Myatt v Fredrix Real Estate P/L

[2002] NSWSC 1095

CITATION:

Myatt & Anor v Fredrix Real Estate P/L [2002] NSWSC 1095

CURRENT JURISDICTION:

Common Law, Administrative Law List

FILE NUMBER(S):

SC 30068/2001

HEARING DATE(S):

11 November 2002

JUDGMENT DATE:

3 December 2002

PARTIES :

Kenneth Ernest Myatt & Angelina Myatt
(Applicants)

Fredrix Real Estate Pty Limited t/as Laing & Simmons, Ashfield
(First Respondent)

Fair Trading Tribunal
(Second Respondent)

JUDGMENT OF:

Master Harrison

LOWER COURT JURISDICTION :	Fair Trading Tribunal
LOWER COURT FILE NUMBER(S) :	CM 1999/523
LOWER COURT JUDICIAL OFFICER :	Deputy Chairman Ian McDonnell

COUNSEL :	Mr E N Gramelis (Applicants) Mr K Odgers (First Respondent)
SOLICITORS:	Mr S Kaouna of Selby Levitt (Applicanbts) Mr D La Rosa of D La Rosa, Izzo & Co (First Respondent)
CATCHWORDS:	Real estate agent's commission - Preliminary issue - Second issue - Denial of natural justice
LEGISLATION CITED:	Fair Trading Act 1998 - s 61 Property, Stock and Business Agents Act 1941 - s 42AA Judicial Review of Admoinistrative Act 2nd ed
CASES CITED:	Multo Pty Limited v Craddock (NSWSC, unreported 11 March 1988) Kioa v West (1985) 159 CLR 550 Shelton v Hansel [2000] NSWSC 357 Big Brother Movement Ltd v Michael Stanton & Sons Pty Ltd [1989] ANZ ConvR 153 L J Hooker Ltd v WJ Adams Estate Pty Ltd (1977) 138 CLR 52
DECISION:	(1) The orders of the Deputy Chairman made on 1 May 2000 and 27 May 2001 are affirmed; (2) The appeal is dismissed; (3) The amended summons is dismissed; (4) The applicants are to pay the respondent's costs as agreed or asessed.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADMINISTRATIVE LAW LIST

MASTER HARRISON

TUESDAY, 3 DECEMBER 2002

30068/2001 - KENNETH ERNEST MYATT & ANOR v
FREDRIX REAL ESTATE PTY LIMITED t/as
LAING & SIMMONS, ASHFIELD & ANOR

JUDGMENT (Appeal decision of Fair Trading Tribunal
- real estate agent’s commission)

1 MASTER: By amended summons filed 30 October 2002 the plaintiffs seek an order that the decision of Deputy Chairman, Ian McDonnell of the Fair Trading Tribunal (FTT) dated 27 April 2001 be set aside and that the case be heard and decided again by the Tribunal, without the hearing of further evidence. The appeal raises two main issues, firstly in relation to the preliminary point and secondly, in relation to the submissions in reply.

2 Mr and Mrs Myatt (the Myatts), the applicants, sought an order in the Fair Trading Tribunal that no commission was owed to the defendant for services performed by the real estate agent in respect of the sale of their property at 43 Orpington Street, Ashfield (the property). The Myatts are the applicants in these proceedings and Fredrix Real Estate Pty Limited t/as Laing & Simmons, Ashfield is the respondent in both the FTT and this court.

3 At the outset it is helpful if some general observations about the function of the Tribunal are made. The Fair Trading Act 1998 established a Tribunal to adjudicate consumer and commercial disputes. The objects of the Act are set out in s 3. They are to ensure that the Tribunal is accessible, its proceedings are efficient and effective and its decisions are fair, and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner.

4 According to s 27 of that Act the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. The Tribunal may dismiss at any stage any proceedings before it for want of prosecution by the applicant or at the request of the applicant.

5 An appeal to this court from the Referee’s decision is only in relation to a question of law, (s 61 Fair Trading Act 1998). A party to proceedings before the Tribunal may appeal to this court on a question of law which includes (but is not limited to) an order affirming or setting aside the decision of the Tribunal, and an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of this court.

