Real Estate Agents Entitlement To Commissions

Real Estate Agents Entitlement To Commissions

Frequently, disputes arise as to whether an agent was the effective cause of sale and therefore entitled to commission on sale of a property .

In Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall [2020] NSWCA a real estate agent agreement appointed the agent on a non-exclusive basis. The agreement conferred a right to be paid commission where the agents were “the effective cause of the sale” and if a purchaser “has been effectively introduced” by them.

Following a sale of the property, by another agent, a dispute arose as to whether the first appointed agent was the effective causer of sale and entitled to payment of commission.

The buyer in this instance was introduced by first agent . An offer was made and rejected by the sellers. A further offer was made, and accepted “in principle” initially but then the acceptance was withdrawn. Further attempts to negotiate were unsuccessful as the agent went overseas on holidays.

The buyer then contacted second agent to look for other properties ,but then went back to look at the subject property, and revived negotiations ,increasing their offer by some $400,000 which was accepted and a contract was signed and a sale then completed . The second agent however-had gone into liquidation and

The issue for the appeal court was whether the first agent was the, or an, effective cause of the sale of the property.

The Court found against the first agent holding that the mere introduction of the buyer to the property is insufficient to amount to an effective cause of sale. The first agent appealed.

The issues on appeal were:

(i)  Whether the primary judge wrongly considered that the appellants’ contention that they were an effective cause of the sale was necessarily inconsistent with the second agent being an effective cause of the sale.

(ii)  Whether the primary judge erred in supposedly equating the importance of procuring finance with the task of providing the clarification on price desired by the purchaser.

(iii)  Whether the primary judge erred in failing to give consideration to whether the task of negotiating a sale could have been undertaken by the first agent.

(iv)  Whether the primary judge’s finding that the appellants were not the effective cause of the sale of the property was contrary to the weight of the evidence.

The Court held, dismissing the appeal:

As to issue (i): While the actions of more than one agent can answer the description of an “effective cause” of the sale of a property, a consideration of whether the first agent’s conduct was the effective cause of the sale nevertheless required a consideration of factors external to him that brought about the sale, including the conduct of the second agent.

As to issue (ii) : The primary judge did not treat the conduct of the second agent in securing the sale of the property as akin to the task of arranging finance. The task of providing clarification to the purchaser was referred to as part of the explanation of how a transaction that was effectively over after the first agent departed on holiday was later revived.

As to issue (iii) : The primary judge did not fail to give consideration to whether the task of negotiating the sale could have been undertaken by the first agent in circumstances where he was not capable of providing the purchaser with any clarification of the respondents’ price expectations because he was overseas and effectively uncontactable.

As to issue (iv) : A determination of effective cause requires a consideration and evaluation of all the circumstances surrounding a sale. The mere introduction of a purchaser that creates their interest in a property is usually, or at least sometimes, insufficient to be an effective cause. In this case the potential for a sale was effectively extinguished when the first agent departed overseas and became uncontactable. It was the second agent who revived and completed the sale.

Each case turns on its own facts, and determination of whether an agent is an effective cause of sale will invariably involve evidence of the terms of the agency agreements and the actual events of introduction, negotiations and offers and acceptance.

If you have a commission dispute as an agent or seller, please don’t hesitate to contact us for advice.

Federal Government announce extension to insolvency relief

Federal Government announce extension to insolvency relief

On 7 September 2020, Federal Treasurer the Hon Josh Frydenberg MP along with the Hon Christian Porter MP, Attorney General, Minister for Industrial Relations announced in a joint media release that the regulatory relief for businesses that have been impacted by the Coronavirus crisis will be extended to 31 December 2020. This will come as welcome news to directors of impacted businesses, as the temporary relief measures will further extend the moratoriums against personal liability of directors for trading whilst insolvent.

The Federal Government, claim that the measures will help prevent a further wave of failures before businesses have had the opportunity to recover from the effects of the pandemic. In their statement, their Honours say that, “as the economy starts to recover, it will be critical that distressed businesses have the necessary flexibility to restructure or to wind down their operations in an orderly manner.”

