FEDERAL COURT OF AUSTRALIA

Investa Properties Pty Ltd v Nankervis (No 2) [2013] FCA 468

THE COURT ORDERS THAT:

1.    Leave to file the Draft Second Proposed Further Amended Statement of Claim be refused.

2.    The applicants pay the costs of the respondents of and incidental to the application for leave to file the Draft Second Proposed Further Amended Statement of Claim, such costs to be taxed if not otherwise agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The applicants, Investa Properties Pty Ltd (“first applicant”) and Investa Residential Group Pty Ltd (“second applicant”), have clearly experienced considerable difficulties articulating proper causes of action in this matter. The document currently before the Court is laboriously (although accurately) described as the Draft Second Proposed Further Amended Statement of Claim. (For convenience, I will refer to this document as the “draft statement of claim”.) The applicants have sought the leave of the Court to file it in the proceeding. However even before the parties made submissions at the hearing last Friday it was clear that the document requires further amendment, in light of the recent settlement of the proceeding between the applicants and the third respondent. At this stage, the extent to which the draft statement of claim will require further amendment as a result of that event has not been the subject of submissions in the Court.

2    The first respondent does not oppose the Court granting leave to the applicants to file the draft statement of claim. Leave is, however, opposed by the second and fourth respondents to the proceeding.

3    Before considering the grounds on which the second and fourth respondents oppose leave, it is helpful to outline the material background facts.

Background

4    The applicants are related corporations, engaged in land development. The first applicant is the holding company of the second applicant. Relevantly, the applicants were engaged in the development of land near Ipswich in south-east Queensland. The development of the land was described to be in various lots. In particular, events relating to Lots 170 and 191 are in dispute. I note that Lot 170 is also referred to as “the Fossil Site” in the draft statement of claim.

5    At material times the second respondent, Mr Adam Barclay, was a director and employee of the fourth respondent, Oliver Hume South East Queensland Pty Ltd. Steps were taken by the applicants to retain the fourth respondent to act as a real estate agent in respect of the sale of lots near Ipswich developed by the applicants, including Lots 170 and 191. The applicants concede that the required statutory form of appointment – that is, in the form required by the Property Agents and Motor Dealers Act 2000 (Qld) (“PAMDA”) – was not executed by the fourth respondent in respect of Lot 170, however the applicants submit that the fourth respondent nonetheless acted as a real estate agent in and about the sale of that lot.

6    The basic case of the applicants against the second and fourth respondents can be summarised as follows:

1.    In relation to Lot 170, the applicants allege that:

(a)    their employee Mr Nankervis, with Mr Barclay’s participation, effected the sale of Lot 170 to the company of an associate, David Tonuri;

(b)    neither Mr Nankervis nor Mr Barclay disclosed to the applicants that the sale was to an associate;

(c)    the sale was at an undervalue;

(d)    Mr Nankervis and Mr Barclay had an arrangement with Mr Tonuri that they would participate in the profits from the purchase and further development of the land.

2.    In relation to Lot 191, the applicants allege that:

(a)    Mr Nankervis, with Mr Barclay’s participation, granted an option to purchase Lot 101 to a company owned by Mr Barclay’s wife;

(b)    neither Mr Nankervis nor Mr Barclay disclosed to the applicants that the option was to a company owned by the spouse of the selling agent;

(c)    the option, which was exercised in favour of another company owned by Mr Barclay’s wife, was at an undervalue.

7    Generally, the applicants claim breach of fiduciary duty and breach of contract. These claims are found in the draft statement of claim currently before the Court, in particular in paragraphs 26 – 36H.

Principles relevant to amendment of statement of claim

8    It is not in dispute that the applicants require the leave of the Court to amend the statement of claim currently filed: r 16.53 Federal Court Rules 2011. Whether leave is granted is at the discretion of the Court. Principles relevant to the current application were explained by Kenny J in Gove Aluminium Limited v EF Maritime Navigation SA [2012] FCA 599 at [10]-[11], and include reference to the overarching purpose set out in s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth) (“the Act”) and issues of case management explained in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 213.

