Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd

Legislative framework

1. It is necessary to set out the legislative framework of the Act and the Regulations in force at the relevant time in some detail. (The Regulations have since been replaced by the Property, Stock and Business Agents Regulation 2014 (NSW)).
2. Section 55 of the Act relevantly provided: "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. Sch 1, cl 19 of the Regulations stated: "19 Agency agreements must comply with regulations An agent must not enter into an agency agreement unless the agreement complies with any applicable requirements of this Regulation, as required by section 55 of the Act."
4. Regulation 13(1) provided that, for the purposes of s 55 of the Act, an agency agreement must comply with the requirements in Sch 7-14 of the Regulations.
5. Sch 8 of the Regulations set out the terms which applied to an agency agreement under which the agent would act for the seller on the sale of residential property. Relevantly, cll 4, 5 and 7 of Sch 8 provided: "4. Price at which property is to be offered If the agreement provides for the property to be offered for sale by private treaty, the agreement must specify the price at which the property is to be offered. 5. Providing principal with consumer guide The agreement must include a provision that states whether or not the agent provided the principal with a copy of the approved guide entitled "Agency Agreements for the Sale of Residential Property" (being the approved guide mentioned in section 56 of the Act) before the agreement was entered into and (if the guide was provided) specifies the date it was provided. … 7. A sales inspection report to form part of the agreement The agreement must include a copy of any sales inspection report prepared by the agent and given to the principal under clause 2 of Schedule 2."
6. Cl 7 of Sch 8 referred to "clause 2 of Schedule 2" of the Regulations, which provided: "2 Sales inspection report required for property On completion of the inspection required by clause 1, an agent must prepare and give to the principal a sales inspection report for the property. The report must specify the following be signed by the agent…"
7. Cl 2 of Sch 2 specified 11 items that must be included in the sales inspection report including the agent's recommendation as to the most suitable method of sale of the property (para (g)) and the agent's estimate of the selling price for the property (para (h)).
8. Cl 2 of Sch 2 prescribed rules of conduct to be observed in the carrying on of a business under a licence issued under the Act. A breach of those rules of conduct was addressed in s 37 of the Act which provided: "37 Rules of conduct for licensee's business (1) The regulations may prescribe rules of conduct to be observed in the course of the carrying on of business or the exercise of functions under a licence or certificate of registration. (2) A licensee or registered person who without reasonable excuse contravenes a rule of conduct prescribed for the purposes of this section is guilty of an offence. Maximum penalty: (a) 100 penalty units in the case of a corporation, or (b) 50 penalty units in any other case."
9. Sch 8, cl 5 refers to s 56 of the Act. Section 56 provided: "56 Approved guide to be provided before agency agreement for residential property signed (1) A real estate agent must not enter into an agency agreement with a person for the sale of residential property unless the agent has provided the person with a copy of the approved guide not more than 1 month before the agreement is signed by or on behalf of the person. Maximum penalty: 40 penalty units (2) In this section: approved guide means a guide with respect to the sale of residential property approved by the Director-General from time to time for the purposes of this section. (3) A contravention of this section does not affect the validity of the agency agreement."
10. After the First Agreement and before the Second Agreement, the Act was amended to include s 55A, which stated: "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 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. … (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."

Additional relevant provisions of the Agreements

1. In addition to the description of the Agreements already provided the following provisions are relevant on this appeal. As highlighted earlier, each Agreement was relevantly in the same terms.
2. Recital E of the Agreements provided: "The Owner acknowledges: (i) receipt from the Agent a copy of the approved guide entitled Agency Agreements for the sale of residential property not more than one month before the signing of this Agreement (February 2010 FTR 32) in compliance with s.56 of the Act; (ii) any requirements under the Regulation forming part of the sales inspection report which are not incorporated into this Agreement is waived by the Owner."
3. Cl 4.4(g) stated: "4.4 The Owner warrants that the Owner … (g) will not unreasonably refuse for any reason to exchange contracts with any Purchaser referred or introduced by the Agent during the currency of this Agreement of any Unit, provided that the Sale Price is equal to or not less than the MUP of the Unit concerned provided the completion date is not more than one (1) month after the day the Owner notifies the purchaser the strata plan for the Development which has been registered, and the deposit is paid in accordance with clause 4.4(h) and (i);"
4. Cl 5.2 provided: "5.2 The Agent has full and final discretion on the promotion, negotiation and marketing of the Units, subject to the terms of this Agreement."

Primary judgment

1. The appellant's case below was that, despite the successful sale of all of the units in the Development, it was not obliged to pay any commission to the respondent because: 1. the Agreements did not comply with the requirements of s 55 of the Act and the relevant Regulations; and 2. the respondent misled it with respect to the fair market value for two bedroom units in the Development during the negotiations for the Second Agreement.
2. The primary judge was satisfied that the Agreements complied with the requirements of s 55 of the Act. The primary judge dismissed the appellant's claim for declaratory relief and other relief.
3. With respect to Sch 8, cl 4 his Honour found it had no application as the Agreements did not provide for the sale of the units by private treaty because the appellant was entitled to determine the method of sale.
4. The primary judge was satisfied that Recital E of each of the Agreements was sufficient compliance with the requirement of the agent to provide the principal with a copy of the approved guide under Sch 8, cl 5. Recital E relevantly acknowledged that the respondent had received the guide "not more than one month before the signing of this Agreement".
5. The primary judge found that Sch 8, cl 7 did not require the agent to prepare a sales inspections report. His Honour found that so much was made clear by the requirement in Sch 8, cl 7, that the agency agreement contain a copy of "any" report prepared under Sch 2, cl 2 of the Regulations. The primary judge concluded that the word "any" contemplated the possibility that no such report existed.
6. The primary judge rejected the appellant's alternative submission that the respondent was estopped from relying on the Act and the Regulations.

