Surian P/L v Gantert - [2003] NSWLC 14

No judgment structure available for this case.

Local Court of New South Wales

CITATION: Surian P/L v Gantert [2003] NSWLC 14

JURISDICTION: Civil

PARTIES: John F Surian Pty Limited t/as Raine & Horne Parramatta
Suzanne Gantert

FILE NUMBER: 6690 of 2003

PLACE OF HEARING: Downing Centre Local Court

DATE OF DECISION:
24/10/2003

MAGISTRATE: Magsitrate B A Lulham

CATCHWORDS: Agent's Commission - Effective Cause of Sale - Statement of Claim - Requirement for notice and service

LEGISLATION CITED: Property Stock & Business Agents Act 1941 s 42
42 A

CASES CITED: Oades & Anor ats Ewart NSW CA (1961) NSWR 45
A.R. Norton Pty Ltd v Fowler (1966) 2 NSWR 489
Jacobs v The Public Trustee (1964) 80 NSW WN 954
Investment Corporation Pty Limited v Knox Street Apartments Pty Limited 56 NSWLR 27
Moneywood v Sulaman Nominees (2002) CLR 351
L.J Hooker Limited v W.J Adams Estates Pty Ltd (1977) 138 CLR 52.
Rasmussen & Russo Pty Limited v Gariglio (1982) Qld R 571

REPRESENTATION: Matthews Folbigg Pty Ltd Solicitors for the Plaintiff
Ms K Rees Counsel for the Plaintiff
Castrission & Co Solicitors for the Defendant
Mr R Rasmussen Counsel for the Defendant

ORDERS: 1. There will be Judgment for the plaitniff in the sum of $ 15,500.00.; 2. The plaintiff will be entitled to interest on the sum of $15,500.00 from 25 August 2002. Such interest to be calculated by the Registry.; 3. The defendant is to pay the plaintiff's costs and disbursements as agreed between the parties. In default of agreement within 28 days the costs and disbursements are to be assessed under the Legal Profession Act.

1 This matter proceeded before me at the Downing Centre on 17 September 2003 when Ms Rees appeared for the plaintiff and Mr Rasmussen for the defendant. The matter was very well prepared and well argued. Excellent witness statements were prepared on behalf of each of the two principal witnesses. Counsel had prepared helpful case summaries and submissions. There was really no dispute on the facts and no issues of credit. Mr Burns the plaintiff's sales person was not cross examined. The defendant Suzanne Gantert was, but the cross examination did not assist me.

2 By an Amended Statement of Liquidated Claim the plaintiff claimed the sum of $15,500.00 being the commission due at a fee of 2.5% of the sale price of the defendant's property located at 69 Buller Street, North Parramatta. Ms Gantert sold her premises to Better Buildings Pty Limited for $620,000.00 by a Contract of Sale dated 25 February 2002. The sale was settled on 26 August 2002. The selling agents nominated on the Contract of Sale were D & D Real Estate Agents of Parramatta.

3 It was not in dispute that Ms Gantert had entered into an Agency Agreement with the plaintiff dated 8 April 2000. In these proceedings the plaintiff relied on the following clauses of the Agency Agreement;

In consideration of the agent promising to use their best

endeavours to sell the subject property, the principal hereby

grants to the agent exclusive selling rights of the property for a

period from 11 April 2000 to 11 July 2000 now called the

'agency period'

The agent shall be entitled to a fee of 2.5% of sale price if

during the agency period the property is sold either by the:

(a) agent;

(b) any other agent; or

(c) by the principal.

The agent shall also be entitled to a fee at the agreed amount if

at any time following the expiration of the exclusive agency

period, the principal enters into a contract for the sale of the

property to a purchaser effectively introduced to the principal

or the property during the exclusive agency period by the

agent by any other agent or by the principal.

In addition to the exclusive selling rights granted to the agent

under Clause 2, the principal also grants to the agent non-

exclusive selling rights of the property commencing on the

expiry of the agency period specified in Clause 2 and until

such time as either the property is sold or this agreement is

terminated by either party giving notice in writing now called

the 'Continuing Agency Period'.

The agent shall be entitled to the amount of fees specified in Clause 3 if during the Continuing Agency Period they effectively introduce to the principal a purchaser who subsequently enters into a binding contract.

4 In a nutshell the plaintiff's case was that during the Exclusive Agency Period the plaintiff effectively introduced the purchaser to the property and to the vendor and the purchaser having subsequently purchased the property, the plaintiff was therefore entitled to commission under Clause 3. (ii) above. In addition the plaintiff claimed that it had effectively introduced the purchaser to the principal during the subsequent Continuing Agency Period and the purchaser having subsequently purchased the property, the plaintiff was entitled to its commission.