9    In this case, although a trial date has been fixed, there remains several months until the trial. This is not a situation where an eleventh hour bid to amend the pleadings has been made by either party. Rather, the application for leave to amend the statement of claim follows from a further attempt by the applicants to plead causes of action sustainable against the respondents.

10    Repeated approaches to the Court to seek leave to replead may be due to different reasons. However there may come a time when the Court can properly draw the inference that difficulties in drafting a statement of claim reflect an underlying and insoluble weakness of the case of the applicant. Endless accommodation provided by this Court to a party to replead is not compatible with the principles contemplated by s 37M and s 37N of the Act.

11    In this case, however, the second and fourth respondents do not – at this stage – cavil with the validity of the repleaded case put by the applicants, and as a matter of general principle do not oppose the Court granting the applicants leave to replead. Rather, the second and fourth respondents have directed their submissions to specific issues concerning the draft statement of claim before the Court: in particular fundamental allegations unsupported by pleaded facts and unarguable propositions of law. In summary, they contend that:

    So far as concerns the second respondent, no fiduciary duty exists or can exist between the first applicant and the second respondent. It follows that no valid claim can be pleaded by the first applicant against the second respondent.

    So far as concerns the claims regarding Lot 170 against the second respondent and the fourth respondent, no effective statutory appointment of the fourth respondent in accordance with PAMDA took place. It follows that no valid contractual claims are sustainable against either respondent, and no fiduciary relationship can arise from such contractual arrangements.

12    I now turn to these issues.

The second respondent

13    In summary, the second respondent claims that no facts have been pleaded by the applicants supporting a finding that a fiduciary duty was owed by the second respondent to the first applicant, because the only possible relationship between the second respondent and the applicants is between the second respondent and the second applicant. In particular:

    In relation to Lot 191, the second applicant was the owner of the relevant land. Although the second applicant is a wholly-owned subsidiary of the first applicant, the applicants do not plead that the first applicant had any interest in either Lot 170 or Lot 191. The applicants do not plead that the second respondent knew of the existence of the first applicant, or that the second respondent agreed to act for or on behalf of the first applicant.

    In relation to Lot 170, the pleaded basis for a fiduciary duty being owed by the second respondent to the first applicant is that the first and second applicants engaged the fourth respondent and thereby the second respondent. However:

    section 133 and s 134 of PAMDA require a real estate agent to be appointed pursuant to the execution of a PAMDA form 22a. Section 134(3) of PAMDA provides that an appointment that is not in form 22a is ineffective from the time that it was made. No form 22a was executed in relation to Lot 170, which means that no retainer was executed;

    on the facts no proper case can be maintained that the first applicant entered into any contract with the fourth respondent, because it is clear from the facts that any retainer of the fourth respondent was only by the second applicant.

Lot 191

14    At paragraph 34 of the draft statement of claim, the applicants plead:

34.    By reason of the position of

(a)    real estate agent held by Oliver Hume SEQ

(b)    licensed real estate agent held by Barclay,

and the responsibilities which they discharged , and the relationship between Investa Properties and Investa Residential Group, at all material times during the engagement of Oliver Hume SEQ pursuant to the Agent Agreement, Barclay and Oliver Hume SEQ:

(a)    owed fiduciary obligations to Investa Properties and Investa Residential Group to:

(i)    …

(ii)    …

15    The second respondent has referred the Court to the definitive statement of Mason J in Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 96-97 where his Honour explained circumstances giving rise to a fiduciary duty in the following terms:

Because distributor-manufacturer is not an established fiduciary relationship it is important in the first instance to ascertain the characteristics which, according to tradition, identify a fiduciary relationship. As the courts have declined to define the concept, preferring instead to develop the law in a case by case approach, we have to distill the essence or the characteristics of the relationship from the illustrations which the judicial decisions provide. In so doing we must recognize that the categories of fiduciary relationships are not closed (Tufton v. Sperni [1952] 2 TLR 516, at p. 522; English v. Dedham Vale Properties Ltd. [1978] 1 WLR 93, at p 110).