Issues on appeal

1. The issues on appeal were as follows: 1. whether the Agreements failed to comply with cll 4, 5 and 7 of Sch 8 of the Regulations, the effect of which would disentitle the respondent from recovering commission under s 55(1) of the Act (ground 1); 2. whether the primary judge erred in finding that in the event that the Second Agreement failed to comply with any applicable requirements of the Regulations, the respondent was nevertheless entitled to relief pursuant to s 55A of the Act, namely an order that the respondent was entitled to the commission claimed under the Second Agreement (ground 2); and 3. whether the primary judge erred in finding that the respondent was entitled to damages for breach of the Second Agreement (ground 3).
2. The appellant made clear in its written submissions that ground 4 in its notice of appeal was no longer pressed.

Notice of contention

1. By notice of contention dated 6 July 2017, the respondent relied on a sole ground of contention, namely that the primary judge erred in failing to find that the appellant was estopped from relying on any failure by the respondent to comply with s 55(1)(b) of the Act to deny the respondent's claim for commission under the First Agreement by: 1. its representations that it would not rely on any such failure; and 2. the respondent's detrimental reliance on those representations by entering into the First Agreement and arranging for the sale of the 16 units the subject of the First Agreement between February - October 2014.

Principles of construction

1. The relevant principles of construction were not controversial on the appeal. The meaning of words and phrases is influenced by the immediate context in which they are used. The meaning of the whole may be different to the sum of the meaning of the parts: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36 at 396-397 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) citing Lord Hoffmann in R v Brown [1996] 1 AC 543 at 561.
2. The modern approach to statutory interpretation uses "context" in its widest sense "to include such things as the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy": CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2 at 408 (per Brennan CJ, Dawson, Toohey and Gummow JJ).
3. Those "legitimate means" include any material that may be considered in the interpretation of a provision of an Act, or a statutory rule made under the Act, including all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer: Interpretation Act 1987 (NSW), s 34(2)(a). A construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object: Interpretation Act, s 33.
4. In Taylor v The Owners - Strata Plan No.11564 (2014) 253 CLR 531; [2014] HCA 9 French CJ, Crennan and Bell JJ said at [39]: "[39]……the task remains the construction of the words the legislature has enacted. In this respect it may not be sufficient that 'the modified construction is reasonably open having regard to the statutory scheme' because any modified meaning must be consistent with the language in fact used by the legislature. Lord Diplock never suggested otherwise. Sometimes, as McHugh J observed in Newcastle City Council v GIO General Ltd, the language of a provision will not admit of a remedial construction. Relevant for present purposes was his Honour's further observation, "[i]f the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances." [citations omitted]
5. At [65]-[66] in the same case Gageler and Keane JJ said: "[65] Statutory construction involves attribution of legal meaning to statutory text, read in context. 'Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning ... but not always.' Context sometimes favours an ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words. Implicit words are sometimes words of limitation. They are sometimes words of extension. But they are always words of explanation. The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair. [66] Context more often reveals statutory text to be capable of a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural. The choice between alternative meanings then turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies. The construction of s 12(2) adopted by the majority in the Court of Appeal coheres with the statutory object of subjecting an award of damages of the kind identified in par (c) of s 12(1) to the rule set out in s 12(2). But it is a very strained construction." [citations omitted]
6. In SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 275; [2017] HCA 34 Keane, Nettle and Gordon JJ said at [14]: "[14] The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected." [citations omitted]
7. In the present case, the Act and the Regulations form part of a legislative scheme and the terms of the Regulations can be taken into account in interpreting the Act, although not of course to expand the scope of the regulation making power: Empire Waste Pty Ltd v District Court of New South Wales (2013) 86 NSWLR 142; [2013] NSWCA 394 at [70] per Bathurst CJ (with whom Beazley P and Hoeben JA agreed).

Ground 1 - agency agreement requirements under Sch 8, cll 4, 5 and 7

1. It will be recalled that s 55 of the Act provides that a licensee is not entitled to commission unless the services were performed pursuant to a written agreement signed by or on behalf of the person and the licensee and the agency agreement complies with any applicable regulations. Regulation 13(1) provided that, for the purposes of s 55 of the Act, an agency agreement must comply with the requirements of Schs 7 to 14.
2. The clauses central to the debate in this case are Sch 8, cll 4, 5 and 7, the terms of which are set out above at [20].
3. The appellant submitted that on the correct construction of Sch 8, cll 4, 5 and 7, both Agreements failed to comply with the Regulations and in such circumstances, under s 55(1)(b) of the Act, the respondent was not entitled to any commission from the appellant for or in connection with the services performed by the respondent pursuant to the Agreements (subject only to the potential availability of relief under s 55A in relation to the Second Agreement).
4. I will address each of the relevant cll of Sch 8 separately, in the order those clauses were addressed by the primary judge.

