RS QLD Pty Ltd v Mottrom[2016] QCAT 527

REASONS FOR DECISION

The Application

1. [1]
   RS QLD Pty Ltd trading as Hinterland Gold Properties (‘Hinterland Gold’) seeks payment of $24,145.00 (plus costs) from Barry Mottrom as commission payable to it in connection with the sale of Mr Mottrom’s property.
2. [2]
   Mr Mottrom denies he is liable to pay the amount sought by Hinterland Gold because his property was sold by another real estate agent.
3. [3]
   Hinterland Gold acknowledges that it did not complete the transaction between Mr Mottrom and the buyer, but submits that it is nevertheless entitled to commission because it was the effective cause of the sale between those parties.  Hinterland Gold seeks orders of the Tribunal accordingly.         

Background

Agreed facts

4. [4]
   Mr Mottrom appointed Hinterland Gold to sell his home in January 2014.  He granted exclusive agency for the period between 27 January and 28 March 2014, after which the appointment was to continue as an open listing until the property was sold or withdrawn. Mr Mottrom was seeking offers over $1.1 million. 
5. [5]
   On three occasions between 15 April and 19 September 2014 Qipeng (Jonathan) Mao and/or Jie (Chris) Liu inspected Mr Mottrom’s house.  The inspections were coordinated by Sue-Ellen Flockhart, real estate agent and director of Hinterland Gold, and she accompanied them on at least one of those occasions. 
6. [6]
   Some time prior to September 2014, Mao and/or Liu made a verbal offer of $750,000.00, including household furniture, which Ms Flockhart verbally passed on to Mr Mottrom. Mr Mottrom rejected that offer.
7. [7]
   Mr Mottrom said Ms Flockhart knew on around 27 September 2014 that he was terminating the agency appointment.  Ms Flockhart told him that she was still attempting to negotiate a sale with Mao and/or Liu.^[1] Mr Mottrom said he agreed to give Ms Flockhart until 6 October to negotiate a sale acceptable to him, and failing that he intended to meet with another agent.
8. [8]
   Ms Flockhart presented Mr Mottrom with a formal written offer for $850,000.00.  Ms Flockhart said she prepared it naming Chris Liu as buyer, but someone had handwritten ‘M & L Property Unit Trust’ at the buyer’s name on the reference schedule and added the following special conditions:

4. subject to finance.

5. price of purchase is furniture on site included.”

9. [9]
   The settlement date was also amended from 30 days to 60 days. The initials “JM” are signed by hand at the base of each page. It was witnessed by “Jie Liu”.
10. [10]
    Mr Mottrom says he rejected the offer on 6 October 2014. Ms Flockhart says it was 22 October 2014. This difference in timing is not important, for reasons I will deal with later. 
11. [11]
    Mr Mottrom says he made a counteroffer of $875,000.00 excluding furniture which was rejected by Mao and/or Liu. He says that Ms Flockhart told him there would be no further counteroffer from Mao and/or Liu and negotiations were at an end because she could do nothing further to obtain an increase in their offer.^[2] There was no submission from Ms Flockhart on this point.
12. [12]
    Mr Mottrom’s property was sold on 8 November 2014 at an auction arranged and marketed by Professionals Vertullo.  The selling price was $860,000.00. The sale did not include household furnishings and was not subject to finance. The buyer was Malway Property Holdings Pty Ltd as Trustee for the Malway Property Unit Trust (‘Malway’). 
13. [13]
    Qipeng Mao was the sole director and one of two shareholders of the trustee company at the time of the auction,^[3] and one of two unitholders of the trust. The other shareholder and unitholder was Meizhi Wang. No evidence was submitted to show that Wang had ever visited the property.
14. [14]
    The sale to Malway settled on 6 February 2015. According to Mr Mottrom, settlement took place three months after auction because representatives of Malway revealed after buying the property that they had not secured finance.  
15. [15]
    Hinterland Gold later made a demand for payment of commission from Mr Mottrom based on their agency appointment agreement. Mr Mottrom denied he was liable and refused to pay.   