The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf. Phipps v. Boardman [1967] 2 AC 46, at p. 127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions “for”, “on behalf of”, and “in the interests of” signify that the fiduciary acts in a “representative” character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.

16    I note that, although Mason J was in dissent in Hospital Products, his Honour’s comments were subsequently recognised as representing the law in this country: I note for example Concut Pty Ltd v Worrell (2000) 75 ALJR 312; [2000] HCA 64 at [17]; Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165 at [70], [78] and John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at [84]-[93].

17    Relevantly, the applicants must plead factual matters which create, in the circumstances of this case, a fiduciary duty owed by the second respondent to the first applicant.

18    The applicants contend, in summary, that:

    Unlike in Hospital Products, the fiduciary obligation which arises in this case is from a very conventional situation where fiduciary obligations are recognised (namely principal and agent).

    The first applicant was the “real” client, with the second applicant being the land-holding nominee, such that the confidential relationship between the second respondent and the second applicant necessarily extended to the first applicant. This is clear from the combination of paragraphs 1(c) and 2(a) of the draft statement of claim, where the applicants plead:

1.    The first applicant, Investa Properties Pty Ltd, is and was at all material times:

a.    …

b.    …

c.    engaged via its subsidiaries in the business of property development, operating a development site at Cardena Drive (off Augusta Parkway), Augustine Heights, Ipswich, Queensland (the Brentwood Site).

2.    The second applicant, Investa Residential Group Pty Ltd (formerly known as Clarendon Residential Group Pty Ltd):

a.    Is, and was at all material times, a wholly owned subsidiary of Investa Properties;

b.    …

    It is not the applicants’ case that there is a fiduciary obligation owing to the second applicant which automatically flows to its holding company, the first applicant. Rather, the reverse is true, because the first applicant was the principal in the relationship with the second respondent (as the agent).

19    In my view, these submissions of the applicants cannot be sustained. The applicants have not pleaded facts which would support the finding of a fiduciary relationship between the first applicant and the second respondent in relation to Lot 191. I have formed this view for the following reasons.

20    First, the applicants concede, quite properly, that a fiduciary obligation owed to a company does not automatically transmit fiduciary obligations owed to its holding company. This concession is unremarkable – as a general proposition the fiduciary duty owed to a company is not owed to shareholders (The Bell Group Ltd (In Liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1 at 4389-4395; Pilmer v The Duke Group Ltd (in liq) at 178-179). It follows that although the second respondent concedes that pleaded facts support the possibility of a fiduciary relationship between himself and the second applicant, any fiduciary relationship between the first applicant and the second respondent must arise because of the relationship between those particular parties.

21    Second, and importantly, in my view no relationship between the first applicant and the second respondent is apparent on the pleadings. I am not satisfied that the broad statement in paragraph 1(c) of the draft statement of claim that the first applicant “engaged via its subsidiaries in the business of property development” equates to any engagement of the second respondent by the first applicant, or the creation of any relationship between them.

22    Similarly, and contrary to the submission of Mr Murr SC for the applicants at the hearing, I am not satisfied that that statement supports “a primary allegation” of the applicants that the first applicant was the active company rather than a mere holding company of the second applicant (transcript 10 May 2013 p 47 ll 13-14). Rather, as submitted by Mr O’Brien for the second respondent, paragraph 2 of the draft statement of claim pleads that the second applicant was, at all material times, the active party. That this is so is evident from the claim in paragraph 2 that the second applicant owned the relevant land, was the entity which contracted with the real estate agents in connection with the sale and marketing of the land, and was the vendor in contracts of sale of the land the subject of these proceedings.

