Peterson Management Services Pty Ltd v Chief Executive, Department of Justice and Attorney-General

This case considers the Property Agents and Motor Dealers Act 2000, particularly sections 133 and 139 of that Act. As to the first section, s 133, the court considered the distinction between recovery of an authorised expense by an agent, and a reward for a service provided by the agent. The latter, it was held, was not within the scope of s 133 of the Act as the mischief to which that provision is directed is the situation where an agent incurs expenses and passes them on to the client, instead of being absorbed by the agent as part of its costs. As to the second section, s 139, the question was whether the agent had calculated its commission incorrectly, by reference to the amount charged by Wotif (a third party booking service), or the amount paid to the agent after Wotif’s commission had been subtracted. Applegarth J (Fraser and Gotterson JJA agreeing) held that the “amount collected” referred to the amount charged by Wotif, and not the amount collected by the agent.

Fraser and Gotterson JJA and Applegarth J

12 May 2017

This matter concerned an application for leave to appeal from a decision of the Queensland Civil and Administrative Tribunal (“QCAT”).

The applicant was a licensed real estate agent which conducted a caretaking and letting business at a resort. [3].

The respondent commenced disciplinary proceedings in QCAT, alleging four contraventions of the now repealed Property Agents and Motor Dealers Act 2000 (“PAMDA”). [4]. The first three alleged contraventions concerned fees and charges for (1) general cleaning services, (2) window cleaning services, and (3) the provision of Foxtel services. [4].

In relation to grounds (1) and (3) the respondent alleged that the applicant had contravened s 141(6) of the PAMDA by stating a single sum, or an agreed dollar charge, for the provision of the services. [4]. Each of these grounds turned upon the construction of s 133 of the PAMDA (see below). The contravention in relation to ground (2) was conceded “because the relevant form did not state any specific fee or charge for the provision of window cleaning services”. [4].

The fourth alleged contravention related to Wotif bookings. [5]. The respondent argued that the applicant had breached s 139(2) of the PAMDA “because the commission it charged was calculated on the amount of rent that Wotif collected by way of rent paid by the tenant, not the amount of rent that the applicant received from Wotif”. [5].

The Tribunal “found that the remaining three grounds were not established”. [6]. The respondent then appealed to the Appeal Tribunal of QCAT, which overturned the primary Tribunal’s dismissal of these three grounds. [7]–[8].

On the applicant’s appeal to the Court of Appeal there were two key issues, namely, the proper interpretation of s 133 of the PAMDA, and the adequacy of the Appeal Tribunal’s reasons concerning the disciplinary ground under s 139(2) in relation to the Wotif bookings. [9].

Interpretation of s 133

Section 133 of the PAMDA required a real estate agent’s written appointment to state for each service to be performed, among other things:

1. “the fees, charges and any commission payable for the service” (s 133(3)(c)(i)); and
2. “the expenses, including advertising and marketing expenses, the agent is authorised to incur in connection with the performance of each service or category of service” (s 133(3)(c)(ii)). [11].

Section 141(1) provided that “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 that is more than the amount of the reward stated in the appointment given under section 133”. A person who did so committed an offence under s 141(6). “Reward” was defined to include “remuneration of any kind including, for example, any fee, commission or gain”. [14].

In support of the alleged contravention, the respondent argued that (i) the applicant charged owners a cleaning fee that was more than the cost it incurred in engaging a cleaner, (ii) the applicant did not disclose the amounts paid to a third party to perform the service, and (iii) the difference between what it charged the owner and what it paid the cleaner was an undisclosed “reward”. [15]. A similar argument was made with respect to the provision of Foxtel services. [15].

The Court of Appeal (Applegarth J, with whom Gotterson and Fraser JJA agreed) rejected this argument and overturned the findings of the Appeal Tribunal. [29].

Properly understood, the expense to which s 133(3)(c)(ii) related was not “any cost or expense incurred in performing the service”. [35]. Rather, it referred to “an expense which the agent [was] ‘authorised to incur’ in connection with the performance of each service” (emphasis added). [35]. The mischief to which the section was directed was the situation in which expenses incurred by an agent were passed on to the client, instead of being absorbed by the agent as part of its costs. [33].

The present case, however, was “not about the recovery of such an authorised expense. It [was] about a reward for service”. [36]. It was a matter for the agent how to organise those services and “unit owners were not ‘billed’ … for the cleaning expenses which the agent incurred”. [36]. “The agent was rewarded by a fixed dollar amount”. [36]. As Applegarth J explained:

“The essential fact in this case is that the client received the service it contracted for at the price it contracted to pay, being the fee or charge stated in the schedule to the appointment form for the ‘clean and service’ of a unit and the monthly Foxtel services. The applicant did not seek to recover or retain more than the reward stated in the appointment form for providing those services.” [39].

The Appeal Tribunal was held to have misconstrued s 133. [53].

Wotif Bookings and s 139(2)

The respondent conceded that the Appeal Tribunal erred in failing to give adequate reasons. [10]. The central issue was whether the applicant contravened s 139(2) by working out its commission “on the amount collected by Wotif from the tenant”, instead of “the amount remitted by Wotif to the applicant”. [54]. Section 139(2) provided that a “real estate agent must not claim commission worked out on an amount more than the actual sale price of the property or the amount collected”.

Applegarth J said:

“In its statutory context, and in particular in the context of s 139(1), the term ‘the amount collected’ in s 139(2) refers to the rent collected. The rent is what the tenant pays to let the owner’s unit. The amount remitted by Wotif to the agent, after the deduction of its 10 per cent, is not ‘the rent’. It is the residue of the rent.” [64].

Further, the PAMDA did not refer “only to the collection of rent in which the agent [was] personally involved”. [67]. It did not refer to “the amount collected by the agent” (emphasis added). [67]. The Court of Appeal upheld the finding of the primary Tribunal, namely, that the “amount received by Wotif from the tenant as rent was ‘the amount collected’”. [69].

In the result, the application for leave to appeal was granted, and the appeal allowed. [73].

J English