Sch 8, cl 4 - failing to specify the price at which each unit would be offered

1. The appellant submitted that the primary judge erroneously adopted too narrow a meaning of the term "provides for" in Sch 8, cl 4, namely ascribing meaning to that term equivalent to "specifies" or "stipulates". The appellant submitted the natural meaning of the words is broader when used to describe whether or not a particular act is permissible or required by a contract.
2. The appellant submitted that pursuant to cl 5.2, each Agreement "provides for" a unit to be sold by private treaty since it confers on the respondent the discretion to select the method of sale. Clause 5.2 relevantly provided that the respondent had "full and final discretion on the promotion, negotiation and marketing of the units". It was submitted that private treaty comprises one of the two primary methods of sale of real property and such method is effected by "negotiation" between the vendor and purchaser.
3. The appellant's criticism of the construction preferred by the primary judge should be rejected. The primary judge was correct in finding that cll 4.4(g) and 5.2 of each Agreement entitled the respondent to determine the method of sale. The construction of "specifies that" or "stipulates that" is the ordinary meaning of the term "provides for".
4. In the present case, the Agreements did not provide for any particular method of sale. Instead, they provided in cl 5.2 that the respondent had "full and final discretion on the promotion, negotiation and marketing of the Units". Moreover, under cl 4.4(g), the appellant warranted that it "will not unreasonably refuse for any reason to exchange contracts with any Purchaser referred or introduced by the Agent during the currency of this Agreement of any Unit, provided that the Sale Price is equal to or not less than the MUP of the Unit concerned". It is plain from these provisions that the respondent was entitled to determine the method of sale under the Agreements.
5. I agree with the primary judge that, read in context, had the legislative purpose been to trigger the Sch 8, cl 4 obligation in every agreement which permitted sale by private treaty then a more natural qualifying expression would have been used.
6. In context, Sch 8, cl 4 operates only when the agreement specifies or stipulates a sale by private treaty. That is because the obligation imposed by Sch 8, cl 4 is to specify the price at which the property is to be offered by private treaty. Here, each Agreement left the agent with the full discretion on the mode of sale of the units and the price. That mode of sale includes a public auction, where even the reserve price is unlikely to be identified until after a marketing campaign. A requirement for specification of the price determined at the time of each Agreement is inconsistent with that provision.
7. Nothing in the relevant context, including the Act and the Regulations inhibited the parties agreeing as they did here. In context, the Agreement did not "provide for" the property to be offered for sale by private treaty.
8. I would reject this aspect of ground 1 of the notice of appeal.

Sch 8, cl 5 - failing to specify the date upon which the principal was provided with a consumer guide

1. The appellant submitted that the primary judge erred in: 1. granting leave to the respondent to file an Amended Commercial List Response. The primary judge granted leave to the respondent to withdraw an admission that the Agreements failed to comply with this clause - his Honour found that admission concerned a point of law turning on the construction of an agreement and the construction of the Act and the Regulations ; and 2. rejecting the appellant's contention that each Agreement failed to comply with Sch 8, cl 5 by finding that Recital E of each Agreement constituted "sufficient compliance" with the relevant clause.
2. The appellant submitted that Sch 8, cl 5 required each Agreement to specify the date on which a copy of the approved guide was provided to the principal. Although Recital E makes clear the approved guide was provided, it was submitted that it did not "specify" the date it was provided. The appellant submitted that the ordinary and natural meaning of "specify" is to "mention, speak of, or name something definitely or explicitly; to set down or state categorically or particularly".
3. With respect to the grant of leave to withdraw the admission, that question was one of law only and no prejudice was identified by the appellant. Senior counsel for the appellant below ultimately acknowledged that the primary judge's observation about the absence of prejudice was correct . The appellant has not identified any basis for this Court to interfere with a discretionary procedural ruling of the primary judge.
4. As to the substantive issue, the primary judge was correct to conclude that the appellant's acknowledgement in Recital E that receipt of the guide occurred and was "not more than one month before the signing of this Agreement" satisfied the requirement in Sch 8, cl 5.
5. The clear purpose of the requirement in cl 5 is that the agency agreement state whether or not the agent has provided the principal with a copy of the approved guide. That requirement makes explicit the obligation upon the agent to draw to the principal's attention the requirement under s 56 of the Act that the principal be given a copy of the approved guide. Recital E in these contracts achieved that purpose.
6. Contextual support for the primary judge's construction is provided by s 56 of the Act, which specifically contemplates the possibility that the approved guide may not be provided in accordance with that section. Unlike many of the other requirements in the Act and the Regulations for inclusion in the agency agreement, s 56 provides that a contravention of the section does not affect the validity of the agency agreement.
7. Cl 5 requires the agreement to specify the date that the approved guide was provided. The only purpose that requirement could have is to focus the parties' attention on the question whether the approved guide was given within the period specified in s 56. A clear statement by the appellant that the guide was given to it within 28 days of the contract being signed, which is the period specified in s 56, is adequate specification of the date for the purposes of cl 5.
8. It was not intended that cl 5 would only be satisfied by the specification of a precise date. The purpose of the requirement is derived from s 56 of the Act which itself uses language of "not more than one month before" the agency agreement was signed.
9. In context, the requirements of Sch 8 cl 5 are satisfied by Recital E which stated that the agent had provided the principal with a copy of the approved guide entitled "Agency Agreements for the Sale of Residential Property" before the agreement was entered into and "not more than one month before signing of this Agreement". In its relevant context, particularly the source requirement in s 56 of the Act, that was sufficient to specify the date the guide was provided within the meaning of Sch 8, cl 5 of the Regulations.
10. I would reject this aspect of ground 1 of the notice of appeal.

