Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd
[2015] VSC 77
•6 March 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
Commercial List A
S CI 2014 00215
| OLIVER HUME (AUSTRALIA) PTY LTD (ACN 068 318 712) | Plaintiff |
| v | |
| LAND SOURCE AUSTRALIA PTY LTD (ACN 132 726 151) | Defendant |
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JUDGE: | Cameron J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 January 2015 |
DATE OF JUDGMENT: | 6 March 2015 |
CASE MAY BE CITED AS: | Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 77 |
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AMENDMENT OF PLEADING — Leave to file and serve amended writ and statement of claim — Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 36.04 — Estate agent claim for unpaid commission — Failure to comply with the requirements for setting out commission in the agreement — Estate Agents Act 1980 (Vic) s 49A — Application to amend pleading to claim rectification — Whether proposed amended pleading is futile because all claims for commission are barred by Estate Agents Act 1980 (Vic) s 50 — Whether s 50 of the Estate Agents Act precludes the court from granting leave to plead rectification — Application for leave to file and serve amended pleading granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Glick, one of Her Majesty’s Counsel with Mr R Peters | Strongman & Crouch |
| For the Defendant | Mr P Bick, one of Her Majesty’s Counsel with Mr A McClelland | Norton Gledhill |
HER HONOUR:
Background
The plaintiff, Oliver Hume (Australia) Pty Ltd (‘Oliver Hume’), is a real estate agency. It was engaged by the defendant, Land Source Australia Pty Ltd (‘Land Source’), to assist with the sale of lots in the Waterford Estate (‘Estate’) (together the ‘Lots’). Pursuant to this arrangement, over the course of 2010 and 2011 the parties entered into six exclusive sale authorities (together the ‘Sale Agreements’) which contained provisions relating to the commission to be paid to Oliver Hume.
Not all of the Sale Agreements are in identical terms. However, the annexures to the Sale Agreements all provided that the following commission was to be paid at settlement of the sale of the Lots:
(a) 3.3 per cent (inclusive of GST) of the net Contract Price if the sales rate on the Estate was less than 160 lots per annum;
(b) 3.85 per cent (inclusive of GST) of the net Contract Price if the sales rate on the Estate was more than 160 lots but less than 200 lots per annum; or
(c) 4.4 per cent (inclusive of GST) of the net Contract Price if the sales rate on the estate was more than 200 lots per annum.[1]
[1]Exhibit ‘JGJ-3’ to the affidavit of Jonathan Guy Joseph dated 6 August 2014.
Oliver Hume alleges that it was a term of the Sale Agreements, a term of a ‘Memorandum of Understanding’ signed by the parties, and orally agreed, that where contracts of sale were entered into but did not proceed to settlement, it would be entitled to an amount of commission to be agreed between the parties, or a fair and reasonable commission for its services performed.
Oliver Hume also alleges that it procured the sale of at least 208 of the Lots and that these sales proceeded to settlement. Land Source has already paid Oliver Hume the sum of $961,021, being commission on the sale of these Lots. Oliver Hume alleges that Land Source owes it an additional $492,981 of commission in relation to these Lots.
Oliver Hume alleges that it procured the sale of 22 Lots which did not proceed to settlement because the contracts for sale were rescinded or cancelled. Oliver Hume alleges that Land Source owes it $121,374 in commission for these Lots.
Land Source has not paid any commission to Oliver Hume for the sale of the 22 Lots that have not proceeded to settlement.
This application
By summons dated 28 November 2014, Oliver Hume, amongst other things, seeks leave to file and serve an amended writ and an amended statement of claim substantially in the form exhibited to the affidavit of Jonathan Guy Joseph sworn 28 November 2014; pursuant to rule 36.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).
Relevantly, the proposed amended pleading contains two paragraphs (11A and 11B), which include rectification claims.[2]
[2]Exhibit ‘JGJ-5’ to the affidavit of Jonathan Guy Joseph dated 28 November 2014.
