Raymond and Rebecca Fraser v Aspect Marketing Pty Ltd atf ASAP Family Trust

APPLICANT'S EVIDENCE 5Both of the applicants provided statements along with Mathew Steinwede and Victoria Driscoll. Both Mr and Mrs Fraser gave evidence on oath and they were cross-examined by Mr Gilbert on behalf of the respondent. 6The applicants were the registered proprietors of a property at XXXX, Wamberal and in about October 2012 that property was not on the market but that Mr Gilbert showed some of clients his through the property, indicating that they were however interested in purchasing a property in Avoca. Mr Fraser noted :- "My wife and I got the impression that they were simply doing a price comparison. We were subsequently informed by Mr Gilbert that the purchasers were proceeding to buy the Avoca property". 7On 5 November 2012 the property at XXXX, Wamberal was listed for sale with McGrath Real Estate pursuant to an auction agreement. On or about 20 December 2012 Mr Adam Gilbert approached the applicants with an offer from his clients. At the time he was informed that the property was listed on an exclusive selling agency agreement with Matt Steinwede at McGrath Real Estates, Terrigal. In February 2013 McGrath Real Estate advised that they had a purchaser who had offered to purchase the property for $830,000.00 on the condition that settlement could be delayed for a period of 6 months. Mr Fraser and his wife were considering that offer when they were then approached by Mr Adam Gilbert who stated that he had a client who was prepared to pay $800,000.00 for the property but no more. Mr Fraser informed Mr Gilbert that they had an exclusive agency agreement with McGraths at Terrigal and that he should contact Mr Steinwede of McGrath's to enter into a conjunction sale with him if his clients were serious about purchasing the property. 8Mr Steinwede advised at that time that he was prepared to enter into a conjunction sale with Mr Gilbert and that he would endeavour to contact him for that purpose. 9On the morning of 26 February 2013 at about 11am Mr Gilbert arrived at the applicants' home with a contract for signature at a price of $820,000.00. Mr and Mrs Fraser claimed that Mr Gilbert applied considerable pressure suggesting that they did not have a better offer and that they should take his offer as the market was tight. Although they were still considering the offer from McGrath Real Estate, Mr Gilbert urged them to sign the contract and he then produced an agency agreement which was backdated to October 2012. 10Mr and Mrs Fraser expressed concern and suggested that they would need to obtain legal advice, however they claim that Mr Gilbert replied "this is normal practise under the circumstances and "I will work it out with Mr Steinwede." 11After he left the house with the documents duly executed Mr and Mrs Fraser discussed the matter further and at 11.24am on the same day they sent a text message to Mr Gilbert in the following terms; "Adam, I am not happy about the sale on Blue Bell. Don't exchange it, I thought we were signing on the new agency agreement. Please call back." 12On the same date at 1.27pm they sent an email to Mr Gilbert in the following terms; "We are completely uncomfortable with the sale of Blue Bell and how it was handled. We feel we were steamrolled into signing that contract. We have spoken with our solicitor who has informed us it is highly illegal to backdate agency agreements and that the agreement should be torn up immediately and the Department of Fair Trading should be notified of it. We would like time to consider the offer on Blue Bell and we may very well go with it but just want some time to discuss it. This morning's meeting has left us feeling very uncomfortable when it should have left us excited at the sales of our properties. Now we feel deceived and need to know that going forward all dealings will be transparent, legal and ethical for all of us" 13Mr Gilbert simply responded; "Let's catch up tomorrow and work this out." 14Mr and Mrs Fraser attempted to contact Mr Gilbert thereafter and when they finally spoke with him on the phone and requested him to return the contracts so legal advice could be obtained he simply replied that it was too late as he had exchanged the contract. A sales advice/invoice dated 26 February 2013 confirms that the contract was apparently exchanged on 26 February 2013 and suggests that the listing agent and selling agent was