Stillwater Aust Pty Ltd T/As Century 21 on Duporth v Anderson

[2010] QDC 315

DISTRICT COURT OF QUEENSLAND

CITATION:

Stillwater Aust Pty Ltd T/AS Century 21 on Duporth v Anderson & Anor [2010] QDC 315

PARTIES:

STILLWATER AUST. PTY LTD T/AS CENTURY 21 ON DUPORTH
(ABN 73 106 924 127)
(Plaintiff)
v

PAUL JAMES ANDERSON AND YOSE AROHA HINEMORA ANDERSON-COOK
(Defendant)

FILE NO/S:

 No D269/09

DIVISION:

Civil Jurisdiction

PROCEEDING:

Hearing

ORIGINATING COURT:

Maroochydore

DELIVERED ON:

20 August 2010

DELIVERED AT:

Maroochydore

HEARING DATE:

16 June 2010

JUDGE:

Robertson DCJ

Order 

CATCHWORDS

The plaintiff is entitled to judgment on its claim.  I will hear the parties on the form of order and costs.

PRINCIPAL AND AGENT- Real Estate Agency- commission- where plaintiff engaged as agent by defendants- where prestige property had been on the market for a long time with no offers - where agent introduced ultimate purchaser to the property and was present at a number of inspections and engaged in significant negotiations, where ultimate purchaser then contacted non real estate agent and business partner of defendants and agent was effectively out of negotiations, whether agent “the effective cause of sale”.

:

Legislation

Property Agent and Motor Dealers Act 2000

Cases Cited

Doyle v Mt Kitson Mining and Exploration Pty Ltd [1984] 2 Qd R 386 at 392
Jones v Dunkel
LJ Hooker v WJ Adams Estates Pty Ltd (1977) 138 CLR 52
Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] 202, CLR 307; 177 ALR 390; 73 ALJR 4

COUNSEL:

Mr. S. M. Gerber for the plaintiff

Mr. D. Topp for the defendants

SOLICITORS:

Schultz Toomey O’Brien Lawyers for the plaintiff

Macfie Curlewis Spiro Lawyers for the defendants

[1]      The plaintiff is a real estate agency which claims commission as agent for the sale of the defendant’s property at 60 Monarch Place, Mons, to Richard Hoy pursuant to the terms of a contract in writing dated 22 May 2009 for a price of $2 million which contract was completed on 18 June 2009.

[2]      Essentially the trial proceeded on the basis of agreed facts.  The plaintiff relied on the evidence of Mr Damien Said, an agent in its employ who had all the relevant dealings with Mr Hoy.  Mr Anderson gave evidence in his defence, however predominantly the evidence called in the defence case came from Mr Will Hughes, investor and business partner of Mr Anderson who at all relevant times acted as the agent for the defendants.

[3]      Despite the alarming number of exhibits (70), the trial (including addresses) finished in a day.  The parties and their lawyers are to be commended for narrowing the issues and saving court time and costs.

[4]      There was only one issue in dispute, and that is, has the plaintiff satisfied me on the balance of probabilities that it was the effective cause of the sale of the property to Mr Hoy.  The contract of sale (Exhibit 30) does not name the plaintiff as the agent and indeed the defendants argue that they, through their friend and agent Will Hughes were the effective cause of sale. 

[5]      Mr Hoy did not give evidence.  It is accepted by the defendants that he was available to give evidence and under subpoena requested by their solicitor but was not called by them.  Mr Gerber asked me to draw a number of inferences pursuant to the decision in Jones v Dunkel against the defendants as a consequence of this and I will deal with this later in these reasons.

[6]      The agreed facts are set out in both written outlines.

[7]      The plaintiff was initially engaged by the defendants as their real estate agent by way of a Form 22a pursuant to the Property Agent and Motor Dealers Act 2000 on 13 July 2008, and Mr Said was the agent who had carriage of the sale on behalf of the plaintiff.

[8]      Prior to that date, another agent Ken Guy Real Estate had the property listed.  Mr Hughes in his evidence said that the property had been listed for sale since approximately mid-2007.

[9]      Mr Hughes also said in his evidence that prior to receipt of an offer from Mr Hoy on 18 February 2009 communicated to Mr Said the vendors had not received one single offer.