The preliminary issue – the decision of 1 May 2000

6 The Deputy Chairman held that on the preliminary matter, the agent was not precluded from claiming commission due to non-compliance with S42AA(1)(c) Property, Stock and Business Agents Act.

7 The appellant submitted that the Deputy Chairman erred in law firstly, in finding that the essential obligations for the first defendant and the services which created an entitlement in the first defendant to a commission, took place after the date of the agency agreement; and secondly, in finding that the first defendant was not precluded from claiming commission, due to non compliance with s 42AA of the Property, Stock and Business Agents Act 1941 and in its construction of s 42AA.

8 The plaintiffs argued that as the agent had not conformed with the provisions of s 42AA of the Property, Stock and Business Agents Act 1941, in respect of the timing of the execution of the exclusive agency agreement, the agent was disentitled to the commission even though the property was the subject of a successful sale.

9 It was not contested that pursuant to the intervention of the agent, Mr and Mrs Myatt were introduced to and subsequently sold to Naraway Pty Limited, their home for the sum of $875,000. Neither was it a matter of debate that on or about 30 July 1998 Mr and Mrs Myatt signed a sales inspection report exclusive agency agreement providing for the sale of the property at $875,000 with the commission payable to the real estate agent of $17,500. The contract for sale was entered into within the period provided in the agency agreement on 3 August 1998.

10 Section 42AA of the Property Stock and Business Agents Act provides:

“Agency agreements to be in writing

(1) A licensee shall not be entitled to:


(a) any remuneration by way of commission, fee, gain or reward for services performed by the licensee in his or her capacity as licensee, or

(b) any sum or reimbursement for expenses or charges incurred in connection with services performed by the licensee in his or her capacity as licensee,

from the person for whom or on whose behalf those services were performed unless:
(c) the agreement pursuant to which those services were performed is in writing and signed by or on behalf of:


(i) the licensee, and

(ii) that person,


(d) the agreement contains such terms (if any) as may be prescribed, and

(e) a copy of the agreement was served by the licensee on that person within 48 hours of the agreement being signed by or on behalf of that person.


(2) Subsection (1) does not apply to a prescribed agreement, transaction, circumstance or person or an agreement, transaction, circumstance or person of a prescribed class or description.

(3) Any provision in, or applying to, an agreement referred to in subsection (1) and purporting to exclude or restrict the operation of the terms (if any) required to be contained in that agreement has no force or effect.

(4) Where a licensee has recovered or retained from a person any remuneration or sum to which the licensee is not entitled by virtue of subsection (1), the person who would be entitled to the remuneration or sum so recovered or retained by the licensee had that remuneration or sum not been so recovered or retained may bring proceedings in any court of competent jurisdiction for the recovery of that remuneration or sum, or both, as a debt.

(5) A licensee who recovers or retains any remuneration or sum to which the licensee is not entitled by virtue of subsection (1) is guilty of an offence against this Act.”

11 The applicants’ case can be summarised by reference to paragraph 10 of their submissions which were before the Deputy Chairman:

“… It follows that for commission to be payable, the services had to be performed pursuant to a written agreement and must have involved the introduction of the purchaser to the principal or to the property, during “the agency period” ... However, unequivocally, Naraway Pty Limited as purchaser, on the admission of the real estate agent, was introduced to the property and to the vendor (principal), prior to the commencement of the agency period, which could only have operated from the time when the exclusive agency agreement was signed.”

