Freehold Land Investments Ltd v Queensland Estates Pty Ltd

Freehold Land Investments Ltd v Queensland Estates Pty Ltd - [1970] HCA 31 - HCA 1970 case summary — Zoe

[13]

Any person who as an agent for others, and whether on commission or for or in expectation of any fee, gain or reward, and either alone or in connection with any other business, and either generally or in respect of any one transaction, exercises or carries on the business of selling land or negotiating for such selling So confined, the definition is simple and straightforward enough. It is clear that the appellant did what it did for gain and the question would simply be, did it, in Queensland, do any act as agent for others which amounted to the exercise or carrying on the business of selling land or negotiating for such sale? No act done otherwise than as an agent for others would bring it within the definition. The matter is, however, complicated by reason of the presence of that part of the definition consisting of the words "or advertises or notifies that he exercises or carries on the business of buying, selling land" etc. The point was made that because the words "as an agent for others" govern these words as well as the exercise or carrying on the business of buying, selling, etc., that the governing words cannot be given their natural meaning because such advertising or notifying might be simply on behalf of the agent himself. To my mind the words "as an agent for others" bear their natural meaning and limit all that follows to acts done as an agent for a principal. The advertising or notifying that a person exercises or carries on the business of buying, selling, etc., of land, etc., may or may not be on behalf of some one else, but unless it be so, to advertise or notify would not bring a person within the definition. If it should be thought that such a construction would unduly limit the definition and exclude from control activities which the legislature intended should be controlled, it is only necessary to refer to other sections of the Act which control such activities by any person, whether or not he is a real estate agent. An instance of this is to be found in s. 17 (3), which is as follows: Any person (not being the holder of a real estate agent's license) who -

[78]

A further point to be noticed concerning the agency authority is that the agent did not become entitled to remuneration simply by finding a person who was able and willing to buy the property or even by procuring the signature of a prospective purchaser to a form of contract. The only remuneration of the agent was to be derived from purchase money "received" in excess of the amounts which would be payable to the vendor in accordance with the pro-forma contract. It should be noticed that the pro-forma contract provided (cl. 2) that the deposit should be payable to the agent for the vendor at Surfers Paradise and that the purchaser should pay all instalments and interest payable under the contract "to the vendor or to whomsoever he may from time to time in writing direct". When the agency authority was revised in December 1967, one of the additions made to it was cl. 8, which provided that the vendor authorized and instructed the prescribed authority "to receive all moneys (principal and interest) from the Purchaser and to pay to the Agent any and all moneys due and payable hereunder including land purchase monies (and/or interest) received in excess of the amounts due and payable to the Vendor in the said agreement of Sale at Annexure "A" ". It was by this means that the appellant (according to its contention) acquired a right greater than a mere contractual right against the respondent, in that it became an equitable assignee of moneys payable by the purchaser to the vendor. The validity of that contention was in issue in the proceedings in the Supreme Court but I think it is not now a material question. But the point which needs to be stressed here is that the basis of the appellant's claim to part of the money in court was that this was money to which it had become entitled under the terms of the agency authority, as granted on 18th May 1967 and extended and revised in December 1967, and I think that it is with reference to the terms of that authority that one must consider the acts done by the appellant, in order to determine the question which has to be decided in this appeal.

[91]

It may be, perhaps, a mistake to treat the words "as an agent for others" as governing and restricting each of the following provisions in the definition in the manner assumed in the appellant's argument. The definition is primarily a definition of a person who carries on a business or advertises that he carries on a business of buying and selling etc. houses etc., or negotiating for such buying and selling etc. No doubt the main purpose of the inclusion of the words "as an agent for others" was to exclude from the operation of the Act investors and developers who buy and sell land on their own account. It is typical of the business of a real estate agent that the transactions of sale or purchase of land in which he takes part or with which he is associated are not his personal transactions but are those of other people. It is in that sense that the business is one which he exercises or carries on "as an agent for others" and, if a person does not do this "generally" but does it "in respect of any one transaction", that transaction as a whole is carried out as an agent for others. But in carrying on such a business the agent is, of course, acting also for his own benefit and for the advancement of his own business interests. Therefore he seeks retainers or selling rights and he advertises. His object is that he will have more opportunities available to him to buy or to sell or to negotiate for buying or selling, that is to say, more opportunities to do those things which, when he does them, he will do as an agent for others. It is not, I think, obvious that the definition must be given the meaning that no step taken by an agent for his own advantage to promote his business (it being supposed always that that business is the business of acting as agent for others) can be itself regarded as part of the "exercising" or "carrying on" by him of the business. But despite the doubts which I have just expressed, I accept, as I have indicated, that in deciding this appeal, the act performed by the appellant in Queensland of obtaining from the respondent the authority to sell the land should be treated as not being within the definition and should therefore be disregarded.