Disputed facts

16. [16]
    Several of Hinterland Gold’s recollections of facts and dates leading to the sale of the property are disputed by Mr Mottrom.  Not all will affect the outcome of this application so I address only those that, in my view, might. 

    1. (a)
       Did Hinterland Gold introduce the buyer to Mr Mottrom?
17. [17]
    Determination of this issue is an important first step in Hinterland Gold’s quest to prove it was the effective cause of the sale.
18. [18]
    Ms Flockhart says she introduced Mao and Liu to the property on 15 April 2014.  Mr Mottrom says Ms Flockhart did not introduce Mao and Liu to his property because one or both of them were his neighbours, and knew that the property was on the market because they saw a “for sale” sign in front of the property for several months prior to 15 April.^[4]
19. [19]
    In West Property Solutions t/as Century 21 West Property Group v Lewis & Anor,^[5] it was held that by advertising, holding open homes and negotiating the terms of a contract, the agent had “introduced” a buyer to the seller. The finding in that case relied in part on a decision of the Queensland Supreme Court^[6] in which it was held that, by conducting an open tender and negotiations, an agent had “introduced” a buyer in a sale of partnership assets even though the buyer was a former partner of the partnership so knew of the sale.^[7]
20. [20]
    No evidence was led as to whether any “for sale” sign in front of Mr Mottrom’s property prior to 15 April bore Hinterland Gold’s name, but it does not matter. Mao and Liu’s first inspection of Mr Mottrom’s property was facilitated by Ms Flockhart. This is clearly an introduction to the property by Hinterland Gold. 
21. [21]
    Mr Mottrom also says that Mao and/or Liu approached Professionals Vertullo directly between 7 October and 8 November seeking an information pack for auction of the property.^[8] Mr Mottrom doesn’t expressly say so, but I assume his submission on this point is intended to suggest that Mr Mao and/or Mr Liu made their own acquaintance with Professionals Vertullo, thereby breaking any connection between Hinterland Gold and Mr Mottrom.
22. [22]
    It is irrelevant whether or not Mao and Liu approached Professionals Vertullo of their own volition after Hinterland Gold’s appointment had been terminated: the introduction had already occurred during the prior agency.
23. [23]
    As alluded to in the written submissions of Hinterland Gold,^[9] it is important to note that the purchase by Malway — a company in which Mao had an interest at the date of purchase — does not, of itself, disconnect Ms Flockhart’s introduction or negotiation efforts from the ultimate sale.  The High Court has said that if an agent’s efforts with A result in a sale to B the agent has earned its commission,^[10] and that this applies equally with respect to the purchase by a company with which the person introduced by the agent was associated.^[11] 
24. [24]
    I find that Hinterland Gold did introduce Mao and/or Liu to Mr Mottrom as interested buyers of his property, by arranging or coordinating inspections of the property by Mao and/or Liu, and whether or not Ms Flockhart was also in attendance, between 15 April and early October 2014.

(b) When was the offer for $850,000.00 presented to Mr Mottrom?

25. [25]
    The offer, despite being in writing and signed by the offerors, was undated.
26. [26]
    Ms Flockhart says she presented the written offer for $850,000.00 to Mr Mottrom on 21 October 2014.^[12] She said she prepared the offer and gave it to Mao and/or Liu on 2 October for signing but it was amended (presumably by the offerors) “on or about 21 October”, and rejected by Mr Mottrom “on or about 22 October.”^[13]
27. [27]
    Mr Mottrom says the offer was presented to him on a day between 26 September and on 6 October 2014.
28. [28]
    It is unclear why the parties’ recollections of the timing of this offer differ by almost a month. I might speculate that one party might be motivated to distance the offer from the auction while it would be to the other’s advantage to put the offer as close to the auction as possible. There is no evidence supporting either party’s submission, other than the letter addressed to Liu on 2 October 2014 from Hinterland Gold apparently enclosing the proposed sale contract, which suggests that the earliest Mr Mottrom could have been presented with the offer was 2 October. 
29. [29]
    I reject Mr Mottrom’s submission to the extent he says he received the offer before 2 October, but the inability to nominate a precise date beyond that is unlikely to impact upon the outcome of this application given the relatively short period of time between the dates that remain at issue.  Accordingly, I find that the written offer for $850,000.00 was presented to Mr Mottrom on a day between 3 October and 21 October 2014. 

