Pace v Samrani Property Group Pty Ltd t/a Ray White Caringbah

NCAT Consumer and Commercial|2023-09-12

Introduction

This is an application by Lorinda Pace (the applicant) pursuant to s 36 of the Property and Stock Agents Act 2002 (NSW) (PSA Act) and Part 6A of the Fair Trading Act 1979 (NSW) (FT Act) for an order pursuant to s 79N(a) of the FT Act that would require Samrani Property Group Pty Ltd t/a Ray White Caringbah (the agent) to pay her $550.00 being the refund of money paid to the agent for the development of marketing materials for the sale of her residential property (the property). The applicant also applies for an order pursuant to s 79N(d) of the FT Act that would relieve her from the obligation to pay a commission fee and disbursements totalling $26,359.50 which the agent claims is owing to it in relation to the sale of that property (I note that this is the amount claimed by the agency in the Local Court proceedings which was inclusive of costs and interest). The applicant claims to be entitled to these orders because she was induced to sign the Sales Inspection Report and Auction Agency Agreement (the Agency Agreement) by misleading and deceptive conduct of the agency's Director and Licensee, Ms Wendy Samrani. This application was made to the Tribunal on 25 May 2023 (the application).
In response to the application, the agent applies for an order pursuant to s 79O(b) of the FT Act that would require the applicant to pay it $25,259.50 in commission fee and marketing costs (exclusive of costs and interest) it claims is owing in relation to the sale of the property and an order pursuant to s 79O(a) that would otherwise dismiss the claim. The agency also applies for an order pursuant to s 60(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) that would require the applicant to pay its costs of the proceedings as agreed or assessed on the ordinary basis.
For reasons set out in greater detail following, I have dismissed the applicant's claims and made an order in favour of the agent which will require the applicant to pay the agent $26,359.50 that is owing in relation to the sale of the property immediately. The applicant has not established on her case that the agent engaged in any conduct that would disentitle it to its commission fees and disbursements. I have made no order as to costs.

Procedural history

The application was first listed before the Tribunal, differently constituted, for Conciliation and Hearing in person in a Group List on 21 June 2023. Ms Pace attended that listing of the application with her partner, Mr Rhodri Williams. Ms Wendy Samrani, who is the Director and Licensee of the agency attended on its behalf. In accordance with the Tribunal's usual practice where both parties are present at the first listing of an application the Tribunal attempted to assist the parties to resolve the dispute cooperatively by conciliation. Those efforts were not successful. Consequently, the application was adjourned to a Special Fixture Hearing and directions were given to the parties for the filing and exchange of the documentary evidence that they intended to rely upon for the final hearing.
On 27 June 2023 the agency made an application to the Tribunal for leave to be represented in the proceedings by an Australian Legal Practitioner. That application was dealt with in chambers by a Tribunal, differently constituted, on 5 July 2023. Leave was granted to both parties to be legally represented in the proceedings.

Evidence and hearing

Both parties have complied with the Tribunal's procedural directions for the filing and exchange of their documentary evidence. The applicant filed a bundle of documents on 13 July 2023 which was marked Exhibit A1. The agent filed a bundle of documents on 2 August 2023 which was marked Exhibit R1.
Ms Pace attended the hearing in person and conducted her own case giving evidence in her own cause under oath. She also called as a witness Mr Rhodri Williams who gave oral evidence under oath. The agent was represented at the hearing by Ms S Heuvel, Braybridge Lawyers Pty Ltd. The agent called as a witness Ms Wendy Samrani who gave oral evidence under oath. The parties had the opportunity to present their cases, to ask the witnesses questions, and to make final submissions to the Tribunal.

Proper parties

When the application was made, Mr Rhodri Williams was listed as an applicant party. He is Ms Pace's domestic partner and a long term occupant of the property the sale of which is at issue in these proceedings. He was also substantially involved on behalf of Ms Pace in the pre- and post-contractual dealings with Ms Samrani in relation to the sale. However, he was not a registered proprietor of the property, and he was not a contracting party to the Sales Inspection Report and Auction Agency Agreement that is the subject of the dispute. Mr Williams is therefore not a proper or necessary party to the proceedings. His appropriate role was that of a witness for the applicant. I therefore ordered his removal as an applicant party to the application pursuant to s 44(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

