Southbank Property P/L v Almond
[2008] QMC 3
•5 December 2008
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Southbank Property P/L v Almond [2008] QMC 003
PARTIES:
SOUTHBANK PROPERTY PTY LTD TRADING AS REMAX SOLUTIONS (ACN 058 053 384)
(plaintiff)
v
LINDA ANN ALMOND
(defendant)
FILE NO/S:
M2291/07
DIVISION:
Magistrates Court
PROCEEDING:
Claim
ORIGINATING COURT:
Magistrates Court at Brisbane
DELIVERED ON:
5 December 2008
DELIVERED AT:
Brisbane
HEARING DATE:
9 July 2008
MAGISTRATE:
Callaghan CJ
ORDER:
Judgement for the plaintiff
CATCHWORDS:
CLAIM – BREACH OF CONTRACT – REAL ESTATE SALE AGREEMENT – is it the real estate agents duty to investigate terms of body corporate rules
Property Agents and Motor Dealers (Real Estate Agents Code of Conduct) Regulation 2001 (Qld), s 8(1)
COUNSEL:
B Blond appeared for the plaintiff
GT Sara appeared for the defendant
SOLICITORS:
Gateway Lawyers for the plaintiff
Paul Pattison Solicitors for the defendant
The Defendant Linda Almond purchased a home unit being unit no 69 at 89 Lambert Street, Kangaroo Point. The unit was apparently purchased off the plan and, prior to October 2006, she settled the purchase. She then wished to sell the unit. The developer of the complex also had unsold units and was wishing to sell them at around the same time.
On 2 October 2006 she met with John Kalaja who is the sole director of the Plaintiff company, Southbank Property Pty Ltd trading as Remax Solutions. John Kalaja was a real estate agent having been so since about the end of 1989 and having operated the Plaintiff company since November 1992. They met at the unit on 2 October 2006 and in that discussion and in ensuing discussions it was agreed between them that he on behalf of the Plaintiff was to sell the unit on Ms Almond’s behalf. An agreement was entered into between Ms Almond and the Plaintiff company on 5 October 2006. That agreement was in writing and a copy of the same is Exhibit 1 in these proceedings.
In essence it was agreed that the unit was to be sold by way of auction on site on the 1st of November 2006 at 7pm. The agreement also provided that an advertising program will be untaken at an agreed cost of $12,600 in order to market the property prior to auction.
It was unknown to both Mr Kalaja and Ms Almond at the time of entering into the agreement that they would need the approval of the Body Corporate of the building in which the unit was situated in order to hold the auction in the unit, nor did they know that such agreement would not be given.
The first that either of them became aware of a potential problem in that regard was when Debbie Richards from the building manager’s office advised Mr Kalaja on 19 October 2006 that someone had complained about their capacity to hold an auction on site. Mr Kalaja said that Ms Richards told him that she would come back to him. Eventually on 30 October 2006 Mr Kalaja was told by her that permission hadn’t been given by the Body Corporate to hold the auction in the unit.
On 31 October 2006 Ms Almond told Mr Kalaja that the auction was not to be held at all if it couldn’t be held in the unit.
The auction never went ahead nor was the unit sold by any other means by Mr Kalaja or the plaintiff company. In fact the agreement between the Plaintiff and Ms Almond was terminated a few days later.
In the run up to the auction the Plaintiff incurred outlays by way of having a floor plan drawn, photographs of the unit taken, a brochure printed and advertising the unit for sale and the auction in various publications the itemised costs of which are all set out in the copy of the tax invoice sent by the plaintiff to Ms Almond dated 15 January 2007 totalling $12, 463.00.
The Plaintiff now claims that amount from the Defendant being monies due and owing by the Defendant.
[10] Ms Almond has refused to pay that amount saying that the Plaintiff breached the terms and conditions of the agency agreement; breached an implied term of the agency agreement that the plaintiff was under a duty of care to exercise the care, skill and diligence of a reasonably competent real estate agent; breached its common law duty to exercise care, skill and diligence of a reasonably competent real estate agent; breached section 8(1) of the Property Agents and Motor Dealers (Real Estate Agents Code of Conduct) Regulation 2001 by not exercising reasonable skill, care and diligence in the conduct of a real estate agency practice by failing or neglecting to make reasonable enquiries concerning the conducting of onsite auctions from the building by failing or neglecting to secure from either Ms Almond or the landholders officers a copy of the Community Management Scheme (which contains the clause which requires an owner or occupier to obtain the written approval of the Committee of the Body Corporate prior permitting any auction sales to be conducted in their unit), by failing or neglecting to consider those bi-laws prior to recommending that Ms Almond sell the unit and by failing and/or neglecting to advise Ms Almond to secure the approval herself prior to advertising the unit for auction.
