Smith & Robertson v Hicki [2010] ACTSC 3 (29 January 2010)

Last Updated: 3 February 2010

THOMAS HAMILTON SMITH & ANOR v PETER HICKI

[2010] ACTSC 3 (29 January 2010)

PRACTICE and PROCEDURE – application for summary judgment for defendant – dispute as to facts – Court not satisfied that action bound to fail – application dismissed

COURTS and JUDICIAL SYSTEM – jurisdiction – cross-vesting legislation – action for damages for breach of contract - application to transfer proceedings to Supreme Court of Queensland – competing factors – pleadings not closed – no evidence as to number and location of witnesses – Court not satisfied transfer would be in interests of justice – application dismissed

Property Agents and Motor Dealers Act 2000 (Queensland) ss 10, 128, 140, 573A, 573B, 573C, 573E

Jurisdiction of Courts (Cross-vesting) Act 1993 s 5

Trade Practices Act 1974 (Commonwealth)

Jurisdiction of Courts (Cross-vesting) Act 1987 (Queensland) s 4

Sultana Investments Pty Ltd v Cellcom Pty Ltd [2008] QCA 537.

Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309

Freehold Land Investments Ltd v Queensland Estates Pty Ltd [1970] HCA 31; (1970) 123 CLR 418

Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993

White Enhancements Pty Ltd v Quick Fit Tyre Service Pty Ltd [2008] ACTSC 122

No. SC 608 of 2009

Judge: Master Harper

Supreme Court of the ACT

Date: 29 January 2010

IN THE SUPREME COURT OF THE )

) No. SC 608 of 2009

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: THOMAS HAMILTON SMITH

First Plaintiff

JANE ROBINSON

Second Plaintiff

AND: PETER HICKI

Defendant

ORDER

Judge: Master Harper

Date: 29 January 2010

Place: Canberra

THE COURT ORDERS THAT:

The defendant’s application in proceeding dated 28 September 2009 be dismissed.

