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[2008] VSCA 123
respondent. Appeal dismissed. VCAT decision upheld: agent entitled to commission for the first (rescinded) sale but not entitled to commission for the subsequent sale because the Continuing Authority did not...
Icon (agent) obtained a binding contract for the vendors' apartment within the 90-day exclusive authority. That contract failed to complete and was rescinded. Icon then introduced a second purchaser within the stated 60-day continuing period and deducted commission for both the failed and the subsequent sale. The Tribunal held, and the Court of Appeal agreed, that the standard-form Authority only created a continuing (non-exclusive) appointment if the property had not been sold during the exclusive period. Because a sale had occurred in the exclusive period (even though it later failed), the continuing appointment did not arise and Icon had no written authority for the second sale. Sections 49A and 50 of the Estate Agents Act bar recovery of commission for the second sale without such a written engagement. The appeal was dismissed and the Tribunal's decision was upheld.
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6 cited instruments linked from this judgment.
Icon Property Pty Ltd (with director and licensed agent Robert Mitchelson) acted under a Real Estate Institute of Victoria standard-form Exclusive Sale Authority given by Paul and Merelyn Wood on 5 February 2005. The Authority provided an Exclusive Authority Period of 90 days and a Continuing Authority Period of 60 days thereafter, and specified commission and advertising expenses ([8]–[9], [43]–[50]).
Icon procured a purchaser, Michael Cay, who entered a binding contract on 23 February 2005 (the Cay sale) and paid a deposit; finance became unconditional on 9 March 2005 ([10]–[12]). The Cay purchaser defaulted (deposit cheque dishonoured) and the vendors rescinded the contract ([13]). Icon had therefore obtained a binding offer within the meaning of the Authority and had become entitled to commission on that transaction ([1], [23]).
After the rescission, Icon introduced new purchasers who entered and later settled a contract on 17 June 2005 (the second sale), which fell within the 60-day Continuing Authority Period specified in the Authority ([15]). No new written Authority was executed after the Cay contract fell through, yet Icon deducted commission for both transactions from the new purchasers' deposit and remitted only the balance to the vendors ([16]).
The vendors commenced VCAT proceedings arguing that Icon was not entitled to commission for the second sale because no further written authority existed and that Mitchelson had agreed to waive the Cay commission (the latter was rejected by the Tribunal). The Acting President (Judge Bowman) found Icon entitled to commission for the Cay sale but not for the second sale, construing Item 2 of the Authority as creating a continuing appointment only if the property had not been sold during the Exclusive Authority Period ([20]–[27], [55]–[59]). Icon appealed. The Court of Appeal dismissed the appeal and upheld the Tribunal on the relevant points: Icon kept commission for the first (rescinded) sale but was not entitled to commission for the second sale because the Continuing Authority did not arise and, absent a further written appointment satisfying s 49A(1), s 50 barred recovery ([1]–[3], [27]–[30], [74]).
Two linked strands determine the decision: contractual construction of the written Authority and statutory requirements under the Estate Agents Act 1980 (Vic) (ss 49A and 50).
Construction of the Authority: The Court focused on the precise wording and structure of the standard-form Authority. The document set out two sequential periods: an Exclusive Authority Period and a Continuing Authority Period described to commence 'from the end of the Exclusive Authority Period' ([43]–[44]). Item 2 expressly states that 'If the property is not sold during the Exclusive Authority Period and a Continuing Authority Period is stated in the Particulars of Appointment then the Vendor appoints the Agent to sell the property on a Non-Exclusive Agency basis for the period stated in the Continuing Authority Period' ([58]). The court held that these initial conditional words are operative. Because a 'sale' occurred during the Exclusive Authority Period (the Cay sale), the precondition for forming the secondary (continuing) appointment was not satisfied and the continuing appointment did not come into existence ([59]–[66]). The court rejected the appellants' construction that the statement 'this is a continuing authority' on the front page, together with the particulars, constituted an independent appointment irrespective of Item 2, because that reading would render the conditional language of Item 2 and the express words of appointment otiose ([64]–[66]).
Statutory requirements: The Estate Agents Act requires that an agent hold a written engagement or appointment satisfying s 49A(1) and comply with s 50 to obtain payment of commission ([28]–[30]). The court reasoned that it was not sufficient for the agent to argue that the Act permits multiple commissions per se; rather, the agent must show that the authority, properly construed, created the written engagement covering the particular transaction ([33]–[36], [73]). Because no written appointment covered the second sale, the agent could not lawfully obtain or seek payment of commission for that transaction ([29]–[30], [74]).