[10]      There was no challenge to Mr Said’s evidence to the effect that prestige properties in the area, with a price of $2 million or more, were not selling at this time.  He said that only three in this price bracket had sold in a year.  This is not surprising giving the dramatic adverse effect on sales as a result of the global financial crisis which impacted on Australian markets during this period.

[11]      The defendant’s must have been content with Mr Said’s efforts when they signed a further Form 22a appointment on 20 January 2009.  There is also no dispute that Mr Said actively marketed the property throughout the period which included a launch with media attending and preparation and wide distribution of marketing material distributed in hard copy and available online.  Exhibit 4 is a colour copy of the relevant marketing material and shows some considerable creativity in presenting the property.  The property was marketed on various websites including realestate.com, Century 21 websites, Homehound and Myhome.

[12]      It is not disputed that the ultimate purchaser Mr Hoy made contact with Mr Said as a result of the Homehound advertising by email dated 10 January 2009.  The second Form 22a signed after this date by the defendants was an open listing and provided that the defendants would pay commission to the plaintiff “if a contract of sale is entered into within the term, or after the term, where (the plaintiff) is the effective cause of the sale within the term, provided that … the contract of sale is completed …”.  It is accepted that Mr Said took Mr Hoy to inspect the property on 14 January 2009 as a result of an arrangement made with Mr Hoy by telephone.  Either the following day or the day after a twilight inspection took place at which Mr Said and Mr Hoy were present with his wife and his mother Mary. 

[13]      Mr Hughes was present at both inspections.  Mr Said gave evidence that he had been told by Mr Hughes that he had to be present at all inspections.  At the second inspection, Mr Hughes invited the purchasers and Mr Said to sit in an area of the house which is set aside for entertaining and which is particularly attractive and during this time he noticed Mr Hughes and Mr Hoy exchange business cards.

[14]      Mr Said was also present when Stuart Greensill from Herron Todd White valued the property on behalf of Mr Hoy soon after the inspection.  He gave evidence that he had extensive contact with Mr Hoy who ultimately advised that his attorney Mr Peter Dunham, an accountant would send Mr Said a letter of offer.

[15]      Mr Hoy was aware from what Mr Said had told him that the property was listed for around $3 million.

[16]      The offer was received from Mr Dunham by email on 9 February 2009 and (relevantly) offered $1.75 million to include furniture and effects.  As a result, a contract was prepared by Mr Said and sent to Mr Dunham for signature.  The offer contained in the contract signed by Mr Dunham varied from the offer set out in the email and it is clear that Mr Dunham has written in a finance clause for $1.4 million.

[17]      Both prior to and after receipt of the email from Mr Dunham, Mr Said had been in touch with Mr Hoy who seemed to spend much of his time overseas.  It is clear to me that at this stage Mr Hughes had become directly involved in suggesting approaches and/or instructing Mr Said on behalf of the defendants to do things towards securing Mr Hoy as a purchaser.  This included sending to Mr Hoy a magazine provided by Mr Hughes in which the property had prominently featured.

[18]      I am satisfied at this stage that Mr Said was not aware of the quantum of the actual valuation commissioned by Mr Hoy.  He received some information from Mr Hughes by email dated 10 February 2009 which valued the property at $2.857 million based on a rate of $2,300 per square metre of home size plus improvements such as the pool, sound and security systems etcetera.  It is clear to me that Mr Said was not holding out much hope for Mr Hoy that his offer would be accepted.  It is also clear that he sent on the “valuation” prepared by Mr Hughes to Mr Hoy.

[19]      The contract signed by Mr Dunham had not been returned to Mr Said so on 16 February 2009 he sent an email to Mr Hoy in these terms

Exhibit 12

[20]      On the same day, in the evening he received a response from Mr Hoy in these terms:

Exhibit 9

[21]      I accept Mr Said’s evidence that the actual valuation (which for convenience is part of Exhibit 9) was not attached to that email.  So much is obvious from the terms of the email itself.  On 18 February 2009 Mr Hoy sent another email to Mr Said in these terms:

Exhibit 13

[22]      It is clear that Mr Hoy was consciously withholding the actual valuation from Mr Said; rather he was using selected excerpts and his interpretation to justify his initial offer.  Relevantly to what occurred later in February he says in the second last paragraph:

“If the property had been valued at $2.5 million we would have made our offer accordingly, however it was not valued at that amount it was considerably lower (well under the $2 million mark)”.