[92]

But then the appellant seeks to use the words "as an agent for others" to impose a further limitation upon the operation of the Act. It is said that whenever the agent is engaged in actions, discussions or communications with his own principal (as contrasted with actions, discussions or communications with the opposite party to the proposed transaction of sale etc.) he cannot be exercising or carrying on the business of buying or selling etc. within the meaning of the definition, for the reason that whenever he is so engaged he is not doing anything "as an agent for others". In my opinion this construction of the Act should not be accepted. Its acceptance would appear to require that the words "as an agent for others" are to be applied to each particular act done or word spoken by an agent in such a way as to lead to the conclusion that if, for example, a vendor's agent telephoned a prospective purchaser to arrange an inspection he would then be acting as an agent for others, but if he telephoned the vendor to inform him of that arrangement he would not then be acting as an agent for others. But in the case last mentioned, I can see no reason whatever for denying that the agent is still acting as agent for his principal (the vendor). I know of no reason why it cannot be part of the function of an agent to have communications with his own principal whenever these are thought necessary or desirable. In my opinion one must look to the whole transaction which is on foot. In the present case it was a transaction under which the appellant was authorized to bring about a sale of land which belonged to the respondent and was to get remuneration, in accordance with the terms of the agency authority which I have described above, which was given to it by the respondent. The appellant was engaged throughout (at least at all times after it had obtained the authority) in the process of seeking to negotiate that sale. Every step which it took which could aid in the achievement of a completed sale was a step in the transaction of negotiating the sale. It was "as an agent for others", that is, as an agent for the owner of the land, that the appellant was carrying out the whole of this process of seeking to bring about a completed sale.

[94]

When Mr. Steley, who was a director of the appellant and who had procured in May 1967 the agency authority on behalf of the appellant, returned on or about 14th December 1967 to Queensland, he brought with him a document in the form of a contract of sale purporting to be accepted and approved by a company called Golden Acres Ltd. by resolution of its board of directors and to be sealed by that company. However that company had not yet been incorporated and it was only by reason of subsequent events that the document had an operative effect, either as an offer by that company to purchase the land or as a contract of sale and purchase binding both parties. In spite of its defective character in this respect, the document was produced by Steley to Mr. Collas (who appears to have acted for both the respondent and the appellant and also, at any rate at a later stage, for the purchaser of the land), and it was also produced to Mr. Alroy, a director of the respondent. There was some discussion at the hearing of this appeal on the question whether the acts of Steley, both in bringing this document to Queensland and in there producing it to the respondent, should be regarded as an act of the appellant (performed through its agent Steley) or as an act of the syndicate of persons who were to purchase the land and were to form the company Golden Acres Ltd. to act as a nominal purchaser. It happened that this syndicate included Steley himself. But I feel no doubt that the proper inference is that it was the appellant company which (through Steley) brought back the document and produced it in Queensland to the representatives of the respondent. That was exactly what the appellant would be expected to do, according to the terms of the agency authority. If, therefore, no obstacle had stood in the way of an immediate completion of the sale by means of the signing and sealing by the respondent as vendor of the document so produced and if it had been so completed, the result would have been in my opinion that the appellant would have acted, partly outside Queensland and partly in Queensland, as a real estate agent in relation to that transaction of sale. It would have so acted, partly in Queensland, because its production of the contract for the purpose of signing by the vendor would have taken place in Queensland and that would have been one of the essential parts of the appellant's function of negotiating for the selling of the land.

[95]

But for several reasons the transaction could not be completed forthwith and without further negotiations. One reason was that the purchasing company had not been incorporated. Another reason was that the original agency authority related to a sale which was to take place by 30th June 1967 and, although the parties had acted on the footing that the authority had been or would be extended, it was no doubt regarded as desirable to have a formal extension of it. Again, there were other important reasons for the making of alterations to the deed of 18th May 1967. These alterations were quite substantial. I do not think it is necessary for me to set out the details, of which an account is given in the judgment of Menzies J. As is explained in that judgment, some of the alterations were intended to give effect to terms that had been agreed upon in correspondence and in telegrams which passed between representatives of the appellant and of the respondent in late November and early December 1967. I think that the changes which were made went further than a mere formal recording of agreements that had already been made in that correspondence. For present purposes there are several important features of these negotiations and of the ultimate resolution of the matters to which they related. One feature is that, undoubtedly, the appellant, through Steley, took an active part in these negotiations. The circumstances that Steley was one of the purchasing syndicate and also became a director of Golden Acres Ltd. may tend to complicate the facts. But it seems plain that it was on behalf of and for the benefit of the appellant that he sought and obtained the advantages to the appellant which flowed from the alteration of the price stated in the pro-forma contract, annexed to the amended authority, from $87,000 to $80,000 and from the insertion in the amended authority of cll. 7 and 8 thereof. Another important feature is that these were not negotiations which had no other object and no other result than the obtaining by the appellant from the respondent of some additional advantages in respect of a sale transaction of which it could be said that it was certain in any event to be completed independently of whether or not those additional advantages were secured. I have said earlier that I am prepared to accept the view that mere haggling by an agent with his own principal for better terms would not be within the scope of the Act. But in this case that was not the character of the negotiations which occurred from about 18th December to 29th or 30th December 1967. It is plain that when Steley came back to Queensland there was as yet no contract of sale. It is plain, according to the evidence of Mr. Collas, that the acceptance of stipulations, which were thereafter introduced as alterations of and additions to the provisions contained in the original agency arrangement, was an essential condition for the completion of the sale. One extract from that evidence will suffice to demonstrate that point, although there are some other pieces of evidence to the same effect. Steley was asked questions about the insertion in the revised agency deed of cl. 7 and in this connexion the following evidence was given:

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