Kukolovski v Georges

Judgment 1Mr Kukolovski is the liquidator of National Andrews Pty Ltd ("National") under a creditors voluntary winding up that followed voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth). 2By his summons filed on 11 February 2011, the liquidator seeks "the opinion, advice and direction of the court pursuant to section 63 of the Trustee Act 1925 or in the alternative section 511 of the Corporations Act 2001" on certain questions. The questions concern a sum of $62,500 held under the liquidator's control. The liquidator is uncertain whether those moneys are an asset applicable in the winding up of National. 3Despite the form of the liquidator's alternative claims, six persons are named as defendants in his summons. They have filed an appearance and made submissions through counsel when the matter came before the court for hearing. They argued that they, not National, are entitled to the moneys to which the liquidator's application relates. The liquidator, for his part, has, through his counsel, exposed all the arguments in favour of the proposition that National in entitled to the moneys to the exclusion of the defendants. It is clear that no one other than the defendants and National has any maintainable claim to the moneys. 4Given the way in which the proceedings were approached and argued, their form is anomalous. The implicit assumption that the liquidator is, in the sense relevant to s 63 of the Trustee Act , a trustee of money that is the property of National (even if held by National non-beneficially) is incorrect: Commissioner of Taxation v Linter Textiles Australia Ltd [2005] HCA 20; (2005) 220 CLR 592. And while the liquidator in a creditors voluntary winding up may seek what is effectively the direction of the court under s 511 of the Corporations Act , that is not a procedure apt to define rights and obligations inter partes: see, for example, Otis Elevator Co Pty Ltd v Guide Rails Pty Ltd [2004] NSWSC 383; (2004) 49 ACSR 531. 5I raised with counsel on both sides the question whether steps should be taken to re-cast the proceedings as adversarial proceedings between National (not itself a party at this point) and the defendants, with claim and counterclaim articulated in relation to the moneys in the liquidator's hands. Neither Mr Ginges of counsel who appeared for the liquidator nor Mr Southwick of counsel who appeared for the defendants saw any need for that course; and given the clear indication by each that his client would abide by the court's decision on the application as it stands, I am content, for the moment, to proceed to the central question directly and without undue attention to the way in which it has arisen. 6The facts are not in dispute. Indeed, the court had the benefit of an agreed statement of facts. National was, at material times, the holder of a real estate agent's licence under the Property, Stock and Business Agents Act 2002. It carried on a real estate agency business. The defendants are the registered proprietors of a home unit development at Granville. In October 2009, they appointed National as the selling agent for that property. A written agency agreement was entered into between the defendants as principals and National as agent. It was a printed form agreement identified by footnote as having been produced and distributed by the Real Estate Institute of New South Wales in August 2003. Blank spaces in the printed form were completed in handwriting. 7The agreement contained relevant provisions as follows: Clause 2(i): "Agent's Remuneration The Agent shall be entitled to a fee of 2.5% (GST incl) if during the Agency Period they effectively introduce a purchaser to the principal or the property who subsequently enters into a binding contract." Clause 10: "Principal's Fee Obligation The fee to which the agent is entitled shall be due and payable on completion of the sale or upon demand if the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract." Clause 12: "Authority to Deduct The Agent is entitled to deduct all fees, expenses and charges from the deposit monies on receipt of authority from the purchaser or their solicitor to account to the Principal or their solicitor." 8On 26 February 2010, a contract for sale was entered into between the defendants as vendors and a purchaser. The sale price was $2,500,000. A deposit of $125,000 was paid by the purchaser to National to be held by National as stakeholder in accordance with the contract. The deposit came in due course into the hands of the liquidator and was held in a bank account established by him in accordance with the Corporations Regulations 2001 (Cth). 9The contract provided for completion 120 days after its date. Completion did not take place on the due date or at all. The purchaser failed to comply with a notice to complete served by the defendants as vendors. The defendants, as vendors, then exercised their right to terminate the contract and to forfeit the deposit. The purchaser apparently accepted that the defendants were entitled to take those steps since, by letter of 23 August 2010 to National, the purchaser's solicitors authorised release of the deposit to the vendors even though there had been no completion under the contract. In November 2010, the liquidator sent a cheque for $62,500 to the defendants' solicitors. He retained the remainder of the deposit (also amounting to $62,500) pending resolution of the dispute that had by then arisen and is now before me. 10The question is whether, in the events that happened, National became entitled to receive the fee or commission provided for in the agency agreement (agreed to be 2.5% of $2,500,000, that is, $62,500) and whether the liquidator may, to the extent of that agreed fee or commission, treat the balance of the forfeited deposit still under his control as an asset available in the winding up of National. It is not disputed that, if such an entitlement to receive arose in National, the liquidator may treat the relevant amount in that way, whereas if no such entitlement arose, the money must be released to the defendants. 