1. This is an application by the defendant in the course of an action for damages for breach of contract.
2. The defendant, Mr Hicki, is the holder of a licence as a real estate agent under the Property Agents and Motor Dealers Act 2000 of the State of Queensland (the Agents Act). He conducts his business from premises at Mermaid Beach on the Gold Coast, under the business name Asset Unity. He has been engaged in that capacity since about 2005.
3. The claim of the plaintiffs is that at all relevant times they were in partnership as finance brokers and advisers, trading under the business name Asset Choice. They assert that the defendant provided financial and property services and offered investment property packages from Queensland developers. They say that on or about 30 March 2007 the parties entered an agency agreement for the referral of investment clients by the plaintiffs to the defendant. It was a term of the agreement that the defendant would pay the plaintiffs a commission for each referred client who purchased a house and land package through the defendant. The commissions ranged between $15,000.00 and $20,000.00 depending on the price. The agreement was that the defendant would pay half the commission within thirty days of settlement of the purchase of the land, and the balance within thirty days of the completion of the construction of the house. They say that the defendant has failed to pay commissions in respect of six sales of properties to buyers introduced by the plaintiffs to the defendant.
4. There is a secondary claim for loss of profits arising from the failure of the defendant to come to Canberra to participate in seminars arranged by the plaintiffs for their clients.
5. The defendant has filed a conditional notice of intention to respond, flagging a challenge to the jurisdiction of this Court. That challenge was not pursued on the hearing of the application: the defendant now accepts that this Court has jurisdiction to determine the action, but submits that it is an inappropriate forum.
6. No defence has yet been filed. The application before the Court seeks an order that the action be dismissed; or in the alternative that the Court decline to exercise jurisdiction, and order the plaintiffs to commence proceedings in a Queensland court within a specified period.
7. On the hearing of the application, counsel for the defendant made it clear that what his client was asking for was summary judgment for the defendant, or failing that, an order for transfer of the proceeding to the Supreme Court of Queensland pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1993. No application was made for formal amendment of the application in proceeding, although strictly none of the substantive orders asked for in that application are now sought. Counsel for the plaintiffs did not object to the application proceeding to hearing.
8. The first plaintiff, Mr Smith, and the defendant have known each other since the 1990s. Mr Smith was a director of a company, Advanced Mortgage Advisors (Australia) Pty Ltd ACN 071 849 137. Mr Hicki was an employee of the company for a period. The company was incorporated in 1995. Following a creditors’ voluntary winding-up in April 2007, it was deregistered in September 2008. Mr Smith was one of the three shareholders and directors. Mr Hicki says that Mr Smith had told him on occasions that he had had success selling investment properties in Queensland to his clients in Canberra. Mr Hicki instigated discussions with Mr Smith which led to an agreement. Mr Hicki says that the agreement was originally between him and Mr Smith’s company, whereas Mr Smith says that the agreement was with him personally. In the absence of a defence this issue was not explored in any detail on the hearing of the application, but I note that on Mr Hicki’s evidence, five of the six contracts for the sale of land referred to in the statement of claim were exchanged between August 2006 and March 2007, that is prior to the date Mr Smith’s company went into liquidation.
9. Mr Hicki says that his agreement with Mr Smith’s company was oral and was in the following terms:
   1. Mr Smith would work in conjunction with Mr Hicki’s business to attract new clients to invest in properties in Queensland for which Asset Unity was the listing agent.
   2. Mr Smith would attract purchasers, usually from the ACT, where Mr Smith lived and worked.
   100. The investment properties were house and land packages in Queensland, the seller being the developer. I infer from the description and from the other evidence that the properties were vacant land at the time of contract.
   4. Mr Smith would advise Mr Hicki of the name and other details of the client wishing to purchase an identified property.
   5. Mr Hicki would provide sales instructions to the solicitor for the seller.
   6. The purchasers would engage solicitors in Queensland.
   7. Mr Smith would send the contract to the solicitors in Queensland for review.
   8. If the purchasers were satisfied with the contract, Mr Smith would have them sign it in Canberra, and return it to the purchasers’ solicitors in Queensland.
   9. If a purchaser wanted to inspect a property, Mr Smith would travel to Queensland with the purchaser for that purpose.
   10. Mr Hicki would pay a commission to Mr Smith on each sale, on a date which depended on the conditions of the contract of sale.
   11. Mr Smith was to achieve five sales a month of properties in Queensland in conjunction with Mr Hicki’s business (I take this to have been an aspirational aspect of the agreement rather than a term which might have led to termination for breach on either side.)
10. The sales in respect of which commission is claimed involved a number of different vendors, and a number of different solicitors on both sides. The only common feature was that Asset Unity was shown as the agent on each contract. In relation to each of the six sales, Mr Hicki prepared and signed a form 27c under the Agents Act headed “Selling agents disclosure to buyer – what we must tell you before you sign.” In each case, amounts payable by way of commission, lead generation fees, marketing fees and referral or introduction fees were shown, and an acknowledgement at the foot of the form was signed by the buyer. By way of example, one such form disclosed a commission of $10,000.00 plus GST to Asset Unity, a lead generation fee of $7500.00 plus GST to Mr Smith and a marketing fee of the same amount to Mr Smith, a total of $25,000.00 plus $2,500.00 GST. Another showed a commission of $6,000.00 to Asset Unity, a lead generation fee to Mr Smith of $7,500.00, a marketing fee to an unrelated organisation of $4,000.00 and referral or introduction fees to Ms Robinson of $7,500.00, all plus GST, a total of $25,000.00 plus $2,500.00 GST.
11. In about December 2006, Ms Robinson came on the scene. Mr Hicki already knew her: they had both worked as consultants with Mr Smith’s company in about 1995. He denies that he ever had any agreement with her, either jointly with Mr Smith or individually. Mr Hicki said that he became a little concerned about how Ms Robinson fitted in with Mr Smith and the company, and he asked Mr Smith to complete a written agreement to cover future sales. By this time three of the six sales had proceeded to exchange of contracts. The document is in evidence and is entitled “Asset Unity Introducers Marketing Compliance Manual.” The purpose of the manual is stated to be to set out formal guidelines for marketing of Asset Unity’s stock developments and projects by its appointed marketing agents to ensure consistency in marketing methods, and to minimise the risk of adverse publicity.
12. Under the heading “Role of marketing agents”, the manual states that marketing agents (alliance members) are licensed real estate agents with significant contacts in the residential property market. Their role is stated to be to conduct a marketing campaign, identify potential buyers, procure sales of properties, arrange the signing of contracts, and sometimes assist in the appointment of other real estate agents.
13. Under the heading “Legal compliance training”, the manual stated “Asset Unity may require you to undertake legal compliance training. Such training will be arranged by and be at the cost of Asset Unity. You must attend that compliance training.”
14. It appears on the face of the document that Mr Smith signed it on 8 March 2007. He does not concede that he did so.
15. In a page headed “Legal guidelines for marketing”, the manual says that marketing agents have obligations under the Trade Practices Act, the Fair Trading Act of each State and the Property Agents and Motor Dealers Act in Queensland regarding the representations they make in respect of developments. Under a subheading “Compliance with Property Agents and Motor Dealers Act”, the manual states “you must comply with all of your obligations under the PAMDA and in particular s 573A (misleading conduct), s 573B (unconscionable conduct), s 573C (false representations and other misleading conduct) and s 573E (offensive conduct). The manual provides that the law of Queensland is to govern the agreement and that the marketing agent is to comply with the provisions of all relevant statutes, regulations and bylaws or other laws and the requirements of government agencies. The documentation included with the manual included a page in which the marketing agent is asked to answer “yes” or “no” to the question, “Does the alliance member carry on business of a finance broker or real estate agent in Western Australia and/or Australian Capital Territory? If yes, please attach a copy of current licence and business certificate.” Mr Smith completed this page by indicating that he carried on business as a finance broker in the Australian Capital Territory. He crossed out the words “real estate agent” and “in Western Australia”. He said that he was awaiting a copy of his current licence and would forward details. The form then asked whether the marketing agent’s business was required to hold any other licences or registrations. Mr Smith answered in the negative.
16. Mr Hicki gave oral evidence that Mr Smith told him that he was licensed as a real estate agent in Queensland. He said that he had not seen the documentation referred to in the last paragraph prior to seeing Mr Smith’s affidavit.
17. Mr Smith’s evidence is that there was an agreement with Mr Hicki but that its terms were somewhat different. He said that most of the purchasers he referred were existing clients of his financial planning business. He referred clients to Mr Hicki on a general basis rather than with respect to any particular property. Mr Hicki provided details of properties direct to the potential purchasers. Mr Smith says that he did not have any dealings with the developer sellers or their solicitors. The only contact he had was with Mr Hicki himself and with Astills Lawyers, a firm of solicitors arranged by Mr Hicki to act for the purchasers. He said that Astills would forward conveyancing documents direct to the purchasers, or sometimes to him for the purpose of forwarding them on to the client. He denied that he ever travelled to Queensland with a purchaser to view a property, or that there was any agreement with Mr Hicki to the effect that he would do so. He said that the arrangement was that half of the referral fee was to be paid on settlement of the purchase of the land and the balance on completion of construction of the house.
18. Mr Smith said that if a client was interested in purchasing a house and land package through Mr Hicki, Mr Smith would organise finance, and “would also retain a copy of the contract for the purposes of organising finance”.
19. A copy of a letter from Astills Lawyers to a purchaser, dated 25 January 2007, was tendered. The letter identified the property and the vendor, and was in the following terms:

