Orchid Avenue Realty Pty Ltd t/as Ray White Surfers Paradise v Chadwick
[2014] QCAT 441
•20 August 2014
| CITATION: | Orchid Avenue Realty Pty Ltd t/as Ray White Surfers Paradise v Chadwick & Anor [2014] QCAT 441 |
| PARTIES: | Orchid Avenue Realty Pty Ltd t/as Ray White Surfers Paradise (Applicant) |
| v | |
| Roxanne Joy Chadwick Damian Chadwick (Respondents) |
| APPLICATION NUMBER: | MCDO111-14 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | 28 July 2014 |
| HEARD AT: | Southport |
| DECISION OF: | Adjudicator Trueman |
| DELIVERED ON: | 20 August 2014 |
| DELIVERED AT: | Southport |
| ORDERS MADE: | 1. The Respondents pay to the Applicant the sum of $26,572.10 within 14 days being for: a. Claim $25,000.00 b. Interest $1,250.00 c. Filing Fee $284.60 d. Bailiff Fee $37.50 |
| CATCHWORDS: | MINOR DEBT – COMMISSIONS OWING – where respondents executed an exclusive agency listing with applicant – where respondents purported to terminate exclusive agency agreement – where respondents sold the property during the exclusive agency agreement period – whether applicant entitled to commissions – amount entitled to – where applicant waivers entitlement to amount over jurisdictional limit Property Agents and Motor Dealers Act 2000 (Qld), s 19, s 134, s 135, s 137 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Kerry Stoker representing Ray White Surfers Paradise |
| RESPONDENT: | Mrs Roxanne Chadwick and Mr Damian Chadwick |
REASONS FOR DECISION
Mr and Mrs Chadwick were the registered owners of a prestigious waterfront property located within the Hope Island Resort. They engaged Ray White Surfers Paradise (‘Ray White’) to sell their home by auction. They signed an exclusive appointment agreement, which started on 5 May 2012 with an end date of 3 July 2012. The property did not sell at auction. Mr and Mrs Chadwick claim they were unhappy with the way Ray White handled their property.
The Chadwicks purported to terminate the exclusive appointment agreement on 28 June 2012. They claim that if a finding is made that they did not effectively terminate the agreement on 28 June 2012 that in the alternative, that the agreement was invalid or has no effect. They allege that because Ray White committed an offence under the Property Agents and Motor Dealers Act 2000 (Qld) the agents conduct rendered the appointment as ineffective from the time it commenced.
Mr and Mrs Chadwick sold the property to a buyer on 29 June 2012, (before the exclusive agency agreement ended) through another Real Estate Agent. Commission has been paid to the Agent who introduced the buyer.
The two questions to be determined in this case are, is Ray White entitled to commission for the sale of the Hope Island property despite not introducing the buyer to the property or was the Exclusive appointment ineffective from the time it was made due to the alleged offences committed by the real estate agent?
The claim filed by Ray White on 12 February 2014 seeks orders that the Respondents pay to them the sum of $25,000.00 for unpaid commissions plus filing fee, bailiffs’ fee and interest totalling $29,294.70.
Mr and Mrs Chadwick filed a Response on 18 March 2014. They state that the claim should be dismissed and allege that they do not owe any commission to Ray White because they terminated their exclusive agency agreement with them. They say that when they later sold their property after termination of the Ray White agreement they have already paid commission to the agent who actually sold their property. They state that Ray White is not entitled to receive any commissions and Ray White have breached the terms of their appointment agreement.
Applicant’s Evidence
Ray White state that they are a licensed Real Estate agency and that Mr and Mrs Chadwick were owners, as tenant in common, of a property located at 1133 Beechwood Drive in Hope Island.
On 28 April 2012, Mr and Mrs Chadwick appointed Ray White as their exclusive agents to sell the Beechwood Drive property. The exclusive appointment commenced on 5 May 2012 and concluded on 3 July 2012. The property was to be auctioned on 31 May 2012.
Ray White provided evidence to the Tribunal in a bundle of documents marked “Exhibit 1”.
Ray White alleges that Jose and Michelle St Ange were appointed to market and sell the property. They conducted open homes and arranged for Mr Kaddatz to conduct the auction.
On 28 June 2012, Ray White stated they received a letter by facsimile from solicitors[1] acting for Mr and Mrs Chadwick, seeking to terminate the exclusive appointment. The correspondence purported to indicate that Mr and Mrs Chadwick were dissatisfied with the Real Estate agents who were marketing and selling the property and the letter stated that their ‘clients financiers had taken possession of the properties and our clients have no choice but to give notice of termination of the appointment’. The letter invited a response as a matter of ‘considerable urgency’.
[1]Exhibit 1 – Ref 6 - Letter to The Manager Ray White from Courtice Neilsen Lawyers.
Ray White stated that due to the fact that they believed that the Bank had taken possession of the property they responded in a letter on 5 July 2012[2] acknowledging that the appointment was at an end as the property was in the possession of the mortgagee and the exclusive agreement had expired on 3 July 2012. The letter stated that:
We are disappointed to hear that the subject properties are now in the possession of our mutual client’s financier. We acknowledge that our agency appointment has been terminated, as I would imagine that as the property is now in the hands of the financiers any agreement in relation to the sale of property would have to be an agreement between financiers and any agency. … In conclusion, we do acknowledge that the Agency Agreement expires on the 3rd of July 2012 and further acknowledge your advice to us that prior to that date our mutual client is no longer the controlling body in relation to the sale of the subject properties.
[2]Exhibit 1 – Ref 7 – Letter to Courtice Neilsen from Andrew Bell, Ray White SP Group.
Ray White provided a copy of a letter they received on 10 July 2012 from Courtice Neilsen Lawyers[3] in response to their letter of 5 July 2012. The letter raised concerns that the letter from Ray White acknowledge the agency appointment had terminated yet the agreement expired earlier on 3 July 2012. The correspondence sought to clarify the situation that the ‘correspondence of 28 June 2012 constituted a notice of termination of the appointment’.
