Trappando Pty Ltd v Sunshine Group Pty Ltd
[2023] QSC 87
•4 May 2023
SUPREME COURT OF QUEENSLAND
CITATION:
Trappando Pty Ltd v Sunshine Group Pty Ltd [2023] QSC 87
PARTIES:
TRAPPANDO PTY LTD ACN 112 828 958
(Plaintiff)
v
SUNSHINE GROUP AUSTRALIA PTY LTD ACN 168 390 083
(Defendant)
FILE NO/S:
CS 154 of 2022
DIVISION:
Trial Division
PROCEEDING:
Trial
DELIVERED ON:
4 May 2023
DELIVERED AT:
Brisbane
HEARING DATE:
7 March 2023, Cairns
JUDGE:
Bowskill CJ
ORDERS:
There will be judgment for the plaintiff on its claim; and the counterclaim is dismissed. The parties are to provide an appropriate draft order, including the amount for interest. I will hear the parties as to costs.
CATCHWORDS:
CONVEYANCING – THE CONTRACT AND CONDITIONS OF SALE – AGENT’S COMMISSION – where the plaintiff was appointed as the defendant’s real estate agent to sell the defendant’s property by way of a Form 6 appointment – where a contract of sale was entered into, but later terminated for the buyer’s breach, and the deposit forfeited – where the plaintiff seeks to recover the agent’s commission, on the basis that it was the effective cause of the sale and is entitled to its commission despite the termination of the contract – whether the plaintiff was properly appointed as the defendant’s real estate agent – whether the plaintiff was the effective cause of sale – whether the plaintiff was the effective cause of sale within the term of the appointment
Property Occupations Act 2014 (Qld), s 20, s 88, s 89, s 104, s 105, s 109(1)
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Commonwealth Bank of Australia v Muirhead [1997] 1 Qd R 567; [1996] QCA 241
Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1925) 35 CLR 449
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
COUNSEL: C J Ryall, for the plaintiff
M Jonsson KC, for the defendant
SOLICITORS: O’Reilly Stevens Lawyers, for the plaintiff
Preston Law, for the defendant
The plaintiff (Trappando) carries on the business of a real estate agency under the name “Andersons Real Estate” at Mission Beach in North Queensland. Trappando holds a real estate agent’s licence under the Property Occupations Act 2014 (Qld). Mr Grahame Anderson is the Sales Manager for Andersons Real Estate. His wife, Mrs Lyn Anderson, is the sole director of Trappando. Mr Anderson is not a director. No issue was taken in this proceeding about Mr Anderson’s ability to bind the company Trappando, when signing documents on its behalf.[1]
[1]Cf s 126 of the Corporations Act 2001 (Cth).
The defendant (Sunshine Group) was, at the material times, the owner of a substantial property, of some 500 acres, located in Jackey Jackey Street, South Mission Beach. Mr David Sun is the director of Sunshine Group.
In circumstances to be explained below, Sunshine Group appointed Trappando as its agent to sell the property. Although a contract of sale was entered into, it was terminated by Sunshine Group and so did not proceed to settlement. By this proceeding, Trappando seeks to recover the agent’s commission which it says it is entitled to. Sunshine Group contends that Trappando has no such entitlement, and counterclaims to recover the deposit, paid under the contract of sale, forfeited upon its termination, and still held by Trappando in its trust account.
The evidence in the trial was limited to a bundle of documents tendered without objection and oral evidence from Mr Grahame Anderson. No evidence was called on behalf of the defendant.
Prior to Sunshine Group becoming the owner of the property, Mr Anderson had been involved in marketing the property for sale by the previous owner, and so had some knowledge about it. He described the property as having Council approval for subdivision, the establishment of a “couple of resorts” and an 18 hole golf course; and also having a federal government approval of some kind, which was held in the names of the prior owners of the property.
In early 2018, Sunshine Group appointed Trappando as its real estate agent for the sale of the property. This was formalised by the execution of a Form 6 appointment on 15 January 2018. The appointment was a “continuing appointment”, starting on that date (but with no end date) and an “open listing” (meaning the property owner retained the right to appoint another agent). The list price was $12,000,000. The parties agreed that commission would be paid as follows:
“4.4% OF THE SALE PRICE IF THE AGENT INTRODUCES THE BUYER TO THE PROPERTY
2.2% OF THE SALE PRICE IF THE SELLER INTRODUCES THE BUYER TO THE PROPERTY, (REFER TO SECTION 4)”
Section (or Part) 4 provided that:
“IF THE SELLER INTRODUCES A POTENTIAL BUYER TO THE PROPERTY, THE AGENT AGREES TO SHOW THE PROPERTY TO THAT BUYER, PROVIDE ALL INFORMATION ABOUT THE PROPERTY, AND PREPARE ALL CONTRACT DOCUMENTATION FOR THE SALE OF THE PROPERTY.”
As Mr Anderson said, even if Mr Sun (of Sunshine Group) introduced the buyer, Mr Anderson would still have “to do a lot of work in securing the federal permits for any potential buyer”, which explained the agreement for payment of some (albeit lower) commission in that event.
There was no interest in the property at that time, at the price nominated.
Later, Mr Anderson received an offer, from a company he called “Property Bay”, to purchase the property for $6,000,000. Although Mr Sun apparently considered the price acceptable, that offer did not proceed to a contract, because “he had an option [to purchase] on the property already”.