(c) Was Mr Mottrom’s property bought for a “significantly better” price that the highest offer presented by Ms Flockhart?

30. [30]
    Mr Mottrom says that the successful bid of $860,000.00 was “significantly better” than the last offer presented by Ms Flockhart because it was higher than $850,000.00, not inclusive of furniture and not subject to finance.^[14] 
31. [31]
    I do not accept that the $10,000.00 difference in price is significant. Nor do I accept that the absence of a finance condition made any practical difference, given the unusual concession afforded by Mr Mottrom to the buyer in allowing three months after auction to arrange finance.      
32. [32]
    The furniture condition is more complex.  The special condition was inserted by Mao and/or Liu, and featured in both the oral offer for $750,000.00 and the written offer for $850,000.00.  Mr Mottrom says, and I accept, that he never wanted to sell his furniture. 
33. [33]
    Accordingly, the absence of a furniture condition—rather than the price—was the only significant difference.  Whether that is sufficient to disentitle Hinterland Gold from its commission depends on the terms of the agreement between them.

Entitlement to Commission

34. [34]
    Hinterland Gold’s claim to commission from the sale of Mr Mottrom’s property relies on clause 2 of the terms and conditions of the PAMD Form 22a Appointment of Real Estate Agent, signed by Mr Mottrom and Ms Flockhart on 16 January 2014. It provides:

35. [35]
    Both parties acknowledge that Mr Mottrom’s property was sold by Professionals Vertullo after the term of Ms Flockhart’s appointment, and Mr Mottrom paid a commission to Professionals Vertullo.  Ms Flockhart nevertheless says she is also entitled to commission on the sale of the property because she was the effective cause within the term (ie, between 15 April and early October 2014) that led to the sale to Malway at the auction on 8 November 2014. 
36. [36]
    Mr Mottrom disagrees.  He does not deny that the agency appointment agreement is valid and binding on him, but says Ms Flockhart:

    1. Failed to effect a sale of the property to Mr Mao and/or Mr Liu or any entity associated with them;
    2. Had informed him that negotiations with Mao and Liu had come to an end;
    3. Did not introduce Mao and/or Liu to Vertullo;
    4. Was not involved in listing the property for auction;
    5. Did not participate in marketing of the property for auction;
    6. Did not attend the auction;
    7. Did not approach the new agent to seek a conjunction arrangement; and
    8. Was not involved in and did not influence the negotiations that resulted in Malway Property Holdings Pty Ltd buying the property.^[15]
37. [37]
    I have already dealt with the issue of introduction at “c) Did not introduce Mao and/or Liu to Vertullo”.^[16]  With respect to “g) Did not approach the new agent to seek a conjunction agreement,” that contention is not supported by anything in law or the agency appointment so does not relieve Mr Mottrom of any contractual obligation to Hinterland Gold under clause 2 of the appointment. 
38. [38]
    The remaining contentions go to the primary issue for adjudication by this Tribunal:  Was Hinterland Gold the effective cause, between 15 April and early October 2014, of the sale of Mr Mottrom’s property? 

Effective Cause of Sale

39. [39]
    Whether an agent was the effective cause of a sale of property is a question of fact. A significant body of Australian case law exists to aid analysis and provide support for the relevance or otherwise of events and circumstances one might typically find in a transaction such as this.

Case law

40. [40]
    In LJ Hooker Ltd v W Adams Estates Pty Ltd^[17] the High Court held that an agent will be entitled to commission for a sale of property which has resulted wholly or partially from the efforts of the agent.^[18]  In other words, the agent must show it was the effective cause of the sale. 
41. [41]
    Effective cause means more than being merely one cause of many leading to the actual sale:  the agent must show that his or her actions really brought about the relation of buyer and seller.^[19] In Moneywood Pty Ltd v Salamon Nominees Pty Ltd,^[20] Gummow J said:

“The notion of ‘effective cause’ reflects the requirement expressed in a long line of cases that it is not enough that the engagement of an agent to find a purchaser or to introduce a purchaser was a step without the taking of which the sale would not have been effected.  Something more immediate is required if the criterion of contractual liability is to be satisfied.”^[21] 

