Hanna v BOS Holdings Pty Ltd

The relevant statutory provisions

1. Relevant provisions of the PSBA are as follows: Part 4 Agency agreements 55 No entitlement to commission or expenses without agency agreement (1) A licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless: (a) the services were performed pursuant to an agreement in writing (an agency agreement) signed by or on behalf of: (i) the person, and (ii) the licensee, and (b) the agency agreement complies with any applicable requirements of the regulations, and (c) a copy of the agency agreement signed by or on behalf of the licensee was served by the licensee on that person within 48 hours after the agreement was signed by or on behalf of the person. Note. Section 55A allows a court or tribunal to order that commission and expenses are recoverable in certain circumstances despite subsection (1). (2) The regulations may make provision for or with respect to regulating the form of agency agreements and the terms, conditions and other provisions that an agency agreement must or must not contain. Without limiting this subsection, the regulations may prescribe one or more standard forms of agency agreement. ….. 55A Relief from disentitlement to commission and expenses (1) A court or tribunal before which relevant proceedings are taken may order that commission or expenses are wholly or partly recoverable by a licensee who would otherwise not be entitled to the commission or expenses (under section 55) because of: (a) a failure by the licensee to serve a copy of the relevant agency agreement on the person within 48 hours after it was signed by or on behalf of the person, or (b) a failure of the relevant agency agreement to comply with the requirements of the regulations. (2) A court or tribunal is not to make such an order in circumstances of a failure to serve a copy of the agency agreement within the required time unless satisfied that: (a) the failure was occasioned by inadvertence or other cause beyond the control of the licensee, and (b) the commission or expenses that will be recoverable if the order is made are in all the circumstances fair and reasonable, and (c) failure to make the order would be unjust. (3) A court or tribunal is not to make such an order in circumstances of a failure of the agency agreement to comply with the requirements of the regulations unless satisfied that: (a) the failure is a minor failure, and (b) no loss has been suffered as a result of the failure by the person for whom or on whose behalf the services concerned were performed, and (c) failure to make the order would be unjust. (4) Proceedings are relevant proceedings if they are proceedings taken by a licensee for the recovery of commission or expenses from a person or proceedings on a consumer claim relating to commission or expenses (as referred to in section 36) in relation to which a licensee is a respondent. Part 5 Residential property and rural land sales Division 3 Representations as to selling price 72A Estimated selling price in agency agreement for sale of residential property (1) A real estate agent must not enter into an agency agreement with a person for the sale of residential property unless the agreement includes the agent's estimate of the likely selling price of the property. (2) A real estate agent's estimate of the likely selling price of a property may be expressed as a price range, but only if the highest price in the price range exceeds the lowest price by not more than 10 per cent of the lowest price. (3) A real estate agent must ensure that the estimated selling price of a residential property is, and remains, a reasonable estimate of the likely selling price of the property. (4) A real estate agent must ensure that the estimated selling price is revised if it ceases to be a reasonable estimate of the likely selling price of a property, by: (a) notifying the other party to the agency agreement, in writing, of the revised estimated selling price, and (b) amending the agency agreement. (5) A real estate agent must, before or when specifying an estimated selling price or revising an estimated selling price, provide the seller or prospective seller of the property with evidence of the reasonableness of the estimated selling price. (6) A real estate agent who fails to comply with subsection (1), (3), (4) or (5) is guilty of an offence. Maximum penalty: 200 penalty units. 73 Underquoting in advertisements for residential property (1) A real estate agent must not publish or cause to be published an advertisement in relation to the sale of a residential property that indicates or suggests a selling price for the property that is less than the estimated selling price for the property. Maximum penalty: 200 penalty units. ….. 73A Underquoting in representations by real estate agents (1) A real estate agent or any person engaged by a real estate agent must not, in the course of marketing a residential property, make any statement to any person that indicates or suggests that the property may be sold for a price that is less than the estimated selling price for the property. …..
2. The Property, Stock and Business Agents Regulation 2014, relevantly, provides: 8 Contents of agency agreements (1) For the purposes of section 55 of the Act, an agency agreement must comply with the requirements of Schedules 7-14 as to the terms, conditions and other provisions that an agency agreement must or must not contain, with the application of those Schedules to be as follows: (a) Schedule 7 applies to all agency agreements (in addition to any other Schedule that may be applicable to the agency agreement)…. Schedule 7 Terms applying to all agency agreements (Clause 8) ….. 9 Remuneration (1) The agreement must include a term specifying: (a) the circumstances in which the licensee is entitled to remuneration (by way of commission or otherwise) for services performed under the agreement, and (b) the amount of the remuneration or the way in which it is to be calculated, and (c) when the remuneration is payable. (2) If the agreement relates to the sale or purchase of residential property and provides for payment of commission to the agent calculated as a percentage of the sale or purchase price, the term must also specify the amount of the remuneration to which the licensee will be entitled calculated on the basis of a specified estimated sale or purchase price for the property.