[3]Exhibit 1 – Ref 8 – Letter from Courtice Neilsen Lawyers to Ray White.
Ray White responded on 12 July 2012 and stated
although the period of our agency agreement has now expired we have not accepted a termination before that expiry date. I couldn’t imagine that there is any issue now as that expiry date has in fact passed so I see no point in prolonging discussion on that particular matter.
Ray White claims that later, it came to their knowledge and attention that Mr and Mrs Chadwick had in fact sold the property to a Melissa Panepinto under a contract signed on 29 June 2012. They claim the property was sold for the sale price of $2,750,000.00.[4]
[4]Exhibit 1 – Ref 4 - Contract for sale of 1133 Beechwood Drive signed by Melissa Panepinto dated 29 June 2012.
Ray White stated that they wrote to Mr and Mrs Chadwick’s solicitors on 7 December 2012 to enquire about the sale and requested some evidence that the property had been sold by the mortgagee in possession. Ray White said they were not provided with any evidence to prove that and as such believe that another agent did sell the property during the period when their exclusive agency agreement was in force.
Ray White stated that if the property was sold during the period they had an exclusive listing that they are entitled to full commission of approximately $69,200.00 plus GST.
Ray White state that for the purposes of permitting this Tribunal with jurisdiction to hear the claim they would limit the amount claimed to the maximum claim of $25,000.00.
Ray White provided evidence[5] that Mr St Ange was licensed at all times and that the Chadwicks’ allegations about him being unlicensed were unfounded.
[5]Exhibit 2 – Licensing Register Extracts Report.
Ray White said that the Chadwicks had made complaints about their alleged conduct to the Office of Fair Trading.[6]
[6]Exhibit 3.
Ray White contends that they did not agree to terminate the exclusive agency agreement. They claim either that if they did it was after the expiry date of the exclusive agency agreement anyway or that they gave ‘conditional approval’ to terminate because the Chadwicks’ lawyers had advised them that the Bank was now in possession of the parties’ properties.
Ray White highlight that the Chadwicks’ evidence was contradictory and untrue, and that the contents of a letter written by them to the Office of Fair Trading as a formal complaint[7] against Ray White was evidence of that. Ray White stated that it would be untrue that the Chadwicks allege that after the auction, they contacted two agents who found a buyer for their property, and that the sale was affected after termination of the exclusive agency agreement.
[7]Exhibit 1 – Ref 2 – Letter to Office of Fair Trading from Roxanne Chadwick.
Ray White stated that they had to wait for a period before filing their claim, as they needed the sale to be recorded on RP Data and the requisite evidence to prove their case.
Respondents’ Evidence
Mr and Mrs Chadwick stated that they signed an appointment for the sale of their residential property on 28 April 2012. In the appointment, they state that Mr Jose St Ange was the licensee. They claim that his licence as a real estate agent expired on 15 February 2012.
Mr and Mrs Chadwick in their response allege that they should not be required to pay commission to Ray White relying on various reasons. They state that in the appointment, there were implied terms of the appointment and that was that Ray White would comply with the code of practice contained in their Code of Practice.[8] They claim that Ray White should act in ‘accordance with their duty as a fiduciary and that they would exercise reasonable skill, care and diligence and in the best interest’ of them.
[8]Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001 (Qld).
Mr and Mrs Chadwick allege that Ray White breached their terms of appointment by failing to act in accordance with instructions that Michelle and Jose St Ange have carriage of the auction sale on their behalf. That they failed in ensuring that Mr St Ange was licensed during the term of the appointment, and failed to exercise due skill, care and diligence in the marketing of the property and failed to act in their best interest by the conduct of its employee or agent, Shaun Kaddatz.
Mr Chadwick alleged that they were unhappy with the way the property was being marketed. They believed that Mr Kaddatz’s actions were driving the price down. They stated that they believed that Mr Kaddatz informed potential purchasers that the property was going to be repossessed and therefore impacting on offers for the property and offers being grossly under the valuation.
Mr Chadwick said that he and his wife had conducted many business dealings with Mr and Mrs St Ange in the past and on Mr St Ange’s recommendation they agreed to take on Mr Kaddatz, due to his auction experience.
Mr Chadwick said that during the marketing campaign, the Hope Island property was empty and a key was left in the letterbox. He said they had moved out of the property in anticipation of the bank taking it. He said they had vacated and were living with family. He said that while he has sold and bought many properties they had ‘limited experience with the auction process’. He said that the Bank allowed them to sell the property but that ‘Westpac Bank had given them strict instructions ... that Ray White had to provide them information of weekly reports, offers, any activity, valuations, and feedback from potential purchasers’.
Mr Chadwick said that the ‘sale proceeds from the property were paid under an irrevocable authority to the bank and that there was still a sizable shortfall after the sale’.
Mr and Mrs Chadwick stated that on 28 June 2012 they gave notice to Ray White to terminate the agency agreement due to breach of their appointment. They allege that on 5 July 2012 Andrew Bell, the CEO of Ray White, confirmed in a letter that Ray White accepted the termination of the appointment.
Mr and Mrs Chadwick stated in their Response that they did not enter into any agreement to sell their property until after the agency agreement had been terminated. They state that the property sold after the appointment was terminated and that Ray White is not entitled to any commission for the sale of the property.
Mr and Mrs Chadwick claim to rely on a second ground that the agency agreement was not in effect at the time they sold their property as they allege that there were matters in relation to the conduct of the real estate agent prior to the signing of the appointment that would render it invalid or of no effect.