Later again, Mr Anderson was approached by Mr Victor Soh, who said he had “international buyers” that would be interested in the property. Mr Soh was not a real estate agent, but came to an agreement with Mr Anderson and Mr Sun, for how he might be rewarded, if he were to introduce the buyer for the property.
That agreement was recorded in a document, dated 13 May 2019, described as follows:
“Deed of Agreement made between:
David Sun
Sunshine Group Australia Pty Ltd
[address]
And
Victor Soh and Grahame Anderson
[address]”
The Deed of Agreement referred to the South Mission Beach property owned by Sunshine Group, and included the following terms:
“The following sets out this agreement:
1.You are interested in finding a buyer for the above mentioned property.
2.The usual commitment fee of $6,000 is payable to Victor Soh and Grahame Anderson to secure a buyer, the commitment fee of $6,000 is payable to Andersons Real Estate Trust Account (The Stakeholder) on the signing of this agreement.
(a)The full amount of $6,000 is refundable to Sunshine Group Australia Pty Ltd if a contract is not signed by 30th July 2019.
(b) The full amount of $6,000 is payable to Victor Soh and Grahame Anderson within one (1) business day of the buyer signing a contract of sale.
3.You agree to pay a success fee to Victor Soh and Grahame Anderson of $500,000 + GST, this is based on a contract price of $6.5 million + GST. The success fee is payable by you to us or to our nominated party on the settlement date of the property. (as per the attached Property Occupations Form 6 listing authority).
4.You undertake to keep the identities of our parties private and confidential and not to disclose to anyone.
5.You undertake to keep all discussions confidential, including discussions with our parties confidential. You undertake not to circumvent us or bypass us. You undertake to work with us and assist us. You agree that Victor Soh can assign this agreement to another party at anytime and with written notice to you.
6.The payment obligations and clause 5 stated above survive the termination of this agreement. Any changes to this agreement must be in writing and by mutual consent only.
7.If our party(s) is agreeable to put in their money based on mutually acceptable terms and conditions, and you then change your mind, there is a fee payable to us of 2% of the amount they are going to put in. This fee is payable by you upon issue of an invoice to you. This clause survives the termination of this agreement.
8.If you have other projects you want to discuss with our party(s), you agree to discuss with us first and enter into similar agreement with us prior to approaching our party(s). If we can’t reach agreement, then you will not approach our party(s).”
It was Mr Anderson’s evidence that Mr Sun wanted a minimum of $6,000,000 for the property, and “he didn’t care who got paid whatever, as long as he got his money”.
Mr Anderson was a party to the Deed of Agreement in his personal capacity (not on behalf of Trappando). It was common ground that there was no Form 6 attached to the Deed of Agreement (cf clause 3 of the Deed of Agreement).
Shortly after the Deed of Agreement was signed, Sunshine Group paid $6,000 to Trappando’s trust account. Despite the wording of clause 2 of the Deed of Agreement, Mr Anderson’s evidence was to the effect that the whole of the $6,000 fee was to be paid to Mr Soh (to cover “what he called airfares to go to meet with his buyers”). Mr Anderson said that Mr Sun was reluctant to pay the whole $6,000 to Mr Soh, and so “we agreed to share that evenly between ourselves. And pay Victor $3000 each”. The way that occurred was that Sunshine Group paid $6,000 to the plaintiff’s trust account. $3,000 of that was then paid to Mr Soh (on 29 May 2019). Another $3,000 was paid by Trappando to Mr Soh. And Trappando subsequently refunded $3,000 to Sunshine Group (on 29 November 2019).
A short time after the Deed of Agreement was executed, possibly on 15 May 2019, the parties agreed to an amendment, to add an additional sub-paragraph (c) to clause 2, which provided:
“(c)You agree to release $3,000 to Victor Soh and Victor Soh guarantees that he will return the $3,000 to the trust account if no buyer is found by 30 July 2019.”
Mr Anderson prepared the Form 6, for the appointment by Sunshine Group (the client) of Trappando as the real estate agent for the sale of the land. This document was dated 25 May 2019. In part 4, section 2 of the Form (“term of appointment”) the box was ticked indicating it was a “single appointment for a particular service or services” and the time period specified was from 25 May 2019 to 30 July 2019. No specific price was mentioned, but part 4, section 3 of the Form stated “reasonable offers considered”.
At part 6 of the Form, the box was ticked indicating the appointment was an “exclusive agency”. In that regard, the Form stated as follows:
“When you must pay the agent
·The client will pay the appointed agent whether this agent, any other agent, or person (including the client themselves) sells the property during the term of the appointment.
·If the client sells the property, after the exclusive appointment expires and if the agent was the effective cause of sale (introduced the buyer to the property) the agent may be entitled to commission.” [emphasis added]
This part of the Form also provided that, at the end of the exclusive agency, the parties agreed that the appointment would continue as an open listing.
At part 5 of the Form, it is recorded that, for an open listing, “you may terminate an open listing for either commercial or residential property sales at any time”. And at part 6 of the Form, in relation to “open listing[s]”, it is recorded “no end date required” and “appointment can be ended by either you or the agent at any time by giving written notice”.