The nature of the appellants' claim

1. By a Commercial List Application filed in the Tribunal the appellants sought a declaration that the amounts claimed by the respondent in a statement of claim dated 9 February 2017 were not due and owing by them.
2. The appellants' claim was a consumer claim within the meaning of Part 6A of the Fair Trading Act 1987 concerning the entitlement of the agent to the amounts sought by the agent in a statement of claim served by it on the appellants, as provided for by s 36 of the PSBA Act.
3. The Tribunal is given jurisdiction to determine such a claim: s 36 (4) and (6) of the PSBA.
4. Section 36 (4) of the PSBA Act provides: (4) A person who is served with a statement of claim under this section or is provided with an itemised account of a transaction as provided by this section may apply to the Tribunal for the determination of a consumer claim within the meaning of Part 6A of the Fair Trading Act 1987 in relation to: (a) the entitlement of the licensee to the whole or any part of the amount specified in the statement of claim or the itemised account, or (b) whether the whole or any part of the amount is reasonable, or both.
5. The appeal was not concerned with any issue as to whether the amount claimed by the agent was reasonable.
6. The orders that could be made by the Tribunal in respect of such a claim included: (d) in the case of a claim for relief from payment of money - an order declaring that a specified amount of money is not due or owing by the claimant to a respondent (s 79N of the Fair Trading Act)

The Tribunal's decision

1. The Tribunal ordered that the appellants pay the respondent the amount of $67,290.00 on or before 13 October 2017 and that the appellants pay the respondent's costs as agreed or assessed. Included in this amount of $67,290.00 was an amount of $59,290.00 in respect of commission - the balance was in respect of the expenses of sale with which this appeal is not concerned.
2. The reasons of the Tribunal concerning the matters the subject of the appeal were: 1. An estimated selling price of between $1.8m and $2m was provided orally by Mr Boskovic to Mr Hanna on 15 March 2016: [67]. 2. Clause 9 of Schedule 7 of the regulation was not complied with and, hence, the condition for entitlement to commission in s 55 (1) (b) was not satisfied. An oral statement as to an estimated selling price was not sufficient: [96] - [103]. 3. As to whether relief from disentitlement under the application of s 55A should be granted: 1. The legislature saw fit to introduce s 55A to prevent minor failures visiting an injustice against a real estate licensee [our emphasis]. It did so in response to judicial criticism of the harsh application of s 55 and its predecessor s 42AA:[104]. 2. The Tribunal must be satisfied that the failure is minor, if no relief were granted it would result in an unjust decision and the failure was caused by inadvertence by the agent [our emphasis]: [105]. 3. Whilst it is not expected that the vendor should have to make a calculation as to the estimated selling price, the material facts as to the estimated commission and its percentage were disclosed and this reflected an estimated sale price of $1.714m: [106]. 4. The addition of the word "auction" instead of a dollar amount for the estimated sale price was based upon a misunderstanding by the person completing the form. It was a mistake rather than being done for any misleading purpose: [107] 5. The case was distinguished from the circumstances in Beyond 2000 Investments Pty Ltd v Ben Boyd Real Estate Pty Ltd [2016] NSWCATCD 19. In that case there was only a Heads of Agreement document, whereas in this case there was an otherwise compliant agency agreement:[107]. 6. A failure to grant relief would be an unjust decision. The agent had performed its duties under the agency: [108]. 1. As to costs, in this case the Tribunal has a general discretion to award costs under rule 38 of the Civil and Administrative Tribunal Rules. The general rule expressed in Oshlack v Richmond River Council (1998) CLR 72 is that a successful party has a reasonable expectation of being awarded costs against the unsuccessful party. The respondent has been entirely successful in defending the applicant's claim. The general rule that cost follow the event should be applied: [115] - [120].

