Huskin v Mid North Developments Pty Ltd
[2010] QDC 493
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- Unreported Judgment
- Huskin v Mid North Developments Pty Ltd[2010] QDC 493
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Huskin v Mid North Developments Pty Ltd[2010] QDC 493
Huskin v Mid North Developments Pty Ltd[2010] QDC 493
DISTRICT COURT OF QUEENSLAND
CITATION: | Huskin v Mid North Developments Pty Ltd [2010] QDC 493 |
PARTIES: | GAILE ANNE HUSKINS AND MID NORTH DEVELOPMENTS PTY LTD (ACN 120 605 236) |
FILE NO/S: | BD673/10 |
DIVISION: | Civil Jurisdiction |
PROCEEDING: | Appeal |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 15 December 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 23 August 2010 |
JUDGE: | Reid DCJ |
ORDER: |
|
CATCHWORDS: | APPEAL – Property Agents and Motor Dealers Act (PAMDA) – whether real estate agent was properly appointed according to s 133(3)(b) of PAMDA – whether real estate agent failed to provide copy of appointment pursuant to s 133(8) of PAMDA – whether any such failures preclude recovery of commission APPEAL – effect of prior conversations between the appellant and respondent, contrary to the express terms of an Appointment as real estate agent – misrepresentation as to circumstances in which higher commission payable Property Agents and Motor Dealers Act 2000 (Qld) – ss 133(3), 133(8), 134, 140, Elbfest Pty Ltd v Mennitti (2008) QDC 14 Rose v Ken Guy Real Estate Pty Ltd (2004) QDC 435 Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 |
COUNSEL: | T. Reilly for the Appellant L. M. Dollar for the Respondant |
SOLICITORS: | Warlow Scott for the Appellant Winchester Young & Maddern for the Respondent |
Introduction
- [1]This is an appeal from a decision of a Magistrate given on 3 February 2010. The learned magistrate ordered that the plaintiff’s claim for commission in respect of the sale of townhouses owned by the respondent be dismissed.
- [2]The basis of the Magistrate’s decision was that the appellant was not entitled to commission:
- Because she did not comply with s 133(3)(b) of the Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) contrary to regulation 17 thereof
- Because she did not comply with s 133(8) of PAMDA
- Because an appointment of Real Estate Agent form (Form 22(a)) was signed on the basis that it would apply only if the respondent appointed other agents, so that the listing became what is known as an open listing.
- [3]The grounds of appeal are as follows:
- The learned magistrate erred in law in finding that the appellant did not comply with s 133(3)(b) of PAMDA, namely that the appointment of real estate agent dated 28 June 2007 between the appellant and the respondent did not state in a way prescribed by regulation the fees, charges and commission payable for the service.
- The learned magistrate erred in law in finding that any such failure to comply with s 133(3)(b) of PAMDA precluded the appellant for establishing her entitlement to commission.
- The learned magistrate erred in law in finding that the appellant failed to comply with s 133(8) of PAMDA, namely that the applicant failed to provide a copy of the second Appointment to the respondent.
- The learned magistrate erred in law in finding that any such failure to comply with s 133(8) of PAMDA precluded the appellant from establishing her entitlements to commission.
- The learned magistrate erred in law in holding that a prior conversation between the appellant and Mr Paul Garazzo on behalf of the respondent was binding on the appellant and the respondent, contrary to the express terms of the second Appointment.
- The learned magistrate erred in fact in finding that the second appointment was signed on the basis that the appellant would be paid a higher commission only if the respondent appointed other agents and that finding could not reasonably be inferred from the undisputed facts or the facts found by the learned magistrate.
- The learned magistrate erred in law in holding that there was no binding agreement between the Appellant and the Respondent.