23    Accordingly, I accept the submissions of the second respondent in relation to Lot 191 and the absence of a fiduciary relationship between himself and the first applicant.

Lot 170

24    The applicants do not plead that a formal contract was executed in accordance with PAMDA between either the second or the fourth respondent and the applicants in relation to Lot 170. Rather, in paragraphs 36A to 36H of the draft statement of claim the applicants plead (in summary) that:

    By the letter of 16 July 2008 both applicants offered the fourth respondent the commission for the sale of Lot 170.

    The fourth respondent accepted that offer “expressly, at a time and in a manner unknown to Investa Properties and Investa Residential Group” or alternatively by the provision of real estate agent services in connection with the sale and marketing of Lot 170.

    Alternatively both applicants offered the second respondent (for the fourth respondent) a commission for the sale of Lot 170, which was accepted expressly or impliedly.

    The contract or contracts arising from the acceptance of those offers contained implied terms in the same terms as the express term alleged in paragraph 31 and the implied term alleged in paragraph 33. Paragraph 31 alleges an express term found in the PAMDA contract for the sale of Lot 191, namely:

When performing this service, the agent must comply with the code of conduct for agents as set out in the Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001 (Qld).

Paragraph 33 alleges an implied term of the PAMDA contract for the sale of Lot 191, namely duties owed to the second applicant:

(a)    to take reasonable care in the performance of its duties;

(b)    of fidelity and good faith; and

(c)    of mutual trust and confidence.

25    The second respondent contends that the applicants’ case has a fundamental flaw – namely that there could be no effective contract of appointment of the fourth respondent in relation to Lot 170 between either of the applicants and the fourth respondent because s 134(3) of PAMDA provides that an appointment which is not in the required form 22a of PAMDA is ineffective from the time it was made. The second respondent contends that the legislation means precisely what it suggests – namely that no agreement for appointment is enforceable. Further, and in any event, the second respondent contends that no proper case can be maintained that the first applicant entered into any contract with the fourth respondent involving Lot 170.

26    In relation to the second point raised by the second respondent, I accept the submission that the pleaded facts do not support a finding that a contractual relationship existed between the first applicant and the fourth or second respondents in respect of Lot 170. I have formed this view in light of the undisputed evidence before the Court that:

    the second applicant was the owner of Lot 170.

    the letter dated 16 July 2008 to the second respondent from Mr Nankervis in which Mr Nankervis offered the fourth respondent the commission to sell Lot 170 was on behalf of the second applicant only.

    no formal contract exists between the first applicant and the fourth (or second) respondent in relation to Lot 170.

    Other engagements of the fourth respondent as real estate agent to sell other lots appear to have been executed on behalf of the second applicant only. The PAMDA form 22a dated 16 July 2009 defines the property the subject of the appointment of the real estate agency as Stage 2A Lots 173-215 and Stage 2B Lots 216-249, and describes the vendor/client as Clarendon Residential Group Pty Ltd, which is the previous name of the second applicant. Curiously, an earlier PAMDA form 22a form executed by the fourth respondent on 30 September 2008 and Mr Nankervis on 1 October 2008 in related to other lots was signed by Mr Nankervis on behalf of “Investa Property Developments Pty Ltd”, an entity which is neither applicant in this proceeding.

27    Further, like the position in respect of Lot 191, I accept the submission of the second respondent that no facts are pleaded to the effect that the first applicant had any interest in Lot 170 or that it stood to receive any profits itself from the development and sale of that lot. The material before the Court indicates that the only entity who stood to gain from the realisation of any lots (including Lot 170) was the second applicant as the owner. Similarly it was only the second applicant which could have suffered any loss from any wrong done by the second respondent if it was a fiduciary.

28    I do not accept that any pleaded facts support a claim that both applicants offered the fourth respondent and/or the second respondent the commission for the sale of Lot 170.