Grounds of appeal

1. By its written submissions dated 13 March 2018, and without objection by the respondent, the appellants relied solely upon three amended grounds of appeal as follows: 1. Ground 1 - the Tribunal erred in law by failing to take into account relevant considerations mandated by s 55A (3) (a) and (b) of the PBSA Act when making an order under section 55A (1) (b) of that Act. 2. Ground 2 - the Tribunal erred in law by failing to ask the right question or identifying the wrong issue when considering making an order under s 55A (1) (b) in that rather than ask or identify as an issue whether or not the Clause 9 failure was minor the Tribunal variously considered whether or not the Clause 9 failure was (i) a mistake, (ii) a misunderstanding and (iii) not for a misleading purpose. 3. Ground 3 - the Tribunal erred in law in finding that the Clause 9 failure was the result of a mistake or misunderstanding when there was no evidence to support this finding.

The appeal right

1. The appellants do not appeal on any grounds other than a ground that is claimed to involve an error of law. The appellants have a right of appeal in respect of such a ground: s 80 (2) (b) of the Civil and Administrative Tribunal Act 2013.

Ground 1

1. As we understood it from the appellants' oral submissions, the matter that the appellants relied upon under Ground 1 was that the Tribunal failed to give a proper, genuine and realistic consideration to whether or not the failure to state the estimated selling price in the agency agreement was a minor failure.
2. In this regard, the appellants placed emphasis on the absence of any reference in the reasons to s 72A of the PSBA. Counsel for the appellants submitted that s 72A highlighted the importance of giving an estimated sale price, this was a highly relevant factor in the assessment of "minor" and that the absence of any consideration of this provision was indicative of a failure to properly take this factor of "minor" into consideration.
3. Assuming that such an approach by the Tribunal would involve an error of law, we do not agree that the Tribunal did err in the manner relied upon.
4. As we emphasised above (in paragraph 20 (3)), it is clear from the reasons that the Tribunal was well apprised of the need to consider whether the failure was a minor failure. Indeed, it appears that it regarded such a consideration as part of the mischief to which s 55A was directed: at [104] of the reasons. Furthermore, the need to be satisfied that the failure was minor was expressly stated in paragraph 105.
5. In this context, whilst the Tribunal did not go on to expressly state that it found that the failure was a minor one, it seems to us that it was implicit that it did so and that it did so for the reasons set out in paragraphs 106 and 107. Each of the matters referred to in those paragraphs bore, relevantly, upon the Tribunal's assessment of a minor failure, namely, that the amount of commission was there to be seen and to be seen as a reflection of a specific estimated sale price, that the failure was not of the gravity that occurred in the Beyond 2000 case, and that it was not satisfied that the insertion of "auction' instead of a dollar figure for the estimated sale price was done for a misleading purpose - rather, it was a mistake.
6. As to the absence of any reference to s 72A, we agree with the respondent that the s 72A argument concerning the evaluation of minor was not presented to the Tribunal in the same way, or, at least, with the same emphasis as it was on the appeal. In this regard, we were referred by the appellants to references to s 72A in the written reasons for the orders sought provided with the appellants' application to the Tribunal and to references in the transcript of the hearing. However, none of these couched the argument in the clear way it was put on appeal. In the circumstances, we are not surprised that the Tribunal's reasons did not advert to this point.
7. Secondly, we do not accept that s 72A has the significance for the assessment of "minor" for which the appellants contend. The regulation in clause 9 of Schedule 7 is concerned with disclosure of remuneration for the benefit of the vendor and with proof as to what has been agreed on that subject. Section 72A appears to have other objectives including achieving a better informed vendor and market about price - as to the market, see 73 and s 73B of the PSBA. With a view to these objectives, the section prescribes a penalty for breach.
8. Furthermore, on the appellants' argument, the presence of s 72A dictates that the failure which occurred in this case could never be assessed as "minor" for the purposes of s 55A. Hence, in such a situation as the present, it would follow that the discretion to relieve from disentitlement to commission would be ineffectual. We do not agree with this approach to the interpretation of these provisions.
9. In oral submissions in support of this ground of appeal Counsel for the appellants also contended that the Tribunal appeared to conflate inadvertence with the issue as to whether the failure was minor. It was submitted that it was possible for there to be inadvertence but for the failure not to be minor.
10. It is true that the Tribunal referred to inadvertence as a factor that needed to be established in determining whether s 55A applied: see the reference to "and was caused by inadvertence by the agent" at [107]. The Tribunal was in error in doing so. Inadvertence is a factor to be determined in respect of a failure to serve a copy of the agency agreement within the required time but it is not by itself a factor to be determined in respect of a failure to comply with the regulations: see s 55A (2) (a). Accordingly, it would seem that the Tribunal, incorrectly, imposed an additional requirement that needed to be met before it would exercise the discretion conferred under s 55A
11. However, we do not agree that in doing so the Tribunal disregarded (or failed to properly consider) the need to establish that the failure was minor. As we have already said, as we interpret the Tribunal's reasons, it considered that there were a number of factors, including mistake, that satisfied the requirement that the failure be "minor".
12. In their written submissions dated 13 March 2018 the appellants also submit that the Tribunal failed to give any proper, genuine or realistic consideration as to whether no loss had been suffered as a result of the failure ; at [33] - [34]: see s 55A (3) (b).
13. In this regard we note that the Tribunal did not make any express finding about this factor. It should have done so.
14. However, it is clear that the Tribunal was conscious of this factor in arriving at its decision as to whether the respondent was entitled to commission as a result of the application of s 55A; see the statement of the issue in italics immediately above paragraph 104. In addition, the appellants have not referred to any material said to have been overlooked by the Tribunal indicating that there was a real question as to whether loss had been suffered. In this regard, we note that in view of the specification of the percentage rate of commission to be charged and of the estimated amount of commission that this would give rise to it is, at the least, very difficult to see how any loss could arise. Finally, we note that we understood from the appellants' oral submissions that the real issue concerning Ground 1 of the appeal was the failure to consider the "minor" requirement.
15. In the circumstances, we are not satisfied that the Tribunal made any material error on this account, if indeed it did fail to give consideration to this factor.