[23]      In fact when one views the valuation of Mr Greensill he estimates the market value at $1.95 million with a range from $1.85 million to $2.05 million.

[24]      It is also clear that Mr Hoy at this stage understood Mr Hughes to be one of the owners of the property. 

[25]      Mr Hughes instructed Mr Said to check with him before communicating with Mr Hoy, so on 20 February 2009, Mr Said sent Mr Hughes a suggested draft response to Mr Hoy.  It was a lengthy and detailed response in which Mr Said did his very best to persuade Mr Hoy to increase his offer.  Mr Hughes did amend the response but not significantly.

[26]      On 21 February 2009 he forwarded the amended response to Mr Said, and Mr Said duly sent this on to Mr Hoy.  Mr Hughes said this in his email to Mr Said:

Exhibit 15

[27]      Mr Said received a polite response from Mr Hoy by email on 22 February 2009 in which he said that he and his wife would await the vendor’s response which Mr Said passed on to Mr Hughes.

[28]      The vendor’s response was to amend the contract to $2.7 million which Mr Said forwarded to Mr Hoy on instructions from Mr Hughes. 

[29]      This counter offer produced a less polite response from Mr Hoy who, on 23 February 2009 emailed Mr Said in the following terms:

Exhibit 21

[30]      Mr Hughes says that around this time Mr Hoy traced him via his mother and called him from Cyprus and told him that if he had to deal with Mr Said there would be no deal.  He told Mr Hughes (according to Hughes) he was angry and disappointed with Mr Said’s performance and that he would not buy the property if he had to deal with Said.

[31]      Of course in making the counter offer and in his latter attempts to keep Mr Hoy negotiating Mr Said had acted on instructions from Mr Hughes.  Mr Hoy could have confirmed this important piece of evidence.  He was available and under subpoena from the defendant.  He was not called by them.  I comfortably draw the inference against the defendants that Mr Hoy’s evidence on this point would not have assisted their case.

[32]      Exhibit 23 is a copy of an email from Mr Hughes to Mr Hoy dated 25 February 2009 in these terms:

Exhibit 23

[33]      Exhibit 24 is presumably Mr Hoy’s response.  It is in these terms:

Exhibit 24

[34]      There is nothing in either message to suggest that Mr Hoy was dissatisfied with Mr Said and would not buy the property if he was involved.  If indeed, as Mr Hughes swears, Mr Hoy was so angry and apparently focussed on Mr Said, the first time he made contact, why is there no reference to this in either message?  It does not accord with common sense.  What is clear is that notwithstanding what he told Mr Said in the email of 23 February 2009 Mr Hoy was not telling the truth.  In fact he was still prepared to negotiate and was still interested in the property.  He was also prepared (and did) send Mr Hughes a copy of the valuation.  Again Mr Hoy could have thrown light on these anomalies but the defendants did not call him.

[35]      On 28 February 2009 Mr Hughes emailed Mr Said in these terms:

Exhibit 25

[36]      By this stage, Mr Said was effectively out of the negotiating loop.  What is striking is that in the 28 February 2009 email, Mr Hughes tells Mr Said that if the property was sold for $2.1 million there “would be no monies available to pay any costs incurred by the sale”.   Mr Hughes was not cross-examined about this but that does sound like a reference to real estate commission.

[37]      On 6 March 2009 Mr Said acting on what he had been told by Mr Hughes in the 28 February 2009 email and not in possession of the actual valuation a copy of which Mr Hughes had not sent to him, sent an email to Mr Hoy which did cause a very strident response from Mr Hoy.  Mr Said in his email said:

Exhibit 26

[38]      Completely contrary to the measured and polite email he sent to Mr Hughes on 26 February 2009 Mr Hoy’s response to Mr Said was anything but polite:

Exhibit 27

[39]      Mr Hoy did not give evidence so there was no opportunity for the plaintiff to explore the nature of his contact with Mr Hughes at this time, but given the contrast between this response and his response to Mr Hughes it seems to me his “anger” was quite contrived.  It was certainly unreasonable given that it was Mr Hughes who had planted the figure of $2.1 million in Mr Said’s mind and Mr Hoy who had told him that the valuation was well below $2 million.