Sch 8, cl 7 - failing to include a copy of any sales inspection report

1. The appellant submitted that the primary judge erred in his construction of Sch 8, cl 7 for essentially four reasons: 1. first, the natural and ordinary meaning of the words "must include" illustrate that the provision was intended to require an agency agreement to include a copy of a sales inspection report in every case. It was the legislature's intention that an agency agreement will fail to comply with the Regulations if, for whatever reason, there is an absence of a sales inspection report; 2. secondly, read in context, Sch 8, cl 7 should not be read as contemplating that an agent will not prepare a sales inspection report. Consideration should be given to the mandatory nature of other requirements in the Regulations, namely, cll 1 and 2 of Sch 2. Such rules are rules of conduct applicable to real estate agents. Moreover, Sch 1, cl 19 provides that an agent must not enter into an agency agreement unless the agreement complies with any applicable requirements of the Regulations; 3. thirdly, the primary judge's construction of the relevant clause leads to absurd and capricious results and should not be preferred in circumstances where other constructions are open. The appellant submitted that a delinquent agent who either does not or fails to prepare a sales inspection report in breach of Sch 2, cl 2 but not Sch 8 cl 7 would remain entitled to commission under s 55 of the Act. A diligent agent who prepares a sales inspection report in accordance with Sch 2, cl 2 of the Regulations, but through inadvertence fails to include a copy of the report in the agency agreement, would be disentitled by s 55 of the Act. The appellant submitted that this Court should not adopt such an interpretation of the scheme that produces this outcome; 4. fourthly, the primary judge's construction of the clause has the effect of depriving consumers of the protection intended to be conferred by the provision, namely, being deprived of information required to be provided to the principal prior to entering into an agency agreement.
2. The starting point in identifying the correct construction of Sch 8, cl 7 is the words used in the clause, in their context. Sch 8 identifies one of the mandatory requirements of the agency agreement the subject of section 55 of the Act. Sch 8 provides that the agreement must include a copy of any sales inspection report prepared by the agent and given to the principal under clause 2 of Schedule 2.
3. In ordinary speech, the word "any" will usually contemplate the possibility that there may be nothing meeting the description of the object of the clause, in this case a sales inspection report ….given to the principal under clause 2 of Schedule 2. That conclusion about the meaning of "any" was drawn by Leeming JA (with whom McColl JA and I agreed) in Fitness First Australia Pty Ltd v Fenshaw Pty Ltd (2016) 92 NSWLR 128; [2016] NSWCA 207 at [45] in a quite different context. The primary judge concluded that this was the correct construction of "any" in Sch 8, cl 7 for essentially two reasons at [104]-[105]: 1. cl 7 itself does not require the agent to prepare a sales inspection report. That requirement is imposed by Sch 2, cl 2; and the consequences of non-compliance with that clause are set out in s 37 of the Act - that is, a maximum penalty of the amounts specified in s 37(2). The requirement in Sch 8, cl 7 that the agency agreement contain a copy of "any" report prepared under Sch 2, cl 2 contemplates the possibility that there is no such report. The clause does not require a report to be attached which does not exist; 2. in the present case, the respondent did not prepare a sales inspection report. Consequently, it did not fail to comply with Sch 8, cl 7. It may have failed to comply with Sch 2, cl 2, but that is not relevant for the purposes of s 55 of the Act.
4. Although the construction preferred by the primary judge is open on the language used, I have come to the view that, in context, it is not correct. In context, the use of the word "any" in Sch 8, cl 7 does not demonstrate a contemplation by the legislature that there may be no sales inspection report ….given to the principal under clause 2 of Sch 2.
5. This is a case where the relevant context reveals the statutory text to be capable of a range of potential meanings, some of which may be less immediately obvious or more awkward than others. As Justices Gageler and Keane have pointed out, the choice between alternative meanings involves an evaluation of the relative coherence of the alternatives with identified statutory objects or policies (see paragraph [43] above).
6. The identified statutory objects or policies here seem relatively clear. In introducing the Bill which became the Act on 9 May 2002, the then Minister for Fair Trading, Mr Acquilina, in his second reading speech described the Bill as "an important piece of consumer protection legislation". In context, the sales inspection report ….given to the principal under clause 2 of Schedule 2, is at the heart of the consumer protection aspect of the regulatory regime established by the Act and the Regulations.
7. A failure to give a sales inspection report to the principal under cl 2 of Sch 2 is a breach of s 37, which has its own penalty regime. A breach of cl 2 of Sch 2 may also have serious disciplinary consequences for an agent, including licensing consequences: ss 191 and 192 of the Act. In short, the mandatory requirement for a sales inspection report in all cases tends strongly in favour of the conclusion that the legislature did not contemplate the possibility that an agent could properly fail to give a sales inspection report to his or her principal under cl 2 of Sch 2.
8. The coherence of the alternatives with identified statutory objects or policies is here satisfied by a meaning of "any" which means "a" report or "the" report but includes as many reports as exist if there are more than one. This conclusion is underlined by the requirement in Sch 8 cl 7 that the agency agreement must include any sales inspection report. It is also underlined by Regulation 13 which specifically provided: "13 Contents of agency agreements (1) For the purposes of section 55 of the Act, an agency agreement must comply with the requirements of Schedules 7-14 as to the terms, conditions and other provisions that an agency agreement must or must not contain…"
9. I readily accept that the primary judge was correct to observe that s 55 refers to an identified series of the Regulations, breach of which will lead to the consequences for which s 55 provides and which may also lead separately to serious disciplinary consequences for an agent. To this may be added the observation that the consequences of a failure by an agent to comply with Sch 1, cl 2 (requiring an agent to comply with fiduciary obligations arising as an agent), cl 3 (requiring an agent to act honestly, fairly and professionally with all parties in a transaction and not to mislead or deceive any parties in negotiations or a transaction), cl 6 (requiring an agent to act in the client's best interest at all times), cl 11 (requiring an agent not to accept an appointment to act where the agent would have a conflict), cl 19 (requiring an agent not to enter into an agreement that conflicts with the Act or the Regulations), and Sch 2, cl 2 (requiring an agent to provide a sales inspection report containing the matters set out in that clause) are each dealt with elsewhere in the Act, and not in s 55.
10. The question here, however, is what Sch 8, cl 7 requires. Sch 8, cl 7 does not, in terms, identify what must be included in the agency agreement. It does however provide that "any" report, which would include more than one if it exists, must be included.
11. I am unable to conclude that in context the legislature, by choosing to identify "any" sales inspection report, contemplated that an agent may not prepare such a report under Sch 2, cl 2. I can find no indication anywhere in the Act or the Regulations that the legislature contemplated that an agent may not prepare a sales inspection report under Sch 2, cl 2. There are abundant references in the Act and the Regulations pointing in the opposite way. Indeed Sch 2, cl 2 is specifically referred to in Sch 8, cl 7.
12. It would not provide a result coherent with the identified policy of the Act and the Regulations if an agent who had carelessly omitted a sales inspection report from the agency agreement was denied commission by s 55 of the Act but an agent who had deliberately failed to prepare a sales inspection report would be entitled to commission under that section. I accept that this is a possible construction of the regulation, but it is not one which is consistent with the clearly identified statutory object or policy of consumer protection by ensuring that a sales inspection report is prepared and given to the principal by an agent in every case.
13. I also accept that a detailed and complicated legislative scheme such as the present may provide for differential results and punishments depending on which separate breach of the legislation has occurred. In this regard it is relevant that the failure by the respondent to comply with any of its obligations including in Sch 1 or Sch 2, cl 2 was no doubt a breach of s 37 with the potentially serious consequences provided for by the Act and the Regulations.
14. The construction I prefer, however, does not have the consequence that s 55 is necessarily conditioned on the compliance by an agent with all of the obligations in Sch 1 or Sch 2, cl 2. Those schedules operate by reason of regulation 11, which provides that the rules of conduct set out in those schedules are prescribed for the purposes of s 37 of the Act.
15. The primary judge's second observation, that the respondent could not be required to include something that did not exist, is here met by the conclusion that the legislature has assumed that there will necessarily be a sales inspection report in existence. The use of the word "any" in context provides only that if there be more than one sales inspection report, each sales inspection report needs to be included.
16. Although not the most natural meaning of the word "any", my conclusion gives effect to the clear consumer protection purpose of the Act and the Regulations. Sch 2, cl 2 imposes the obligation of providing the information in the report after the preliminary inspection, prior to entering into the agency agreement. Sch 8, cl 7 identifies, in part, the essential contents of the agency agreement.
17. The construction I prefer promotes the coherent operation of the Act and the Regulations by ensuring that what the Act and the Regulations identify as an essential attribute of the pre-contractual relationship between agent and principal, the sales inspection report, finds refection in an essential attribute of the contractual relationship between agent and principal, in Sch 8, cl 7.
18. Section 55 of the Act has been described as operating in an absolute and unforgiving way: Kukolovski v Georges [2011] NSWSC 359 per Barrett J at [34]. I accept that in the circumstances of this case the construction I prefer has a harsh consequence for this respondent. That, however, is the result of the application of the legislation before the addition of s 55A into the Act, to which I will turn in relation to the Second Agreement.
19. I would uphold ground 1 of the notice of appeal on this basis.