THE CONTRACT
[11] The agreement between the Plaintiff and Ms Almond was in the standard form of agreement Form 22a under the “Property Agents and Motor Dealers Act 2000”. By the agreement Ms Almond appointed the Plaintiff to sell the residence and authorised the Plaintiff to sell by auction[1]. It was an exclusive agency commencing on 6 October 2006 and was to expire on 4 December 2006, a period of 60 days. The term exclusive agency meant that Ms Almond must pay the Plaintiff its commission if the Plaintiff sold the unit, another agent sold the unit, or Ms Almond sold the unit. At the end of the 60 days the appointment was to continue as an Open Listing which meant that Ms Almond didn’t have to pay the Plaintiff if she or another agent sold the unit but did have to pay the Plaintiff its commission if the Plaintiff sold the unit. The commission was standard commission for these types of contracts (5% of the first $18,000 plus 2.5% of the balance plus GST).
[1] Item 4
[12] Clause 8.1 of the agreement was in the following terms:-
“ The client authorises the agent to incur the following expenses in relation to the performance of the service/s: [Agent to complete in relation to each service or category of service] .
Advertising/Marketing (if any);
Advertising (by any means) including those listed in the attaching Advertising Program to the extent of $12,600; or as listed below * attach Advertising Program.
Half payable in two weeks balance payable by auction day”
[13] When authorising the agent to sell by auction, item 4 of the agreement referred to item E in the items schedule.
[14] Item E in the items schedule provided the following:-
“Date of auction: 1st November 2006
Place of auction: on site
Time of auction: 7pm
Fee for auctioneer: $440.”
Item E also referred to Clause 11 applying. Clause 11 simply set out matters that are not relevant to this judgement save for the fact that it allowed the agent to engage the services of an auctioneer and provided that the client shall pay the amount specified in item E above as a fee for the auctioneer’s services.
[15] Mr Kalaja in his evidence said that the auction was to take place on site as it was convenient, as they usually open their properties for half an hour prior to auction and as the unit had a nice ambience about it.
[16] Ms Almond said in her evidence that in her discussions with Mr Kalaja a lot of emphasis was placed on the view from the unit and the ambience capturing the river lights. She said that’s why she agreed to sell the unit by auction. The differences in the versions of these discussions matters little. It was the clear intention of both Ms Almond and Mr Kalaja that the auction was to take place in the unit. The words “on site” where they appear in the written agreement, Exhibit 1, were clearly understood by both Mr Kalaja representing the Plaintiff and Ms Almond, to mean within the confines of the unit and not anywhere else in the unit complex.
COMMUNITY MANAGEMENT STATEMENT
[17] The statement itself was not tendered into evidence however the relevant clause of same was pleaded in paragraph 13 of the Defence which was admitted by the Plaintiff in paragraph 1 on the Reply and Answer. It is clause 12, which provides:-
“An owner or occupier of a lot shall not permit any auction sale to be conducted or to take place in their lot or in the dwelling or upon the parcel without the prior approval in writing of the committee of the Body Corporate.”
[18] Not having the whole document placed before me I am unable to determine neither what the word “dwelling” means nor what the word “parcel” means. Given my earlier finding that it was clearly agreed between the parties that the auction was to take place within the confines of the unit it matters not.
[19] When Mr Kalaja received the first phone call from Debbie Richards, on the 19th of October he said he told her that he’d been involved in many, many auctions on site (by this he meant other buildings – not this building) previously and had never been told that he could not hold an auction on site. He said to her that he couldn’t understand why they couldn’t hold an auction on site which might last only 10 minutes or so yet he could have a couple of inspections a week lasting 45 minutes. The matter was left in the air and no firm decision had been made by the Body Corporate.
[20] Also there is no evidence that any formal application was made to the Body Corporate for its written approval for the auction.
[21] Mr Kalaja telephoned Debbie Richards on the 25th of October to find out whether she had received any information from the Body Corporate about whether he could hold the auction in the unit or not and she told him that she hadn’t.
[22] He next spoke to her on 30 October 2006. On that occasion he was told by her that he would not be able to conduct the auction on site. He communicated that fact to Ms Almond who told him that she would talk to her husband about the various options that were available.
