Property News June 2006
Retail Leases Amendment Act 2005 (NSW) passed on 17 November 2005
The Act overhauls retail leases to make it easier for retailers and landlords of retail shops to do business in New South Wales. The 5 most important features of the new Act are:
1. The regulation of the collection, management and refund of cash security bonds by the Office of Fair Trading.
2. The Disclosure Statement has been updated so parties will have more information before signing a lease such as including cashflow commitments arising from rent, outgoings, advertising and promotion costs, and tenants are better informed with the rights in the area of lease assignment.
3. An improved dispute resolution process determine current market rent. More certain procedures for setting the market rent increases where a landlord and tenant cannot agree.
4. An extension of the applicable retailers in the First Schedule. Some new comers are internet cafes, pet grooming salons, toy and game repair shops, water filter shops and travel agencies.
5. A significant amendment is to allow the Retail Leases Division of the Tribunal to hear disputes concerning “misleading and deceptive conduct” and to update the monetary jurisdiction of the Tribunal. Matters more appropriately dealt with by the Supreme Court are to be still transferred.
Amendments to Strata Scheme Management Regulations
Section 75A of the Strata Schemes Management Act requires the establishment of sinking funds and 10-year sinking fund plans, and to review those plans regularly. Currently, section 75A only applies to owners corporations established after 7 February 2005. As from 1 May 2006 s.75A will extend to all owners corporations apart from certain two lot strata plans.
If the SP number is 50,000 or more, then the compliance date is 1 July this year. Between 30,000 and 50,000, compliance must be by 1 July 2007, and SP numbers between 10,000 and 30,000 must comply by 1 July 2008, and the rest on 1 July 2009.
The case of Tropac Timers and A-One Ashphalt concerns the failure by the purchaser to complete a contract for the sale of land because of an unfulfilled special condition. The special condition imposed on the vendor an obligation to carry out certain work. The vendor purported to terminate the contract on the grounds of the purchaser’s refusal to complete the Contract amounted to a repudiatory breach. The purchaser sought specific performance of the contract and the vendor sought to have the proceedings struck-out.
The Court held that, whether in the case of an actual or an anticipatory breach, the party may only terminate a contract on the basis of a breach by the other party if he himself is ready and willing to perform his part of the contract. Therefore, since there was an issue as to whether the vendor was guilty of its own breach so as to disentitle it from rescinding from the purchaser’s breach, the application was dismissed.
Easements
3 statutory provisions which apply to the creation, modification or extinguishment of easements either temporarily or permanently are:
The Common Law does not assist developers in seeking a temporary or permanent easement over adjoining land to conduct a project. Even where the developer has obtained the agreement of a neighbour in obtaining a licence over adjoining land for use for a temporary purpose, Australian courts may not enforce a contractual right of entry (Cowell v Rosehill Racecourse Co (1987) 56 CLR 605).
Litigation arising out of a neighbour seeking an injunction against a “trespass” or a developer seeking a licence to use land temporarily usually occurs at the most difficult time financially in a project [Bendall Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 465]
However the statutory provisions of
- s.88K of the Conveyancing Act, 1989
- s.40 of the Land and Environment Court Act, 1979
- The Access to Neighbouring Lands Act, 2000
can assist developers in seeking temporary easements and also with permanent easements or rights of way for utilities and services.
Cases under s.88K are conducted in the Equity Division of the Supreme Court. Cases under the Access to Neighbouring Land Act 2000 [from 1 January 2001] are conducted in the Local Court with appeal on questions of law to the Land and Environment Court . This legislation covers most applications for access for the purpose of carrying out building work or development
Section 40 of the Land and Environment Court 1979 was assented to on 2 October 2002 and can only apply in circumstances where the Court has determined to grant the development consent on an appeal.
In the opinion of Justice Bryson of the Supreme Court of NSW factors determining the granting of or the variation or extinguishment of an easement are: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement, as well as considerations of the public interest. Issues of compensation and the costs of the litigation are also matters to be seriously considered before an application is made.
Cases and legislation of note for Agents & Auctioneers in NSW
The Australian Competition & Consumer Commission (“ACCC”) has issued a guide to the Trade Practices Act for the real estate industry called “Fair and Square” dated May 2005 (“Guide”). Obtain further information on the ACC’s website on www.accc.gov.au. The Guide discusses misleading or deceptive conduct and anti-competitive behaviour such as price fixing, market sharing, exclusive dealing and unconscionable conduct, recognising that small business may be at a disadvantage when dealing with larger business and so the Guide was written for owners, managers and advisers to the real estate industry and providing examples relevant to that particular industry.
