A Gold Coast agent has defeated a seller’s claim that an agreed 50% commission for a successful $24 mil sale of a Varsity Lakes development site was “unconscionable”.

Ngat Doan of APD Technology Pty Ltd had agreed with Century 21 Central agent Sasan Rahmani that any sum he could achieve in excess of $12 mil “was for it to keep and to share with any other intervening agents”.

APD had acquired the 7000 m2 Lake St site adjacent to Bond University in 2009 for $2.31 mil and obtained a DA for the construction of a 203 unit condominium complex in 2014. It had unsuccessfully sought buyers for many years.

With a prospect identified, Rahmani emailed Doan in February 2017 – copying in his solicitor – requesting confirmation that out of the proposed sale at $24 mil, APD understood it would receive $10.8 mil on settlement and that Century 21’s commission would be $13.2 mil incl GST.

Doan emailed back from his base in Sydney “All agreed, OK”.

In the meantime, Rahmani had recruited Tony Yan of Mint Property as a conjunction agent to introduce the $24 mil buyer on a promise of a $5.5 mil share of the comm.

Doan was cautioned by his Miami solicitor that “he was doing himself a considerable disservice” by selling at the half the price at which the project “stacked up”.

He responded that he only wanted to receive $12 mil to put into another project and “didn’t care”, preffering not to know about the “background” payments Rahmani had to make to “a number of Chinese ‘agents’ involved” to get the deal done.

The sale to Bondbao Pty Ltd was signed up in March 2017 and settled in June at which time APD received $10.8 mil and (presumably) in due course, a refund of $1.2 mil of the GST it paid to the agent, to make up a the total of $12 mil.

Century 21 received its $13.2 mil (incl GST) from Doan’s solicitor’s trust account promptly after settlement and in turn paid Mint its promised cut.

It did not take long for Doan to demand that Century 21 repay to it all but $528k ie 2.2% of the sale price which it contended was all the agent should get.

He did not dispute the Form 6 he signed in November 2016 agreed commission at 2.2% of $12,245,000 plus 99% of the amount by which the contract price exceeded that sum.

Rather, he claimed to have been duped by Rahmani’s story that the deal could only be done with an artificially inflated purchase price so that the buyers could achieve their objective of circumventing PRC foreign exchange controls to get the excess funds out of China.

APD launched proceedings against Rahmani – with whom Doan had done real estate deals for more than 30 years – and Century 21 alleging misleading and deceptive conduct; unconscionable conduct and breach of fiduciary duty.

“An agency commission of 50% on the sale of real property is extraordinary, and all the more so where the purchase price is so high.” Justice Angus Stewart observed when the matter came before him in the Federal Court in Brisbane.

The seller called expert evidence from Tony Hope – a 10 yr real estate agent professional – that “a fair and reasonable commission” on the sale of the property would range between 1% to 1.5% of the contracted final sale price.

Justice Stewart observed though, that Doan had frequently offered supercharged incentives to agents he engaged, just like in the arrangement under scrutiny.

Indeed several earlier Form 6 appointments in favour of Century 21 had been signed by him with very similar commission incentives for the Varsity Lakes site in the years leading up to the sale out of which the dispute had erupted.

Doan’s solicitor swore that he was “one of the smartest and most cunning business people he had ever met” and that it was “absolutely in character” for him to have agreed to a 50% commission on the sale of a property for over $20 mil.

Stewart J assessed Doan as a “generally an unimpressive witness” who had been prepared to engage in a “dishonest scheme” and rejected his assertions that the agent had misrepresented the purpose of the inflated sale price.

He reasoned that Doan had gone ahead with the unorthodox deal because he convinced himself the maximum value of the site was in fact no more than the $12 mil he was to receive.

Thus all of APD’s claims against the agent were dismissed and Century 21 with Mint – having grasped the carrot – get to keep their extravagant commissions.

Doan also sought compensation from his solicitor for failing to “safeguard his interests” in advising it on the sale. That claim was dismissed with the court concluding the solicitor – like Rahmani – to be an “impressive” witness and believing the solicitor’s accounts of the warnings he had given to the perhaps blinkered seller.

APD Technology Pty Ltd v Maximo Developments Pty Ltd [2021] FCA 678 Stewart J, 25 June 2021


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