Reliance Taylors Lakes Pty Ltd v Latin America Pty Ltd
[2020] VCC 1584
•5 October 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-20-00509
| RELIANCE TAYLORS LAKES PTY LTD | Plaintiff |
| v | |
| LATIN AMERICA PTY LTD & ORS | Defendant |
---
JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 September, 1 October 2020 | |
DATE OF JUDGMENT: | 5 October 2020 | |
CASE MAY BE CITED AS: | Reliance Taylors Lakes Pty Ltd v Latin America Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1584 | |
REASONS FOR JUDGMENT
---
Subject: Claim for agent’s commission
Catchwords: Claim for agent’s commission; commission pursuant to standard REIV form of exclusive sales authority; whether properties `sold’ and commission earned where contracts subject to unfulfilled conditions precedent to performance; application for summary dismissal of claim; not sufficiently certain to justify summary judgment; Estate Agents Act 1980 (Vic) sections 49A and 50; Deficiency in rebate statement; entitlement to commission based on deficient exclusive sale authority barred; no effective estoppel available
Legislation Cited: Foreign Acquisitions and Takeovers Act 1975 (Cth); Estate Agents Act 1980; Civil Procedure Act 2010; Justice Legislation Miscellaneous Amendment Bill 2018
Cases Cited:Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR; Hausman v Abigroup Contractors Pty Ltd [2009] VSCA 288; Real Estate City Pty Ltd v Moustafa [2005] VSCA 181; LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52; Trotter v. McSpadden and Another [1986] VR 329; CA and CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd [2017] VSCA 11; Hamilton Finlay Pty Ltd v Aojia Investments Pty Ltd [2017] VSC 319; Kukolovski v Georges [2011] NSWSC 359; Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd (2002) 56 NSWLR 27; Cahill v Kiversun Pty Ltd; Molonglo Group (Australia) Pty Ltd v Cahill [2017] VSC 641; Newmont Pty Ltd v Laverton Nickel NL ((1982) 44 ALR 598; Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153; Sumampow v Mercator Property Consultants Pty Ltd [2005] WASCA 64; Advisory Services Pty Ltd v Augustin & Anor [2017] VCC 1195
Judgment: 1. Within 14 days of this day the parties must bring in short Minutes to give effect to these reasons.
2. Costs reserved.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr H Kirimof | Wyndham Partners Lawyers |
| For the Defendants | Mr T L Bevan | Verduci Lawyers |
HIS HONOUR:
Background
1 The defendant, Latin America Pty Ltd (“Latin America”), was the registered proprietor of land at 53 Wattle Road, Maidstone, with an area of approximately 1,500 square metres and zoned as Industrial 3 (affidavit of Mario Enrique Murga Turcios, 2 September 2020, paragraph 2).
2 Latin America investigated the possibility of having the land rezoned for residential use. Discussions with a planning officer at the responsible authority, Maribyrnong City Council, in mid-2017, indicated that an environmental audit of the site would be required. An environmental audit was carried out by Tomkin and Taylor Pty Ltd, raising issues relative to the former use of the site as a bus depot with potential contamination from stored fuel. There was also an issue as to disused underground storage tanks. (Mario Enrique Murga Turcios affidavit, paragraphs 3 and 4).
3 On 6 August 2018, Latin America executed an exclusive sale authority with the plaintiff, Reliance Taylors Lakes Pty Ltd (“Reliance”). (Mario Enrique Murga Turcios affidavit, paragraph 5, Exhibit MEMT-5).
4 On 10 October 2018, Latin America and Hong Tin Investments Pty Ltd (“Hong Tin”) entered into a contract for the sale of the property for a total price of $2,150,000, with a 10 per cent deposit of $215,000 and the balance payable on the scheduled settlement date of 3 December 2018.