Ground 2 - s 55A of the Act

1. It will be recalled that s 55A is a statutory exemption to the operation of s 55. It was introduced in 2013 and is thus only applicable to the Second Agreement. An order under s 55A(1) may be made if the Court is satisfied that the following matters are established: 1. the failure of the agency agreement to comply with the requirements of the Regulations a is a "minor failure"; 2. the principal has suffered no "loss" as a result of the failure; and 3. the failure to make the order would be "unjust".
2. The terms "minor failure", "loss" and "unjust" are not defined in the Act so their meaning must be ascertained from the relevant context.
3. The primary judge held that if it were found that the Second Agreement failed to comply with the Regulations, then under s 55A the respondent would be entitled to recover the whole of its commission claimed under the Second Agreement.
4. The findings by the primary judge that the failure to include the selling price or to identify the date upon which the consumer guide was provided were each minor failures may be passed over as I have concluded that the respondent did not breach either clause of Regulation 8.
5. The primary judge made the following findings about s 55A and Regulation 8, cl 7: "[115]… The failure to comply with cl 7 was minor given the nature of the transaction. The contract was for the sale of a large number of units off the plan in a development undertaken by Ryde. The Second Agreement and the Second Put Option already contained much of the information that would have been contained in the sales inspection report including the principal's name and address, the agent's name, address and telephone number, a description of the property and of the fittings and fixtures included in the sale of the property, and a description of the terms and conditions of sale known to the agent. Some of the information that was to be included in the report was irrelevant to Ryde, such as the agent's recommendation on the most suitable method of sale of the property, the agent's estimate of the selling price and details of any special instructions about the marketing and showing of the property. Consequently, the failure to attach what would have been a largely irrelevant report was minor. [116] I am satisfied that Ryde suffered no loss as a consequence of the failure to comply with Schedule 8, cls 4, 5 and 7. It is not obvious how the failure to comply with any of those clauses could have caused Ryde loss. Ryde submits that it suffered loss because PIA did not provide an estimate of the selling prices for the units or a price range, which would have been included in a sales inspection report. However, the parties had extensive discussions about the expected selling prices of the units and the discount that should be given to PIA if it agreed to the Put Options. There is no reason to think that the sales inspection report would have contained a different set of prices. And it is difficult to see how Ryde suffered any loss because of the failure to attach to the Second Agreement a sales inspection report that included those prices. [117] Ryde's real complaint, of course, is that PIA failed to tell it that the expected prices for the units would be greater than their respective MUPs. It will be necessary to return to that complaint below. But that is not a loss that arises from the failure to attach a copy of a sales inspection report to the contract. It is a loss that arises, if at all, from a breach of duty on the part of PIA. [118] In my opinion, it would be unjust not to make an order under s 55A. The Second Agreement was negotiated between sophisticated and knowledgeable parties. It reflected a commercial relationship in which all the risks and benefits of a sale to a third party were placed on PIA. PIA took those commercial risks and incurred costs in connection with the marketing and sale of the units. It would be unjust if it were not entitled to obtain the benefits due to it under the contract."
6. The appellant submitted that the primary judge's finding that the respondent was entitled to an order in its favour under s 55A(1) is reviewable by this Court in accordance with the principles in Warren v Coombs (1979) 142 CLR 531 at 551-552. The appellant submitted that the appellant suffered loss by paying higher commission than it would have done had the respondent provided estimates of the selling price or price range of the units, the subject of the Second Agreement.
7. The appellant submitted that if the respondent had not breached its obligations under, relevantly, Sch 8, cl 7, the sales inspection report would have included an estimate of the selling price or price range for each unit. The appellant submitted that contrary to the primary judge's finding, the negotiations between Mr Gabra and Mr Wang were about setting the MUPs for the units, not the likely selling prices of the units.
8. The appellant submitted that the failure to make the order would not be unjust under s 55A(3)(c) in circumstances where the respondent failed to prove the matters referred to in s 55A(3)(a) and (b).
9. As to the test engaged here in reviewing the primary judge's s 55A finding, in the absence of submissions to the contrary by the respondent, I am prepared to assume that this Court is obliged to decide "the facts as well as the law" for itself in accordance with Warren v Coombes. I would, however, prefer to reserve to a case where the matter was argued the question of whether, within the meaning of s55A, a failure is "minor" or whether it would be "unjust" if an agent were not entitled to commission, should be determined in accordance with the principles of appellate restraint explained by Mason and Deane JJ in Norbis v Norbis (1986) 161 CLR 513 at 518 and 520.
10. In my view, the primary judge correctly concluded that an order under s 55A should be made in relation to the Second Agreement in this case.
11. In context, the failure to provide a sales inspection report, including a range of prices, was a "minor failure". What constitutes a minor failure must be determined in all of the relevant circumstances of the particular case. In this case the relevant circumstances included the fact that the appellant was a sophisticated business entity that negotiated the Second Agreement at arm's length with the respondent. The essence of the arrangement involved one sophisticated business entity, the appellant, laying off its risk in relation to the Development to another sophisticated business entity by the agreed mechanism of the MUP, which provided a guaranteed payment to the appellant, and the put options, which placed the sales risk on the respondent. The equivalent bargaining powers of each entity and the absence of information asymmetry is to be contrasted with the position which often characterises relations between consumers and experienced real estate agents. An inequality of bargaining power or information asymmetry was absent here.
12. It was also relevant that the Second Agreement and the Second Put Option already contained much of the information that would have been contained in the sales inspection report including the principal's name and address, the agent's name, address and telephone number, a description of the property and of the fittings and fixtures included in the sale of the property, and a description of the terms and conditions of sale known to the agent.
13. A critical finding of the primary judge, which the appellant addressed only in terms of onus, was that the parties had extensive discussions about the expected selling prices of the units and the discount that should be given to the respondent if it agreed to the Put Options. His Honour concluded, correctly on the evidence, that there was no reason to think that any sales inspection report prepared by the respondent would have contained a different set of prices. That conclusion is fatal to the appellant's claim that the failure to provide a sales inspection report was other than a "minor failure".
14. The primary judge was also correct to conclude that the principal suffered no loss as a result of the failure to provide any estimate of selling price as part of the sales inspection report. On the evidence, the parties had extensive discussions about the expected selling prices of the units and the discount that should be given to the respondent if it agreed to the Put Options. Assuming in the appellant's favour that the respondent bore an onus of proving what price range it would have given in a sales inspection report, the primary judge correctly concluded that any sales inspection report the respondent prepared would have contained the same set of prices.
15. His Honour was correct in that finding which was based on the evidence of extensive discussions between sophisticated property developers experienced in the local area in circumstances where their financial interests were opposed and there was no information asymmetry. It was, with respect to the appellant, obvious that the respondent hoped to sell the properties for more than he had contracted to pay the appellant upon the exercise of the Put Options. Quite how much the respondent would be able to achieve was unknown, but the two sophisticated commercial parties negotiated the Second Agreement based on their best estimates of the likely sale prices. The appellant proceeded with the Second Agreement as the protections it gave him suited his commercial interests in laying off the risk of the Development onto the respondent. The appellant did not suffer any loss because of the failure to attach to the Second Agreement a sales inspection report that included a range of prices which it had already discussed with the respondent for the purposes of an arm's length negotiation.
16. In the present case it would be unjust to deny the respondent its commission when its sophisticated counter party, the appellant, has received what it bargained for in the Second Agreement and expressly waived reliance on the minor failures to comply with the Regulations upon which it now relies.
17. I would reject ground 2 of the notice of appeal.

