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REIQ Journal : November 2008
28 LEGAL ISSUES Paul Hopkins, Senior Partner, Carter Newell Lawyers Section 140(1)(c) of the PAMD Act provides: “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 – (c) had been properly appointed under division 2 [which includes section 135] by the person to be charged with the reward or expense”. Menniti argued that the agent had failed to bring to his attention the right to negotiate the term of the exclusive appointment up to a maximum term of 60 days as required by s135(1)(b) of the PAMD Act. Alternatively, Menniti argued that the agent insisted that he agree to a 60 day term. The agent’s evidence was that she advised Menniti prior to executing the exclusive appointment that she was not prepared to accept the property as an open listing. She said that on 2 February 2005, Menniti telephoned her and informed her that he was willing to enter into an exclusive appointment with her. At this time, Menniti enquired as to the length of the term of the exclusive appointment. The agent advised Menniti that the term of the appointment would be 60 days. Later that day, the agent met with Menniti to execute an Appointment which she had prepared following their telephone discussion earlier that day. The agent stated that she explained various aspects of the document to Menniti prior to executing the Appointment, including Clause 5 which relates to the length of the term of the appointment and stipulates that the parties may negotiate a term of up to 60 days. The agent said that she explained the difference between an open listing and a sole and exclusive agency and explained briefly the agent’s entitlement to payment of commission. By ensuring that your clients are aware of their rights at the time of executing an Appointment, the likelihood for a dispute arising in the future will be reduced. Menniti asserted that he was not given the chance to negotiate the term of the agency, but rather was told by the agent that the term would last for 60 days. There was no evidence presented to the Court that the agent had expressly informed Menniti of his right to negotiate a term of up to 60 days. The only evidence available was that the agent had taken Menniti through the form quite specifically prior to it being executed by both parties. The Supreme Court noted that the agent’s evidence was not contradicted by any other evidence produced at the trial of this matter. The agent had said on at least four occasions during her evidence that she had gone through the Appointment with Menniti and explained it to him. The Court found in favour of Elfbest, concluding that as the agent had given evidence that she had explained the various sections of the Appointment to Menniti and this evidence had not been challenged at trial, Menitti’s attention must have been drawn to the statement contained in Clause 5.1 of the Appointment regarding his ability to negotiate the term of the exclusive appointment. Whilst the agent in this case was found not to have breached her duties to the seller, the case serves as a timely reminder for agents to ensure that: your understanding of when the agency starts and finishes is the same as the client’s; and you have brought to the client’s attention their right to negotiate the term of the appointment up to 60 days. By ensuring that your clients are aware of their rights at the time of executing an Appointment, the likelihood for a dispute arising in the future will be reduced. REIQ Journal November 2008
December January 2009