Material facts

At the material time for this dispute the applicant was the registered proprietor of a residential property on a suburban block at Caringbah South which she was desirous of selling. The property is a duplex dwelling with 3 bedrooms, 2 bathrooms, and a garage. It is not in issue that the property was in modest condition at that time with some building defects.
The agency is a real estate agent. It holds a NSW Property Corporation Licence issued pursuant to the PSA Act.
Ms Samrani is the Director and Licensee of the agency. She gave unchallenged evidence under oath that she has more than 28 years' experience in the property industry as a registered valuer, residential sales agent and selling agent. She holds a Diploma in Business Valuation and a Class 1 Real Estate Agent license. She has worked from her present address for 24 years. She has received numerous industry awards in relation to her work (detailed at paragraph 8 of her Affidavit).
During the evening of 15 September 2022 Ms Pace sent Ms Samrani a text message inquiring if she would be available to provide an appraisal of the property the following weekend and requesting that she email a 'sales proposal' before then. Ms Samrani responded to that message immediately and over subsequent communications it was arranged that she would conduct the appraisal at 3:30pm on Saturday 17 September 2022. One of the reasons that time was selected was that Rhodri Williams could be present.
On 16 September 2022 Ms Samrani emailed Ms Pace a "marketing submission" for her consideration. That email includes the following statements: … Market Appraisal Please be aware that real estate is not an exact science and that opinion is based on current and comparable sales. On the other hand, purchasing is very much an emotional decision and this is why opinions can vary. I shall provide you with an appraisal at our meeting tomorrow afternoon. I am renowned for achieving above market value for my clients and would love to exceed your expectations. I take pride in looking after my client's assets and my service guarantee is to achieve a premium outcome. I currently hold one of the largest databases of active buyers in the Sutherland Shire …. … Marketing Submission … Attached documents: … - An Active Pipe overview outlining the number of clients and active buyers on my database at the moment. Your home will be exposed to more than 21,000 clients on my database. … My profile I am a very active agent in the Sutherland Shire and am proud to be one of Ray White's top performers in Sydney by achieving the following awards with the Ray White Group [ a list of awards is then itemised]. … … As you are aware I have sold several homes in the Shire at record prices and currently have the largest database of buyers ready to purchase a property ideally like yours,
On 17 September 2022 Ms Pace and Mr Williams met with three prospective selling agents at the property, including Ms Samrani. They met Mr Steven Beattie from a selling agent trading as McGrath Cronulla at 9:00am and Mr Matthew Johnson from a selling agent trading as Matthew Blak Property at 1:30pm. The applicant contends that both selling agents estimated that the property could achieve a sale price between $1,100,000.00 and $1,250,000.00 subject to certain qualifications. In this respect the applicant relies upon a Statement made by Mr Beatie dated 20 June 2023 in which he refers to his meeting on 17 September 2022 with Ms Pace and Mr Williams at states that he provided his 'opinion that the property would most likely sell for somewhere between $1,150,000 and $1,250.00'.
Ms Samrani attended the property and met with Ms Pace and Mr Williams at 3:30pm as arranged. She inspected the property and afterwards provided an appraisal in which she stated a belief that she could obtain a sale price between $1,450,000.00 to $1,550,000.00 based on her recent sales experience in the area. She advised the prospects of achieving such a result would be enhanced if the property was repainted, decluttered, styled, and if there was a 'makeover' of the back yard.
Ms Samrani also provided to Ms Pace and Mr Williams a 'Marketing Submission' and a number of documents illustrating recent sale prices achieved in the locality, being a 'Sales Search Report', 'Recent Sales Sheet'. 'Suburb Flyover Report' and 'Comparative Market Analysis'. The agent relies upon the sales achieved for 4 properties which are illustrated in these materials, being: 1. [-] Gannons Road, Caringbah South which sold for $1,550,000 on 16 September 2022 (Ray White was selling agent), 2. [-] Port Hacking Road, Miranda which sold for $1,460,000.00 on 23 March 2022 (Ms Samrani was selling agent), 3. [-] Willirong Road, Caringbah which sold for $1,425,000.00 on 13 September 2022, and 4. [-] Cabramatta Road, Woolooware which sold for $1,530.00 on 13 September 2022 (Ms Samrani was selling agent).
Ms Samrani gave evidence that following her meeting with Ms Pace and Mr Williams she returned to her car and completed a written summary of her appraisal and the outcome of discussions with Ms Pace and Mr Williams. That summary is annexure WS-11 of Ms Samrani's Affidavit dated 1 August 2023. It relevantly includes the following details: Agent price opinion: $1,450,000 - $1,550,000 Comparable price range: $1,450,000 - $1,550,000 Vendors price expectations: $1,400,000 - $1,600,000 Reason for selling: Purchased property in Miranda Timeframe: asap Commission: 1.75% inc GST Pricing: TBA Marketing: off market then on market Bronze Package $4,700 + Auction $895 NOTES Presentation - poor I recommended painting and decluttering and styling would enhance the value of the property to enable me to achieve the guide of $1,450,00 - $1,550,00 based on the following 2 recent sales [the four sales set out at paragraph 14 above are then listed].