Part 7 of the Form (dealing with Commission) recorded the following agreement:
“The client and the agent agree that the commission including GST payable for the service to be performed by the agent is:
1. Sale price of up to and including $6,300,000 + GST – 4.4% of the sale price.
2. Sale price of over and including $6,300,001 + GST – All money above $6,000,000 + GST to be paid to the agent + GST.
(eg. sale price of $6,500,000 + GST - $500,000 + GST to be paid to the agent).”
As to “when commission is payable”, the “other” box was ticked, and the words “refer to item 5 of the essential terms and conditions” added. Item 5 is in the following terms:
“5.ENTITLEMENT TO COMMISSION – SALE
5.1 The Client agrees to pay the Agent Commission as specified in Part 7 of the Appointment of Property Agent if a Contract of Sale of the Property is entered into with a Buyer, whether within the Term or after the Term, where the Relevant Person is the effective cause of the sale within the Term, provided that:
5.1.1the Contract of Sale of the Property is completed; or
5.1.2the Client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or
5.1.3the Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or
5.1.4the Contract of Sale is terminated by mutual agreement of the Client and the Buyer.
5.2For the purposes of Clause 5.1 a Relevant Person is, where the Appointment of Property Agent is for:
5.2.1an Exclusive Agency, any person (including the Client); or
5.2.2a Sole Agency, any person other than the Client; or
5.3.2an Open Listing, the Agent only.”
Clause 1.10 of the essential terms and conditions provided that “Term” means the term specified in Part 4, Section 2 of the Appointment of Property Agent. Section 2 of the Form specifies the period from 25 May 2019 to 30 July 2019.
The standard wording which appears in part 7 of the Form reads as follows:
“To the client
The commission is negotiable. It must be written as a percentage or dollar amount.
Make sure you understand when commission is payable. If you choose ‘Other’ and the contract does not settle, the agent may still seek commission.
To the agent
You should ensure that commission is clearly expressed and the client fully understands the likely amount and when it is payable. Refer to section 104 and 105 of the Property Occupations Act 2014.”
At part 9 of the Form, where the client and agent sign, there is a warning in large bold letters: “the client is advised to seek independent legal advice before signing this form”.
Item 15 of the essential terms and conditions stated that:
“15.1This document constitutes the entire Agreement of the parties with respect to the subject matter of this document and supersedes all prior negotiations or expressions of intent or understandings with respect to the Appointment of the Agent to the Property.”
It is not in issue that Mr Sun signed the Form 6, on behalf of Sunshine Group, as the client. Nor is it in issue that Mr Anderson signed the Form 6, on behalf of Trappando, as the agent, and was authorised to do so.
On or about 30 July 2019, Mr Anderson and Mr Soh proposed a further variation of the Deed of Agreement, to extend the date for a buyer to be found to 30 August 2019 – “to allow the Malaysian buyers some time to inspect the property”. A similar variation was proposed to the Form 6 appointment.[2] An amended Deed of Agreement, and extract from the Form 6 (showing inconsistent dates) were sent by Mr Anderson to Mr Sun, by email on 30 July 2019, seeking his signature and return of the documents. That did not happen. The evidence does not support a finding that Sunshine Group, by Mr Sun, agreed to this extension.
[2]Although all that was provided with the email setting out the proposal was the signing page of the Form 6, with the date 30/08/2019 nominated for Anderson Real Estate to sign, and the date 30/07/2019 for Sunshine Group Australia Pty Ltd: Exhibit 1, at p 10 and p 51.
In terms of efforts to sell the property, Mr Anderson said he had “several conversations with Victor Soh about having buyers and flying over to meet them personally, which never eventuated”. Mr Anderson said he started marketing the property on the “realestate.com” website, and received some general inquiries about the property, but none at a price that would be suitable, until he received a phone call from a person named Mr Mawhinney of the Mayfair Group. It seems he made contact with Mr Anderson via the advertisement on realestate.com, with the first contact on 24 July 2019. Mr Anderson met with Mr Mawhinney at the site, and corresponded with him about the council and federal approvals for the site.
It is the plaintiff’s case that on or about 17 August 2019, the plaintiff introduced the property to Mainland Property Holdings Pty Ltd as trustee for Mission Beach Property Trust.[3] In the absence of any evidence to the contrary, I proceed on this basis.
[3]See paragraph 5 of the amended statement of claim (not admitted by the defendant, in paragraph 4 of the amended defence).
On about 21 August 2019, Mainland Property Holdings Pty Ltd as trustee for Mission Beach Property Trust made an offer to purchase the land, for $7,500,000. Sunshine Group accepted the offer and a contract was formed, dated 22 August 2019.
The contract names Trappando as the seller’s (Sunshine Group’s) agent. It provided for an initial deposit of $75,000 to be paid within seven business days of the contract date and a balance deposit of $675,000 to be paid “within 3 business days of the satisfaction of due diligence condition”. Settlement was to occur within 90 days of satisfaction of the due diligence condition. The due diligence condition was contained in clause 2 of the special conditions to the contract.
On 3 February 2020, the buyer’s (Mainland Property) solicitor emailed Mr Anderson and his wife, to advise that the buyer needed to be changed to another company, Mainland Property Holdings No 5 Pty Ltd as trustee for Mission Beach Property Trust No 5, and requesting that a new contract be prepared, in the same terms as the original signed contract, with the following amendments:
(a)balance deposit to be paid by 6 February 2020;
(b)settlement date to be 5 May 2020; and
(c)special condition 2 (due diligence) to be removed.