42. [42]
    Justice Gummow noted that in all the cases on effective cause, the essential issue is whether the agent brought about the state of affairs giving rise to the contractual right to the commission.^[22] Justice McHugh expressed effective cause as giving rise to the right to commission when the agent has introduced a buyer who is ready, willing and able to complete the purchase.^[23]
43. [43]
    Decisions in which the first agent was found to be the effective cause of sale include:

    1. Where the first agent introduced a buyer whose $3.95 million offer met the seller’s asking price, but was rejected by the seller who’d been told he could get $4.2 million.  The seller soon realised his expectation was unrealistic and the buyer later secured the property for $3.9 million through another agent.  The first agent was found to be the effective cause of the sale because it had introduced the buyer and had worked him into a position in which he made an offer to purchase it;^[24]
    2. Where a seller was found liable to pay commission to the agent who had introduced and made offers of up to $250,000.00 on behalf of buyers who, despite having their early offers rejected for being below the vendor’s asking price, eventually bought the same property for $250,000.00 through a second agent;^[25]  and
    3. Where an agent had put in inordinate efforts to negotiate between a difficult buyer and seller but failed to complete the sale during her appointment because the parties could not agree to a special condition on window coverings.  The second agent apparently overcame the window covering issue, closing the sale with the same buyer two months later.  The Court found that the first agent’s “considerable” efforts had flowed through to the sale.^[26]
44. [44]
    The common feature of these cases seems to be that the agent worked the buyer into a position to purchase property on terms—including price—which the vendor eventually agreed to through a different agent.
45. [45]
    Decisions in which the first agent was not the effective cause of sale include:

    1. Where an agent introduced a prospective buyer, presenting an offer of $25 million to a hotel vendor which was rejected.  The same buyer made an offer of $29.7 million through a second agent which was accepted. The first agent sought commission but was held not to be the effective cause of the sale because: (i) it was insufficient to rely only on an introduction and the offer of $25 million; (ii) the difference in price was clearly due to the second agent’s efforts; and (iii) an employee of the buyer had dealt with the first agent but the company director had dealt with the second agent, so the company director could not have been influenced by the first agent’s efforts.  It was held that the first agent did not show that his efforts continued to influence the purchaser in its eventual decision to buy from the subsequent agent;^[27]
    2. Where an agent who introduced a buyer was held not to be the effective cause of sale because it was the second agent who made it possible for the buyer to obtain the finance required to complete the purchase;^[28] and
    3. Where a buyer who had been a registered bidder at an auction later purchased the same property by private contract, the agent could not prove that he had done anything in addition to that introduction to have been the effective cause of the sale.^[29]
46. [46]
    The common thread is that the agent hadn’t been the one to bring about the state of affairs giving rise to the contractual right to commission. 

Was Hinterland Gold the effective cause of the sale of Mr Mottrom’s property on 8 November 2014?

47. [47]
    Hinterland Gold’s introduction of Mao and Liu to Mr Mottram’s property resulted in an offer of $850,000.00 including all household furniture.  There was no evidence before the Tribunal that Ms Flockhart negotiated the buyers to a point that they were ready, willing and able to buy at or near that price without furniture during the term of Hinterland Gold’s appointment. 
48. [48]
    Mr Mottrom was unwilling to sell his property fully furnished for $850,000.00, but was a willing seller at $860,000.00 without furniture.  Professionals Vertullo, and not Ms Flockhart, brought about the sale on these terms.  Neither Malway nor Mao (and/or Liu) were ready, willing and able to complete the purchase on these terms during the term of Hinterland Gold’s agency.
49. [49]
    The evidence did not show that Ms Flockhart put in inordinate efforts that flowed through to the eventual sale at auction.  Nor does it show that her efforts continued to influence Malway in its eventual decision to buy.
50. [50]
    Accordingly, I find that Hinterland Gold did not bring about the state of affairs giving rise to the sale, was therefore not the effective cause of sale and is not entitled to commission as claimed.

Orders

51. [51]
    The application is dismissed.