As insolvency and restructuring lawyers, Rostron Carlyle Rojas Lawyers have seen how this regulatory relief can be utilised to protect directors in re-arranging their company’s affairs. The temporary relief measures are extraordinary and unlikely to be replicated once the world moves back to business-as-usual. If you have felt the effects of the pandemic on your business, now is the time to get advice on how to structure your company’s affairs.

Speak with one of Rostron Carlyle Rojas Lawyers’ qualified restructuring and insolvency lawyers today, at:
QLD: 07 3009 8444
NSW: 02 9307 8900
Email: [email protected]

Important Legal Considerations when Buying or Selling Residential Property during the COVID-19 Pandemic

Buying or Selling Residential Property during the COVID-19

There is currently a great deal of uncertainty as to just how great of an impact the COVID-19 pandemic will have on the residential property market. With the real possibility of a second wave of the pandemic reaching QLD, there are also contractual issues which those who are currently engaged in the buying/selling process need to consider.

One of the most common questions we are receiving at the moment is ‘what happens if a party is unable to complete a Contract of Sale due to the impact of COVID-19?’ The answer will always depend on the individual Contract however given the vast majority of residential property sales are conducted using the standard form REIQ Contract, it is prudent to be aware of how this particular contract deals with the issue.

The REIQ Contract specifies that time is of the essence. This key concept means that by not completing the Contract (i.e. settling) on the due date, you may find yourself in breach of an essential Contract term, entitling the other party to terminate the Contract and sue you for damages.

The Contract does however contain a provision that will, in certain circumstances, suspend the parties’ obligation to complete the Contract and make time no longer of the essence. In order for these obligations to be suspended, a Delay Event must have occurred. A Delay Event is defined in the Contract as the following circumstances:

1. A tsunami, flood, cyclone, earthquake, bushfire or other act of nature;
2. Riot, civil commotion, war, invasion or a terrorist act;
3. An imminent threat of an event described in the above two paragraphs; or
4. Compliance with any lawful direction or order made by a Government Agency.

Whilst there may be a possibility in very limited circumstances for a COVID-19 related delay to fall within the scope of paragraph 4 above, in most instances the types of delays encountered as a result of COVID-19 are very unlikely to be classified as a Delay Event. Therefore, in most cases, a failure to settle on the due date as a result of COVID-19 will not prevent you from breaching an essential condition of the REIQ Contract and exposing yourself to considerable legal risk.

The simplest solution to avoid any unnecessary risk is to negotiate the insertion of a special condition into your contract prior to signing. An appropriately drafted special condition will ensure that the common COVID related delays will suspend your settlement obligations until such time as completion of the contract becomes possible.

Please note that the advice contained in this article is general in nature. If you are considering buying or selling residential property in these uncertain times, contact Rostron Carlyle Rojas Lawyers prior to signing a contract of sale. Our team will be able to review your contract, provide legal advice tailored to your individual circumstances and ensure you are adequately protected against the uncertainty posed by COVID-19.

NSW Government Announces Changes to Stamp Duty Thresholds for Eligible First Home Buyers

NSW Government Announces Changes to Stamp Duty Thresholds for Eligible First Home Buyers

In a bid to stimulate consumer spending, boost housing construction and create opportunities for employment as part of its COVID-19 Recovery Plan, on 26 July 2020 the New South Wales Government formally announced various changes to stamp duty thresholds for eligible first home buyers.

For the 12-month period commencing on 1 August 2020, the stamp duty thresholds for eligible first home buyers under the NSW Government First Home Buyers Assistance Scheme are to be temporarily changed as follows:

New Homes

– Full Stamp Duty Exemption for purchases of new homes valued at less than $800,000 (previous threshold being $650,000); and

– Partial Stamp Duty Exemptions for purchases of new homes valued between $800,000 and $1,000,000 (previous range being between $650,000 and $800,000).

Vacant Land

– Full Stamp Duty Exemption for purchases of vacant land (on which it is intended to build a home) valued at less than $400,000 (previous threshold being $350,000); and

– Partial Stamp Duty Exemptions for purchases of vacant land (on which it is intended to build a home) valued between $400,000 and $500,000 (previous range being between $350,000 and $450,000).