This seems to have taken some time to implement. On 5 May 2020, Sunshine Group and Mainland Property Holdings Pty Ltd (the original buyer) entered into a deed of rescission and release (rescinding the contract made on 22 August 2019, on the condition that the other Mainland company enter into a contract on the same terms, and with the deposit paid or payable under the original contract to form the deposit under the new contract). On the same date, Sunshine Group (as seller) and Mainland Property Holdings No 5 Pty Ltd as Trustee for Mission Beach Property Trust No 5 (as buyer), entered into a contract for sale of the land. Trappando was again named as the seller’s agent. The new contract recorded that the balance deposit of $675,000 was paid on 6 February 2020, and the settlement date was 5 May 2020. There were no special conditions (other than providing for electronic signatures).
That contract did not proceed to settlement. The evidence of Mr Anderson was that the seller, Sunshine Group, terminated the contract. It is admitted that, on 2 June 2021, Sunshine Group lawfully terminated the contract to sell the land to Mainland Property Holdings No 5 Pty Ltd. The deposit was forfeited, and most of it ($631,250) remains in Trappando’s trust account (part of the deposit ($118,750) has already been paid to Sunshine Group).
By these proceedings, Trappando seeks to recover the sum of $1,650,000 from Sunshine Group, being the commission it says is payable under the agreement recorded in the Form 6 dated 25 May 2019. Alternatively, Trappando claims $330,000, which it alleges would be the commission if calculated under the earlier appointment, from 2018 (which it seeks to rely on, in the event the 2019 appointment is found to be ineffective).
In so far as its primary claim is concerned, Trappando alleges that it was the effective cause of the sale of the property by Sunshine Group, pursuant to the first contract of sale as well as the second contract of sale; and that it is entitled to recover the commission, despite the termination of the later contract, having regard to part 7 of the appointment and clause 5.1.3 of item 5 of the essential terms and conditions.
Sunshine Group defends the claim on a number of bases, including:
(a)that Trappando is not entitled to recover any commission, because it was not properly appointed under the Property Occupations Act (s 89), because:
(i)the May 2019 appointment was not dated under the hand of the defendant’s representative signatory, and is therefore invalid for failure to comply with s 109(1)(a) of the Property Occupations Act; and
(ii)the May 2019 appointment did not state in writing that the commission was to be worked out only on the actual sale price, and is therefore invalid for failure to comply with s 105(2)(a) of the Property Occupations Act;
(b)that Trappando was not the effective cause of sale (rather, it was Mr Anderson in his personal capacity);
(c)in any event, Trappando was not the effective cause of sale within the Term of the appointment (which ended on 30 July 2019); and
(d)that the May 2019 appointment must be read and construed in conjunction with the Deed of Agreement between Sunshine Group, Victor Soh and Grahame Anderson, pursuant to which no commission was payable unless the contract actually proceeded to settlement.
The defendant counterclaims, to recover the balance of the deposit money held in Trappando’s trust account ($631,250) together with the balance of $3,000 not yet refunded to it, under the Deed of Agreement. As to the $3,000, the plaintiff says that is the liability of Mr Soh, not the plaintiff.
In so far as Trappando seeks to revert to the 2018 appointment, to make its alternative claim, Sunshine Group relies on many of the same arguments to challenge the validity of that appointment.
It is convenient to deal with each of the arguments in turn.
The appointment was not dated
Section 89 of the Property Occupations Act prohibits a person from suing for, or recovering a reward for the performance of an activity as a property agent unless, at the time the activity was performed, the person held a property agent licence, which authorised them to perform the activity, and was properly appointed under part 4 of the Act (which includes ss 102 to 114).
There is no dispute that Trappando was appropriately licensed. The dispute is as to whether Trappando was properly appointed.
One of the requirements for a proper appointment is found in s 109(1), which provides:
“109 Giving signed appointment to client
(1) An appointment of a property agent … must be signed and dated by –
(a) the client; and
(b) the property agent…” [emphasis added]
It is admitted that Sunshine Group signed the Form 6 appointment. The point taken is that the person who signed on behalf of Sunshine Group, Mr Sun, did not, himself, write the date on the Form. The date was inserted into the Form by Mr Anderson, who prepared the Form using a computer program provided by the REIQ, and then provided it to Mr Sun. Sunshine Group submits that, in those circumstances, the appointment was not “signed and dated” by the client.
The defendant submits that, although its argument might “seem unduly technical – and even harsh”, that is appropriate given the requirement arises out of legislation expressly directed towards protection of consumers.
The plaintiff submits that by signing the form, next to the printed date, the defendant’s representative should be taken to have adopted the date. In this regard, the plaintiff relies on the statement of principle in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [45] where the High Court said:
“It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.” [emphasis added]
The plaintiff also relies upon Commonwealth Bank of Australia v Muirhead [1997] 1 Qd R 567. In this case, the Bank sued Mr and Mrs Muirhead to recover money loaned to them under various finance facilities including a “bill facility” which took the form of eight bills of exchange. Summary judgment was granted in favour of the bank; the Muirheads appealed. One of the arguments on the appeal was that the bills were signed only by Mrs Muirhead. The relevant statutory provision, s 28(1) of the Bills of Exchange Act 1909 (Cth), provided that a person was not liable as drawer of a bill if he had not signed it. Another section of that Act provided it was not necessary for the person to sign “with his own hand” but was sufficient “if his signature is written [on the bill] by some other person by or under his authority”.
