised of a number of annexures supporting the applicant’s claim.

9. The exclusive selling agency agreement was dated 23 August 2017 and related to a property described as lot 23 in SP 61618 at a listed price of $369,000.00. There were no special terms and conditions of sale included and the agent’s estimated selling fee was a flat fee of $12,500.00. The exclusive agency agreement was to conclude on 23 October 2017. The property could more properly be described as berth 23/XXX XXX XXX, Woolloomooloo.

10. Mr McGrath deposed that on 23 October 2017 he spoke with a representative of First National Real Estate and informed him that the listing agreement was terminated and he noted that there was no contact with First National Real Estate thereafter.

11. The affidavit of Joanne Blendell indicates that she prepared a contract for sale for the applicants and at about the same time an email was forwarded to the respondent terminating the agency agreement.

12. Negotiations in relation to a sale of the property continued between Mr Graves, Solicitor, on behalf of the purchaser, and Mr Foulsham on behalf of the applicant vendors until 14 November 2017 when the contract was sent for signing. Exchange took place on 21 November 2017.

13. There was no contact with the respondent agent nor any sales advice apart from an email dated 21 November 2017 sent by Ms Blendell to the respondent in error.

14. There was no request for an agent to attend on settlement and it is noted that the sale was settled on 19 February 2018. On that date the solicitors for the purchaser directed the respondent to account to the solicitors for the applicants for all monies held.

15. The affidavit of Mr Peter Brennan of 10 Lincoln Crescent Woolloomooloo notes that in about October 2017 he had become aware that Mr McGrath was selling his berth and he expressed interest in purchasing it at that time. Mr Brennan instructed Mr Graves of Bradford and Scott Solicitors to act on his behalf for the purchase but shortly thereafter had some discussions with Mr Gerathy who was also a neighbour in the Lincoln Street complex. It was then decided that Mr Gerathy would probably be better suited to Mr McGrath’s berth and an arrangement was made for the berth to be sold to him. Mr Brennan swore that he had no involvement with any real estate agent and in particular with the respondent and he was not aware of Mr Gerathy having any involvement with any real estate agent in relation to the proposed purchase.

16. The affidavit of John Gerathy was not signed until 9 October 2018 as he was travelling in Central Australia.

17. Mr Brennan claimed that in early October he received material from First National in relation to a sale of Marina berth 23 at Woolloomooloo. He noted that the size of the berth was overstated and that berths could only be occupied by owners or residents of the TWT Development and not by tenants. He made no contact with the selling agent.

18. In conclusion Mr Brennan observed that First National Real Estate was not in any way involved or instrumental in the actions which led to he and his wife purchasing the berth. He did not speak to, or meet anyone from First National Real Estate in relation to the purchase of the berth from the applicants.

19. When the respondent failed to attend the hearing itself or through a representative, Mr Foulsham filed an affidavit of service indicating that on 10 September 2018 affidavits of Terry McGrath and Cherry Blendell were served by email on Mr Khosh who was then acting as solicitor for the respondent. He noted that a read receipt was provided in respect of that email. Further, on 27 September he sent copies of an affidavit of Peter Brennan and a proposed affidavit of John Gerathy to Mr Khosh via email and again he noted that a “read” receipt was received in respect of that email. It was noted further that notices of the Hearing and of orders made by the Tribunal were also sent to Mr Khosh via his email address at altitudelawyers.com.au.

20. Mr Salama submitted that there was ample evidence to establish that the representatives of the respondent had received the documentation and notices and that it was appropriate for the matter to proceed ex parte.

Respondent’s Evidence

21. No evidence or documents have been provided by or on behalf of the respondent, and no extension of time to provide material has been sought by or on behalf of the respondent to do so. No material has been provided to indicate that Mr Khosh has ceased to act for the respondent since his attendance before the Tribunal on its behalf on 20 August 2018.

Decision

22. It is first necessary to consider whether the matter should proceed to a hearing and determination in the absence of the respondent. It is clear that the respondent attended, through its solicitor, on 20 August 2018. The members notes on that occasion indicate that the parties were provided with an opportunity to negotiate and resolve the matter and that the respondent was not prepared to discuss any settlement offers. It can thereby be inferred that at that stage the respondent, through its solicitor, was not prepared to indicate the basis upon which it claimed to be entitled to the deposit monies it received allegedly in error.

23. Directions were made for evidence to be put on and both parties were given an opportunity, if necessary, to apply for extensions of time. The respondent failed to provide any documents in support of its case and failed to seek any further opportunity to provide such evidence. The Tribunal was not given any indication that the solicitor who appeared for the respondent on 20 August 2018 was no longer acting on behalf of the respondent. All notices of the hearing were forwarded to the respondent through its solicitor with no response to the applicant or the tribunal. The affidavit evidence of Mr Foulsham provides clear evidence that all the material relied upon by the applicants was provided to the respondent and notice of the Hearing date was also sent via email.

24. Counsel for the applicants has urged that the matter proceed.

25. Section 38(5) of the Civil and Administrative Tribunal Act 2013 imposes a duty on the Tribunal to take such measures as are reasonably practical to ensure that parties have a reasonable opportunity to be heard or otherwise have their submissions submitted in proceedings. It is however necessary to consider the obligation under s.38(5) of the Act in conjunction with the provisions of s. 36. In Kalice v Borck and Ors [2017] NSWCATAP 46 the Tribunal observed (25):-

The opportunity to be heard, is not an immutable right, and the Tribunal must consider the just, quick, cheap and efficient resolution of the real issues in proceedings under s.36 of the Civil and Administrative Tribunal Act 2013.

