Commentary: s49A of the Estate Agents Act 1980 (Vic) and Advisory Services Pty Ltd (t/a Ray White St Albans) v Augustin & Anor [2018] VSCA 95

Last updated: 4/10/2018

Note: after publishing this commentary in April 2018, the Justice Legislation Miscellaneous Amendment Act 2018 (Vic) was enacted to make amendments to the Estate Agents Act 1980 (Vic).  The commentary below discusses the position before the Estate Agents Act 1980 (Vic) was amended:

Executive Summary

In April 2018 the Supreme Court of Victoria – Court of Appeal confirmed that an estate agent was not entitled to payment from the vendor (eg, the commission) as the written engagement between the estate agent and the vendor did not contain prescribed terms that the Estate Agents Act 1980 (Vic) (the Act) required.

This may mean that other Victorian landowners who have, at one stage, appointed an estate agent, may now be entitled to claim payments made to their estate agents if their respective written engagement or appointment likewise failed to include the prescribed terms.

If you are an estate agent, or are/were a landowner who appointed an estate agent, you should seek legal advice about your options.   You can seek advice from:

(a) Mr Twidale, on 03 9225 6341, or twidale@vicbar.com.au. Mr Twidale is happy to meet with you for thirty minutes to have an obligation free discussion;

(b) your own solicitor;

(c) if you do not have a solicitor, you can contact the Law Institute of Victoria for a referral. You should ask to be referred to a solicitor who specialises in property law.

Can a landowner now reclaim payments made to their estate agent?

In Victoria, an estate agent is not entitled to claim payment from their client (eg, the commission) unless the agent holds a “written engagement or appointment” signed by their client (eg, the vendor).  The written engagement or appointment must contain prescribed information, including what is called a “rebate statement”.

The rebate statement must:

  • be in a form approved by Consumer Affairs; and
  • include in the statement the words “the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses” (the prescribed warning).

The failure to comply with these requirements is serious; the estate agent is not entitled to claim any payment from their client and may also be liable to a large fine.

In August 2017 the County Court of Victoria found that a Consumer Affairs approved rebate statement did not comply with the Act as it did not contain each and every word of the prescribed warning.  In April 2018 the Supreme Court of Victoria – Court of Appeal upheld the decision of the County Court of Victoria.

Consequences

If a written engagement or appointment does not include each and every word of the prescribed warning, then the estate agent may not be able to charge a commission, or must return it, as the case requires.

Commentary that may be of interest to landowners

If your written engagement or appointment does not contain each and every word of the prescribed warning, the estate agent may not be entitled to payment (eg, commission), or must repay the payment to you (as the case requires).

You should seek legal advice as the circumstances of your case will largely determine whether you have a right to bring a claim against the estate agent.   You can seek advice from:

(a) Mr Twidale, on 03 9225 6341, or twidale@vicbar.com.au. Mr Twidale is happy to meet with you for thirty minutes to have an obligation free discussion.

(b) your own solicitor;

(c) if you do not have a solicitor, you can contact the Law Institute of Victoria for a referral. You should ask to be referred to a solicitor who specialises in property law.

Commentary that may be of interest to estate agents

It is important to have your template written engagements or appointments carefully reviewed by a lawyer to ensure they comply with the Act.

If you are faced with a claim by a vendor to be reimbursed any payments you have received (eg, the commission), you should urgently seek legal advice.   If the written engagement or appointment did not contain each and every word of the prescribed warning, the circumstances of your case may mean that you can seek indemnification from a third party (eg, a lawyer, or a professional body) who you relied upon to prepare a compliant written engagement or appointment template.   A lawyer can advise you on this.

You can seek advice from:

(a) Mr Twidale, on 03 9225 6341, or twidale@vicbar.com.au. Mr Twidale is happy to meet with you for thirty minutes to have an obligation free discussion.

(b) your own solicitor;

(c) if you do not have a solicitor, you can contact the Law Institute of Victoria for a referral. You should ask to be referred to a solicitor who specialises in property law.

Important Notice and Disclaimer

This page is intended to provide commentary and general information, and does not constitute legal advice, and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive.

You should seek legal or other professional advice before acting or relying on any of the content.

Liability limited by a scheme approved under professional standards legislation.