5 The defendant was the owner of premises 69 Buller Street, North Parramatta. The adjacent property 67 Buller Street was owned by Ms Emma Hicks. The next adjacent property was situated at the corner of Buller Street and Gladstone Street and known as 40 Gladstone Street was owned by Lou Wehbe. Lou Wehbe and his brother Joe Wehbe were property developers. The property fronting Gladstone Street next to the corner block, being 38 Gladstone Street was owned by Ms J. Norman. The adjoining property 36 Gladstone Street was owned by Mr & Mrs T. Davenport. Attached to this Judgment as Annexure 1 is a plan of the area bounded by Buller and Gladstone Streets showing the positions of the properties 69 and 67 Buller Street and 36, 38 and 40 Gladstone Street. It appeared that the daughter of Marie Hicks, the owner of 67 Buller Street contacted Mr Paul Raymond Burns a real estate agent employed by the plaintiff in March 2000. The owner of 38 Gladstone Street, North Parramatta had learned that the five properties (hereinafter referred to as 'the subject properties') were to be rezoned under the Draft Parramatta Local Environmental Plan as Residential 2C which would permit the land to be used for multi-storey units. Mr Burns made inquiries of the Council. He confirmed that the Council proposed to alter the zoning. It was not in dispute that each of the subject properties would have a greater value if sold as a re-development site. To obtain the best price each of the subject properties would have to be sold to the one developer.

Paul Raymond Burns

6 The witness statement of Paul Raymond Burns of 11 August 2003 was tendered.

7 Mr Burns stated that after being contacted by the owner of 67 Buller Street, North Parramatta he made the various inquiries at the Council and was satisfied that the zoning of the subject properties was to be altered. He said he approached Ms Gantert and informed her that he had received instructions from her neighbours to act on their behalf on the sale of their property to a developer and recommended that she should list her property with him as well. He said he completed a Sales Inspection Report and Exclusive Agency Agreement which he left with Ms Gantert who said that she wished to bounce the idea off someone else. About a week later Ms Gantert signed the Exclusive Agency Agreement which was dated 8 April 2000.

8 That document was obviously important as it was the document that gave the Exclusive Agency to the plaintiff for the period from 11 April 2000 to 11 July 2000 and the Non-Exclusive Agency for the property for the period after 11 July 2000. The Agency Agreement showed the agent's opinion as to current reasonable selling price to be $600,000.00.

9 Mr Burns stated that he identified the owner of Lot 40 to be Lou Wehbe. He was aware that he and his brother Joe Wehbe were property developers. He considered them to be likely purchasers. He contacted Lou Wehbe and informed him that he was the agent for the owners of the properties adjoining his property 40 Gladstone Street. He told Lou Wehbe they wanted to sell their properties to a developer. He asked Lou Wehbe if he wanted to sell. He replied that the didn't but that he may be interested in buying the properties.

10 Subsequently Paul Burns negotiated with Joe Wehbe and he was able to negotiate a price for each of the properties, 36 and 38 Gladstone Street and 67 and 69 Buller Street. He said that the agreement reached was for the vendors to give Better Buildings Pty Limited a six months option to purchase the properties in return for a 1% option fee. The option period was to commence from the gazettal of the Parramatta Local Environmental Plan. The purchaser was to be Better Buildings Pty Limited. He said Ms Gantert agreed to enter into agreement for the sale of her property on the above basis and a Sales Advice was forwarded to Ms Gantert's solicitors. Sales Advices subject to the same conditions but for different sale prices were forwarded to each of the other three owners of the subject properties. There was some negotiation regarding the proposed purchase price with Ms Gantert. An Option to Purchase Agreement was prepared but not exchanged. The parties were unable to agree upon a clause which would give each party the right to terminate the agreement in the event that the rezoning of the property had not occurred within a certain period of time.

11 Mr Burns said that from May 2000 to July 2001 he made inquiries with the Council in relation to the gazettal of the Parramatta Local Environmental Plan. In about July 2001 he formed the impression the gazettal was going to happen in the near future and on 23 July 2001 he sent a letter to Ms Gantert enclosing a new deal offered by Better Building Pty Limited. The offer involved the purchasers obtaining a nine month option commencing on the date that the Local Environmental Plan was gazetted. The purchaser was to pay a 1% option fee which was to be refunded if the Local Environmental Plan was not gazetted within nine months. The same offer was made to the three adjoining owners. An agreement was not reached in relation to that offer and in August 2001 the three adjoining owners terminated their Agency Agreements with the plaintiff.

12 In November Mr Burns had contact with one of the adjoining owners and received instructions to proceed to see if he could conclude the deal with Better Buildings Pty Limited.

13 The Parramatta Local Environmental Plan was gazetted on 7 December 2001.

14 Mr Burns said that on 13 December 2001 he telephoned Ms Gantert on 13 December 2001 and the following conversation took place;

Burns: "The LEP has been gazetted, let's get going on the sale of your property."

Gantert: "I've signed with another agent."

Burns: "But you haven't terminated your agreement with Raine & Horne."

