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    •  Effective cause of sale
        -  Termination due to purchaser's default

Termination due to purchaser's default 

National Andrews Pty Limited was a real estate agent. It went into liquidation under a creditor’s voluntary winding up, following voluntary administration. Mr Kukolovski was appointed as liquidator of the company.

Mr Kukolovski sought the advice of the Court whether an amount of $62,500.00, claimed by National Andrews Pty Limited as the agency fee for a sale that did not go through, was money that validly belonged to National Andrews Pty Limited, or whether it should be returned to the vendors.

Georges and certain others, the defendants to the action, had owned a home unit development in Granville. They had appointed National Andrews Pty Limited as the selling agent for that property and had entered into a written agency agreement.

A contract of sale had been entered into, and a deposit of $125,000.00 had been paid by the purchaser to National Andrews. Under the agency agreement, the agency fee was half this amount, $62,500.00.

The sale did not go through, and Georges and the other vendors terminated the contract and stated that they would retain the deposit. The purchaser’s solicitors apparently accepted this, and authorised released of the deposit to the vendors.

Mr Kukolovski, who was now in control of National Andrews Pty Limited as its liquidator, sent a cheque for half the deposit, $62,500.00, to the vendors, and retained the other half of the deposit pending determination by the Court as to whether the company could retain it as its agency fee.

The Court held that, on the proper construction of the agency agreement, National Andrews Pty Limited did not obtain the right to recover any fee from the vendors, because termination of the contract occurred because of the purchaser’s default and not because of the vendor’s default.

The Court stated that the general position, where the contract is silent, is as was stated in a previous case:

“Where an agent is employed on a commission to sell a property (and non completion is not due to the default of the vendor) the commission only becomes payable if the sale is completed … if the plaintiff was the effective cause of that sale … he would at common law have earned his commission.”

The Court therefore held that the amount of $62,500.00 should be returned to the vendors. 

Kukolovski v Georges [2011] NSWSC 359