9.1 Where a liability to pay the Sales Commission arises under this Agreement then the liability is subject to the contract of sale of the Franchised Business proceeding to completion unless:

[omitted - a list of circumstances not presently relevant]

Warning: A commission may be payable under this Agreement even if the sale of the property or business is not completed.

1. Shortly after entering the exclusive agency agreement Mr Wilcox entered a franchise agreement with the applicant under which the applicant would carry out business broking in the ACT and Mr Wilcox would assign his ACT-based contracts to the applicant. Under the franchise agreement Mr Wilcox transferred case management of the respondent's matter to the applicant. This transfer occurred without the knowledge or consent of the respondent.
2. The applicant marketed the respondent's business and introduced potential purchasers to the respondent. In the course of these activities, Mr Newham for the applicant dealt directly with Ms Miller for the respondent so that she was at least aware of Mr Newham's involvement in lieu of that of Mr Wilcox, even if the legal relationship between the two men was not known to her.
3. On 23 December 2015 Mr Newham introduced Ms Malone, the third party, and her business associate Ms Strickland to the respondent. Negotiations ensued but a sale did not transpire.
4. On or about 2 July 2016 the respondent terminated the exclusive agency agreement with Mr Wilcox and hence with the applicant, and retained the services of another broker. At the time of termination the applicant gave the respondent written notice of the identity of persons introduced by the applicant to the respondent and in respect of whom the applicant would be seeking commission for any completed sale by the respondent to any of these people. The list contained the name of Ms Strickland but not that of Ms Malone.
5. On 8 November 2016 the respondent entered a contract of sale of the business to Atarashii Stones Pty Ltd, which was a company of which Ms Malone was the sole director, secretary and shareholder. Ms Malone featured in the contract of sale as a guarantor for company's performance. Completion of the sale occurred shortly thereafter.
6. The applicant did not become aware of the sale until early 2017. He then made demand on the respondent for the commission he claimed was payable to him under the exclusive agency agreement. The respondent denied liability.
7. On 8 September 2017 the applicant commenced proceedings in this tribunal, nominating Ms Miller and her husband Craig Miller as the respondents.
8. On 10 October 2017 the respondents filed an interim application seeking the summary dismissal of the application in accordance with section 54 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) on the basis that the list of introduced persons provided by the applicant did not include Ms Malone or her company.
9. On 31 October 2017 the interim application was dismissed. The respondent's name was amended to that now in the title to these proceedings, Craig Miller was removed as a respondent, and the applicant was ordered to provide particulars of his claimed introduction of Ms Malone to the respondent.
10. On 22 November 2017 a differently constituted Tribunal made directions for the timetable for filing of evidence.
11. On 29 November 2017 the applicant filed and served the particulars concerning the introduction of Ms Malone to the respondent.
12. On 20 December 2017 the applicant filed and served its submissions with attachments A to K.
13. On 24 January 2018 the respondent filed and served its response with attachments A to D. The response contended that:
    • (a) The Tribunal lacked jurisdiction to hear the present dispute. The exclusive agreement expressly limited jurisdiction to the courts and tribunal of New South Wales (NSW).
    • (b) Nevertheless, the respondent consented to this Tribunal hearing the matter as long as the relevant laws of NSW were applied.
    • (c) Section 55 of the Property, Stock and Agents Act 2002 (NSW) (NSW Act) and its regulations apply to the present exclusive agreement and have the effect of invalidating any clause that requires the respondent to pay the claimed commission that does not comply with the Property, Stock and Agents Regulation 2014 (NSW) (NSW Regulation).
    • (d) The exclusive agency agreement had not been validly assigned to the applicant from Mr Wilcox and so the applicant was not privy to the agreement. (Section 12 Conveyancing Act 1919 was relied upon.)
    • (e) Mr Newham was not a licensed business agent in NSW and section 8 of the NSW Act precludes him from charging or recovering any commission.
14. The exclusive agency agreement contained a dispute resolution clause (clause 19) which survived the termination of the Agreement (clause 19.10). It required inter alia that:
    • (a) any dispute "must be dealt with in accordance with this clause before any legal proceedings shall be instituted" (clause 19.1);
    • (b) the parties must put each other on notice and in good faith attempt to negotiate a settlement (clause 19.3);
    • (c) if these negotiations do not take place with a stated time frame then the parties are to invoke the conciliation process of the Administrative Decisions Tribunal (NSW) which now forms part of the New South Wales Civil and Administrative Tribunal (NCAT) (clause 19.5);