[23] On 31 October 2006 Ms Almond communicated to Mr Kalaja that if the auction could not be held on site there would be no auction at all.
THE EFFECT OF THE BODY CORPORATE’S DECISION UPON THE AGREEMENT
[24] Ms Almond says, (which I accept), that she would never have entered into an agreement to auction the unit if the auction could not have been held at the unit. Further clause 11.2 of the agency agreement states that the “date, place and time for the Auction shall be as specified in Item F of the Items Schedule or as otherwise agreed with the client in writing from time to time”. “F” is clearly a typographical error as Item F is only relevant to the commencement of the appointment. It should have been typed in as Item “E” as it is the item which refers to Clause 11 and which sets out clearly the date place and time of the auction. Item E provides for the place of the auction to be “on site”. As such, it was a fundamental term of the agreement. The agreement was frustrated by the decision of the Body Corporate to not provide approval for the auction to be held within the confines of the unit.
[25] The event which frustrated the agreement was the communication of the Body Corporate’s stance that no auction would be held in the unit. That event occurred on 30 October 2006. The occurrence of that frustrating event brought “the contract to an end forthwith, without more and automatically.”[2] The agreement was terminated at that time as to the future only. It was not void ab initio. Accordingly, the Plaintiff and Ms Almond must each respectfully fulfil its/her “contractual obligation so far as they have fallen due before the frustrating event, but (each) is excused from performing those that fall due later.”[3]
[2] See Hirji Mulji v Cheong Yue S.S. CO. LTD. [1926] A.C. 497 at 505
[3] See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] A.C. 32 at 58
[26] Therefore putting aside the question of the alleged negligence of the Plaintiff’s agent Mr Kalaja, Ms Almond should have to pay for advertising in accordance with the terms of the agreement.
[27] It is argued that as half of the advertising fee was payable in two weeks of the commencement of the agreement on 6th October 2006 and the balance payable by auction day and as the auction day never occurred then the balance should never be payable. In Krell v Henry[4] the Plaintiff agreed to let a room to the defendant for the day upon which Edward VII was to be crowned. Both parties understood that the purpose of the letting was to view the coronation procession, but this did not appear in the agreement itself. The procession was cancelled owing to the illness of the King. The Court of Appeal took the view that the procession was the foundation of the contract and that the effect of its cancellation was to discharge the parties from further performance of their obligations. In that case it was also held that the Plaintiff could not recover the agreed rent from the Defendant as it did not fall due until the last minute of June 24 and before that moment had arrived the abandonment of the possession had been announced (therefore frustrating the contract).
[4] [1903] 2K.B.740
[28] This case is not really any different from that in that here half the advertising fees were payable in 2 weeks from the date of the agency agreement and the balance of monies was payable “by auction day”. Auction day never arrived due to the frustration of the contract. Accordingly, subject to the defence being made out, Ms Almond is responsible to pay for one half of the advertising fees.
THE DEFENCE
[29] An analysis of the Plaintiff’s duties to Ms Almond and whether the Plaintiff has breached any of them needs to be undertaken.
[30] Evidence was given by Mr Kalaja that in his lengthy experience as a Real Estate Agent (he has also been Chairman of the Real Estate Institute Sales Committee) having been involved in many auctions of home units (20% of about 2,500 undertaken by himself and his team) he has never been told that he could not hold an auction on site. Further he said that he has participated in many courses during which he has never been told that it is a requirement of the real estate agent to research the Community Management Statement of a Body Corporate to ascertain as to whether one needs the permission of the Body Corporate to conduct an auction in a unit. The caveat on Mr Kalaja’s evidence in this regard is that he also is the voice of the Plaintiff.
[31] As against this the Defendant called Ms Elisa Wellington, another licensed real estate agent to provide an opinion on the duty of a real estate sales person to research the Community Management Statement of a Body Corporate to ascertain as to whether one needs the permission of the Body Corporate to conduct an auction in a unit.
[32] Ms Wellington used to work for Mr Kalaja’s company (and was dismissed – the reason for which was not disclosed, nor does it matter for these purposes). Also she ultimately entered into an agreement with Ms Almond to sell the unit, successfully doing so, albeit for a price considerably less then it was expected to fetch. She had been involved in selling real estate in this area for about 8 years. She said that she has been involved in at least 50 auctions of home units conducting about 40 of them in the units themselves. Of those units she said that she was aware of another 2 buildings where auctions were not able to be held in the unit. The caveat on Ms Wellington’s evidence is that she cannot, in the circumstances of her previously having had a workplace relationship with Mr Kalaja which soured to some degree and then establishing an agency relationship with Ms Almond, be said to be truly independent.