There is a controversy about when it was completed. The applicant submits that it could not have been completed on 17 September 2023 because it states the 'reason for selling' 'purchased property in Miranda' which had not occurred on that date. It is also contended that the statements contained in the "Notes" are self-serving and have been inserted later as a defence to the applicant's claim. Under cross-examination Ms Samrani stated words to the effect that started to complete the document on 17 September 2022 but may have added information later. She stated that she understood from her meeting with Ms Pace and Mr Williams that they had purchased or were about to purchase a property in Miranda on that date.
During discussions with Ms Pace and Mr Williams on 17 September 2022 Ms Samrani made a representation about the size of her agency's data base. There is a dispute between the parties as to what that representation was. It is Ms Samrani's sworn evidence that she told Ms Pace and Mr Williams that she had 'one of the largest databases in the Sutherland Shire'. Ms Samrani contends that this was a truthful statement. In support of it she has attached to her Affidavit an 'overview' from her agency's 'contacts' database which states that there were 21,751 'total contacts' 'currently in your account' at the time that report was printed.
Ms Pace and Mr Williams contends that this representation was more expansive. This is set out in paragraph 6 of Ms Pace's Statement dated 11 June 2023: 6. The Respondent claimed to have access to the "largest database of buyers ready to purchase a property ideally like yours" and by allowing her to market the property to that database, instead of choosing any other Agent we may consider, we would be more likely to achieve an advantageous sale price. The Agent said words to the effect of: "its not just Caringbah, it's the whole of the Sutherland Shire Ray White organisation, and Sutherland Shire is where your buyer will come from".
On or about 19 September 2022 Ms Samrani emailed the applicant and Mr Williams a list of improvements to the presentation of the property that she recommended be completed before it was offered for sale. Mr Williams replied to this email indicating an intention to carry out some (but not all) of this work. In that email he sought reassurance from Ms Samrani that if the work he indicated was done she remained confident of achieving the sale price she had estimated. Ms Samrani replied stating: "I'm confident we can get as close as possible to a value within the guide as long as most of the [work] is attained".
On 20 September Ms Pace signed a Sales Inspection Report and Auction Agency Agreement (the Agency Agreement) with the agency, which the document shows were prepared by the agent on 19 September 2022. The Agency Agreement is in standard form. It is not in issue that it complies with the requirements of the Property and Stock Agents Regulation 2022 (NSW). The Sales Inspection Report component of that document contains the following statements: Price The Agent's opinion as to the current estimated selling price (or price range): $1,450,000 to $1,550,000 Note: This opinion is not to be construed as a valuation and if a price range is used then the highest price in the price range must not be more than 10% higher than the lowest price in the price range. The Principal instructs the Agent to maker the Property (including GST, if any) at a price guide of: $1,450,000 to $1,550,000 Note: The price at which the Property is marketed cannot be less than the Agent's current estimated selling price for the Property. The Agent's recommended method of sale: Auction unless sold prior.
The Auction Agency Agreement component of that document includes the following terms relevant to the determination of this dispute: Agency Period 1. In consideration of the Agent promising to use their best endeavours to sell the subject Property, the Principal hereby grants to the Agent exclusive selling rights of the Property for a period from 20/09/22 to 20/12/22 inclusive now called the "Exclusive Agency Period". … Agent's Remuneration 5. i. The Agent shall be entitled to a fee of 1.75% including GST if during the Exclusive Agency Period the Property is sold either: (a) by the Agent; (b) by any other agent; or (c) by the Principal. iv. The Agent's fee is calculated on the selling price. If the sale is subject to GST then the Agent's fee is calculated on the GST inclusive selling price. v. The Agent's remuneration in the event of a sale that the Agent's estimate of selling price would equate to $25,375 - $27,125 (GST Inc) vi. The fee to which the Agent is entitled shall be due and payable upon demand: (a) on completion of the sale … IMPORTANT: This is an exclusive agency agreement. This means you may have to pay the agent commission even if another agent (or you) sells the property or introduces a buyer who later buys the property. WARNING: Have you signed an agency agreement for the sale of this property with another agent? If you have you may have to pay 2 commissions (if this agreement or the other agreement you have signed is a sole or exclusive agency agreement). … Services, Charges and Expenses 8. The Agent shall perform the following services to be entitled to reimbursement of the following charges and expenses incurred by Service Amount When due and payable by the Principal Off-market Campaign $550. Inc GST Off-market cost due upfront Bronze Marketing package $4,700 inc GST Via campaign agent Auctioneer $984.50 inc GST Auctioneer fee is payable if cancelled or sold prior All marketing due if listing is withdrawn from sale