Gantert: "That agreement was only for a fixed period which has expired."

Burns: "It continues after that period until you terminate it."

15 Mr Burns said he wrote to Ms Gantert on 13 December 2001 a letter in the following terms;

'We write to confirm our discussion of this morning (13.12.01) when you stated you no longer wished to deal with Raine & Horne Parramatta.

As you are aware, Raine & Horne Parramatta went very close to selling your property to a company by the name of Better Buildings Pty Limited and whilst we respect your decision to terminate our Agency Agreement we wish to point out that should Better Buildings Pty Limited or any person associated with Better Buildings Pty Limited purchase your property, then Raine & Horne Parramatta will be entitled to the fee mentioned in the Agency Agreement.

As we believe Better Buildings Pty Limited are still keen to purchase your property, we hope that you will allow us to sell your property in the near future.

If you require any further information regarding the above matter please do not hesitate to contact the undersigned.'

16 On 14 December Mr Burns received a letter from Ms Gantert terminating the Agency.

17 On 19 December 2001 the three adjoining owners signed new Agency Agreements with the plaintiff who was given a two weeks Exclusive Agency. Mr Burns was able to negotiate a new price for each of the three adjoining owners being an increase of approximately $20,000 on the figure previously negotiated. Sales advices in relation to those three properties were issued on 20 December 2001. Contracts of Sale were exchanged on 4 February 2002 and settled on 5 August 2002.

18 Mr Burns said that whilst he was on holidays between December 2001 and February 2002 Joe Wehbe of Better Buildings Pty Limited contacted him and the following conversation took place;

Joe Wehbe: "I want to buy 69 Buller Street but they don't want to sell it to me as they don't want to pay double commission."

Burns: "Wait until D & D's agency period ends and then I'll sell it to you."

Joe Wehbe: "No I don't want to wait."

Burns: "Tell the agency at D & D that I will split the commission with him."

Joe Wehbe: "That sounds fair, I'll tell him."

19 Mr Burns stated that upon his return from holidays he spoke with Hassan Derbas of D & D Realty who was not prepared to split the commission with his firm. Mr Burns wrote to Ms Gantert on 20 February 2002 in the following terms;

'We wish to advise that we had a meeting with the licensee of D & D Realty on Tuesday the 19th of February 02. At this meeting we offered to split the commission with them in order to prevent you from paying two commissions. They however refused our offer leaving us no alternative but to pass the matter to our solicitors.

20 On 25 March 2002 Mr Burns forwarded the following invoice to Ms Gantert;

'25 March 2002

Ms S. Gantert

69 Buller Street

NORTH PARRAMATTA NSW 2151

ABN 16001 906 118

DATE: 25TH March 2002 INVOICE NO 3812

Re: 69 Buller Street, North Parramatta

PARTICULARS AMOUNT

Invoice for $15,500 being for sale of the above property $15,500.00

$15,500.00

"If you dispute part or all of the amount specified in this statement/itemised account, and if you have been unable to resolve the dispute, you may apply to the Fair Trading Tribunal for a determination of the matter. Legal action to recover the amount specified in this statement/itemised account cannot be commenced until 28 days after it has been served on you."

Melanie Heard

21 The plaintiff also relied upon an Affidavit of Melanie Heard, Solicitor for the plaintiff. In her Affidavit she annexed a copy of a letter dated 12 July 2002 served by mail upon Sid Hawach & Associates, the purchaser's Solicitors. The letter of 12 July 2002 enclosed a copy of the Agency Agreement and also a copy of all of the relevant correspondence between the plaintiff and the defendant and purported to set out the legal and factual basis upon which the plaintiff claimed to be entitled to the commission.

22 Neither Mr Burns nor Ms Heard was cross examined.

CASE FOR DEFENDANT

Suzanne Gantert

23 The witness statement of Suzanne Gantert dated 29 July 2003 was tendered.

24 In such statement Ms Gantert said that when first approached by Mr Burns from Raine & Horne to list her property with him she said that she wanted to wait until the rezoning came through before selling her property. Subsequently she agreed to sign an Exclusive Agency for a period of three months from 11 April 2000. She agreed that two offers were received for the sale of her property for the sum of $600,000 to Better Homes Pty Limited. Each of the offers was in the form of granting the purchaser an option to purchase, dependant on the rezoning. The option agreements were not entered into because of concerns as to the length of the option and the doubts as to when the rezoning of the properties would be gazetted.

25 Ms Gantert said that on 8 August 2001 she attended a meeting with the other three owners of the subject properties at which Mr Derbas from D & D Real Estate said that he would market the properties on a straight out sales basis and suggested that the owners wait until the LEP was gazetted before they sign an Agency Agreement with him. Ms Gantert stated that she was amazed to learn in mid January 2002 from Derbas that her neighbours had signed up with Raine & Horne.