12 The plaintiffs placed strong emphasis on the wording of s 42AA(1)(c) “the Agreement pursuant to which those services were performed”. In oral submissions, the plaintiffs’ counsel in this court stated that whatever steps were taken after the agreement was signed were characterised as events. Those events do not constitute “a service”. The Deputy Chairman referred to a number of cases where the term “pursuant to” is used in both State and Federal legislation (enumerated in paragraphs 4, 5 6 and 7 of his judgment). The plaintiffs submitted that “the words ‘pursuant to’ are construed as meaning, ‘following’ or ‘according to’” and that the meaning of these key words clearly contemplates such words as having a chronological significance in that one event follows another. The defendant argued that the agent only becomes entitled to his commission when the property is sold – clause 3 of the exclusive agency agreement clearly stipulates that the agent shall be entitled if the property is sold. The Deputy Chairman stated (under the heading “Findings”) that after perusing the definition of “pursuant” in the Shorter Oxford (3rd ed) dictionary and the Macquarie dictionary, “pursuant to” could be defined either as having a strict notion of chronological sequence or “in a manner comfortable”. If the latter definition was applied the services could take place before the agreement was signed.

13 The Deputy Chairman then considered a decision of Bryson J in Multo Pty Limited v Craddock (NSWSC, unreported 11 March 1988, 4004/1987) where his Honour stated:

“Section 42AA goes to the substance of entitlement and speaks as law to annihilate what would otherwise would be rights … In section 42AA the comprehensive disentitlement can be escaped only by falling within the exceptions in sub-paragraphs (c), (d) and (e) following the words “unless” … The terms of subsection (c) made it plain that the performance of the terms must be subsequent in time for the formation of the agreement in writing. If there were any room for an entitlement to arise under an oral agreement, which was later to be reduced to writing, the fact that the services had been performed before it was reduced to writing would not make it less true that the services were performed pursuant to the agreement; but that line of thought is not available in the operation of paragraph (c). If the services must be pursuant to the agreement in writing they must be later in time than the time when the agreement was either originally made in writing or was later reduced to writing.”

14 According to the Deputy Chairman, the Multo decision supports the propositions that the works “pursuant to” as contained in s 42AA of the Property, Stock and Business Agents Act carry with it a clear implication that the services must follow the written agreement.

15 However, the Deputy Chairman decided that the critical question to be determined was what in fact are “the services … performed” by the agent? According to the Deputy Chairman, an agent under the agreement will not be entitled to a commission unless the property is sold.

16 The Deputy Chairman held:

“It is not contentious that a contract for sale of the land was exchanged on 3 August 1998 following the execution of the agency agreement. The contract subsequently proceeded to settlement in early 1999. The Applicants obtained the funds contracted. The essential obligations of the agent and the services which create an entitlement in the agent to a commission took place after the date of the agency agreement.
I find, that on the preliminary matter, the Agent is not precluded from claiming commission due to non-compliance with S42AA(1)(c)(c) Property, Stock and Business Agents Act.”

17 The Deputy Chairman held that the services took place both before and after the agreement was signed and the agent is not precluded from claiming commission. It is my view that the Deputy Chairman was entitled to come to that decision. There is no error of law.

The second issue – the decision of 27 April 2001

18 On 27 April 2001, the Deputy Chairman made an order that the respondent’s commission is reviewed pursuant to s 42A of the Property, Stock and Business Agents Act 1941 and is reduced by one third to the sum of $113,667.

19 The review of the commission was heard by the Deputy Chairman on 31 August 2000 and 26 September 2000. The issue to be decided was whether during the agency period the agent effectively introduced to the principal a purchaser who subsequently entered into a binding contract. If the agent did so, he is entitled to remuneration. The preliminary issue (above) was revisited and there was further evidence that after the agreements were signed, there were negotiations over a reduction in price due to an easement on the property and that the matter was then handed to solicitors to arrange an exchange of contracts. The Deputy Chairman’s view that the agent was entitled to a commission did not change.

20 On 26 September 2000 at the conclusion of the evidence, the Deputy Chairman made directions for the service of submission. Those directions were that the applicant file and serve written submissions in this matter seven days after receipt of the transcript; the respondents to have seven days after that to file and serve its submissions and then the applicant is to have three days if there is any rejoinder.

21 The applicant filed its submissions on 29 January 2001 and served them on the respondent the next day, namely 30 January 2001. The respondent took over two months (until 3 April 2001) instead of seven days to file its submissions, but due to an oversight did not serve them on the respondent until 27 April 2001. The applicant filed their submissions in reply with the Deputy Chairman on 30 April 2001 but by that date the judgment had already been delivered on 27 April 2001, three days earlier. There is no evidence as to whether the parties were notified by the Tribunal of the date for judgment.