Adam Gilbert. On 5 March 2013 the applicant's solicitors, Ferrys, wrote to the solicitors for the purchaser noting that there was an issue regarding agents' commission and requesting that the deposit be paid into the office trust account pending resolution of that dispute. On the same day they wrote to the manager of Adam Gilbert Real Estate; "We are instructed by our clients that no agency agreement has been entered into between the vendors and yourself in accordance with s.55 of the Property, Stock and Business Agents Act 2002. Accordingly you are not entitled to claim commission in this matter. We have therefore requested the purchaser to pay the balance of the deposit into our Trust account whereupon we will hold the amount of commission claimed until a suitable resolution is reached. Please forward the 0.25% deposit in the sum of $2,050.00 to our office to be held by us in Trust pending that resolution. We note McGrath Terrigal holds the listing agreement in relation to the property. Jamie Woodcock of McGrath Terrigal is quite happy to discuss the commission matter with you and we suggest you contact him without further delay." 15Subsequent communications between the solicitor for the applicants, the solicitor for the purchaser and the solicitors acting for the respondent have been included in the evidence. Invoices for expenses associated with advertising and marketing of the property through McGrath of Terrigal have also been attached and it is noted that marketing expenses of $1,638.00 were claimed from Havenview Management Pty Ltd on 14 November 2012 and a further amount of $780.00 on 5 February 2013. McGrath Central Coast have submitted a tax invoice for commission in a sum of $22,550.00. 16A statement of Mathew Steinwede, Principal of McGrath Real Estate Terrigal, annexed a copy of the selling agency agreement dated 5 November 2012 which was signed by the applicants. It gives details of an advertising campaign which commenced on 23 November 2012. Mr Steinwede referred to attempts to discuss a conjunction sale agreement with Mr Gilbert after an initial unsuccessful offer was made on 20 December 2012. He referred to attempts to contact Mr Gilbert on 21 December 2012, 28 December 2012, 29 December 2012, 31 December 2012, 2 January 2013 and 27 March 2013. He claimed that he has never received a return phone call nor has any arrangement been made between Mr Gilbert at his office in relation to a conjunction sale of the property. Mr Steinwede claims he is entitled to the full commission on the sale as a result of the exclusive agency agreement signed by the applicants and having regard to the time and effort put into attempted sales of the property by his agency. 17A statement of Victoria Driscoll refers to her dealings with McGrath Real Estate and also annexes and email referring to a conversation with Mr Gilbert on 18 December 2012 when he sought a copy of the contract. She notes that he was advised to contact McGrath Real Estate and see what their attitude was.

RESPONDENT'S EVIDENCE 18Evidence provided by the respondent included a statement of Mr Adam Gilbert and a statutory declaration of Sandra Gilbert, together with correspondence between the parties and their solicitors, material referred to the Minister for Fair Trading, copies of agency agreements and copies of the contract for sale. There was an issue raised by Mr Gilbert in relation to what he described as the "actual front page of the contract for sale" provided by Priority lawyers and stamped by the Office of State Revenue and a copy of the front page of the contract of sale produced by the applicants. In general terms the difference between the two documents was the inclusion in handwriting of Adam Gilbert Real Estate as the vendor's agent. That information was not included in the copy of the contract produced by Mr and Mrs Fraser. An incomplete copy of a statutory declaration of the purchaser, Darren Stephan O'Connell sworn 13 November 2013 was produced and to the extent that it is legible it has been taken into account although the copy omits some of the parts of the paragraphs and accordingly it is difficult to attribute weight to that document. Mr Gilbert was cross-examined by the solicitor for the applicants and he indicated that he had been a licensed real estate agent since about 2007 and he was aware of the requirement that he have knowledge of the Act and Regulations. He agreed that he could not perform