Ground 3 - damages for breach of the Second Agreement

1. The primary judge found that the respondent was entitled to damages for the appellant's breach of cl 4.4(g) of the Second Agreement by refusing to exchange contracts for sale with replacement purchasers for Lots 2, 37 and 40. The appellant submitted that the primary judge overlooked an argument it had made that it was entitled to succeed on the basis of clauses concerning the replacement or substitution of purchasers, being cll 7.3 and 7.4 of the Second Agreement, not cl 4.4(g).
2. Cll 7.3 and 7.4 relevantly provided: "Replacement Purchaser 7.3 The Owner agrees that the Owner must facilitate the replacement or substitution of the purchaser on any contract that is exchanged if requested by the Agent or the purchaser and confirmed by the purchaser of the unit concerned. 7.4 The Owner must cooperate and facilitate by way of rescission and entry into new contracts so long as there is no delay and there is no change in the Contract Price and the new purchaser or the Agent pays to the Owner the Owner's reasonable legal costs for the legal documentation to effect the replacement or substitution of the purchaser."
3. The appellant submitted that it was under no obligation to replace or substitute any of the purchasers of Lots 2, 37 or 40 because the conditions imposed by cl 7.4 were not satisfied for two reasons. First, the facilitation of each replacement purchaser would have caused a "delay" in the time of settlement of the sale. Secondly, in each case, the contract price with the replacement purchaser had changed from the contract price with the initial purchaser. In those circumstances, the appellant submitted it was entitled to refuse to exchange contracts with the replacement purchasers.
4. In the alternative, the appellant submitted that it was entitled to refuse exchange of contracts for the sale of each of the units. The completion dates were more than one month after notification of registration of the strata plan, which occurred on about 7 January 2015. Therefore, the appellant was not required by cl 4.4(g) to facilitate the replacement of any of the purchasers.
5. The appellant's submission should be rejected. Clauses 7.3 and 7.4 operate to oblige the appellant to facilitate the replacement of a purchaser by way of rescission and entry into a new contract. The respondent accepts that it could not rely on the rights identified in those clauses in this case. As a matter of construction, those clauses do not impose a limitation on the obligations upon the appellant contained in cl 4.4(g) of the Second Agreement that the primary judge correctly found had been breached.
6. In relation to the three units in question, the relevant purchaser was introduced by the respondent during the currency of the Second Agreement. The sales price was greater than the applicable MUP.
7. Consistently with its obligations under the Second Agreement, it was not open to the appellant to fix a completion date that was more than one month after the day it notified the purchaser the strata plan for the Development had been registered. The deposits for each unit had been paid in accordance with cls 4.4(h) and (l).
8. The primary judge was correct to conclude that under cl 4.4(g) the appellant was obliged to exchange contracts with the relevant purchasers. Under cl 4.4(g), the appellant warranted that it would not "unreasonably refuse to exchange contracts with any Purchaser referred or introduced by [the respondent] during the currency of the agreement".
9. The respondent accepted that cll 7.3-7.5 of the Second Agreement specifically provided limits upon the appellant's obligations where rescission and entry into new contracts was sought. The respondent's complaint, however, was not a failure by the appellant to facilitate rescission and entry into new contracts, but was a complaint about a breach of cl 4.4(g).
10. The three purchasers were introduced by the respondent before the expiration of the exclusive agency period. It is not suggested that any of the purchasers were unwilling or unable to complete within the time period specified in cl 4.4(g) or that any other condition to the operation of the clause could not be satisfied.
11. It is implicit in cl 4.4(g) that exchange or completion could occur after the agreement came to an end - or, more accurately, after the exclusive agency period came to an end. The primary judge correctly observed that ancillary obligations imposed on the appellant, such as the obligations imposed by cll 4.4(j) and (k), continued to operate to give effect to the obligation created by cl 4.4(g).
12. The expiration of the exclusive agency period, which was the matter relied upon by the appellant before the primary judge, could not itself operate as a reasonable ground for refusing to exchange contracts when cl 4.4(g) operates by reference to when a purchaser is referred or introduced. No different conclusion arises when consideration is given to the separate obligations in cll 7.3-7.4 which do not limit the breadth of the obligation provided in cl 4.4 (g).
13. Ground 3 should be dismissed.

