An Auckland real estate firm sued a former client for more than $40,000 in a bid to recover commission money on a property it never actually sold.
This was despite Pukekohe agent Gary Murphy signing a declaration stating that if no sale eventuated "as a result of our efforts then no commission shall be charged for our services".
David Griffiths listed a 2.8ha block of vacant land on Bombay Rd, Franklin, with Professionals franchise Property Link Group in March 2012, signing a six-month agency agreement.
The land was zoned "village growth" and had resource consent for an eight-lot subdivision.
When no tenders were received after three months, Griffiths sought advice from the Real Estate Agents Authority about ending the agreement early and listing elsewhere.
He was advised that a vendor could legally cancel an agency agreement after 90 days if the listing was for residential property, so notified Professionals in writing before listing the land with Don Ha Real Estate.
Don Ha immediately found a buyer and the property, which is partly bordered by smaller plots of residential dwellings but grazed by cattle at the time, eventually sold for $750,000.
However, in August 2013, Griffiths received a letter from barrister John Waymouth acting for the Professionals Real Estate Group "with respect to all litigation and enforcement matters".
The letter demanded payment of $32,142.50 in unpaid commission plus $5363.75 in interest and $3450 in legal fees "to date".
"If payment is not received in the next 10 working days, then proceedings for recovery by way of filing in the District Court and at the first opportunity summary judgment proceedings will be brought against all parties without further notice."
Griffiths refused to back down, and the case went to trial yesterday in Auckland District Court.
It boiled down to whether the land was rural or residential, and whether Griffiths could legally cancel the agreement.
Waymouth argued the land was primarily rural in nature and sold as a "pastoral block", meaning Professionals' six-month listing agreement was still in force.
But Griffiths' lawyer, Peter Webb, argued it was valued and marketed on a residential basis, with houses subsequently built on the site. His client was given a residential property guide by Professionals staff.
Murphy, who was cited with unsatisfactory conduct last year for allowing prospective purchasers to enter and view a property when he knew it was contaminated by methamphetamine, said it was his firm's practice to provide residential guides to clients, irrespective of whether the land was rural.
He told yesterday's hearing he believed Griffiths' property had subsequently sold as a result of the Professionals marketing campaign, though accepted he had never met the purchaser.
Griffiths, a retiree who now lives in Papamoa Beach, carried out his own detective work on the case.
He sourced red colour-coded marketing material used to advertise his property then recorded conversations with Professionals staff. They confirmed red denoted residential property, while green denoted rural - though Murphy told the court he was not bound by the colour-coding system.
Griffiths also obtained evidence from QV suggesting the land was zoned "vacant residential" for ratings purposes and an email from Auckland Council saying the village zone covered "all residential housing" in smaller rural and coastal towns across Franklin.
Judge Laurie Hinton said Murphy "happened to go about this deal as if it was residential. The forms are residential. The guide was residential. It's all residential."
However, a technicality meant subdivisions were treated as non-residential under the Real Estate Agents Act.
"I have sympathy for both parties."
After an adjournment, a confidential settlement was reached and Professionals will now withdraw the civil action.
Griffiths told the Herald the case had taken a huge emotional toll and he had already spent around $20,000 on legal fees.
Murphy declined to comment.