Commission Catastrophe Looms In Victoria

Modified on Mon, 21 May 2018 at 04:16 PM

Article published from Property Nerd 20/5/18 at 22:25

As we wrote about last week, the Victorian Court of Appeal of the Supreme Court (VCSA) ruled that a form distributed by the Real Estate Institute Victoria (REIV) did not include the specific rebate warning required by law.

As a result, the agent in the case before the court lost a commission of $385,000.

We discussed the specifics of the VCSA court decision in last week's article. To summarize:

The Exclusive Sales Authority form (ESA) distributed by REIV contained a modified rebate clause, which had been approved by Consumer Affairs Victoria. REIV had been making this form available for about 6 years.

But the VCSA ruled that the law required very specific rebate language that was not in the modified "short" form.

This ruling could have vast consequences, since some agents could lose commissions going back the full 6 years. Some say as much as a billion dollars is at stake.

And as of Thursday April 17th, we are seeing the first of the followup suits resulting from this ruling.

Marika Sutherland of Melbourne, described as an "elderly" woman, is seeking to prevent the collection of a commission on the sale in February 2017 of her property at 37 Oak Street, Beaumaris.

Her lawyers are seeking the 10% deposit Ms Sutherland paid on the $1.385 million property: $138,500. The actual amount of commission to be paid out is $81,616.

Globe Real Estate (GRE), the agency involved, has retained lawyers at Marsh & Maher to represent them. Last week we quoted Amy Sheggerud-Woods, a partner at Marsh & Maher who is representing GRE and its owner, Yufang "Kiki" Jiang.

Ms Sutherland's solicitor, Bill Gioutlou, filed an application with the court last August, claiming violation of the Estate Agent Act 1980, section 49A, claiming that consequently GRE is not due any commission.

GRE is, of course, opposing this.

Ms Jiang said, in a sworn affidavit, that she purchased the ESA form with the belief that it was valid as long as she used it as directed by REIV.

GRE is claiming that any responsibility for the mixup lies ultimately with REIV. If the court finds this is true, GRE could claim relief from REIV, including costs, damages, or losses from the legal proceedings.

For its part, REIV has filed claims denying negligence, as their form was approved by Consumer Affairs Victoria, and it is trying to get the Victorian government to amend the laws to prevent what it views as a looming catastrophe.

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