There is a dispute between the parties as to the extent to which the applicant carried out the work recommended by Ms Samrani to prepare the property for sale. In her Statement Ms Pace says she spend about $10,000.00 preparing the property for sale. What that expenditure related to is not explained and there is no objective evidence of this expenditure in evidence. It is agreed between the parties that some interior painting was done. It also agreed that the applicant did not have the property professionally styled. The agent also contends the property was not decluttered or the back yard presented in the manner recommended. As a result the agency arranged for the photographs of the property to be altered to incorporate digital styling. The agency provided this service at no cost to the applicant.
On 3 October 2022 the applicant paid the agent $550.00 in respect of the "off-market campaign" marketing cost.
The marketing campaign for the sale of the property commenced on or about 14 October 2022. At that time the property was listed for auction on 5 November 2022. Open home inspections were conducted from that date. It is sufficient to say that there was limited interest in the property. Ms Samrani notified the applicant and Mr Williams twice immediately following inspections that a prospective purchaser may proceed to an offer, but on later follow-up that interest had dissipated. The applicant contends that Ms Samrani misrepresented to her that interest expressed by these purchasers. Ms Samrani contends that it is commonplace for prospective purchasers to express a positive intention at an open home, but resile from that later.
On 30 September the applicant and Mr Williams purchased their new home in Miranda. Settlement of the purchase was scheduled for 20 January 2023. That purchase created pressure in relation to the sale of the property as they required the proceeds of sale to settle their purchase of the Miranda Property. There was therefore an imperative for them that the property sell before the end of November 2022. From that date they became anxious both about the sale price they would achieve for the property (they had to achieve a price $1,200,000.00 or more to fund the Miranda purchase), and about when the property would sell. In this context they progressively began to loose confidence in Ms Samrani and her marketing campaign.
The auction was listed to proceed on 5 November 2023. On or about 3 November 2022 there was a discussion between Ms Pace, Mr Williams, and Ms Samrani as to whether the auction should proceed because as at that date there were no registered bidders. It was agreed that it should because of the potential for prospective purchasers to register before the auction or turn up on the day of the auction.
Ms Samrani recommended the applicant set a reserve price of $1,300,000.00 for the auction which she agreed to.
However, the auction did not proceed on 5 November 2022 because there were no registered bidders.
Following the auction, Ms Samrani recommended to the applicant that the marketing campaign continue with a price guide of $1,200,000.00.
The agent conducted an open home inspection on 13 November 2022. Four prospective purchaser groups attended that open inspection. Two prospective purchaser groups requested and were supplied with Contracts for Sale for their inspection.
By that date the applicant and Ms Williams were feeling very stressed and anxious about their ability to sell the property in time to settle on their Miranda purchase, and at a price that would fund that purchase. They discussed engaging other sales agents to sell the property. In this regard Mr Williams had in-principle discussions with Mr Beattie of McGrath Cronulla and Mr Johnson of Matthew Blak Property.
On 16 November 2022 Mr Williams met with Ms Samrani to discuss the state of play. Ms Samrani recommended the applicant reduce the price guide for the property to $1,100,000.00 to $1,150,000.00. Mr Williams indicated the applicant's wish to engage another selling agent sell the property. Ms Samrani recommended against this, stating that her period of exclusive agency had not ended, and the risk that the applicant may end up paying two commission fees if the property was sold by another agent. However, subject to those provisos, it appears Ms Samrani acquiesced to Mr Williams.
Ms Pace and Mr Williams contend that Ms Samrani "admitted" to Mr Williams at their 16 November 2022 meeting that her database was limited to contacts in the Caringbah area, not the whole of the Ray White network in the Sutherland Shire.
On 18 November 2022 the applicant signed a Sales Inspection Report and Non-Exclusive Agency Agreement with Shire Real Estate Pty Ltd t/a McGrath Cronulla. That agreement estimated a selling price for the property of $1,150,000.00 to $1,250,000.00, a selling fee of 1.65% plus GST. The agreement included a warning to the applicant about the risk of her paying two commission fees.
On 25 November 2022 the agent referred an offer of purchase of the property at $1,000,000.00 to the applicant for consideration. She rejected that offer later that day.
On 30 November 2022 the applicant signed a Sales Inspection Report and Non-Exclusive Agency Agreement with Mattblak No.1 Pty Ltd t/as Mattblack Property/Johnson Property Pty Ltd. The vendor's listing price and Agent's opinion as to selling price specified in that agreement is $1,200,000.00. A selling fee of 1.65% including GST is also specified. The agreement included a warning to the applicant about the risk of her paying two commission fees.
On 2 December 2022 the agent provided the applicant with a Vendor Marketing Report and Inspection Feedback. That report advised that there had been 37 inspections of the property by prospective purchases over the course of the marketing campaign, that the vendor asking price was now set at $1,200,000.00, that buyer feedback was in the range $1,100,000.00 to $1,100,000.00, that the agent recommended an advertised price of $1,150,000.00, and confirmed two verbal offers had been received (and rejected) both in the amount of $1,050,000.00.
The applicant contends that the 'offers' referred to in this report are fictitious. She claims that one was only an expression of low level interest which Ms Samrani did discuss with her, and that she has no knowledge of the other offer.
On 5 December 2022 a prospective buyer introduced to the property by McGrath Cronulla made an offer to purchase the property for $1,150,000.00 (the McGrath offer). The applicant's ability to accept that offer was dependent upon her obtaining bridging finance for the purchase of the Miranda property. After receiving this offer, the applicant made enquiries about bridging finance and the Miranda settlement to ascertain if it would be possible to accept the offer.
On 8 December 2022 the agency referred an offer it had received from a prospective purchaser to purchase the property for $1,150,000.00 subject to the applicant agreeing to a 5% deposit and settlement on 28 February 2022 (the agency). In her email referring the offer to the applicant and Mr Williams, Ms Samrani stated that the offer was above buyer feedback, and that the property market was about to 'shut down' ahead of Christmas. She also recommended that the applicant seek an extension on the settlement of the Miranda Property to enable her to accept the offer.
The applicant did not accept the agency offer instead instructing Ms Samrani to make a counteroffer at $1,200,000.00 or otherwise on several terms that it is not necessary to set out. That resulted in the prospective purchaser increasing his offer to $1,160,000.00. Ms Samrani recommended the applicant accept this offer. However, she did not do so.
Later on 8 December 2022 the applicant accepted the MsGrath offer and signed a Contract for the Sale of the property for $1,150,000.00 with a settlement date of 20 January 2023.
Between 19 December 2022 and 23 December 2022, the agency (Ms Samrani) sought advice from McGrath's Cronulla and the applicant's conveyancer (Blundell, Madigan Lawyers) that the applicant had entered into a Contract for the Sale of the property. There was no response to these inquiries. The applicant's and Mr William's Statements contain detailed explanations (or justifications) for why that was the case, but these are not material. The agency engaged Baybridge Lawyers to act for it in relation to the matter.
On 23 December 2022 Blundell Madigan Lawyers advised Baybridge Lawyers that the applicant had entered into Contract for Sale of the property and that McGrath Cronulla held the deposit from the sale in its Trust Account.
On 24 January 2023 the agency served a Statement of Claim on the applicant for its commission fee in the amount of $20,125.00 and marketing costs in the amount of $5,134.00.
The applicant did not apply to NCAT under s 36 of the PSA Act for a review of the commission and fees set out in the Statement of Claim within 28 days of it being served. The agency thus became entitled to file a Statement of Claim seeking payment of its commission and fees in the Local Court and did so on 26 April 2023. That proceeding was subsequently discontinued by consent of the parties on the basis that the applicant (here) would pay the agency's costs of the Local Court proceedings and institute these proceedings.

