Varneba Pty Ltd v William Simpson

[2007] NSWDC 48

CITATION:	Varneba Pty Ltd v William Simpson [2007] NSWDC 48
HEARING DATE(S):	3 April 2007
JUDGMENT DATE:	4 April 2007
JURISDICTION:	Civil
JUDGMENT OF:	Rolfe DCJ
DECISION:	See paragraphs 21 and 22 of this Judgment.
CATCHWORDS:	Real Estate Agent's claim for commission - Failure to comply with s 36 of the Property, Stock and Business Agents Act 2002 - Defendant submitted that the plaintiff's cause of action was inchoate and the Court had no jurisdiction to entertain it held s 36(1) did not operate so as to postpone the accrual of the debt claimed under the agency agreement and was procedural in nature only
LEGISLATION CITED:	Property, Stock and Business Agents Act 2002 Auctioneers and Agents Act (1941) (NSW) Workers Compensation Act 1987 (NSW) Uniform Civil Procedure Rules
CASES CITED:	Cook Hill Investments Pty Ltd v Rodriguez (NSW SC, 17 June 1986, Young J unreported BC 8600927 National Business Consultants Pty Ltd v Reysson Pty Ltd (1986) TasR (NC) N15; BC 8600005 Remuneration Database Pty Ltd v Pauline Goodyear Real Estate Pty Ltd (NSWSC 12 February 2007, White J, unreported; BC 200700498 Berowra Holdings Pty Ltd v Gordon (2006) 228 ALR 387 Networked Sales v Rodrigues (2006) NSW SC 888 para 13
PARTIES:	Varneba Pty Ltd (Plaintiff/Cross Defendant) William Simpson (1st Defendant/Cross Claimant) Gail Simpson (2nd Defendant/Cross Claimant) Malouf Real Estate Pty Ltd (3rd Defendant/Cross Claimant)
FILE NUMBER(S):	367/06
COUNSEL:	S B Docker (Plaintiff/Cross Defendant) J J Loofs (Defendants/Cross Claimants)

JUDGMENT

1 These proceedings arise out of the sale of 8 Fisher Avenue Vaucluse (the “Property”), which was owned by the 1st and 2nd Defendants (“Vendors”).

2 The plaintiff is a real estate agent who entered into an agency agreement with the Vendors on 2 July 2005 concerning the sale of the Property (the “Ray White Agency Agreement”).

3 In early October 2005 the Vendors entered into an agency agreement with the 3rd Defendant concerning the sale of the Property (the “LJ Hooker Agency Agreement”).

4 On 21 October 2005 the plaintiff and the 3rd Defendant entered into the Conjunction Agreement.

5 On 25 November 2005 the Vendors exchanged contracts for the sale of the Property with Mr and Mrs Penklis (the “Purchasers”).

6 Shortly prior to 25 November 2005, the 3rd Defendant purportedly terminated the Conjunction Agreement. The plaintiff contests the 3rd Defendant’s entitlement to do so.

7 It is the plaintiff’s case that it effectively introduced the Purchasers to the Property and to the Vendors. As a consequence, the plaintiff claims $92,950.00 from the 3rd Defendant under the Conjunction Agreement, being the plaintiff’s share of the commission on the sale of the Property.

8 In the alternative the plaintiff claims damages for alleged breaches of the Conjunction Agreement. The damages include the amount of $185,900, which the plaintiff says the Vendors owe it under the Ray White Agency Agreement.

9 The proceedings were commenced in the Commercial List in this Court on 3 February 2006 and on 5 December 2006 they were fixed for hearing for three days commencing yesterday, 3 April 2007.

10 At the commencement of the hearing on 3 April 2007 and in accordance with the practice in the Commercial List, counsel for the parties handed up a statement of issues. The document, although headed “Defendants’ Statement of Issues”, was, in effect, a consolidation of the issues identified respectively by counsel for the plaintiff and counsel for the defendants. Specifically, counsel for the defendants raised for the first time the question as to whether s 36 of the Property, Stock and Business Agents Act 2002 had been complied with. S 36 (1) provides:

“An action or other proceedings cannot be commenced by a licensee for the recovery of remuneration or any sum as reimbursement for expenses until the expiration of 28 days after a statement of claim has been served personally or by post on the person to be charged with the remuneration or expenses.”

11 Counsel for the plaintiff conceded, in relation to the first Ray White Agency Agreement, that the plaintiff had not complied with s 36 (1).