Notice of Contention

1. The primary judge rejected the respondent's estoppel argument on the basis that his Honour was bound by the decision in Overmyer Industrial Brokers Pty Ltd v Campbell's Cash & Carry Pty Ltd [2003] NSWCA 305 (Young CJ in Eq., Meagher and Beazley JJA) at [55]: "It would seem almost unarguable…that no estoppel in the face of [s 42AA of the Property, Stock and Business Agents Act 1941] will lie."
2. The respondent submitted that this Court should depart from its decision in Overmyer and find that the appellant is estopped from relying on s 55(1) of the Act to deny the respondent the commission which it is otherwise entitled under the First Agreement. The respondent submitted that Overmyer is erroneous in light of the principles in Tudor Developments Pty Ltd v Makeig (2008) 72 NSWLR 624; [2008] NSWCA 263 which determined whether estoppel is available to prevent reliance on a statute.
3. The respondent submitted that there are three "compelling reasons" to depart from Overmyer. First, in that case, the factual basis for an estoppel did not exist, so the ruling concerning estoppel was obiter. Secondly, it is uncontroversial that s 55 has the effect of operating in a harsh and unfair way and serves no apparent beneficial purpose in dealings between sophisticated property development parties at arm's length. Thirdly, the principle from this Court with respect to estoppel not lying against a statute is not one lying "in a stream of authority" or "catena of cases" such that departure from it would have a practical impact on the consistency of decision making: cf Queensland v Commonwealth (1977) 139 CLR 385; [1977] HCA 60 at 630.
4. This ground may be dealt with shortly. In my view the statement of principle in Overmyer is correct as it applied to s 42AA of the 1941 Act and the primary judge was correct to apply the reasoning to s 55 of the Act in finding that estoppel does not lie in the face of s 55.
5. The respondent's submission that s 55 of the Act materially differs from s 42AA of the 1941 Act and that an estoppel will lie in the face of the statute should be rejected for a number of reasons. First, the provisions are relevantly identical. In particular, the provisions each prescribe the relevant consequences of breach, namely that the agent is not entitled to recover remuneration.
6. Secondly, each provision is intended to regulate agency agreements and to confer protection on consumers. It would be a dramatic intervention in a consumer protection statute, in effect, to permit contracting out by agents by recognising an estoppel claim such as the present.
7. Thirdly, and relatedly, the provisions each provide that parties cannot exclude or restrict the operation of the Act. In this regard, there is a prohibition on terms in an agreement which are inconsistent with the matters required by Sch 8 addressed earlier in these reasons. Regulation 13 (3) of the Regulations provided: "13 Contents of agency agreements … An agency agreement must not contain any term, condition or other provision that is inconsistent with a term, condition or other provision of the agency agreement is required to contain by this clause, but otherwise the terms, conditions and other provisions that an agency agreement can contain is not limited by this clause…"
8. Fourthly, the fact that the provisions may operate in a harsh and unfair way provides no basis for concluding that it was intended that an estoppel would lie in the face of the statute.
9. Finally, the fact that the Act now contains a statutory exemption to the operation of s 55(1), in s55A addressed above, does not assist in determining whether an estoppel lies in the face of s 55.
10. The notice of contention should be dismissed.

