Presti & Muscat-Presti v Maloney's the Real Estate Agent Pty Limited (Civil Disputes)

[2009] ACAT 47

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

PRESTI & MUSCAT-PRESTI v MALONEY’S THE REAL ESTATE AGENT PTY LIMITED (Civil Disputes) [2009] ACAT 47

AA 11 of 2009

Catchwords:             Real estate agent-agency agreement - failure of agreement to comply with Act and regulations- strict compliance required to recover commission or expenses- no claim on a quantum meruit basis- no estoppel arises against a statutory prohibition

Legislation:               Agents Act 2003 ss 99, 100,

Property Stock and Business Agents Act 2002 (NSW) ss 18, 55

Agents Regulations 2003 s15

Cases:Sayed v. Ace Business Brokers Pty Ltd. (Commercial) [2006] NSWCTTT 518

Terry Pfeiffer v. Connors, [2000] NSWSC 452

Investmentsource v. Knox (2002) NSW SC 710

Overmyer Industrial Brokers Pty Ltd v. Campbells Cash and Carry Pty Ltd [2003] NSWCA 305

Tribunal:       Mr C.G. Chenoweth   Acting Presidential Member

Date of Orders:  13 November 2009
Date of Reasons for Decision:         13 November 2009

AUSTRALIAN CAPITAL TERRITORY            )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          AA 11 of 2009

BETWEEN:

JASON PAUL PRESTI &

ROBYN CARMEN MUSCAT-PRESTI

Appellants

AND:

MALONEY’S THE REAL ESTATE
AGENT PTY LIMITED

Respondent

TRIBUNAL:Mr C.G. Chenoweth

DATE:  13 November 2009

ORDER

1. That this appeal be allowed, and the decision of 10 February 2009 in this matter be set aside.

   
   
   

2. That the respondent pay to the appellant the sum of $400.00.

…………………………….
  Mr C.G. Chenoweth
Acting Presidential Member

REASONS FOR DECISION

1. This matter is an appeal from a decision of Member Thomson dated 10 February 2009. The decision was supported by reasons for decision dated 3 June 2009. In the decision under appeal, the Member ordered that the appellant pay to the respondents the sum of $3,366.00 together with costs of $112.00, a total of $3,478.00.

2. The appellants had engaged the respondent as a real estate agent to seek to sell the appellant’s house in Canberra. The parties entered into a written agreement dated 5 February 2008 ("the agreement"). The agreement was in evidence before the Tribunal.

3. The respondent was unsuccessful in selling the appellants house. The respondent claimed the costs of advertising the property as provided for in the agreement, and also claimed other incidental expenses of attempting to sell the property.

4. The reasons for decision of 3 June 2009 indicate that in the hearing before the Member, there was argument about whether the respondent had made sufficient efforts to sell the property and whether genuine offers to purchase had been made, or had been put to the vendors. These issues were not pursued on appeal. The only issue that this Tribunal has to decide is whether the agreement complied with section 100 (1) of the Agents Act 2003 ("the Act)" and the Agents Regulations 2003 made under it (“the Regulations”) and if not, the consequence of that failure.

5. In the decision under appeal, the Member indicated that even if there were failures to comply with the Act (which must include the detail in the schedules to the Regulations) he did not believe that the failure would necessarily result in the agreement being rendered unenforceable. He noted that the defects were not in any essential terms of the contract, nor were of such a nature as to give rise to a claim for damages by the appellants. He considered the agreement valid and enforceable. He noted that Mr Presti "basically admitted that he was using the information supplied by the (Department of Fair Trading officers) in an attempt to have the contract rendered or declared invalid and thus avoid having to pay the advertising and other associated costs." (Paragraph 37)

6. The appellants by an appeal notice dated 12 June 2009 appeal from this decision on two grounds: firstly that a failure of the agreement to comply with the Act made the agreement unenforceable, and secondly, that the Member should have held that the respondent real estate agency was prevented from recovering commission or expenses where the agreement did not comply with section 100 of the Act, and section 15 (i) of the Regulations. The notice of appeal also set out particulars of the manner in which the appellants contended that the agreement failed to comply with the Regulations.