The rectification claim was initially introduced in an earlier proposed amendment of the statement of claim (‘the proposed earlier amendment’).
Land Source opposed leave being granted in relation to the proposed earlier amendment and likewise opposed the orders being sought in relation to the proposed amendments the subject of Oliver Hume’s present summons.
At the hearing of Oliver Hume’s application, a further form of proposed pleading of paragraph 11A was produced. It was conceded by Oliver Hume at the hearing of the application that this pleading was not satisfactory.
Oliver Hume’s summons also seeks an order that Lindsay Kotzman, a director of Land Source and a signatory to the first of the Sale Agreements, be joined to the proceedings as second defendant. Against Mr Kotzman it is said that he breached the first of the Sale Agreements by failing to procure a guarantee from the directors of Land Source as required by the first of the Sale Agreements.
The Estate Agents Act — relevant provisions
Land Source contends that pursuant to s 50 of the Estate Agents Act 1980 (Vic) (‘Estate Agents Act’), Oliver Hume is prohibited from suing for and retaining commissions because the Sale Agreements do not comply with s 49A of the Estate Agents Act. In particular, it is alleged that the Sale Agreements do not contain statements of the commission payable as dollar amounts and do not contain a rebate statement which complies with the Estate Agents Act. The sections provide:
49A Offence not to give certain information about commission
(1)An estate agent must not obtain, or seek to obtain, any payment from a person in respect of work done by, or on behalf of, the agent or in respect of any outgoings incurred by the agent unless—
(a)the agent holds a written engagement or appointment that is signed by the person (or the person's representative); and
(b)before obtaining the person's signature to the engagement or appointment, the agent (or an agents' representative employed by the agent) informed the person (or the person's agent or representative) that the commission to be paid to the agent under the engagement or appointment and any money to be paid by the person in respect of outgoings were subject to negotiation; and
(c)the engagement or appointment contains—
(i)details of the commission and outgoings that have been agreed; and
(ii)if a fee is to be calculated on a percentage basis, a statement of that fee expressed as both a percentage and as the dollar amount that would be payable on the reserve price or any other relevant amount set out in the engagement or appointment; and
(iii)a rebate statement that complies with subsection (4); and
(iv)a statement in a form approved by the Director as to where a complaint concerning any commission or outgoings in the engagement or appointment can be made; and
(v)anything else required by the Director; and
(d)the agent (or an agent's representative employed by the agent) gave the person a copy of the signed engagement or appointment.
Penalty: 100 penalty units.
(2)An estate agent or agent's representative must not destroy any document required by this section and must retain any such document for the prescribed period.
Penalty: 100 penalty units.
(3)If an estate agent takes any money in respect of commission or outgoings from any money held in trust by the agent on behalf of a person, the agent must give the person written notice of the amount taken, and why it was taken, within 7 days of taking it.
Penalty: 100 penalty units.
(4)A rebate statement complies with this subsection if it is in a form approved by the Director and it contains—
(a)a statement of whether or not the agent will be, or is likely to be, entitled to any rebate in respect of—
(i) any outgoings; or
(ii)any prepayments made by the person engaging or appointing the agent (the client) in respect of any intended expenditure by the agent on the client's behalf; or
(iii)any payments made by the client to another person in respect of the work; and
(b)if such an entitlement will, or is likely to, occur, details of—
(i)the goods or services to which the rebate relates; and
(ii)the name of the person providing the rebate; and
(iii)the amount of the rebate that will be attributable to the engagement or appointment, or if that amount is not known at the time the statement is made, an estimate (in dollars) of the amount; and
(c)a statement that the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses; and
(d)any other statements or details required by the regulations.
(5)Section 48C also applies for the purposes of subsection (4)(b)(iii).