Mr and Mrs Chadwick raise matters pertaining to an allegation that the real estate agent did not specifically bring to their notice and attention the information in the form of appointment about the effect of an open listing and an exclusive or sole listing. They denied being told they could have discussed these options and they said they did not know the difference between sole and exclusive agency. They allege that they told the agents that the bank was going to repossess the property on 30 June 2012 and despite that, Ray White ended the term of appointment after that date on 3 July 2012.
Mr and Mrs Chadwick state that at no time did the agent advise them that they could negotiate the term of appointment, neither negotiate the type of listing nor was it explained the difference between sole and exclusive agency. They said it was not explained to them the consequences of each of those types of listings and what sole and exclusive agency actually meant. They allege that the conduct of the agents, being in breach of their duties and obligations, renders the exclusive agency agreement as ineffective from the time it was made because the real estate agent committed an offence or offences against s 134A or s 135(1) of the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMDA’).
Mr and Mrs Chadwick conceded that they had financial problems and the Banks were pressuring them to sell their properties. They were given demands to repay all borrowings and they were advised to voluntarily vacate their home on or before 30 June 2012.[9] They said they did negotiate to sell the properties rather than the banks to take possession. They said they entered into an agreement with Westpac to allow the properties to go to auction. They said the agreement was confirmed in writing on 27 April 2012 in a letter from their lawyers to Westpac.[10]
[9]Letter from DLA Piper to Courtice Neilsen lawyers dated 14 June 2012.
[10]Exhibit 4.
Mr and Mrs Chadwick conceded that Hum and Fea found a buyer for their home. The property was inspected by the buyer with an arrangement they had with that agent from Hum and Fea. The said that as they did not live in the property they did not know when agents used the key in the letter box and took prospective buyers through the property.
Mr and Mrs Chadwick agreed that they have signed listing agreements in the past. Mr Chadwick said that they had signed agreements in the past and never before or on this occasion had the content ever been explained to them. He said, ‘but on this occasion the dates and type of listing did matter’. He said that he told Ray White that the bank were going to take possession of the property on 30 June yet the agreement went past that date.
Mr Chadwick said that the letter sent by their lawyer to Ray White had ‘effective termination’. He said ‘we were informing not requesting the termination’. He said ‘we gave many reasons why we were terminating and … we don’t need Ray White’s permission to terminate’.
Mr Chadwick said that Ray White did not sell the home and did not introduce the buyer. He said we did ‘not do anything intentional to rob Ray White of commission’.
Witness Evidence
Ray White called evidence from three witnesses, Mr and Mrs St Ange, the agents who were engaged to market and sell the property. The third witness was Ms Melissa Panepinto, the person who purchased the Hope Island property previously owned by Mr and Mrs Chadwick.
Evidence of Michelle St Ange
Mrs St Ange gave evidence that she had been working with Ray White since June 2010. Prior to that, she said she and her husband worked with Hope Island Realty and she had been working in real estate for about 12 years. She said she had known Mrs Chadwick before she married, as she was a previous client. She said that she had sold a few properties for her, and to her and her husband. She estimated to have performed about 4 – 5 transactions. She said that she had been trying to sell their Hope Island property, originally listing it in 2008 for sale, and had it for sale ‘on and off for the last 4 years’.
Mrs St Ange said that she was present when the Chadwicks signed the Form 22A Appointment Agreement. She said that it was signed on 28 April in the Chadwicks’ home. She said that she was present with the Chadwicks, as was her husband, Jose, and Shaun Kaddatz was there. She said she recalled the incident clearly and that they were sitting around the table at the Chadwicks’ home. She said Shaun Kaddatz prepared the appointment and he presented it to the Chadwicks. She said that Shaun Kaddatz went through the agreement using a ‘checklist’. She said the checklist was a great idea and it prompted him to go through all the important parts of the agreement. She said she recalled that he went through all aspects of the agreement and she noted that she was so impressed with the checklist method that she ‘later adopted the checklist’ to use in her own practice. She recalled that the issue of price was not discussed during the listing.
Mrs St Ange said she clearly remembers Shaun Kaddatz discussing the 60-day period and the 30-day auction period, and the fact that these dates were negotiable. She said that she particularly recalls Mr Kaddatz discussing and explaining to the Chadwicks that the listing would be an exclusive listing; she said she believed that the Chadwicks understood what the exclusive appointment meant. She recalls that Mr Kaddatz made it clear as to the type of listing it was and emphasised the Exclusive listing, she said they signed every page and she said she believed that they clearly knew what they were signing.
Mrs St Ange said that the Chadwicks did not request to seek legal advice before signing the agreement. She stated that Mr Kaddatz explained the 60-day listing as preferable as they needed 30 days exclusive for the auction period and another 30 days exclusive period after the auction to follow up on the buyers and to negotiate a sale. Mrs St Ange said she had ‘no doubts that the Chadwicks were properly informed about the content of the agreement, irrespective of their experience’.
Mrs St Ange said that during the meeting at the Chadwicks’ home, and the signing of the Exclusive appointment, that ‘at no time did the Chadwicks ever mention to her and the other agent present that the Bank would be taking possession of their property on 30 June 2012’. She said that the Chadwicks said to them that they were ‘having a hard time and needed to sell the property that at no time was the bank ever mentioned’.
Mrs St Ange conceded that she was aware that the Chadwicks were not ‘happy with Mr Kaddatz dealing with the property’. She said she told the Chadwicks that Mr Kaddatz was the ‘auction professional’ and that they believed he would do the best job for them. Mrs St Ange said that she saw Mr Kaddatz’s involvement as an ‘added bonus’ for the auction. She said the Chadwicks signed the advertising and marketing agreement, which was for approximately $40,000 and for Mr Kaddatz to be involved. She said she thought it was a lot of money to spend on advertising. She said that she realised that the Chadwicks were not happy with the fact that she and her husband went on leave after the auction but she said she left ‘appropriate plans in place’ to cover the office while she was away. She said her phone was transferred to her brother and the office and other people were employed to handle any enquiries.