26 Ms Gantert said that she terminated the Agency Agreement with Raine & Horne during a telephone conversation on 13 December 2001 with Mr Burns. Ms Gantert said that she telephoned Mr Burns on that occasion, but I think it more likely that Mr Burns had telephoned her as he alleged in his witness statement.

27 Ms Gantert said she did not become aware until mid January that the three owners of the other subject properties had sold to Better Buildings Pty Limited. Ms Gantert she became agitated at that stage as she realised, as hers was the only property in the square constituted by the subject properties, which had not been acquired by Better Buildings Pty Limited.

28 Ms Gantert said that Mr Derbas put up a sign on her building and introduced several interested parties but said that Mr Derbas then said to her;

"The only way is for me to approach Better Buildings to see if they are still interested in purchasing the subject property as all the zoning problems that you previously had are no longer applicable."

29 An agreement was reached for Better Buildings Pty Limited to purchase her property for $620,000. Ms Gantert said she received the letter from Raine & Horne dated 20 February indicating that D & D Real Estate were not willing to halve the commission. Significantly that letter was received prior to the exchange of contracts with Better Buildings Pty Limited on 25 February 2002.

30 Ms Gantert said she instructed Sid Hawach & Associates to act for her on the sale, on advice from the agents. The Solicitors gave her advice on the claim by Raine & Horne for commission. A copy of their letter of advice was attached to her statement.

31 Ms Gantert was cross examined but I do not think it is necessary for me to refer to the evidence given in such cross examination.

32 The defendant relied on an argument under s42A of the Property Stock & Business Agents Act 1941. Such section provides as follows;

'42A Review of commissions fees etc.

1. No action or other proceedings shall be commenced by any licensee for the recovery of;

(a) Any remuneration by way of commission, fee, gain or reward for services performed by such licensee in his or her capacity as such, or

(b) Any sum as reimbursement for expenses or charges incurred in connection with the services performed by such licensee in his or her capacity as such,

until the expiration of 28 days after a Statement of Claim in writing setting out the amount claimed and containing details of the services performed by such licensee in respect of which such commission, fee, gain, reward, expenses or charges are claimed has been served personally or by post on the person to be charged with the same.

2. (Repealed).

3. …….

4. Without limiting the Consumer Claims Act 1998 the person served with the Statement of Claim in accordance with sub-section 1 or the person receiving or obtaining an itemised account as provided in sub-section 3, may in accordance with s6 of that Act apply to the Tribunal for the determination of a consumer claim within the meaning of that Act in relation to;

(a) The entitlement of the licensee to the whole or any part of the amount specified in the Statement of Claim or the itemised account, or

(b) Whether the whole or any part of the amount is reasonable,

or both.'

5. ….

6. 'The regulations may make provision for or with respect to requiring the inclusion, in the manner prescribed by the Regulations in Statements of Claim or itemised accounts referred to in this section of a notice in a form approved by the Director General containing advice concerning remedies available under the Consumer Claims Act 1998.'

33 The plaintiff relied on the invoice for $15,500 posted to the defendant and dated 25 March 2002. I set that invoice out in full in paragraph 20. The invoice referred to the sale of the property 69 Buller Street, North Parramatta and significantly included a statement of the defendant's rights under s41A(6) to apply to the Fair Trading Tribunal for the determination of any dispute.

34 Mr Rasmussen for the defendant relied on the Court of Appeal decision in Oades & Anor. ats Ewart (NSW Court of Appeal 1961 NSWR 45). There Owen J stated that the Statement of Claim required by S42A should include the following matters;

'In a case such as the present, I am of the opinion that a Statement of Claim sufficiently details the services performed in respect of which an estate agent claims commission if he identifies the property sold, the vendor and purchaser of it, the price, and shows how the amount which he claims as commission is made up, namely by stating the percentage which he has charged on the amount of the sale price.'

35 Mr Rasmussen submitted that the statement relied upon in this matter did not identify the purchaser of the property and did not show how the amount claimed for commission was calculated. It did not show the percentage which the agent charged on the sale price. Indeed it did not state the sale price. Mr Rasmussen submitted that the invoice of 25 March 2002 lacked sufficient particulars to be considered a Statement of Claim and did not comply with s42A(1).

36 Ms Rees referred me to A. R. Norton Pty Limited v Fowler (1966) 2NSWR. In that matter the agent relied upon a letter written by his solicitors to the solicitors acting for the vendor as being the document which complied with s42A(1). Sugarman JA said as follows (p489 at 10-25);

Oades v Ewart & Anor

37 Ms Rees also referred me to the decision of Herron CJ, Richardson and Brereton JJ in Jacobs v The Public Trustee (1964) NSW WN Vol 80 p954) wherein the Court found that the statement of claim required under s42A(1) of the Act need not be contained in a single document and may be given either before or after legal liability has been incurred by the principal to pay the amount of the agent's commission.