50 Commission
(1)An estate agent is not entitled to sue for or recover or retain any commission or money in respect of any outgoings for or in respect of any transaction unless—
(a)at all material times in relation to the transaction he or she is the holder of an estate agent's licence; and
(b)the agent has complied with section 49A(1) with respect to the engagement or appointment to undertake the transaction and is not in breach of section 49A(2) with respect to the engagement or appointment; and
(c)the agent has complied with sections 48A and 48B with respect to the engagement, appointment or transaction.
(4)Any estate agent who demands or receives or retains from or pays out of any moneys held by him or her on behalf of another person any fee in respect of negotiating or procuring an advance under the Co-operative Housing Societies Act 1958 or any loan under the Housing Act 1983 and any estate agent who for or in respect of any service or transaction or any auctioneer who for or in respect of the sale by auction of any real estate demands receives or retains from any moneys received by him or her an amount by way of commission or otherwise which is in excess of the amount allowed by the agent's engagement or appointment to act shall be guilty of an offence against this Act; and the Court, in addition to imposing any penalty, may order the agent or auctioneer, to refund any excess or improper amount received or retained by him or her.
(5)Any covenant agreement or condition whereby any person agrees to waive or surrender any right or remedy which he or she may have in respect of the excess or improper amount received or retained by an estate agent or auctioneer, or in any event, any covenant agreement or condition whereby any person agrees to waive or surrender any right or remedy which he or she may have against any estate agent or auctioneer under this Act shall be absolutely void and of no effect whatsoever.
Oliver Hume submits that it has substantially complied with the requirements in the Estate Agents Act. Further or alternatively, it seeks to amend its statement of claim relying on the doctrine of rectification. It argues that the parties intended to comply with the Estate Agents Act and therefore the Sale Agreements should be rectified to remedy any failure in the Sale Agreements to comply with those provisions.
What requires decision on this application?
This judgment deals with the application by Oliver Hume for leave to file and serve an amended writ and statement of claim. Land Source opposes the application on the grounds that the proposed amendments (being primarily paragraphs 11A and 11B) are futile, being bad in law. Land Source also says that further paragraphs in the further proposed amended statement of claim are objectionable.
In Land Source’s submission, the remedy of rectification cannot be deployed to achieve the result desired by Oliver Hume. Moreover, it is not open to Oliver Hume to call in aid the remedy of rectification in the face of the statute.
Land Source relied on various affidavits and on submissions dated 15 August 2014 and 23 December 2014. Whilst initially Land Source only opposed the amendment to Oliver Hume’s statement of claim insofar as paragraphs 11A and 11B were concerned, in its supplementary submissions dated 3 February 2015, a broader objection was taken to leave being granted to various paragraphs of the proposed amended statement of claim. Those amendments relate to rectification claims more generally and the joinder of Mr Kotzman as a defendant in the proceeding.
Insofar as the proposed claim against Mr Kotzman was concerned, Land Source’s position appeared somewhat inconsistent. In his affidavit of 12 December 2014, Andrew Green states that the application to join Mr Kotzman as second defendant is not opposed by Land Source.[3] In the course of the hearing of the application Land Source submitted that the proposed pleading was unsatisfactory (as disclosing an error on the facts, being the terms of the first of the Sale Agreements). Land Source argued that, as a minimum, a re-pleading and clarification was required before the court should be disposed to order that Mr Kotzman be joined to the proceeding. However, in its supplementary submissions dated 3 February 2015 Land Source takes objection to the paragraphs in the proposed pleading insofar as they relate to the joinder of Mr Kotzman.[4]
[3]Affidavit of Andrew John Green dated 12 December 2014 [16].
[4]Land Source Australia Pty Ltd, ‘Defendant’s Outline of Supplementary Submissions’, Submission in Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd, S CI 2014 00215, 3 February 2015, 1 [3(a)].
In relation to the other paragraphs going to the rectification claim, Land Source did not separately address those paragraphs, contending that it would fail in relation to its objection in the event that Land Source’s rectification argument succeeded.