Mrs St Ange stated that she recalls Mr Kaddatz discussing with the Chadwicks that they were prepared to sell the property in conjunct with other agents. She said it was discussed that conjunctions would be negotiated as she said they never normally conjunct when they were going to auction, but that because they knew of their financial predicament and that the Chadwicks were ‘strapped’, she said they were prepared to conjunct at any time to assist them.
Mrs St Ange said she recalled a phone call from Mrs Chadwick, complaining that Ruth Fea had told her she had phoned Mr Kaddatz regarding a conjunction but allegedly, he had not called her back. Mrs St Ange said she queried this with Mr Kaddatz and he sent her an email[11] confirming that he had called Ruth Fea after he was advised she had a buyer and may conjunct. She said that Mr Kaddatz expressed his concerns that it was alleged he had not called Ruth Fea, when the emails in fact noted that she had never called him, and he had ‘phoned her twice in the last 10 days’. Mr Kaddatz’s email states that he ‘welcomed her if she has any buyers’.
[11]Exhibit 1- Ref 3 – email from Shaun Kaddatz to Mr and Mrs Chadwick & Mr and Mrs St Ange dated 29 May 2012.
Mr Chadwick challenged Mrs St Ange about the circumstances of the signing of the exclusive listing agreement. She stated that while Mr Kaddatz did not specifically say to the Chadwicks to suggest a lesser period that the options were discussed. Mrs St Ange said it was preferable to have the listing for 60 days. She said that ‘an auction can go ahead as an open listing but it was not usual, but it can be an option’.
Mrs St Ange said she believed that Mr Kaddatz explained the difference between sole and exclusive agency and she said she believed that the Chadwicks understood the various options. She said that Mr Kaddatz asked the Chadwicks at the signing of the agreement if they had any questions and that they said they did not have any. She said that in her opinion, they ‘seemed to understand what they were signing’.
Mrs St Ange said that at no time was ‘The Bank involvement’ ever mentioned, she said that all she knew was ‘that they had a mortgage and that they were doing it tough’. She said that the auction did not go well, and that she overheard a conversation between Mr Chadwick and Mr Bell involving what she thought was a ‘disagreement about the reserve price being too high’. She said she thought Mr Chadwick was ‘angry as he had a valuation for more than $3 million and that he wanted the reserve to be higher’ than that proposed by Mr Bell.
Mrs St Ange said that she was aware that the Chadwicks were unhappy with how the auction went and ‘were angry with Mr Kaddatz’. She said that the Chadwicks sent an email to the office on 4 June 2012 to ‘delete Mr Kaddatz from all advertising material’.
Mrs St Ange stated that the Chadwicks ‘had a prior exclusive listing for them before on another property that went to auction’. She said that she recalled going through the appointment agreement ‘page by page ... we have to be honest and have to tell vendors ... we discussed everything ... we discussed conjunct as well ... that’s our job’.
Evidence of Melissa Panepinto
Ms Panepinto said she was living in Adelaide when she inspected the property at Hope Island. She said that she was the current owner of 1133 Beechwood Drive. She said she signed the contract to purchase the property on 29 June 2012 in Adelaide. She said that she was sent the contract by electronic mail and that she signed it and sent it back to the Agent. She said she inspected the property between 2 – 4 weeks prior to signing the contract.
Ms Panepinto said that she looked at the property twice with the agent. She said after the second time she looked at the property, once she got home to Adelaide the agent rang her to make an offer. She said she wanted to offer $2.5 million but the agent told her the offer was not high enough. She said that the agent told her that the vendor had another person, a family member, interested in buying the property and that they would not accept an offer lower than $2.7 million. She said that she made the higher offer, signed the contract on 29 June 2012 and the property settled later in November 2012.
Ms Panepinto said that she had learnt later that it ‘was a lie that there was another person interested in the property’ as she was told after settlement that the ‘Banks were involved’.
Evidence of Mr Jose St Ange
Mr St Ange stated that he had worked for Ray White for four years and had been working selling real estate in the Hope Island area for 12 years. He said he had been involved with the marketing and sale of the Chadwicks’ property in Hope Island on an off before 2012. He said prior to 2012 he had tried to sell it once or twice before then, he said that it was ‘hard to sell’.
Mr St Ange said that he was present with his wife, Michelle and Shaun Kaddatz with the Chadwicks when they signed the Form 22A. He said Mr Kaddatz prepared and presented the listing agreement. He said that the representation was conducted when they were all sitting together and Mr Kaddatz ‘went through the checklist’. He said Mr Kaddatz went through the agreement … ‘every page’… and he told the Chadwicks he needed 60 days on the exclusive listing. He said Mr Kaddatz explained conjunction, as he said ‘we normally do not do that but would do so from day 1’ for the Chadwicks ‘due to the relationship we had with them’.
Mr St Ange said he recalls Mr Kaddatz explained the difference between sole and exclusive agency listing and he informed the Chadwicks that they would have to ‘let the other agents know we had the property on exclusive so to remove the property from their listings’.
Mr St Ange said that he believed that Mr Kaddatz made it clear to the Chadwicks that the listing was exclusive. He said that Mr Kaddatz put it in a way to the Chadwicks that they could have had a lesser period than 60 days for the listing but that Mr Kaddatz requested and said he ‘needed 60 days as it might be detrimental to the auction process’. Mr St Ange said he had no doubt in his mind that Mr Kaddatz gave a ‘proper explanation given to Part 5 of the Form 22A’.
Mr St Ange said that the Chadwicks did not raise any issue with the Banks being involved or taking possession, but he did understand that they were having a ‘hard time’. He said the Chadwicks were not happy using Mr Kaddatz but he said he told them Mr Kaddatz was the ‘auction guru’.