Background
- [4]The appellant was a licensed real estate agent. She also worked with her partner, Clive White, who was a builder operating through a company, White Construction (Qld) Pty Ltd (“White Construction”). The respondent was building a small townhouse development in Zillmere. The directors of the respondent company were Paul Garazzo and his brother Rodney Garazzo. In the course of discussions about the development between the respondent and White Construction, the appellant offered to act as marketing agent for the project. She agreed to charge what was said to be a discounted commission of $5,500 per townhouse sold. That appointment was the subject of a written Appointment of Real Estate Agent form, which was Exhibit 7 in the proceedings. The appointment was said to be a sole agency, and was to end on 9 May 2007. It seems that by agreement this was extended to 1 July 2007. Nothing turns on that appointment.
- [5]Sales progressed more slowly than anticipated, and apparently only two units had been sold “off the plan” by June 2007. As a result, Paul Garazzo and the appellant had a discussion regarding the appointment of other agents to market the units. During such discussions Paul Garazzo said that he discussed with the appellant that if the respondent appointed other agents, that is, if she was not the sole agent, then she would be entitled to commission at a new and higher rate of 5% on the first $18,000 of the sale price and 2.5% on the balance. Any such appointment of other agents would create what is known in the industry as an “open listing”. Paul Garazzo said, however, that he told the appellant that if he did not appoint other agents, then she would be entitled to commission only at the rate set out in the original appointment document, Exhibit 7. He said she agreed to this proposal.
- [6]This conversation was a matter of dispute.
- [7]The magistrate preferred the evidence of Paul Garazzo on this and other matters.
- [8]Despite this conversation, Paul Garazzo was asked by the appellant to sign and did sign a new Appointment of Real Estate Agent form which provided for commission at the higher rate to be charged. A copy of that document was Exhibit 9 in the proceedings.
- [9]A number of issues arose with respect to that written appointment.
- [10]Clause 7.1 thereof, which provided for the agreed commission, stated relevantly as follows:
“Please note that you (the client) will:
- have the right to negotiate the commission, charges and services.
To the client: The property Agents and Motor Dealers Regulation 2001 sets a maximum amount of commission chargeable by your agent for residential property.
You have a right to negotiate an amount lower than this amount of commission.
Agreed commission: The client and the agent agree that the maximum commission (and GST) payable for the service to be performed by the agent is:
You must express the commission in both formats:
| Dollar Amount | Percentage |
Total commission | $ | 5% $18,000 |
GST | $ | and 2.5 Bal |
Total payment | $on sale price |
|
To the client:
Percentage: commission expressed as a percentage is worked out only on the actual sale price
Amount: commission expressed as an amount represents the commission payable if the property is sold at the reserve or listing price (Part 4.2 above). The amount of commission payable may vary from the amount stated.”
- [11]A tick, which had originally been placed in Part 5 of the Form to indicate it was a sole agency, had been crossed out and a tick instead placed in the box to indicate it was an open listing. The magistrate found that this was done by Paul Garazzo as an indication of their oral agreement that the appointment would only apply in the event that other agents were appointed i.e. if it became an open listing. Garazzo said he agreed to the higher commission in the even of an open listing in order to ensure that the appellant was not disadvantaged in respect of the commission in comparison with other agents if they were in fact appointed.
- [12]In fact, no other agents were ever appointed.
- [13]A significant dispute at the trial concerned whether or not the appointment document that I have referred to in fact had a schedule annexed. This was seen to be of critical importance. The alleged schedule, which was part of Exhibit 2, being another copy of the Appointment of Real Estate Agent form tendered through the appellant, provided as follows:
“Part 4.2 Reserve or listing price and commission: Part 7 The reserve or listing price may increase/alter as there are a number of Townhouses at individual List Prices, the Commission will be payable on the actual Sale Price. To express the commission in both formats see the examples below:
5% first $18,000 and 2.5 of the balance of the Sale price (considered the standard rate of commission in Qld)
$325,000 $8,575 plus 10% GST at $857.50
$340,000 $8,950 plus 10% GST at $895.00
$345,000 $9,075 plus 10% GST at $907.50
$355,000 $9,325 plus 10% GST at $932.50”
- [14]The appellant submitted that the appointment agreement was fully set out in Exhibit 2 and that she is entitled to the full REIQ commission as set out in that document. Garazzo denied the annexure was attached to the document, exhibit 9, which he signed.
