VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
Civil Division 
Civil Claims List	
vcat reference No. C151/2019	
CATCHWORDS	
Agent’s commission, whether money paid by applicant was a fee to agent or part payment of construction costs, misleading and deceptive conduct under the Australian Consumer Law, breach of section 53 Estate Agents Act 1980 (Vic), consideration of sections 49A and 50 of the Estate Agents Act 1980 (Vic).  	

APPLICANT	Lin Zhang	
RESPONDENT	H&T Reality Pty Ltd ABN: 27 129 683 781	
WHERE HELD	Melbourne	
BEFORE	Senior Member L. Forde	
HEARING TYPE	Hearing	
DATE OF HEARING	13 May 2019 	
DATE OF ORDER	7 June 2019	
CITATION	Zhang v H&T Reality Pty Ltd (Civil Claims) [2019] VCAT 847	

ORDERS
1.	The Tribunal orders that the respondent H&T Reality Pty Ltd must pay the applicant Lin Zhang the sum of $50,318.00.
2.	Having regard to section 115B(1) of the Victorian Civil and Administrative Tribunal Act 1998 and being satisfied that the applicant has substantially succeeded in his claim, the Tribunal orders that the respondent must reimburse the applicant the application fee of $475.40.
3.	The respondent must pay the applicant’s costs of and incidental to the proceeding fixed in the sum of $5,000.00. 

L. Forde
Senior Member			

APPEARANCES:		
For Applicant	Mr M. Laynon, solicitor	
For Respondent	Ms L. Ma, solicitor	