Mr St Ange said he recalled that the Chadwicks were happy to sign the exclusive agreement and that he told them he was going on holidays after the auction. He said that the Chadwicks were ‘satisfied with that’.
Mr St Ange said he had ‘either sold or traded between 5 – 6 properties for the Chadwicks’ and ‘found them to be reasonable in his dealings with them’.
Legislation
The Tribunal has jurisdiction to hear a matter that involves a claim to recover a debt or liquidated demand of money – a person to whom the debt is owed or money is payable.[12]
[12]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) s 12(4)(a).
If a party to a claim is entitled to recover from the other party an amount exceeding the sum of $25,000, a relevant person may agree to limit their claim to the prescribed amount in order to bring the claim within the Tribunal's jurisdiction for a minor civil dispute.[13]
[13]Ibid s 12(2).
Section 134 of PAMDA states that:
(1)The appointment must be in the approved form.
(2)The approved form must include a prominent statement that the client should seek independent legal advice before signing the appointment.
(3)An appointment that does not comply with subsection (1) is ineffective from the time it is made.
Section 135 of PAMDA states that the appointment of real estate agent – sole and exclusive agencies – the requirement is:
(1)If the appointment is for a sole or exclusive agency, before the appointment is signed, the real estate agent must discuss with the client whether the appointment is to be for a sole agency or an exclusive agency and specifically bring to the client’s notice the information in the form of appointment about—
(a)the proposed term of the appointment; and
(b)if the appointment is for the sale of residential property, the client’s entitlement to negotiate the term of the appointment up to a maximum term of 60 days; and
(c)the difference between sole agency and exclusive agency, unless the information has been brought to the client’s notice under section 134A; and
(d)the consequences for the client if the property is sold by someone other than the agent during the term of the appointment.
If a real estate agent commits an offence against s 134A or s 135(1) of PAMDA the consequences are that, the appointment of a real estate agent for the sale of residential property under a sole or exclusive agency is ineffective from the time it is made.[14]
[14]PAMDA s 137.
Findings
There are two limbs to the defence relied upon by Mr and Mrs Chadwick, if the first of terminated agreement fails, they seek to rely on, in the alternative, the defence that the agreement was ineffective from inception. I will deal with each of them separately. Firstly:
Did Ray White terminate the Exclusive Agency Agreement?
Mr and Mrs Chadwick’s evidence was that they terminated their exclusive agreement with Ray White due to being unhappy with the way they conducted the marketing and auction of their property. They said that they did not have to ‘ask’ to terminate the agreement they ‘told’ Ray White. I do not agree with the Chadwicks on that point. The exclusive agency agreement is clear in its terms and conditions in that the agreement has a start and an end date.
The listing agreement clearly states at part 5 that refers to open, sole or exclusive listing that
If you are dissatisfied with your agent’s service and want to appoint a new agent during the existing agents terms, and your property is sold during that term, you may have to pay: two commissions: a commission to each agent; and damages for breach of contract arising under the existing agent’s appointment.
The agreement also sets out the warning ‘If you need more information before you make a choice between open listing, a sole agency or exclusive agency, ask your legal adviser’.
I find that the Chadwicks had signed listing authorities before, were experienced property buyers and sellers and they had the assistance of legal advice, evidenced by legal letters written on their behalf to Ray White regarding termination of the exclusive listing authority.
I found the Chadwicks’ evidence was deliberate, concise, structured and yet at times inconsistent. They appeared to be clear in their evidence they gave about dealings with the agents while signing the exclusive agency agreement, stating that they were not explained anything and that they were not given options. The Chadwicks seek to rely on lack of knowledge, and naivety as a defence that they did not understand what they were signing, did not get legal advice and yet claim that they were not given options and explanation for the type of or term of the listing. I find that evidence hard to believe. I find it difficult to accept that Mr and Mrs Chadwick did not know the difference between sole and exclusive agency. They were experienced property owners having sold and brought at least 4 – 5 properties with Ray White in the past.
I accept the evidence of Mr and Mrs St Ange. They both gave detailed evidence how often they had negotiated property dealings with the Chadwicks in the past. Mrs St Ange said that she had known Mrs Chadwick for a long time and knew her well; she said that she had entered into an exclusive agency with them in the past, and that she was confident they knew what they were signing.
Mr and Mrs St Ange gave evidence that was consistent with each other. They both gave clear evidence of their recollection of events that occurred on the day the exclusive agreement was signed. They gave evidence at times that was slightly different that struck me as them both reflecting on different events that occurred that same day. I find that supports a finding that they had not colluded before the hearing to try and give the same evidence, or were not trying to fabricate the circumstances and facts, to support Ray White. Both Mr and Mrs St Ange recalled different events that day, they both appeared to answer questions honestly and were both prepared to concede if they could not recall some events clearly.
In contrast, the Chadwicks’ evidence was often contradictory. They said that they were not happy with Mr Kaddatz being involved in the marketing of their property. The said that they did not want him dealing with their property. Their lawyer wrote a letter stating that Mr and Mrs St Ange must conduct the auction and that the St Anges’ appointed Mr Kaddatz to assist them, despite the Chadwicks’ concerns. The letter suggests that the Chadwicks did not approve of Mr Kaddatz’s involvement, yet they did agree for him to be involved. That was evidenced by the fact that they agreed to Mr Kaddatz’s involvement when they signed the marketing schedule[15] specifically appointing Mr Kaddatz and Mr Jose St Ange as marketing agents. If they did not want Mr Kaddatz involved, they would not have signed the marketing schedule.
[15]Exhibit 1 – ref 5 – PAMD Form 22 A – Prestige marketing schedule – page 16.