29    In relation to the first point concerning Lot 170, namely the objection of the second respondent to any contractual claim of the applicants against the second and fourth respondents in relation to Lot 170, I note that this objection is supported by the fourth respondent. I will now turn to this issue and in particular the submissions of the fourth respondent on this point.

The second and fourth respondents – contractual position concerning Lot 170

30    The opposition of the second and fourth respondents to an order granting leave to the applicants to file the draft statement of claim in this context is founded in paragraphs 26, 26A, 27 and 28 of the draft statement of claim. These paragraphs read as follows:

26.    On or about 1 October 2008, Investa Residential Group entered into an agreement with the fourth respondent, Oliver Hume South East Queensland Pty Ltd, called Appointment of Real Estate Agent Sale and Purchases Agreement (Form 22a) pursuant to the Property Agent and Motor Dealers Act 2000 (Qld) (PAMDA)

Particulars

Appointment of Real Estate Agent Sale and Purchases Agreement (Form 22a) dated 1 October 2008.

26A.    On or about 16 July 2009, Investa Residential Group entered into a further agreement with Oliver Hume SEQ called Appointment of Real Estate Agent Sale and Purchases Agreement (Form 22a) pursuant to PAMDA. This agreement and the agreement of 1 October 2008, referred to in paragraph 26 above, are referred to collectively as “the Agent Agreements”.

Particulars

Appointment of Real Estate Agent Sale and Purchases Agreement (Form 22a) dated 16 July 2009.

27.    Pursuant to the Agent Agreements, Oliver Hume SEQ agreed to provide real estate agent services in connection with the sales and marketing of the development of the Brentwood Site.

28. At all material times Oliver Hume SEQ was a licensed real estate agency pursuant to the PAMDA.

31    In addition to the submissions made by the second respondent in relation to this issue, the fourth respondent contends, in summary, that:

    The relief sought against it in the draft statement of claim in relation to Lot 170 arises only if the applicants establish that the fourth respondent was a “real estate agent” appointed in accordance with the provisions of PAMDA.

    Beyond paragraphs 26, 26A, 27 and 28 of the draft statement of claim, no further material facts or particulars are pleaded by the applicants in relation to the appointment of the fourth respondent.

    The Court is in a position to look at the documents alleged to give rise to the alleged agency agreement and assess whether the allegations in these paragraphs are sustainable.

    It is clear that no PAMDA form 22a was executed referable to Lot 170 purporting to appoint the fourth respondent as a real estate agent.

    In paragraphs 30, 31 and 33 of the draft statement of claim the applicants also purport to rely on PAMDA to substantiate a contract between themselves and the fourth respondent concerning the sale of Lot 170. In paragraph 34 of the draft statement of claim the applicants plead fiduciary duties owing by the second and fourth respondents to both applicants which are said to arise by reason of the contractual engagement of the fourth respondent as real estate agent.

    In the absence of a valid PAMDA form 22a executed by either of the applicants and the fourth respondent in relation to Lot 170, any purported engagement of the fourth respondent as agent was ineffective pursuant to s 134(3) of PAMDA. Accordingly, no valid contract existed between the applicants and the fourth respondent.

32    The submissions of the fourth respondent are also relevant to the position of the second respondent, who was a director and employee of the fourth respondent at all material times.

33    The applicants reject the proposition that the absence of an executed PAMDA form 22a precludes the existence of a contract between the applicants and the fourth or second respondents. In summary, the applicants submit that:

    the PAMDA says nothing about any terms in form 22a other than the appointment of the real estate agent.

    the PAMDA does not preclude the client from enforcing other terms in a non-complying but duly executed form 22a.

    the PAMDA says nothing about contracts for real estate agent services that are not in the approved form, except that they cannot be effective appointments, and therefore could not entitle the real estate agent to act and to receive a reward for acting.