- [15]In addition to the factual dispute concerning the circumstances in which the document was signed and whether an annexure was then attached, Paul Garazzo, on behalf of the respondent, also said that no copy of the appointment document was provided to him as required by s 133(8) of PAMDA. The learned magistrate accepted that to be so.
PAMDA
- [16]Part 2, Division 2 of the PAMDA deals with appointment of real estate agents. So far as relevant, section 133 provides as follows:
“(1) A real estate agent must not act as a real estate agent for a person (client) or perform an activity (service) for the client unless—
- (a)the client first appoints the real estate agent in writing.
…
Maximum penalty – 200 penalty points
…
- (3)The appointment must, for each service—
…
- (b)state, in the way prescribed under a regulation, that ... commission payable for the service (is) negotiable up to any amount that may be prescribed under a regulation; and
- (c)state—
- (i)the fees, charges and any commission payable for the service; and
…
- (d)if the service to be performed is the sale … of property … and commission is payable in relation to the service and expressed as a percentage of an estimated sale price …, state that the commission is worked out only on the actual sale price …
- (8)The real estate agent must give copy of the signed appointment to the client.
Maximum penalty – 200 penalty units…”
- [17]Section 134 provides as follows:
“Form of appointment:
- (1)The appointment must be in the approved form.
- (2)The approved form must include a prominent statement that the client should seek independent legal advice before signing the appointment.
- (3)An appointment that does not comply with subsection(1) is ineffective from the time it is made.”
- [18]Part 2, Division 4 of PAMDA deals with recovery of reward or expense.
- [19]Section 140, which is within that part, provides so far as relevant, as follows;
“Restriction on recovery of an award or expense – no proper authorisation etc
- (3)A person is not entitled to sue for, or recover or retain, a reward or expense for the performance of an activity as a real estate agent unless, at the time the activity was performed, the person—
…
- (c)had been properly appointed under Division 2 by the person to be charged with the reward or expense.”
- [20]I interpose that the reference in s 140 of PAMDA to the requirement that the agent “had been properly appointed under Division 2” appears to direct one’s mind to s 133 of PAMDA and particularly to subsection (3) thereof. That subsection, on its face, prescribes the necessary requirements of such an appointment. It should be noted that non-compliance with the subjection does not invoke any penalty as does non-compliance with subsections (1) and (8). Moreover, the requirement in subsection (8) relates to a requirement placed upon the real estate agent, after completion of a signed appointment, and there is no direct reference in subsection (8) to the validity of the appointment depending on compliance with the requirement of the subsection to provide a copy of the signed appointment to the client. Rather a penalty of up to 200 penalty units is imposed for breach.
- [21]This may be contrasted with subsection (3), which sets out the requirements of any appointment, but makes no provision for any penalty in the event of a breach of its provisions.
- [22]Regulation 17 of the PAMDA 2001 provides as follows:
“Appointment of resident letting agent, real estate agent or pastoral house
For section … 133(3)(b) … the appointment must state the following:
‘The maximum amount of commission chargeable is [state percentage and estimated amount in dollars]. Please note you have a right to negotiate an amount lower than this amount of commission.’”
Trial judgment
- [23]A significant issue of the trial was whether or not the second appointment form included the single page annexure that I have referred to. This was considered of some importance because, as can be seen, the annexure clearly sought to comply with the provisions of s 133(3)(b) of PAMDA and Regulation 17 of the Regulations to the Act. The clauses from the Schedule that I have quoted sought to express the commission payable in both a percentage and estimated amount of dollars. It was also important in relation to issues of credit.
- [24]As might be expected in a Form 22A under the Act, the form itself sought to comply with the relevant statutory provision and regulation. On the original four-page form, however, no dollar amount was filled in and this was only done in the annexed schedule. For this reason, the question of whether or not the schedule was completed at the time was seen to be of critical importance at the trial. No signed schedule was produced and Paul Garazzo said he had never seen one. The appellant said that it was attached to the form when signed. The magistrate rejected her evidence in respect of this.