Mr Muirhead had not signed the bills, nor had his signature been written on the bill. Mrs Muirhead signed the bills, immediately beneath the printed inscription “For and on behalf of GAR & SS Muirhead”. In dismissing the Muirheads’ argument in this regard, McPherson JA (with whom Macrossan CJ and Davies JA agreed) referred to Bondina Ltd v Rollaway Shower Blinds Ltd [1986] 1 WLR 517. In that case, there was an attempt to make two directors who signed a cheque, without adding words indicating that they did so in a representative capacity, personally liable on the cheque. The cheque was a bank cheque form, printed with a company name and bank account number, signed by two individuals who were directors of the company. In dismissing the contention that a director signing the cheque in this way could be personally liable, Dillon LJ said, at 520:
“… when the [director] signed the cheque, he adopted all the printing and writing on it; not merely the writing designating the payee and the amount for which the cheque was drawn, if that had been written out for him and not by himself, but also the printing of the company’s name and the printing of the numbers which designate the company’s account. The effect of this is to show that the cheque is drawn on the company’s account and not on any other account. It is not a case of a joint liability of several people. It shows plainly, as I construe it, looking no further than the form of the cheque itself, that the drawer of the cheque was the company and not the [directors].”
After referring to this, and other authorities, McPherson JA said, at 574:
“… the only rational conclusion is that Mrs Muirhead was intending by her own signature to confirm the words “For and on behalf of GAR & SS Muirhead” appearing on the forms she signed. For this purpose it cannot matter whether those words were in fact printed or typed on the form of bill by the Bank before she signed it, or were placed there by Mrs Muirhead herself at the time she signed. In either event, she was adopting and authenticating those words by subscribing her own signature immediately below. In doing so, she thus ‘signed’ not only her own name but that of her husband GAR Muirhead…” [emphasis added]
By analogy, in this case, the only rational conclusion is that Mr Sun, by signing the Form 6 appointment, adopted the printed date that appeared directly next to the place where he signed. The Form was, in this way, “signed and dated” by Mr Sun on behalf of Sunshine Group.
Actual sale price
Next, the defendant argues that the Form 6 appointment is invalid and unenforceable, for failure to comply with s 105 of the Property Occupations Act, which provides as follows:
“105 Other requirements - commission
(1)This section applies to an appointment of a property agent or resident letting agent for a service that is the sale or letting of property or the collecting of rents if commission is payable for the service and is expressed as a percentage of an estimated sale price or amount of rent to be paid or collected.
(2)The appointment must state, in writing, that the commission for the service is worked out only on—
(a) for the sale of property – the actual sale price; or
(b) for the letting of property – the actual rental for the property; or
(c) for the collecting of rents – the actual amount of rent collected.” [emphasis added]
This provision needs to be read with s 88 of the Act, which prohibits a property agent from claiming commission worked out on an amount more than the actual sale price of the property; and makes it an offence to do so.
The defendant contends that s 105(2)(a) has not been complied with because nowhere in the Form 6 appointment is there a statement that the commission for the service is worked out only on the “actual sale price”. Part 7 of the Form, which deals with commission, refers to the “sale price”, but not the “actual sale price”.
The defendant submits there is a distinction to be drawn between the listed or advertised sale price, on the one hand, and the actual contracted sale price, on the other. That much may be readily accepted. The defendant also seeks to draw a distinction between the actual contracted sale price – being the price for which the parties agree to buy and sell, respectively, the property – and the price ultimately realised at completion, or settlement, of the sale. The defendant contends that the term “actual sale price”, in s 105(2)(a) means the actual sale price realised upon completion (or settlement) of the contract of sale.
I reject the defendant’s submission in that regard. It is evident from the scheme of the Property Occupations Act that the freedom of contracting parties – such as principal (property owner) and agent – to agree upon an arrangement that is suitable to them is retained. This is reflected in the objects of the Act, which include providing for a system of licensing and regulation that achieves an appropriate balance between the need for regulation to protect consumers, and the need to promote freedom of enterprise in the market place (s 12(1)(a)). By its nature, and plain meaning, commission is a payment for the performance of a service or work done.[4] This is reflected in s 88(1)(a), which provides that “[t]his section applies to … a property agent who performs, for the payment of a commission, a service of selling… property”. The Act also contemplates that the parties will record, in the approved appointment form, the fees, charges and any commission payable for the service and when such fees, charges and any commission for the service become payable (s 104(1)(c)(ii) and (iii)) – without limiting the circumstances in which such commission may become payable.
[4]The Oxford English Dictionary Online, for example, relevantly defines “commission” as “payment, or a payment, for services or work done was an agent in a commercial transaction, typically a set percentage of the value involved”.
Item 5 of the essential terms and conditions, which forms part of the agreement between the property owner and the agent, is to be seen in this context. It expressly contemplates that commission might be payable, for the service performed by the agent, even where the sale is not completed. The defendant’s putative interpretation of the phrase “actual sale price” conflicts with item 5 of the essential terms and conditions, which contemplates an entitlement to commission, in some cases, where the contract of sale is not completed. In such cases, the “actual sale price” – for the purposes of the prohibition in s 88 of the Act – must be the actual sale price, agreed to in the contract of sale, even though the contract has not completed.