7. By its notice of response dated 22 July 2009, the respondent did not admit generally the grounds of the appeal. It did admit that the agreement failed to comply with the Regulations in respect of two matters, and denied two other particulars of failure to comply with the Regulations claimed by the appellants. The respondent denied any detrimental effect on the appellants in any event. The respondent denied that the agreement was unlawful under the provisions of the Act.

8. The respondent also claimed in its response that the request to place advertising and incur other expenses amounted to a representation by the appellants to the respondent that these costs would be paid. It contended that the request for further advertising constituted a separate oral contract. There was a further claim by the respondent that the appellant’s silence and failure to advise the respondent that they would not pay the costs amounted to a representation by silence that was separately enforceable. The respondent claimed that by reason of all of these matters, the appellants were estopped from mounting the claims in the appeal notice.

9. The appellants filed a notice of reply dated 31 July 2009. In it, they responded that whatever representations may have been inferred from the agreement, a failure to comply with section 100 of the Act meant that the respondent could not recover any expenses, and that no estoppel in the face of the statute would lie.

10. Counsel for both the appellants and the respondent filed written submissions outlining the arguments, and referred to a number of authorities on a similar provision in the New South Wales Property Stock and Business Agents Act 2002. While section 55 of that act, and its predecessor in similar form (sections 42AA and 42A of the Property Stock and Business Agents Act 1941), have been the subject of litigation in New South Wales, there did not appear to be any decision on the equivalent provision, section 100 of the Act, in the Territory.

11. The Act provides for both the system of licensing real estate agents, and for the minimum content that must be in forms of agreement used in real estate transactions. Section 18 provides that a person commits an offence if the person is not licensed as a real estate agent, and that person carries on the business of a real estate agent. There was no argument in this case that the respondent was a licensed real estate agent, nor that the transaction represented by the agreement was one forming part of the business of a real estate agent.

12. Part six of the Act regulates the contents and enforceability of real estate agency agreements. Section 99 provides that this part of the Act applies to services provided in the sale of residential land.

13. Section 100 (1) of the Act is headed "No commission or expenses without agency agreement.”

It provides as follows:

“ A licensed agent is not entitled to commission or expenses from the principal for services provided by the agent for the principal unless-

(a)the services were carried out under a written agreement signed by the principal and the agent (an agency agreement); and

(b)the agency agreement-

(c)identifies the rebates, discounts, commissions and expenses that the agent may receive; and

(d)estimates the amount of any rebates, discounts, commissions and expenses; and

(e)the agency agreement complies with the regulations; and

(f)(not relevant).

14. The Regulations provide detailed requirements for the content of agency agreements. In view of the acknowledgement by the respondent that the agreement did not comply in at least two respects with the Regulations it is not necessary to decide whether the other two failures to comply alleged by the appellant had been made out. Section 100 (1) (c) of the Act does not distinguish between degrees of failure to comply.

15. The question for this Tribunal is whether in the light of the respondent's failure to comply with all of the Regulations in the preparation and completion of the agreement, section 100 of the Act prevents the respondent from claiming expenses provided for in, or resulting from entry into, the agreement.

16. The ordinary interpretation of section 100 (1) of the Act leads to the conclusion that all of the requirements must be complied with as a condition of the agent being entitled to commission or expenses. While counsel for the respondent encouraged me to draw a distinction between commission and expenses, there is nothing in the wording of the section to support such an argument. The agent is entitled to neither unless the section is complied with.

17. The requirement for strict compliance may be a harsh outcome for the agent, particularly where the failure cannot be said to have affected the client in any real way and the parties have otherwise conducted themselves in accordance with the agreed arrangements, but it has been the outcome in a number of cases in New South Wales where a similar provision under the equivalent legislation has been considered.

18. Section 55 of the Property Stock and Business Agents Act 2002 of New South Wales is in very similar form and structure to section 100 (1) of the Act. The terms of that section and its predecessor were considered by Senior Member Durie of the New South Wales Consumer Trader and Tenancy Tribunal in a matter of Sayed v. Ace Business Brokers Pty Ltd. (Commercial) [2006] NSWCTTT 518. In that case, the Senior Member reviewed the earlier decisions of the Supreme Court in relation to the preceding section to section 55, (sections 42A and 42AA of the 1941 Act) and concluded that before the respondent in that case was entitled to commission, "the agency agreement had to comply strictly with the terms of the act and (regulations)" (paragraph l).