services for reward without an agency agreement and he conceded that the agency agreement executed by the applicants contained a cooling off period of 3 days which had not been waived. He agreed that the agency agreement was backdated to 18 October 2012 and accepted that there was no agreement in writing until 26 February 2013. Contracts were exchanged unconditionally on 26 February 2013 but he was unable to say whether the exchange took place before or after he had received communications from the applicants expressing concerns about the contract and the backdated agency agreement. He stated that the date of 18 October 2012 was the date that he took the ultimate purchasers through the property and agreed that the date was nominated by him but written into the agreement by Mr and Mrs Fraser. He claimed that he and the Frasers had been family friends for years. 19Mr Gilbert claimed that he was the effective cause of the sale of the property at 71 Blue Bell Drive, Wamberal and that he was accordingly entitled to his commission. He claimed that the applicants engaged him to sell a property at 109 Scenic Highway, Terrigal on 18 September 2012 and an agency agreement was signed by them on that date. 20He claimed that on 17 October 2012 there was a verbal agreement that if something were to come of the inspection of the property undertaken on or about 18 October 2012 that the parties would then execute an Agency Agreement. He conceded that the property was not on the market at the time and as a long-time friend of the family he simply took the ultimate purchaser on a "one off" inspection. He claimed the inspection took place on 20 October 2012 and no offer was made at the time. He conceded that the property at Blue Bell Drive was listed with McGrath Real Estate on 5 November 2012 although he claimed not to have known about that until later. 21Mr Gilbert suggested that the ultimate buyer expressed interest in making an offer in mid December 2012 and on 18 December 2012 he requested a copy of the contract from the applicants' solicitors. He claimed that no conjunction agreement existed at the time the contract was issued or at any other time and that none had been sought at any time by McGrath or by him. 22Mr Gilbert claimed that an initial offer was made by the ultimate purchaser for $800,000.00 on 20 December 2012 and that offer was rejected. Negotiations continued through to February and by 3 February 2013 Mr Gilbert assumed that the exclusive agency agreement with McGraths would have lapsed. 23Mr Gilbert refered to a transcript of phone records which he suggested would establish that the meeting with Mr and Mrs Fraser on 26 February took place earlier than 11am and that he confirmed the sales at approximately 10.48am and 10.50am. He noted that a text was received from Rebecca Fraser saying she was not happy with the sale of Blue Bell and that the contract should not be exchanged. 24Mr Gilbert referred to conversations which he claimed took place on 21 February 2013 wherein he suggested that Mr Fraser had agreed to sign an agency Agreement in respect of the Blue Bell Drive property if the purchaser was prepared to pay $820,000.00. It is noted that Mr Fraser referred to a conversation on 21 February 2013 and said that there was never any confirmation of the existence of the verbal agreement and that at all times the respondent was informed that the property was listed for sale on an exclusive selling agency group with McGrath Real Estate and that he would need to deal with them in relation to the sale. 25Mr Gilbert claimed that numerous attempts were made by the applicants to rescind the contract and to have him removed as vendor's agent between 26 February and 16 April 2013. The contract exchanged unconditionally on 12 March 2013 and ultimately settled on 16 April 2013. Correspondence between the solicitors for the applicants and Mr Gilbert and/or his solicitors has been annexed to the documents provided by the respondent and all of these documents have been reviewed and taken into account. 26The respondent, through Mr Gilbert submitted that it was entitled to the commission as it was the effective cause of sale of the property and that the provisions of s. 55 of the Act should not operate to defeat that entitlement. In the event that s. 55 is interpreted in a manner which prevented recovery of the commission then Mr Gilbert, on behalf of the respondent seeks relief under s. 55A.

