Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Liao v SJB 5 Pty Ltd t/as Laing & Simmons Ryde [2017] NSWCATAP 92 Hearing dates: 3 March 2017 Date of orders: 28 April 2017 Decision date: 28 April 2017 Jurisdiction: Appeal Panel Before: L Pearson, Principal Member DAC Robertson, Senior Member Decision: 1. Leave to appeal refused. 2. Appeal dismissed. Catchwords: CONTRACT – construction - contract in writing – to be construed without reference to prior negotiations Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Cases Cited: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Collins v Urban [2014] NSWCATAP 17 Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 Category: Principal judgment Parties: Chuan Hui Liao (Appellant) SJB 5 Pty Ltd t/as Laing & Simmons Ryde (Respondent) Representation: In person (Appellant) K Changizi, Director (Respondent) File Number(s): AP 16/50713 Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 09 November 2016 Before: P Boyce, Senior Member File Number(s): COM 16/41421 REASONS FOR DECISION 1. The appellant was the applicant in proceedings filed in the Consumer and Commercial Division on 12 September 2016 by which he sought orders for the reimbursement by the respondent of the sum of $4,458.99 withheld by the respondent from the deposit received by the respondent as selling agent in relation to the sale of a property owned by the appellant at Carlingford. 2. The amount in question was the amount calculated by the respondent as the marketing costs for the advertising and promotion of the sale of the property. That sum was deducted in addition to a commission of 2% of the selling price (which was $1,280,000). 3. The appellant appeared in person. The respondent was represented by Mr Changizi, a director of the appellant. 4. The background facts and relevant contractual terms were set out in the decision under appeal as follows: 21 On 4 June 2016 the applicant and respondent entered into an Exclusive Selling Agency Agreement ("Agreement") granting to the respondent an exclusive selling agency for a period of three (3) months from 4 June 2016 to sell the applicants property at *** Carlingford ("Property"). 22 The agreement was entered into at the Property. The applicant, Mr Changizi and an employee of the respondent, Mr Chung were present. 23 Also attached to the Agreement was an "Inspection Report" ("Report"). In that Report, the respondent expressed an opinion that the Property would sell for a sale price of between $1,150,000 and $1,250,000. 24. The Agreement provided at Item B(1) for commission to be payable to the respondent by the applicant on sale of the Property at the rate of 2% including GST (handwritten in the form). 25. At Item I, the Agreement set out an example of the calculation of commission by way of explanation and further agreement (handwritten in the form) "Example: Sale $1,250,000 only $15,000 to Lang + Simmons-$1,235,000.00 to Mr Liao (Monty or Vendor)-$1,280,000 plus or greater 2% commission to Laing + Simmons only". The applicant endorsed this provision by placing his initials beneath it. 26 At Item C, the Agreement provides: "The vendor shall reimburse the agent for the following authorised expenses incurred during this Agreement: (The following handwritten) Internet: a) Domain $1,040.60 b) realestate.com $1,650.00 Brochures a) Digital central (50 pack A4 double sided $ 52.14 Newspaper Advertisement Northern District Times (quarter page) $ 396.00 Architecture Draft + Plan/report $1,980.00 $5,118.74 Upon sale and or withdrawal within 90 days" 27 Clause 9.5 provides that the Agent is entitled to Commission, Fees for services and reimbursement of Expenses as set out in Item B and C. 28 The applicant signed the Agreement in the signature block on page 4 of the Agreement. Mr Changizi similarly signed the Agreement on behalf of the respondent. Both signatures appear with a date of 4/6/16. 29 The respondent marketed the Property and as a result secured a purchaser of the Property for the applicant. The sale price was $1,280,000. The sale completed on 26 August 2016. 30 At completion of the sale the applicant's solicitor authorised the respondent to deduct its commission and expenses from the deposit it held as stakeholder. 31 On or about 30 August 2016 the respondent deposited the balance of the deposit held by it to the applicant's account less the commission of $25,600 being 2% of $1,280,000 plus a marketing fee in the amount of $4,458.99. 1. The appellant and Mr Changizi each gave sworn evidence orally at the hearing. In addition the appellant relied upon a witness statement signed by a Mr Trach Lai (Alex) Chung dated 11 October 2016. 2. Mr Chung's statement was in the following terms: I am Trach Lai (Alex) Chung as the agent who acting on behalf of Laing + Simmons Ryde to sign up the Sales Inspection Report and Exclusive Selling Agency Agreement for Mr Liao as an exclusive representative agent to put *** Carlingford 2118 on the market as private treaty on 04 June 2016. I am here would like to declare that the whole marketing campaign's cost is 2% inclusive GST without any marketing cost as agreed at the time of the document signed (referring to (Page 3 of 7) Additional Instructions of the Agency Agreement). Hope this would help to solve the problems. 