34    The applicants submit further that PAMDA does not invalidate the contracts for which the applicants contend.

35    In Polar Aviation Pty Ltd v Civil Aviation Safety Authority [2012] FCAFC 97 at [42]-[43] the Full Court of the Federal Court cited with approval Beaumont J in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (unreported, Beaumont J, 13 September 1994) where his Honour said:

Where a point of law has to be decided, and the judge is satisfied that this can be done by him appropriately, thereby avoiding the necessity of, and expense in going to trial, he is entitled to determine the point: cf Williams & Humbert v W & H Trade Marks [1986] AC 368.

36    In these circumstances where it appears that all material facts and particulars have been pleaded by the applicants concerning the appointment of the fourth respondent to sell Lot 170, it is appropriate for me to determine the question whether in fact that appointment was valid.

37    In my view the submissions of the applicants in respect of the existence of a valid contract of appointment for the sale of Lot 170 are not sustainable. I have formed this view for the following reasons.

38    First, s 134(3) of the PAMDA is very specific in its terms. Section 134 provides:

134 Form of appointment

(1) The appointment must be in the approved form.

(2) The approved form must include a prominent statement that the client should not seek independent legal advice before signing the appointment.

(3) An appointment that does not comply with subsection (1) is ineffective from the time it is made.

39    “Ineffective” is not a word that lends itself to ambiguity. The Macquarie Dictionary defines “ineffective” as “not effective”. “Effective” means “actually in effect”, and “in effect” is defined relevantly as “be in effect, be in operation, as a law”. On a plain reading of s 134, an appointment which is ineffective, must not be a valid appointment. A contract whereby a real estate agent is purported to be appointed which does not comply with s 134(1) must not be a valid contract of appointment.

40    Second, this construction of s 134(3) is consistent with the observations of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78]:

However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning…

41    In this case the ordinary meaning of s 134(3) is that an appointment of a real estate agent which does not comply with s 134(1) is not effective. In my view the context in which the words appear in the statute supports the literal interpretation of “ineffective” according to its ordinary meaning. In particular, I note that s 134 is in Pt 2 Div 2 of PAMDA, which sets out highly prescriptive provisions detailing the terms of engagement of a real estate agent, including fees charges and commissions, expenses the real estate agent is authorised to incur in connection with the performance of each service, timing of payment of fees charges and commissions, the exclusivity or otherwise of the appointment, the date of commencement of the appointment, revocation of the appointment, and proper execution of the appointment. The detailed and comprehensive nature of these provisions suggests an intention on the part of the legislature that only an appointment complying with the statutory requirements would be effective.

42    Third, I note that the Court of Appeal of Queensland in Yong Internationals Pty Ltd v Gibbs [2011] QCA 161 accepted as uncontroversial the proposition that failure to make an appointment in the approved form 22a results in an invalid appointment (at [31]), although substantial compliance with the form would be sufficient (at [32]). In this case there is no question of substantial compliance with the PAMDA form 22a in relation to Lot 170.

43    Fourth, I note that at the hearing the applicants suggested that the PAMDA form 22a executed on 1 October 2008 actually did include Lot 170 in the property details, because the property details included the following description:

Lot: 9, 88, 89-92, 99-110, 122-131, 136-145, 54-60, 72-78, 400-412, 413-416, 107, 131, 152-

44    The applicants submitted that the reference to “152 –” included Lot 170.

45    In my view this submission has no merit, in light of:

    the fact that the applicants have not pleaded that the engagement of either the second or fourth respondents was pursuant to a PAMDA form 22a; and

    the apparent non-sequential nature of the list of lots in the property detail description, such that no proper inference can be drawn that all lots numbered after Lot 152 were contemplated by the retainer of the fourth respondent as real estate agent at that time.

46    Finally, the tenor of the applicants’ submission is that while the appointment of a real estate agent may be ineffective because it does not comply with the statute, the validity of any associated contract for the real estate agent’s services would not be affected by the non-compliance. In my view, this submission has little merit. Indeed, if the appointment of the real estate agent is not valid, it scarcely makes sense that the performance of services pursuant to that appointment could nonetheless be the subject of a valid contract. In my view, such a submission runs contrary to the policy of PAMDA, and in particular Pt 2 Div 2 of that Act.