5 The contract was in a standard form, apparently as prescribed by the Estate Agents (Contracts) Regulations 2008. The contract included the following special condition:
“*UP ON (sic) ACCEPTANCE OF THIS OFFER LATIN AMERICA PTY LTD (VENDOR) SHOULD PROVIDE RECEIPTS FOR APPLCIATION FOR TOWN PLANNING PERMITS OF 10 TOWNHOUSES. UNIT 1 TO 10 AND ALL ORIGINAL COPIOES OF PLANS AND PERMIT WORK DONE UNTIL SETTLEMENT.” [There were then inserted in manuscript the words “at settlement”] (Exhibit AJ-1 to the affidavit of Apoorva Jaiswal, sworn 29 September 2020)
6 There was further manuscript: “*Receipts for application will be provided in seven days”.
7 There was a further typed special condition as follows: “*THIS OFFER IS SUBJECT TO FIRB APPROVAL”. (Mario Enrique Murga Turcios affidavit, paragraph 6, Exhibit AJ-1 to the affidavit of Apoorva Jaiswal, sworn 29 September 2020)
8 The reference to “FIRB” is apparently to the Foreign Investment Review Board established by the Commonwealth Foreign Acquisitions and Takeovers Act 1975. (Mario Enrique Murga Turcios affidavit, paragraph 8) No approval from the Board was forthcoming. (Ibid, 9)
9 By email dated 20 November 2018, the solicitors for Hong Tin stated a desire on behalf of their client to “cancel the contract and get the refund of deposit monies”. The email cited the cost of removal of the underground storage tank. Mr Murga Turcios, a director of Latin America, instructed its solicitor to agree to the termination of the contract and return of deposit. (Mario Enrique Murga Turcios affidavit, paragraphs 11 and 12)
10 Latin America then executed a further exclusive sale authority, apparently on an REIV standard form. The text under the heading “Item 6: Rebate Statement – No rebate will be received” was struck out and initialled. On 20 June 2019, Latin America and AJM Capital Pty Ltd (“AJM”) and/or nominees entered into a further contract for the sale of the land. There were extensive printed special conditions and a further page of printed “further special conditions”. The first of these provided that the contract was:
“subject to and conditional on [Latin America] obtaining [a planning permit]…for the construction of at least 10 townhouses (all of which must have at least three bedrooms and the Permit must endorse plans that are substantially the same as the plans attached to the Vendor Statement…within two years of the day of sale”. (Exhibit AJ-2 to Jaiswal affidavit)
11 There was a second “condition precedent” based on the purchaser undertaking “due diligence”, a term which was not defined in the contract. The purchaser was entitled to terminate the contract if it was “not satisfied with its due diligence”. The planning permit application failed. (Mario Enrique Murga Turcios affidavit, paragraph 17)
12 On 12 July 2019, AJM terminated the contract. (Mario Enrique Murga Turcios affidavit, paragraph 18, MEMT12)
This proceeding
13 Solicitors acting for Reliance commenced the present proceeding seeking payment of agent’s commission upon “sales” to Hong Tin and AJM.
14 In its Statement of Claim, Reliance recited the various exclusive sales authorities and the sales contracts. With respect to the sale to Hong Tin, it sought commission under the terms of the October 2018 exclusive sale authority. Alternatively, under the August 2018 exclusive sale authority. In both cases, claims were made against Mr Turcios and Ms De Murga as guarantors of Latin America’s liability, allegedly in accordance with the terms of the authorities.
15 As to the second sale to AJM, Reliance claimed commission pursuant to the April 2019 exclusive sale authority, and likewise alleged guarantee liability against Mr Turcios and Ms De Murga.
16 By their Defence and Counterclaim, the defendants denied liability generally as to the April 2019 exclusive sale authority. They said that it “did not comply with s49A(1)(iii) of the Estate Agents Act 1980 in that the April 2019 ESA did not contain a compliant rebate statement”. Consequently, they said Reliance was “not entitled to sue for or recover any commission in respect of the AJM Contract as it had not complied with s49A(1)…”.
17 They made a counterclaim against Apoorva Jaiswal as a defendant to their counterclaim, alleging unconscionable conduct. Mr Jaiswal was a director of Reliance and its “representative when dealing with the defendants”.