1. The Tribunal Member recorded that the respondent relied upon the terms of Item C of the Agreement [as set out in paragraph 26 of the decision under appeal extracted above] as the source of its entitlement to charge the marketing fee. The appellant submitted that the agreement between the parties was that the respondent would not charge a marketing fee in addition to a commission on sale. As the Tribunal Member recorded: The applicant says that he acknowledges that the Agreement contained Item C and that in his negotiations with the respondent about the terms and conditions of the Agreement he should have insisted on Item C being deleted. 1. The Tribunal Member stated in paragraph 41 of his reasons: 41 To determine if the applicant is liable for the marketing costs under the Agreement, the Tribunal must consider whether the terms of the Agreement reflect the agreement between the applicant and the respondent. 1. The Senior Member found as follows: 43 The evidence of Mr Chung must be discounted as he was not present at the hearing to be tested on his evidence. The statement he makes is ambiguous. It appears from the respondent's evidence that Mr Chung may have been a disgruntled employee of the respondent and as such it may be inferred that he had an interest in diminishing the respondent's case. For those circumstances, the Tribunal attributes little weight to the content of his statement in assisting with determining the issue of the inclusion of the marketing expenses in the Agreement. 44. The applicant contends that he placed his own advertisement on line on domain.com and that it assisted in the marketing of the Property. He did so without the respondent's knowledge. There is no evidence before the Tribunal as to the effectiveness of the applicant's advertisement and in any case the Agreement is an exclusive agency agreement and if it were an issue, which it is not, then the applicant is not absolved from liability under the Agreement if he were the effective cause of sale of the Property. 45 The Agreement is required under the Property Stock and Business Agents Act 2002 to have an agency agreement in place if the respondent is to be able to successfully claim commission and expenses. 46 The Agreement complies with the requirements of section 55 and as such the respondent is able to claim its commission and expenses under the Agreement. 47 The applicant brings this claim by application filed on 12 September 2016. The respondent's statement is dated 30 August 2016. The application is brought within 28 days of the date of the statement. 48 The applicant forcefully put to the Tribunal his own evidence as to his experience as a property management professional. For the applicant to state with the benefit of hindsight that he should have requested Item C to be deleted is self-defeating of the position he has taken. With his experience as a property professional it is inferred that he has knowledge of the importance of agency agreements and their terms and conditions. As such to say that he should have deleted Item C is disingenuous. 49 The Agreement was made on 4 June 2016, the respondent achieved for the applicant a sale price exceeding the likely opinion of sale price set out in the Inspection Report. The applicant's agitation for the Tribunal to disregard the terms of Item C cannot be supported by the applicant's evidence. 50 The Tribunal finds that it was the intention of the parties to the Agreement that marketing costs would be payable by the applicant in addition to the commission. 51 The amount of the expenses charged by the respondent are less than the Agreement disclosed to be the expenses. The Tribunal finds that the expenses claimed were reasonable. 52 Accordingly, the applicants claim is dismissed. 1. By virtue of section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) the appellant may appeal against the decision of the Tribunal Member as of right on a question of law or, with the leave of the Appeal Panel on other grounds. 2. As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of clause 12(1) of Schedule 4 to the Civil and Administrative Tribunal Act, leave to appeal may only be granted under s80(2)(b): If the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarized at [71] and [79] as follows: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred. 1. The appellant identified his grounds of appeal as follows: Member ignore my supporting documents and even misunderstood who signed the contract. 1. The appellant sought leave to appeal on each of the three grounds referred to in clause 12 of Schedule 4, that is that the decision was not fair and equitable, that the decision of the Tribunal was against the weight of evidence and on the basis that significant new evidence is now available that was not reasonably available at the time of the hearing. 2. As we understand it, the basis for the appellant's application for leave to appeal was in essence: 1. That the Tribunal Member disregarded the evidence of Mr Chung. 2. That the appellant had not understood that he should have Mr Chung available for cross examination. 3. That the Tribunal was incorrect in stating that the Agreement had been signed by Mr Changizi in that it was Mr Chung who had signed the Agreement (this was said to be the significant new evidence now available). 1. Ultimately the issue between the parties, and the issue the Tribunal was called upon to determine, was the correct construction of the Agency Agreement. The correct construction of a contract is a question of law: Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 at 279 [82] fn 88. 