We refer to the abovementioned transaction and note that you wish us to act on your behalf.

We enclose here with the following for your immediate attention:

1. Contract of sale (in duplicate); and
2. Building contract (in duplicate).

Please thoroughly peruse each of the abovementioned contracts.

Once you have done so and are satisfied with the contents of same, please sign and initial the contracts where indicated and return to this office in the enclosed express post envelope.

Should you have any questions relating to the contracts, please do not hesitate to contact Anna Christofas of this office.

20. This seems to have been the extent of the legal advice the purchasers obtained from their Queensland solicitors as to the legal obligations they were undertaking.
21. In cross-examination, Mr Smith conceded that he had witnessed the signatures of the purchasers on a number of the agreements for a sale. He had been present by prior arrangement when they had signed, in each case in Canberra. He had returned the contracts by express post to Ms Christofas at Astills in the envelope they had provided.

The summary judgment application

22. Counsel for the defendant submits that the defendant has a good defence on the merits and is entitled to summary judgment.
23. The principal submission is that because of the operation of s140 of the Agents Act, the plaintiffs have no entitlement to sue or recover the amounts they are claiming. The section is in the following terms:
    140. Restriction on recovery of reward or expense – no proper authorisation etc

(1) A person is not entitled to sue for, or recover or retain, a reward or expense for the performance of an activity as a real estate agent unless, at the time the activity was performed, the person -

(a) held a real estate agent's licence; and

(b) was authorised under the person's licence to perform the activity; and

(c) had been properly appointed under division 2 by the person to be charged with the reward or expense.

(2) A person who sues for, or recovers or retains, a reward or expense for the performance of an activity as a real estate agent other than as provided by subsection (1) commits an offence.

Maximum penalty for subsection (2) - 200 penalty units.

