As talk about the property market continues to predict falling unit prices in Brisbane and falling property prices in Sydney and Melbourne, thousands of dollars worth of agent’s fees are being decided by the courts.
In Brisbane, real estate agency and advisory business Tessa is taking legal action against the developer of the Newstead Series apartment project in Brisbane after it refused to pay millions of dollars in fees Tessa alleges it is owed for selling hundreds of apartments.
Tessa has commenced proceedings before the Supreme Court of Queensland as it pursues JGL Properties-owned company Evelyn Street Project for up to $5.2 million in fees.
Brisbane apartment sales have slowed dramatically in the last six months and there are at least 5659 new apartments still to be settled and completed this year, according to analysts Urbis.
Some developers have struggled to sell remaining stock and the result of this legal dispute could have serious ramifications for other developers and selling agents in the struggling market.
The dispute will also be watched forensically by banks as well.
The 200 apartments, built by listed group Watpac, were designed by bureau^proberts, New York’s 26 Street Design, and Lat 27°, and included half an acre of outdoor living space and amenities, including a 25-metre pool, gymnasium, sauna, entertainment areas and outdoor cinema.
The developer, represented by William Roberts Lawyers, has since responded to Tessa alleging the agency agreement between the two parties is “a clear case of a statutory disqualification with the result that Tessa is not entitled to be paid or keep commissions and fees as the formal requirements were not complied with.”
The developer’s lawyer said that because Tessa did not get a Form 6 appointment for the apartment towers “Ajax” and “Koerstz”, it is not entitled to be paid any commission for sales in those two towers. Further, the developer’s lawyer argues that Tessa is now not even entitled to be paid or keep any commission for sales in or other fees relating to “The Carlyle” and “The Donaldson” because of technical reasons in the Property Occupations Act of 2014.
Tessa has already received commissions and advisory agents fees of $4.95 million to date from the developer but the developer has demanded that be paid back.
The developer denies that Tessa is entitled to payment of a second tranche of fees that become due upon settlement of each apartment sales contract, which started settling on June 15 this year.
Meanwhile, the Queensland Civil and Administrative Tribunal has ruled that Century 21 West Property Group should be paid a commission for a sale, even though it was dismissed before the contract was signed.
The case rested on whether or not the Brisbane agency was entitled to claim it was formally responsible for connecting the buyers with the sellers.
The vendors, Jason Hunter Lewis and Silvana Piccirillo, argued that they deserved credit for finding the buyers, because the buyers responded to vendor-paid advertising rather than an approach from West Property.
However, the tribunal ruled that West Property had formally introduced the buyers through organising advertising, holding open homes and negotiating the terms of a contract.
“That was the purpose of the appointment. The fact that Mr Lewis and Ms Piccirillo paid for the advertising is not a relevant consideration,” according to the tribunal.
The dispute dated back to 1 February 2014, when the eventual buyers inspected the Cashmere home with a West Property agent.
On 12 February, West Property presented a signed contract to Mr Lewis and Ms Piccirillo, which included special conditions requested by the buyers.
The three parties had back-and-forth discussions about the conditions during 13 and 14 February, which concluded with the agent telling the vendors that the buyers were happy to proceed with the purchase.
However, on February 15, the vendors terminated West’s appointment and hired new agents.
“They eventually sold the Cashmere property to the same buyers on the same terms as West presented to them on 12 February 2014,” according to the tribunal.
Mr Lewis and Ms Piccirillo argued that their decision to invest time and money in hiring new agents proved that they didn’t believe West Property had finalised a deal.
The tribunal deemed that to be an irrelevant issue because an introduction had occurred regardless.
“West warned Mr Lewis and Ms Piccirillo about the possibility of double commission in its email of 15 February,” the tribunal ruled.
“They cannot say they did not know of the risk. They cannot now say that they did not understand the terms of West’s appointment.”
The tribunal ordered the vendors to pay $12,696 to West Property – $11,000 in commission, and $1,696 in interest and filing fees.
If you are thinking of putting your residential, commercial or industrial property up for sale, see us first before you do or sign anything. Commission disputes are our specialty. If an agent is claiming commission on a sale the agent did not make, or if two agents are both wanting commission as the ‘effective clause’ of the one sale, you are in deep trouble. But we’ve seen it all before, and know intimately both the loopholes and defences available to you as well as the consumer-protective obligations with which agents must strictly comply.
We offer a FREE, 10-minute phone consultation – contact us today.