At the hearing of Oliver Hume’s summons it was conceded by its counsel that its proposed amendments (the basis of its rectification claim) did not do ‘justice to the claim’ and are not particularised.[5] It was suggested by counsel for Land Source that, were the court to be persuaded to allow a further opportunity to Oliver Hume to reformulate its pleading, then the appropriate course was for the parties to confer and then return to court.
[5]Transcript of Proceedings, Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd (Supreme Court of Victoria, S CI 2014 00215, Cameron J, 28 January 2015) 13.
It is not the compass of this judgment to anticipate the form of a proposed pleading that may be formulated by Oliver Hume either in respect of the rectification claim or the proposed joinder of Mr Kotzman (if indeed any further amendments are contemplated in relation to that issue). Whether any further proposed pleading is sound or liable to be struck out is to be determined at another time.
The issues in dispute
Oliver Hume seeks to amend its pleading to plead that even if the court finds that it has not complied with the requirements of the Estate Agents Act, under the equitable doctrine of rectification, where an agreement does not accord with the common intention of the parties, the court can order that an agreement be rectified so that it accords with any such common intention. Oliver Hume claims that in this case there was a common intention to comply with the Estate Agents Act and for commission to be payable. So, it is said, the Sale Agreements should be rectified such that they comply with the Estate Agents Act. Oliver Hume concedes that if it cannot establish that there was a common intention of the parties that the words chosen in the Sale Agreements would meet the strict requirements of the Estate Agents Act, then it will fail at trial.[6]
[6]Ibid 12.
Land Source submits that Oliver Hume should not be granted leave to amend its statement of claim in the manner proposed, because any amendment is futile. In support of this argument, Land Source relies on the words of s 50 of the Estate Agents Act that ‘[a]n estate agent is not entitled to sue for or recover or retain any commission or money in respect of any outgoings for or in respect of any transaction’ unless they have complied with s 49A. Land Source submits that this precludes Oliver Hume relying on any remedy, including rectification, to obtain or retain commission.
Land Source also submitted that Oliver Hume ought be denied leave to amend its statement of claim given that it has had ample time to formulate a proper pleading based on appropriate facts in relation to its rectification claims and has had three attempts at doing so.
In support of its submission, Land Source relied on the decision of Ryan J in Laing v Construction, Forestry, Mining and Energy Union (No 2),[7] in which his Honour cited Gleeson CJ in Trau v University of Sydney.[8] In Trau, his Honour said:
Even under the modern system of pleading, considerations of form and substance are often closely intertwined. If one sees that a plaintiff’s lawyers are experiencing extreme difficulty in formulating with clarity and particularity their client’s cause of action then that is often a very good indication that there is no cause of action. The history of the present matter creates the strong impression that such a problem exists, compounded by an additional difficulty created by a need to manoeuvre around problems concerning periods of limitation.
[7](2006) 155 IR 244, 253.
[8](1989) 34 IR 466, 475.
Accordingly, the submissions of Land Source during the hearing of the application were to the effect that a satisfactory pleading based on appropriate facts is unlikely to be achieved.
Is rectification precluded by the Estate Agents Act?
The threshold issue to be decided, on an interlocutory basis, is whether s 50 of the Estate Agents Act precludes the court from granting leave to plead rectification of the Sale Agreements. If so, Oliver Hume’s application for leave to amend paragraphs 11A and 11B must be dismissed.
Land Source conceded that there is no authority which expressly deals with the availability of rectification in the context of the Estate Agents Act.[9] However, it submitted that in analogous cases courts have held that estate agents cannot avoid the requirements of similar legislation by relying on equitable principles such as estoppel, restitution, quantum meruit and unjust enrichment.
[9]Land Source Australia Pty Ltd, ‘Defendant’s Outline of Supplementary Submissions’, Submission in Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd, S CI 2014 00215, 3 February 2015, 2 [5].
Land Source submits that rectification ‘is not available to restrospectively alter a contract so that it discloses information that was not, in fact disclosed, and in circumstances where the contract accurately reflects the bargain those parties made, and the omission of the information has no effect upon the contract as an instrument’.