Contentions of the parties

The applicant contends that the Agency Agreement ought to be set aside because she was induced to enter into it by Ms Samrani's misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law. In this respect, she contends that Ms Samrani made two misleading and/or deceptive representations to her and Mr Williams in the pre-agreement period, which they relied on to their detriment, being: 1. a representation that the property would achieve a sale price between $1,450,000.00 and $1,550,000.00, and 2. her agency had the largest database of prospective buyers ready to purchase a property ideally like theirs.
With respect to representation (i) it is contended that this was not a "reasonable estimate" of the property's selling price for the purposes of s 72A(3) of the PSA Act as is demonstrated by the following: 1. on or about 5 November 2022, following an unsuccessful auction, the agent advised the applicant to publicise a price guide of $1,200,000 to secure greater interest, 2. on or about 16 November 2022, the Mr Williams met with Ms Samrani who verbally 'implored' him (and the applicant) to lower the price to $1,100,000.00 or $1,150,000.00, and 3. on or about 2 December 2022, the agent wrote to the applicant and sought to reduce the estimated selling price and advertise the property for sale at $1,150,000.00.
The agency denies any misleading or deceptive conduct in relation to the Agency Agreement. It contends that the representation made as to the size of its database, which it contends was that it was 'one of the largest in the Sutherland Shire' is true and has not been proved to be misleading or deceptive by the applicant. It contends that the estimated selling price for the property given before 20 September 2022 when the Agency Agreement was signed was reasonable at that time and was supported by objective evidence of its reasonableness. It contends that the period from 20 September 2022 was characterised by market volatility due to a succession of mortgage interest rate increases and the prospect of further increases, which was beyond its control. It also contends that its ability to achieve a higher sale price for the property was inhibited by the applicant's decision not to upgrade its presentation in accordance with Ms Samrani's recommendations.
The agency contends that in accordance with clause 5(1)(b) of its Agency Agreement with the applicant it is entitled to a commission fee of 1.75% of the sale price for the property plus GST in the amount of $20,125.00 because the property was sold during the exclusive period of agency. Additionally, it contends that it is entitled its unpaid marketing costs in the amount of $5,134.50 in accordance with clause 8 of the Agency Agreement.

Jurisdiction

There is no issue that the Tribunal has jurisdiction to hear and determine these proceedings as a consumer claim pursuant to s 36 of the PSA Act and Part 6A of the FT Act.