The letter Mrs Chadwick wrote to the Office of Fair Trading suggests that after the auction conducted by Ray White, she contacted two real estate agents to make them aware that the property had not sold and that there had been a termination of the appointment. That is not the case and the dates do not match up. The issue of terminating the exclusive listing was evidenced only after the agents had shown prospective purchasers through the property and one was about to make an offer, around the end of May 2012. The letter is contradictory to what actually occurred as Hum and Fea were showing buyers through the property in late May and early June 2012 before termination of Ray White’s agreement was ever raised in a lawyer’s letter on 28 June 2012. A contract was signed on 29 June 2012, it is impossible to suggest that Mrs Chadwick arranged for an inspection, an offer, a contract and have it signed by a buyer in Adelaide in one day.
The Chadwicks allege that the contract for the sale of their property was not entered into until after the exclusive agency agreement was terminated. That is not correct. The contract for sale was signed on 29 June 2012. The lawyer’s letter purporting to terminate was sent 28 June 2012. Ray White did not respond until 5 July, 2 days after the exclusive listing ended on 3 July 2012. As at 29 June 2012, Ray White had not responded to the termination issue and the exclusive agency agreement was still in place. To suggest that the contract of 29 June 2012 was entered into after termination of the appointment has no substance.
Mr and Mrs Chadwick claim that they are auction novices, while they conceded they were familiar with selling properties, they said they were not experienced with auctions, that they did not get legal advice, that they were not explained the difference between sole and exclusive listing and were not told they could negotiate the length of the listing. I accept that the Chadwicks were stressed and anxious, the Bank was threatening foreclosure and they needed to affect an immediate sale. I find that they agreed for Mr Kaddatz to be involved with the auction process and the marketing campaign that they were content with an exclusive listing and for a 60-day period and that, they would have agreed to anything if it had assisted them to get the property sold as quickly as possible.
I find it hard to accept that the Chadwicks were novice property owners. They had bought, sold and traded up to six properties with Mr and Mrs St Ange alone in recent years. They were familiar with signing listing authorities, and had signed exclusive listing authorities and auction listing in the past.
The Chadwicks had the assistance of legal representation, evidenced by letters from their lawyers, including a letter seeking to terminate the exclusive agency agreement. The evidence of the Chadwicks that they believed that they did not have to seek permission from Ray White to end the exclusive agreement lacks credibility, as their actions contradict the oral evidence they gave. For example, if they believed they did not need the permission from Ray White to end the exclusive agreement they would not have instructed their lawyers to write to Ray White to seek their response regarding termination, ‘as a matter of considerable urgency’. I find that the Chadwicks had legal representation and they were advised as to their exclusive agency listing and the ramification of what that listing entailed. I am satisfied that is the likely reason that the lawyers wrote to Ray White on 28 June 2012 as the Chadwicks had concerns regarding the pending sale.
The evidence suggests that the Chadwicks’ concerns regarding the ramification of selling their property to a buyer not introduced through Ray White is the reason that the lawyers wrote to Ray White and used the ‘excuse’ that the financiers had taken possession so Ray White would agree for the agency agreement to be terminated. I find that it was likely the Chadwicks wanted Ray White to agree to immediately terminate the agreement on or around 28 June 2012 so they could sell the property to the waiting buyer in South Australia, on 29 June 2012 without recourse. On the evidence, the Chadwicks had the potential buyer waiting in the wings since the end of May/early June, and by mid June, the buyer was prepared to make an offer.
The evidence from Ms Panepinto was clear, unequivocal, and uncontested. I accept she inspected the Hope Island property in or around end of May 2012, between two or four weeks before she purchased the property. It is not in dispute that she inspected the property while it was under exclusive listing with Ray White. I find that she inspected the property on two occasions on the same day, with agents from Fea and Hum at Hope Island. It is not in dispute that there were negotiations for the purchase price of the property and that Ms Panepinto signed a contract to purchase the property on 29 June 2012 in Adelaide.
Ms Panepinto said she could not recall exactly the day she inspected the property as she looked at many properties with the agents. What is relevant is that she signed the contract and returned it on 29 June 2012; the day after the Chadwicks’ letter had been sent to Ray White, seeking to terminate the agreement. This was before the exclusive listing agreement had ended, and prior to Ray White giving conditional consent to terminate on 5 July 2012 due to the ‘bank taking possession of the property’.
I find that the solicitors’ letter to terminate the exclusive agency agreement was misleading and used as a weapon to induce Ray White to agree to terminate the exclusive agency agreement due to the ‘financiers taking possession of the property’. I find that Ray White, upon receiving the letter, would have considered that any agency agreement they had with the Chadwicks would have no effect in any event if the bank had taken possession and that any future dealing with the property would have to be between agent and mortgagee in possession. Ray White in fact responded in this way and said ‘as the property is now in the hands of the financiers any agreement in relation to the sale of the property would have to be an agreement between the financiers and any agency’.
On the evidence I find that Ray White gave conditional consent on 5 July 2012 to end the exclusive agency agreement and that subject to the condition being met, (mortgagee in possession) the agreement was to be terminated as at 3 July 2012. I find that Ray White would not have agreed to terminate the exclusive listing agreement except for the condition (my emphasis) that the bank had taken possession. I find that, as the condition was not met, as the bank had not actually taken possession of the property; the consent was not validly given. I find that the Chadwicks cannot therefore rely on the conditional consent given by Ray White as a defence to not pay them commission under the exclusive agency agreement for the sale of the Hope Island property.
Ray White said in their evidence that they were prepared to sell the property in conjunct with another agent. I cannot understand why the eventual selling agent was not prepared to conjunct, other than the obvious point that they would have received 70% commission rather than 100%. Ray White marketed the property and spent considerable time and effort in trying to affect a sale; they should be entitled to some commissions in the circumstances. A reason as to why the Chadwicks did not insist on a conjunct with the new agent and Ray White is a mystery, as the sale through conjunct would have achieved the same result for them, without complicating issues of disputed commissions between two agents.
