Home » To Fax or Not to Fax? The Property Agents and Motor Dealers Act 2000 (Qld)

The case is important in that it highlights the significance of the consumer protection focus of the Act and the strict interpretation taken by the Court.

The Facts
The case involved a standard REIQ contract for the sale of houses and land on the Gold Coast. The seller’s agent submitted the contract (containing the buyer’s offer), to the buyer for signing by facsimile. The documents were sent in the following order:

1. The fax cover sheet;
2. The Buyer’s Disclosure (Form 27b);
3. The Form 30c Warning Statement; and
4. The REIQ contract.

The buyer signed the documents and returned them to the agent. The original copy of the contract was later signed by the seller and dated 10 June 2003. Completion was due on 4 June 2004. Prior to settlement, the buyer terminated the contract, relying on s. 367 (2) of the PAMD Act. The buyer alleged that the warning statement was not attached as the first or top sheet to the contract as required by s. 366 (1).

The buyer applied for summary judgment in the District Court. At first instance, the Court decided that, in these circumstances, a faxed copy of the warning statement was ‘attached’ for the purposes of s. 366 (1). The Court held that the buyer was bound by the contract. The buyer appealed to the Court of Appeal.

On appeal, the Court held that there were outstanding questions of fact that required determination and the matter was ultimately sent back to the District Court for trial. However, in obiter, the justices made interesting observations regarding the interpretation of the Act and the meaning of the word ‘attached’ for the purpose of the Court made some clear statements about the interpretation of the word “attach” for the purpose of s. 366 (1) of the PAMD Act.

De Jersey CJ , in referring to the Macquarie and Shorter Oxford English dictionaries stated that some form of physical joinder or incorporation was required. If a relevant contract was entered into only by facsimile, then he considered that the warning statement could not be attached as the first or top sheet to the contract as there was no physical joinder or incorporation of the warning statement to the contract.

He referred to the consumer protection object stated in the preamble to the Act and extended its application to giving a buyer the right to terminate a contract even for “quite technical contraventions…regardless of whether there had been any material disadvantaged suffered.

The impact of the comments, while not a definitive judgment, were significant enough for the legislators to move towards amendments to the Act. The comments made by the Court pointed to a clear anomaly in the legislation. In an effort to balance the rights of consumers in the residential property industry, the strict interpretation of the word ‘attach’ has lead to consequences that are commercially unrealistic in the 21st century.

The proposed amendments to the Property Agents & Motor Dealers Act 2000
The proposed amendments to the Act were introduced into the Queensland Parliament on 29 September 2005.

A definition of ‘attached’ is included in the amendments to mean “attached in a secure way so that the warning statement, any information sheet and the contract appear to be a single document”. Examples have been given as stapling and binding.

Section 365 has been substantially amended to cover circumstances when the buyer is bound by the contract. Section 365 of the Act is the trigger for the calculation of the cooling off period. Under the proposed amendments 3 methods of delivery of the contract documents are prescribed for contracts relating to houses and land. These are:

1. by fax, if the documents are sent in the exact manner as set out in proposed section 365 (2) (a);
2. by electronic communication, if the documents are sent in the exact manner as prescribed in proposed section 365 (2) (b);
3. by being handed or otherwise receiving the documents in a manner other than s. 365 (2) (a) and (b). An example has been given of receipt by post.

The same methods of delivery are prescribed for contracts relating to units, with the added obligation regarding the delivery of the information sheet. In all cases, the seller or the seller’s agent is obliged to direct the buyer’s attention to the warning statement and the relevant contract.

A new s. 366 is proposed regarding warning statements. Again, different methods of delivery have been contemplated and the amendment prescribes the order in which the documents must be delivered when using the various methods of delivery. A new provision has been included to allow an error to be corrected before the contract is signed by the buyer. This is outlined in s. 366C and allows the seller or the seller’s agent to give a notice to a proposed buyer of the failure to comply with sections 366, 366, 366A or s 366B. The notice must identify the failure, withdraw the contract and advise whether new documents will be given.

If a notice under s. 366C has not been given, and there is a departure from the method of delivery contemplated in sections 366, 366A or 366B, then the buyer has the right to terminate the contract before settlement.

The amendments are prescriptive and onerous. They add another layer of unnecessary compliance which does nothing to promote the objective of consumer protection. The consequences for non-compliance give the buyer the right to terminate the contract.

Until the amendments to the Act are passed, parties involved in the preparation of contracts that fall under the Act will need to carefully consider how contract documentation is delivered to a buyer.

Findlaw Feature Writer

Annette Greenhow
Director of Property and Commercial Services
Michael Sing Lawyers – Legal Solutions
agreenhow@mslawyers.com.au