The court therefore concluded that although Icon was entitled to commission for the Cay sale (binding offer obtained), it could not claim commission for the later sale because the conditions for the Continuing Authority had not been met and there was no fresh written engagement satisfying the statute ([1], [23], [27]–[30], [74]).
Before: The general principles governing an agent's entitlement to commission are a mix of common-law agency principles and statutory regulation. Common law often treated an agent as having 'sold' land when the agent procured a binding and enforceable contract, but different jurisdictions and authorities have nuanced approaches (see discussion and footnote at [52]/[5]). The Estate Agents Act in Victoria had already introduced statutory requirements (ss 49A and 50) designed to ensure transparency and written agreement on commission and expenses.
After: This decision applies contractual construction principles strictly to standard-form agency documents and confirms that statutory preconditions in ss 49A and 50 are decisive. The case emphasises that a continuing authority in a standard form will not be treated as operative where its own express preconditions (such as 'if the property is not sold during the Exclusive Authority Period') are not satisfied. Agents cannot rely on industry practice or the possibility of claiming quantum meruit to circumvent the need for a fresh written engagement covering a subsequent transaction. Practitioners must ensure written authority expressly and unambiguously covers multiple sales if that is the intent.
Item 2 (quoted at [58]):
The Court's observation (at [59]):
Statutory nexus (at [73]):
Redlich JA summary (at [1]–[2]):
This decision is directly engaged where:
Under these facts, the Authority's conditional language will typically prevent the continuing appointment operating and statutory requirements (ss 49A & 50) will bar recovery for the later sale absent a fresh written engagement.
This decision is a Court of Appeal authority applying contractual construction to a standard-form Real Estate Institute of Victoria Authority together with statutory requirements. It emphasises the primacy of the written terms and the statutory regime. Later courts (not canvassed in the judgment) looking at similar standard-form authorities will be guided to:
Practitioners should search subsequent Victorian decisions and VCAT rulings for application or refinement; the judgment itself cites other authorities for background (Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at [37]; Di Dio Nominees [1992] 2 VR 732 at [66]; TJ Board & Sons [2000] VSC 497 at [70]) but the Court used these mainly for general principles. The thrust is that later courts will be unlikely to allow recovery where no written appointment covers the transaction.
Multiple-sales express drafting: The Court held that the particular Authority did not provide for multiple commissions. It remains open how differently worded authorities, expressly stipulating multiple commissions or expressly covering sequential transactions, will fare. The Court repeatedly emphasised that the issue depends upon the exact terms of the authority ([32]–[36], [55]–[66]).
Quantum meruit in different circumstances: The Court noted that a claim in quantum meruit might not yield two full commissions in all cases and was cautious about permitting a continuing claim for work and labour done ([72]). The extent to which unjust enrichment or quantum meruit relief might be available in cases where no written engagement exists but an agent has performed significant work is not resolved by this decision and would turn on the particular facts and any equitable considerations.
Definition of 'sale' and 'binding offer': The authority's definition of 'sale' as 'the result of obtaining a Binding Offer' was used here, but the Court acknowledged difficulties in that definition and recognised different jurisdictions' approaches (footnote to [52]/[5]). The precise moment an agent is treated as having 'sold' property for commission purposes may still be contested in different fact patterns.
Interaction with industry practice: The Court noted the agent's affidavit that industry practice may commonly result in agents claiming multiple commissions where an initial sale fails ([19]), but it did not allow practice to override the written terms and statutory requirements. Whether a consistent industry practice, clearly established and evidenced, could ever be used to imply terms into a written authority that would permit multiple commissions remains doubtful post this decision.
Practical takeaway: Agents and vendors should ensure that written authorities clearly state whether multiple commissions are payable for successive sales and under what conditions, and agents must obtain fresh written engagement satisfying s 49A(1) before seeking commission for any subsequent transaction that the original authority does not unequivocally cover ([64]–[66], [73]–[74]).
CONTRACT - Construction of agent's authority - Entitlement of estate agent to separate commissions in respect of successive sales of the same property - Second sale not covered by the terms of the agent's written authority - Continuing authority expressed to arise if the property is not sold during the exclusive authority period (as defined) - ss 49A & 50 Estate Agents Act 1980 (Vic).