Applicable Law

Section 74(3) of the FT Act provides that the Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a … contravention of Chapter 2 of the Australian Consumer Law (ACL) if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit.
Chapter 2 of the ACL sets out certain consumer 'general protections', including, in s 18, the protection from misleading or deceptive conduct: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that its misleading or deceptive or is likely to mislead or deceive.
In Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [10], Gordon J (as she then was) summarised the principles to be applied in determining if conduct is capable of being misleading and deceptive for the purposes of s 52(1) of the former Trade Practices Act 1974. Those principles apply equally in relation to s 18 of the ACL: 1. A contravention is established by "conduct" which is misleading or deceptive or likely to mislead or deceive. The "conduct", in the circumstances, must lead, or be capable of leading, a person into error and the error or misconception must result from "conduct" of the corporation and not from other circumstances for which the corporation is not responsible. "Conduct" likely to mislead or deceive if there is a "real or not remote chance or possibility regardless of whether it is less or more than fifty per cent", 2. Section 52(1) is concerned with the effect or likely effect of the "conduct" upon the minds of that person or those persons in relation to whom the question of whether the "conduct" is or is likely to be misleading or deceptive falls to be tested. The test is objective and the Court must determine the question for itself. Section 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests. Moreover, it would be wrong to select particular words or acts which although misleading in isolation do not have that character when viewed in context, 3. "Conduct" can include making a statement which is misleading or deceptive or likely to mislead or deceive, 4. By making a statement of past or present fact, a corporation's state of mind is irrelevant unless the statement involved the state of the corporation's mind. Contravention of s 52(1) does not depend upon the corporation's intention or its belief concerning the accuracy of the statement of fact but upon whether the statement conveys a meaning which is false. A false meaning will be conveyed if what is stated concerning the past or present fact is inaccurate but also if, although literally true, the statement conveys a meaning which is false, 5. Precisely the same principles control the operation of s 52(1) to statements involving the state of mind of the maker when the statement was made (e.g. promises, predictions and opinions). A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or impliedly) that the maker of the statement had a particular state of mind when the statement was made, and, commonly that there was a basis for that state of mind, 6. A statement of opinion will not be misleading or deceptive or likely to mislead or deceive merely because it turns out to be incorrect, misinforms or is likely to do so. An incorrect opinion does not of itself establish that establish that the opinion was not held by the person who expressed it or that it lacked any or any adequate foundation. An expression of opinion which is identifiable as an expression of opinion conveys no more than the opinion is held and perhaps that there is a basis for the opinion. If that is so, an expression of opinion however erroneous misrepresents nothing. 7. However, an opinion may convey that there is a basis for it, that it is honestly held and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise. If the evidence shows that the opinion was not held or that it lacked any or adequate foundation, particularly if the opinion was expressed as an expert, a statement of opinion may contravene s 52.
Part 3 of the PSA Act contains the general rules for the conduct of licensees. Division 5 of that Part deals with representations and advertisements by licensees. In this respect s 52 provides: 52 Misrepresentation by licensee or registered person (1) A person (the "agent") who is exercising or performing any function as a licensee or registered person must not induce any other person to enter into any contract or arrangement by - (a) any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the agent or not), or (b) any failure to disclose a material fact of a kind prescribed by the regulation (whether intended or not) that the agent knows or ought to reasonably know. Maximum penalty - 200 penalty units (2) Without limiting the generality of subsection (1), a statement, representation or promise is taken to be false, misleading or deceptive if it is of such a nature that it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the statement, representation or promise indicates that the state of affairs does exist. (3) If is a sufficient defence to a prosecution for an offence under this section if the defendant proves that the defendant did not know, and had no reasonable cause to suspect, that the statement, representation or promise was false, misleading or deceptive.
Part 5 of the PSA Act regulates residential property sales. Division 3 of that Part regulates representations by a licensee as to selling price. In this respect s 72A relevantly provides: 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 of 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 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, (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.

