Russtar Pty Ltd v Hamilton[2010] QDC 419

DISTRICT COURT OF QUEENSLAND

1. [1]
   The appellant, Russtar, operates a licensed real estate agency known as Savvy Business.  It sued the defendants for unpaid commission related to the sale of a business known as "The Fruit Shed".  On the 12th of November 2009, after a three-day hearing spread over three days in 2009, his Honour Magistrate Killeen found against the appellant and gave judgment for the respondents with costs.

2. [2]
   From that decision the appellant now appeals to this Court pursuant to section 45 of the Magistrates Court Act 1921 (Qld).  Jurisdiction is conferred on this Court pursuant to section 47 of the Magistrates Court Act 1921 (Qld), and following rules 782 of the Uniform Civil Procedure Rules 1991 (Qld) apply to procedure.  Although not clearly stated, it's clearly an appeal on the record before his Honour.

3. [3]
   His Honour's reserved decision was given in writing and sets out his findings of fact and conclusions of law.  As he found, Mr Rodney Russell the principal of the appellant entity, was the actual real estate agent who dealt with Mr Hamilton, who, with Michelle Huby, was the owner of the business known as "The Fruit Shed".

4. [4]
   There is no dispute that from on or about the 12th of October 2007, Mr Hamilton had dealings with Mr Russell and subsequently appointed the appellant as his agent for the sale of the business.  The enforceability of that appointment was an issue in dispute before his Honour.

5. [5]
   A Form 21a pursuant to the Property and Motor Dealers Act 2000 (Qld)  (the PAMDA) was prepared by Mr Russell and given to Mr Hamilton, which he signed.  Mr Russell as agent did not sign in the two places marked in the form and there is some dispute about the legal effect of this.  The respondents argued successfully before his Honour that the appellants had breached mandatory provisions of the PAMDA thus preventing the applicant from suing on the agency agreement.

6. [6]
   The appointment was for an exclusive agency said to commence on the 23rd of October 2007 and ending on the 22nd of February 2008.  The appointment conventionally annexed extracts from the approved REIQ terms and conditions, which defined agreed commission to be paid under the appointment in clause 2.1 of those terms and conditions, and entitlement to commission in 3.1 of the terms and conditions as follows:

"The client agrees to pay the agent commission as specified in the appointment.  If a contract of sale of the business ... 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:

1. the contract of sale of the business ... is completed; or
2. the client defaults under the contract of sale and that contract is terminated by reason of or following that default;  or
3. the contract of sale is not completed and the whole or part of the deposit paid is liable to be forfeited;  or
4. the contract of sale is terminated by mutual agreement of the client and the buyer".

7. [7]
   There was also a dispute about whether or not Mr Hamilton ever received a copy of the form 21a signed only by him.  His Honour found (contrary to Mr Hamilton's evidence) that he did, but that it was not signed by the agent as required by sections 133(7) and (8) of the PAMDA.

8. [8]
   Mr Russell proceeded to actively market the business including advertising it, and he introduced a buyer resulting in a conditional contract being entered into on the 20th of December 2007.  The contract named the appellant as agent.  The contract was never completed as a result of one of the essential conditions concerning due diligence to the satisfaction of the buyer not being met.

9. [9]
   On the 25th of January 2008 Mr Russell introduced another potential purchaser Mr Shadforth, and they met with Mr Hamilton at the business.

10. [10]
    His Honour preferred the evidence of Mr Russell and Shadforth to that of Mr Hamilton where there was conflict.  There is no real challenge to his findings of credit nor could there be.  He had the advantage of observing and hearing the witnesses over an extended period of the trial.  He clearly formed an unfavourable impression of Mr Hamilton who he thought was evasive and vague on occasions.  He accepted the evidence from Mr Russell and Mr Shadforth that this meeting occurred in the face of Mr Hamilton's denial.

11. [11]
    It was, however common ground that the three met again on the 15th of February 2008 at The Fruit Shed premises.  This meeting, pleaded in the Amended Statement of Claim filed on the 10th of April 2008, and the agreement alleged to have been forged during the meeting, is the essential factual focus of the appellant's case as pleaded and conducted at the hearing in the Magistrates Court.

12. [12]
    The crux of the appellant's case at trial is contained in paragraphs 3, 4, 5, 8, 9, 10 and 11 of the amended statement of claim which I will not repeat here.  The entity referred to in paragraph 8 is the entity associated with Mr Shadforth; a company known as Fresh Invest Proprietary Limited, which in effect, acted as the corporate trustee of a trust associated with the Shadforth family.  On the evidence, it was formed after the meeting on the 15th of February 2008 and prior to the preparation of the contract around about the 19th of February 2008 by Mr Shadforth's solicitors.