19. In the New South Wales Supreme Court case of Terry Pfeiffer v. Connors, [2000] NSWSC 452, Windeyer J. considered the implications of a failure by a real estate agent to comply with the strict provisions of section 42AA of the Property Stock and Business Agents Act 1941. The provisions of that act also required that the agreement contains such terms (if any) "as may be prescribed" and was in similar terms to both the later New South Wales Act of 2002 and the Act itself. While His Honour made it clear that in that case the claim by the vendors of the property to recover commission that they had paid some two years in the past was "completely unmeritorious", he upheld the decision of the magistrate in the court below that not only was the agreement not enforceable but that the agent had to refund commission in circumstances where a copy of the agreement was not sent to the vendors within the prescribed time.

20. The Supreme Court of New South Wales considered the issue further in the case of Investmentsource v. Knox (2002) NSW SC 710 (15 August 2002). In this case, Barrett J. found that an agreement between commercial parties relating to a property development amounted to an agreement that had to be regulated by sections 42AA and 42A of the Property Stock and Business Agents act 1941. The failure to comply with the strict provisions of that act rendered the commission that had been agreed under the commercial agreement unenforceable.

21. In view of the consistent authority in New South Wales, and the provisions of the Act itself, I consider that strict compliance with the Act is a necessary precondition to the enforcement of the agreement by a real estate agent or the recovery of any money under it.

22. In its written submissions the respondent contended that notwithstanding the provisions of section 100 (1) of the Act, the respondent should be able to claim its expenses from the appellant on the principle of equitable estoppel. Reference was made to the New South Wales Supreme Court case of Overmyer Industrial Brokers Pty Ltd v. Campbells Cash and Carry Pty Ltd [2003] NSWCA 305. In that case, a real estate agency during the sale of a property terminated all of its agency agreements when it updated its marketing policy. No new agreement was then entered into and when seeking commission upon sale of the property, the plaintiff relied upon principles of equitable estoppel on the grounds that the defendant represented a commission would be paid, and thus encouraged the plaintiff to its detriment to continue to act in the sale of the property. In that case, Young C.J. confirmed the general principle that a party cannot rely on an estoppel in the face of a statute but noted that the policy depended upon the nature of the enactment, the purpose of the provision and the social policy behind it. The application to uphold the agreement on the basis of an estoppel was unsuccessful. A similar outcome was reached in the case of Terry Pfeiffer v. Connors.

23. In the present case, the plain meaning of section 100 of the Act indicates that the intention of the legislature was that unless all of the requirements of the Act and Regulations were complied with there could be no enforceable agreement nor recovery of costs under it. To allow the respondent to recover those costs, calculated by reference to and arriving directly out of the agreement, would be giving to the respondent “commission or expenses without an agency agreement” which section 100 (1), both in its heading and opening words, specifically says that the agent is not entitled to. To override the words of the statute in this manner is to ignore their plain meaning.

24. The decision of the Tribunal is that the order of Member Thomson is set aside, and that the respondent is not entitled to recover any of its expenses under or arising out of the agreement.

25. The appellant sought a further order that its filing fee of $400 should be paid by the respondent to the appellant. Counsel for the appellant noted that the filing fee on the original application had been awarded to the respondent by the Member in that decision. Counsel for the respondent before me did not oppose the order for the payment of the filing fee on the appeal. In the circumstances, I consider that the appropriate order is that the respondent pay to the appellant the filing fee of $400 paid in lodging this appeal.

…………………………….
  Mr C.G. Chenoweth
Acting Presidential Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A  FILE NO:      AA 09/11

APPLICANT:                JASON PAUL PRESTI &
ROBYN CARMEN MUSCAT-PRESTI

RESPONDENT:            MALONEY’S THE REAL ESTATE AGENT PTY LIMITED

COUNSEL APPEARING:       APPLICANT:          

RESPONDENT:

SOLICITORS:      APPLICANT:          MR BUNDOCK

RESPONDENT:      MR MEAGHER

OTHER:  APPLICANT:          

RESPONDENT:      

TRIBUNAL MEMBER/S:       MR C.G. CHENOWETH

DATE/S OF HEARING:          6 OCTOBER 2009     PLACE: CANBERRA

DATE/S OF DECISION:          13 NOVEMBER 2009PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( )        CASE NOTE ( )        UNREPORTED DECISION ( )

COMMENTS: