Important to protect against potential liability for prior agent’s commission
We have recently obtained a favourable judgment for Barfoot & Thompson (“Barfoots”); whereby, they recovered commission due under a sole agency agreement from vendors who sold the property privately shortly after the sole agency expired. Barfoot & Thompson Limited v Gore Nominee Limited & Hon Thi Thuy Hoang  NZDC 14564
The sole agency agreement included a provision that the vendors must pay the commission if they entered into a private agreement to sell their property within six months following expiry or termination of the agency, through the instrumentality of Barfoots or to a purchaser introduced by Barfoots. Barfoots claimed that the purchasers, Ms Zhang and Mr Chen, were introduced to the property during the term of their sole agency.
Shortly after termination of the sole agency, Barfoots provided, at the owners’ request, a list of people introduced to the property during the agency period. By providing the list, Barfoots is in compliance with their obligations under Rule 9.11 of the Real Estate Agents Act (Professional Conduct and Client Care). The list included the names Vicky Zhang and Yunlong Chen, as well as various other names, some of whom were only first names without surnames and others only surnames.
The vendors proceeded to enter into an agreement for sale and purchase of the property to Ms Meilan Zhang, who then transferred the property into the names of Ms Zhang and Mr Chen. When Barfoots became aware of the sale, they requested that the vendors pay the commission due but the vendors refused to pay; following which, Barfoots issued proceedings in the District Court (the “Court”).
Evidence was presented that Meilan Zhang also uses the name Vicky Zhang, and Court accepted that the names referred to the same person. The Court held that it was clear the list of people introduced did not contain sufficient details to be relied upon, and that it was incumbent upon the vendors to make inquiries of purchasers if they were concerned they may have been introduced to the property by Barfoots during the term of their agency. The Court also held that Mr Chen’s name was included on the list and that he was clearly a purchaser.
A vendor entering into a private sale, after the expiry of a sole agency agreement, should protect themselves against a potential claim by requiring the purchasers to agree to pay any commission for which the vendor is liable on the sale.
If you’d like to discuss this or require assistance dealing with any dispute over submission please do not hesitate to contact Brett Vautier.
Source: Agent Brief December 2017
Author: Sarah Leppard