The changes offer eligible first-home buyers significant stamp duty savings as well as the potential to access a greater range of properties in New South Wales.

The temporary changes under the First Home Buyers Assistance Scheme are not anticipated to affect the existing First Home Owner Grant (New Home) scheme, under which the NSW Government offers $10,000 to eligible first home buyers (in addition to the concessions available under the First Home Buyers Assistance Scheme) who either:

– Are purchasing a new or recently substantially renovated home worth no more than $600,000; or

– Are purchasing land to build a new home, where the total price of the land and home is no more than $750,000.

Rostron Carlyle Rojas Lawyers have an experienced team of Commercial and Property lawyers committed to achieving superior outcomes for their clients.

For further information or assistance regarding the purchase of your first property, or in relation to property or commercial matters generally, please contact James Hatzopoulos at Rostron Carlyle Rojas Lawyers on (02) 9307 8900 or by email to [email protected]

Director identification numbers being introduced

Director identification numbers being introduced

The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) (Act) passed by the Federal parliament on 12 June 2020 with the effect that directors of Australian companies will soon be identified by a permanent unique number which will be known as a director identification number (DIN). The main purposes of the Act are to:

• ensure that all directors have their identity verified as part of the DIN(director identification number) application process (this includes alternate directors acting as directors, and other officers such as company secretaries as might be prescribed by regulations);
• ensure directors only have one DIN and preventing directors hiding behind aliases or variations of their name;
• prevent director identity fraud;
• apply a consistent regime across Australian body corporates, Aboriginal and Torres Strait Islander corporations, and registered foreign companies;
• further aid in the deterrence and penalisation of illegal phoenix activity; and
• impose criminal and civil penalties for non-compliance.

The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 is one of five other acts which have been passed by parliament which will together introduce a single business register, allow for the governments technology to be modernised and address the issue of phoenix activity.

Whilst the Act is not yet in force it will come into force on the date fixed by proclamation or within two years from the day the Act receives assent. After the Act becomes operational:
• existing directors having to apply for a director identification number within a period of time to be announced;
• within the first 12 months (Transitional Period) of the new Act’s operation a person who is appointed a director will have 28 days to apply for a director identification number (DIN).
• after the Transitional Period ends, a director must apply for a director identification number prior to being appointed as a director or such time as specified by the registrar; and
• The resignation of a director will then only take effect from the date of notification and a director that fails to notify the ASIC of their resignation within 28 days may be held accountable.
• There will be criminal and civil penalties for applying for multiple DINs or misrepresenting a DIN  with the penalties for a director applying for multiple DINs or misrepresenting a DIN (director identification number) being up to $21,000 (100 penalty units) and/or 12 months imprisonment as at the date of this article.
This is in stark contract with the current process as ASIC does not take steps to verify the identity of company directors and will have a significant impact on:
• the time frame and costs to incorporate companies will be lengthened where the person to be appointed as a director does not already hold a DIN;
• clearly identifying the directorships an individual holds and removing the discrepancies and errors commonly seen in Government registers; and
• making the process of locating directors in insolvency matters by creditors, administrators and liquidators more efficient and easier.

If you have any questions regarding the introduction of director identification number (DINs) or other matters relating to your or duties as a director, please contact Rostron Carlyle Rojas Lawyers:

For Dreamworld, the nightmare continues!

Work Health and Safety Prosecutions- Dreamworld Litigation Case

Work Health and Safety Prosecutions

The recent announcement of charges being laid against Ardent Leisure Ltd, the operator of Dreamworld is a reminder of the consequences of injury and deaths in the workplace, and the failure to have and maintain safe systems of work.

Queensland Work Health and Safety Prosecutor has filed three charges against Ardent Leisure in the Magistrates Court, alleging the company breached the QLD Work Health and Safety Act (2011) (WHSA).

All three charges attract a maximum penalty of $1.5 million.