18 In its reply, Reliance said that Hong Tin had originally offered $2.1 million for the land, which Latin America and the other defendants rejected, stating that they wanted “a bit more at least 2.3 [million dollars]”, and then agreed to an increase in commission from that provided for in the 2018 exclusive sale authority. Reliance, it was said, detrimentally relied on this and:
“forewent the opportunity to obtain a binding offer from Hong Tin Investments and pursue the commission under the August ESA and proceeded to continue making endeavours to achieve a higher sale price”.
This application
19 Solicitors for the defendants filed a Summons dated 4 September 2020, seeking summary judgment in favour of the defendants “pursuant to s62 of the Civil Procedure Act 2010 and Part 3 of Order 22 of the County Court Civil Procedure Rules 2008”. That application came on for hearing before me.
20 Having heard counsels’ arguments upon the application, I invited the parties to consider whether it might be appropriate to have at least one of the major arguments as to the proper construction of the standard provisions in the exclusive sale authorities dealt with finally as a separate question. Having had the opportunity to consider the matter overnight, counsel for the defendants, Mr Bevan, favoured the suggested course. He propounded a form of “preliminary questions” for the purposes of Rule 47.04.
21 Mr Kirimof, on behalf of the plaintiff, however, contended that the matter should be dealt with as a Summons under s62 of the Civil Procedure Act. He resisted any attempt to convert the application into a determination of a separate question on a final basis.
22 Given that the possibility of the determination of the separate question was raised only from the Bench and “on the run”, I considered it would be inappropriate to proceed in that manner in the absence of consent from both parties. The application, therefore, proceeded in its original form.
Nature of application
23 Section 62 of the Civil Procedure Act provides:
“A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.”
24 The authoritative analysis of the nature and tests for summary judgment application under the Civil Procedure Act is the decision of the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27.
25 Blanalko’s case dealt with an application under s63 of the Act, which provides as follows:
“(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2) A court may give summary judgment in any civil proceeding under subsection (1)—
(a)on the application of a plaintiff in a civil proceeding;
(b)on the application of a defendant in a civil proceeding;
(c)on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.”
26 Section 64 of the Act empowers the Court, in the circumstances therein described, to allow a matter to proceed to trial despite a finding that a claim or defence has no real prospects of success. Neither party has placed any reliance on s64 of the Act, so I can put it to one side.
27 Warren CJ and Nettle JA (as he then was), having analysed the text of s63 and various authorities concluded:
“It follows that, for present purposes, the test under s 63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success; that the ‘real chance of success’ test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent’s case is not ‘hopeless’ or ‘bound to fail’, it does not have a real prospect of succeeding.” (Ibid (2013) 42 VR 27, 39)
28 Summarising the conclusions in the final paragraph of the joint judgment, their Honours said:
“…
d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.” (Ibid (2013) 432 VR 27, 40)
29 These formulations of the test for summary judgment applications under the Civil Procedure Act do not, so far as I can see, entail any proviso permitting the summary determination of a proceeding based upon a view that they can be decided based on a determination of a question of law not dependent upon evidence or cross-examination at trial, such that the judicial officer dealing with the summary judgment application might be thought to be in as good a position to determine that question of law as the judge presiding at trial. Put another way, the high level of certainty demanded and the justification for a summary determination seems to apply alike to determinations proceeding from questions of law as from questions of fact.
30 I turn therefore to the submissions of counsel.
Submissions by the Defendants for summary dismissal
31 The defendants were represented by Mr T L Bevan of counsel. He said, first, that since the account of events given by the defendants’ deponent, Mr Turcios, was not contradicted by material filed on behalf of the plaintiff, his account of events stood unchallenged. He referred Hausman v Abigroup Contractors Pty Ltd [2009] VSCA 288 [63]-[65]. He said that the various exclusive sale authorities were in REIV standard form (subject to the deletion in the April 2019 authority) and that in each of them Item 1 provided that a commission was payable to the agent where the property was “sold”. He said general condition 1.13 defined the word “sold” in the following terms:
“‘Sold’ is the result of obtaining a binding offer and ‘sale’ and ‘sell’ have corresponding meanings.” (Submission of Plaintiff, paragraph 7)
32 Next, he referred to general condition 1.3 which defined the phrase “binding offer” to mean:
“1.3.1 an offer at the Vendor’s price and on terms set out in the Particulars of Appointment which would result in an enforceable contract of sale if signed by the Vendors and exchanged with the purchaser.