- [25]The magistrate, in coming to this conclusion, was influenced by a number of factors. She noted that the document had been faxed by the appellant on two occasions. Exhibit 4 at the trial was an undated coversheet from the appellant to her solicitors. Exhibit 5 was a copy of the received facsimile. It indicated that four pages were received, although the coversheet itself says that the fax should contain six pages, including that coversheet. This would indicate that the attached documents, which include the Form 22 appointment, should comprise five pages, whereas in fact only three were sent. The appellant said that what was faxed was her licence (which was Exhibit 1 in the proceedings and was only one page), a further one-page document and the second Appointment. Consequently, that would mean that of the pages comprising the standard Form 22 only two were sent. The standard form is four pages and of course the annexure would have been an additional page. The Magistrate speculated that because only four pages went through, only one side of the double-sided Form 22 may have been faxed (i.e. two of four pages, excluding the annexure). This suggested to the Magistrate that the Form 22 did not include the annexure.
- [26]The Magistrate said that a more significant document was Exhibit 9, which was a facsimile of the second Appointment sent by the appellant to the respondent on 12 February 2008. Again, it comprised only four pages, and did not include the Annexure.
- [27]When asked to explain this at the trial, the appellant said that her paperwork was packed up in boxes and she “obtained a copy I had in my car”. She said, “I didn’t see the need to have another piece of paper.”
- [28]Not surprisingly, the Magistrate found this explanation unconvincing.
- [29]The magistrate also noted that the appellant in cross‑examination conceded that a copy of the Form 22 that she had with her in court did not include the Annexure.
- [30]In the circumstances, the magistrate accepted the evidence of Paul Garozzo and rejected that of the appellant about whether or not the document, when signed, included the Schedule.
- [31]The magistrate, in coming to her conclusions, was influenced by the fact that the Form 22 itself did not refer to any attached Schedule. The magistrate said:
“If a schedule was attached, it would be reasonably expected it would refer to the schedule.”
- [32]In my opinion, the magistrate was quite entitled to come to such a conclusion and the respondent has not been able to demonstrate any appellable error in regard to that finding.
- [33]The magistrate also appropriately found that her determination that the Schedule was not attached to the second Appointment reflected adversely on the appellant’s credibility.
- [34]The magistrate referred to a part of the appellant’s evidence when she was asked why a duplicate was not provided for signing on the day the second Appointment was executed. She said, at T50 l 14:
“You would have had to sign two lots of documents, which seems a bit arduous.”
- [35]The learned Magistrate understandably found this explanation unconvincing.
- [36]She also found the appellant’s evidence that she provided a copy subsequently by leaving it on Mr Garazzo’s front porch unconvincing. She pointed out that the appellant was not able to say when this occurred or in what circumstances.
- [37]There were other matters too which caused the magistrate to have doubts about the credibility of the appellant. In cross-examination she had initially denied arguing with Paul Garazzo about the open listing and denied having said that she had three buyers “ready to go”. When she was shown an email sent by her to that effect, after the telephone conversation with Mr Garozzo, she recanted somewhat. Once again, this adversely affected the appellant’s credibility before the magistrate.
- [38]In such circumstances, the magistrate was entitled to find, as she did, that Mr Garazzo had in fact told the appellant that only if the Defendant appointed other agents, would she be entitled to commission at the higher rate of 5% on the first $18,000 and 2.5% on the balance as set out in the second appointment document.
- [39]It was in such circumstance that the Magistrate found the Form 22A document, Exhibit 9, was signed. The learned magistrate found that the document had been prepared as a sole agency agreement but that Mr Garozzo changed the sole agency provision to an open listing by crossing out the tick in the sole agency box and ticking the open listing box. She found that the document was signed after the appellant said:
“Look, I’ve got it prepared. Let’s just sign it. It’s between you and I and it’s done when it’s required.”
- [40]The magistrate accepted that Mr Garozzo’s evidence that this amended document, which authorised an “open listing” was signed in the context of an agreement between he and the appellant that “if it ever came into effect that we were going to open this with other agents, then it would be an open listing and not a sole agency.” She accepted the evidence of Mr Garazzo that if there had been a schedule attached it would have stood out. He said it was not attached and a copy of the document was not provided to him.