Denial of natural justice

22 In relation to natural justice, Professor S A de Smith, Judicial Review of Administrative Act, 2nd ed., pp 180-181 has stated:

“Natural justice generally required that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed, so that they may be in a position: (a) to make representations on their own behalf; or (b) to appear at a hearing or inquiry (if one is to be held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet.”

23 In Kioa v West (1985) 159 CLR 550 the High Court held that the duty to accord natural justice is a duty to act fairly. In the normal course, a party to judicial proceedings (as are those in a tribunal) could expect to be apprised of the nature of the case sought to be made against it, and of the date and time fixed for hearing such as to give it a reasonable opportunity to meet that case and to advance its own. These statements are similar to those expressed by Professor de Smith and referred to earlier. Brennan J (as he then was) at 628 stated:

“A person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interest which the repository of the power proposes to take into account in deciding upon its exercise.”

24 In relation to procedural fairness, Mason J stated in Kioa that the law had now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. Procedural fairness is a notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case (pp 454 and 455). However, whether there is a denial of procedural fairness depends on the circumstances in each case.

25 The appellant drew attention to Shelton v Hansel [2000] NSWSC 357 where Greg James J stated at paragraph [15]:

“A failure to consider the legal basis of the defence by limiting his consideration only to whether or not there has been proof of actual authority in my view goes to taint the whole of the magistrate’s decision. …”

26 Shelton was a case where the Magistrate failed to consider issues raised in the defence, namely ostensible authority and estoppel. The Magistrate considered only the defence of actual authority. These defences would have involved a different fact finding exercise. The appellant submitted that in this case, like in Shelton, the Deputy Chairman’s failure to consider the submissions in reply tainted the whole of his decision. While it was not the fault of the applicants’ solicitor that the submissions in reply were late but rather the delay was due to an oversight by the respondent’s solicitor in not serving their submissions on the applicants’ solicitor, it does not automatically follow that a failure to consider a pleaded issue in a defence or submission results in a denial of natural justice.

27 The appellant filed lengthy submissions. They were met by brief submissions by the respondent. The respondent’s submissions drew attention to a critical portion of Mr Myatt’s evidence and the relevant case law.

28 On 30 July 1998, the parties entered into a written agency agreement. Clause 2 stipulated that “In Consideration of the Agent promising to use their endeavours to sell the subject property the principal hereby grants to the Agent exclusive selling rights of the property for a period from 30-7-98 to 14-8-98 now called the ‘Agency Period’. The Agent shall also be entitled to a fee of 2% Flat Fee on selling price if during the Agency Period the property is sold either: a) by the Agent; b) by any other Agent; c) by the principal.” On Mr Myatt’s own evidence he admitted that the real estate agent, Mr Ghani came back to him and indicated that he had a buyer who was prepared to make an unconditional offer of $825,000 and again asked him to sign a selling agency agreement. Mr Myatt agreed that the agent had made an appointment for this purpose but he did not turn up, but chose to contact the office and say “Whoever pays $827,000 today, he would sell”. Mr Myatt then went to the office of Laing & Simmons at Ashfield, negotiated the commission down from 3% to 2% and signed the agreement (see para 30 of the judgment and the defendant’s submissions). These events were not hotly in dispute.

29 Mr Myatt also admitted in evidence that he had a selling agreement with LJ Hooker, Five Dock and through this agency he had been negotiating to sell with a prospective purchaser, Mr Albert Bechara. Mr Bechara is the principal of Grace Constructions. Mr Ghani knew that the Myatts had an agreement with L J Hooker, Five Dock. Mr Bechara and Dianne Ibrahim are related. Ms Ibrahim is a director of Naraway Pty Limited, the purchaser of the property.

