When Performance Trumps Compliance

David Collins
September 18, 2024
11:23 am

When Performance Trumps Compliance

In the case of Christer Nominees Pty Ltd v Calabria Community Club Ltd, the Supreme Court of New South Wales considered whether the Plaintiff was entitled to unpaid commission fees for real estate services provided under two agency agreements. The Court ruled in favour of the Plaintiff, awarding it $419,137.08 plus interest and costs.

Case Overview: The case involves Christer Nominees Pty Ltd seeking to recover unpaid commission fees from Calabria Community Club Ltd for real estate services provided in a strata development project in Prairiewood, NSW, including:

Introducing purchasers for multiple units in the strata development.
Introducing a purchaser for apartment C702 (Lot 69 of the Strata Plan), who entered a contract for purchase of the apartment for $665,000, although this contract did not proceed to settlement.
Introducing a replacement purchaser for apartment C702 (Lot 69 of the Strata Plan), who entered a contract for purchase of the apartment for $664,900, which did proceed to settlement.
The Plaintiff introduced purchasers who executed contracts for sale in respect of 89 apartments, and each such contract proceeded to settlement.

Agency Agreements: The Plaintiff relied on two exclusive and binding agency agreements dated 1 July 2015 and 1 August 2016, which were signed by one of the Defendant’s directors, leading to a dispute over their validity.

Defendant’s Argument: The Defendant argued that the agreements were invalid as they were not signed by two directors as is required by the company’s constitution and claimed the Plaintiff did not comply with several requirements under the Property and Stock Agents Act 2002 (NSW) (the Act) and the Property and Stock Agents Regulation 2014 (NSW). Specifically, the Defendant argued that the Plaintiff failed to meet the requirements imposed by sections 28, 36, 55, and 56 of the Act.

Key Issues for Determination: The Court examined whether the agreements were binding, whether the Plaintiff complied with the Act, and if the Plaintiff was entitled to commission fees.

Implied Actual Authority: The Court held that the single director who signed the agreements had implied actual authority due to the board’s acquiescence in his actions. The Court noted that the board of directors had acquiesced in the actions of the single director who signed the agreements. This acquiescence was demonstrated by the fact that the board did not object to the director’s actions and allowed the agreements to be executed without requiring a second signature.
Performance of Obligations: The Court observed that the Defendant had performed its obligations under the agreements by paying commission fees to the Plaintiff. This performance indicated that the Defendant had accepted the agreements as binding and valid.
Intention to Create Legal Relations: The Court considered the relevant surrounding circumstances and concluded that the parties intended to enter into binding legal relations. The fact that the Defendant subsequently paid commission fees to the Plaintiff supported this conclusion.
Compliance with Legislation: The Court held that the Plaintiff complied with the relevant legislative requirements and was entitled to relief from non-compliance under section 55A of the Act.
Outcome: The Plaintiff was awarded the sum of $419,137.08 plus interest, and costs.

Takeaways: The case demonstrates that in certain circumstances the Court may grant relief from non-compliance with legislative requirements and that the intention to create legal relations is supported when each party performs part of the contract.