13. [13]
    As to this aspect of the case, his Honour inferentially found that there was an oral agreement between Mr Hamilton and Mr Shadforth on the 15th of February 2008, as to some of the terms of the agreement, to be reduced to writing.  His Honour found on the evidence that the final terms were not agreed and noted that subsequently, on the 19th of February 2008, the solicitors for the Shadforth interests wrote to the appellant requiring amendments to the draft contract prepared by it.  The appellant challenges this finding on appeal.

14. [14]
    His Honour found that a contract for the sale of the business was received by Mr Russell on the 20th of February 2008 and signed by the purchasers on that day, and contrary to the facts pleaded in paragraph 10 of the amended statement of claim, his Honour found that that contract was never actually presented to Mr Hamilton.  The contract is found on pages 68 to 92 of Exhibit 6 and in the plaintiff appellant's book of documents, and contains extracts from the standard REIQ conditions of sale of a business.  His Honour found that Mr Hamilton had probably before then found the entity that ultimately purchased the business, that is, prior to the involvement of Mr Shadforth who was introduced by Mr Russell.

15. [15]
    His Honour also found in the days leading up to the expiration of the exclusive agency on the 22nd of February 2008, Mr Hamilton was avoiding Mr Russell and was being evasive.  However, his Honour found that in fact Mr Hamilton did not sign the contract and he found (a) that there was never a concluded oral agreement reached on the 15th of February 2008, and (b) there was no basis in fact or in law to read into the form 21a appointment an implied term of the type pleaded in clause 5 of the Amended Statement of Claim.

16. [16]
    As his Honour observed, it was never the case pleaded by the appellant that it was entitled to commission on the basis of clause 3.1 of the standard conditions attached to the form 21a on the basis that it was the effective cause of sale to the ultimate purchaser.  Given the objects and purposes of the PAMDA which are primarily consumer protection focused, it would seem strange that a term of the type pleaded should be implied in the standard form of appointment of agent under the Act, particularly where claiming commission pursuant to an oral agreement amounts to an offence.

17. [17]
    In his reasons for judgment, his Honour quoted with approval an extract from an ancient House of Lords authority, Luxor (Eastbourne) Limited v Cooper [1941] AC 108:

"The agents introduced proposed buyers who were ready, willing and able to buy the seller's cinemas for the minimum price stipulated, however the sellers would not sell them.  No sale occurred.  Thus, the event upon which the commission depended had not happened.  The agents therefore could not sue for commission on the agreement.  However, the agents contended that there should be an implied term into agency agreements of this nature, a term that the principal would not do anything to prevent the agent earning commission in accordance with the contract".

18. [18]
    His Honour observed the House of Lords held that no such term should be implied into the contract in that particular case.

19. [19]
    A finding of the kind now contended for by the appellants would, in my view, run contrary to the legislative intent embodied in the PAMDA.  His Honour was clearly right in my view, to find that there was no such implied term in the agreement.

20. [20]
    In oral argument today, for the first time, Mr Hackett makes an argument to the effect that there was a concluded agreement made between Hamilton and Shadforth on the 15th of February 2008 which falls within classes (a) and (b) of the classes of contract referred to in the High Court's seminal decision in Masters v Cameron [1954] 91 CLR 353.  I agree with Mr Lee that this really wasn't the way in which the case was presented before his Honour.  However, in order to determine whether his Honour was right in finding that there was no concluded agreement on that day, it is necessary for me to review the evidence of the three people present that day, and Mr Hackett has helpfully provided me with the references in the transcript to the relevant evidence which I have read.

21. [21]
    In relation to that evidence, and bearing in mind his Honour's findings as to credibility, his Honour concluded that what occurred leading up to and upon the 15th of February 2008 constituted no more than preliminary negotiations to reach agreement on a price.  It is clear that his Honour did, at least by implication, accept that Mr Hamilton and Mr Shadforth had agreed on a price, namely $790,000 plus stock.  The evidence of Mr Russell and Mr Shadforth in particular establishes that that price was agreed and there was a handshake and it was agreed that "a deal had been done" or words to that effect.

22. [22]
    However, as his Honour noted, Mr Hamilton did not know the name of the intended purchaser; which is not surprising as the company entity to act as the vehicle to purchase the business had not yet been established.  It is clear that the solicitors for the Shadforth interests advised them, and they accepted the advice, that a precise due diligence clause should be inserted into the ultimate contract, making the contract conditional upon due diligence occurring to the buyer's satisfaction within 21 days of the date of contract.  This, in my opinion, was a clear departure from the quite vague discussions held between the parties up to and on the 15th of February 2008 about this issue; an issue which I regard as an important term of any proposed agreement to sell the business.