[40]      As I have said it is not necessary for me to resolve these apparent anomalies.  Mr Said responded in a polite way to Mr Hoy’s email and proposed reducing his commission but he acknowledged that Mr Hoy was going to deal with Mr Hughes from then on.  He also emailed Mr Hughes on 28 February 2009 in these terms:

Exhibit 38

[41]      The defendant’s case is that together with the involvement of Mr Hughes up to this point, and his actions thereafter to sort out a number of problems, they were the effective cause of sale pursuant to the contract of sale for the property for $2 million on 22 May 2009.  Mr Hughes gave evidence about negotiating with the original developer about varying a building covenant which attached to the land to enable Mr Hoy to have his dog.  Mr Said was never made aware of any building covenants by Mr Hughes who must have always known of them, nor did he know about Mr Hoy’s dog.  Mr Hughes also gave evidence about electrical warranties and ADSL and Austar connections with which he assisted.  As Mr Gerber rightly submitted these are not matters that would ordinarily be covered by a real estate agent in an event.  The right to commission accrues when a contract of sale is signed by a purchaser which completes where the agent has been the effective cause of sale.

[42]      It is obvious that as at 22 February 2009 Mr Hoy, willing to purchase the property for $2 million.  This he communicated to Mr Hughes and not Mr Said.  He was also then willing to pay an additional $100,000 for the furniture which was increased later to $250,000 and contained in a separate chattel agreement.

[43]      In my view, the evidence establishes clearly that thereafter Mr Hughes’ efforts were mainly directed at bringing his business partner Mr Anderson’s expectations down and increasing the price paid for the furniture.

[44]      The leading authority on the proper construction of “effective cause of sale” is Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; 202, CLR 351; 177 ALR 390; 73 ALJR 408. It is unnecessary for me to repeat the various extracts from the judgments of members of the High Court which are extensively reproduced in the written outlines of the parties.

[45]      “The inquiry is whether the actions of the agent really brought about the relation of buyer and seller and it is seldom conclusive that there were other events which could each be described as a cause of the ensuing sale” per Jacobs J in LJ Hooker v WJ Adams Estates Pty Ltd (1977) 138 CLR 52 at 86; quoted with approval by Gummow J in Moneywood at 376-377. Mere introduction of the ultimate purchaser is ordinarily not sufficient. In Doyle v Mt Kitson Mining and Exploration Pty Ltd [1984] 2 Qd R 386 at 392, McPherson J (as he then was) said that it would be “quite artificial to suppose that the parties intended that their agent should earn his commissions simply by finding or locating an individual who, independently of any further action/actions by the agent, later agreed to buy the subject property”.

[46]      On the evidence here this is quite clearly not such a case.  On the defendants own case through the evidence of their agent Hughes the property had been on the market, firstly with another or other agents and then with the plaintiff since mid- 2007.  The ultimate purchaser Hoy was the first potential buyer to make any offer during that whole period.  Mr Said’s uncontested evidence is that only three properties in that price range had actually sold in the previous 12 months.  Mr Hoy “discovered” the property as the result of the plaintiff’s extensive online advertising of it.  Mr Said then attended two lengthy inspections and assisted Mr Hoy’s valuer in having the property valued.  He then actively encouraged Mr Hoy by promoting the property to him until he was effectively removed from the scene by Mr Hughes and Mr Hoy.  Very soon after that Mr Hoy indicated that he was prepared to pay $2 million for the property which indeed was the actual selling price.  Again it is not correct as Mr Hughes intimated in one email that it would be necessary for there to be a separate contract for furniture because the furniture was not owned by the same entity who owned the property.  The separate chattels contract indicates that Mr Anderson and his wife owned both the property and the furniture.  It is unclear to me why separate contracts were needed.  The plaintiff’s claim in any event relates only to commission for the sale of the property.

[47]      It follows that for the reasons I have set out I am satisfied that Mr Said on behalf of the plaintiff was the effective cause of the sale of the property.  It follows that the plaintiff is entitled to judgment on its claim.  I will hear the parties on the form of order and costs.