1 The written authority authorising the first appellant to sell the respondents' apartment in Sandilands Street, South Melbourne was a standard form authority approved by the Real Estate Institute of Victoria Ltd. It authorised the estate agent to sell the apartment and entitled the estate agent to a commission upon the estate agent obtaining a binding offer within the meaning of the terms of the authority. The estate agent obtained a binding offer, but the purchaser failed to complete the contract. Under the authority the estate agent became entitled to a commission.
2 I agree for the reasons given by Dodds-Streeton JA and Osborn AJA, that the Acting President of the Victorian Civil and Administrative Tribunal was right to conclude that, upon the proper construction of the authority, the estate agent was not entitled to any further commission as a consequence of a further and subsequent sale of the apartment. I also agree that the estate agent's entitlement to a further commission was governed by s 49A(1) and s 50 of the Estate Agent's Act 1980. In the absence of a further written authority authorising the estate agent to sell the apartment, the appellants were not entitled to a commission on the subsequent sale of the apartment.
4 This is an appeal pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 ('the VCAT Act') against part of a decision by Acting President Judge Bowman.
5 By that decision his Honour upheld the entitlement of an estate agent to commission in respect of an initial sale of residential premises which the purchaser failed to complete. He further held that the agent was not entitled to commission
with respect to a subsequent sale of the property to another purchaser by reason of the provisions of ss 49A(1) and 50(1) of the Estate Agents Act 1980 ('the Estate Agents Act').
6 In particular, his Honour held that the agent did not hold a written engagement or appointment with respect to the second sale.
7 The appeal is directed to his Honour's decision with respect to the second sale and seeks to maintain the agent's claim to a second commission.
8 Robert Mitchelson is a director of Icon and a licensed real estate agent. (In these reasons a reference to Mr Mitchelson refers to both appellants unless otherwise indicated.) On 5 February 2005, the respondents, Paul and Merelyn Wood, as vendors, executed an Authority ('the Authority') authorising Icon to sell their apartment in Sandilands Street, South Melbourne for an asking price of $1,350,000 with commission of $44,550 or 3.3% of the sale price, including GST. A further sum of up to $11,000 was stated to be payable for advertising and expenses.
9 The Authority stated the agent's 'exclusive authority period' to be 90 days from the date of the agreement and stated the agent's 'continuing authority period' to be 60 days from the end of the exclusive authority period.
10 Mr Mitchelson introduced the vendors to one Mr Michael Cay, who, on 23 February 2005, signed a contract of sale dated 23 February 2005 for $1,500,000, conditional on obtaining finance by 9 March 2005 ('the Cay sale'). On 23 February 2005, the vendors and Mr Cay also entered a 'proprietors sale agreement', whereby the vendors would accept only $1,300,000 if Mr Cay settled within 60 days.
11 Mr Cay paid a deposit of $150,000 on 23 February 2005 with settlement to be 90 days from the date of the agreement, or earlier. The Cay sale became unconditional on 9 March 2005, when Mr Cay advised that his finance had been approved.
12 The Cay sale was made within Icon's exclusive agency period as defined in the Authority.
13 The Cay sale, however, did not proceed. Mr Cay's deposit cheque was dishonoured on 10 March 2005 and a notice of rescission was served on 1 April 2005. A subsequent cheque of Mr Cay for $30,000 delivered to Mr Wood on 22 April 2005, pursuant to an attempt to salvage the transaction, was also dishonoured a few days later on 26 April 2005.
14 The respondents issued proceedings against Mr Cay on 7 July 2005 in the Supreme Court, in which (by an amendment to their statement of claim dated 22 July 2005) they included a claim for the agent's commission and expenses in relation to the subsequent re-sale of the property.[1]
15 After the Cay sale fell through, Mr Mitchelson (who retained some advertising moneys) introduced the respondents to a Mr Kleeman and Mrs Donner, who signed a contract of sale dated 17 June 2005 for $1,225,000 on a 60 day settlement ('the second sale'). The second contract of sale, which was executed within the continuing agency period, subsequently settled successfully. It was not disputed that no new Authority was executed after the Cay sale fell through.