Oliver Hume’s fortunes will rise or fall on, first, whether the remedy of rectification is available in light of the provisions of the Estate Agents Act and, secondly, whether it is able to establish a disconformity between the Sale Agreements and the common intention of the parties such as to attract that remedy.
Oliver Hume will no doubt face difficulties if it cannot establish such disconformity in circumstances where the Sale Agreements may be said to accurately reflect the bargain struck between the parties, and are not void. But, as I said, the determination of that question is for another time when the final form of the proposed pleading is examined.
In Maxwell v Moorabool Developments Pty Ltd, Habersberger J stated that the wording in s 50 of the Estate Agents Act ‘could not have been wider or stronger’ and would bar any claim whether in contract and equity such as restitution and unjust enrichment.[10]
[10][2004] VSC 392 [210]–[211].
Land Source relied on the case of Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd (‘Overmyer’), where the court cited English case law that stands for the proposition that whether estoppel can be used as a defence to non‑compliance with a statute depends on the nature and purpose of the statute, including whether there are public policy reasons for the statute such as protecting the broader public interest.[11]
[11]Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd [2003] NSWCA 305 [54]–[55] citing Yaxley v Gotts [2000] Ch 162, 191.
In that case, the court considered s 42AA of the Property, Stock and Business Agents Act 1941 (NSW) which sets out various formal requirements that must be satisfied in order to entitle a licensee to claim commission. Like the Estate Agents Act, the legislation provides that a licensee shall not be entitled to any remuneration unless the provisions of the Act are complied with. Further, a licensee who recovers or retains commission when the relevant provisions have not been complied with may be sued for the recovery of that sum and is guilty of an offence. In these circumstances, Young CJ in Eq held that:
It would seem to me almost unarguable that the legislature has made it as plain as plain can be that there is not to be recovery of the remuneration in the instant case and that no estoppel in the face of the statute will lie.[12]
[12]Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd [2003] NSWCA 305 [55].
In Overmyer, the court cited the decision of Bryson J in Multo Pty Ltd v Craddock,[13] which seems to go further in finding that:
By subs (3), contracting out is of no force or effect. By subs (4) where remuneration is recovered or retained to which the licensee is not entitled by virtue of subs (1), the person charged may recover it back. By subs (5) 'a licensee who recovers or retains any remuneration or sum to which he is not entitled ... ' commits an offence.[14]
This section deals with the substance and states the law as to entitlement; it does not deal with procedure and put procedural barriers in the way of enforcement of rights. [15]
…
It is also to be observed that s 42AA deals not only with entitlement to remuneration under express or implied contracts, but deals also with any remuneration by way of gain or reward for services performed; it does not limit itself to disentitling parties from enforcing their contracts and the disentitlement which it enacts is irrespective of the legal basis of a claim for remuneration by way of reward for services.[16]
…
[O]n my understanding of its meaning s 42AA makes illegal and has the effect of forbidding the enforcement of any equities arising in that manner just as much as it forbids the enforcement of the contract itself.[17]
[13](Unreported, Supreme Court of New South Wales, Bryson J, 11 March 1988).
[14]Ibid 7.
[15]Ibid 7.
[16]Ibid 7.
[17]Ibid 20.
Furthermore, in Sevastopoulos v Spanos,[18] Beach J considered a similar provision in the House Contracts Guarantee Act, which provides that variations to building work contracts must be in writing and signed, otherwise the builder is not entitled to recover in any court the cost of any work performed. After examining the purpose of that Act, including the need to protect the interests and rights of the building owner and subsequent building owners if there are defects in the building in the future, Beach J held that:
unless a variation to a domestic building work contract is in writing and signed by the builder and the building owner personally or by an agent, the builder is not entitled to recover in any court the cost of any work performed or materials supplied under the variation, and it does not matter whether any claim by a builder in respect of such cost is brought in contract in indebitatus assumpsit or otherwise.[19]
[18][1991] 2 VR 194.