30 The Deputy Chairman referred to Big Brother Movement Ltd v Michael Stanton & Sons Pty Ltd [1989] ANZ ConvR 153 where Kirby P (as he then was) stated:

“The ‘introduction’ had occurred before the Agency Agreement was signed. It is difficult to see how, in the circumstances, the agreement which plainly anticipates an introduction as an “event” taking place after its execution, will apply to facts which have preceded that execution. However, even if it did apply to past events, it is necessary to construe the agreement bearing in mind its commercial object. This is to reward with commission the agent who brings together, for the first time in a relevant way, the parties who thereafter proceed to a settlement. The commercial objective is to ensure equity to the vendor and the agent. The vendor who completes the purchase with a party who has been introduced by the agent should not be entitled to evade the payment of commission simply by purporting to terminate the agency agreement. But equally, the agent who has not initiated the original contact which eventually proceeds to the completion of a purchase, should not secure the commission which is conditional upon that vital first contact”.

31 In L J Hooker Ltd v WJ Adams Estate Pty Ltd (1977) 138 CLR 52 Barwick CJ held that the most common way of performing an agent’s task is to introduce to the principal a person who becomes a purchaser and if this occurs, the agent has thus been an effective cause of the sale. The Deputy Chairman was satisfied that the agent was the effective cause of the sale.

32 The Deputy Chairman made findings at paragraph 144 where he stated:

“The issue of credit however remain for consideration in respect of the Applicants. Mr Myatt was a combative and uncooperative witness in cross-examination. He frequently sought to avoid or foreclose a line of enquiry in cross-examination and was unprepared to make disclosure or admission where such answer may not have assisted his case.”

33 And at paragraphs 152 to 156:

“Mr Myatt’s equivocal evidence in relation to his activities seeking advice from the local council and attempting to determine the market value of the property does not sit with his assertion that he was disinterested in selling his property at the best price available. With this one can have no difficulty.
However, in actively pursuing his own interests and benefiting from the deliberate play-off of one agent against another, whoever the potential buyers were found to be, Mr Myatt can hardly then characterise his position as one of disadvantage brought about without his active participation.
The intervention of the Respondent was actively encouraged by the Applicants, who deliberately refrained from granting the Respondent a written retainer until it suited their purpose. The Respondent acted on the invitation extended to find a buyer at an acceptable price in the clear expectation that it would then be granted the retainer. The fact that the Respondent repeatedly asked for a retainer through the two and a half month period is not seriously in contest.
There is little question on the facts that the Respondent was the effective cause of the sale. Further, it is clear that the Agent was engaged up to the date of exchange in negotiating the sale. The mere fact that the prospective purchaser sought to reduce the price prior to exchange is neither exceptional, nor can the relaying of the request be seriously characterised as “working for” the purchaser.
On the facts presented by way of both oral and documentary evidence, the Applicants have failed to prove a case on the several grounds advanced.”

34 I have carefully read the applicants’ and respondent’s submissions and the applicants’ submissions in rely. As previously stated, the respondent’s submissions refer to the evidence given by Mr Myatt which I have referred to earlier, and relevant authorities. The submissions in reply were not before the Deputy Chairman (Ex CG1 12-14). Those submissions reiterate evidence that they had already referred to in their detailed submissions (Ex CG1 27-41). They do not arise from anything contained in the respondent’s submissions. In one sense there was no leave granted to file submissions in reply because they do not arise from any joinder, but rather are an attempt to restate their case, and introduce a new ground, breaches of s 84AA of the Property, Stock and Business Agents Act and Regulation 19 of that Act. The submissions in reply would not have required the Deputy Chairman to embark on a different fact finding exercise to overcome critical admissions made by Mr Myatt. In these circumstances there has been no denial of natural justice.

35 Costs are discretionary. Costs usually follow the event. The applicants are to pay the respondent’s costs as agreed or assessed.

36 The orders I make are:

(1) The orders of the Deputy Chairman made on 1 May 2000 and 27 May 2001 are affirmed.

(2) The appeal is dismissed.

(3) The amended summons is dismissed.

(4) The applicants are to pay the respondent’s costs as agreed or assessed.
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Last Modified: 12/16/2002