Archive for April, 2018

VCAT loses jurisdiction to hear a dispute where a party is not resident in Victoria

Following last week’s High Court decision in Burns v Corbett [2018] HCA 15 the Victorian Victorian Civil and Administrative Tribunal has lost its jurisdiction to hear and determine a dispute where one of the parties is resident of a State other than Victoria.

This will pose significant problems for VCAT particularly concerning its exclusive jurisdiction to hear and determine a “retail tenancy dispute” under the Retail Leases Act 2003 (2003 Act)[1]. Proceedings in the Tribunal where a party is not resident in Victoria will be affected by the decision. Because VCAT never had jurisdiction to hear and determine a matter where a party was not resident in Victoria, Burns is also likely to have consequences for proceedings that have been heard and determined where one party was not a resident of Victoria.

Where a party is not resident in Victoria, disputes under the 2003 Act will have to be heard and determined in a Victorian court, the Federal Court or an interstate court. Where a “retail tenancy dispute” is heard in a court, a significant issue will be whether the cost regime in the 2003 Act applies or whether the awarding of costs will be governed by court rules. Except in limited circumstances, s.92 of the 2003 Act requires each party to bear its own costs.

In Burns the High Court held that provisions of the Civil and Administrative Tribunal Act 2013 (NSW) were invalid to the extent that they purported to confer jurisdiction upon the Civil and Administrative Tribunal of New South Wales (NCAT) concerning matters between residents of different States.

Chapter III of the Australian Constitution includes ss75 to 77. Section 75(iv) provides that the High Court has original jurisdiction in all matters between residents of different States. Section 76 enables the Commonwealth Parliament to confer additional original jurisdiction on the High Court. Except for the High Court, s.77 permits Parliament to defines the jurisdiction of any federal court including defining the extent to which the jurisdiction of any federal court is exclusive of the jurisdiction of a State court, and gives State courts federal jurisdiction. Section 39 of the Judiciary Act 1903 invests State courts with federal jurisdiction subject to certain conditions and restrictions.

In Burns, Mr Burns complained to the Anti-Discrimination Board of New South Wales about statements made by Ms Corbett and Mr Gaynor which he alleged vilified homosexuals contrary to the Anti-Discrimination Act 1977 (NSW)). Mr Burns was a resident of New South Wales, Ms Corbett was a resident of Victoria and Mr Gaynor was a resident of Queensland.

The complaint against Ms Corbett was referred to the Administrative Decisions Tribunal of New South Wales (predecessor to NCAT) which found that Ms Corbett had breached the Act and ordered her to make an apology. Ms Corbett refused to apologise and Mr Burns commenced a proceeding in the Supreme Court charging Ms Corbett with contempt. Ms Corbett contended that neither the ADT nor NCAT had jurisdiction because she was a resident of Victoria. The complaint against Mr Gaynor was dismissed by NCAT. However, Mr Gaynor obtained leave to appeal to the Court of Appeal in respect of an interlocutory costs order on the basis that NCAT had no jurisdiction to determine matters concerning residents of a State other than New South Wales.

The New South Wales Court of Appeal determined the jurisdiction disputes. The Court had to decide whether NCAT could hear and determine a dispute arising under the Act between a resident of New South Wales and a resident of another State. It was common ground that in determining Mr Burns’ complaints, NCAT was exercising the judicial power of the State despite it not being a “court of a State” within the meaning of Chapter III. The Court held that NCAT had no jurisdiction to hear and determine the complaints against Ms Corbett or Mr Gaynor.

The High Court unanimously dismissed the appeals with a majority deciding that Chapter III permitted adjudicative authority concerning the matters in ss 75 and 76 to be exercised only by a State court. Chapter III would be undermined were a State Parliament able to confer adjudicative authority concerning any of the matters referred to in ss 75 and 76 on a State tribunal that was not a State court.

Parties to current litigation in VCAT need to consider whether the proceeding can continue in the Tribunal.

 

 

 

 

[1]See s.89(4) of the Retail Leases Act2003.

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Real estate agents face claims for recovery of commissions

Vendors of properties who have paid commissions to real estate agents are gearing up to recover the commissions on the ground that they were paid by mistake following the Court of Appeal’s decision in Advisory Services Pty Ltd v Augustin [2018] VSCA 95. Agents are in turn likely to take action against the party that drafted the standard form real estate agent’s authority which was found not to comply with the Estate Agents Act 1980.