[19]Sevastopoulos v Spanos [1991] 2 VR 194, 205.
In Salamon Nominees Pty Ltd v Moneywood Pty Ltd, Chesterman J held, in respect of analogous legislation in the Auctioneers and Estate Agents Act 1971 (Qld) that:
The estoppel alleged here would necessarily operate so as to nullify section 76. For reasons which have seemed sufficient since at least 1922, Parliament has decreed that agents should not be able to sue for their commission unless their appointment was evidenced in writing. The respondent may not circumvent that statutory policy by estoppel. The statute absolutely prohibits the recovery of commission by an agent whose appointment is not evidenced in writing. To say that the commission may be recoverable in a circumstance where there is no written evidence of an appointment is to alter the clear terms of the statute, which is impermissible.[20]
[20]Salamon Nominees Pty Ltd v Moneywood Pty Ltd (1999) Q Conv R ¶54-525, [60237] [48].
It is clear from the plain and ordinary meaning of the words of the Estate Agents Act that the legislation is intended to have a strict operation. There is no scope, on that plain reading, for distinguishing between sophisticated parties or those who may be commercially inexperienced. Given the construct of the legislation, harsh consequences may follow from a failure to comply with its terms.
The authorities have construed such provisions strictly. They stand for the proposition that it is not for litigants to seek the aid of equity to nullify what Parliament has decreed, nor to permit parties to recover remuneration or commission in clear circumvention of Acts of Parliament.
Is rectification available in view of the provisions of the Estate Agents Act?
Rectification operates retrospectively such that if the court were to order rectification, the rights of the parties are treated as always being in accordance with the rectified contract, a proposition upon which both parties agreed in their submissions. It follows that if the Sale Agreements are rectified in the manner contended for by Oliver Hume, they will be treated as if they had always complied with the requirements of the Estate Agents Act. In that case, no question of s 50 of the Estate Agents Act barring a claim would arise.
Oliver Hume relied on various authorities in support of this submission. In Bosaid v Andry, it was held that the doctrine of rectification can be used to correct a document which does not comply with legislation and once this has occurred the contract will be treated as if it always complied with the legislation and can then be enforced at common law. In that case, Sholl J held:
I am of opinion that it is no answer to such a claim merely to say that the equitable remedy of rectification must be granted before there is a sufficient writing, within the meaning of the Instruments Act, upon which to base a common law claim. Rectification can be obtained quite independently of and notwithstanding the Instruments Act: USA v Motor Trucks Ltd, [1924] AC 196. And rectification being an independent head of equitable jurisdiction, it was before the Judicature Acts, and therefore still is, possible to reform an incorrectly expressed instrument so as to satisfy the requirements of the law as to writing, and then use the reformed writing as the basis of a common law claim: see Leake on Contracts, 8th ed., pp. 221-4; Druiff v Lord Parker (1868) LR 5 Eq 131; Pollock on Contracts, 11th ed., pp. 425-6. In that respect, rectification differs from the equitable doctrine of part performance, which when applicable will support only the award of a limited equitable remedy: see JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282, per Dixon, J (as he then was), at pp. 295-301; [1931] ALR 157, at pp. 161-3.[21]
[21]Bosaid v Andry [1963] VR 465, 468.
Similarly, the plaintiff relied on the decision in Burroughes v Abbott, where a trust deed that was rendered void by the Income Tax Acts was rectified in accordance with the intention of the parties such that the statute no longer rendered it void and the trust deed was lawful.[22] P.O. Lawrence J held that:
I have no doubt whatever that according to the established rules of this Court there is ample jurisdiction to rectify the deed of 1909 so as to make it conform to the order of November 25, 1907, and carry out the clear intention of the Court and of all the parties to it.[23]
[22]Burroughes v Abbott [1922] 1 Ch 86.
[23]Ibid 95.
