Yong Internationals has failed to successfully appeal its loss of a $226,000 commission over the $9 million contract for a 35 ha vacant land development site at Redbank Plains.
Yong had failed to complete section 4.1 of the PAMDA form 22a about “how the service is to be performed” and the seller contended that as a result, there was no valid appointment and it was not entitled to any commission.
The contract – which was subsequently amended by deed to accommodate a reduction in purchase price – required the buyer to pay non-refundable amounts of $300,000 towards the purchase price.
When the specified development application date passed by without the buyer having lodged, the seller purported to terminate.
The buyer sued and a settlement agreement was reached that resulted in the seller retaining the site and the $300,000 already paid.
Yong claimed its commission arguing that “as the form 22a contained information throughout about how the service was to be performed, non-completion of clause 4.1 did not result in failure to substantially comply”.
The Court of Appeal ruled otherwise: “The requirement to state how the service is to be performed …is of considerable practical importance in defining the role of the agent and apprising the client of the services to which the client is entitled. The relevant service in this case would appear to be the selling of land and perhaps negotiating for the selling of land”.
Neither could the form be regarded as being “substantially” compliant because section 133(3)(a) states that the appointment “must” provide the information. Thus the 22a was held invalid.
The appeal court upheld Yong’s argument that clause 2.1 (4) of the appointment – commission is payable if the contract “is terminated by mutual agreement” – was capable of applying to the settlement agreement had the 22a been valid.
As this was not the case, Yong was denied any commission and the District Court ruling against it was affirmed.
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