Ground 2

1. It will be apparent from our analysis of the reasons in addressing Ground 1 of the appeal that we do not accept Ground 2 of the appeal. In our opinion, the Tribunal did ask itself the right question, namely whether the failure was "minor".

Ground 3

1. In oral submissions Counsel for the appellants frankly indicated that Ground 3 was a less compelling ground of appeal. Counsel was correct in conveying that assessment.
2. In order to succeed on this ground of appeal the appellants needed to go so far as to demonstrate that there was no evidence to support the findings of misunderstanding and mistake in paragraph 107 of the reasons. The appellants were unable to demonstrate this.
3. In support of this ground of appeal the appellants referred to some cross-examination of Mr Boscovic in which Mr Boscovic agreed that inserting the word "auction" was his normal manner of completing the relevant provision on page 1 of the agency agreement concerning the estimated selling price when there was to be a sale by auction. We were also referred to parts of his evidence in which he did not accept that a dollar figure for the estimated selling price needed to be inserted in the circumstances.
4. In our opinion, this evidence supports the Tribunal's finding of misunderstanding and mistake - as to the latter, as we read it, a mistake in the sense of a mistaken understanding or opinion.
5. Accordingly, we reject this ground of the appeal.

Orders on the appeal

1. For the above reasons we order that the appeal be dismissed.
2. As to the costs of the appeal, the respondent has sought an order for the payment of its costs of the appeal. The appellants have asked to be heard on the question of the costs of the appeal. Accordingly, we make the following directions: 1. Within 14 days of the date of these reasons, the appellants are to provide to the Registry of the Appeal Panel and to the respondent written submissions on the question of the costs of the appeal and as to whether that question can be determined on the papers thereby dispensing with any oral hearing concerning that question. 2. Within 14 days after receipt of the above written submissions, the respondent is to provide to the Registry of the Appeal Panel and to the appellants its written submissions in reply.

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: 17 October 2018