Consideration

The agency has a straightforward claim in contract to a commission fee on the sale of the property and marketing costs pursuant to clauses 5 and 8 of the Agency Agreement. The agency's Agency Agreement and the agency agreements the applicant signed with McGrath Cronulla and Mattblack Property each contained the required statutory warning to the applicant that she may have to pay two commission fees if the property was sold by another agent during her period of exclusive agency with the agent. The applicant was at all times clearly on notice as to this risk.
There is no issue that the property was sold by another agent during the period of exclusive agency. There is no issue that the commission fee claimed by the agent has been calculated at 1.75% of the selling price for the property in accordance with clause 5 of the Agency Agreement.
The applicant contends that the Agency Agreement can and ought to be set aside because she was induced to sign it by Ms Samrani's misleading and deceptive conduct. There are several difficulties for the applicant in relation to this.
With respect to the database issue, there is some discrepancy between the parties as to what Ms Samrani represented but having regard to the written marketing submission Ms Samrani provided to the applicant and Mr Williams on 16 September 2022, I am satisfied that the representation was to the effect that the agency had 'one of the largest databases of active buyers in the Sutherland Shire ready to purchase a property ideally like yours'.
The applicant bears the onus of proving that this representation was misleading or deceptive. She has not proved that Ms Samrani has made a false claim about the size of her agency's database by reference to any objective material. Nor has she proved the size of the contact databases of other selling agents working in the Sutherland Shire or elsewhere so as to demonstrate that the stated size of the agency's database (more than 21,000 contacts) was not 'one of' the largest in the Sutherland Shire.
The only 'evidence' she offers in this regard is Mr William's claim that Ms Samrani admitted that this was false during a meeting he had with her on 16 November 2022. That conversation appears to have turned on whether Ms Samrani had access to the contact databases of other Ray White agents working in the Sutherland Shire. Given that the agent is a franchise that works in a competitive market, it would be curious if it did.
I am not satisfied that Ms Samrani ever represented to the applicant or Mr Williams that she had access to other Ray White contact databases. No reference to this appears in the marketing submission she sent to the applicant on 16 September 2022 and there is no other reference to this in any of the other written materials she provided to the applicant or in the written communications that passed between the parties. I am satisfied that Ms Samrani's representations as to the size of her database were limited to her own agency's database. She has submitted objective evidence of the size of her agency's database that establishes that it contains more than 21,751 'total contacts'. That is more than the representation as to its size she made to the applicant.
The representations contained in the words 'active buyers' and 'ready to purchase a property ideally like yours' are more specific than mere size. However, it falls to the applicant to prove those representations false. Her only 'evidence' of this is that the property did not immediately sell. That does not prove that the database did not contain active buyers interested in properties like hers or that the number active buyers was not 'one of' the largest in the Sutherland Shire. The property was inspected by 37 prospective buyers between 14 October 2022 and 2 December 2022. There is nothing in the evidence that would allow me to conclude that this was other than a significant level of interest. In any event these statements are properly construed as marketing puffery. Puffery does not constitute misleading and deceptive conduct: Sabre Corpo Pty Ltd v Laboratories Pharm-A-Care Pty Ltd (1995) IPR 445 at [453].
The applicant relies upon s 52 of the PSA Act in relation to this element of the claim. Section 52 is a civil penalty offence. NCAT has no role in its enforcement. The section may however be relevant to the extent that it incorporates an industry code that Ms Samrani is obliged to comply with as licensee. In this respect it is evidence of the relevant expertise upon which her opinion is to be based for the purposes of item vii in the Dukemaster summary of principles to be applied in determining if conduct is misleading or deceptive. But for the reasons stated above I am not satisfied that the representations made by Ms Samrani about the size of her agency's database were false, misleading, or deceptive.
With respect to the opinion Ms Samrani gave between 16 and 20 September 2022 as to the potential sale price for the property the applicant has not proved on her evidence that this estimate was misleading or deceptive. In compliance with s 72(5) of the PSA Act Ms Samrani provided the applicant and Mr Williams with objective evidence of the reasonableness of her estimate in the form of a list of comparative recent sales. The applicant now quibbles about the similarity of these properties to her property. But the basis of Ms Samrani's opinion was fully exposed to her before she signed the Agency Agreement, and she had the opportunity to scrutinize it. She could not be misled or deceived by Ms Samrani's representations as to potential selling price in these circumstances. She was free to accept or reject that opinion and the basis for it.
To the extent that the applicant relies otherwise on s 72A of the PSA Act, like s 52, it is a civil penalty offence, and the Tribunal has no role in its enforcement. It is evidence of the standard of expertise Ms Samrani was required to exhibit and is relevant in that sense. However, it is the applicant's own case that Ms Samrani 3 times revised her estimate of the sale price achievable for the property during the sales campaign in response to prospective purchaser feedback and changing market conditions. Section 72(4) was thus complied with in substance. No want of expertise in revising the estimated sale price is demonstrated.
The marketing submission Ms Samrani provided to the applicant and Mr Williams on 16 September 2022 expressly stated that 'real estate is not an exact science' and that her sale price opinion was based on 'current and comparable sales' (emphasis added). In subsequent communications Ms Samrani also made clear to the applicant and Mr Williams that her estimated sale price was contingent upon them taking action to rectify some building defects and styling the property. While some improvements were carried out, no professional styling was done, and not all recommended other work was completed. Additionally, the property was marketed in a volatile economic environment brought about by successive mortgage interest rate rises. This was an externality affecting the achievable sale price over which the agent had no control.
The applicant submitted that Ms Samrani could and should have predicted the interest rate rises that occurred after 16 September 2022 and factored these into her estimated selling price. How it is that Ms Samrani would know what the Reserve Bank would decide in relation to interest rate rises before it did itself is not explained. In relation to the successive interest rate rises that had occurred up to 16 to 20 September 2022 I am satisfied that these were implicitly taken into consideration by Ms Samrani because her estimate of sale price was based on very recent comparative sales, the evidence of which was provided to the applicant and Mr Williams. Those sales took place against the backdrop of those interest rate rises.
As is clear from the principles distilled in Dukemaster that a statement of opinion will not be misleading or deceptive merely because it turns out to be incorrect. While I accept that Ms Samrani is an expert in her field and that as a consequence, her opinion, if it was not honestly held, or lacked adequate foundation, is capable of constituting misleading or deceptive conduct for the purposes of s 18 of the ACL. However, it falls to the applicant to establish that this opinion was not genuinely held by Ms Samrani or that there was no adequate foundation for it at the time it was given. She has not done so for the reasons set out above.
For the foregoing reasons, the applicant has not established any misleading or deceptive conduct by the agent that would justify the Agency Agreement being set aside. Her claim must therefore be dismissed. The agent has established an entitlement in contract to its commission fee and marketing costs. It is entitled to an order that will require the applicant to pay these in the total sum of $25.259.50 immediately.

