Fry v Commissioner for Fair Trading

Meaning of the expression 'carried on business'

1. The expression "carried on business" is not defined in the PSA Act, the Property and Stock Agents Regulation 2014 or the Order. I agree with the Respondent that the concept of "carrying on business as a real estate agent" is to be considered in the broader context of the PSA Act. In determining whether a person had carried on business as a real estate agent before 23 March 2020, the relevant provisions on the requirements for the conduct of a licensee's business under Part 3 of the PSBA are to be considered.
2. In Loschiavo v Commissioner for Fair Trading [2021] NSWCATAD 102 ("Loschiavo") Senior Member Isenberg stated at paragraph [29] - [32]: 29. On a broad view, the phrase "carry on business" may suggest that persons who held a licence could obtain a class 1 licence provided they had actually worked as a real estate agent. This would set those persons apart from those who had acquired a licence but not utilised it to facilitate their work in the industry and therefore do not have relevant experience. If this were the correct interpretation, namely that the person need only have had a licence for a short period of time (that is, less than 2 years), and had been employed in the industry, also for only an unspecified period of time, then clearly the increased qualification measures introduced would not be addressed, and the intention of the amendments would be ignored. 30. On the other hand, it should be recalled that, prior to the amendment, for licensing purposes there was effectively no distinction between licensees and licensees in charge. As I understand it, there was no distinction in the requirements in order to be employed as a real estate agent and to be the principal, or "licensee in charge" of a business. All licensees, on that view, could be said to have been "carrying on business", although not "carrying on a business 31 Section 8(1)(a) of the Act provides that a person cannot act as, or carry on the business of, a real estate agent, unless the person is the holder of a real estate agent's licence. That section differentiates between those who act as a real estate agent and those who carry on the business of a real estate agent. Having identified this distinction in the Act, and, consistent with the expressed intention of the changes, I am confident that the correct interpretation of the first alterative in cl 10(4)(c)(ii), is that the person must have previously been actively carrying on business as a real estate agent as the principal of that business. 32 Further, as discussed below, the position of an employee is specifically addressed in the second alternative in cl 10(4)(c)(ii).".
3. In Loschiavo, the evidence was to the effect that the Applicant was a senior property manager and she managed the rental aspect of her employer's business. She was not the principal of the business nor was she an owner of the business or a licensee-in-charge. Her employer, the principal of the real estate agency, had overall control.
4. Consequently, the Tribunal found that Ms Loschiavo did not actively carry on business as a real estate agent as the principal of the business and she could not meet the requirement of clause 10(4)(c)(ii).
5. The Applicant submits that both Konrad and Loschiavo can be distinguished on their facts. Both Ms Konrad and Ms Loschiavo were employees. They were not partners or employed to be the licensee-in-charge or principal of the businesses in which they were employed. They were not part owners in the business that employed them. They were not operating their own business and neither "carried on business" under their licence. The Applicant submits that those facts can be distinguished from the facts in this matter in that he carried on business under his licence as a sole trader.
6. I note that this issue of the correct interpretation of clause 10(4)(c)(ii) of the PSA Act has not yet been considered by an Appeal Panel. In the circumstances I propose to follow the approach taken in Loschiavo in regard to the construction of the expression "carried on business under the licence". That is, that in order to satisfy the first alterative in clause 10(4)(c)(ii) the person must have previously been actively carrying on business as a real estate agent as the principal of that business. For the purposes of clause 10(4)(c)(ii) of the PSA Act, a person who carried on business as a sole trader is the principal of that business.
7. In Williams v ATM & CPA Projects Pty Ltd [2015] NSWSC 703 Ball J considered whether the plaintiffs to the proceedings were in fact real estate agents. In doing so, his Honour needed to determine whether the plaintiffs "carried on business" as an auctioneer of land or as an agent for certain purposes, pursuant to section 3(1) of the PSBA Act. He stated at paragraphs [69] - [71]: 69. A person is an "agent" for the purposes of the Act if the person negotiates for the sale of real estate. It is not necessary for the person to have authority to bind his or her principal: Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2008] NSWSC 801 at [46] per Young CJ in Eq. 70. Whether a person carries on business as a real estate agent is a question of fact. In order to carry on business, repetition and continuity of the activities which characterise the business are necessary. However, an isolated activity with the intention of repeating it is sufficient. As Lopes and Kay LJJ said in Re Griffin; Ex parte The Board of Trade (1890) 60 LJQB 235 at 237, cited with approval by Barwick CJ in Fairway Estates Pty Ltd v Federal Commissioner of Taxation [1970] HCA 29; (1970) 123 CLR 153 at 165: If an isolated transaction, which if repeated would be a transaction in a business, is proved to have been undertaken with the intent that it should be the first of several transactions, that is, with the intent of carrying on a business, then it is a first transaction in an existing business. See also Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229 at [145] per Young JA (with whom Hodgson and Macfarlan JJA agreed). 71. Similarly, it seems to me that a person who holds himself or herself out as a person who is in the business of introducing potential buyers to potential sellers of property carries on that business even if the business is not generally successful in the sense that only in isolated instances do the introductions result in a sale.
8. Williams v ATM & CPA Projects Pty Ltd has been followed in several decisions: see for example Lauvan Pty Limited & Anor v Bega & Ors [2018] NSWSC 154; Lui v Guan; Sun Link Group Pty Ltd v Lui [2019] NSWSC 803.
9. In Lauvan Pty Limited & Anor v Bega & Ors Gleeson JA stated: 262. Whether a person carries on a business is a question of fact. The expression "in the course of a business carried on" should be given a similar meaning to the well-known expression "carrying on a business". That latter expression has been held to require "repetition, and continuity of the activities which characterise the business": Williams v ATM & CPA Projects Pty Ltd [2015] NSWSC 703 at [70] (Ball J) and the cases cited therein. 263. Similar remarks were expressed by Muir JA in Shakespeare Haney Securities Limited v Crawford. His Honour said (at [43]) that, in the context of statutory or contractual provisions referring to the carrying on of a business, system, continuity and/or regularity are frequently identified as necessary features of a business, making reference to the comments in Hyde v Sullivan (1956) 56 SR (NSW) 113 at 119: Speaking generally, the phrase 'to carry on business' means to conduct some form of commercial enterprise, systematically and regularly, with a view to profit and implicit in this idea are the features of continuity and system.

