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The parties disputed the agent’s entitlement to recover commission payable on the sale of 500 acres under a Form 6 appointment. The appellant sought to argue that the appointment was invalid as not complying with s 105(1) Property Occupations Act 2014 because the relevant Form 6 did not include a mandatory statement that the commission was to be worked out only on the actual sale price. The Court upheld the conclusion which the Chief Justice had reached at first instance, confirming that the Form 6 appointment appointed the agent as real estate agent for the sale of the property; expressly provided for the payment of commission in the circumstances which arose; and that the agent had established an entitlement to the claimed commission.
Boddice JA and Burns and Ryan JJ
3 November 2023
The factual background was quite complex. The respondent was appointed in early 2018 to sell the appellant’s property by way of a Form 6 appointment. . The Form 6 indicated it was a “continuing appointment” commencing on that date for an “open listing”. The list price was $12,000,000. Commission was payable as follows:
“4.4% OF THE SALE PRICE IF THE AGENT INTRODUCES THE BUYER TO THE PROPERTY 2.2% OF THE SALE PRICE IF THE SELLER INTRODUCES THE BUYER TO THE PROPERTY…” .
As matters eventuated the sales manager of the respondent, on 13 May 2019 the director of the appellant and a third party who claimed to have interested buyers also entered into a Deed of Agreement in order for the third party to be rewarded for any introduction of the buyer to the property. Pursuant to the Deed of Agreement, no commission was payable unless the contract proceeded to settlement. . On 25 May 2019, another Form 6 was executed and it also appointed the respondent as real estate agent for the sale of the property. . The Form 6 relevantly stated:
“The client and the agent agree that the commission including GST payable for the service to be performed by the agent is :
1.Sale price of up to and including $6,300,000 + GST. - 4.4% of the sale price.
2.Sale price of over and including $6,300,001 + GST. - All money above $6,000,000 + GST. To be paid to the agent + GST.
(e.g. sale price of $6,500,000 + GST - $500,000 + GST to be paid to the agent)”.
In clause 15 of the essential terms and conditions of that document it stated:
“15.1This document constitutes the entire Agreement of the parties with respect to the subject matter of this document and supersedes all prior negotiations or expressions of intent or understandings with respect to the Appointment of the Agent to the Property.”
On 17 August 2019, a contract of sale was entered into for $7,500,000, but the contract was terminated by the appellant on 2 June 2021 for the buyer’s breach, and the deposit was forfeited. –. The issue then arose as to whether the respondent was entitled to recover $1,650,000 from the appellant on account of commission payable under the agreement recorded in the second Form 6 (or alternatively $330,000 as commission in the event the later Form 6 was deemed ineffective). .
The appellant sought to resist paying the commission, on a number of bases including that the respondent’s appointment was invalid as not complying with s 105(1) Property Occupations Act 2014 because the relevant Form 6 did not include a mandatory statement that the commission was to be calculate only on the actual sale price as required by s 105(2)(a) of that Act. .
The primary decision
The Chief Justice’s view was that the sale had occurred within the period contemplated by the later Form 6, and commission was payable according to its terms, which were not to be read down. In her view, the failure to state in the appointment that commission would be calculated by reference to the “actual” sale price was of little consequence. , .
The Court did not accept the appellant’s argument that on a proper construction of s 105 of the Act, the respondent had not been properly appointed since the relevant Form 6 did not include a mandatory statement that the commission was to be worked out only on the actual sale price. The Court held as follows:
1.Section 105(1) of the Act only operates in circumstances where the commission payable for the service “is expressed as a percentage of an estimated sale price…”. Only, in that event, does the requirement arise that the appointment state, in writing, that the commission is calculated only on the actual sale price of the property. . Here, the relevant Form 6 (being the later one) provided a method for the calculation of commission payable. . With respect to the wording of the clause, whilst it was dubious whether the commission was expressed as a percentage of an estimated sale price that was not a matter the court was required to determine. ;
2.The primary judge’s determination that the omission of the word “actual”, before “sale price”, did not deprive the relevant Form 6 of legal effect was not erroneous. The wording of the Form 6 did not contain any formula for the payment of the respondent’s commission aside from a reference to a particular sale price. The only proper construction of the words “sale price” therein was that it meant the price for which the property was agreed to be sold, which, on a proper reading of the section, is the actual sale price. ;
3.The primary judge correctly held that s 48A(2) Acts Interpretation Act 1954 had no application in the current matter since the requirement as to actual sale price was not required by the approved form; rather, it was required by the Act itself. ;
4.In addition, the primary judge’s finding that nothing in the proper construction of the Act supported an argument that a failure to strictly comply with s 105(2)(a) would compromise the Form 6 appointment was not affected by error. Instead, substantial compliance with the requirements of s 105(2)(a) will suffice. ;
5.There was no error in the finding at first instance that the Form 6 was not to be construed with an earlier document (with different parties and a different event as to when commission was payable). As the Form 6 provided that commission was payable on entry into a contract (even if it did not proceed to settlement), the respondent was entitled to the commission. –;
6.When construed properly, it was apparent that the Form 6 intended that after the term of the exclusive agency expired the respondent’s appointment continued as a non-exclusive agency. As such, the time at which the buyer was found for the property occurred during the appointment and the respondent was the effective cause of sale “within the Term”. The sale had taken place within the time envisaged. –.
The Court dismissed the appeal finding no error had been made at first instance. The Court ordered that the appellant pay the respondent’s costs of the appeal, to be assessed on the standard basis.