    • (d) if the conciliation in NCAT fails then the parties may commence legal proceedings as they think fit (clause 19.9).
15. Clause 29 of the exclusive agency agreement provided that the agreement was governed by the law of NSW.
16. On 24 January 2018 the respondent applied to join Ms Malone as a third party based on an indemnity clause in the contract of sale from the respondent to Ms Malone's company, with her as a personal guarantor.
17. On 13 February 2018 a differently constituted Tribunal ordered the joinder of Ms Malone as a third party.
18. Throughout February to April 2018 a series of subpoenas were issued and were returnable.
19. On 15 March 2018, the applicant filed an application for an interim order to set aside the joinder of Ms Malone as a third party. On 6 April 2018 Ms Malone filed her response in support of this interim application and on 10 April 2018 the respondent filed its response opposing the interim application.
20. On 9 May 2018, a differently constituted Tribunal heard and dismissed the interim application.[1]
21. On 10 May 2018, the applicant filed a timeline of events and a witness statement from Len Ferguson.
22. On 6 June 2018, the respondent filed a timeline of events, a witness statement from Frank Walmsley and a copy of the orders it sought, being:
    • (1) The Tribunal dismiss the Applicant's application on the following grounds:
      • (a) The Agency Agreement between the applicant and the respondent is non-compliant with schedule 11(3) of the Property, Stock and Business Agents Regulations 2014 and the Applicant is therefore not entitled to a commission under section 55 of the Property, Stock and Business Agents Act 2002.
      • (b) The Agency Agreement was not correctly assigned pursuant to the operation of section 12 of the Conveyancing Act 1919 (NSW).
      • (c) The applicant was not the effective cause of sale of the business.
    • (2) The Tribunal orders that the Third Party pay all the Respondent's costs arising in relation to these proceedings.
23. On 29 June 2018, Ms Malone, the third party, filed her timeline and submissions. Ms Malone argued that she was only a guarantor for the liability of her company and not a guarantor for any losses suffered by the respondent as the seller.
24. On 9 July 2018, Ms Malone's solicitors filed further submissions on the law.
25. On 10 July 2018, the hearing commenced before the presently constituted Tribunal. Mr Newham appeared in person, Mr Carden and Mr Marks (solicitors) appeared for the respondent and Mr Andrew (solicitor) appeared by phone for the third party.
26. At the hearing the Tribunal raised the question of why the matter was in the ACT Civil and Administrative Tribunal and not the NSW Civil and Administrative Tribunal. The parties informed the Tribunal that this issue had already been the subject of an oral determination[2], by a differently constituted Tribunal, that this Tribunal had jurisdiction to hear the dispute. I have proceeded on that basis.
27. The Tribunal raised the issue whether the other provisions of the dispute resolution clause had been complied with before these proceedings were commenced. The Tribunal received the same response. Again, I have proceeded on that basis.
28. The respondent contended that the issues raised in their draft orders 1(a) of 6 June 2018 (at paragraph 24 above) were the determinative issues and sought a ruling on these points of law. If these points of law were determined in favour of the respondent then the applicant's case would be dismissed and there would be no need to determine the validity of the assignment or the factual issue of whether the applicant was the effective cause of the sale to the third party.
29. The applicant and the third party concurred with this suggestion.
30. By consent the Tribunal made the following orders:
    1. By 31 July 2018, the applicant is to file and serve submissions on the respondent's application to strike out the claim based on compliance with section 55 of the Property, Stock and Business Agents Act 2002 and regulation 3 of Schedule 11 to the Property, Stock and Business Agents Regulation 2014.
    2. By 8 August 2018, the respondent is to file and serve any submissions in response.
    3. Upon receipt of the submissions the Tribunal will proceed to an internal ruling on the point of law without further hearing.
    4. By 31 July 2018, the respondent will file and serve a response to the third party's submission (sic) (which were filed on 9 July 2018).
31. Mr Andrew for the third party said that there would be no further submissions by Ms Malone.
32. On 1 August 2018, the respondent filed its submissions concerning the third party's submissions of 9 July 2018. These submissions address the arguments raised by the third party in terms of the claimed indemnity, but they do not address the issues that are to be determined in this interlocutory decision.
33. On 9 August 2018, the applicant filed their submissions.
34. On 22 August 2018, the tribunal registry inquired with the respondent whether it would be filing a response to the applicant's submissions of 9 August 2018. In an email of the same day the respondent advised that it relied upon the submissions previously made.