The prosecution arises from the 2016 Thunder River Rapids Ride tragedy, when the lives of four people were lost when the ride malfunctioned.
In a coronial inquest which followed, the findings of the coroner were damning of the operators:

Coroner James McDougall found the ride was clearly unsafe and “shoddy” record keeping was also to blame, and stated,

“It is clear from the expert evidence that at the time of the incident, the design and construction of the TRRR at the conveyor and unload area posed a significant risk to the health and safety of patrons,” said McDougall.
“This general ignorance of proper safety and adequate assessments was a recurring theme throughout Dreamworld in many of the Departments and reflects a systemic failure to ensure the safety of patrons and staff by the use of a proper safety management system, with the necessary engineering oversight of high- risk plant.”

Under the WHSA, there is a clear and non-delegable duty upon persons carrying on a business or undertaking (PCBU) to ensure the safety of their workplaces for workers and invitees.

This duty includes:
• Having proper and adequate maintenance systems in place
• Actual implementation and use of those systems
• Proper procedures for training of staff
• Keeping accurate and complete records of maintenance and training
• Conducting safety audits and assessments on a regular basis appropriate to the risk,
• Ensuring the design or layout of any operating plant and equipment is safe for users
• Compliance with specific codes
A breach of the duty can result is significant penalties.

The WHS Act provides for the following maximum penalties:

Work Health and Safety Act Maximum Penalties Table

It is an offence for a PCBU or a senior officer to negligently cause the death of a worker.

Where a PCBU or a senior officer is found to have committed industrial manslaughter, a maximum penalty of 20 years’ imprisonment applies for an individual applies, or a fine of up to $10 million for a body corporate.

Categories of offences

The three categories of offences for failing to comply with a WHS duty reflect different degrees of seriousness or culpability.

Category 1 – the most serious breaches, where a duty holder recklessly exposes a person to the risk of death or serious injury.

Category 2 – failure to comply with a health and safety duty that exposes a person to risk of death, serious injury or illness.

Category 3 – failure to comply with a health and safety duty.

The magnitude and seriousness of these penalties should leave no doubt that breaches of the duty can seriously impact upon an employer, and proper regard needs to be had for compliance.

If you conduct a business or undertaking, and have a workplace injury or death, and want legal advice or assistance, please contact us.

Related: What is the role of a litigation lawyer?

What is the Government’s New COVID-19 Grant HomeBuilder?

What Is The Government’s New COVID-19 Grant HomeBuilder

Since its much-anticipated announcement in early June, we have received an influx of questions from our clients regarding the Australian Government’s new HomeBuilder grant.

This brief note sets out all you need to know about the HomeBuilder grant.

Why HomeBuilder?

Homebuilder is a government led initiative to cushion and stimulate the residential construction industry from the effects of the COVID-19 pandemic. HomeBuilder aims to encourage the commencement of new home builds and substantial renovations.

How much is the HomeBuilder Grant?

Eligible owner-occupiers (including first home buyers) may be entitled to a grant of $25,000 to either build a new home or substantially renovate an existing home.

Am I Eligible for the HomeBuilder Grant?

To be eligible for the HomeBuilder grant, you must:
• be an Australian Citizen (you must be a natural person; the grant is not available to a company or trust);
• be aged 18 years or older;
• if applying as an individual, have a taxable income of not more than $125,000;
• if applying as a couple, have a combined taxable income of not more than $200,000;
• if you are building a new home that will serve as your principal place of residence, the value of your property must be less than $750,000;
• if you renovating your principal place of residence, the value of your home (prior to the renovation works) must not exceed $1,500,000 and the contract for the renovation works must be between $150,000 and $750,000; and
• sign a contract between 4 June 2020 and 31 December 2020, with construction required to commence on or after 4 June 2020 and within 3 months of the contract date.

Implementation

HomeBuilder will be implemented by respective State and Territory Governments via a National Partnership Agreement with the Commonwealth Government. The relevant State or Territory revenue offices are expected to release information on when and how you will be able to access HomeBuilder.
An imminent release of information by State and Territory revenue offices, on when and how you will be able to access HomeBuilder, is expected. This briefing note will be updated once further information has been made available.