DECISION 27The applicants' solicitors submit that the respondent is in breach of a number of sections of The Property, Stock and Business Agents Act 2002. It is claimed that if the breaches are established the respondent will be excluded from any rights to commission in respect of the sale of the property at XXXX, Wamberal. It is conceded that the respondent was the effective cause of sale of the property but it is claimed that at the time of effecting the sale (the performance of the services) the licensee of the respondent company did not have in place a valid selling agreement as required by s. 55 of The Act. It is submitted that the statement of Mr Gilbert clearly sets out the work done prior to 26 February 2013 and admits that the agency agreement was not signed until the date when the contract was executed. The sale had been negotiated, inspections had been carried out and the contract had been prepared prior to the signing of the agency agreement by the applicants. 28The applicants' solicitor points out that the only agency agreement relied upon by the respondent is a verbal agreement and such an agreement does not comply with the provisions of s.55 of the Act. 29The applicants' solicitor further submits that the respondent was aware of a sole agency agreement signed with McGrath Real Estate and that Mr Gilbert was specifically advised of such an agreement in an email from Victoria Driscoll on 18 December 2012. The respondent was, in that email, advised to contact McGrath Real Estate and resolve any issues concerning the commission. It is contended that the respondent did not deal with that issue but simply said he was not aware of it. At no stage prior to the signing and exchange of the contract did the respondent make any enquiry as to whether the sole agency agreement was still in place, notwithstanding that he was, it is claimed, aware of its existence. 30The applicants further submit that there was no valid agency between them and the respondent at the time when the contract was executed because the cooling off period under the agreement had not expired at the time when the contract was executed and thereafter exchanged and the applicants had attempted to exercise their rights pursuant to the cooling off clause on 26 February 2014 by sending a text message at 11.24am on that date. 31The respondent, through Mr Gilbert claims that the present application arises primarily from his refusal to comply with a demand by the applicant to breach trust accounting guidelines and allow monies to be transferred into the vendors' solicitors trust account pending determination of the commission dispute. He points out that the applicants did not seek a determination to have another agent receive benefits from the sale but they simply seek a determination to disentitle him from the selling fee exploiting the fact that the agency agreement was backdated to reflect a true and accurate record of events. He submits that, under contract law, it was entirely acceptable and common to have the agency agreement back dated as was pointed out in a letter written to the applicant by the respondents' solicitor David Zammit in June 2013. Mr Gilbert has requested that the Tribunal dismiss the application and further order that he be reimbursed for legal costs in a sum of $5,529.11. He has pointed out that, notwithstanding McGrath's knowledge of the proceedings, neither they nor any other party has sought to have a commission paid to them. He notes further that clause 33.1 of the contract provides a protection to the vendor by way of an indemnity from the purchaser which would cover any loss claimed by way of a second commission. 32Mr Gilbert claims that a verbal agreement has existed since 17 October 2012 which implied permission from the applicants to introduce the purchaser who inspected the property in question on 20 October 2012. This was followed by the provision of a contract for sale on 18 December 2012 and rejection of an offer on 20 December 2012. It is claimed that the verbal agreement was acknowledged on 25 January 2013 when, in an email written by the applicant, he proposed a commission deal for both the property at XXXX, Wamberal as well as the property at XXXX, Terrigal. Mr Gilbert submitted that the signing of an agreement was merely the formal memorialising of earlier events. 33Reference was made to attempt to resolve the matter at mediation and these references are not admissible as any discussions taking place in a mediation are clearly confidential by reason of the mediation agreement between the parties. 34It is common ground that the purchasers, Darren O'Connell and Rae Phillips were introduced to the property by Mr Gilbert who was a licenced Real Estate Agent trading with the respondent and there is little doubt that Mr Gilbert was the effective cause of the sale of the property at 71 Blue Bell Drive. 35It is also clear on the evidence that no written agency agreement came into existence until 26 February 2013 after the purchasers had been introduced to the property, a price had been negotiated and contracts had been prepared (and probably executed by the purchasers). 36The respondent does not appear to suggest that a written agreement was in place at the time when the services were provided by the agent because no submission has been made to the contrary and further Mr Gilbert clearly felt it necessary to suggest that the written agreement should be backdated to a time prior to the introduction of the purchasers to the property. The date nominated by Mr Gilbert was also a date which preceded the exclusive agency agreement executed in favour of McGrath Real Estate at Terrigal. 