Soushen Pty Limited v Barclays Business Brokers

Soushen Pty Limited v Barclays Business Brokers - [1999] NSWSC 1064 - NSWSC 1998 case summary — Zoe

[14]

10 The Respondent submitted that the Fair Trading Tribunal has no power to make an order for security of costs because: o The Tribunal has no inherent powers, being a creature of statute and; o The Fair Trading Tribunal Act 1998 contains no provision empowering the Tribunal to make such an order. 11 The Respondent also submitted, apparently in the alternative, that it cannot be required to give security for costs because "it is a well established principle that a party to litigation who is defending rights may not be ordered to give security for costs (Willey v Synam (1935) 54 CLR 175; Re Travelodge Australia Limited (1978) 21 ACTR 17). Decision on Application for Security for Costs 12 The Tribunal has considered the application and documents supporting each parties position on it. The Fair Trading Tribunal is created by the Fair Trading Tribunal Act 1998 ('the Act'). Section 48 of the Act provides for the awarding of costs by the Tribunal as follows: 48 Costs (1) The parties to a matter before the Tribunal are to bear their own costs, except as provided by this section (2) In cases where an amount claimed or disputed, costs are not to be awarded if the amount does not exceed $10,000 (or such other amount as may be prescribed by the regulations) unless the Tribunal is of the opinion that the exceptional circumstances of the case warrant an award of costs. (3) Except as otherwise provided by the regulations or by any other Act or law, in cases where an amount is claimed or disputed in the Commercial Division or the Home Building Division, the Tribunal may award costs if: (a) the amount claimed or disputed exceeds $10,000 (or such other amount as may be prescribed by the regulations, and (b) the parties were granted the right to legal representation. (4) The Tribunal may, however, in any case award costs in relation to proceedings before it in any Division: (a) in respect of expenses incurred in obtaining professional or expert services (other than legal services), if the amount ordered to be paid by the Tribunal exceeds the amount prescribed for the purposes of this paragraph, or (b) in repsect of expenses incurred in a manner or in circumstances prescribed by the regulations, or (c) in respect of any particular expenses, if it is satisfied that there are special circumstances warranting an award of costs in respect of them. (5) If costs are to be awarded the Tribunal may: (a) determine to whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in Division 6 of Part II of the Legal Profession Act 1987 or on any other basis. (6) In this section costs includes: (a) costs of or incidental to proceedings in the Tribunal, and (b) the costs of or incidental to the application.

[22]

20 The Application for an order for Security for Costs is refused. APPLICATION PURSUANT TO THE PROPERTY STOCK AND BUSINESS AGENTS ACT 1941 THE ISSUE 21 The Applicant asks the Tribunal to determine the entitlement of the Respondent to the whole or part of any commission which was payable by the Applicant to the Respondent. The Property Stock and Business Agents Act 1941 establishes a licensing regime and otherwise regulates the conduct of business agents (and others). Section 42A of the Act provides for the review of commissions as follows: 42A Review of commissions, fees etc ( 1) No action or other proceedings shall be commenced by any licensee for the recovery of: (a) any remuneration by way of commission, fee, gain or reward for services performed by such licensee in his or her capacity as such, or (b) any sum as reimbursement for expenses or charges incurred in connection with services performed by such licensee in his or her capacity as such, until the expiration of 28 days after a statement of claim in writing setting out the amount claimed and containing details of the services performed by such licensee in respect of which such commission, fee, gain, reward, expenses or charges are claimed has been served personally or by post on the person to be charged with the same. (2) (Repealed) (3) Where any sum of money has been paid to or is or has been retained by a licensee out of any moneys received by or paid to such licensee in respect of any transaction by or with him or her as a licensee such moneys being so paid or so retained as remuneration by way of commission, fee, gain or reward for services performed in connection with such transaction or as reimbursement for expenses or charges incurred in connection with such transaction, the person paying such moneys or the person who would be entitled to the moneys so retained by such licensee had such moneys not been so retained, may, if an itemised account of such transaction has not been received by such person, require such licensee to furnish the person with an itemised account of such transaction under and in accordance with section 38A. (4) Without limiting the Consumer Claims Act 1998, the person served with the statement of claim in accordance with subsection (1) or the person receiving or obtaining an itemised account as provided in subsection (3) may, in accordance with section 6 of that Act, apply to the Tribunal for the determination of a consumer claim within the meaning of that Act in relation to: (a) the entitlement of the licensee to the whole or any part of the amount specified in the statement of claim or the itemised account, or (b) whether the whole or any part of the amount is reasonable, or both. (5) Without limiting the Consumer Claims Act 1998, the Tribunal has jurisdiction to hear and determine any such consumer claim despite: (a) the terms or conditions of any agreement or contract entered into between the licensee and the applicant, and (b) the amount being more or less than the maximum amount (if any) of remuneration to which a licensee is entitled under this Act. (6) The regulations may make provision for or with respect to requiring the inclusion, in the manner prescribed by the regulations, in statements of claim or itemised accounts referred to in this section, of a notice, in a form approved by the Director-General, containing advice concerning remedies available under the Consumer Claims Act 1998.