The purpose of s 105(2), importantly read with s 88, is to prevent an unscrupulous agent purporting to charge commission on an advertised, or listed price – as opposed to the (actual) price for which the buyer has contracted with the seller to purchase the property.
But the question remains, whether the failure to state, in the appointment in this case, that the commission for the service is worked out only on the actual sale price for the sale of the property, is such as to invalidate the appointment?
In answering this question, the first issue is whether s 105 applies at all.
Section 102(2) of the Act provides that the appointment of a property agent must, inter alia, “comply with division 2 and section 109(1)”. Division 2 includes ss 104 and 105. Section 104(1) of the Act provides that an appointment of a property agent must include “the following in the approved form”, listing a number of things, including “for each service, provision for the inclusion of a statement about … the fees, charges and any commission payable for the service” (s 104(1)(c)(ii).
Section 105 imposes an additional requirement in relation to commission. By s 105(1), the section applies “to an appointment of a property agent … for a service that is the sale … of property … if commission is payable for the service and is expressed as a percentage of an estimated sale price …”.
Here, commission was agreed to be payable on differing bases, depending upon the sale price: see again part 7 of the Form, which provided:
“The client and the agent agree that the commission including GST payable for the service to be performed by the agent is:
1. Sale price of up to and including $6,300,000 + GST – 4.4% of the sale price.
2. Sale price of over and including $6,300,001 + GST – All money above $6,000,000 + GST to be paid to the agent + GST.
(eg. sale price of $6,500,000 + GST - $500,000 + GST to be paid to the agent).”
The first basis could perhaps be described as referring to a “percentage of an estimated sale price” (see s 105(1)); but the second is not. Because the contract of sale that was entered into was for a sale price of $7,500,000, it is only the second basis that is relevant. So, does the requirement apply? If so, does the omission of the word “actual” matter?
On balance, in my view the answer to the first question – does the requirement apply – is yes. The appointment, in part at least, provided for commission to be payable as a percentage of an estimated sale price. The determination of whether s 105 applies must be made at the time the appointment is made – not subsequently (when, as here, once the sale price is known, the commission is calculated on a different basis).
In my view, the answer to the next question – does the omission of the word “actual” matter – is, in the circumstances of this case, no.
Although the Form 6 appointment does not include a statement that the commission for the service is worked out only on “the actual sale price”, that is the plain meaning of the words that do appear in part 7 of the Form. Nothing turns on the absence of the word “actual” here – because it is clear that what is referred to in part 7 is the “sale price”, meaning the price for which the property is agreed to be sold, as opposed, for example, to an advertised or listed price.[5] That construction is supported by an objective analysis of the words used; as well as by the surrounding circumstances known to both parties at the time the appointment was made.[6] There was no nominated list price for the property by the time of the May 2019 appointment; Mr Anderson had previously found a buyer willing to pay $6,000,000 for the property – which, on the unchallenged evidence of Mr Anderson, Mr Sun had indicated he would be happy with (although could not accept, because of the option); and a contract price of this amount was referred to in the Deed of Agreement as well.
[5]See, by analogy, Peterson Management Services Pty Ltd v Chief Executive, Department of Justice and Attorney-General [2018] 1 Qd R 178 at [65].
[6]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544 at [16], [17] and [73].
In any event, it cannot be concluded, upon the proper construction of the Property Occupations Act as a whole, that it was the intention of the legislature that failure to strictly comply with s 105(2)(a) would invalidate an appointment.[7]
[7]Tasker v Fullwood [1978] 1 NSWLR 20 at 23-4; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 [93].
There are a number of circumstances in which the Act provides that failure to comply with a provision of the Act renders an appointment “ineffective from the time it is made” – but s 105 is not one of them: see s 99 (agent acting for more than one party to a transaction); s 111 (form of reappointment) and s 112 (other ineffective appointments, which includes those that do not comply with s 104).
The fact that the Act provides that an appointment that does not comply with s 104 is “ineffective from the time it is made” (s 112(4)) and says nothing about a failure to comply with s 105, is a powerful indicator that the legislature did not intend that failure strictly to comply with s 105 would invalidate an appointment. The purpose of a provision such as s 105 is to ensure the consumer – the seller – is properly informed about how commission may be calculated. Protection of the consumer is also ensured by s 88 of the Act, which makes it an offence to claim commission on any amount more than the actual sale price. The consumer protection purpose of the legislation is not, therefore, thwarted by a failure to strictly comply with s 105(2)(a), for example, by omitting to use the word “actual”. Where there has been substantial compliance with the requirement – in a manner which fulfils the purpose of the provision – that is sufficient.[8]
[8]See, by analogy, Samuel Montagu & Co Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 at 314, and Pearce, ‘Statutory Interpretation in Australia’ (9th ed, LexisNexis) at p 401.
For completeness, I note that s 48A of the Acts Interpretation Act 1954 does not apply here. That section provides:
“48A Compliance with forms
(1)If a form is prescribed or approved under an Act, strict compliance with the form is not necessary and substantial compliance is sufficient.
