- Legal battles between sellers and agents surrounding commissions have become more common
- One Gold Coast case saw a commercial real estate agent receive $100K plus interest after a four-year battle
- Cases expected to occur more frequently given longer selling times for certain properties
Amid the turbulent housing market, legal battles between sellers and agents surrounding commissions have become more common, with a litigator warning these cases will continue to rise.
Ben Twomey, Twomey Dispute Legal practitioner director, noted that commission disputes typically arise between a seller and agent when there is an open listing and lengthy process, with his Gold Coast firm dealing with such disputes regularly.
“This issue does seem to arise fairly often where there is an open listing and the agent is arguing they were the effective cause of sale,” Mr Twomey said.
“However, being the effective cause of sale isn’t as simple as the agent introducing the buyer to the property. That is not enough.
“The agent needs to show they were instrumental in bringing about the deal.”
Mr Twomey noted a 2021 case in his form, conducted for Real Commercial QLD real estate agent Joseph Codianni against Preetpal ‘Mick’ Singh, as an example of an acrimonious legal dispute that made it to trial following a complicated sale.
The legal action commences in 2019 after Mr Singh refused to pay Mr Codianni $100,000 in commission for his involvement in the sale of Mr Singh’s commercial property at 35 Dominion Road, Ashmore.
This asset was sold to Bill Adler, Imagine Education director, for $3.2 million in September 2018.
Before the sale, two contracts to purchase the property for $3.2 million were signed between Stonehaven, Mr Alder’s company, and Mr Singh, where Mr Codianni was the exclusive selling agent.
Both contracts, however, were terminated as Stonehaven was unable to obtain finance.
Mr Codianni claimed it was his idea to put in an agreement for Imagine Education and Stonehaven to lease the property for five years, with Stonehaven given an opinion until May 31 219, whereby they could purchase the property on the same terms as one of the previous contracts.
In September 2018, Stonehaven exercised this option, for $3.2 million.
Mr Singh refused to pay Mr Codianni commission, arguing that he was not the effective cause of sale because the transaction was due to the call option deed drawn by his solicitors and Stonehaven’s.
Additionally, he alleged that CBRE senior director Tania Moore introduced him to Mr Alder when he was seeking to lease the subject property.
Following the hearing in April, magistrate Grace Kahlert ruled in Mr Codianni’s favour,
“The efforts of Mr Codianni to get Mr Adler……to offer to buy the property from the defendant for $3,200,000 flowed through such that he was in a real sense a significant and substantial cause of the ultimate sale in September, 2018,” the Magistrate ruled in the July 2021 judgment.
Mr Codianni was awarded $100,000 plus interest – resulting in $113,821.
The case had been fought over the four years as “purely our of principle” Mr Codiannai said, on the behalf of other agents.
“This case cost me $135,000, which was in excess of the commission that I was owed from the sale,” he said.
“However, I wanted to send a message to the minority of wealthy sellers who don’t pay agents for a job well done in the knowledge that most agents or agencies are reluctant to enter a lengthy and costly court battle.
Joseph Codianni, Real Commercial QLD
“I was able to present the court with a significant amount of documented evidence that clearly showed I was entitled to the commission I was seeking.
“Real estate agents run the only businesses that work effectively for free until a property sells and settles, and after putting in enormous amounts of my effort, expertise, and time, I wasn’t prepared to walk away”.
“I achieved an above market price for Mr Singh’s property of $500,000 over valuation plus about an additional $400,000 in rental income until settlement was reached in 2018.”
Mr Codianni did note the case was a “gamble” given he wasn’t sure if Mr Singh had the assets to pay him.
“He bet that I would give up and walk away but he was wrong.”
Cases to become more common
Given that properties are taking longer to sell, leading to a range of complications, Mr Twomey said he expects such cases to become more common.
He advises agents to fully document the sales process.
“When you’re alleging that you were the effective cause of sale, you need to give a chronology of all you did that contributed to the sale being brought about,” he said.
“You need to keep a chronology of everything that happened. Make detailed notes and have as much of it documented as you can.
“Generally speaking, the law recognises that our memories aren’t perfect and if you’ve got a hotly contested case, you want to have as much stuff in writing as you possibly can.”
Ben Twomey, Twomey Dispute Legal
In Mr Codianni’s case, there was plenty of documentation to support he was owed commission.
“What the court held was that without Joseph there was no deal,” he said.
“Joseph did a really good job. When the contracts fell through in the first few months, he put other options on the table such as the lease and call option deed, that led to the sale.
“It was a resounding victory, and the judgment reflects that.”
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Disclaimer: This article contains general information and should at no time be considered legal advice to the reader. The reader should always verify their situation with their legal advisors before taken any further steps.
