Breaking News – Rebate Statement Issues Resolved By Parliament

By Mark Skermer, Principal, MST Lawyers and Evelyn Marcou, Senior Associate, MST Lawyers

MST Lawyers is delighted to report that the Justice Legislation Miscellaneous Amendment Act 2018 (Vic) (Act) was passed by the Legislative Council on 18 September 2018 and received Royal Assent on Tuesday of this week.

This is great news for Victorian real estate agents as it provides certainty moving forward in relation to the question of whether rebate statements complied with the legislative requirements of the Estate Agents Act 1980 (Vic) and, more importantly, the effect of non-compliance on the ability of an agent to sue for or to retain commission.

Background

As agents will be aware, the matter of Advisory Services Pty Ltd v Augustin & Anor [2017] VCC 1195 was decided by Her Honour Judge Marks of the County Court on 29 August 2017.

The substance of that decision was that the agent’s authority in that matter failed to comply with section 49 of the Estate Agents Act 1980 (Vic) insofar as it did not contain the statutorily required information for the rebate statement component of the authority.

The effect of this finding was that by reason of this failure, an agent could not sue for commission under section 50 of the Estate Agents Act 1980 (Vic).

This decision was appealed, and the Court of Appeal of the Supreme Court handed down judgment on 19 April 2018 dismissing the appeal, which meant the original decision stood.

This naturally caused a great degree of concern within the real estate community given the wide-reaching implications of the decisions both at first instance and then on appeal. At stake was the ability of agents to sue for commissions and to retain commissions already received given that the form used in the case was an approved form and was used widely in Victoria.

MST Lawyers is aware of instances where sellers sought to subsequently rely on this decision to recover commissions paid.

Legislative Process

As a result of these matters, various stakeholders within the community sought to have legislation introduced to provide a solution which did not punish estate agents for effectively following the rules.

Pleasingly, the Victorian Government introduced legislation into the Parliament to deal with this matter.

The Act became law on Tuesday but is retrospective in the sense that it applies from 9 June 2018 and the Act prohibits any action for recovery of commission prior to 9 June 2018.

The Act amends section 49A(5) of the Estate Agents Act 1980 (Vic) and includes the following:

An estate agent whose rebate statement contained in an engagement or appointment is in a form approved by the Director does not fail to comply with subsection (4) merely because the rebate statement does not contain—

                                            (a)   the statement referred to in subsection (4)(a); or

                                            (b)   the statement referred to in subsection (4)(c).

 

This should hopefully provide clarity on this issue moving forward and be a very welcome announcement for estate agents.

Mark Skermer is the current Chairperson of the Estate Agents Council and would be delighted to discuss these issues or estate agents practices more generally.

If you have any questions about this article or require assistance, please contact either Mark Skermer or Evelyn Marcou of MST Lawyers by email or call +61 3 8540 0200.