The relevant provisions of the NSW Act and the NSW Regulation

55(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:

(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(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

(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:

(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

(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.

1. Clause 3 of Schedule 11 to the NSW Regulation provides:

3(1) On and from 1 March 2015, if the agency agreement includes a term that a commission is payable even if the sale of the business is not completed, the agency agreement must include the following statement:

WARNING: The term immediately above provides that a commission is payable under this agreement even if the sale of the business is not completed.

(2) The statement must be included in the agreement immediately following the term and must be no less prominent than that term.

Consideration of the issue - non-compliance with the NSW Act and Regulation

1. The respondent's position on this issue is most fully set out in Annexure A to its Response of 24 January 2018. The respondent contends that clause 8.3 of the exclusive agency agreement should contain the warning required by clause 3 of Schedule 11 to the NSW Regulation, immediately following clause 8.3. The exclusive agency agreement in this case was entered into after 1 March 2015 so that clause 3 of Schedule 11 applied. The absence of that statutory warning was said to be a breach of the NSW Regulation that enlivens section 55(1)(b) of the NSW Act such that no commission is payable.
2. The respondent took the Tribunal to the decision of Barrett J in Kukolovski v Georges [2011] NSWSC 359 (Kukolovski) and Favretto LCM in World Square Realty Pty Ltd v Mathew Camilleri; Mathew Camilleri v Feng Chen and Rong Gu [2013] NSWLC 20. It was the respondent's position that any breach of the NSW Regulation, no matter how small, is sufficient to bring section 55(1)(b) of the NSW Act into play.
3. The respondent did not refer to section 55A, which was inserted into the NSW Act in 2013 expressly to overcome any unfair outcomes from applying section 55. The cases to which the respondent referred pre-dated this amendment.
4. The first issue to consider is whether clause 8.3 of the exclusive agency agreement in fact breaches clause 3 of Schedule 11 to the NSW Regulation.
5. Clause 8.3 establishes a liability for commission on the part of the respondent where a contract of sale is entered into between the respondent and a buyer effectively introduced by the applicant, within 12 months of the end of the term of the agreement. In the present case a contract of sale was entered into within that time frame between the respondent and Ms Malone's company.
6. Clause 9.1 goes on to provide:

9.1 Where a liability to pay the Sales Commission arises under this Agreement then the liability is subject to the contract of sale of the Franchised Business proceeding to completion unless:

[There follows a list of circumstances not presently relevant. One such exception is where the contract does not proceed to completion due to default on the part of the seller.]

Warning: A commission may be payable under this Agreement even if the sale of the property or business is not completed.

1. The Tribunal construes clause 9.1 to impose a limitation on the liability arising under clause 8.1: that is, the liability only crystallises if and when the contract of sale comes to completion, except in the cases of the exceptions set out in clause 9.1 which are not presently relevant. This construction of clauses 8.3 and 9.1 is consistent with the view taken by Barrett J in Kukolovski[3] and with the effect of the applicant's submissions of 9 August 2018 (albeit for different reasons).
2. Clause 8.3 does not of itself create any right to the commission 'even if the sale of the business is not completed' as required by clause 3 of Schedule 11 to the NSW Regulation. In fact, the effect of clause 9.1 is to limit the right to commission expressly to circumstances where the sale does proceed to completion, unless the sale fails by fault of the seller. This exception is explicable on the simple basis that the agent should not forfeit their commission if they have done everything required of them under the exclusive agency agreement and it is in fact the seller who has reneged or defaulted due to no fault of the agent.
3. Insofar as clause 8.3 does not fall within the ambit of clause 3 of Schedule 11 to the NSW Regulation, there is no need for the statutory warning to immediately follow clause 8.3. The respondent's argument to the contrary is rejected.
4. However clause 9.1 would fall within the ambit of clause 3 of Schedule 11 to the NSW Regulation. It does contain the required statutory warning albeit at the end of clause 9 and not immediately following clause 9.1. Nothing turns on this. The terms of clause 9.2 and 9.3 are logically part of and follow from clause 9.1. It is just an expediency of drafting to present clause 9 in its present form. The fact is that the statutory warning is present in the appropriate place.
5. The Tribunal finds that clause 9.1 does not breach section 55 of clause 3 of Schedule 11 to the NSW Regulation.
6. In the alternative and assuming there was some substance in the respondent's argument concerning the placement of the statutory warning at the end of clause 9 instead of at the end of clause 8.3, it is then necessary to address the application of section 55A of the NSW Act.
7. The Tribunal notes the decision of the NSW Court of Appeal in Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339 in which section 55A was applied in circumstances where there was noncompliance with the NSW Regulation. In that case, the Court noted the business sophistication of the seller and agent and held that the breaches were not causative of any loss. The Court was influenced by the absence of any power imbalance between the seller and agent.
8. It is true that no evidence was led in the present matter concerning the section 55A factors. This is because neither the respondent nor the applicant took the Tribunal to this section. This is understandable on the part of the unrepresented applicant but it is more difficult to understand in the case of the respondent.
9. If the respondent wishes to re-open this issue at the substantive hearing it may do so and lead relevant evidence, but for the purposes of this interlocutory decision the Tribunal is satisfied that the respondent was not in any position of power imbalance relative to the applicant.
10. The present assumed breach is minor, not causative of any loss to the respondent and it would be unjust to deprive the agent of its commission on this basis alone (per section 55A(3) of the NSW Act).

Jodi Miller Pty Ltd as Trustee for the Miller Family Trust

[1] Newham Business Brokers Pty Ltd v Jody [sic] Miller Pty Ltd as trustee for the Miller Family Trust & Anor [2018] ACAT 57 (unreported)

[2] On hearing before Senior Member Robinson 13 February 2018

[3] [2011] NSWSC 359 [24]-[25]