2. The evidence of Mr Chung was no more than oral evidence of the parties' intentions. Such evidence is not admissible in the determination of the correct construction of a written contract. As Mason CJ stated in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352-353: The true rule is that evidence of surrounding circumstances isadmissible to assist in the interpretation of the contract if the languageis ambiguous or susceptible of more than one meaning. But it is notadmissible to contradict the language of the contract when it has a plainmeaning. Generally speaking facts existing when the contract was madewill not be receivable as part of the surrounding circumstances as an aidto construction, unless they were known to both parties, although, as wehave seen, if the facts are notorious knowledge of them will bepresumed. It is here that a difficulty arises with respect to the evidence of priornegotiations. Obviously the prior negotiations will tend to establishobjective background facts which were known to both parties and thesubject matter of the contract. To the extent to which they have thistendency they are admissible. But in so far as they consist of statementsand actions of the parties which are reflective of their actual intentionsand expectations they are not receivable. The point is that suchstatements and actions reveal the terms of the contract which the partiesintended or hoped to make. They are superseded by, and merged in, thecontract itself. The object of the parol evidence rule is to exclude them,the prior oral agreement of the parties being inadmissible in aid ofconstruction, though admissible in an action for rectification. Consequently when the issue is which of two or more possiblemeanings is to be given to a contractual provision we look, not to theactual intentions, aspirations or expectations of the parties before or atthe time of the contract, except in so far as they are expressed in thecontract, but to the objective framework of facts within which thecontract came into existence, and to the parties' presumed intention inthis setting. We do not take into account the actual intentions of theparties and for the very good reason that an investigation of thosematters would not only be time consuming but it would also beunrewarding as it would tend to give too much weight to these factors atthe expense of the actual language of the written contract. 1. Mr Chung's evidence did not identify any background circumstances which might cast light on the intention of the parties. Rather, even construed most favourably to the appellant, it merely stated the parties' "actual intention and expectations" 2. The Agreement between the appellant and the respondent was reflected in the written Agency Agreement and the intentions of the parties are to be determined from the written contract. 3. For that reason the Tribunal Member's rejection of the evidence of Mr Chung could not have affected the outcome of the proceedings. 4. In addressing the correct interpretation of the Agency Agreement, the appellant placed emphasis on the use of the word "only" in the additional instructions at Item I of the Agreement. The appellant submitted that that word signified that the only payment to be made to the respondent was the commission calculated in accordance with the additional instructions. Had that been the only pointer to the intention of the parties in relation to the additional instructions, that submission might have had some force. However we note that there were three countervailing factors which we consider override any force which the submission might otherwise have had. 5. The first is that Item B of the Agreement, which states the amount of commission to which the agent will be entitled, includes the words "look at additional instructions". That draws attention to the additional instructions at Item I of the Agreement, and specifically associates those instructions with the calculation of commission, as opposed to the calculation of amounts payable to the agent generally. 6. The second countervailing factor is the use of the words written next to the total sum set out in Item C, being "upon sale and or withdrawal within 90 days". The reference in that passage to "upon sale" cannot be construed in any way other than as an explicit statement that the marketing expenses would be paid in the event of a sale. It is impossible to give that wording any other meaning. 7. The third factor is Clause 9.5 of the standard form Terms of Agreement attached to the Agreement which is in the following terms: "The Agent is entitled to Commission, Fees for services and reimbursement of Expenses (including any taxes or deductions debited by financial institutions against the Agent's account and attributable to the affairs of the Vendor) as set out Items (B) and (C), for the execution of services under this Agreement. 1. That explicitly provides that the agent shall be entitled to reimbursement of expenses. 