(2)If a form prescribed or approved under an Act requires –
(a) the form to be completed in a specified way; or
(b) specified information or documents to be included in, attached to or given with the form; or
(c) the form, or information or documents included in, attached to or given with the form, to be verified in a specified way;
the form is not properly completed unless the requirement is complied with. …”
The requirement in s 105(2)(a) is imposed by the Act itself – it is not something required by the approved form – so questions of the form being “properly completed” or of substantial compliance with the requirements of the form do not arise.[9]
[9]Cf Yong Internationals Pty Ltd v Gibbs & Ors [2011] QCA 161.
I find that the Form 6 appointment made in May 2019 was valid, and effective.
The plaintiff was not the effective cause of sale
In addition to the next point (which raises a timing issue), the defendant contends that, in any event, it was not the plaintiff, Trappando, which was the effective cause of sale, but Mr Anderson, acting on his own behalf.
Counsel for the defendant emphasised the Deed of Agreement, to which Mr Anderson is named as a party in his personal capacity, as supporting the contention that it was Mr Anderson, in his personal capacity, who was the effective cause of sale, and not the plaintiff. That was not put to Mr Anderson in cross-examination.
I reject the defendant’s contention in this regard.
It was clear on the evidence that Mr Anderson was the Sales Manager for Andersons Real Estate, the business conducted by Trappando. The email correspondence that he sent, in relation to the sale of the property, was all signed off by him in that way. It was Trappando that was appointed the real estate agent for the sale of the property, by the Form 6. It was also Trappando that was nominated as the seller’s agent in both the first contract of sale, dated 22 August 2019 and the second (substitute) contract of sale, dated 5 May 2020. The property was marketed by Andersons Real Estate on the realestate.com website. That is how Mr Mawhinney found out about the property. It was Mr Anderson – I find, on behalf of Andersons Real Estate – who did the work to show the property to and negotiate with Mr Mawhinney, and provide him the necessary information in relation to the approvals for the property, ultimately leading to the offer being made. Whilst Mr Anderson did speak in terms of “I”, when describing the things he did to bring about a sale, rather than “Trappando”, or “Andersons Real Estate”, in my view that reflects the fact that he is not a lawyer, and the business is essentially a “husband and wife” business – with him as the Sales Manager, and his wife as the sole director. To use that to argue that it was not Trappando, the appointed agent, that brought about the sale, but rather the Sales Manager in his personal capacity – particularly without putting that proposition to Mr Anderson in cross-examination – is unfair and unreasonable.
Subject to the next point, I find that the plaintiff was the effective cause of sale of the property (not Mr Anderson in his personal capacity).
The plaintiff was not the effective cause of sale “within the Term”
The next argument by the defendant relies upon the words of item 5 of the essential terms and conditions. It is referred to above, but for convenience provides as follows:
“5.ENTITLEMENT TO COMMISSION – SALE
5.1 The Client agrees to pay the Agent Commission as specified in Part 7 of the Appointment of Property Agent if a Contract of Sale of the Property is entered into with a Buyer, whether within the Term or after the Term, where the Relevant Person is the effective cause of sale within the Term, provided that:
5.1.1the Contract of Sale of the Property is completed; or
5.1.2the Client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or
5.1.3the Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or
5.1.4the Contract of Sale is terminated by mutual agreement of the Client and the Buyer.
5.2For the purposes of Clause 5.1 a Relevant Person is, where the Appointment of Property Agent is for:
5.2.1an Exclusive Agency, any person (including the Client); or
5.2.2a Sole Agency, any person other than the Client; or
5.3.2an Open Listing, the Agent only.” [emphasis added]
As already mentioned, “Term” is defined in clause 1.10 to mean the term specified in part 4, section 2 of the appointment. Part 4, section 2 provides that the appointment is a “single appointment for a particular service or services”, which starts on 25/05/2019 and ends on 30/07/2019. However, part 6 provides that the arrangement is an “exclusive agency” and at the end of the exclusive agency, the parties “agree” “that the appointment would continue as an open listing”. The Form further provides (in part 6) that for an open listing “no end date [is] required” and the appointment can be ended “at any time by giving written notice”.[10]
[10]See also s 20 of the Property Occupations Act2014 (Qld).
The question is – in the context of this particular agreement, what is the “Term”? Is it limited to the time period from 25 May 2019 to 30 July 2019? Or does it extend beyond that, because of the agreement to continue as an open listing?
Returning to the principles of construction, the meaning of the agreement embodied in the appointment is to be determined objectively, in terms of what a reasonable person in the position of the parties would have understood it to mean. The agreement is to be construed as a whole, with words to be understood having regard to their context.[11]
[11]Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1925) 35 CLR 449 at 455 per Isaacs and Rich JJ.
On the one hand, the word “Term”, as used in clause 5.1, is specifically defined in clause 1.10 – to mean the term specified in part 4, section 2. The term that is specified there is limited to the period from 25 May 2019 to 30 July 2019. Accordingly, it could be open to construe “Term”, where it is used in clause 5.1, as meaning that time period.
On that construction, the contract(s) of sale were entered into after the Term. The first contract, with Mainland Property Holdings Pty Ltd as trustee for Mission Beach Property Trust, was entered into on 22 August 2019. The second contract, with Mainland Property Holdings No 5 Pty Ltd as trustee for Mission Beach Property Trust No 5, was entered into on 5 May 2020. As already discussed, it was essentially in substitution for the first contract – because the buyer wanted to change the purchasing entity.