1.3.2 an enforceable contract of sale signed by Vendor and the purchaser. For the purposes of GC 1.3.1 the offer must be in a contract of sale signed by the purchaser and ‘Vendor’s Price’ has the meaning in GC 1.14.
For the purposes of GC 1.3.1 and GC 1.3.2 ‘enforceable contract of sale’ means a contract which may be enforced by an order for specific performance and/ or upon the breach of which either the Vendor or the purchaser would be entitled to an award of damages.” (Ibid, paragraph 8)
33 According to Mr Bevan, the obligation to pay agent’s commission depended on the terms of the agent’s engagement and therefore upon the proper construction of the relevant agreement. He referred to Real Estate City Pty Ltd v Moustafa [2005] VSCA 181 at [34] and LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52, 66 per Gibbs J (as he then was). Mr Bevan said that the commission was only payable in the present circumstances “where the agent has secured a contract which may be enforced by specific performance or an award of damages”.) (Ibid, paragraph 10) Where a contract of sale was subject to some condition, such as a condition precedent, whilst it was unfulfilled, the purchaser was under no obligation to complete the sale and was not in breach of contract. Therefore, whilst the contract remained conditional there was no “binding offer” or “sale” so as to entitle the agent to commission. The right to commission accrued only when the condition was fulfilled. He referred to Trotter v. McSpadden and Anor [1986] VR 329. These contracts, he said, were conditional and came to an end without the conditions being fulfilled and therefore there was no accrued entitlement to commission. He referred to the circumstances of termination of both the Hong Tin investments and AJM Capital contracts.
34 He said, further, that the plaintiff’s Statement of Claim at paragraph 21 admitted non-compliance with s49A(1)(iii) of the Estate Agent’s Act 1980. By virtue of s50(1) of the Act this disentitled the agent to any commission. He said this result was confirmed and mandated by the Court of Appeal’s decision in CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd [2017] VSCA 11, [93]. These conditions, according to Mr Bevan, operated in “an absolute and unforgiving way”. He referred to Hamilton Finlay Pty Ltd v Aojia Investments Pty Ltd [2017] VSC 319, Kukolovski v Georges [2011] NSWSC 359, [34], per Barrett J and Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd (2002) 56 NSWLR 27, 46 [86] (Barrett J). According to Mr Bevan the proceeding had no prospect of success and should be summarily dismissed.
Contentions of behalf of Reliance
35 Mr Kirimoff, on behalf of the plaintiff, Reliance, contended that in accordance with the definitions quoted by Mr Bevan from the standard form exclusive sales authority, in the events that had occurred, his client had earned the commissions claimed by it in its Statement of Claim. He referred first to Cahill v Kiversun Pty Ltd; Molonglo Group (Australia) Pty Ltd v Cahill [2017] VSC 641, a decision of Kennedy J, where, according to Mr Kirimof, her Honour “had occasion to consider a similar issue”. (Ibid, paragraph 21) He quoted a passage from [163] of her Honour’s judgment where she said:
“… the critical issue is always the intention of the parties, which must be ascertained objectively from the terms of the document, construed in the context of the surrounding circumstances.”
36 There, the question was which of two parties who claimed to have been sold the land by the defendant should be entitled to complete the purchase? One of the contesting parties submitted that the contract relied on by Cahill was not enforceable. It referred to the provision in the contract “this offer is conditional upon the purchaser’s solicitor’s approval of the final contract of sale and s32 … Statement”. (Cahill v Kiversun (Ibid) at paragraph 66(1.)) Mr Kirimof noted that despite this language her Honour had concluded that an enforceable contract existed. He quoted paragraphs [175]-[177] from the judgment which are in the following terms:
“At first blush, this may be seen to support the proposition that the Agreement to Purchase is only an offer. However, SC 1 also provides for a corresponding right for the vendor to ‘withdraw from the sale’ if the documentation (approved by the purchaser’s solicitor) is not returned within the relevant five business day period.