37Section 55 of the Property, Stock and Business Agents Act 2002 provides; 55 No entitlement to commission or expenses without agency agreement. (1) a licensee is not entitled to any commission or expenses from a person for, or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless; (a) the services were performed pursuant to an agreement in writing (an agency agreement) signed by or on behalf of; (i) the person and (ii) the licensee and (b) the agency agreement complies with any applicable requirements of the regulations and (c) a copy of the agency agreement signed by or on behalf of the licensee was served by the licensee on that person within 48 hours after the agreement was signed by or on behalf of the person. (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. (3) without limiting the means by which a copy of the agency agreement may be served on a person, it may be served by means of facsimile transmission or by such other means as the regulations may allow. (4) a court or tribunal before which proceedings are taken by a licensee for the recovery of commission or expenses from a person, or before which a licensee is respondent to a consumer claim relating to commission or expenses (as referred to in s.36), may order that the commission or expenses concerned are wholly or partly recoverable despite 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. (5) a court or tribunal is not to make such an order unless satisfied that; (a) the failure to serve a copy of the agreement within the required time was occasioned by inadvertence or some other cause beyond the control of the licensee, and (b) the commission or expenses that will be recoverable if the order is made are in all the circumstances fair and reasonable and, (c) failure to make the order would be unjust 38Section 36 of the Property, Stock and Business Agents Act 2002 enables a person who is served with a statement of claim under the section or an itemised account of the transaction as provided by this section to apply to the Tribunal for determination of a consumer claim within the meaning of the Consumer Claims Act in relation to; (a) the entitlement of a licensee to the whole or any part of an amount specified in the statement paid or itemised account or; (b) whether the whole or any part of the amount is reasonable or both. 39In 2013 s. 55A was introduced into the Property, Stock and Business Agents Act 2002 in the following terms; 55A Relief from disentitlement to commission and expenses (1) a court or tribunal before which relevant proceedings are taken may order that commission or expenses are wholly or partly recoverable by a licensee who would otherwise not be entitled to the commission or expenses (under s.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. 40 Regulation 13 of the Property, Stock and Business Agents Regulation 2003 prescribes the contents of agency agreements and schedule 7 to the regulations applies to all agency agreements whilst schedule 8 applies to an agency agreement under which the agent will act for a seller on the sale of residential property. It is clear that at the relevant time namely prior to 26 February 2013 there was no agency agreement complying with the requirements of the regulations as the respondent simply relies on the oral agreement to execute a written agreement at some future time. Whilst the applicants dispute this claim I am satisfied that in either event there was no agreement which complied with the requirements of the regulations at the relevant time. 41 Section 55A(3) provides; 55A(3) a court or tribunal is not to make such an order in circumstances of a failure of the agency agreement to comply with the requirements of the regulations unless satisfied that; (a) the failure is a minor failure and (b) no loss has been suffered as a result of the failure by the person for whom or on whose behalf the services concerned were performed and (c) failure to make the order would be unjust 42 In Pratt v Arwin Realty Business and Finance Brokers [2011] NSWCTTT 455 Member Lynch dealt with a claim where an agency agreement was backdated prior to being signed by one of two parties. She noted in that case that there was no written agreement as required by s.55(1)(a) and she referred to an earlier decision of the Tribunal in Apps v G A Fletcher Enterprises [2005] NSWCTTT 141 where the Tribunal held that there was no signed agency agreement and consequently no commission was payable. 43 The member also referred to a decision of the Supreme Court in Terry Pfeiffer v Connors [2000] NSWSC 452 where failure to comply with the requirements of service entitled the principal to a refund of commission from the agent and a decision of Justice Barrett in Investmentsource v Knox [2002] NSWSC 710 where he referred to the public aspect of the section and the fact that "these are protective provisions intended to safeguard clients by imposing certain standards of conduct on licensees". 44 In Gregson v Ray White Epping (General) [2013] NSWCTTT 258 Senior Member Bordon considered the provisions of s. 55(1)(b) and he observed; "31 the provision is indeed draconian. However on my reading of the provision there is no discretion for a tribunal to nevertheless order payment of expenses and commission if the agency agreement does not comply with any applicable provision in the regulations (see Kukulovski v Georges [2011] NSWSC 359 and Terry Pfeiffer Real Estate v Connors (supre). He made orders in that case that the applicants were relieved from paying commission and marketing costs." 