The authorities demonstrate that rectification can be distinguished from other equitable remedies which operate after the fact. For example, estoppel prevents loss suffered as a result of a party relying on an assumption. Likewise, unjust enrichment requires a party who has unjustly profited at another person’s expense to make restitution and similarly, quantum meruit requires payment of the reasonable value of services rendered. These remedies prevent a party from suffering loss but, unlike rectification, do not operate retrospectively. Equity, by operation of the doctrine of rectification, allows the parties to have the agreement they always intended. It does not come to the aid of a party to reconstruct their agreement to achieve a desired result or compliance with legislation that no party turned their mind to at the time. But, it allows the law to properly rest on the agreement that the parties always intended where there is disconformity with the written instrument.
The Estate Agents Act ought properly to be applied to a final form of agreement, or instrument, between parties. Equity will properly come to the aid of parties, through the remedy of rectification, if the instrument does not properly accord with, for example, their common intention if there is a ‘disconformity’ between their agreement as written and that common intention.
Whether this is the case in this matter remains to be seen. Oliver Hume has yet to properly plead the material facts and give particulars of the agreement as alleged. Rectification seeks to protect a party against the harsh consequences of a document that may not properly reflect the bargain of the parties — that without rectification, reliance on the document may be unconscionable.[24] In appropriate circumstances, rectification should, in my opinion, be capable of being called in aid even in the face of legislation with a clear social policy objective — so long as there is nothing on a plain reading of the statute that prohibits it.
[24]Dr Ian Spry, Equitable Remedies (Thomson Reuters, 9th ed, 2013) 632.
In response to these submissions, Land Source sought to distinguish the cases relied on by Oliver Hume on the basis that rectification relates to the rights of parties being treated as if they have always been in accordance with the rectified contract; whereas in this case, Oliver Hume always had the right to receive commission, and therefore it is not seeking to alter its rights, it is seeking to remedy the lack of disclosure in the Sale Agreements.[25] It also submits that this case can be distinguished from Burroughes v Abbott as in that case the agreement was rectified so it was no longer void. However, in this case the Sale Agreements are not void, they are valid agreements, although they do not comply with the Estate Agents Act. Moreover, it is argued that there was no common intention in Burroughes v Abbott and therefore it does not stand for the proposition that such as intention without more, is sufficient to give rise to rectification.[26]
[25]Land Source Australia Pty Ltd, ‘Defendant’s Outline of Supplementary Submissions’, Submission in Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd, S CI 2014 00215, 3 February 2015, 7.
[26]Ibid 8.
As I have said, it is not necessary at this point to decide, nor can it be decided, whether any reformulated pleading by Oliver Hume will satisfy the test for rectification.
The legislation is clear, in its plain and ordinary terms. It operates strictly. So, if on the proper construction of the Sale Agreements (in a rectified form or otherwise), the formal requirements of the Estate Agents Act are not met, then Oliver Hume is not entitled to charge for or retain its commission.
Conclusion
For these reasons, on an interlocutory basis, I do not consider that Oliver Hume ought be denied the opportunity to file a further amended writ and statement of claim including, but not limited to, claims based upon rectification of the Sale Agreements, in the face of the provisions of the Estate Agents Act.
It is common ground that Oliver Hume has not, to date, properly pleaded the factual foundation of the alleged common intention and has not provided any particulars of it.
Given the time it has taken and its several attempts to formulate its rectification claims, there is considerable force in Land Source’s submissions that Oliver Hume ought not be afforded a further opportunity to attempt to re‑plead these claims. By way of observation, it would be, in my view, challenging for Oliver Hume to justify any further delay in properly pleading its claim.
In view of the affidavit material filed on behalf of Land Source in relation to the joinder of Mr Kotzman and the submissions made by counsel for Land Source, I propose to order that Mr Kotzman be joined to the proceeding as a second defendant.
I am content to adopt the course urged upon me by counsel for Land Source that a draft amended writ and statement of claim be provided to it by Oliver Hume. Any dispute as to the form of that further proposed pleading may be the subject of a further application to this court.
I will hear the parties on the appropriate form of orders, including orders as to costs.
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