There is no need to provide for a right to ‘withdraw from the sale’ if the document was intended to constitute an offer only. Further, it cannot be intended that there be an agreement in existence for the purposes of the vendor’s right to ‘withdraw’ (if the relevant documentation is not returned) but not a contract for the purposes of the purchaser’s rights (if the documentation is not approved).
In such circumstances, the reference to ‘this offer is conditional upon’ in the document plainly means ‘this contract’ in circumstances where the offer has clearly been accepted by reason of the execution of the document. This is similar to the reasoning utilised in the case of Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (Baulkham Hills).”
(Footnotes omitted.)
37 He referred to authorities supporting the view that contingent conditions as to performance did not render the relevant agreements other than binding and enforceable. He referred to Newmont Pty Ltd v Laverton Nickel NL ((1982) 44 ALR 598 at 605) in which rendered the relevant agreement was conditional on approval by the Supreme Court; Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153, where the contract was “subject to and conditional upon” approval by the local council of a subdivision and Sumampow v Mercator Property Consultants Pty Ltd [2005] WASCA 64, where the relevant clause was “The operation of this Deed is subject to .. the following conditions precedent”.
38 According to Mr Kirimof, both contracts clearly manifested an intention to create immediately binding contracts “albeit ones whose performance [was] conditional upon certain events”. (Plaintiff’s Submissions, paragraph 27) He referred to various features, all of which were consistent with the relevant documents being written, binding and final contracts. Insofar as the special conditions in the first (Hong Tim) contract made reference to an offer or offers, he said this was not fatal to the finding he contended for in light of the reasoning of Kennedy J in Cahill’s case. He referred to the language of the special conditions in the second (AJM) contract, stating that such language “clearly demonstrates that the parties contemplated the existence of a contract that needed to be positively terminated, and if it were not, settlement would become due”. (Ibid, paragraph 33) He said, “If there were a freedom for both parties to withdraw from the contract before the condition [were] satisfied, it might be said that there was no contract at all until the condition is satisfied.” (Ibid, paragraph 37)
39 Turning then to the meaning of the phrase “enforceable contract of sale” in the standard terms of the exclusive sale authority, he said that language “does not affect” his reasoning at all. They were both, he said, capable of being enforced by an order for specific performance and/or upon breach by an award of damages. Non-fulfilment of the relevant conditions would not, in itself, be a breach of either contract, but those contracts he said:
“… contained a myriad of other terms … in common with most land contracts, such as the right to receive payment and the obligation to transfer title to the land, that were capable of being breached that would give rise to an entitlement to damages [or] specific performance.” (Ibid, paragraph 40)
40 In any event, he said that aside from express terms of the contract, there was an implied obligation on the part of the parties to cooperate with one another. He referred to N C Seddon and R A Bigwood, Cheshire & Fifoot Law of Contract (LexisNexis Butterworths, 11th Aus ed. 2017) paragraph 1077.
41 According to Mr Kirimof, the exclusive sale authority created an entitlement for the agent to recover commission, both in the case of an offer to purchase upon certain stipulated terms and also in the case of an enforceable contract signed by the vendor and purchaser. The present contracts fell within the second limb of that entitlement. He said the:
“…agent is entitled to their commission immediately [upon signature of the contract by both parties]. There is no need for the agent to wait and see whether the contract proceeds smoothly, that is, whether contingent conditions are satisfied and promises are performed. This is the category that applies to both land contracts in the current proceeding.” (Ibid, paragraph 46)
42 The risk as to non-fulfilment of the conditional contingency lay with the vendor, not the agent, he said. The agent had “completed its task”.