16 On 14 July 2005, Mr Mitchelson sent an account to the respondents deducting his commission for both the Cay sale and the second sale, together with advertising expenses. Mr Mitchelson therefore returned only $22,421.96[2] to the respondents from the $120,000 deposit received from the purchasers under the second sale.
17 The vendors disputed Mr Mitchelson's entitlement to commission on either sale. They commenced proceedings in VCAT on 7 July 2005, in which they argued that Mr Mitchelson had agreed to waive the commission on the Cay sale and that Icon had not, following the rescission of the Cay contract, obtained a new Authority appointing him as agent for the second sale.
18 The appellants contended that Icon was entitled to commission on both the Cay sale and the second sale. They argued that there was no agreement to waive the commission on the Cay sale (or no waiver agreement supported by consideration) and the 'sale' was a binding contract as defined in the Authority, the rescission of which was no fault of the appellants. They contended that they were also entitled to commission on the second sale, because the Authority remained effective during the continuing authority period, given that the first contract had been rescinded.
19 In his affidavit sworn 4 October 2007, Mr Mitchelson deposes that, as a matter of practice in the estate agency industry, agents are commonly paid two lots of commission when an initial sale is rescinded, but the property is then resold within the exclusive or continuing authority period, without the agent first obtaining a second written engagement.
20 In his reasons for judgment delivered on 14 August 2007, Judge Bowman considered the conflicting evidence of the parties in relation to the appellants' alleged waiver of commission payable on the Cay sale.
21 The respondents testified that Mr Mitchelson had agreed that no commission would be charged on the second sale or that only one commission would be charged in relation to the property, whereas Mr Mitchelson contended that nothing was said about commission, whether in relation to a reduced commission or to only one commission being charged.
22 Judge Bowman was ultimately not persuaded that Mr Mitchelson, an experienced businessman, had agreed to waive the Cay sale commission, to which he was already entitled, in circumstances where he might not resell the property and might ultimately receive nothing at all.
23 His Honour therefore concluded that, as the Cay sale was a sale within the meaning of the Authority and, as the evidence did not establish an agreement to waive or forgo the relevant commission, Mr Mitchelson (who was not guilty of misrepresentation or misleading or deceptive conduct) was entitled to retain the commission for the Cay sale.
24 In contrast, his Honour held that Mr Mitchelson was not entitled to retain the commission on the second sale.
25 Judge Bowman accepted that, pursuant to Item 2 of the Authority, 'one only gets to the continuing authority period if the property is not sold during the exclusive authority period. Therefore, we do not get to the continuing authority period'.
Item 1. Agent's Entitlement to Commission
The Agent will endeavour to sell the Property in consideration for which the Vendor agrees to pay the Agent the Agent's Commission on the terms of this Authority if the Property is sold -
(i) during the Exclusive Authority Period by the Agent or by any other person (including the Vendor or another Agent) for the Price and upon the above conditions; or
(ii) during the Continuing Authority Period by the Agent; or
(iii) to a person introduced to the property by the Agent before the Vendor signed this appointment; or
(iv) within 120 days after the expiration of the Exclusive Authority Period for the Price to a person introduced to the property by the Agent within the Exclusive Authority Period and to whom, as a result of the introduction, the Property is sold.
Items 1(ii), (iii) and (iv) shall not apply where the Vendor has incurred a liability to pay Agent's Commission under any Exclusive Agency agreement signed by the Vendor with another Agent after the expiration of the Exclusive Authority Period.
Item 2. Continuing Authority Period
If the property is not sold during the Exclusive Authority Period and a Continuing Authority Period is stated in the Particulars of Appointment then the Vendor appoints the Agent to sell the property on a Non-Exclusive Agency basis for the period stated in the Continuing Authority Period.
The Vendor may terminate or delete the Continuing Authority Period at any time by written Notice to the Agent. Item 1 is still applicable to this Authority even if the Continuing Authority Period does not apply or ceases.
In consideration of the Agent agreeing to endeavour to sell the property the Vendor will pay the Agent the Agent's Commission if the Property is sold by the Agent for the Price at any time during the continuing Authority Period except where the Vendor has incurred a liability to pay the Agent's Commission under any Exclusive Agency agreement signed by the Vendor with another Agent after the expiration of the Exclusive Authority Period shown in this Authority.