47    It follows that the objections of the second and fourth respondent to the draft statement of claim, so far as concerns a contractual retainer of the fourth and/or second respondent for the sale of Lot 170, are substantiated.

Fiduciary obligations in the absence of a valid contract

48    In relation to Lot 170 however, the applicants submit that irrespective whether the second or fourth respondents were engaged pursuant to an effective appointment in accordance with the PAMDA, fiduciary obligations can nonetheless have arisen between those respondents and the applicants in relation to Lot 170.

49    It is clear that fiduciary obligations may arise independently and in addition to contractual obligations imposed by a formal contract between parties. For example, as Dixon J observed in Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929) 42 CLR 384 at 408:

The subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking for which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm.

(Emphasis added.)

50    Similarly, in United Dominions Corporation Limited v Brian Proprietary Limited (1985) 157 CLR 1 at 16, Dawson J noted in relation to a joint venture that:

Although the relationship between participants in a joint venture which is not a partnership will be governed by the particular contract rather than extrinsic principles of law, the relationship may nevertheless be a fiduciary one if the necessary confidence is reposed by the participants in one another. Of course, in a partnership the parties are agents for each other and this may constitute a separate reason for the fiduciary character of a partnership. There may be no such agency between participants in a joint venture but, as Dixon J pointed out in Birtchnell v. Equity Trustees, Executors and Agency Co. Ltd. (1929) 42 CLR 384, at pp. 407-408, even in a partnership it is really the mutual confidence between partners which imposes fiduciary duties upon them and the same confidence may, in appropriate circumstances, be found to exist between participants in a joint venture.

51    However it is also clear that the scope of fiduciary obligations may be influenced by the contractual relationship between the parties. As Mason J observed in Hospital Products at 97:

That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.

52    In this case I have found that no effective contract existed between either of the applicants and either the second or fourth respondents in relation to Lot 170 because of the operation of s 134(3) PAMDA. The applicants cannot sustain a plea of a fiduciary relationship between these parties on that basis. Material facts or particulars must be pleaded to support a claim of a fiduciary relationship other than by reference to contract.

53    The applicants contend that, in relation to Lot 170, fiduciary obligations are in fact pleaded separately from any contractual foundation in paragraphs 36G and 36H of the draft statement of claim. These paragraphs provide as follows:

36G.    Further and alternatively, Oliver Hume SEQ and Barclay were in a position of confidence in relation to Investa Properties and Investa Residential Group in connection with the sale and marketing of the Fossil Site because:

(a)    Investa Residential Group engaged Oliver Hume SEQ, and thereby Barclay, to provide real estate agent services to Investa Residential Group in connection with the sales and marketing of other lots in the Brentwood site;

(b)    Pursuant to that engagement, Oliver Hume SEQ, by Barclay, provided real estate agent services to Investa Properties and Investa Residential Group in connection with the sales and marketing of other lots in the Brentwood site;

(c)    While acting in the course of that engagement and otherwise because of it, Barclay and Oliver Hume SEQ acquired knowledge of the Fossil Site, including plans, approvals, reports and valuations relating to it and proposals affecting it;

(d)    While acting in the course of that engagement and otherwise because of it, Barclay and Oliver Hume SEQ also acquired knowledge of Investa Properties and Investa Residential Group’s intentions and requirements in relation to the sale and marketing of the Fossil Site;

(e)    Barclay and Oliver Hume SEQ provided real estate agent services in connection with the sale and marketing of the Fossil Site, particulars of which are given in paragraph 36E above; and

(f)    Investa Properties and Investa Residential Group, on the one hand, and Barclay and Oliver Hume SEQ, on the other, acted throughout on the basis that Barclay and Oliver Hume SEQ were acting in the interests of Investa Properties and Investa Residential Group in relation to the sales and marketing of the properties in the Brentwood site, including the Fossil Site.