Conclusion and Orders

1. The appellant has had success in this appeal but has also failed in a number of respects. My preliminary view is that the respondent should only be required to pay a portion of the appellant's costs of the appeal. The costs of the case below raises different issues as it was fought on many more grounds, and subject only to one matter where the appellant succeeded in this Court, the appellant was wholly unsuccessful. My preliminary view is that the respondent is entitled to a portion of its costs of the Amended Summons and the appellant should pay the respondent's costs of the Amended First Cross-Summons.
2. I think in the circumstances, however, that rather than make orders for costs now, the better course is to give the parties an opportunity to consider these reasons and make written submissions about the costs of the trial and the appeal having regard to these findings. Those submissions can then be considered on the papers.
3. I propose the following orders: 1. Appeal allowed; 2. Set aside order 1 made by the primary judge on 11 May 2017 and in lieu make the following orders: 1. As to the Amended Summons filed on 19 October 2015: 1. declare that the First Defendant is not entitled to any commission under s 55 of the Property, Stock and Business Agents Act 2002 (NSW) in respect of the exclusive agency agreement between the Plaintiff and the First Defendant dated 15 May 2012; 2. the Amended Summons is otherwise dismissed ; and 1. Set aside order 2 made by the primary judge on 11 May 2017 and in lieu make the following orders: 1. As to the Amended First Cross-Summons filed on 5 November 2015: 1. judgment for the Cross-Claimant against the First Cross-Defendant in the sum of $3,896,804; 2. the First Cross-Defendant pay interest on $3,465,724 of the judgment sum at 10% per annum from 18 May 2015 to the date the judgment is entered. 3. the First Cross-Defendant pay interest on $431,080 of the judgment sum under s 100 of the Civil Procedure Act 2005 (NSW), at the rates set out in Practice Note SC Gen 16, from 18 May 2015 to the date judgment is entered; 4. the Amended First Cross-Summons be otherwise dismissed; 1. Appellant to provide submissions about the costs of the appeal and the trial not exceeding 10 pages to the associate of the presiding judge by 27 January 2018. 2. Respondent to provide submissions in reply about the costs of the appeal and the trial not exceeding 10 pages to the associate of the presiding judge by 14 February 2018. 3. Appellant to provide submissions in reply about the costs of the appeal and the trial not exceeding 3 pages to the associate of the presiding judge by 21 February 2018. 4. The question of cost to be determined on the papers.
4. BARRETT AJA: I agree that orders should be made as Payne JA proposes. I also agree with his Honour's reasons but wish to add some observations of my own on one matter.
5. I have found the question concerning clause 7 of schedule 8 to the Property Stock and Business Agents Regulation 2003 (NSW) particularly difficult. [1] My conclusion, however, is that when the provisions of that regulation and of the Property, Stock and Business Agents Act 2002 (NSW) concerning property inspection reports are read as a whole and their protective purpose is recognised, it is seen that a complying agency agreement could not come into existence unless a sales inspection report (reflecting the outcome of a physical inspection in accordance with clause 1 of schedule 2) had been prepared and given in accordance with clause 2 of schedule 2 and a copy of that report was included as part of the agency agreement.
6. The reading of clause 7 of schedule 8 that commended itself to the primary judge is clearly available, particularly when that clause is viewed in isolation. The word "any" often indicates recognition of the possibility that there may exist nothing within the relevant description. For example, the words "any authorised person" refer to each of the members of a class made up of all persons who are authorised and thereby indicate the existence of a complementary class made up of all persons who are not authorised. If, at a given time, no person is authorised, no one is comprehended by the words "any authorised person".
7. Clause 7 of schedule 8 could have referred to "the sales inspection report" prepared and given under clause 2 of schedule 2 or "a sales inspection report" prepared and given under that clause. Had either such form of words been adopted, a sales inspection report so prepared and given before the agency agreement was made would clearly have been in contemplation; and the unmistakeable message would have been that the existence of such a report (and, accordingly, prior compliance with clause 2 of schedule 2) was essential to compliance with clause 7 of schedule 8. Instead, the chosen words were "any sales inspection report".
8. The factor that has been decisive in my conclusion that "any sales inspection report" should be construed in the way preferred by Payne JA is comparison of a case where the command in clause 2 of schedule 2 was simply disobeyed with a case in which there was diligent compliance with that command but a copy of the resultant report was, through inadvertence or otherwise, not included in the agency agreement. If the words "any sales inspection report" were given the meaning accepted by the primary judge, an agent who wilfully disobeyed clause 2 of schedule 2 would escape the disentitlement to commission wrought by s 55(1)(b) of the Act but an agent who scrupulously obeyed that clause would incur the disentitlement just because a copy of the report was not included in the agency agreement.
9. It cannot have been intended that the significant non-compliance in the first of these cases should escape the penalty attracted by the obviously much less serious non-compliance in the second case. I say that the latter is obviously much less serious because performance of the obligation under clause 2 of schedule 2 would have caused the vendor to become aware of everything intended to be communicated through a sales inspection report, so that inclusion of a copy of the existing report in the agency agreement would have told the vendor nothing new about such matters; whereas, if no sales inspection report had ever been prepared, the vendor would have received from the agent through such a report none of the information that clause 2 of schedule 2 intended should be given by that medium. Such a situation would be quite at odds with the obvious consumer protection purpose of the provisions about sales inspection reports.
10. It remains to identify what, according to the foregoing analysis, is achieved by the word "any" that would not also be achieved by "the" or "a". The answer comes from the fact that "any" is sometimes used to include within the relevant provision every instance of the specified thing - in the sense of "each and every". Thus, in R v District Court of the Northern District of Queensland, ex parte Thompson (1968) 118 CLR 488; [1968] HCA 48, Barwick CJ (at 491-492) construed a statutory expression recognising conscientious objection to engaging "in any form of military service" as referring to engaging "in military service at all" without distinction between, say, service as an infantryman and service as a cook. On this basis (and as Payne JA concludes), the reference to "any sales inspection report" made and given under clause 2 of schedule 2 served to exclude limitation and to comprehend every such report in any case in which, for some reason, several have been made and given under that clause.

Endnote

1. Although, in this case, the question arises under a provision no longer in force, it is of continuing relevance because several provisions of the successor regulation (the Property, Stock and Business Agents Regulation 2014 (NSW)) refer, in a like context, to "any sales inspection report": see clause 8 of schedule 8 concerning an agency agreement for the sale of residential property, clause 6 of schedule 10 concerning an agency agreement of the sale of rural land and clause 6 of schedule 11 concerning an agency agreement for the sale of a business. 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 December 2017