Costs

The agency applies for its costs of the proceedings. The applicant opposes a costs order being made
Section 60 of the NCAT contains the costs regime that is applicable in this case. It provides: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following - (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be award by the Tribunal, the Tribunal may - (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section - "costs" includes - (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal as well as the costs of or incidental to the application or appeal.
With respect to s 60(3)(f) the s 36(3) duty is expressed as follows: 36 Guiding principle to be applied to practice and procedure (1) The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. … (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle, and for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal - (a) a party to proceedings in the Tribunal. …
The term "special circumstances" is not defined in the NCAT Act. However, it has repeatedly been interpreted to mean 'circumstances that are out of the ordinary, but not necessarily those that are extraordinary or exceptional': Megerditchian v Kurmond Homes PL [2014] NSWCATAP 120 at [11]; CPD Holdings PL t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [24], [29]-[32]; Ingate v Andrews [2018] NSWCATAP 170 at [7]; Disapora Holdings Pty Ltd v Owners SP 686 [2019] NSWCATAP 250 (Disapora) at [17].
The discretion to award costs pursuant to s 60(2) must be exercised judicially and not capriciously having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [37]. It involves a two-step process. First, the Tribunal must determine if there are special circumstances that justify would justify an award of costs such that the discretion to award costs is enlivened. If the discretion is enlivened, second, the Tribunal must determine if that discretion should be exercised in favour of a costs order being made. The Tribunal retains discretion not to make a costs order even if special circumstances exist: Obeita v Australian College of Professionals PL [2014] NSWCATAP 38 at [81]; Brodyn Pty Ltd v Owners Corporation SP 73019 (No 2) [2016] NSWCATAP 224 at [23]-[26] (Brodyn); Alexander James Pty Ltd v Pozetu Pty Ltd (No, 2) [2016] NSWCATAP 75 at [14]; Disapora at [17].
Each case turns on its own facts: Kadsielski v Guca 1 Pty Ltd [2018] NSWCATAP 223 at [15]; Gizah Pty Limited v AXA Trustees Limited (No. 2) [2001] NSWADT 164 at [30]; Brunsprop Pty Ltd v Joanne Hay and Wes Davies [2015] NSWCATAP 152 at [27].
If the discretion to award costs is enlivened, in the exercise of the discretion the Tribunal is to have regard to the facts upon which the finding of special circumstances was based and the principles applicable to the awarding of costs generally. Those principles are: costs are compensatory; an unsuccessful party bears the costs of the successful party; whether by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; and, whether a costs order should be made to reflect the fact that only some aspects of the case should properly be characterised as out of the ordinary: Brodyn at [24]-[25].
The agency contends that the following special circumstances justify an award of costs in this case: 1. the applicant unnecessarily prolonged the time taken to complete the proceedings. In this respect it is contended that the applicant failed to respond to the Statement of Claim served on her by the agency, which required it to institute proceedings in the Local Court. Only then did the applicant file this proceeding. 2. it is contended that if the applicant had filed this claim after receiving the Statement of Claim, the agency would not have incurred additional costs, 3. the applicant has failed to substantiate her allegations of misleading and deceptive conduct by the agency. These claims added complexity to the proceedings which required the agency to obtain legal advice and representation. 4. the applicant always had minimal prospects of success given that this is a claim in contract. In this respect it is also said that the claim is lacking in substance, is misconceived, and has been drafted in an attempt to circumvent the applicant's contractual obligation to pay the commission fee and marketing owed to the agency. In this respect, citing as authority for the proposition AIN v Medical Council of New South Wales [2015] NSWCATAP 241, the agency contends that the subjective motives of the applicant may be considered in determining if there are special circumstances that justify an award of costs. 5. the applicant and Mr Williams acted dishonestly in December 22 by intentionally withholding information from the agency in relation to the sale of the property.
The applicant contends that no costs order should be made because she is not represented in the proceedings by a legal practitioner. She contends that leave ought not to have been granted to the agency to be legally represented. In this respect she contends that the usual rule that each party has the conduct of its own case ought to have applied, and that the usual rule that each party bears its own costs of the proceedings should apply in relation to costs.
The discretion to award costs pursuant to s 60(2) of the NCAT Act operates independently of the discretion to grant leave to a party to the proceedings to be represented by an Australian legal practitioner. The agency thus always faced the prospect that in instructing solicitors to act for it in the proceedings in would not be able to recover these costs from the applicant.
It may be accepted that the applicant's case was weak, that is to say, lacking in substance. In this respect it also relevant to consider that the applicant's misleading and deceptive conduct claim is, from the agency's perspective, a scandalous allegation which it felt bound to vigorously defend. I give this consideration some weight. However, it cannot be said that the claim is misconceived. In this respect it disclosed an arguable cause of action that was within the Tribunal's jurisdiction to determine. It could not be said to have no tenable basis in fact or law.
It may also be accepted that the applicant and Mr Williams acted foolishly in engaging other agents during the period of exclusive agency, and then acted deceptively by failing to be transparent with the agency about the sale of the property. It is not unreasonable for the agency to construe this proceeding as an attempt by the applicant to deflect onto it the consequences of this unfortunate behaviour. In this respect I give the applicant's subjective motives in conducting this litigation some weight. However, while not irrelevant to the discretion to award costs, the origins of a dispute are not determinative. The purpose of a costs order is not to punish or scold, it is compensatory.
The applicant's misleading and deceptive conduct claim added some minor complexity to the proceeding. Nevertheless, it did not prolong the time necessarily to determine the dispute.
The agency accepts that both parties have complied with their s 36 obligations to the Tribunal and the other party, and that neither party has disadvantaged the other in the conduct of their case before the Tribunal.
It was the applicant who sought to have this dispute resolved in NCAT after the agency instituted proceedings in the Local Court. In this way she prolonged the time taken to determine the dispute. However, as she has paid the agency's costs of the Local Court proceedings, it is not appropriate to give that factor any significant weight.
Weighing each of these considerations in the balance, I am satisfied that the usual rule as to costs should apply in this case. While there are some factors out of the ordinary that engage the s 60(2) discretion to award costs in the agency's favour these are not sufficiently compelling to displace the usual rule that each party bears its own costs. There will therefore be no order as to costs.

Orders

For the foregoing reasons I made the following orders: 1. Rhodri Williams is removed as a party to the application. 2. Lorinda Pace must pay Samrani Property Group Pty Ltd t/a Ray White Caringbah $25,259.50 immediately. 3. The application is otherwise dismissed. 4. No order as to costs.

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: 13 August 2024

Fair Trading Act 1979(NSW)

Property and Stock Agents Act 2000(NSW)

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Judgment (13 paragraphs)

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Legislation Cited (5)

Cases Cited (12)