CA & CA Ballan Pty Ltd v Oliver Hume

CA & CA Ballan Pty Ltd v Oliver Hume - [2017] VSCA 11 - VSCA 2017 case summary — Zoe

[32]

7A At the time of entering the Exclusive Sale Authorities, Oliver Hume and the defendants knew that:

(a) under the Act, for an estate agent to obtain payment from a person for work done by the estate agent for that person, the estate agent was required (amongst other things) to hold a written engagement or appointment signed by the person (or the person's representative) containing (amongst other things):

(i) details of the commission and outgoings that have been agreed;

(ii) if a fee is to be calculated on a percentage basis, a statement of that fee expressed as both a percentage and as the dollar amount that would be payable on the reserve price or any other relevant amount set out in the engagement or appointment (Dollar Amount Statement); and

(iii) a rebate statement that complied with section 49A(4) of the Act (Compliant Rebate Statement)

(together, the Disclosure Requirements);

(b) if Oliver Hume, as an estate agent, failed to comply with any one of the Disclosure Requirements, it would, by reason of the Act, not be entitled to sue for or recover or retain any commission for or in respect of the subject transaction (the Prohibition on Commission); and

(c) the Real Estate Institute of Victoria Limited (REIV), the peak professional body for estate agents in Victoria, had prepared and made available for use by its members a suggested form of exclusive sale authority (the REIV Suggested Form).

Particulars

[Particulars of the knowledge of the Agents and the Developer are set out]

7B. At the time of the making of Exclusive Sale Authorities, Oliver Hume and the defendants believed that, in the circumstances of this case, where the Estate was a multi-lot residential development and the fee payable to Oliver Hume was to be calculated on a percentage basis:

(a) it was sufficient, to satisfy the requirement of a Dollar Amount Statement to insert in the section of the REIV Suggested Form referring to 'Dollar amount of Estimated commission', a dollar amount of commission that would be payable on a single estimated selling price (Single Price Estimate) ...; and

(b) it was not necessary to insert a dollar amount of commission payable on an estimated selling price for each individual lot.

Particulars

The parties' belief is to be inferred from the words used in the Exclusive Sale Authorities. It is anticipated that further particulars will be provided by way of evidence at trial.

7C. At the time of entering the Exclusive Sale Authorities, it was the common intention of the parties to the Exclusive Sale Authorities that:

(a) a Single Price Estimate would be inserted in the Exclusive Sale Authorities with respect to 'Dollar amount of the Estimated Commission including GST' and would satisfy the requirement of a Dollar Amount Statement;

(b) the words appearing in the REIV Suggested Form with respect to 'Rebate Statement' would appear in the Exclusive Sale Authorities and would constitute a Compliant Rebate Statement; and

(c) the Prohibition on Commission would not apply to Oliver Hume.

Particulars

[Particulars of the intention of the Agents and the Developer are set out]

7D. In accordance with the common intention referred to at paragraph 7C:

(a) a Single Price Estimate was inserted in the Exclusive Sale Agreements with respect to 'Dollar amount of the Estimated Commission including GST'; and

(b) the words appearing in the REIV Suggested Form with respect to 'Rebate Statement' appeared in the Exclusive Sale Agreements.

7E. In the belief that the Exclusive Sale Authorities corresponded with and gave effect to the common intention referred to at paragraph 7C, the Exclusive Sale Authorities were signed by the parties.

7F. If one or more of the Exclusive Sale Authorities did not satisfy the Disclosure Requirements (which Oliver Hume denies), then:

(a) the Exclusive Sale Authorities were prepared and executed under a mutual mistake as to the effect of the words used in the Exclusive Sale Authorities; and

Particulars

The parties' mutual mistake was that they understood, including by their use of the REIV Suggested Form and the insertion of a Single Price Estimate, that the Exclusive Sale Authorities included all necessary information to satisfy the Disclosure Requirements and that the Prohibition on Commission would not apply to Oliver Hume.

The mistake is evidenced by Oliver Hume's sending to the first defendant of invoices for payment of commission and by the first defendant's payment of those invoices.

(b) the Exclusive Sale Authorities do not embody the agreement between the parties and do not correspond with or give effect to the agreement and common intention of the parties; and

Particulars

The common intention of the parties is as referred to at paragraph 7C.

(c) Oliver Hume is entitled to have the Exclusive Sale Authorities rectified by the making of orders providing for the following:

(i) the words appearing next to the words 'Dollar amount of the Estimated Commission including GST' in the Particulars of Appointment of the First OHA Authority, the Second OHA Authority, the Third OHA Authority, the Fourth OHA Authority, the Fifth OHA Authority, the Eighth OHA Authority, the Ninth OHA Authority, the Eleventh OHA Authority, the Thirteenth OHA Authority, the Fifteenth OHA Authority, the First OHREG Authority, the Second OHREG Authority, the Fifth OHREG Authority, the Sixth OHREG Authority, the Ninth OHREG Authority and the Tenth OHREG Authority are deleted and there are substituted the words -

i. As per the attached price list;

(ii) the price list in the First OHA Authority is relevantly in the form of Annexure A hereto;

[Paragraphs (iii)-(xvii) are in the same terms as (ii) for each of the other ESAs with a different Annexure (B to P) for each one.]