45 In Cantwell v Beitzel anors [2014] NSWSC 242 Justice Bellew considered an appeal from the decision of a magistrate in relation to s.55(1) and his honour observed; "61 that then leaves the question of the meaning of the term "not entitled" as it appears s.55(1). In my view the term "not entitled" means having in law no right or title (see Sutton v Zullo Enterprises Pty Ltd [2000] 2Qdr196@204 per McPherson JA). In the context of the present case that means that the plaintiff has no right or title to the monies he has retained. In those circumstances the defendants are entitled to recovery of the monies paid to the plaintiff by way of remuneration pursuant to management agreements." 46 Subject to a consideration of the provisions of s.55A of the Act the operation of s.55 of the Property, Stock and Business Agents Act may well be determinative of the applicants claim that the respondent is not entitled to expenses and commission because there was no agency agreement which complied with the regulations. 47 In order for the respondent to bring itself within the relevant part of s.55A it is necessary for the Tribunal to be satisfied; (a) that the failure to comply with the requirement of the regulations was minor and (b) that no loss was suffered as a result of the failure by the applicants or persons for whom the services were rendered and performed and (c) that failure to make an order under s.55A would be unjust 48 I am satisfied on the evidence that Mr Gilbert, on behalf of the respondent, was or ought to have been aware of the exclusive agency agreement from at least December 2012. There is no evidence that he knew of the date when that agreement commenced or of the date when it would have expired. He clearly sought to procure a written agency agreement in purported compliance with s.55 of the Act when he knew or ought to have known that such agreement may have been in breach of s.58 of the Act. He further requested a backdating of the agreement to a date prior to the time when services were first provided and again he appears, on the evidence, to have done this knowing that his actions constituted a breach of the requirement of the Act and Regulations. In the circumstances I am not satisfied that the failure is minor. 49 McGrath Real Estate has submitted an invoice for agents commission and other expenses to the applicants. I am satisfied on the evidence available that the respondent through Mr Gilbert was aware that there may have been a need for a conjunction sale yet he clearly took no steps to properly address that difficulty notwithstanding that in reply to an email forwarded to him on 26 February 2013 he said he would "take care of it" and I am accordingly not satisfied that no loss would be suffered as a result of the failure to comply with the requirements of the regulations. 50 On the whole of the evidence I am satisfied that Mr Gilbert exchanged contracts at a point in time when the agency agreement, (even if it had been valid) was capable of being rescinded under the cooling off period. I am further satisfied that he exchanged contracts when he knew, or ought to have known, that the applicants had in writing requested him to refrain from undertaking any exchange until they had an opportunity to get legal advice concerning the backdated agency agreement and difficulties which may arise from two claims for commission. I am not satisfied that the terms of the contract and the indemnity from the purchaser would operate to overcome this problem, although it has been conceded that the respondent, through Mr Gilbert was the effective cause of the sale. I am not satisfied that a failure to make the order awarding compensation would be unjust in the circumstances. In order to grant relief it is necessary for the Tribunal to be satisfied that each of the requirements of sections (a), (b) and (c) have been made out but I am not satisfied on the evidence that any of them have been made out and accordingly relief under s.55A is not available. 51 It is unnecessary to further consider the provisions of s.58 of the Act which precludes a licensee from entering into an agency agreement with a person in respect of a sale of a residential property where a licensee knows or has reasonable cause to suspect that the person had entered into a sole agency agreement or an exclusive agency agreement with another licensee for provision of those services. It is also unnecessary to further consider the provisions of s.60 of the Property, Stock and Business Agents Act which relates to the rescission of an agency agreement during the cooling off period. Although it is clear that the respondent exchanged contracts during the cooling off period and before the applicants had an opportunity to rescind the agency agreement there is no evidence that they in fact did so in accordance with the requirements of subsections (2) and (3) of s.60. 52 Both parties have made an application for costs and in relation to the application made by the applicants I note that Mr Ferry has conceded that the Tribunal is not in a position to order costs automatically following a decision in favour of the applicants. The circumstances of the present case do not suggest that the issues raised by the respondent were devoid of any merit and I am not satisfied, having regard to the submissions of both parties that I should make an order for costs in favour of the applicants. The respondent has been unsuccessful and I am not satisfied that the respondent should obtain costs in any event. It is appropriate to therefore order that each party pay for their own costs. J Ringrose General Member Civil and Administrative Tribunal 17 June 2014

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: 21 August 2014