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24 October 2014

Mentor

Question 1: How green does your garden grow

Our client is very concerned because the 90-year-old cyprus pine hedge running along the entire frontage of the property he has purchased looks like it is dying. It was not this way when he purchased. What recourse does he have against the vendor should the hedge continue to deteriorate and be substantially different from when he purchased i.e. beyond fair wear and tear?

Answer: ‘Fair wear and tear’ is a relative term.  It may be that fair wear and tear in the context of a 90-year-old hedge is that it dies.
Your client will need to show that some external factor has come into play that has caused the hedge to suffer some unusual and unexpected deterioration. An expert will need to be consulted. This may prove difficult as the vendor has very limited obligations in terms of allowing access for an inspection. Perhaps the inspection can be conducted from outside the property.

The fact that the hedge is dying does not, of itself, go beyond ‘fair wear and tear’.

Question 2: Conciliation conference

Just prior to a conciliation conference my opponent (applicant) has sent me a ‘Conciliation Conference Document’ setting out his client’s case and proposal. This wasn't ordered at first hearing and I can't find a requirement for me to do likewise. Please advise the status of this document and need to reply in kind.

Answer: Our commentary sets out the actions to be taken before a conciliation conference. As it is a relatively informal meeting any summary of the parties’ position and the outcome sought will assist the parties and the registrar in negotiating a settlement. You are not required to do what you have described as done by the other party, but it may be helpful for the registrar to have your summary as well. The issues should then become apparent.

Question 3: Is commission payable?

Is the agent’s commission payable when there is a mutual rescission of a contract? (New South Wales)

Answer: If the sale does not proceed to completion - for example, if a purchaser exercises cooling off rights, or if the vendor terminates the contract for breach of an essential provision - the agent will not be entitled to commission. In some limited circumstances, where the sale does not complete because of conduct by the vendor, the agent may be entitled to commission.

Donowa v Webster (1929) 29 SR (NSW) 318
Peacock v Tarleton (1928) 28 SR (NSW) 561
New South Wales Land and Housing Corporation v Sydneywide Real Estate Co P/L [1998] NSWSC 270

Commission usually forms part of the deposit paid by the purchaser to the agent. The agent must hold any deposit paid in respect of the sale of land as stakeholder pending the instructions of both vendor and purchaser (which will usually be communicated following settlement of the transaction or rescission of the contract, or less frequently when an early release of the deposit is agreed to), or court order.
Section 86 Property, Stock and Business Agents Act

Where a purchaser has validly rescinded the contract under the cooling off provisions in the Conveyancing Act, the agent can rely on a statutory procedure for dealing with that part of the deposit which is to be forfeited to the vendor.
Section 65 Property, Stock and Busines Agents Act

Should the agent fail to collect the deposit or should the deposit cheque bounce, the agent may not be entitled to commission.
Akarana Real Estate Ltd v Angus (1993) ANZ ConvR 91

If the contract does not proceed because a special condition is not satisfied then the whole of the deposit is returned to the purchaser and the agent is not entitled to commission.
Comley v Wellman (1948) 65 WN (NSW) 268
Trotter v McSpadden [1986] VicRp 32

An agent may not be able to recover commission if the authority provides for ‘no sale – no charge’, even if the vendor refuses to complete the sale.
Real Estate City P/L v Moustafa [2003] VSC 11
But see Real Estate City P/L v Moustafa & Anor [2005] VSCA 181

However, if the vendor agrees to allow the purchaser to withdraw from the contract, the agent may still have an entitlement to commission. The vendor will be obliged to show that the purchaser was entitled to withdraw because of the non-fulfilment of the special condition. If the vendor simply allowed the purchaser to withdraw, then the agent is entitled to commission.
Cannon Real Estate P/L v Hubble [2000] VSCA 116

See article: Estate agent - Agent's commission. See also 1001 Conveyancing Answers (NSW).

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