As always, Rostron Carlyle Rojas Lawyers are dedicated to keeping you updated on the continuously evolving COVID-19 situation. If you would like more information on this briefing note, please contact us today on (07) 3009 8444 or email us at [email protected]

Time to review your business affairs

Time to review your business affairs

The beginning of the new financial year is a good opportunity to set aside time to review your contracts and ensure that the key aspects of your business are in order. In particular you should check:
• that you are aware of the changes to award rates which may affect the amounts payable to your employees and whether your employment agreements need to be updated to deal with changes in the law such as those changes introduced in response to the Covid-19 pandemic;

• that your key customers or suppliers have executed current written agreements;

• whether any of your contracts need to be renewed or extended;

• that all of your licenses and authorisations are up to date;

• whether your terms and conditions are up to date, noting that we frequently review terms and conditions which are in breach of the Australian Consumer Law or do not provide standard protections for the businesses such as the right to register security interests;

• that your insurance policies to ensure they are appropriate and adequate for your current business operations and whether your policies need to be updated to take into account recent changes in your business;

• that your company register, the ASIC register, trust documents or partnership agreements are up-to-date and reflect the current structure of your business; and,

• whether any personal property security interests have been registered over your business which should be removed

• whether any personal property security interests registered in your favour need to be extended to avoid the registration expiring; and

• the status of your debtors and whether you need to engage professionals to collect the debt on your behalf.

In addition to the above you may also wish to consider reviewing your current business structure and your business succession arrangements to ensure that they up to date and match up with your requirements.

Rostron Carlyle Rojas Lawyers can assist you in reviewing each of the above, provide you with practical advice and work with you to rectify any problem areas identified.

New Financial Year – Company Structuring

New Financial Year – Company Structuring

To say that the second half of financial year 2020 was a roller coaster for business is quite the understatement. The lingering drought, catastrophic bushfires and COVID-19 pandemic combined to strike fear into even the most solid of Australian businesses. As an individual you may have lost your employed position and are starting to focus more on that hobby as an income-producing endeavour, or you may have been trading as a sole trader but are feeling a little exposed to the winds of economic change. The start of a new financial year brings with it the opportunity to address these concerns and provide you with the comfort of increased protection in company structuring.

Admittedly operating as a sole trader provides you with ultimate flexibility – there are no partners, directors or shareholders to answer to, and you free to run the business in whichever manner you choose with comparatively little regulatory compliance. However, being a sole trader exposes you to risk as you must enter into contracts as an individual and will therefore be personally liable in the event of default. Your personal assets will therefore be exposed to attack.

A simple and relatively inexpensive solution to this problem is the establishment of a company. A company is a legal entity that is separate from you as an individual; therefore, contracts that the company enters into expose the company, rather than the individual director/s and shareholder/s, to risk in the event of default or other litigation. There are exceptions to this rule, most notably where an individual director is required to be a personal guarantor to a contract. However, generally speaking, the company structure allows the functions of the business to be conducted and clearly delineated from the operation of the business. Companies are also subject to a flat rate of tax which can assist in streamlining the accounts of the business. What’s more, with the start of this financial year the company tax rate has been reduced to 26% for ‘base rate entities’ (companies with at least 20% active income that turn over less than $50 million a year), and will reduce further to 25% on 1 July 2021. Who doesn’t like a tax break to start the new year!

Companies also allow for the relatively straightforward addition and removal of partners to the business, as well as the provision of equity to valued employees. A possible investor may wish to enter into the business by providing funding; the simplest way of achieving this is by the investor being issued shares in the company that runs a business in return for their investment. Likewise, if a shareholder ever wishes to exit the business, their shareholding would need to be valued and then sold to one of the remaining shareholders.

So if you are a sole trader looking to start the new financial year with more peace of mind (and potentially more generous tax treatment), don’t hesitate to contact Rostron Carlyle Rojas Lawyers. We will be happy to guide you through the process of setting up your trading company.

Building and Construction Reform Package set to Raise Standards for Residential Developments in NSW

Building and Construction Reform Package set to Raise Standards-Residential Developments in NSW

The NSW Government passed two new pieces of legislation in June 2020, designed to ensure greater standards of construction for residential developments. The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“RAB Act”) and the Design and Building Practitioners Act 2020 (NSW) (“DBP Act”) both attained royal assent on the 10th of June and will commence in stages throughout the next 12 months.

