Kedcorp Pty Ltd v Jenkins[1999] QCA 452

SUPREME COURT OF QUEENSLAND

1. THE COURT:  The appellant prosecuted the respondent company under the Justices Act 1886 for an offence under s 19(2)(a) of the Auctioneers and Agents Act 1971.  The essential allegation was that the respondent acted as a real estate agent when not the holder of a licence.  The respondent company was convicted after a summary trial before a stipendiary magistrate.  It then appealed to a District Court judge on three grounds which may be summarised-

1. The magistrate erred in failing to draw an inference adverse to the complainant because of the failure of the prosecution to call one Hayley as a witness.

2. The findings of fact made by the magistrate did not establish a breach of the Act.

3. The charge was bad for duplicity.

2. His Honour held against the submissions of the respondent on points (a) and (b), but was of the view that the charge was bad for duplicity and accordingly quashed the conviction. The prosecutor then brought an application to this court for leave to appeal against that judgment, and leave was granted on 6 November 1998. The appeal challenges the judge's finding on issue (c) above; and the respondent has filed a Notice of Contention relying on points (a) and (b) in the event that this court considers that the complaint was not duplicitous.

3. The essential words in the charge were that the respondent "did act as a real estate agent … without holding a licence". Section 19(2) relevantly provides:

"A corporation shall not-

1. act as … a real estate agent …; or

2. carry on … a relevant business;

unless it is the holder of a licence …".

4. "Relevant business" is defined to include the business of a real estate agent. It will be noted that a charge could have been laid under either subparagraph (a) or subparagraph (b) but that in the event it was laid under (a). Further particulars were supplied as follows:

"It will be alleged that between the 1st day of January 1995 and the 27th day of June 1996 the defendant, Kedcorp Pty Ltd, did as an agent for others, namely, the vendor and/or purchaser in each transaction, in expectation of a fee, gain or reward, carry on the business of buying and selling houses, land and estates and the negotiating for the buying of houses, land or estates, namely …". 

(There then followed a list containing six particular properties).

5. At the hearing evidence was provided of transactions by which four of the specified properties were sold and of the respondent's involvement in such sales.

6. The definition of "real estate agent" (in s 2 of the Act) is complex. For present purposes it is sufficient to set out the following extract from the definition:

"real estate agent" means any person who, as an agent for others, … in expectation of any fee, gain, or reward, and either alone or in connection with any other business, and either generally or in respect of any 1 transaction, exercises or carries on … the business of buying, [or] selling … houses, land, or estates, or negotiating for such buying, selling … or letting …".

There are certain exclusions in the definition which are not here relevant.

7. The evidence consisted of oral evidence from some 14 witnesses. The defence elected not to give or call evidence. The evidence included a record of interview with Mr Kleinhans which provided the respondent's version in relation to the events surrounding the charge. The witnesses included the vendors and the purchasers involved in the transactions that had been mentioned in the particulars.

8. On the evidence accepted by the stipendiary magistrate it was shown that the respondent engaged in a telephone marketing service which randomly telephoned members of the public with a view to compiling a list of persons interested in tax minimisation. Company representatives, who were given three days training, were provided with the names of such persons as "leads" and with kits to show to such persons. These kits would assist the representative in ascertaining what the client could afford, and in showing the client how to become involved in spending his or her money in obtaining an investment property and at the same time becoming involved in negative gearing. Under the system established by the respondent the client would then be taken on a tour to see prospective properties. The respondent kept a stock list of properties for this purpose, provided to it by real estate agents, the most active one being LJ Hooker (Beenleigh branch). Mr Hayley was a sales representative for that agency. After receiving information from this representative, the management of the respondent (usually Mr Kleinhans) would determine the level of value of property that would best suit the client and would prepare a list of some seven properties referred to as a "run". The representative would then take the client on a drive to the first six properties without any detailed inspection of them. Those properties were specially selected to make the value of the seventh property look attractive. It was the seventh property that was intended to interest the client, who would be allowed to inspect it and who would be told of its attractive features. The client would be taken back to the respondent's office and a senior officer (usually Mr Kleinhans) would endeavour to sell his scheme to the client. He would calculate the cost to the client, the loan that was necessary to meet various costs, the repayments due on the loan and details of the negative gearing scheme, and advise the client of the taxation advantages.