Reasons
1	I conducted a hearing in this proceeding on 13 May 2019. I made orders that the respondent pay the applicant $50,318 and reimburse to the applicant the filing fee of $475.40 for the reasons given orally at the hearing. Subsequently the respondent requested written reasons. These reasons reflect the reasons given orally in the hearing, with some additional background, and editing, to improve readability.
The Claim
2	In 2016, Mr Jacob Qi an employee of the respondent, introduced the applicant to a development at Tarneit, Victoria. Based on discussions with Mr Qi, the applicant entered into a New Home contract for the purchase of land and construction of a property at lot 415 Liston Avenue Tarneit Victoria.
3	Ms Zhang claims to have paid a deposit to the respondent for the land purchase and deposits totalling $50,318 for the building contract. The building deposit was 15% of the building price. The development did not proceed through no fault of Ms Zhang. She was refunded her land deposit. but not her building deposit.
4	The respondent claims that the $50,318 paid by Ms Zhang is not refundable, it being monies paid under a Service Agreement. Payment was not conditional upon the development proceeding.
5	The issue for determination is whether the applicant is entitled to be refunded the $50,318 she paid to the respondent.
WITNESSES AND EVIDENCE
6	Jacob Qi is no longer employed by the respondent. He was not called to give evidence. The applicant gave evidence on her own behalf.  Mr Polo Wang a sales manager employed by the respondent gave evidence with the assistance of a Mandarin interpreter. 
7	Ms Zhang’s evidence can be summarised as follows:
i	She knew Jacob Qi from an immigration group. After he joined the respondent he told her he had found a site for her to buy. She visited the site once before entering into the land purchase and construction contracts;
ii	When she met with Mr Qi in 2016 to proceed with the purchase, she was provided with documents for the construction of the house and purchase of the land. Mr Qi had organised a solicitor to be present to give her advice on the documents before she signed them. The solicitor advised her in relation to the contract for the sale of land. The solicitor said she was not qualified to advise on the construction contract;
iii	She does not remember signing the Service Agreement or being told about it. Jacob Qi told her she had to pay a 15% deposit under the building contracts rather than the usual 5% because she was an overseas buyer. She relied upon the statements he made to her;
iv	No advice was given to her about the existence of the Service Agreement, its content or effect. She does not recall having seen the Service Agreement although accepts her signature appears on the agreement. She signed documents where Jacob told her to sign and believed the documents she signed were limited to the sale of land contract and building contract. She was not given copies of the documents at the time she signed them. Jacob took the documents away with him. He said the vendor had to sign them;
v	Her oral English is good, but she is not proficient in reading English;
vi	She is not wealthy. She would never agree to pay someone $50,000 in addition to the purchase price of a property; 
vii	In 2017, she paid two payments totalling $50,318 being 15% of the construction costs to the respondent after receiving instructions from Jason Qi through Wechat to do so. Mr Qi’s instructions stated that the money was for “construction”. He did not say the money was for a service fee. She produced the Wechat documents to the Tribunal;
viii	She received receipts from the respondent for the payments dated 14 August 2017 and 12 October 2017. The description on the receipts produced at the hearing read “holding by Polo.”  Polo is a reference to Mr Wang an employee of the respondent. She said that she first met him in June 2018.
ix	The plan of subdivision for the property was not approved and the purchase could not proceed. This was not due to any fault on her part;
x	She was refunded her land deposit, but the respondent has refused to return the construction cost deposit. When she met with Mr Wang in 2018 he said he could refund the money or find her another project. Despite wanting the money, the respondent has not refunded it to her.
8	There is no dispute about whether the $50,318 was paid by the applicant. The dispute is whether the respondent is entitled to retain the money. 
9	Mr Wang’s evidence can be summarised as follows:
i	He met the applicant in a coffee shop on level 10 in 2016. He was doing some training in the coffee shop. Coincidently the applicant and Jason Qi were at the table next to him. He had a conversation with the applicant before she signed the contract documents;
ii	He explained the services the respondent was providing under the Services Agreement in detail to the applicant. He explained a fee of 15% for service was charged. The fee was for the respondent choosing the project and helping the applicant with finance. It was a non-refundable introduction fee;
iii	He believes Ms Zhang signed the Service Agreement after he explained the contents to her at the coffee shop;
iv	When questioned about the precise explanation he gave of the Service Agreement he stated that he clearly remembered that he explained the fee of 15% and how 5% can be refunded and his commission could be claimed from the builder. Overseas buyers are charged 15%. He did not tell the applicant of her right to negotiate the fee. He confirmed in questioning that the money the respondent took could not be refunded and it will be part of the applicant’s building price;
v	The respondent acted for both the applicant and the land owner;
vi	The respondent received a commission from the builder;
vii	The money paid by Ms Zhang under the Service Agreement was part of the building cost if the development proceeded;
viii	When asked what would happen to the money if the transaction did not proceed, he said it depends upon who bears the responsibility for the matter not proceeding. If the builder is responsible it will be refunded;
ix	When asked if he explained the penalty clause in 4.4 of the Service Agreement he said “yes of course”;
x	When questioned in more detail about clauses in the agreements and when payments were made he responded that he did not have any idea about the back office;
xi	When asked how he could have explained how the contracts worked to the applicant when he had difficulty explaining them to the Tribunal, he said he explained just his part that she could not get a refund and the payments would be her part of the building price.
10	I prefer the evidence of the applicant Ms Zhang over that of Mr Wang.  I find Mr Wang’s version of events is not credible. It makes no sense that he would join Ms Zhang and Mr Qi in 2016 somewhat fortuitously then take over the conversation and explain the Services Agreement. I do not find Mr Wang to be a credible witness.  His evidence changed several times. For example, he was adamant that he told the applicant that the 15% fee was not refundable. Later in his evidence, when questioned further, he said that if the purchaser was responsible for the matter not going ahead it would not be refunded and by implication if the purchaser was not at fault for the development not going ahead, the money would be refundable. He had very clear recollections of certain matters in relation to his supposed meeting with the applicant in 2016 in a coffee shop and then on other matters inexplicably had a very poor recollection. I find there has been a reinvention of the facts. I prefer Ms Zhang’s evidence that she did not meet Mr Wang until June 2018. Accordingly, I find that she was not told about the Services Agreement or that any money was payable under it to the respondent. 