23. [23]
    Mr Shadforth referred obliquely in his evidence to the lease in the sense that he was aware of it, but there is no suggestion that the assignment of the existing lease was discussed and agreed to up to or on the 15th of February 2008.  Mr Russell brushed that off in evidence as being standard; that is, it occurred in every business contract, but I would regard the clause relating to the assignment of the lease as fundamental, albeit in the buyer's favour.

24. [24]
    In any event, neither due diligence nor the assignment of the lease are pleaded as part of the terms of the oral agreement in clause 9 of the Amended Statement of Claim which Mr Hackett belatedly argues is caught by the first two of the Masters v Cameron classes of contract.  Clearly, the contract prepared by the solicitors and submitted to Mr Russell on or about the 20th of February 2008 is a significantly different contract to the agreement on price reached on the 15th of February 2008 and pleaded in paragraph 9 of the Amended Statement of Claim. Mr Shadforth was also quite unsure about any final agreement about stock being agreed on the 15th of February 2008, but that is not critical to my ultimate conclusion; and that is, his Honour did not err in holding that the appellant had not proved the formation of a final or complete agreement on the 15th of February 2008.  In the contract tendered by the purchaser's solicitors, the assignment of the lease is included and even in that agreement, the name of the actual lessor is incorrect.  Even at that stage, there could not have been real mutuality between the parties.  It defies logic that the purchaser would agree to purchase the business without being fully protected in relation to the assignment of the lease.

25. [25]
    The other insurmountable difficulty for the appellant is that even if it had been held that a final oral agreement had been forged within the classes (a) or (b) in Masters v Cameron, the entitlement to commission would not arise in any event because of the terms of clause 3.1 of the Form 21a.  On the facts found by his Honour, with which I agree, Mr Hackett's attempt today to categorise what occurred in the circumstances of this case under 3.1(4) must fail.

26. [26]
    His Honour also found against the appellant in relation to the respondents' argument that any agreement of the kind alleged in paragraph 9 of the amended statement of claim could not be enforced as it was not in writing, and therefore was caught by section 11(1)(a) of the Property Law Act 1974 (Qld).  It is not necessary for me to make any conclusive ruling about the correctness of this point because of my view that the appellant has failed in its primary argument.  However, in deference to the argument presented by the appellant's counsel, I will say something.

27. [27]
    Section 11 has been the subject of a great deal of jurisprudential interpretation, angst and discussion, not necessarily in that order.  In Theodore v Misford Pty Ltd and Another [2003] QCA 580, the President (with whom Phillipedes J agreed) said (by reference to section 11 and Riches v Hogben [1986] 1 QDR 315);  at paragraph [5]):

"The phrase 'interest in land' is ordinarily understood to include both the legal and equitable state in land and any right, charge, power or privilege over or in connection with the land".

28. [28]
    The interest there under consideration was an oral agreement to create an equitable mortgage by the lodging of title deeds with a solicitor for the purchaser.  It seems clear to me that an essential component of completion of the contract in this case was the assignment of the lease, which clearly falls within the wide description of an “interest in land” in the President's judgment.  In my opinion, it is not to the point that the contract contemplated necessarily a separate assignment to be signed by the lessor, because it is the contract which required the vendor as lessee to facilitate that assignment as an essential prerequisite to completion of the business contract.  It would follow that pursuant to section 59 of the Property Law Act 1974 (Qld), no action was maintainable to enforce the alleged oral agreement between the parties in this case.

29. [29]
    I don't intend to make any conclusive findings in relation to his Honour's acceptance of Mr Lee's arguments concerning section 133(7) and (8) of the PAMDA.

30. [30]
    There is probably merit in Mr Hackett's argument relying on the judgment of  Fraser JA in Quyd Proprietary Limited v Marvas Proprietary Limited [2008] QCA 257, to which reference is made at pages 7 to 9 of Mr Hackett's written outline that in the circumstances of this case, where his Honour clearly found Mr Hamilton did receive a copy of the form 21a albeit not signed by the agent, and acted at all times consistently with the creation of an exclusive agency with the appellant, and applying the purposive approach to statutory interpretation referred to by Fraser JA, a finding setting aside the whole of the appointment agreement on the basis of failure to strictly comply with section 137(7) and (8) could be maintained.

31. [31]
    The order of the Court is that the appeal is dismissed with costs.