I find that the property sold during the exclusive agency period. Ray White would, technically be entitled to the entire commission amount of more than $69,000.00. However, I note they have limited their claim for the lower amount of $25,000.00, which they say is the amount they would have received in a conjunct.
I strike out the first limb of the defence relied upon by the Chadwicks and their defence to not pay commission due to the fact that the exclusive agreement was terminated by consent, that defence must fail. I will now consider the second limb of their defence:
Was the Agency Agreement ineffective from inception due to breaches by the Agent of s 137 of PAMDA?
Both Mr and Mrs St Ange gave concise, detailed and consistent evidence about the presentation of the Exclusive Listing Agreement by Mr Kaddatz to Mr and Mrs Chadwick and both referred to his ‘checklist’. I accept this evidence as Mrs St Ange went further, and I found she gave honest and open evidence that she had not ‘seen the checklist be used before’ and was ‘so impressed with it’ that she now ‘uses it’ in her own practice. Both Mr and Mrs St Ange impressed me as witnesses and they both gave what appeared to be an honest recollection of the meeting at the Chadwicks’ home when they signed the exclusive agreement. I accept that their evidence is more a reflection of what occurred on that day and that the Chadwicks’ recollection of the events during that meeting is less clear. I accept that the Chadwicks were stressed, anxious, probably overwhelmed, as the bank was threatening foreclosure on their home and they needed an immediate and urgent sale. I find that the Chadwicks agreed for Mr Kaddatz to be involved with the auction, that they were content with an exclusive listing and for a 60 day time frame, and that they wanted the property sold as quickly as possible.
The evidence of Mr and Mrs St Ange was that the presentation of the Exclusive Agreement was conducted in a thorough manner and that Mr Kaddatz went through the agreement page by page, carefully and in depth. They both said that Mr Kaddatz used a checklist to go over each and every aspect of the agreement, and they were impressed with his checklist. They both stated that Mr Kaddatz discussed the involvement of other agents and conjunctions and specifically the exclusive agreement requirements.
I am satisfied and I accept the evidence of Mr and Mrs St Ange that Mr Kaddatz went through the exclusive appointment agreement with the Chadwicks in a thorough and appropriate manner. Mr and Mrs St Ange were both consistent in their evidence that the Chadwicks signed the appointment agreement after an explanation of all options and that the Chadwicks had no queries regarding the content and nature of the agreement. I am satisfied that the Chadwicks knew what they were signing and hence their desire to later obtain legal advice and assistance to have it terminated after the auction and when another agent had found a potential buyer.
I find it impossible for the Chadwicks to expect the Tribunal to believe that following a termination letter on 28 June, they were able to arrange a sale in one day. I find that the prospective buyer looked at the property in or around late May 2012. She received a contract and signed it on 29 June 2012 in South Australia. It is clear on the evidence that Ms Panepinto both inspected and made an offer and signed the contract during the exclusive appointment period.
I find that the appointment was made in the approved form[16] and from the evidence, it is clear that the appointment included a prominent statement in the agreement that the Chadwicks should seek independent legal advice before signing the appointment.[17]
[16]Pursuant to s 134(1) of PAMDA.
[17]Pursuant to s 134(2) of PAMDA.
I accept the evidence of Mr and Mrs St Ange and am satisfied on their evidence that Mr Kaddatz explained the unique and special conditions of the exclusive listing and that he informed Mr and Mrs Chadwick as to the difference between sole agency and exclusive agency.
I accept that Mr Kaddatz discussed with the Chadwicks that the appointment was an exclusive agency and specifically brought it to their attention that the appointment was for a period of 60 days. Mr St Ange said that the Chadwicks were informed that they could have a shorter period than 60 days but that it would be ‘detrimental to the auction process’. I accept Mr St Ange’s evidence in that regard, and I find that Mr Kaddatz did explain the reasoning behind the time required, due to the auction process. I find that the Chadwicks were told that they could request a lesser period. I find that they would have accepted their agents’ opinion and preference for 60 days and were advised that a shorter period might be detrimental to the auction process. I find that the Chadwicks knew they could have a shorter listing period but that they had confidence and trust in their agent and agreed to the 60 days listing period.
I find that the conversation between the parties regarding removing the property from the listing of all other agents as evidence consistently given by both Mr and Mrs St Ange. I find that this conversation did occur and it was likely because Mr Kaddatz was emphasising the consequences to the Chadwicks if someone other than Ray White sold the property during the term of the appointment. I accept the conversation is consistent with a finding that he was giving them warning to remove the property from other agents due to the exclusive listing appointment.
I find on the evidence that it was clear that the Chadwicks were desperate to sell the property. They had the banks banging on their door and threatening foreclosure. I can understand and sympathise that under pressure and stress they focused on selling the property and repaying mortgages to the bank rather than thinking about their exclusive listing agreement, or how that agreement might legally bind them. I accept that the Chadwicks were more likely focused on a potential buyer that Fea and Hum had ready to purchase the property that they so desperately needed to sell.
I accept the evidence of Mr and Mrs St Ange that Mr Kaddatz used a ‘checklist’ to present the exclusive listing agreement to the Chadwicks. I find that in doing so, Mr Kaddatz fulfilled his obligations under PAMDA.
I find that the Chadwicks were experienced property owners who had bought and sold many properties before. I find that they were well aware of the requirements and their obligations under an exclusive listing authority and were concerned to the point they instructed their solicitor to write to Ray White seeking termination. I reject Mr Chadwick’s evidence that he was ‘telling’, not ‘asking’, Ray White that they were terminating the listing agreement. I do not accept that for two reasons, firstly Mr Chadwick’s instructed lawyer wrote a letter stating there were two reasons that the Chadwicks were seeking to terminate. Firstly, that the agency somehow had breached the terms and conditions of their appointment with serious allegations about the conduct of Mr Kaddatz. In the circumstances I find that unless the allegations had been proven the agreement was still valid and in effect. Unless either Ray White agreed to terminate, or the agent or agent’s breach of their obligations under PAMDA were proved, the agreement bound the parties. The second reason particularised in the letter seems more compelling in that the lawyer states that ‘our client’s financiers have taken possession of the properties’. This point alone, in the letter would have been the inducement for Mr Bell, of Ray White, to concede the termination, as he would be well aware that if that was the case, the owners no longer had control or permission to sell the property. Mr Bell would have been aware that any future negotiations for the sale would rest in the control of the bank and mortgagee in possession.