11	As a general principal, people are bound by their acts in signing a document regardless of whether they read the document. The situation changes where the contents of documents are explained, and where one party is at a disadvantage in their English reading skills and that person is directed to sign the documents after an explanation of the documents and in reliance upon that explanation. I accept the applicant’s evidence that she is not strong in her written English ability. I accept that she chose to rely upon information Jacob Qi provided to her at the time about the contents of the documents she was signing.
12	I do not accept that Mr Wang met with the applicant in 2016 and discussed the contents of the Service Agreement for the reasons stated above as well as the following reasons.
13	The Service Agreement is an extremely complicated document and in parts makes no sense. For example, clause 4.4 refers to a “penalty”. Penalties are usually considered in contract law when there has been a breach by a party and the contract provides a remedy of a stipulated amount for that breach. This is not the case in clause 4.4. Further, Mr Zhang tried to explain the operation of the Service Agreement several times in his evidence to the Tribunal and gave inconsistent evidence about what he understood the agreement to mean.
14	If Mr Wang can not explain the agreement to the Tribunal, I find it unlikely he could have explained it to Ms Zhang even if I found that he had met her in 2016. I also find his version of the meeting in the coffee shop to be untenable and fanciful.
15	There was an elaborate arrangement set up by the respondent for the respondent to take a deposit of 15% of the construction contract price rather than the 5% allowed for under the Domestic Building Contracts Act 1995 (Vic). The Wechat extracts produced to the Tribunal support the applicant’s case that Jacob Qi told her she had to pay a 15% deposit for construction costs rather than the standard 5% deposit. He labels the money in his directions to her as “construction” costs. This supports the applicant’s case that Mr Qi represented to her that the fees she was paying were construction and land acquisition fees and not service agreement fees for the respondent. 
16	I accept the applicant’s evidence that Mr Qi did not inform her about the service agreement.  Had he told her about the Service Agreement I expect the solicitor engaged to advise Ms Zhang in 2016 would have also advised on that document as well. She did not. I also find that Ms Zhang would have objected to paying a non-refundable fee to the respondent.
17	I find that the applicant was misled by the respondent in relation to the entire contractual arrangement. A clause in the service agreement that Ms Zhang is not able to rely upon any external representations is contrary to law. Even if the clause could be relied upon given the applicant had no knowledge of signing the document she is not bound by it. I find that the service agreement was hidden amongst other documents and the contents never brought to Ms Zhang’s attention. 
18	Furthermore, there is an obligation by reason of s53 of the Estate Agents Act 1980 (Vic) (the Act) for an agent to deliver a copy of any contract such as the ones signed by the applicant to her at the time of the signing and obtain an acknowledgment in writing.
19	The applicant says that this was not done by the respondent and this was not challenged by the respondent. I find there was a breach of s53 of the Act by the respondent.
20	Section 50 of the Act provides that an estate agent is not entitled to sue for commission or retain money unless the agent has complied with s49A(1) and (2) of the Act. Section 49A(1) refers to the obligation on the agent not to obtain any payment from a person unless the agent informs the person that the commission to be paid to the agent is negotiable.
21	The undisputed evidence in this case is that the applicant was not told that the amount or commission to the respondent was open to negotiation. Mr Wang said if a purchaser wanted to negotiate the company would consider the opportunity to negotiate. He did not say he told the applicant of her right to negotiate. Accordingly, I find that there has been a breach of s50 of the Act which prevents the respondent from suing for or retaining the money they currently retain.
22	The matter is further complicated by the fact that the respondent as stated by Mr Wang acted for both the applicant under the Service Agreement and the builder. This is made clear in clause 17 of the Service Agreement where it states the respondent also acts for the builder and expects to receive a commission from the builder.  Where the respondent acts as agent for both sides to a transaction it is essential that it makes full and proper disclosure to both parties. Full disclosure was not made to Ms Zhang.
23	The respondent did not did not make submissions to the Tribunal regarding the Real Estate Agents Act 1980 (Vic). 
24	The respondent is required to refund the $50,308.00 to the applicant.
25	The applicant applied for costs under s109 of the Victorian Civil and Administrative Act 1998 on the basis that the respondent’s case was hopeless and bound to fail. It was submitted that the case is unusual in that the respondent acted badly notwithstanding opportunities to discuss and respond to the claim.
26	The respondent submitted that each party should bear its own costs. Ms Ma told the Tribunal that an offer had been made but did not have a copy of the offer. She then clarified that the offer was not to refund money but to assist the applicant with purchasing another property. She further clarified that a refund of the full amount was offered. When asked for more details, Mr Wang advised the Tribunal that he instructed Jacob Qi who at that time had resigned to pass on an offer to repay after a period. He also said he told the applicant he would refund her after a couple of weeks.
27	The applicant denied an offer was made to her by Jacob Qi or by Mr Wang.
28	The solicitor for the applicant advised the Tribunal that a verbal offer had been made to the applicant for a partial refund of money but not the full amount and with no date for payment.
29	I find that the respondent’s defence was bound to fail for many reasons, as stated, including noncompliance with the Act and the fabrication of evidence by Mr Wang. I am satisfied that it is fair to award the applicant her costs, pursuant to s109(2) of the Victorian Civil and Administrative Tribunal Act 1998.
30	Rather than put the parties to the time and expense of having costs assessed I will fix the costs at the suggestion of the applicant’s solicitor, at $5000. The respondent chose not to make any submission on the quantum of costs.

L. Forde
Senior Member