9. If the client was willing to proceed Mr Kleinhans would have the client sign a receipt for a statement (under s 66 of the Auctioneers and Agents Act^[1]), and a contract for the purchase of the property.  Such forms would have been initially prepared by the agent, although the contract of course would not have been signed by the vendor at that stage.  The total cost of purchase and the outlays associated with it were to be raised by way of loan and the contract was said to be subject to the purchaser obtaining that loan.  The purchaser client would then be referred to a finance consultant who would assist the client to obtain the finance, to a solicitor who would act on the conveyance, and to a tax agent who might assist the client as and when necessary.

10. The amount of finance would be the sum which would be sufficient to pay the full purchase price of the property, a fee to the respondent (referred to as an administration fee) and further fees charged by each of the other persons just mentioned. The amount of purchase price inserted into the contract signed by the client was always substantially more than the amount which the vendor had told the real estate agent it was prepared to accept. In nearly all cases the additional sum added to the price was $10,000.

11. Once the contract was signed it was returned to LJ Hooker who would contact the vendor. It would at some stage become known to the vendor that its property was being sold for $10,000 more than the vendor had expected to receive or than it would receive, but the system apparently delayed this moment until after the vendor had authorised the respondent to retain money in excess of the price originally authorised by the vendor. Before presentation of the contract to the vendor for signature the vendor would be required to sign an agreement to pay the respondent all amounts of the purchase price over that which they had agreed to accept. Irrevocable authorities were also obtained requiring the purchaser's solicitor to pay the excess amount to the respondent and further arrangements were made to ensure that the other "professionals" involved were also duly remunerated. The vendor would however eventually be told that the excess amount was to pay the fees of the respondent.

12. The stipendiary magistrate found that with respect to each of the four particularised properties in the charges against the respondent, the dealings occurred in this way. He also found that the purchasers had no dealings with LJ Hooker except for the purposes of attending to pick up a key to allow inspection of the premises. In each transaction LJ Hooker was named in the contract as the real estate agent. Whilst the respondent generally had no face-to-face dealings with the vendors, a contract was always entered into between the respondent and the vendor prior to the vendor accepting the contract of sale. Under that contract, which was made after the respondent had already induced the purchaser to offer to pay considerably more than the property's market value, the respondent undertook to "obtain a purchase price for the dwelling which will provide to the vendors" the specified sum at which the vendors had originally intended to sell. A clause then provided:

"The remuneration for the promotional advertising, marketing and other consultancy or advisory and financial services provided by the Promoter on behalf of the Vendors will be such sum as represents the difference between the contract price for the dwelling sold and the sum of …".  (The original figure at which the vendor had authorised the agent to sell would then be inserted).

The vendor would also sign an irrevocable authority in writing authorising the solicitors for the purchaser to pay $10,000 to the respondent upon completion.  The contract went on to assert that "nothing in this agreement shall be construed as creating a relationship as principal and agent between the vendors and the promoter …".

Did the respondent act as a "real estate agent"?

13. There is no doubt that the respondent in expectation of a substantial fee was generally carrying on a business of negotiating for buying and selling houses and land. The only question in our view that is arguable in relation to whether or not the respondent's conduct satisfies the definition of "real estate agent" is whether in so acting it acted "as an agent for others". The submission on behalf of the respondent is that it at no stage acted as an agent for either the purchaser or the vendor in any of these transactions.