36H.    Because of the facts alleged in paragraph 36G above, Barclay and Oliver Hume SEQ had fiduciary obligations to Investa Properties and Investa Residential Group in the same terms as the fiduciary obligations alleged in paragraph 34 above.

54    I accept the submission of the applicants that a separate fiduciary relationship could have arisen between the second applicant and either the second or fourth respondent in relation to Lot 170. For reasons I have already given (and which are unnecessary to repeat) I do not accept that the pleaded facts support a claim that a fiduciary relationship could have arisen between either of those respondents and the first applicant.

55    I note further that paragraph 34 of the draft statement of claim, to which reference is made in paragraph 36H, refers to the position of the second and fourth respondents and their relationship with the applicants “at all material times during the engagement of Oliver Hume SEQ pursuant to the Agent Agreements”. The “Agent Agreements” are defined in paragraph 26A of the draft statement of claim as the two PAMDA form 22a agreements executed on 1 October 2008 and 16 July 2009. In light of the fact that no PAMDA form 22a agreements were executed in relation to Lot 170, there is no basis upon which terms implied into such agreements could be relevant to any fiduciary relationship involving Lot 170. No pleading to this effect is sustainable.

The fourth respondent and paragraph 31 of the draft statement of claim

56    As no PAMDA form 22a was executed in relation to Lot 170, no question arises as to whether the notation on the PAMDA contract after the signature clause was a term of any contract involving that Lot.

57    The position is different however in relation to Lot 191, where a PAMDA form 22a was executed. Paragraph 31 of the draft statement of claim reads as follows:

31.    The following term was an express term of the Agent Agreements (Agent Agreements Express Terms):

When performing this service, the agent must comply with the code of conduct for agents as set out in the Property Agents and Motor Dealers (Real Estate Practice Code of Conduct) Regulations 2001 (Qld).

58    Paragraph 31A particularises material contents of the Code of Conduct.

59    Mr Murr SC submitted in summary that:

    although the notation was positioned in the PAMDA form 22a after the signature clause, whether it had contractual effect falls to be decided on the usual principles concerning whether an unsigned note does or does not import contractual terms.

    the relevant principle involved is whether the person against whom the contractual term is alleged has had the terms adequately drawn to their attention.

    it is a plainly arguable proposition that inserting a note of that kind immediately adjacent to or immediately in the vicinity of a signature block so that it cannot be missed is something which is capable of importing into the contract the terms of that notation.

    this is particularly the case where the parties have been dealing with each other on the basis of being real estate agent and land developer/land owner, and have been dealing with each other on the basis of the prescribed PAMDA forms which includes that notation.

60    The fourth respondent adopted earlier submissions of the second respondent on this point, including that:

    it is not apparent that Parliament intended the provisions of the Code of Conduct to be incorporated as contractual terms into appointments of real estate agents executed in accordance with PAMDA.

    the fact that the notation appears after the signature clause on the PAMDA form 22a demonstrates that the notation was simply an alert to vendors that the real estate agent was required to comply with the Code of Conduct.

61    In my view it is at least an arguable proposition that, by course of conduct between the relevant applicant and the fourth respondent involving execution of PAMDA form 22a documents, the notation after the signature clause could have been incorporated into the contract between them such that the provisions of the Code of Conduct also became terms of the contract of appointment. However at present the draft statement of claim does not plead facts supporting such an allegation. The applicants will need to amend paragraph 31 should they decide to pursue such an allegation.

Conclusion

62    In my view the appropriate order is that leave to file the Draft Second Proposed Further Amended Statement of Claim proposed by the applicants be refused. However as I have already observed, it appears that the respondents do not oppose the grant of leave to the applicants to replead. The applicants should do so in light of the reasons in this judgment.

63    In addition to orders refusing leave and for costs, I will also make timetabling directions for filing of amended pleadings in this proceeding.

Associate:

Dated:    17 May 2013