If no Continuing Authority Period is stated in the Particulars of Appointment the Authority lapses (subject to Item 1(ii), (iii) and (iv) above) at the expiration of the Exclusive Authority Period shown in this Authority.
27 His Honour held that because the property had been 'sold' during the Exclusive Authority Period, the Authority was no longer relevantly operational on 17 June 2005, the date of the second sale, and, as no new or further authority was ever executed, there was no valid authority in existence or current at the time. It followed that at the time of the second sale, the appellants did not hold an operational 'written engagement or appointment' within the terms of s 49A(1) of the Estate Agents Act.
28 Section 49A(1)(a) of the Estate Agents Act provides, broadly, that an estate agent must not obtain or seek to obtain payment for work done or outgoings incurred unless the agent holds a written engagement or appointment signed by the person from whom the payment is sought. Section 49A(1)(b) provides that the person must first be informed that the agent's commission and money to be paid were both subject to negotiation. Section 49A(1)(c) provides that the engagement or appointment must contain details of the commission and outgoings that have been agreed and other specified information. Section 49A(1)(d) provides that the agent must give the person a copy of the signed engagement or appointment.
29 Section 50(1) of the Estate Agents Act provides that an estate agent is not entitled to:
sue for or recover or retain any commission or money in respect of outgoings for or in respect of any transaction, unless:
(a) ...
(b) the agent has complied with section 49A(1) with respect to the engagement or appointment to undertake the transaction and is not in breach of section 49A(2) with respect to the engagement or appointment.
30 It followed, his Honour reasoned, that if the Authority were not relevantly operational on 17 June 2005, the date of entry into the second contract, then there was no written engagement or appointment within terms of s 49(1)(a) of the Estate Agents Act and the agent consequently could not obtain or seek payment, and further, was within the prohibition under s 50(1).
31 The notice of appeal raises three questions of law:
32 In our view the answer to the first question must depend upon the terms of the written engagement or appointment in issue.
34 It is only if the agent held a satisfactory written engagement or appointment to undertake the work for which commission is now sought, that the claim can succeed. As counsel for the respondents submitted:
It is not to the point that the Act does not limit the life of an Authority to a single sale: the respondents do not contend, and the VCAT did not find, that the Act contains such a prohibition or that it is not possible for an agent and vendor to enter into a written appointment that provides for multiple sales and multiple commissions. Rather, it is the respondents' position that the Authority properly construed does not so provide.
35 It follows that the critical question is one of construction of the written engagement and appointment upon which the agent relies. This is the third question of law raised in the appeal.
...that upon a proper construction of the written appointment or engagement ("the Authority"):
There is considerable difficulty, and no little danger, in trying to formulate general propositions on such a subject, for contracts with commission agents do not follow a single pattern and the primary necessity in each instance is to ascertain with precision what are the express terms of the particular contract under discussion, and then to consider whether these express terms necessitate the addition, by implication, of other terms.
38 The first page of the Authority is first headed with reference to the Real Estate Institute of Victoria Ltd. It is apparent that the Authority is in a standard form and it may be inferred that it is intended to meet the requirements of the relevant statutory regime.
39 The first page of the Authority is next headed 'Exclusive Sale Authority' and states 'Particulars of Appointment - This is a Continuing Authority - see Notices & Disclosures Items 1 & 2'.
40 The sequential reference to an exclusive sale authority and a continuing authority introduces the substantive provisions contained in Items 1 and 2.
41 The particulars go on to describe the identity and address of first, the agent and second, the vendors.
42 They describe the property the subject of the Authority.
43 They state an 'Exclusive Authority Period' of 90 days from the date of the agreement and a 'Continuing Authority Period' of 60 days 'from the end of the 'Exclusive Authority Period'.
44 The particulars thus make plain that two sequential periods of authority of different character are the subject of the agreement.
45 The particulars then state the property is being sold with vacant possession upon payment of the full purchase price.
46 The vendors' asking price is stipulated as $1,350,000 payable in '30/60/90 days'.
47 The agent's estimate of selling price is stated as between $1.3 million and $1.35 million.
48 Commission is stated to be $44,550 or calculated as follows: '3.3% of the sale price including GST'.
49 The dollar amount of 'estimated commission' is then restated as $44,550 including GST of $4,050 if (the property is) sold at a price of $1,350,000.