(xviii) the Rebate Notice in each is in the following form-

A rebate includes any discount, commission or other benefit, and includes non-monetary benefits. It is illegal for an Agent to keep any rebate they receive for advertising or other outgoings purchased by the Agent on your behalf. Section 48A of the Estate Agents Act 1980 requires the Agent to immediately pay you any rebate they receive in relation to the sale, management or leasing of your property. The Agent is not entitled to retain any rebate and must not charge you an amount for any expense that is more than the cost of those expenses; and

(xix) the Rebate Entitlement Statement in each is in the following form -

The Agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses.

[105]

So long as a mistake relates to the meaning or effect of a document (rather than the consequences of, or the advantages to be gained from, entering into it), relief may be available even though the actual words of the document were deliberately adopted by the parties. It is now firmly established that the fact that the parties intended to use a particular form of words in the mistaken belief that it was achieving their common intention does not prevent the court from giving effect to their true intention. Further, it seems to me that where (as here) the mistake results from the inadvertent omission of a word or phrase from a document, and it is sought to introduce additional words into the document to cure that mistake, it may, in practice, prove easier to discharge the evidential burden of establishing the existence of a mistake than in the case where words have been inadvertently included in the document which it is sought to rectify. This is because parties may not always appreciate the legal effect of the omission of particular words. ...

In the present case, the claim to rectification was formulated in response to a claim ... for additional inheritance tax. In my judgment, the effect of the authorities is that the court cannot rectify a document merely because it fails to achieve the fiscal objectives of the parties to it. A mere misapprehension as to the tax consequences of executing a particular document will not justify an order for its rectification. The specific intention of the parties as to how the fiscal objective was to be achieved must be shown if the court is to order rectification. The court will order the rectification of a document only if it is satisfied by cogent evidence (sufficient to counteract the effect of the parties' subscription to the relevant document) that: (1) the document does not give effect to the true agreement or arrangement between the parties, and (2) there is an issue, capable of being contested, between the parties; it being irrelevant, first, that rectification of the document is sought or consented to by all of them; and, secondly, that rectification is desired because it has beneficial fiscal consequences. Conversely, the court will not order rectification of a document if the parties' rights will be unaffected, and if the only effect of the order will be to secure a fiscal benefit for one or more of them.[81]

[177]

100 The difficulty with these submissions is that they do not pay sufficient regard to the manner in which the common intention is pleaded. It is not pleaded as a common intention as to consequence. Rather, the pleaded intention specifies both the intention to comply with the legislative requirements and how it was intended that that would be achieved. The pleadings specifically identify the belief the parties had about the means by which the requirements of the Act would be satisfied, namely, the insertion of a single price estimate for the commission to be charged and the inclusion of the rebate statement appearing on the REIV form. As noted above, the precise scope of the intention is all important.[139] The pleaded intentions here are sufficiently analogous to those in Mayo v W & K Holdings (NSW) Pty Ltd (in liq),[140] Wills v Gibbs[141] and GE Capital Finance Australasia Pty Ltd v Federal Commissioner of Taxation[142] to find that the pleaded claim is not fanciful. Based on the analysis set out above, those cases are not clearly inconsistent with binding authority on this Court, nor are they clearly distinguishable. Leaving aside the Agents' arguments that the ESAs do not fall foul of the Act and looking solely at the rectification pleading, it is apparent that the rights of the parties would be affected by a decision as to the availability of rectification. If rectification were not ordered, then the Developers would not have to pay, notwithstanding their contractual obligation to do so. If the ESAs were rectified, then (all other things being equal) the Agents would be entitled to payment. Although viewed in one way the transaction between the parties would not be altered if the ESAs were rectified because the ESAs would provide for the same amount of commission and (absent the effect of the legislation) the words and figures used would suggest an obligation to pay that amount. However, in a real and meaningful way the substance of their agreement (payment for services) vanishes without rectification. This may be contrasted to a situation where rectification would only affect the rights of one of the parties in terms of a fiscal benefit. For example, if an unrectified ESA attracted stamp duty payable by the Agents but a rectified ESA would not, either way the rights of the Developers would not be affected. In that example, the Developers would have to pay commission regardless and the agreement between the parties would be the same and would have the same financial consequences as between them. This is consistent with McLelland AJA's observations in Carlenka.[143]

At a glance

Court

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Source

Judgment (267 paragraphs)

Parties

Legislation Cited (10)

Cases Cited (15)