2. For the foregoing reasons we are of the view that, on its proper construction, the Agency Agreement provides that the respondent was entitled to payment of marketing expenses as set out in Item C of the Agreement as well as commission calculated in accordance with Items B and I. 3. Moreover, even putting to one side our view as to the clear and explicit meaning of the contract, we would not find that there was any basis for the grant of leave to appeal against the Member's decision. Although we would not accept the proposition stated by the Member in paragraph 41 of his reasons (as set out at [8] above), we find no potential miscarriage of justice in the way in which the Member has approached the determination of the actual intention of the parties in executing the contract. 4. We note that the appellant acknowledged his experience in real estate transactions and acknowledged that clause C should have been deleted. The appellant sought to rely upon the proposition that he had initialled Item I, the additional instructions, as indicating that that part and only that part of the contract determined the amount payable in the event of a successful sale. That proposition appears to us to reflect at best a subjective intention of the appellant and not one that is likely to have been communicated to the respondent whether via Mr Chung or otherwise. 5. As the Member noted, Mr Chung's witness statement was ambiguous and not explicit about the negotiations which led to the execution of the agreement. Even putting to one side the legal obstacles to reliance, in the determination of the meaning of the contract, upon the negotiations leading to the contract and the subjective intentions of the parties at the time of execution of the contract, Mr Chung's statement does not unequivocally suggest that the parties had discussed and agreed that the commission on any sale at $1,280,000 or more was 2% and no more and would include all advertising costs. 6. In relation to the appellant's submission that that he had not understood that he should have Mr Chung available for cross-examination, the Appeal Panel was provided with a copy of directions made by a Member of the Tribunal on 4 October 2016 which provided relevantly: 4 The applicant shall provide to the respondent and the Tribunal, either in person or by post, a copy of all documents (see note below), on which the applicant intends to rely at the hearing by 11-Oct-2016. 5 The respondent shall provide to the applicant and the Tribunal, either in person or by post, a copy of all documents (see note below), on which the respondent intends to reply at the hearing by 18-Oct-2016. IMPORTANT NOTE For the purpose of these directions "document" means: Witness statements/statutory declarations or affidavits Accounts or receipts Any other document to be relied upon And all documents must be legible and in colour (if the original is in colour). 1. We acknowledge that the directions made by the Tribunal may not have indicated to the appellant that he should ensure his witness was available to be cross-examined and we accept that the appellant may not have understood that it would be advantageous to have Mr Chung available. However, we note that the Tribunal's website provides guidance to parties which includes the following statement under the tab "Going to the Tribunal" and the sub-tab "Evidence and Witnesses": "Any witness who provides a statement or affidavit in support of your case should be available to give evidence in person at the hearing. This is the rule unless all other parties agree that the witness does not need to attend for cross-examination. If a witness is not available to give evidence at the hearing, the party who wants to rely on that person's evidence should obtain the views of the other parties and apply to the Tribunal for the evidence to be given by telephone or video link." 1. We do not consider that the appellant was denied procedural fairness in relation to Mr Chung's evidence. Nor are we persuaded that the Tribunal Member's decision that the parties did not intend that the appellant not be liable for advertising expenses in addition to commission was against the weight of evidence or not fair and equitable. The fact that the Agreement was signed by Mr Chung and not Mr Changizi cannot be described as evidence which was not reasonably available at the time of the hearing, nor could it fairly be described as "significant" in the sense that it could have been decisive of the issues between the parties. 2. Accordingly the application for leave to appeal is dismissed and the appeal must also be dismissed. 3. Mr Changizi sought an order that the appellant pay the respondent's costs of the hearing. Mr Changizi noted that, although he had not sought legal representation, he had had to travel to the Tribunal on two occasions and paid $49 on each occasion for parking and estimated his travel costs at about $16 on each occasion. 4. Pursuant to s60 of the Civil and Administrative Tribunal Act, in the ordinary course the Tribunal can only award costs where there are special circumstances. Mr Changizi submitted that there were special circumstances. He submitted that those circumstances included that the appellant is "taking advantage of the system", which we understood to mean that the appellant was utilising the right of appeal in circumstances where the appeal was without prospects of success. Although we do not consider that the appeal had significant prospects of success we do not consider that in the circumstances of this case there were any special circumstances warranting an award of costs and we decline to make any order as to costs. 5. Accordingly each party is to pay their own costs of the proceedings. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 April 2017