50 Marketing expenses are then stated with components of advertising and other expenses totalling $11,000. The particulars of appointment further contain an acknowledgement by the vendor of 'having been informed by the agent, before signing this Authority, that the agent's fees and the marketing expenses are subject to negotiation'.
51 The particulars of appointment comprising the first page of the Authority are dated and signed by both the agent and the vendor.
52 Page 2 of the Authority contains general conditions. These commence with a series of definitions which are said to apply unless inconsistent with the context. They relevantly include the following:
1.4 "Binding offer" is an offer on the terms set out in the Particulars of Appointment which, if obtained in compliance with this Appointment, would (or does) result in a contract enforceable against the Purchaser.
1.6 "Continuing Authority Period" means the stated number of days (if any) listed as the Continuing Authority Period in the Particulars of Appointment which period commences immediately upon the expiry of the Exclusive Authority period.
1.7 "Exclusive Authority Period" means the stated number of days listed as the Exclusive Authority Period in the Particulars of Appointment.
1.13 "Price" means:
(i) an amount equal to or greater than the Vendor's asking price stated in the Particulars of Appointment; or
(ii) the Price at which the Vendor signs a Contract of Sale to sell the Property even if less than the Vendor's asking price stated in the Particulars of Appointment.
1.18 "Sale" is the result of obtaining a Binding Offer and "sell" and "sold" have corresponding meanings in the same situations.[5]
Where the purchaser does not complete the purchase and the vendor is entitled to a forfeited deposit the Vendor will take all reasonable steps to recover the unpaid deposit from the Purchaser and/or any other person who may be liable for payment of the deposit and to pay the Professional Fees from the sum of the deposit paid or recovered.
If the Property is sold and no deposit is received by the Agent the Vendor will pay the Professional Fees on demand including (but not limited to) any guide and services tax or other consumption tax.
55 Items 1 and 2 which are already set above follow on page 3 of the Authority. They constitute the initial provisions contained within a second portion of the Authority comprising four items and a warranty that the agent is a member of the Real Estate Institute of Victoria Ltd. This part of the Authority is again signed by the parties at its conclusion on page 4.
56 Item 1 is headed Agent's Entitlement to Commission and contains an agreement to pay commission if the property is sold in a series of circumstances. In the present case the parties accept it was 'sold' sequentially in each of the periods referred to in sub-paragraphs (i) and (ii).
(i) during the Exclusive Authority Period by the Agent or by any other person (including the Vendor or another Agent) for the Price and upon the above conditions; or
(ii) during the Continuing Authority Period by the Agent; ...
57 It is apparent from the further terms of Item 1, however, that the Authority envisages that despite a sale within the second of these periods no commission may be payable.
Items 1(ii), (iii) and (iv) shall not apply where the Vendor has incurred a liability to pay Agent's Commission under any Exclusive Agency agreement signed by the Vendor with another Agent after the expiration of the Exclusive Authority Period.
58 Item 2 is headed Continuing Authority Period and the plain meaning of paragraph 1 is that the agent is appointed to sell the property during a further period after the Exclusive Authority Period in the circumstances there stated.
If the property is not sold during the Exclusive Authority Period and a Continuing Authority Period is stated in the Particulars of Appointment then the Vendor appoints the Agent to sell the property on a Non-Exclusive Agency basis for the period stated in the Continuing Authority Period.
59 The fundamental difficulty confronting the agent in the present case is that the commencing words of this appointment are 'if the property is not sold during the Exclusive Authority Period ...' It is the agent's own case and common ground between the parties that the property was so sold and the agent has recovered commission for such sale. We shall return to the proper construction of this part of the Authority shortly.
60 After dealing by Item 3 with the estimated selling price and by Item 4 with the making of complaints and setting out the agent's warranty as to membership of the Real Estate Institute of Victoria Ltd the Authority goes on to deal with the question of rebate for advertising or other outgoings at page 5 (which is again signed by the parties).
61 Page 6 somewhat anomalously summarises the provisions of s 54(1) of the Estate Agents Act and then states under the heading Level of Service:
The Vendor acknowledges that the level of services to be provided by the Agent has been negotiated and is ... as follows -
Advertise, market and sell the property.
62 Provisions relating to commission sharing are then struck out as not applicable.
63 The Authority then relevantly concludes with vendor acknowledgements in the following terms:
1. The Vendor is obliged to pay the Agent -
(a) the Marketing Expenses incurred during the currency of this agreement whether or not a sale takes place.