[33] So on the one hand Ms Wellington says there is a duty on an agent to check with a relevant body corporate as to whether there is any restriction (real or possible) to a vendor holding an auction in a unit and on the other hand Mr Kalaja says that there is no such duty. Neither party has called any truly independent expert to give evidence one way or the other. I would have been greatly assisted by such evidence. On the question as to what duty is owed by a real estate agent in these circumstances I do not prefer either’s opinion evidence.
[34] The burden of proving that the Plaintiff and/or Mr Kalaja were in breach of:
34.1.clause 7.2 of the agreement[5];
34.2.the implied term of the agency agreement as pleaded in paragraph 12 of the Amended Defence and Counterclaim;
34.3.a duty at common law imposed on the Plaintiff, as pleaded in that same paragraph; and/or
34.4.the statutory duty imposed on the plaintiff as pleaded in paragraph 11 of the Amended Defence and Counterclaim;[6]
is clearly on the defendant as it is the defendant who asserts the affirmative of the issue.
[5] Whereby the plaintiff was authorised, inter alia, to take reasonable steps to find out or verify the facts material to the sale that a prudent agent would find out or verify in order to avoid error, omission, exaggeration or misrepresentation.
[6] All of which is pleaded in paragraph 19 of the Amended Defence and Counterclaim
[35] My view is that clause 7.2 of the Agreement doesn’t extend to placing upon the agent a duty to ascertain as to whether there is any obstruction (real or possible) to the holding of an auction in the unit as the making of such enquiries are not in order to avoid “error, omission, exaggeration or misrepresentation” as the place of holding an auction is not a fact material to the sale in so far as a prospective purchaser is concerned as the clause read as a whole is clearly directed to ownership, description, errors in the same, omissions and exaggeration. Even if it be the case, it is my view that Ms Almond has failed to prove that a prudent agent would conduct such an enquiry.
[36] The implied term of the agency as pleaded in paragraph 12 of the Amended Defence and Counterclaim, the duty at common law pleaded in the same paragraph and the statutory duty said to be imposed upon the plaintiff as pleaded in paragraph 11 of the Amended Defence and Counterclaim are in reality all the same duty: viz; that the plaintiff is under a duty of care to the defendant to exercise the care, skill and diligence of a reasonably competent real estate agent in discharging its obligations to the defendant.
[37] My view is that Ms Almond has failed to prove that such a duty extended to the plaintiff or Mr Kalaja requiring either to enquire of the body corporate as to whether there was any obstruction (real or possible) to the holding of an auction in the unit.
[38] Paragraph 19 of the Amended Defence and Counterclaim and with it the defence therefore fails.
[39] Similarly, to be successful in the counterclaim, the onus is on the defendant to prove there is a duty owed and that the Plaintiff breached that duty. As Ms Almond has failed to prove that such a duty extended to the plaintiff it follows that the Counterclaim also fails.
AMOUNT TO BE PAID
[40] As has been earlier said, Ms Almond is responsible to pay half the costs of the Advertising program. There was no advertising program attached to Exhibit 1, nor was it “listed below”[7]. I am of the view that the drawing of a floor plan, the taking of professional photos and the production of Property Brochures (all being necessary preliminary activities to the placement of advertisements) as well as the placement of advertisements in the printed media are all part of the “Advertising Program”. Those items are listed in Exhibit 2 (and were said by Mr Kalaja to have been incurred, evidence which I accept) and total $12,023.00. One half of the same is $6011.50.
[7] Both of which were provided for in clause 8.1.1 of the Agreement, Exhibit 1
[41] Mr Kalaja also said that the plaintiff had incurred the fee of the Auctioneer (Mr Dane Atherton) in the sum of $440.00. I accept this evidence. This item doesn’t form part of the “Advertising Program” and therefore is not subject to the condition of half being payable within 2 weeks of the agreement and the balance being payable by Auction Day. Clause 11.4 of the Agreement authorises the agent to engage an auctioneer and if that occurs then the client shall pay the amount specified in Item E (4) as a fee for the Auctioneer’s services. That fee was specified (and incurred) at $440.00. Ms Almond is responsible to pay the whole of that amount.
JUDGMENT
[42] I give judgment for the plaintiff against the Defendant in the sum of $6,451.50, being one half of the costs of the advertising program plus the Auctioneer’s fee, for claim and I will hear the parties as to the question of interest and costs.
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