12 What then followed was a discourse between the Court and counsel for the parties.

13 In essence, counsel for the defendants submitted that when one looks at the whole of the s 36, it is abundantly clear that the provision was enacted to protect members of the public and it must be interpreted in that context: see his written submissions dated 3 April 2007. Counsel for the defendants particularly relied on Cook Hills Investments Pty Ltd v Rodriguez (NSW SC, 17 June 1986, Young J, unreported; BC 8600927) in which the Court had to consider an almost identical provision contained in s 42A of the Auctioneers and Agents Act (1941) (NSW). The case involved the granting of a Mareva injunction. In granting that injunction, Young J said:

“I will approach the case on the basis that the plaintiff does not have a cause of action but has a inchoate cause of action and there may be very real difficulties in doing what is necessary to obtain a full cause of action.”

14 Counsel for the defendants submitted that this Court was bound by the dictum and should apply it here, which would have the consequence, so it was argued, that it was unnecessary for the defendants to specifically plead the matter because the plaintiff’s cause of action, in respect of the claim arising out of the Ray White Agency Agreement, was not a full cause of action. Given the concession made by counsel for the plaintiff about the failure to comply with s 36 of the Act, this meant that the Court had no jurisdiction to determine that part of the plaintiff’s claim arising out of the Ray White Agency Agreement.

15 Reliance was also placed on the decision in National Business Consultants Pty Ltd v Reysson Pty Ltd (1986) TasR (NC) N15; BC 8600005. Cosgrove J said in that case, whilst dealing with a similar statutory provision, that the agent’s right to remuneration was “inchoate” until the procedure outlined in the statute had been followed.

16 Both cases were considered recently in Remuneration Database Pty Ltd v Pauline Goodyear Real Estate Pty Ltd (NSWSC, 12 February 2007, White J, unreported; BC 200700498). In that case it was submitted on behalf of the agent that s 36 (1) of the Act went no further than postponing the agent’s entitlement to commence proceedings to recover commission. It did not purport to postpone the accrual of the debt under the agency agreement. In other words, the agent’s right to commission arose under the agreement, not the Act. S 36 merely postponed the remedy at common law of the right to commence proceedings for recovery of a presently due and payable debt. Although White J found it unnecessary to decide the point, he thought there was “much to be said for the (agents’) submissions”. I respectfully agree.

17 In Cook Hills Investments no submissions were made to the Court along the lines of those identified by White J in Remuneration Database. Further, although the remarks of Young J in Cook Hills Investments are persuasive, his Honour did not have to finally determine the point because he was concerned with whether or not he ought grant a Mareva injunction. The decision did not go beyond that and it is most doubtful that the matter was fully argued before the learned Judge because the relevant defendants were not before the Court and the moving party got the relief it sought.

18 Also, Young J did not, of course, have the benefit of considering the High Court’s decision in Berowra Holdings Pty Ltd v Gordon (2006) 228 ALR 387, which White J cited in his judgment in Remuneration Database. Although in that case the High Court was dealing with a different statutory provision, namely, s 151 C of the Workers Compensation Act 1987 (NSW), like White J, this Court has received guidance from what the High Court said in that case.

19 In my opinion, s 36 (1) of the Act does not create a statutory right to remuneration. The plaintiff’s right to commission is based on the Ray White Agency Agreement, that is to say, it finds its source in the contract itself. In this respect, what the High Court said in Berowra Holdings at para 23 is apposite:

“The approach of the Courts has consistently been to require very clear legislative intent before treating a statutory provision as taking away common law rights of a plaintiff, where there is an alternative construction available.”

20 In my opinion, therefore, s 36 does not take away the plaintiff’s common law rights. It is only procedural; it imposes steps to be taken before proceedings can be commenced, but that does not mean that any commission owed by the Vendors under the Ray White Agency Agreement is not a contractual debt presently due and payable. In my opinion, s 36 merely postpones the common law remedy to commence proceedings for recovery of a presently due and payable debt until the procedure laid down in s 36 is followed: see also Networked Sales v Rodrigues (2006) NSW SC 888 at para 13 per Harrison, Assoc J. This Court therefore has the jurisdiction to determine the plaintiff’s claim.

21 It follows, as a matter of procedure that, at the very least, the defendants ought to have pleaded the provision in s 36 (1) on the basis that it either postponed or temporarily barred the plaintiff’s remedy. Procedurally, such a plea was required because of the operation of Rule 14.14 (2)(b) of the Uniform Civil Procedure Rules and also Practice Note No. 2, Case Management in the Commercial List, paragraph 4.2 of which includes the following:

“All parties to the proceedings must ensure that the issues are clearly spelt out in the pleadings to avoid new issues arising at the trial.”

22 Practice Note No. 2 was designed to prevent exactly what happened in this case, namely, the s 36 point did not emerge until counsel for the defendants included it in the defendants’ statement of issues document.

23 I will now stand this matter down to give the parties the opportunity to consider these reasons.

**********