11Submissions were addressed at two levels. First, there is the question whether, under the terms of the agency agreement, National became entitled to receive the fee or commission. Second and if the answer is in the affirmative, there is a question whether the contractual right is defeated by statutory provisions. 12It is not disputed that National did what is contemplated by clause 2(i) of the agreement, that is, that it introduced a purchaser who subsequently entered into a binding contract and that this happened within the stipulated period. The condition in the part of clause 2(i) starting with the word "if" was satisfied, so that National was "entitled to" the specified fee. 13The issue between the parties arises from clause 10. That clause identifies the point at which the clause 2(i) fee becomes "due and payable" - that is, obviously enough, due and payable by the principal (vendor) to the agent, so that the right to payment is enforceable by the agent. 14The question is whether the true meaning and effect of clause 10 are that, even though an entitlement to the fee has arisen in the agent under clause 2(i) by reason of the agent's having introduced a purchaser who has entered into a binding contract, the obligation of the principal actually to pay the fee to which the entitlement relates and, accordingly, the right of the agent actually to receive it arise only if one of the clause 10 events happens - that is, if the sale under that contract is completed or if the principal (as vendor) defaults in completing and a demand for payment is thereafter made by the agent. In other words, does the clause 10 specification regarding the point at which the fee is "due and payable" qualify the clause 2(i) entitlement so that it is in truth an entitlement to receive only that which clause 10 makes due and payable? 15Case law emphasises that the question of an estate agent's entitlement to commission and to receive payment of that commission is always a question of construction of the agency contract. As decided cases show, contractual provisions on the subject take many and varied forms. In New South Wales, however, the form and content of such provisions is influenced by the requirements of legislation. It is sufficient, at this point merely to note clause 9(1) of Schedule 7 to the Property, Stock and Business Agents Regulation 2003: "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." 16It is reasonable to infer that clause 2(i) of the agreement now before the court was formulated by reference to paragraph (a) of this provision, while clause 10 was formulated by reference to paragraph (c) - so that the two clauses together were intended to identify both the circumstances creating an entitlement to commission and the time at which the commission was payable. 17While each case must depend on the particular contractual terms, guidance may usefully be drawn from cases in which similarly worded provisions have arisen for consideration. 18One such case is New South Wales Land and Housing Corporation v Sydneywide Real Estate Co Pty Ltd (1998) 9 BPR 16,565. Clause 3(i) of the agency agreement there under consideration provided that " the agent shall be entitled to a commission of 0.75% of gross sale price if during the agency period the property is sold ...". Clause 12 provided: "The commission to which the Agent is entitled shall be due and payable on completion of the sale or upon demand if the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract." 19During the agency period mentioned in clause 3(i), a contract for sale was entered into. The contract did not, however, proceed to completion. The vendor terminated the contract on the basis of breach by the purchaser. The deposit was forfeited to the vendor. Young J held that clause 12 made "the commission due and payable on completion of the sale, except for an event which did not happen" (a reference, I think, to demand by the agent after default of the vendor leading to non-completion) so that "[t]he whole contract must then be construed as meaning that the commission never became payable". 20The approach that thus commended itself to Young J was thus that, unless clause 12 operated to make the commission due and payable, it "never became payable" and that this was so despite the entitlement provided for in clause 3(i) having arisen, in the sense that the event upon and by reference to which the entitlement was expressed to come into existence had in fact happened. 21Another case involving provisions in terms similar to those now before the court is CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37; (2010) 14 BPR 27,361. The relevant clauses are described in the judgment at first instance ( Jainran Pty Ltd v Boyana Pty Ltd [2008] NSWSC 468) :