38 In Investmentsource Corporation Pty Limited v Knox Street Apartments Pty Limited 56 NSWLR p27 the agent sought to rely upon a statutory demand under s459E of the Corporations Act 2001 as being the Statement of Claim for the purposes of s42A(1). His Honour Barrett J considered s42A(1) and referred particularly to s42A(4) which sets out right of the person served with a claim to apply to the Consumer Trade & Tenancy Tribunal for a determination of any dispute and then stated as follows;

Oades v Ewart

Raine & Horne Commercial Pty Limited v Concepts & Developments Pty Limited

The purpose of s42A is to provide a client or principal with an itemised bill of the commission claimed so that an application for review of whether the commission is reasonable can be made to the Real Estate Services Council …. within 28 days after service of the Statement of Claim under s42A(4).'

39 Barrett J referred also referred to the provision of S42A(6) requiring a notice to be appended to the Statement of Claim containing advice concerning the remedies available under the Consumer Claims Act. The Notice under the Corporations Act did not contain such a statement and Barrett J held that such Notice;

' Therefore failed to exhibit a feature made essential by the Legislation, being a feature that went to the very purpose of the document as a means of providing information about the availability of the review process. This caused the document not to be of the character required by the statute.'

40 In that case the agent also sought to rely upon a letter from the agent not to the defendant but to an associated company. Barrett J stated;

Jacobs v Public Trustee

A Norton Pty Ltd v Fowler

But there are two problems. First, the letter is not addressed to Knox, being the party upon which a statement of claim would necessary have been served. Second (and as in the case of the statutory demand), the letter did not contain and did not have appended to it the notice required by client 16 of the Regulation and therefore failed to satisfy a fundamental requirement going to the purpose a "statement of claim" is intended to serve within the statutory scheme.'

41 Significantly the Statement of Claim relied upon by the plaintiff in this matter included the appropriate notice required by S41A(6).

42 The statement of Melanie Heard was tendered as evidence and the plaintiff sought to rely on the letter dated 12 July 2002 from Matthew Folbigg Pty Limited to Sid Hawach & Associates the defendant's solicitor, to overcome any deficiency in the Statement of Claim dated 25 March 2002. The letter from the solicitors certainly set out the basis upon which the plaintiff sought the commission. It did not set out how the amount claimed of $15,500 was calculated and did not set out the notice required pursuant to s41A(6). The plaintiff sought to rely on that letter in conjunction with the Statement of Claim and clearly the authorities to which I have referred indicate that the Statement of Claim can be constituted by more than one document and no particular formality is called for.

43 However, the problem confronting the plaintiff in seeking to rely on the letter to the solicitors dated 12 July 2002, is that s42A(1) requires the Statement of Claim to be;

'Served personally or by post on the person to be charged with the same.'

44 In the extract from the decision of Sugarman JA in A.R. Norton Pty Limited v Fowler which I have previously set out, the Learned Judge specifically declined to decide the question as to whether correspondence between solicitors was sufficient, bearing in mind the requirement for service on the person to be charged. In A.R. Norton Pty Limited v Fowler the point was not relied upon but before me, Mr Rasmussen for the defendant did rely on the fact that the letter of 12 July 2002 was not served on his client and he of course relied on what Barrett J found in Investmentsource Corporation Pty Limited v Knox Street Apartments Pty Limited 56 NSWLR 27.

45 I am of the view that the plaintiff cannot rely on the letter of 12 July 2002 as forming part of the Statement of Claim under s42A(1). It was not served on the person to be charged.

46 However I am satisfied that the invoice dated 25 March 2002 did comply with the requirements of the section. There is no form prescribed by the section or the Regulations. I am satisfied that Owen J in Oades v Ewart was not attempting to prescribe what had to be included in the statement. Whilst the statement of 25 March 2002 did not set out how the amount claimed of $15,500 was calculated, the plaintiff had signed the Sales Inspection Report and Exclusive Agency Agreement with the defendant which document clearly indicated that the commission would be charged at a rate of 2.5% of the sale price. Further, that document indicated that the commission on a contract price of $600,000 would be $15,000. Whilst it would have been preferable for the statement to have included the calculation, it seems to me that the calculation was an obvious one from documents served on the defendant. S42A does of course only require "a Statement of Claim in writing setting out the amount claimed." Moreover, I think it most important and persuasive that the statement of 25 March 2002 did include notice required by s42A(6) and that therefore the statement clearly complied with the purpose of s42A, namely to inform the defendant of her rights under s42A(4) and of the amount which was being claimed so as to enable her to give consideration as to whether or not she would exercise her rights under s42A(4).

47 S42A also requires "A Statement of Claim in writing setting out …. and containing details of the services performed by such licensee". I am of the view that the Statement of Claim dated 25 March did comply with that requirement. If there be any doubt I find that the plaintiff could rely on the letters to the defendant dated 14 December 2001 and 20 February 2002 in conjunction with the Statement of Claim dated 25 march 2002 to satisfy the section. The defendant fails on the argument under s42A(1).