- [41]The learned Magistrate accepted that the original appointment was only effective up to 1 July 2007 and that thereafter a new appointment was required. She also accepted that the higher commission referred to in the second appointment document would only be payable if the Defendant appointed other agents pursuant to an open listing.
- [42]In my view the magistrate was quite entitled to come to the factual conclusions she did.
- [43]In such circumstances, the Magistrate dismissed the appellants claim;
- Because of non-compliance with s 133(3)(b) of PAMDA in circumstances where she found the signed appointment document did not include the schedule.
- Because of non-compliance with s 133(8) of PAMDA
- Because the respondent had in fact paid to the appellant commission at the initial agreed rate of $5500 per unit, and the second appointment document only came into effect if and when other agents were appointed pursuant to an open listing.
The Appeal
- [44]The appellant’s counsel argued that even if s 133(3)(b) of PAMDA and Regulation 17 required her to state both the calculation and amount of commission, the failure to do so would not preclude her from claiming her commission on the basis set out in the second appointment.
- [45]In paragraph of his submissions 18 it is said:
“There is nothing in the Act to suggest that the failure to state the amount of commission as well as the calculation of commission payable will prevent the appellant from claiming the commission under the second Appointment.”
- [46]The appellant’ counsel also relied on the decisions of Elbfest Pty Ltd v Mennitti (2008) QDC 14 and Rose v Ken Guy Real Estate Pty Ltd (2004) QDC 435 to the effect that in the circumstances the omission to state the commission as both a percentage and as an estimated actual amount was nevertheless substantial compliance with the statutory requirements, and having regard to s 49(1) and (2) of the Acts Interpretation Act, should be excused.
- [47]It was submitted by the appellant that because Mr Paul Garazzo said in evidence that he could calculate the commission having regard to the formula set out in the Appointment document that the company suffered no prejudice and to require strict compliance would unduly punish the appellant by denying the payment of the full commission.
- [48]The respondent did not really oppose the matter or the basis of non-compliance with s 133(3). At paragraph 42 of the respondent’s submissions, his counsel said:
“It is conceded that there is authority for the proposition that a real estate agent who states the commission payable as a percentage, but fails to state the estimated dollar amount is not prevented form recovering commission as the form has been substantially complied with. … if this were the only breach, it would be open for the court to conclude that there had been substantial. compliance with s 133(3)(b).”
- [49]Section 140 of the Act provides as I have said that a person is not entitled to sue for or recover such commission unless, at the time the activity was performed, the person had been properly appointed under Division 2 by the person to be charged with the reward or expense.
- [50]With respect to the requirement that of a copy of the signed appointment be provided to the respondent, the appellant argued that this was done on 12 February 2008. The appellant said that this constituted compliance with s 133(8). The magistrate found, as she was entitled to do, that this did not occur. .
- [51]The respondent in its submissions argued that s 140(1) of PAMDA restricts recovery of any commission unless the agent is properly appointed under Division 2. In my view, this is what the words mean, but a preliminary question is whether non-compliance with s 133(8) affects the validity of the appointment, as the Magistrate found to be the case.
- [52]In my view, compliance with s 133(8) would require that the form be provided to the respondent Non compliance is however penalised by the imposition of a penalty, and does not affect the validity of the appointment.
- [53]S 140 of the Act provides that a person is not entitled to sue for a reward for the performance of activity as a real estate agent unless at the time the activity was performed the person had been properly appointed (my emphasis). In my view, the appellant was at the time of the sale of the unit properly appointed. Non-compliance with s 133(8) does not affect the validity of the appointment and in my view, the effect of the failure to comply with s 133(3)(b) is not sufficient to distinguish this case from those earlier District Court cases to which I have referred, relating to substantial compliance so that the appellants non-compliance with s 133(8) does not affect the validity of the appointment.