43 As to the decision of Gobbo J in the Supreme Court of Victoria in Trotter [1986] VR 329, he said that this case could be distinguished. He continued:
“In that case the ‘extremely cryptic’ terms of engagement between the vendor and agent provided that the commission was payable ‘upon a person found or introduced by you signing (either by himself or by his agent) a document whereby that person legally binds himself to become the purchaser of the property’. The commission agreement was not couched in terms of the existence of an enforceable contract of sale but someone ‘binding themselves to become the purchaser’.” (Plaintiff’s Submissions, paragraph 49)
44 He noted that the various formalities associated with the present contracts, such as the warning “THIS IS A LEGALLY BINDING AGREEMENT. YOU SHOULD READ THIS CONTRACT BEFORE SIGNING IT” did not appear in the relevant contract.
45 As to the Defence relied on under the Estate Agents Act 1980, he said that Judge Marks in Advisory Services Pty Ltd v Augustin & Anor [2017] VCC 1195 [3], left open the possibility that the invalidating effect of s50 of the Estate Agents Act could conceivably have been avoided had there been a claim before her Honour either for rectification or for an argument based on estoppel or quantum meruit. He said it was therefore at least arguable that s50 would not be regarded as “intended even to prevent the operation of an estoppel in circumstances where it would be unconscionable for a litigant to rely upon it”. (Plaintiff’s submissions, paragraph 54) He noted that the issue of estoppel did not arise in the Court of Appeal on appeal from her Honour’s judgment [2018] VSCA 95, nor in the Hamilton Finlay case [2017] VSC 319.
Conclusion
Construction of exclusive sale authorities
46 The central question as to the construction of the exclusive sale authorities as relied upon by Mr Bevan is whether the existence in both contracts of conditions precedent takes them outside the concept of “enforceable contract” for the purposes of giving rise to a commission entitlement for the plaintiff. Speaking of contractual conditions precedent generally, Mason J (as he then was) said:
“… There is an obvious difference between the condition which is precedent to the formation or existence of a contract and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitles the party to terminate the contract on nonfulfilment. In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate.
Conditions precedent within the first category may produce different consequences. In most cases, but perhaps not in all, a party may be able to withdraw from the transaction before fulfilment of the condition. But in each class of case, the transaction creates no enforceable rights in respect of the subject matter of the transaction unless the condition is fulfilled because, until the occurrence of that event, there can be no binding contract. There is also a problem in classifying a transaction which imposes an obligation on a party not to do anything which will prevent fulfilment of the condition. Even if it is to be placed in the first category, that consisting of conditional contracts - and I have some difficulty in placing it there - it yields no enforceable rights with respect to the subject matter of the transaction unless and until the contract is fulfilled, though the obligation not to prevent fulfilment of the condition will be enforceable in the event of its breach.
Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens. Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion.” (Perri v Coolangatta Investments Pty. Ltd. (1982) 149 CLR 537, 551-2)
47 Mr Kirimof’s contentions proceeded on the basis that in accordance with these principles the conditions precedent referred to would be characterised as conditions precedent to performance. Mr Kirimof said it would not matter if they were characterised as conditions subsequent. Mr Bevan did not dissent.
48 According to this view, contracts, albeit conditional contracts, arose in both cases. Both counsel were agreed that if the purchasers, perhaps the day after entering into such contact, had said “I’ve changed my mind, the deal is off”, it would have been competent for Latin America to treat such statement as a repudiation and an entitlement to sue for damages would arise should Latin America choose to accept such repudiations. Presumably, the quantum of any damages which might be awarded would have to take cognisance of the contingency that the relevant condition precedent or precedents would not have been satisfied and therefore the likelihood of the vendor deriving the benefits of performance of the contract would be less than 100 per cent, perhaps dramatically so. This consideration would not however negate the availability of damages as a remedy for the repudiation in some amount, even if only a nominal amount. The contracts would therefore appear to be enforceable according to that analysis. There would be no occasion to effect a summary dismissal of the plaintiff’s claim on this basis.
49 There may of course be arguments to the contrary. It is not the occasion now to canvass the various statements of principle by the High Court in recent years as to the circumstances in which a court may legitimately resort to considerations other than the literal construction of the language used in a written contract to construe its proper legal effect. The availability of such arguments necessarily adds a degree of uncertainty and lack of clarity. Arguments along these lines could not possibly yield the necessary clarity and certainty to justify a summary determination.