14. The respondent, it is said, had no power to negotiate on behalf of a vendor or purchaser or to communicate any offers. But a central objective of the respondent's scheme was to find a purchaser and introduce that purchaser to a vendor whose name he obtained from the vendor's original real estate agent. It is true that a registered real estate agent obtained payment of the usual commission. It would seem that it did so without having contributed very much to the ultimate result other than by cooperating in the scheme that was administered by the respondent. There is however no principle that prevents there being more than one real estate agent for the purposes of the definition in s 2. In our view the definition is satisfied by the respondent's conduct in a number of ways. In the first place we agree with the stipendiary magistrate's finding that there was conjoint activity with LJ Hooker in the selling of the property. The respondent found the purchasers and convinced those purchasers to buy the properties. The respondent thereby earned the legal right to take substantial remuneration from the purchase monies. The joint activity of the respondent and the registered real estate agent brought about the sale. We note in passing that in expectation of gain the respondent was assisting the registered real estate agent to earn its commission. The fact that the respondent's separate gain was not paid by the registered real estate agent is not to the point. It is also the case that the respondent obtained remuneration by persuading its client purchaser to pay a considerably greater sum than he or she needed to pay in order to acquire the property. Plainly the fee paid by the vendor was for the respondent's contribution in the selling of the property notwithstanding the attempt to camouflage the respondent's services by describing them as "promotional, advertising, marketing and other consultancy or advisory and financial services". It will be noted that even that self-serving description includes the word "marketing", and that the respondent's services to the vendor were based on rights including "the exclusive right to … market … the acquisition by third parties [of] the property".

15. There can be no doubt that the respondent's conduct satisfies the definition of "real estate agent" in that, as an agent for others, in expectation of gain it carried on the business of negotiating for buying and selling houses and land.

16. There is no merit in the suggestion that the assertion in the contract between the vendor and the respondent that "nothing in this agreement shall be construed as creating a relationship as principal and agent …" can govern the ultimate finding of fact if the reality was otherwise. In the present case this would seem to be little more than a self-serving statement by the respondent in which it has persuaded someone else to join. A similar conclusion was reached by Lindgren J in Colbron v St Bees Island Pty Ltd ^[2] in holding that the question whether a person acts as a real estate agent under what was then s 5(1) of the Auctioneers and Agents Act 1971 is not concluded by an assertion to the contrary in an agreement between that person and the vendors.  It may be noted that in that case Lindgren J also observed that "no reason suggests itself as to why the presence of authority to commit contractually would be required before it could be said that a person had, as an agent for others, negotiated for the buying or selling of land".^[3]  In our view the words "as an agent for others" in s 2, which is merely one element in a complex definition, simply connotes a person engaged to act on behalf of another.  The context, as the remainder of the definition indicates, is that of participating in some aspect of the buying and selling of real estate and associated activities.  It is not amiss to note in this context that the classical function of a real estate agent has been regarded as "to find a buyer" or to introduce a vendor and purchaser.  The activities of the respondent adequately satisfy these requirements and those of the definition.

17. We therefore consider that the evidence established conduct which was capable of establishing breaches under both s 19(2)(a) and s 19(2)(b).

Duplicity

18. The combined effect of the definition of "real estate agent" in s 2 and of the offence provisions in s 19 was considered by the Full Court in Golden Acres Limited v Queensland Estates Pty Ltd ^[4]  and upon appeal in the High Court in Freehold Land Investments Limited v Queensland Estates Pty Ltd. ^[5]   In that case a company, in an isolated transaction, agreed to negotiate the sale of land with an entitlement to receive as commission whatever amount could be obtained from the purchaser in excess of a sum specified in the agreement as payable to the vendor.  That company was held to have acted as a real estate agent in breach of the Act notwithstanding that only one transaction was involved.  In the High Court it was noted that a person who as agent for others carries on the business of negotiating for buying or selling in respect of one transaction satisfies the definition if it is shown that such activity, if done repeatedly, would constitute the carrying on of the business of a real estate agent.  We do not find it necessary to make a step by step comparison between that case and the present one.  On the face of the definition of "real estate agent", liability may be established by means of activity "either generally or in respect of any one transaction".  This suggests that a case may be brought in either of these ways.  A person may be held to act as a real estate agent if he or she generally, as an agent for others, exercises or carries on such a business; and such a person may also be shown to be a real estate agent if in respect of any one transaction it is proved that he or she as agent for another has acted in a way which, if done repeatedly, would constitute the carrying on of a business.