48 S42 of the Property Stock and Business Agents Act 1941 provides;

1. Subject to this Act no person shall be entitled to bring any proceeding in any Court to recover any commission, fee, gain or reward for any service performed by the person;

(a) As a real estate agent unless the person was the holder of a real estate agents licence or employed such a holder at the time of performing the service, or

(b) …..

(c) …..

(d) …..

(e) …..

and in the case of a corporation unless it was the holder of a corporation licence at the time of performing such service.

49 Ms Rees for the plaintiff tendered a copy of the Corporation Licence No. 139591 issued to the plaintiff John F. Surian Pty Limited on 11 September 2003 with an expiry dated of 8 September 2006. Mr Rasmussen took the point that the tender of such licence did not prove that the plaintiff was the holder of a Corporation Licence at the time of performing the service. His submission was correct. However the point was not raised in the pleadings or during the hearing of the matter and over the objection of Mr Rasmussen I allowed Ms Rees to recall Mr Burns who gave oral evidence of his knowledge that the plaintiff was licensed under the provisions of the Act when it performed the services, the subject of the dispute in these proceedings. I accepted his evidence and I was satisfied the requirements of s42 had been met.

50 This question raised the real issue in these proceedings. Whilst the Sales Inspection Report in both Clause 3(ii) and Clause 4 used the term 'effectively introduced' the purchaser to the principal or the property the cases make it clear that:

Moneywood v Salaman Nominees

51 In Moneywood McHugh J went on to say at p361, L30;

" In determining whether the agent's conduct was an effective cause, the law looks at the substance of the matter."

52 All of the reported cases confirmed that principle and I therefore found considering the facts of decided cases were not particularly helpful as each case obviously depended on particular facts. However, the facts and findings in Moneywood are instructive. The headnote of the case provides as follows;

'Facts

The owner of land of an area of 47.5372 ha appointed a licensed estate agent to sell it. The appointment was originally oral and was made after the agent told the owner that he had a developer who was interested in purchasing the land. Commission at the rate of 2 per cent of the purchase price was agreed. The developer signed a contract for the purchase of the land. The contract described the agent as the vendor's agent and it contained a term stating that by executing the contract the vendor confirmed the appointment of the vendor's agent as the agent of the vendor to introduce the buyer. It also contained special conditions which made completion conditional upon the vendor receiving advice from the local council as to the conditions of approval for rezoning the whole of the land which would be required by the council upon giving such approval but which also required the purchaser to accept the land in its "unrezoned state". Before the original date for completion the council notified the vendor that it might acquire part of the land. The vendor subsequently agreed to sell 16.06 ha of the land to the council and it then entered into a new contract of sale of 31.338 ha to the original purchaser. The agent was not identified as the vendor's agent in either subsequent contract. The vendor refused to pay the agent commission in respect of any contract.

Held

53 In Moneywood the Primary Judge and the majority in the Queensland Court of Appeal found that the agent had been an effective cause of the sale of the 33.338 ha of land and each of the five High Court Judges separately agreed with that finding. Gummow J agreed, even though he found that the owner of the property had done a very considerable amount of work and negotiation himself to bring about the situation whereby the Council bought part of the land and the original purchaser the balance of the land.

54 In considering the meaning to be given to the words 'effective cause' Gummow J stated (p375, para 82);

Doyle v Mount Kidston Mining and Exploration Pty Ltd,

55 Gummow J quoted with approval the observation of Jacobs J in L.J. Hooker Limited v W.J. Adams Estates Pty Limited (1977) 138 CLR 52 as follows;

'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.'

56 When discussing the importance of the introduction, Kirby J in Moneywood effectively highlighted the factual issue in this matter. He said (p389 para 125);

'Introduction is necessary because, without it, no completed transaction will usually be possible. But it is insufficient because (as the decided cases repeatedly demonstrate) many transactions fail. The purchaser who is introduced may be willing but not able to complete the contemplated transaction. Into the failure of one transaction will often step other agents with the same principals but with access to funding that cures the purchaser's previous inability to complete the transaction. When this happens, such agents will commonly stake their own claims to commission. This will then oblige Courts, in resolving disputed claims, to determine the contested issues of causation which such claims present.'

57 That is of course the practical situation here. The defendant Ms Gantert has paid commission to D & D Real Estate Agents and then faced the claim by the plaintiff for commission on the sale of the same property.

58 Finally, in relation to the case of Moneywood Callinan J found on the facts in that matter (p408, para 180);

'The appellant's introduction of the buyer was critical in this case.'

59 Applying those principles to this case, I have no difficulty in being satisfied on the balance of probabilities that the plaintiff was the effective cause of the sale and is entitled to its commission under the Agency Agreement.