Advisory concerned an appeal from the County Court where the trial judge decided that a real estate agent’s authority from its client (the vendor of land) did not contain the precise wording of s.49A(4)(c) of the Act with the consequence that the authority was unenforceable pursuant to s.50.

Section 50(1) provides, among other things, that an estate agent is not entitled to sue for or recover or retain any commission or money in respect of any outgoings unless the agent has complied with s.49A(1) with respect to the engagement or appointment.

Section 49A(1) says:

(a) An estate agent must not obtain, or seek to obtain, any payment from a person in respect of work done by, or on behalf of, the agent or in respect of any outgoings incurred by the agent unless:the agent holds a written engagement or appointment that is signed by the person (or the person’s representative); and

…; and

(c) the engagement or appointment contains –

  (i) details of the commission and outgoings that have been agreed; and

         …; and

(iii) a rebate statement that complies with subsection (4).

(emphasis added)

Section 49A(4) says:

A rebate statement complies with this subsection if it is in a form approved by the Director and it contains-

(a)   a statement of whether or not the agent will be, or is likely to be, entitled to any rebate in respect of –

(i) any outgoings;

….; and

(c)        a statement that the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses.

(emphasis added)

Section 48A(1) says that an estate agent is not entitled to retain any amount the agent receives from another person as a rebate in respect of –

(a) any outgoings; or

(b)  any prepayments made by the client in respect of any intended expenditure by the agent on the client’s behalf; or

(c) any payments made by the client to another person in respect of the work.

Section 48B(1) says:

An estate agent must not seek to obtain from the client an amount for any outgoings or proposed outgoings (the expenses) that is more than the amount paid, or payable, by the agent for those expenses.

The agent’s authority provided for the agent to be paid a commission but did not require the client to pay  outgoings. However,  the authority did not contain a statement in the exact words set out in in s.49A(4)(c). The language used in the authority was based on one of the two forms approved by the Director of Consumer Affairs Victoria and available for download by real estate agents. One of the forms contained the words used in s.49A(4)(c) and the other did not. In accordance with the latter form, the authority stated:

 Item 6: Rebate Statement – No Rebate will be received

“The Agent will not, or is not likely to be, entitled to any rebate. A rebate includes any discount, commission or other benefit, and includes non-monetary benefit, and includes non-monetary benefits.”

(*If entitled to a rebate, complete and attach the rebate statement approved by the Director of Consumer Affairs Victoria, at the time of signing this Authority. The statement can be downloaded at www.consumer.vic.gov.au)

Item 8 of the authority provided, under the heading “Agent’s role”, that the “Agent will advertise, market and endeavour to sell” the property.

In the Particulars of Appointment that formed the front page of the authority, there appeared a section headed “Marketing Expenses” which included spaces for “Advertising”, “Other Expenses” and “Total” which were filled in with a dashe that the parties agreed meant that there were no Marketing Expenses payable by the client.

The trial judge held that whether or not an agent was entitled to a rebate, s.49A(c) applied but that substantial compliance with the section would suffice. However, the judge held that the authority did not comply with s.49(4)(c) because it did not convey the information that the estate agent was not entitled to retain any rebate and must not charge the vendor an amount for any expenses that is more than the cost of those expenses. The judge also rejected an argument that a rebate statement would comply with s.49A(4) if it was in a form approved by the Director. The Authority did not make it clear that no rebate could arise.

The Court of Appeal held that ss48A and 48B were explicit prohibitions on certain conduct by estate agents and viewed in that light, the requirement in s.49A(1)(c) that the statement be contained in the engagement or appointment could be seen as ensuring that the client was advised as to the existence of the prohibitions. The Court said that the relevant question was whether the Act required notice to the client in circumstances where the prohibitions could not, by virtue of the arrangement between the estate agent and the client, be breached in any event? The Court answered this question “yes”. The Court  said that that it was apparent that Parliament intended the client be aware of the prohibitions in the context of being able to negotiate the terms of commission and payments in respect of outgoings. The Court held that the correct construction of s.49A(4)(c) was that the statement it describes must be contained in the rebate statement required by s.49A(1) irrespective of whether the agent would be, or likely to be, entitled to any rebate or charge any amount by way of expenses.

 

 

 

 

 

 

 

 

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