It is not in dispute that the bank did not take possession and sell the house but that the Chadwicks sold the property themselves through Hum and Fea Real Estate.
I find that the exclusive listing authority was valid until its expiry on 3 July 2012.
The difference between an exclusive agency and a sole agency is the extent of the entitlement of Ray White to receive an agreed commission or other reward on the sale of the Hope Island property.[18]
[18]PAMDA s 19(1).
As Ray White had an exclusive agency, they are entitled, on the sale of the Hope Island property and in accordance with the terms of an agreement with the Chadwicks, to receive an agreed commission or other reward, whether or not the selling agent is the effective cause of the sale.[19] (my emphasis added)
[19]Pursuant to s 19(2) of PAMDA.
In this case, although Ray White were not the agents who caused the effective sale of the property I find that at the date of the sale, being 29 June 2012, they held an exclusive listing authority with the Chadwicks for the sale of their property at Hope Island.
The exclusive listing authority that was signed by the Chadwicks states at 2.1 of the Agreement that:
Entitlement to Commission
2.1The 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, whether within the term or after the term, where the relevant person is the effective cause of the sale within the term, provided that:
(1)the contract of sale of the property is completed; or
(2)the client defaults under the contract of sale and that contract is terminated by reason of or the 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, or
(4)the contract of sale is terminated by mutual agreement of the client and the buyer
2.2For the purpose of Clause 2.1 a relevant person is, where the appointment is for;
(1)an exclusive agency, any person (including the client) or
(2)a sole agency, any person other than the client, or
(3)an open listing, the agent only.
I find that, as the exclusive listing was current and in effect at the time the property was sold, Ray White were entitled, pursuant to clause 2.1, to the full commission on the sale of the property and that would have amounted to a sum, according to Ray White, in excess of some $69,000.00.
There were five matters the Chadwicks’ letter from their lawyer dated 28 June 2012 raised as an excuse to terminate their exclusive listing agreement. The letter relates to a reference to the
agents going on annual leave, the appointment of Mr Kaddatz to the auction process, advice given to them to withdraw their property from auction due to unrealistic price expectations, unsatisfactory offers to purchase the property prior to auction, allegations that Mr Kaddatz contacted the valuer to allegedly express his concerns that the valuation on the property was too high.
The matters are in my view either minor, untrue, not in the power of the agents or without merit. For example, it is incorrect that the agents appointed Mr Kaddatz; the evidence suggests that the Chadwicks themselves agreed and signed a marketing schedule appointing Mr Kaddatz to market the property. The agents cannot control the amount a prospective purchaser offers for the property, an agent cannot be blamed for any offer, only the market will dictate that. There is no proof that there were factors or evidence that any Ray White agent has breached their appointment agreement.
The termination due to the alleged breaches by the agents was denied by Mr Bell and in my view would have been difficult for the Chadwicks to prove.
There was no evidence presented by the Chadwicks that supports their allegations that any conduct by the Ray White agents would have warranted terminating their exclusive listing agreement. The allegations in my view are mostly inconsequential, or without evidence to substantiate.
While I understand, the Chadwicks were unhappy with Ray White for the marketing and selling of their property that alone does not give them the right to terminate the exclusive agency appointment. There is no proof that the agents have breached the terms of their appointment and the Property Agents and Motor Dealers (Real Estate Agent’s Practice Code of Conduct) Regulations 2001 and their defence based on this ground has no merit. On the evidence, I cannot make a finding that the agents from Ray White neglected their obligations under s 134 and s 135 of the PAMDA nor committed an offence or offences against PAMDA.
I find that the appointment agreement was in the approved form and that the agreement included a prominent statement that the clients should seek independent legal advice before signing the appointment.
I find that Ray White have waivered their rights to claim anything more than the $25,000 being the jurisdiction limit for the Tribunal and they state that this is the amount they would have received if the selling agent had conjunct with them. I find their position in this regard to be more than fair and reasonable in the circumstances.
For the reasons I have given I find in favour of Ray White and am persuaded on the evidence that they are owed commissions’ payable under their exclusive agreement that ended 3 July 2012 for the sale of the Hope Island property on 29 June 2012. I find that the Chadwicks must pay them the sum of $25,000.00 and also pay the bailiff and filing fee plus interest on the claim sum, calculated from the date of the filing of the original claim to the date of this decision.
This case is an unfortunate example of a parties’ failure to obtain proper legal advice before attempting to terminate an exclusive listing contract with their listing agent. The agreement clearly stated the terms and conditions of the listing agreement and many warnings including what occurs if a breach of specific terms and condition occurs and the consequences. The Chadwicks obtained legal advice but for whatever reason proceeded to sell their property through another agent while still under a contractual agreement that gave Ray White an exclusive listing authority to sell the Hope Island property.
The lesson in this unfortunate series of events is that had the Chadwicks and their selling agent either waited a few more days and had the prospective buyer execute a contract after 3 July 2012 or conjunct with Ray White to sell the property, this commission dispute would not have arisen.
The order I will make is as follows:
1. That the Respondents pay to the Applicant the sum of $26,572.10 within 14 days being for:
a.Claim $25,000.00
b.Interest $1,250.00
c.Filing fee $284.60
d.Bailiff fee $ 37.50
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