- [54]In my view, the learned magistrate was quite entitled to find:
- (i)that the appellant was in breach of s 133(3)(b) in that the appointment document did not state in the way prescribed by Regulation 17 the commission payable in both percentage and an estimated amount;
- (ii)that in breach of s 133(8) the appellant did not give a copy of the signed Appointment to the client;
- [55]Nevertheless, in my view the appellant was properly appointed at the time of selling the units she did subsequent to the second appointment because there had been substantial compliance with s 133(3) and non compliance with s 133(8) did not effect the validity of the appointment so s 140(1) did not disentitle her to recover commission.
- [56]In such circumstances it is necessary to determine the further matter as to whether the conversations which the magistrate found to have taken place prior to the signing of the document meant that the commission set out in the written second Appointment was not recoverable. I note that she had in fact been paid sommission on such units at the original rate.
- [57]The appellant’s counsel submited that the finding that the second appointment was signed on the basis that the appellant would be paid the higher commission only if the respondent appointed other agents was contrary to the express terms of the written agreement, and cannot stand. He relied on Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 to support that proposition.
- [58]By contrast, counsel for the respondent argued that even if (as is the case) I am satisfied the learned Magistrate was wrong to find the Appellant was not entitled to recover the claimed commission because she was not properly appointed under the Act, the finding about the conversation at the time of the execution of the Form 22A meant the decision at trial should not be interfered with
- [59]He submitted that an appellate court will not interfere lightly with a finding of fact by a trial judge based upon the credibility of witnesses and that I should not do so in the circumstances of this case.
- [60]In this case, the Magistrate’s finding of fact, and her preference for the evidence of Mr Garazzo over that of the Appellant appears to me to be well reasoned and is justified especially having regard to her assessment of the credibility of the witnesses having seen and heard them.
- [61]The respondent’s counsel submits that the principle that parties are bound by the terms of a written agreement does not apply if they were induced to do so by fraud, mistake or misrepresentation. In this case the Respondent pleaded in paragraphs 11-14 of its defence that the Appellant had misrepresented the facts concerning the circumstances in which she could be entitled to the higher commission.
- [62]Indeed he pointed out that at paragraph 42 of the Appellant’s counsel’s submission at the trial it was conceded that if the factual scenario pleaded in paragraphs 11-14 of the defence were established, that would support a finding of innocent misrepresentation. The Magistrate, in my opinion appropriately, found such facts to be proven.
- [63]In her judgement, the learned Magistrate said:
“Counsel for Huskins relies on Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 at paragraph 33 as authority for his assertion that parties who execute a written agreement are bound by it, but in that case, the respondents’ claim about misrepresentation had not been decided by the primary judge, and were remitted for further consideration.”
- [64]The learned magistrate then set out her findings of fact, including the fact that:
“the second appointment was signed on the basis that the plaintiff would be paid a higher commission if the defendant appointed other agents (an open listing)”
And said that such findings
“preclude the (Appellant) from establishing her entitlement to commission at the higher rate claimed”
- [65]In my view, the learned Magistrate’s reference to Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 and to the effect of misrepresentations referred to therein clearly indicate the Magistrate’s intention to find that in the case before her, the Appellant had misrepresented the facts concerning the circumstances in which the full commission would be paid.
- [66]In Equuscorp Pty Ltd v Glengallen investments (supra) at [33] the Court said:
“The respondents such having executed a loan agreement, each is bound by it. Having executed the document and not having been induced to do so by fraud, mistake or misrepresentation, the respondents cannot now be heard to say that they were not bound by the agreement recorded in it.”
- [67]In my view, such a finding was entirely appropriate having regard to the factual finding made.
- [68]In such circumstances, I would dismiss the appeal.
- [69]I will order that – subject to what I shall say next – that the Appellant pay the Respondent’s costs of and incidental to the appeal to be agreed, or, failing agreement, to be assessed on a standard bases.
- [70]I will add that if either party wishes to agitate for another costs order, they prepare written submissions in support of such orders and deliver them to my associate and to the other party within 3 business days, and the other party then have 2 business days to respond by delivering copies of submissions to my associate and to the other party.
- [71]I will then determine what other order with respect to costs is appropriate on the basis of such written submissions.