(b) ...
The document is again signed by the parties at the foot of this page.
64 It is submitted on behalf of the appellant that the statement 'this is a continuing authority' at the commencement of the Particulars of Appointment on page 1 of the Authority coupled with the further statement of a continuing authority period of 60 days within those particulars, constitutes an appointment independently of Item 2.
65 In turn, it is submitted 'Item 2 is concerned with limiting the character or scope of the continuing authority (to be on a non-exclusive basis). It is not concerned with the creation of the continuing authority'.
66 There are a series of insurmountable difficulties confronting these propositions:
(a) The statement 'this is a continuing authority' is immediately followed by direct reference to Items 1 and 2:
The initial statement is plainly intended to be informed by the terms of Items 1 and 2.
(b) The definition of continuing authority period makes clear that this phrase simply describes a period of days, as does its ordinary meaning. The inclusion of a continuing authority period within the initial particulars does not in terms amount to an appointment.
(c) The appellant's construction leaves no work to be done by the initial phrase of Item 2 'if the property is not sold during the Exclusive Authority Period ...' Such phrase is rendered entirely otiose.
(d) The appellant's construction leaves no work to be done by the express words of appointment in Item 2 '... then the Vendor appoints the Agent to sell the property on a non-exclusive agency basis for the period stated in the Continuing Authority Period'. The reference to appointment is rendered entirely otiose.
(e) The appellants' construction ignores the fact that on its plain meaning Item 2 provides that the statement of a continuing authority period in the particulars, is a pre-condition to the appointment envisaged by the first paragraph of Item 2 which is additional to the pre-condition first stated, namely that the property is not sold during the Exclusive Authority Period. The appellant's construction thus seeks to give the statement of a continuing authority period within the document a role and function other than that given to it by Item 2.
(f) The continuing authority contemplated by Item 2 is by necessity, not an exclusive authority as otherwise provided for by the Authority documents.[6] The opening paragraph of Item 2 cannot sensibly be regarded as doing no more than restating this distinction. Rather, it states the pre-conditions to secondary appointment by way of a continuing authority.
(g) It is submitted on behalf of the appellants that because the second paragraph of Item 2 provides for the termination or deletion of the Continuing Authority Period 'at any time' this presupposes the existence of a continuing authority during the Exclusive Authority Period. There are two difficulties with this proposition. First, the provision relied on relates to the termination of a 'period' not an authority. Secondly, the authority contemplated is itself conditional and the first of the relevant pre-conditions has not been met.
67 There are further indications in the other provisions of the Authority which support the construction adopted by the Deputy President.
(a) The vendor acknowledgements at the end of the substantive provisions of the Authority make clear that the Authority entitles the agent to market expenses whether or not a sale takes place. They further reiterate the obligation to pay commission in the event the vendor sells the property during the Exclusive Authority Period. But they do not acknowledge any obligation with respect to the continuing authority period. This structure supports the view that the appointment with respect to the continuing authority period is subordinate to the primary appointment with respect to the Exclusive Authority Period and limited by the terms of Item 2.
(b) The statement and estimate of the commission payable in the Particulars of Appointment are not in terms which suggest multiple commissions may be payable in respect of sequential sales.
(c) The agent's entitlement to payment of commission as expressed in Item 1 arises if the property is 'sold' in a series of alternative situations each linked by the word 'or'. The words used are expressed in the singular.
(d) As counsel for the respondents submits, it is nowhere stated that the vendor may be liable for more than one commission.
68 Both the appellants and the respondents point to broader contextual considerations which might be said to support the construction for which they contend.
69 The appellants contend that it would be incongruous if an agent procured a series of sales, one or more of which did not proceed to completion, but could claim only one commission in circumstances where a vendor might be entitled to retain a series of deposits.
70 The respondents submit that their construction best serves the scheme established by ss 49A and 50 of the Estate Agents Act. The purpose of that scheme was described by Smith J in TJ Board & Sons Pty Ltd v BGG Pollard Pty Ltd:[7]
The purpose of the provisions is, presumably, to inform and so empower potential clients of estate agents to negotiate commission and expense arrangements. In those aims, it might be said to recognise an imbalance of bargaining power between estate agents and their prospective clients.
