Real estate agents are not traders

Journal,  Journal,  Principals,  Salespeople

Real estate agents are all too familiar with dealing with the Queensland Civil and Administrative Tribunal (Tribunal) in managing defaulting or difficult tenants on behalf of their landlord clients.

But what is the situation when the client seeks to hold the real estate agent accountable for their disappointment with respect to the manner in which an agent has managed the proposed sale of a residential property?  Is the owners’ complaint about an agent having failed to provide real estate agency services with requisite skill and care a matter justiciable (capable of being heard) by the Tribunal?  The answer is no.

The issue was recently considered again by the Tribunal in a decision delivered on 26 October 2021.[1]  In that case, the owners of a property issued proceedings against their real estate agent seeking damages alleging that the agent had misrepresented its ability to sell their property for the desired price and within the specified time – a common complaint of disappointed sellers.

The owners sought to hold the agent responsible for damages for misrepresentation and breach of contract in the amount of $24,697.50.

The Tribunal sought submissions from the owners and the agent as to whether the real estate agent was a “trader”, as defined in schedule 3 of the Queensland Civil and Administrative Tribunal Act 2009 (Act).

The significance of the definition of “trader” is that section 11 of the Act only vests the Tribunal with jurisdiction to hear a claim arising out of a contract between a “consumer“ and a “trader” or a contract between two “traders”.

While it was plain that the owners bringing the claim were “consumers”, whether the agent is a “trader” turns upon the definition in section 3 of the Act, which defines “trader” as:

A person who in trade or commerce:

(i)          carries on a business of supplying goods or providing services; or

(ii)        regularly holds himself/herself or itself out as ready to supply goods or to provide services of a similar nature; and

(iii)       includes a person who is or was the landlord of premises let to a tenant as a dwelling other than for –

  • assigning or subletting the dwelling to someone else; or
  • a trade or business carried on by the tenant.

(b)        however, a person is not a trader in relation to goods or services if in supplying the goods or providing the services

(iv)       the person acts in the exercise of a discipline that is not ordinarily regarded as within the field or trade or commerce; or

(v)        the person is giving effect to the instructions of someone else who in providing the instructions acts in the exercise of a discipline that is not ordinarily regarded as within the field of trade or commerce, and the goods supplied, or the services provided are in all respects in accordance with the instructions.

The Tribunal has previously ruled that professional services from a number of persons are excluded from the definition of “trader”, including:

  • lawyers;
  • surveyors;
  • valuers;
  • town planning consultants;
  • automatists;
  • advocacy consultants; and
  • importantly, real estate agents.

The decision excluding real estate agents from the definition of “trader” was reached by the QCAT Appeal Tribunal in 2018 in a case called Grommen v Hawes.[2]

The owners in the case decided in October 2021 argued that Grommen was wrong because it compared the function of a real estate agent with a valuer.  The owners argued that the accreditation of a real estate agent is far less arduous than the accreditation of a valuer and, in this regard, submitted that, for real estate agents:

  • the certificate course is short in length;
  • there is no pre-qualification period required;
  • there are no ongoing educational requirements; and
  • the other cases in which professions have been excluded from the definition of “trader” were professions where there was registration of the professional by a professional board and the professional had an obligation to undertake ongoing training.

The agent countered that the agent is licensed, must conduct his or her professional practice in accordance with the requirements of the Property Occupations Act which, like the legislation for other professions, has a mechanism for disciplining agents and managing complaints of unsatisfactory professional conduct or professional misconduct.

The agent also argued that, in expressing an opinion to a client as to the price and strategy for the sale of real property, the agent is applying the “methodology and principles” developed and accepted in disciplines of property valuation and sales “being disciplines not ordinarily regarded as being within the field of trade or commerce”.

The Tribunal in the matter decided in October 2021 saw no reason depart from Grommen and concluded that:

Whilst the process of obtaining a real estate agent’s licence may be less onerous than other professions found to be excluded by the definition of trader, it is still a profession that is governed by a Code of Conduct and professional practice requirements set out in the Property Occupations Act.  Failure by a real estate agent to comply with legislative requirements can result in disciplinary action being taken against them.

I agree with the submissions of the agent that the profession of a real estate agent requires an element of intellectual activity in the pricing and strategies for sale and applying methodology and principles developed in the disciplines of property valuations and sales.”[3] (emphasis added)

As it was held that a real estate agent does not fall within the definition of a “trader”, the owners’ complaint about the services provided by the agency was not justiciable by the Tribunal.

The Tribunal also decided, for good measure, that the claim for damages brought against the agent by the disappointed sellers was not a “minor civil debt” because the money claimed was not a liquidated amount of money but, rather, an amount of money to be assessed by the Tribunal.

What this means is that any complaints by a disappointed client with respect to the service that he or she receives from a real estate agency is not justiciable in the Tribunal but, rather, in the State Courts as a claim for damages for breach of contract and/or negligence, or in the Federal Court, as a claim under the Australian Consumer Law.

References:

[1] Weedon and Roberts v Place 57 [2021] QCAT 365.

[2] Grommen v Hawes [2018] QCATA 49.

[3] See paragraphs 17 and 18 in the judgment delivered on 26 October 2021.

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