[23]

22 When making orders in a consumer claim, the Tribunal must take into account the matters set out in section 13 of the Consumer Claims Act. That section, in so far as it is relevant to this matter reads as follows: (1) When making an order or orders under this Part, the Tribunal must make such Orders as, in its opinion, will be fair and equitable to all the parties to the claim. (2) Without limiting subsection (1), when the Tribunal is considering whether or not to make an order or orders under this Part, the following factors are relevant, so far as they are material to the particular circumstances of the case: (a) whether or not there was any material inequality in bargaining power between the parties to the claim, (b) whether or not (i) any party to the claim was not reasonably able to protect the party's interest, or (ii) any person who represented any of the parties to the claim was not reasonably able to protect the interests of any party represented by that person, because of the age or physical or mental capacity of that party or person, (c) the relative economic circumstances, educational background and literacy of (i) the parties to the claim, and (ii) any person who represented any of those parties, (d) whether or not and when independent legal or other expert advice was obtained by the claimant, (e) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the claimant (i) by any other party to the claim (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the claim (iii) by any person to the knowledge of any other party to the claim or of any person appearing to or purporting to act for or on behalf of any other party to the claim (f) the conduct of the parties to the claim in relation to similar transactions to which any of them has been a party, (g) where the subject of the claim is a contract for the supply of goods or services or a contract collateral to such a contract: (i) whether or not before or at the time when the contract was made its provisions were the subject of negotiation, and (ii) whether or not it was reasonably practicable for the claimant to negotiate for the alteration of or to reject any of the provisions of the contract (iii) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or are not reasonably necessary for the protection of the legitimate interests of any party to the claim, and (iv) if the contract is wholly or partly in writing, the physical form of the contract and the intelligibility of the language in which it is expressed, and (v) the extent (if any) to which the provisions of the contract and their legal effect were accurately explained by any person to the claimant and whether or not the claimant understood the provisions and their effect and (vi) the commercial or other setting, purpose and effect of the contract. FACTS 23 The Applicant has filed a Statement by Mr Henson, dated 14 March 2000, and an Affidavit of Mr Cohen, sworn 23 July 1999 and filed in the Supreme Court of NSW. The Applicant also filed written submissions dated 5 June 2000. A number of other relevant support documents were attached to these documents and have been considered by the Tribunal. The Respondent has filed an Affidavit of Mr Poppeliers, Director of Barclays, dated 10 May 2000.

[27]

o Barclays was at all material times the holder of a "Corporation Licence" under the Property Stock and Business Agents Act 1941. o It is not disputed that Barclays introduced Soushen to Mediacom Pty Ltd, who later became ISIS Communications Pty Ltd and nominated ISIS Education Pty Ltd as the purchaser of the business. o On 21 January 1999 "Heads of Agreement" were entered into between Mediacom Pty Ltd, and Soushen. The sum of $50,000 was lodged by ISIS with Barclays, as stakeholder, in January 1999. An Agreement for Sale of the business was entered into in March 1999 and ISIS lodged a further $100,000 deposit with Barclays on or about March 1999. o On 14 July ISIS wrote to Barclays stating that it "authorises Barclay Brokers to release the amount of $150,000 held in trust by Barclays, as a deposit on the acquisition of Select Learning. The deposit of $150,000 now represents an initial payment on the acquisition of Select Learning." o Barclays replied by facsimile of 14 July that it would "release the funds accordingly to the Vendors in question". o On 15 July the Solicitor acting for Soushen wrote to Barclays asking that the commission be calculated and deducted from the deposit with the balance of the funds ($150,000)to be sent to Soushen forthwith. In the event that Barclays were unable to calculate the commission the entire $150,000 was called on by Soushen. On the same day Barclays acknowledged their receipt of a copy of the final sales agreement between Soushen and Isis. o On 16 July Barclays released an amount of $50,000 to Soushen. o On 19 July Soushen wrote to Barclays stating that commission of "4% less the $3602.00 on a purchase price of $1.25 million" was to be deducted from the deposit of $150,000 and the balance to be paid to Soushen "without delay". o On 23 July 1999, Barclays solicitor responded to Soushen to the effect that Souschen claimed a 'lien over the balance of the fund' pursuant to Section 36(3) of the Property Stock and Business Agents Act 1941. This arose from claims by Barclays that Soushen's conduct of the negotiations for the sale of the business were a breach of contract and had caused damage calculated by Soushen to be 'far in excess of the balance of the fund which it has been instructed to remit'. o Barclays referred the matter to their legal advisors on 21 July 1999 and on 23 July 1999 Soushen filed a Summons in the Supreme Court of NSW seeking certain orders in relation to the deposit monies of $150,000. On 23 July 1999 the Court ordered that Barclays cease to carry on business from that day. o The matter was again before the Court on 6 August 1999 and a number of orders were made, including a dissolution of the order to cease trading and an order that Barclays pay the amount of $47,062 be paid to Soushen's solicitors and to be held in trust. The Court further ordered that "Pending resolution of the dispute as to commission payable to the defendant [Barclays] by the plaintiff [Soushen] the defendant be restrained from dispensing , appropriating or otherwise dealing with the sum of $8000, being the balance of the deposit paid to the Defendant pursuant to the Sale of Business Agreements dated on or about 19 July 1999". The Court also ordered that Barclays was to pay Soushen's costs " as agreed or assessed of the proceedings except for the appearances on 27 July 1999 and 29 July 1999". o On 9 August 1999 Soushen forwarded an assessment of costs for the sum of $21,028.44. A 'Certificate as to Determination of Costs' pursuant to the Legal Profession Act 1987 was issued to Barclays by Soushen on 11 February 2000 for the amount of $18,819.29. Soushen no longer claim these costs in relation to the Supreme Court proceedings as part of their application to the Tribunal. An amount of $9809.43 being costs in the Tribunal, is now claimed (Affidavit of Henson, 14 March 2000). o On 30 August 1999 a Sale of Business Agreement was settled between Soushen and Barclays with a nominated purchase price of $1,400,000.00. o On 16 September 1999 Barclays sent to Soushen an intemised account of Commission due in a document headed 'Settlement Advice'. Soushen lodged this application in the Tribunal on 6 October 1999. Proceedings in the Supreme Court are adjourned pending determination by the Tribunal of the entitlement of Barclays to the amount of commission claimed.

At a glance

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Before

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Judgment (50 paragraphs)

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Cases Cited (2)