And, on the plaintiff’s pleaded case, the plaintiff was not the effective cause of sale “within the Term” – because, as already noted, the plaintiff’s case is that it introduced the property to Mainland Property Holdings Pty Ltd on or about 17 August 2019.
On this construction, therefore, there would be no entitlement to commission, in accordance with item 5 of the essential terms and conditions.
The alternative construction is that, although the word “Term” is specifically defined in clause 1.10, by reference to the term specified in part 4, section 2 of the appointment Form, that word must be construed in the context of the agreement as a whole. That includes the agreement that, after the term of the exclusive agency (which is the time period specified in part 4, section 2), the parties expressly agreed that the appointment would continue as an “open listing”. No end date is required for an open listing – and none is provided for in the agreement constituted by the appointment in this case. Accordingly, the Term of the appointment, in fact, continues – until either the client or the agent give written notice of the ending of the appointment.
Section 20 of the Property Occupations Act sets out the meaning of “open listing”, as follows:
“20 Meaning of open listing
An open listing is a written agreement entered into between a person (seller) and a property agent (selling agent) under which the seller appoints the selling agent, in accordance with the terms of the agreement, to sell stated property and under the agreement –
(a)the seller retains a right –
(i) to sell the seller’s property during the term of the agreement; or
(ii) to appoint additional property agents as selling agents to sell the property on terms similar to those under the agreement; and
(b) the appointed selling agent is entitled to remuneration only if he or she is the effective cause of sale; and
(c)the appointment of the selling agent can be ended, at any time, by either –
(i) the seller giving the selling agent written notice of the ending of the appointment; or
(ii) the selling agent giving the seller written notice of the ending of the appointment.” [emphasis added]
That meaning of “open listing” is reflected in the terms of the agreement, as recorded in the Form 6, incorporating the essential terms and conditions. As can be seen in clause 5.2.1, where there is an exclusive agency, the agent is entitled to commission in accordance with clause 5.1 regardless of whether the agent, or another person, was the effective cause of sale. In the present case, there was an exclusive agency between 25 May 2019 and 30 July 2019. Under clause 5.2.3, where there is an open listing, the agent will only be entitled to commission in accordance with clause 5.1 where the agent is the effective cause of sale. But in order to give meaning to clause 5.1, in the case of an open listing, the reference to “Term” in clause 5.1 must mean the term of the open listing. There was no end date provided for in the appointment, for the open listing; and neither party had given written notice of the ending of the appointment.
Having regard to the principles of construction, it is the second construction that is correct. To construe “Term” only by reference to the date range provided for in part 4, section 2, for an exclusive listing, is to disregard the parties’ express agreement, for the appointment to convert to an open listing at the end of the exclusive agency.
On this construction, the contract(s) of sale were entered into within the term of the appointment and the agent – the plaintiff – was the effective cause of sale within the term of the appointment. Accordingly, as clause 5.1.3 applies (the contract of sale was not completed, and the whole of the deposit paid was forfeited), the plaintiff is entitled to recover the commission that the defendant (as client) agreed to pay under the appointment.
Commission only becomes payable upon settlement
This contention relied upon the defendant’s argument that the 2019 appointment had to be read and construed conjointly with the Deed of Agreement; and in fact that the Deed of Agreement was the “dominating” agreement. I reject this argument, for the following reasons:
(a)the plaintiff is not a party to the Deed of Agreement;
(b)in so far as the Deed of Agreement purported to record an appointment of Mr Anderson, personally, and Mr Soh, as agents for the sale of the property, and an agreement for payment of commission for such sale, it would be unenforceable for non-compliance with the Property Occupations Act in multiple respects – not the least of which is that Mr Soh is not a licensed real estate agent;
(c)in those circumstances, it is difficult to see how it could have any impact on the interpretation or operation of the later Form 6 appointment, a contractual arrangement between Trappando and Sunshine Group – let alone, that the May 2019 appointment was “plainly required to be read down so as to operate congruently and harmoniously with” the Deed of Agreement; and
(d)the Form 6 appointment entered into in May 2019 is an agreement between the plaintiff (as real estate agent) and the defendant (as seller). Clause 15.1 of the essential terms and conditions provided that it “constitutes the entire Agreement of the parties with respect to the subject matter of this document and supersedes all prior negotiations or expressions of intent or understandings”.
The final point relied on by the defendant – that the proceeding suffers a fatal defect because Mr Soh, a joint-obligee, was not joined as a party – depended upon the acceptance of the point just dealt with. It is unnecessary to say anything more about that.
Conclusion
In the result, the plaintiff’s claim succeeds because the precondition to it claiming commission under the May 2019 appointment, set out in clause 5.1, was satisfied – a contract of sale of the property with a buyer was entered into, during the term of the open listing, and the plaintiff was the effective cause of sale within that term – having introduced the buyer to property on 17 August 2019.
There will be judgment for the plaintiff on its claim.
In so far as the defendant’s counterclaim relates to balance of the forfeited deposit, it is dismissed. In relation to the additional claim to recover the remaining $3,000 of the money paid to Mr Soh, that is also dismissed. It is apparent from the variation made to the Deed of Agreement, referred to in paragraph [29] above, that the obligation to repay the $3,000 is upon Mr Soh, not Mr Anderson; and certainly not the plaintiff (which is not a party to the Deed of Agreement).
I will hear the parties as to the appropriate form of order (including as to the interest component and as to costs).
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