24. The Agents Act is lengthy (643 sections, 528 pages) and I have not been taken to its provisions by counsel in any detail.
25. Counsel for the defendant submits that the plaintiff undertook the activities of a real estate agent for the purposes of the Act, in circumstances having a sufficient nexus with the State of Queensland to attract the operation of the section. The activities were identifying prospective purchasers, advising them to buy, referring them to the defendant, delivering a draft contract to the buyer, receiving the contracts forwarded by the defendant’s solicitors, posting the contracts signed by the purchasers to the seller’s solicitors in Queensland, arranging finance for the purchasers and advising purchasers about finance, commission and steps required to finalise matters.
26. Counsel for the defendant relies on a decision of the Court of Appeal of the Supreme Court of Queensland (McMurdo P, Holmes JA and White AJA) in Sultana Investments Pty Ltd v Cellcom Pty Ltd [2008] QCA 537. Their Honours in that case allowed an appeal from a judge of the Queensland District Court in favour of a claimant for consultancy fees for introduction of buyers. For ease of comprehension I shall refer to the successful appellant as the developer, and to the respondent as the broker. The developer owned land in the Brisbane area on which it proposed to build a residential apartment complex. The developer was engaged, through its own staff, in selling the apartments off the plan. The broker was based in Sydney and operated a finance broking and financial planning business. The broker had in the past recommended property development projects in Queensland to its clients, who engaged a Brisbane solicitor to do the conveyancing work. The solicitor was related by marriage to a member of the developer’s sales staff. The developer had appointed a firm of estate agents. The appointment envisaged that other agents or investment groups might introduce buyers.
27. The developer approached the broker, on the recommendation of the Brisbane solicitor, to ascertain whether the broker was interested in recommending the development to its investors. A principal of the broker came to Brisbane and looked over the site. An arrangement was made that the broker would receive a fee of $10,000.00 for each sale, payable half on exchange and half on settlement. The principal told the developer that the broker did not hold a Queensland real estate agent’s licence. The arrangement was confirmed in correspondence. Twenty-two units were sold to clients of the broker, unconditional contracts being signed. Contracts were sent, presumably by the solicitors for the developer, in bulk to the broker who arranged for their completion and signature by the buyers. They were then returned by the broker, either to the Brisbane solicitor or to his brother-in-law who worked for the developer. After completion of the building, difficulties arose with finance for eight of the twenty-two buyers. Their contracts were rescinded by the developer, leading to ill feeling between the parties.
28. The issue before the Court of Appeal was whether the broker was precluded by s 140 of the Agents Act from recovering the amounts it claimed.
29. Their Honours noted that under s 128 of the Agents Act, a real estate agent’s licence authorised the holder to perform certain activities as an agent for others for reward. The activities included the buying and selling of places of residence or land, and negotiating for the buying and selling of place of residence or land. The objects of the Act, set out in s 10, were to provide a system of licensing and regulating persons as real estate agents (inter alia) to achieve an appropriate balance between consumer protection and freedom of enterprise. A specific object was the protection of consumers against “particular undesirable practices associated with the promotion of residential property”. The trial judge had held that the broker had performed acts which constituted buying or selling or negotiating for the buying or selling of apartments. This was apparently not challenged by the broker. Despite this, the trial judge had characterised the respondent as acting throughout as a financial planner. The Court of Appeal, it appears to me, took the view that the unchallenged finding by the trial judge (referred to at [30] and [31]) led inevitably to the conclusion that the broker was performing activities of a real estate agent, and therefore performing “an activity as a real estate agent” for the purposes of s 140.
30. The trial judge had found that there was insufficient nexus between the broker’s activities and the State of Queensland to bring into operation the Queensland legislation. Their Honours noted at [42] that as a matter of conventional statutory construction the prohibition in s 140 does not extend to conduct wholly carried on outside Queensland. Their Honours cited as authority for this proposition the decision of the High Court of Australia in Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309 and Freehold Land Investments Ltd v Queensland Estates Pty Ltd [1970] HCA 31; (1970) 123 CLR 418. Their Honours noted that this was reinforced by specific sections of the Agents Act which provided that the sections applied to conduct “whether happening in or outside Queensland, relating to residential property in Queensland”. There was no such extraterritorial provision in relation to s 140. The Court of Appeal quoted with approval a passage from WD Duncan, Real Estate Agency Law in Queensland (4th ed, Law Book, 2006) at pp 206-207, in which Professor Duncan had said that a person would be acting as a real estate agent for the purposes of the Agents Act if part of the work was performed in Queensland and part outside Queensland. He referred to a number of steps conventionally taken by an estate agent in negotiating and finalising a transaction, including introducing the property, and negotiating the contract and any special conditions. He said that regardless of how minor any act carried out inside Queensland, the person would be acting as a real estate agent in Queensland for the purposes of the legislation. He gave an example that the production of the contract for signing by the seller in Queensland would be deemed to be one of the essential parts of a real estate agent’s function, citing Freehold Land Investments v Queensland Estates as authority for that proposition.
31. The Court of Appeal found that the trial judge had erred in concluding that the Agents Act did not apply to the broker because there was insufficient nexus between its activities in respect of the purchase of the apartments and the State of Queensland. Their Honours did not spell out in detail what acts the broker had carried out in Queensland. Certainly a principal of the broker had come to Queensland and visited the project site, in negotiating the agreement with the developer, and the broker arranged for purchasers to fly to Brisbane to inspect the project by arrangement with the developer.
32. The Court of Appeal next dealt with a submission that the developer was estopped from setting up s 140 as a defence. The Court found against the submission for three reasons. Firstly, there was a general principle that a party could not set up an estoppel in the face of a statute: Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 per Lord Radcliffe at 1015-1016.
33. Secondly, the evidence was that the developer had not been aware that the broker was not a licensed real estate agent, and had assumed it was.
34. Thirdly, the Agents Act was a beneficial act, principally enacted for the benefit of consumers, and s 140 should be construed in absolute terms notwithstanding that in the particular case the “consumers” (the buyers) were not making any complaint. The Court characterised the outcome as an unattractive one but said that it was the consequence of a legislative decision to require those who acted as real estate agents to be licensed.
35. A difference on the facts between the present case and Sultana Investments v Cellcom is that in the latter, the broker dealt direct with the developer, and also dealt direct with the purchasers, who were its financial planning clients. There was no conventional real estate agent interposed, although a 1% commission was payable by the seller to a nominated “sole exclusive selling agent” which appears to have played no part in the sale. In the present case most of the conventional role played by a licensed real estate agent was filled by the defendant.
36. In the present case, a number of the activities which counsel for the defendant submits were undertaken by the plaintiffs are not conceded. There is a factual evidentiary conflict as to precisely what the plaintiffs did. The present application is not an appropriate occasion to determine disputed questions of fact which may ultimately be decisive as to the outcome of the action itself.
37. To the extent that Sultana Investments v Cellcom lays down legal principle, this Court would of course follow it. But it seems to me that its application will depend on the findings of fact which are made on the trial of the action, and on a decision by the trial judge as to whether the facts so found are distinguishable from the facts in Sultana or are so similar to those facts that the same outcome must follow.
38. The defendant has not satisfied me that the plaintiff’s claim is bound to fail. In those circumstances its application for summary judgment will be dismissed.