26. In Waters v Waghorn [2016] NSWCATAP 247 the Appeal Panel noted:-

What emerges from a review of authorities is that in order to demonstrate breach of procedural fairness it is necessary to point to something outside the control of the party which led to denial of procedural fairness … an appeal on the grounds of breach of procedural fairness is unlikely to succeed where the party had notice of his unavailability and through contumelious or dilatory conduct failed to appear.

27. It is appropriate that the matter be heard in the absence of the respondent in the circumstances.

28. The applicants have a right to receive the balance of deposit paid for the purchase of the berth subject to any right or entitlement to commission which can be established by the respondent.

29. It is necessary to have regard to cl 9.1 of the Exclusive Selling Agency Agreement dated 23 August 2017 which provides:-

The vendor acknowledges the agent is entitled to Commission if:-

1. during the initial or any extended exclusive agency period (item A) the property is sold.

2. during the non-exclusive agency period (cl 4) the property is sold to a purchaser who has been effectively introduced by the agent or,

3. after the conclusion of the exclusive or non-exclusive agency period (item A and cl 4) the property is sold to a purchaser who has been effectively introduced by the agent during either of those agency periods.

30. The evidence before the Tribunal is that the contract was exchanged between the applicants and the purchaser on 21 November 2017 and settlement took place on 19 February 2018. The Tribunal accepts the evidence of the applicants, which is uncontradicted, that the agency agreement was brought to an end by written notice on 23 October 2017.

31. It remains to consider whether, in the meaning of clause 9.1(C) the property was sold to a purchaser who had effectively been introduced by the agent during either the exclusive agency period or any deemed extension thereafter.

32. Evidence has been provided by Mr McGrath, Mr Brennan and Mr Gerathy and the whole of that evidence expressly denies that the respondent agents had any involvement in the introduction of the sale. The High Court of Australia considered the principals related to agents commission in L J Hooker Ltd v W K Adams Estate Pty Ltd [1977] 13 ALR 161 where His Honour Justice Gibbs observed at p 172:-

When an agent is employed to sell a property or to find a buyer, he does not earn his commission simply by finding someone who is ready, willing and able to buy or who offers to buy. Notwithstanding what was said in earlier decisions of this court it has become clear since Luxor Eastbourne Pty Ltd v Cooper that in such a case it is at least necessary that a binding contract of sale should have been executed. His Honour continued:-

In the words of Erle C J in Green v Bartlett [1863] 14CB (NS681) “if the relation of buyer and seller is really brought about by the act of the agent he is entitled to commission although the actual sale has not been effected by him or in the words of the later authorities the plaintiffs must shew that some act of his was the causa causans of the sale … like all questions of causation this is ultimately a question of fact.

33. In Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2 the High Court was again required to consider in some detail entitlement to agents commission. Gummow J observed at para 81:-

(81) The starting point of the criterion of “effective cause” relied upon in the Queensland courts and in the submissions in this court. The requirement of “effective cause” is one of the various concepts understood as terms implied by the law which are found in a body of common law learning applicable to real estate agencies.

34. At paragraph 82 His Honour observed:-

(82) The notion of “effective cause” reflects the requirement expressed in a long line of cases that it is not enough that the engagement of the agent to find a purchaser or introduce a purchaser was a step without the taking of which the sale would not have been affected. Something more immediate is required if the criterion of contractual liability is to be satisfied. This is because, as McPherson J put it in Doyle v Mt Kidston Mining and Exploration Pty Ltd [1984] 2 Qld R 286:-

“it would be quite artificial to suppose that the parties intended that the agent should earn his commission by simply finding or locating an individual who independently of any further action by the agent later agreed to buy the subject property”. The cases illustrate Lord Hoffmann’s proposition in Environment Agency v Empress Car Company Abertillery Ltd [1999] 2 AC 22 that one cannot give a “common sense” answer to a question of causation for the purpose of attributing responsibility (and creating rights) without knowing the purpose and scope of the rule or criterion under which responsibility is imposed.

35. In Ken Wolf Real Estate Pty Ltd v O’Holloran [2012] NSWSC 993 His Honour Justice Beech-Jones reviewed established authorities and observed:-

(46) The concept of a real estate agent being an “effective cause” of a sale was discussed by Gummow J in Moneywood Pty Ltd v Salamon Nominees Pty Ltd (supra). Effective introduction would have a similar meaning. It suffices to state that it does not necessarily follow from the fact that the plaintiff earned a fee for the first contact that it or another agent “effectively introduced purchases”.

36. The respondent has not seen fit to provide any material contradictory of the evidence provided by and on behalf of the applicants to establish an entitlement to any part of the 5% deposit which was forwarded in error to the agents at the time when the deposit was paid. It is noted that although in a letter acknowledging receipt of the monies the respondent noted that their sale fee was a $12,500.00 flat fee. No attempt has been made by it to pay out any part of the sum of $18,063.00 received and no explanation has been provided for the retention of any part of that amount.

37. It follows that the respondent is to pay the applicants the sum of $18,063.00 immediately and the Tribunal will consider submissions in relation to a claim for costs, given that both parties were granted legal representation at the Hearing, but it is appropriate that both parties have a right to provide submissions and consider the submissions of the other party in that regard.

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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: 30 January 2019