50 Trotter [1986] VR 329, might be thought to be a powerful precedent favouring the defendants’ argument based on construction of exclusive sale authorities. Despite Mr Kirimof’s contentions to the contrary, it is far from clear to me that the concept of a purchaser binding himself to a purchase is materially different to the concept of an enforceable contract as regards the obligations of the purchaser. I have already quoted the terms of the commission agreement which was before his Honour. He said:
“In my view, a contract, though in some or most respects legally binding, which was conditional upon a particular event occurring that was not related to obligations resting on either of the parties to the contract, was not a binding contract for the purposes of the engagement. I reach this view for a number of reasons. An agent does not become entitled to commission until the condition upon which the binding force of the contract depends is satisfied. It may be true that for certain purposes there is a legally binding contract, but it is not, in my view, a binding contract for the purposes of bringing about an entitlement to commission. Even if this were not so as a matter of principle, this is true here as a matter of construction. The contract of sale is really a statement by the purchaser that there is only a legally binding contract if or only to the extent that a certain event occurs. It is not an event that relates to performance of the contract. It is an event that contemplates that an extraneous event unconnected with performance is necessary to make the contract binding. Moreover, the engagement and entitlement to commission is subject to a possible implication that the commission is not payable in the event of the condition not being fulfilled.” [1986] VR 329,331
51 The condition precedent in Trotter’s case related to sale by the purchasers of their own residential property by a stipulated date.
52 It might be contended that a contract having the effect contended for by Mr Kirimof, that the agent could earn commission upon a contract of sale which would never be completed, would not be regarded as “business like”, or that it would be “unreasonable”, such that the Court should go behind the literal meaning of the words in the standard form. On the other hand, the standard form seems to have been prepared by the Real Estate Institute of Victoria, a body constituted to protect and advance the interests of estate agents. From the standpoint of an estate agent who thought that he or she should be entitled to a commission for finding a purchaser and having that purchaser commit to a contract, even if the contract does not, for lack of fulfilment of the condition precedent, proceed to completion, this may be far from unreasonable. These arguments and others which might be urged, however, are not productive of the necessary certainty to justify a summary dismissal.
53 The application for summary dismissal based upon the construction of the exclusive sale authorities fails.
The Estate Agents Act 1980
54 Section 49A and s50 of the Estate Agents Act 1980 provide inter alia:
“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
…
(c) the engagement or appointment contains—
…
(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
“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—
…
(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
...
(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.”
55 Remedial legislation was introduced via the Justice Legislation Miscellaneous Amendment Bill 2018 relative to deficient rebate statements in an estate agent’s engagement, but those remedial provisions took effect from 2018 only. It is unnecessary, for the purposes of the present proceeding, to consider these remedial provisions because the deletion of the entire item dealing with rebate under the April 2019 exclusive sale authority constituted a clear breach of the obligations with respect to disclosure of rebate, even under the relaxed regime provided for by the 2018 amendment. In CA and CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd [2017] VSCA 11, the Court of Appeal upheld an order made by the primary judge (Cameron J) giving leave to the plaintiff estate agent to amend its Statement of Claim so as to seek rectification of the relevant exclusive sale authorities, rendering them compliant with s49A of the statute. The premise upon which the Court proceeded was that, absent rectification, the commission claim must necessarily fail. Here, there would seem to be no question of rectification because the deficiency in the exclusive sale authority was created by an apparently deliberate deletion initialled by the parties. Conscious of this problem, the present plaintiff had sought to rely upon an estoppel, to the detail of which I will turn presently. The contention on behalf of the defendants by Mr Bevan was that the estoppel will not exonerate a party in breach of mandatory provisions of the statute. Mr Kirimof said there might be circumstances in which estoppel may prevail against the provisions of a statute and he referred to the Statute of Frauds. In the Ballan case their Honours considered the rule that generally, estoppel will not prevail against the mandatory provisions of a statute. In the joint judgment of Redlich, Tait and Ferguson JJA, at paragraphs 73, the Court said:
“In Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd,97 a vendor wanted to sell a commercial property. It entered into various agency agreements which it later terminated. One of the agents alleged that the vendor represented that if the agent was the cause of a sale it would be paid commission of 2.5 per cent and the vendor would not take advantage of the fact that there was no written agreement as required by the relevant legislation. The property was sold. The deposit was paid to the agent. The agent deducted 2 per cent commission. The vendor sought to recover the amount deducted. The agent defended the claim on the basis that the vendor was estopped from relying on the legislative provision that required the contract to be in writing and also on the basis that it was entitled to damages for breach of the misleading and deceptive conduct provisions of the Trade Practices Act 1974 (Cth). The agent also sought the additional 0.5 per cent commission that it claimed it was owed. Young CJ in Eq (with whom Meagher and Beazley JJA agreed) held that if the vendor had made the representation alleged the agent would have been entitled to damages. His Honour held that the fact that the agent retained the commission in breach of the legislative provision requiring the contract to be in writing was irrelevant ‘because it was conceded that what was improperly removed must be restored.’ He found that no representation had been made as alleged and consequently the claim for damages for breach of the misleading and deceptive conduct provisions failed. His Honour then considered whether estoppel was available. He quoted the statement of Beldam LJ in Yaxley v Gotts of ‘the general principle that a party cannot rely on an estoppel in the face of a statute depends upon the nature of the enactment, the purpose of the provision and the social policy behind it.’ Young CJ in Eq continued:
‘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.’”
(Footnotes omitted.)
56 Mr Bevan contended, and I accept, that this constitutes an expression of opinion on the part of the Court of Appeal, perhaps obiter that estoppel would not avail as against s49A and s50 of the Estate Agent’s Act. The estoppel pleaded in the present Statement of Claim is as follows:
“Rebate statement estoppel
21. A representative of the plaintiff crossed out the rebate statement in the April 2019 ESA on the basis that it did not comply with the Estate Agents Act 1980.
22. The defendants were aware, or can be taken to be aware, of the content of the compliant rebate statement which was contained in the October 2018 ESA.
23. With the notice alleged in the preceding paragraph, the defendants sought the plaintiff’s services under the April 2019 ESA.
24. The plaintiff relied on the defendants (sic) engagement of its services to its detriment by continuing to perform services in procuring the sale on 20 June 2019 alleged below.
25. The defendants are estopped from relying on the deletion of the rebate statement, absence of a rebate statement, or non-compliance of the rebate statement in the April 2019 ESA.”
57 This plea would appear to boil down to the proposition that, as long as the other party to the transaction is aware of the statutory contravention and assents, an estoppel may arise simply from the fact that the contravening party continues to perform the engagement. This is, in my view, entirely inconsistent with the approach to these matters evident in the Court of Appeal’s decision in the Ballan case quoted above. Mr Kirimof conceded that it was not possible for an agent, by the express terms of a contract, to relieve himself or herself from the obligations under s49A. He said, however, that on his reading of the Act, there was no express prohibition on contracting out. As I read the statute, s50(5) constitutes such a prohibition. It is in elaborate and somewhat antique language, but ultimately the last three or four lines seem to boil down to a generalised prohibition on contracting out which would deprive an agent’s customer of rights which the customer would otherwise have. It follows, therefore, that in my view, the challenge to the claim framed under the April 2019 exclusive sale authority based on s49A and s50 of the Estate Agent’s Act, must succeed.
Disposition
58 The logic of my reasons would have it that I should dismiss the plaintiff’s claim insofar as it is based upon the April 2019 exclusive sale authority, but otherwise dismiss the defendants’ Summons. I will however refrain from pronouncing such an order at this point, merely inviting the parties to bring in short minutes to give effect to my reason to cover the possibility that contrary to my understanding, this plaintiff might seek to take the course which the plaintiff in the Ballan case took, namely to seek an amendment to its Statement of Claim to raise an issue for rectification. For reasons already explained, my expectation is that would not be this plaintiff’s intention.
59 I have heard no argument on the question of costs and so I will reserve them.
---
0
16
0