The question of transfer to Queensland

39. The Jurisdiction of Courts (Cross-vesting) Act 1993 relevantly provides in s 5(1) that if a proceeding is pending in this Court, and it appears to this Court that it is in the interests of justice that the proceedings be determined by the Supreme Court of a state or another territory, this Court must transfer the proceeding to that other court. Once the Court is satisfied that the subsection applies to the proceeding, no question of a discretion arises and the transfer is mandatory.
40. It has not been submitted on behalf of the defendant that this Court would lack jurisdiction to determine this action in the absence of s 4 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Queensland). If that were the case, an argument in favour of transfer to the Supreme Court of Queensland would have a little more force. This Court would be required to take account of the extent to which the matters to be decided arise under or involve questions as to the application or interpretation of the Agents Act.
41. I said in White Enhancements Pty Ltd v Quick Fit Tyre Service Pty Ltd [2008] ACTSC 122 at [29] that it would be a rare occasion when a court would be persuaded to transfer an action in circumstances where the only pleading before the Court was the statement of claim. I expressed the view, in the hope that it might be of assistance in future applications for transfer, that the Court would generally find it of assistance to have the pleadings closed before an application for transfer is made, so that the issues to be determined on the hearing of the action are identified. I would add to those remarks that it would also be helpful for the Court to have some idea of the number of witnesses likely to be called on both sides, and the usual place of residence or business of each of the witnesses, so that questions of convenience and expense in that regard can also be taken into account.
42. I should say at this stage that I am not presently satisfied that questions of the construction of the applicable provisions of the Agents Act would represent a heavy factor in favour of transfer to Queensland. This is a provisional view and I may be persuaded otherwise on a future application for transfer following the close of pleadings.
43. The present application for transfer will be dismissed.
44. I shall hear the parties as to costs.

I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 29 January 2010

Counsel for the plaintiffs: Mr DA Hassall

Solicitors for the plaintiff: AB Vincent

Counsel for the defendant: Mr RJ Arthur

Solicitors for the defendant: Bradley Allen for Michael Sing Lawyers

Date of hearing: 13 November 2009

Date of judgment: 29 January 2010