71 The respondents contend that in the event that a sale is achieved within the meaning of the Authority, commission will be payable, but the entitlement to a further commission will depend on a further written engagement in renegotiated form.[8] It is submitted there is no unfairness in this for the estate agent. The property having been 'sold' during the currency of the Authority, the agent is entitled to commission and if he wishes to earn another commission he can readily sign the vendor up to a new Authority before undertaking any further work. The terms of the further potential commission will be renegotiated in the circumstances which have then arisen.
72 In our view the contextual submissions put on behalf of the appellants seek to assert a right in effect to a species of continuing claim for work and labour done. The difficulty is that the circumstances of different cases of successive sales may well mean that an agent's entitlement on a quantum meruit basis would not be to two full commissions. Further, the appellants' case as to entitlement to commission is not, when analysed, premised on the fact of payment or non-payment of deposits.
73 Conversely, the matters advanced on behalf of the respondents support the plain meaning of the Authority. Section 49A supports the view that the agent must hold an unequivocal written engagement containing information making clear the obligations which may follow from it, and signed by the vendors, before the agent may seek payment in respect of work done. Section 50 buttresses this position by precluding a claim of the type that is now in issue.
74 Accordingly, the appeal should be dismissed because the property was sold during the Exclusive Authority Period and there was no written engagement or appointment of the agent with respect to a further sale in the Continuing Authority Period.
[1] The vendors obtained judgment in default of appearance against Mr Cay but Mr Cay was made bankrupt shortly before the date of judgment. As the Acting President noted, it was unlikely that the creditors of Mr Cay would receive a dividend and therefore unlikely that the judgment would be satisfied.
[2] It is unclear how that figure was calculated.
[3] [1941] AC 108, 119. See also Lord Russell of Killowen at 124 and Lord Wright at 124 applied in Scott v Willmore & Randell [1949] VicLawRp 21; [1949] VLR 113, 115.
[4] Scott v Willmore & Randell [1949] VicLawRp 21; [1949] VLR 113, 115.
[5] This definition is not without some obvious difficulties. In particular the phrase 'is the result of' is potentially contentious as is the word 'sale' itself. At common law an agent's right to commission absent special terms in the contract of agency depended on proof that his services were the effective cause of the transaction he claimed to have brought about. Bowstead on Agency 18th ed, art 62 and the cases there cited. Again, absent special terms in the contract an agent engaged to sell land is to be regarded as having sold such land when he brings about a binding and enforceable contract between the vendor and purchaser. Scott v Willmore and Randell [1949] VicLawRp 21; [1949] VLR 113; Leonard v Chris Doyle & Son, unreported decision of the Full Court comprising Winneke CJ, Adam and Starke JJ, 8 December 1966 (cited in Storey H & Goldberg A, Real Estate Agency in Victoria, (2nd ed, 1974) at pp 99 and 112). However, a different view has been taken in New South Wales and other jurisdictions: Caffrey v Montano (1968) 2 NSWR 182. As to which see the observations of Ormiston JA in Real Estate City Pty Ltd v Moustafa [2005] VSCA 181 at [32] & [33]. In the present case it is accepted by the respondents that a sale as a result of a binding offer obtained by the agent occurred within the meaning of the authority upon the conclusion of a binding and enforceable contract for sale of the property. It is unnecessary to resolve whether the Acting President was correct to accept the agent's contention that sale occurred within the meaning of the definition simply upon the obtaining of a binding offer.
[6] In Di Dio Nominees Pty Ltd v Brian Mark Real Estate Pty Ltd [1992] VicRp 99; [1992] 2 VR 732, Marks J stated:
The purpose of a sole agency agreement is to encourage an estate agent to focus his or her endeavours, including expenditure of time and money, on the role of the property of the owner in consideration of the promise that the agent will not be deprived of commission in the event that the property is sold by someone else or that a sale results from the activity of others during the period.
[7] [2000] VSC 497 at page 4.
[8] See s 49A(1)(b).
Icon Property Pty Ltd & Anor
Wood & Anor [2008] VSCA 123
Appeal dismissed. VCAT decision upheld: agent entitled to commission for the first (rescinded) sale but not entitled to commission for the subsequent sale because the Continuing Authority did not arise and no written engagement existed for the second sale; agent prevented from seeking payment under ss 49A(1) and 50 of the Estate Agents Act 1980 [1]–[3], [27]–[30], [74].