After
selling three Northland dairy farms for eleven million dollars through a rival agent,
the Webster family argued they were not liable to pay $253,000 commission to
Bayleys in the North who held a pre-existing sole agency. Signing the prior sole agency as director of
a farming company or as trustee of a family trust proved critical.
The High Court was told
the Webster family listed Ridgeview Farms Ltd, Clear Ridge Station Ltd and
Beejay Stud Ltd with Bayleys in September 2015.
A six months sole agency was agreed.
Bayleys later learnt the Websters sold through another agent during the
sole agency period and were refusing to pay any second commission to Bayleys. The
sole agency entitled Bayleys to a commission for any sale in the six month
period, regardless of who made the sale.
As a sweetener, Bayleys offered to reduce its claim to a two per cent
commission: $252,999. The Real Estate
Agents Act bars agents from suing for any disputed commission unless they had clients’
written authority to sell.
Listed on title to
Beejay Stud were David Webster and Frances Kim Webster. They held title as trustees of a family
trust. They signed the sole agency agreement
in respect of Beejay Stud, described as ‘owners’ of Beejay. A trust is not a legal entity. Trustees own the assets and are restricted as
to what they can do with these assets according to terms of the trust. Having signed personally as owners, they were
personally liable for commission due, Justice Brewer ruled. If the amount cannot be agreed, a further
court hearing is required.
There was no personal
liability to pay Bayleys’ commission on the sales of Ridgeview Farms and Clear
Ridge Station. As registered companies
they are legal entities in their own right.
The companies had title to the respective farms. Members of the Webster family did not sign in
a personal capacity; they signed as director of each farming company. Commission claimed by Bayleys is owed by each
of the companies, not by each director who signed as agent for the company.
Mackys
Real Estate Ltd v. Webster – High Court (19.10.17)
17.139