60 It was not in dispute that the plaintiff introduced the eventual purchaser to the property and to the defendant as the owner of the property. It was not in dispute that as a result of the considerable amount of work carried out by Mr Burns for the defendant and on behalf of the owners of the other subject properties, he was able to put to the Wehbe brothers, the Directors of Better Buildings Pty Limited (the eventual purchaser) a proposal which would enable Better Buildings Pty Limited to own the whole of the square consisting of the four adjoining properties plus their property. Of critical importance in this matter was the fact that the effect of the rezoning which enabled the properties to be used for medium density housing, was that the value of each separate property would rise if the property was able to be used for medium density housing. The resultant position was that the properties if sold together to a developer was worth more than if sold separately.

61 Mr Rasmussen for the defendant sought to rely on the fact that neither of the agreements which were reached between the defendant and the ultimate purchasers, Better Buildings Pty Limited, were in fact exchanged and that therefore the plaintiff had not introduced to the vendor a purchaser who was ready, willing and able to purchase the property. The fact that the ultimate purchaser did not purchase the property during the agency period, does not defeat the plaintiff's claim. There was no doubt that during the whole of the period from about May 2000 Better Buildings Pty Limited was anxious to purchase the defendant's property. The stumbling block which caused the difficulties in relation to the options was the doubt and confusion as to how long it would take for the gazettal of the Parramatta Local Environment Plan. Not only was the defendant disappointed with the delay and the inability to be able to reach agreement on the terms of the option to be granted to Better Buildings Pty Limited, so also were the other three owners of the subject properties as the evidence indicated that the other owners terminated the plaintiff's Agency Agreement some time in August 2001.

62 However as soon as the Local Environmental Plan was gazetted on 7 December 2001 the plaintiff was able to obtain new agencies from the other three owners and was able to negotiate for the sale of each of their properties to Better Buildings Pty Limited. In each case the purchase price was about $20,000 more than that which was indicated in the Option Proposals in July 2001. The contract for each of those sales were exchanged on 4 February 2002 and settled on 5 August 2002.

63 The statement of Suzanne Gantert indicated that after the adjoining owners terminated their agency with the plaintiff the four owners of the subject properties had a meeting with Mr Derbas of D & D Real Estate who put a proposition to them that he would market all their properties. The defendant apparently decided to list her property with D & D and did so on the evening of 13 December 2001. On that morning she had spoken to Mr Burns of Raine & Horne. She terminated the agency with Raine & Horne on 14 December 2001 and received their letter of 13 December 2001 setting out the view that Raine & Horne had introduced Better Buildings Pty Limited to the vendor and to the property and in the event of that company purchasing the property, Raine & Horne would seek to claim their commission. It was unfortunate that the defendant did not appear to be in contact with the other three owners and was not aware of their decision to list the properties with the plaintiff and was not aware that the plaintiff had negotiated the sale of those three properties to Better Buildings Pty Limited on 20 December 2002.

64 The practical result of the sale of the three adjoining properties to Better Buildings Pty Limited was that there was really only one viable purchaser for the defendant's property who would be prepared to pay the increased price brought about by the fact that the property had been rezoned. Clearly that purchaser was Better Buildings Pty Limited.

65 The defendant was aware from 14 December 2001 of the intention of the plaintiff to claim commission if the property was sold to Better Buildings Pty Limited.

66 I am satisfied that the agent Hassan Derbas from D & D Real Estate must have been aware from the time he learned in mid January that the owners of the other three subject properties had sold to Better Buildings Pty Limited that such company was the only viable purchaser of the defendant's property. It would seem he took some time to inform Ms Gantert of that fact, but then did approach Mr Joe Wehbe. It is clear from the statement of Paul Burns that Mr Derbas was aware of the potential for the defendant to pay double commission, as he said as much to Mr Wehbe (see para 34 of Burns statement).

67 The price paid for the defendant's property was $20,000 more than the figure previously proposed by the purchasers in July of 2001. It was a similar increase to that paid to each of the other three owners. Settlement of the sale by the defendant was delayed for six months, the same period settlement was delayed for the other three purchasers.

68 I have recounted the facts in some detail. The only conclusion from those facts is that the plaintiff was the effective cause of the sale. It was the plaintiff who introduced the eventual purchaser to the owner of the property and to the property. It was the plaintiff who put together the proposal which enabled all of the properties to be offered as a whole. During the whole of the time from May 2000 to the gazettal of the property, it was obvious that the eventual purchaser was keen to purchase the property and the only reason the sale could not proceed was the delay in the gazettal of the LEP. The plaintiff was the effective cause of the sale of the defendant's property to Better Buildings Pty Limited. It was the work of the plaintiff which brought about that sale. Moreover, this was not a matter similar to Rasmussen & Russo Pty Limited v Gaviglio [1982] Qld R571 where Kelly J found there was;

'A complete cessation of the necessary causal relationship between 'the agent's' actions and the sale which eventually took place.'