The legislation places a greater onus on the developers and design practitioners by apportioning responsibility to them where a building defect is discovered. The Government hopes the implementation of these Acts will regain public confidence in residential developments after substantial defects in new developments around Sydney made headlines in 2018. The RAB Act is focussed on procedures and bestows powers to the regulator through the development process. While the DPB Act sets out to register and regulate design practitioners; assigning a duty of care and accountability around building defects. We detail the key takeaways of each act below.

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) Key Takeaways:

– The RAB Act is the first of its kind in Australia; establishing a requirement for developers to notify the Secretary of the Department of Customer Service (“the DCS”) at least six months, but no more than 12 months, of the intended completion of building work. This is intended to afford the Secretary time to make regular inspections prior to completion. Where a defect is discovered the DCS can withhold a buildings occupational certificate until rectifications are made by the developer.

– The RAB Act allows for a grace period of 60 days if expected completion is advanced or delayed. If the expected completion is moved beyond the grace period, the developer must submit a notice of change to the secretary within one week of his knowledge of the change.

– A failure to correctly file an expected completion notice with the Secretary may result in a maximum penalty of $210,000 for a body corporate or $42,000 in any other case.

– The definition of a “developer” for the purposes of the RAB Act includes “the person who contracted or arranged for, or facilitated or otherwise caused, the building work to be carried out”. If the building work is the erection or construction of a building or part of a building, the owner of the land is also taken to be a developer.

– The RAB Act was assented on 10 June and will commence on 1 September 2020. However, it should be noted that it will retroactively apply to buildings completed within the last six years. The date of the occupational certificate is the relevant consideration.

– If work is, or likely to be in contravention to the Act, the Secretary may issue a stop work order. The RAB Act also sets out the process required to appeal against a stop work order. Proceedings for offences will be taken before the Local Court or before Land and Environment Court. (This applies for the DPB Act as well).

The Design and Building Practitioners Act 2020 (NSW) Key Takeaways:

– The DBP Act introduces a statutory duty of care for the benefit of land owners and places accountability for new and existing defective construction work. Any person who carries out construction work has a duty of care to avoid economic loss caused by defects relating to building or construction work.

– Construction work includes the construction of a building, making alterations or additions to a building, renovations, applying protective treatment, preparations of design, and building products used for the development of residential buildings.

– The DBP Act states that any design practitioner who makes a compliance declaration must be registered and qualified to do so. Major variations to designs must be declared as compliant before being provided to the builder. Registered building practitioners must build in accordance with these declared designs and issue a compliance declaration stating that the final building complies with the Building Code of Australia.

– Design practitioners will have responsibility for their designs that are ultimately relied upon for building work. A registered design practitioner must provide a compliance declaration if they prepare a regulated design for a person and that design is in connection with building work.

– Penalties of up to $420,000, two years imprisonment, or both may apply for breaches of the DBP Act.

– The DBP has been written to comply and cooperate with other established legislations such as the Home Building Act, Civil Liability Act, Strata Schemes Management Act, Building Products Management Act etc. Relatively, the DBP Act and RAB Act does not limit the rights and obligations set out in these acts.

– The DBP Act was assented on the 10 June, commencing partly on the same date and partly on 1 July 2021.

Who Does this affect?

The purpose of this reform package was to limit the risk of building defects from going unnoticed in through the design and certification processes. It does this by placing a heavier burden of responsibility onto the design professionals for building defects. It is important if your business is involved in the development of residential dwellings that you are complying with the new regulations. This includes:
– understanding if you meet the registration and qualification requirements;
– consider how this may affect current and ongoing projects;
– be prepared for inspections and possible investigations; and
– form an action plan around the process of stop work orders.
These changes also affect land owners within residential buildings that have experienced calamity as a result of a building defect. If you have experienced economic loss as a result of a building defect within the last 6 years you may be entitled to reasonable compensation.

Rostron Carlyle Rojas is here to help
Understanding how new legislation may affect you can be difficult. We are committed to keeping you updated with relevant updates on legislation that may effect you and your business. Should you require further advice on this current matter or others, we would be delighted to assist.

Cntact us today at:
Email [email protected]
Telephone 9307 8900
Address: Rostron Carlyle Rojas Lawyers
13.05, 88 Phillip Street
Sydney NSW 2000