19. In our view, having charged the respondent with acting as a real estate agent, there was nothing inappropriate in stating as particulars of that charge that it carried on the business of buying and selling houses followed by a list of the transactions which it would be submitted demonstrated the carrying on of that business. It is hardly surprising that the proof of carrying on a business might involve conduct in a number of transactions. The prosecutor was entitled to prove the charge by showing that the respondent generally carried on such a business and to prove that allegation by means of the particulars specified. There was nothing duplicitous in this.

20. The principles concerning duplicity in charges have been considered in many cases and in particular in the High Court decisions of Johnson v Miller ^[6]S v The Queen ^[7]and Walsh v Tattersall. ^[8]The principle was recognised in the latter case by Kirby J in the concise terms that "a prosecutor may not ordinarily charge in one count of an indictment, information or complaint two or more separate offences provided by law".^[9]In the present case however, on the proper construction of the Auctioneers and Agents Act 1971, the charge was one that was provided for by s 19 (construed with regard to s 2) and only one offence was charged.  The particulars were proper particulars of that offence.  It may be observed that when an element of an offence involves proof by the prosecution that a defendant is conducting a business, or the conduct of a business needs to be established, as for example in drug trafficking cases, it is hardly surprising that the proof of that element may require proof of a number of transactions.

21. It was conceded by counsel for the respondent that had the charge been laid under s 19(2)(b) he could not contend that any duplicity would have been involved. In that event precisely the same case as was led would have convicted the respondent. Counsel for the respondent at the trial, during the opening, submitted that the charge was duplicitous. The stipendiary magistrate ruled against the submission after reference inter alia to the definition section. We respectfully agree with the following observation on that section:

"[I]t would appear from that definition there that a person can act as a real estate agent by carrying out any one transaction of those type[s] defined therein or generally act in respect of those matters or things set out therein.  So, the offence can be constituted not by one single act but it can also be constituted by the carrying on of a number of those things set out therein".

It may be noted that during final addresses below counsel drew attention to the court's powers under the Justices Act to amend a complaint should it be found that the evidence as presented did not meet the complaint as particularised.  This no doubt was a reference to the court's powers under s 48 of the Justices Act.  In the event the Magistrate did not find it necessary to make any amendment, and with that conclusion we respectfully agree.  However it seems to us that if, contrary to our view on the duplicity point, the charge should have been brought under s 19(2)(b) rather than s 19(2)(a), it would have been appropriate for that amendment to have been made at any stage of the proceedings.  We do not understand it to have been submitted by counsel for the appellant that had such an amendment been applied for and allowed the evidence would have taken a different course or that any adjournment would have been necessitated.

22. We would add that there was no ground for holding that the respondent was in any way prejudiced or embarrassed in his defence by reason of the presentation of the complaint in this case. It seems to us that even if the charge had been limited to acting as a real estate agent in respect of one transaction, the prosecutor would have been entitled to call precisely the same evidence as was given in this case in order to prove the character of the respondent's conduct in conducting that transaction.

23. In our view the complaint was not bad for duplicity and the learned District Court judge erred in concluding that it was.

Inference from failure to call Mr Hayley

24. There was good reason for the prosecutor in deciding not to call Mr Hayley as a witness. Apart from the arguable propriety of Mr Hayley's actions, Mr Hayley by the time of trial was working for the respondent. There is no occasion for the drawing of any adverse inference against the prosecution on this point.

Orders

25. We would allow the appeal and dismiss the notice of cross contention. The decision of the District Court should be set aside and the decision of the stipendiary magistrate reinstated. The respondent should pay the costs of this appeal, of the application for leave to appeal and of the appeal in the District Court.