Some recent cases concerning real estate agents are as follows:
Hughes v. Egger (No.2) (2005) NSW SC 323. 5 April 2005
This case held that the trustees for sale are under a duty to sell as expeditiously as possible and to get the best possible purchase price for the land. Once the order appointing the trustees is registered the land vests in the trustees and the former owner’s only rights are to compel due performance of the trust and to share in accordance with their beneficial interests the proceeds of sale. In addition, Section 66I of the Conveyancing Act recognises that the Court may allow current owners of a property to purchase the property either at auction or otherwise on such terms as to non-payment of deposit or as to the setting off or accounting of any purchase money for any part thereof as would seem reasonable.
Prestige Residential Marketing Pty Limited v A&M Short Investments Pty Limited & Anor (2005) NSWSC 485.27 May 2005
This case involved the defendant real estate agents services for the Plaintiff Prestige Residential Marketing Pty Limited in respect of the sale of a property. The agent claimed commission in the sum of $44,000. By way of a compromise the Plaintiff only offered $11,000. The offer was not accepted. The agent brought an application in the CTTT claiming a determination of reasonable fees pursuant to Section 41A(4) of the Act and the total value of the claim was expressed to be $44,000. There is a limitation on the Tribunal’s jurisdiction to make orders which at that time was $25,000. The Plaintiff unsuccessfully appealed to the Supreme Court.T
Big Leap Developments Pty Limited v Statewide Properties (Commercial) (2004) NSW CTTT 697. 26 November 2004
The Applicant was the owner and developer of 8 units. The Applicant sought a review of agent’s commission paid or to be paid to the agent. The Applicant sought a declaration that the agent is not entitled to commission.
The Applicant disputed the fact that the owner and the developer of the property did not sign the Agency Agreement and did not give authority to the person who did and did not receive a copy within 48 hours of being signed on behalf of that person.
The Tribunal accepted that failure to comply strictly with the Act and the Regulations entirely deprived the agent of an entitlement to charge a fee or expense pursuant to the Act and the Regulation.
Authority for this strict interpretation is in the New South Wales Supreme Court, Court of Appeal decision in Overmyer Industrial Brokers Pty Limited v Campbells Cash & Carry Pty Limited (2003) Brown v. McCallum Real Estate Pty Limited (General) (2004) NSW CTTT 54 (12 January 2004).
The owner of a property sought an order from the Tribunal for relief from payment of a commission of $21,450. The owner had a 12 acre rural property near Ballina. On 9 May 2003 the owner entered an Exclusive Agency Agreement with the respondent agent for six months. The owner received no calls or follow up for three weeks after signing the agreement. The agent made efforts to collects information, arranged to put a sign on the property and developed a marketing strategy to sell the property.
The owner’s sister who lived on the property was approached by a passer-by who expressed an interest in purchasing the property. The owner wrote a handwritten letter to the agent and slid it under his door rescinding the agreement from 1 June 2003. The purchaser swore that he was introduced to the property as a result of the agent’s signage. He did not wish to deal with the agent and preferred to deal directly with the owner. The purchaser exchanged and settled on 20 July 2003 and the agent was successful for a claim for full commission as agreed in the Agency Agreement. was the second defendant, Mr Thomson.
Allen & Supple v. Port Macquarie Hastings Real Estate Centre Pty Limited t/as LJ Hooker Port Macquarie (Commercial) (2004) NSW CTTT 57. A decision handed down on 16 January 2004. This is of the Consumer Trader & Tenancy Tribunal, Commercial Division.
The applicant owner made application to the Tribunal for an order to be relieved from payment of the commission and advertising expenses for a property at Port Macquarie. The Tribunal granted legal representation for both parties. They failed to reach conciliation under the Act. The owner argued unsuccessfully that Port Macquarie Hastings Real Estate Centre Pty Limited trading as LJ Hook Port Macquarie (Commercial) was firstly not entitled to any remuneration as it was not appropriately licensed as a business agent under the Act. Secondly, the owner argued successfully the requirements of clause 3.1(c) of the Agency Agreement dated 5 November 2001 were not met as there were no introduction of the purchaser to the applicants or to the property, as the property had already been introduced to the owner through a previous real estate agency. If there had been a lapse of the original introduction by the previous real estate agency which was made by Port Macquarie First National Real Estate the “First Agent”, around January 2001, there had been no reintroduction by the respondent company.
If the respondent company was found to have introduced or reintroduced the purchasers to the owner for the property, it is still not entitled to remuneration as it was not established that it was the effective cause of the sale, and that the respondent had not proved a causal link between its activities and the eventual sale.
Contact Annette Fontana at ForumLaw on 02 9560 3388 to discuss your property matters.