The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq)

The Property Investors Alliance Pty Ltd (the appellant) and C88 Project Pty Ltd (in liq) (the respondent) entered into a Sole Agency Agreement for the marketing and sale of units in a residential development. The appellant, as the selling agent, was entitled to a "Commission" upon the sale of units. The dispute arose because the appellant asserted that the definition of "Commission" in the Agreement was intended to include commission accrued prior to its execution, a claim the respondent resisted. The appellant also sought to establish a caveatable interest in the nature of an equitable charge over certain units in the development, entitling it to a judicial sale. The appeal was heard by White and Kirk JJA, and Griffiths AJA.

The court was required to determine two primary legal issues. Firstly, whether the appellant had provided sufficient proof, by inference, of a common intention that the "Commission" as defined in the Sole Agency Agreement should have extended to commission accrued prior to the Agreement's execution, thereby justifying rectification of the Agreement. Secondly, the court had to consider whether the Sole Agency Agreement granted the appellant a caveatable interest in the form of an equitable charge over the units, and if so, whether such a grant was rendered void by section 49(1) of the Property and Stock Agents Act 2002 (NSW) due to the appellant's status as a real estate agent.

Regarding the claim for rectification, the court found that the uncontradicted evidence of the appellant's sole director, without the respondent's directors or managers providing evidence on their intentions at the time of execution, did not amount to clear and convincing proof of a common intention by inference. Consequently, relief in the nature of rectification was denied. However, on the issue of the caveatable interest, the court held that the Sole Agency Agreement, by conferring a right on the appellant to compel the sale of specified units at a fixed price and to offset outstanding commission against the purchase price, and by authorising the appellant to lodge caveats to protect its entitlement to commission, impliedly granted the appellant an equitable charge over the units in the development. The court further determined that the interpretation clause within the Agreement, which purported to sever any repugnant provisions, did not sever the clauses that impliedly granted this equitable charge, as the grant of the charge was not considered to be in contravention of section 49(1) of the Property and Stock Agents Act 2002 (NSW).

The appeal was allowed in part, and the order dated 12 August 2022 was set aside. The proceedings were remitted to the primary judge for the purpose of considering making orders for judicial sale. The parties were directed to seek agreement on the form of a declaratory order giving effect to the reasons and on the costs of the proceedings, both below and on appeal, within 14 days. If agreement could not be reached, they were to provide written submissions on these matters.