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Business Law

Seller forced to pay $1,650,000 commission on failed sale

In an earlier news article, we discussed the risks of sellers blindly signing agent’s appointments which often incorporate provisions requiring the seller to pay commission on sales which have not settled.  The REIQ standard terms for agent’s appointments contain that quite hazardous obligation, together with other provisions which might excite the interest of the seller’s lawyer if the seller thought to take advice before signing the Form 6. A particularly vivid demonstration on this occurred in the matter of Trappando Pty Ltd v Sunshine Group Pty Ltd [2023] QSC 87 in which the seller was found liable to pay their agent’s commission in the sum of $1,650,000 for a sale: Briefly, the circumstances were that the agent was appointed by the Defendant by a Form 6 appointment, which relevantly provided that the commission would be (where there was a sale price over $6,300,001 plus GST), the amount of the sale price over $6M plus GST.  The appointment went on to include the usual REIQ standard terms which provide that commission is payable: The agent introduced a buyer at a contract price of $7,500,000.  Under the terms of that contract, a deposit of $750,000 was paid. The seller terminated the contract, claiming to be entitled to the deposit of $750,000.  The agent claimed to be entitled to commission being $1,650,000. The obvious outcome is that the agent was claiming commission some $900,000 in excess of the deposit.  Ignoring for the time being the question of whether or not the seller could sue the buyer for that $900,000 as damages for breach of contract (there being some question in our mind about that given that the terms of the agent’s appointment were quite unusual), the buyer was put into external management and remained so, with at least some likelihood that there would be difficulties in any attempt to recover against it, and the result that the seller could well be $900,000 out of pocket for sale that did not proceed. The seller appealed the decision, but was unsuccessful yet again, failing to disturb the order that it paid the entirety of the commission.  This decision reflects the risks of signing Form 6 appointments to act which allow the agent to be paid commission in circumstances other than the settlement of the contract.  It also demonstrates the risks of a significant success fee being built into the agent’s commission, in those circumstances. For advice in relation to agent appointments, please contact our property lawyers Peter Muller at peterm@qbmlaw.com.au and Jessica Murray at jessicam@qbmlaw.com

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Employee’s Right to Disconnect

As of 26 August 2024, national system employees of non-small business employers (mainly employers of 15 or more employees, including in associated companies) have a “right to disconnect”.  This right applies to employees of small business employers (14 or less employees) as of 26 August 2025.  The Fair Work Commission published a draft of the right insofar as it would apply to the Business Equipment Award 2020 in July 2024.  That draft notes that section 333M of the Fair Work Act provides that unless it is unreasonable to do so, an employee may refuse to monitor, read or respond to contact, or attempted contact from their employer or third parties (relating to their employment) outside of their working hours, and that the section goes on to set out matters to be taken into account in deciding whether the employee’s refusal is reasonable. The proposed clause provides that the employer must not directly or indirectly prevent an employee from exercising their right to disconnect, but this does not prevent an employer from requiring the employee to monitor, or read or respond to contact outside of working hours where: The proposed clause goes on to suggest that contact is permissible where there is an emergency roster change or a recall to work, under that award.  As a result, there is some question as to whether it is intended that the employer is prevented from contacting the employee except in certain circumstances, or whether the employer can contact as much as it wants, the right is for the employee to ignore those attempts.  The fact that contact is “permissible” in some circumstances suggests that contact is not permissible in others. Of course, this was a draft of an award provision, it is unclear what form the right to disconnect will take in respect of each award. For advice in relating to commercial and business law, including employment, please contact Peter Muller at peterm@qbmlaw.com.au

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Caveat loan

Queensland Building & Construction Commission – Suspension or Cancellation of Building Licenses

The Queensland Building and Construction Commission are cracking down on licensing requirements for builders, contractors and subcontractors. Under Section 48 of the Queensland Building and Constructions Commission Act 1991 the Commission may suspend or cancel a license for a variety of reasons including where a builder or contractor’s financial circumstances do not satisfy the relevant financial requirements in accordance with the Commission’s policy. If builders or contractors receive a notice to suspend or cancel their licenses from the QBCC they must act quickly. Strict time limits apply to challenge such notices and to apply to have any decision by the QBBC either suspending or cancelling a license reviewed by the Queensland Civil and Administrative Tribunal. If you require assistance you can contact our partner Justin Mathews of our office on (07) 5574 0111 or email justinm@qbmlaw.com.au.

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Queensland Government Delays Commencement of Parts of the Building Industry Fairness (Security of Payment) Act 2017

Earlier this year, the Queensland Building and Construction Commission announced that Chapters 3, 4 and 5 of the Building Industry Fairness (Security of Payment) Act 2017 (“BIFSPA”) that relate to statutory progress payments and subcontractors charges would commence on 1 July 2018. The Government has now announced that Chapters 3, 4 and 5 of BIFSPA will not commence until 17 December 2018.  That means that payment claims, payment schedules and adjudication applications will continue to be governed by the Building and Construction Industry Payments Act 2004 (“BCIPA”). Remember, under BCIPA:- Your invoice must have an endorsement that it is made under the BCIPA. A payment claim must be served within 6 months of completion of work. Your payment claim must be issued on the reference date specified in the construction contract. If you do not receive a payment schedule, you nevertheless must send a second chance notice to a contractor inviting the contractor to submit a payment schedule prior to issuing proceedings or making an adjudication application to recover the amount owing pursuant to a payment claim. Strict time limits apply that must be complied with. Strict time limits apply to make an adjudication application if you receive a payment schedule in response to a payment claim. Sometimes you may have to choose between recovery under BCIPA or proceeding with notices to secure funds by way of a charge to a contractor and enforcement under the SCA.  If you pursue the option of proceeding under the SCA you are unable to pursue recovery under BCIPA. Strict time limits apply under the SCA for the issuing of notices.  You may have to act swiftly to utilise these processes to secure funds, if contractors are delaying payments and/or unable to pay you,  prior to you issuing proceedings to recover monies owing to you under a construction contract. We have acted for subcontractors in various building projects, where the mechanisms available under the SCA have been successfully used to assist subcontractors to secure monies and ultimately recover monies owing from contractors who engaged them and become insolvent. For further enquiries and assistance please contact Justin Mathews of our office on (07) 5574 0111 or email justinm@qbmlaw.com.au.

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