Had the Applicant carried on business under the licence immediately before the commencement day?

1. It is clear from the authorities that I have referred to above that the question of whether the Applicant carried on business under the licence is a question of fact.
2. It is not in dispute that the Applicant held a real estate agent's licence immediately before the commencement day.
3. It is not in dispute that the activities that the Applicant undertook under the Contractor Agreement included listing, negotiation for the sale of real estate and selling of real estate. I agree with the Applicant that these are activities of a real estate.
4. The issue in dispute is whether, immediately before 23 March 2020, the Applicant had merely acted as a real estate agent or whether he carried on business as a real estate agent.
5. I agree with the Respondent that the classification of a contractual relationship must be determined by the rights and obligations which the contract creates, and not by the label the parties put on it. In this matter I am satisfied that the Contractor Agreement is a commercial arrangement between the two business parties i.e. Palmasgold Pty Ltd as the Principal and the Applicant as Contractor. The Contractor Agreement accurately identified the Applicant trading as Redfox International as "a licensed Real Estate Agent" and "a conjunction agent with the Principal".
6. As noted above, the Revenue NSW Guidelines relate to payroll tax obligations in the real estate industry. The mere existence of a conjunction arrangement does not preclude the Applicant carrying on his business independently.
7. Notwithstanding the terms of the Contractor Agreement that the Respondent points to, I am satisfied that it was contemplated by both parties to the Contractor Agreement that the Applicant would operate his business independently to Raine & Horne. This much is clear from the provision which states: "It is the express intention of the parties that the Contractor is in all respects an independent Contractor and no other relationship or authority will be inferred or implied.
8. This is not a situation of the kind described by the Revenue NSW guideline in relation to internal conjunction arrangements. There is clear distinction between the Applicant and Raine & Horne. The Applicant was neither working nor representing himself under the brand name of Raine & Horne. Both Raine & Horne and the Applicant are independent when it comes to their core income-producing activities.
9. Raine & Horne and the Applicant agreed to enter into the Contractor Agreement for the listing and selling of real estate. It can be inferred that the Applicant held himself out to Raine & Horne as a person who was in the business of introducing potential buyers to potential sellers of property. As such he was a person who carried on that business: Williams v ATM & CPA Projects Pty Ltd at paragraph [71].
10. Similarly, I am satisfied that the Applicant conducted a form of commercial enterprise, systematically and regularly, with a view to profit and with "repetition, and continuity of the activities which characterise the business": Lauvan Pty Limited & Anor v Bega & Ors at paragraphs [262] - [263].
11. In the circumstances of this matter I am satisfied that the activities that the Applicant carried out under the Contractor Agreement were sufficiently systematic, continuous and repetitious to be characterised as a course of business.
12. For the reasons that the Applicant has identified, I am satisfied that the Applicant in fact operated a separate business to that of Raine & Horne.
13. I find as a fact that the Applicant carried on business under the licence immediately before the commencement day.
14. It follows that the Applicant has satisfied Pathway 3(c)(ii) of the Order. Unless there are other reasons for refusing the Applicant's licence application, it should be granted. The Respondent has not identified any issues of that kind in relation to the Applicant. Therefore the licence should be granted.

Orders 1. The decision under review is set aside. 2. The decision is made that application by Christian Fry for a Class 1 Real Estate Agent Licence under the Property and Stock Agents Act 2002 is granted.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 February 2022