69 In Rasmussen the second agent had obtained finance for the purchaser which the purchaser would otherwise have been unable to obtain. It was not unusual then that on those facts a Court could find that the first agent was not the effective cause of the ultimate sale.

70 That was not the position in this case. The second agent D & D Real Estate offered the defendant's property to other developers who were not interested no doubt because the defendant's property on its own was too small for development. Eventually, reluctantly he offered the property to Better Buildings Pty Limited the purchaser introduced to the property and the owner by the defendant and whom I find was anxious to purchase the property as a result of the interest kindled by, and the work done by the plaintiff. The increase in the purchase price and the six months delay for settlement were terms similar to those arranged by the plaintiff on the sale of the three properties owned by the adjoining owners. The second agent did nothing to break the causal connection between the plaintiff's work and the ultimate sale.

71 The plaintiff was the effective cause of the sale.

72 It gives me no joy to make that finding which will result in a verdict against the defendant. I have considerable sympathy for the defendant. Her credibility was not in issue. She sought legal advice in relation to her liability for payment of commission. She was not well served with the advice she received. Moreover, before she exchanged contracts on the sale of her property the plaintiff had informed her in writing;

1. that it intended to claim commission on the sale and was referring the matter to its solicitor.

2. that it had offered to split the commission with the second agent D & D Real Estate which offer D & D Real Estate had refused.

73 The plaintiff's offer was sensible and reasonable, indeed generous. Mr Derbas of D & D Real Estate was well aware of the risk of the defendant having to pay double commission. He indicated that to Mr Wehbe as a reason why the defendant was reluctant to sell to Mr Wehbe.

74 In those circumstances I find it extraordinary that D & D Real Estate would not have accepted the offer to split the commission. I cannot believe that a competent solicitor or agent could properly advise the defendant to proceed to exchange contracts on 25 February 2002 with no agreement as to the commission, thereby exposing the defendant to these proceedings which had been clearly foreshadowed.

75 I appreciate that in making these comments I have not heard from the Solicitors Sid Hawatch & Associates or the agents D & D Real Estate who were not parties to these proceedings.

76 I propose to request the Clerk of the Court to forward a copy of this judgment to the Real Estate Institute of New South Wales for their consideration in relation to the actions of D & D Real Estate at Parramatta.

77 I propose to make the following orders:

1. There will be judgment for the plaintiff in the sum of $15,500.00.

2. The plaintiff will be entitled to interest on the sum of $15,500.00 from 25 August 2002. Such interest to be calculated by the Registry.

3. The defendant is to pay the plaintiff's costs and disbursements as agreed between the parties. In default of agreement within 28 days the costs and disbursements are to be assessed under the Legal Profession Act.

78 I will hear from the parties in relation to the proposed orders.

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Citations

Surian P/L v Gantert [2003] NSWLC 14

Cases Citing This Decision

0

Cases Cited

2

Statutory Material Cited

2

LJ Hooker Ltd v WJ Adams Estates Pty Ltd [1977] HCA 13

Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2

CITATION:	Surian P/L v Gantert [2003] NSWLC 14
JURISDICTION:	Civil
PARTIES:	John F Surian Pty Limited t/as Raine & Horne Parramatta Suzanne Gantert
FILE NUMBER:	6690 of 2003
PLACE OF HEARING:	Downing Centre Local Court
DATE OF DECISION:	24/10/2003
MAGISTRATE:	Magsitrate B A Lulham
CATCHWORDS:	Agent's Commission - Effective Cause of Sale - Statement of Claim - Requirement for notice and service
LEGISLATION CITED:	Property Stock & Business Agents Act 1941 s 42 42 A
CASES CITED:	Oades & Anor ats Ewart NSW CA (1961) NSWR 45 A.R. Norton Pty Ltd v Fowler (1966) 2 NSWR 489 Jacobs v The Public Trustee (1964) 80 NSW WN 954 Investment Corporation Pty Limited v Knox Street Apartments Pty Limited 56 NSWLR 27 Moneywood v Sulaman Nominees (2002) CLR 351 L.J Hooker Limited v W.J Adams Estates Pty Ltd (1977) 138 CLR 52. Rasmussen & Russo Pty Limited v Gariglio (1982) Qld R 571
REPRESENTATION:	Matthews Folbigg Pty Ltd Solicitors for the Plaintiff Ms K Rees Counsel for the Plaintiff Castrission & Co Solicitors for the Defendant Mr R Rasmussen Counsel for the Defendant
ORDERS:	1. There will be Judgment for the plaitniff in the sum of $ 15,500.00.; 2. The plaintiff will be entitled to interest on the sum of $15,500.00 from 25 August 2002. Such interest to be calculated by the Registry.; 3. The defendant is to pay the plaintiff's costs and disbursements as agreed between the parties. In default of agreement within 28 days the costs and disbursements are to be assessed under the Legal Profession Act.