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Old 04-15-2007, 03:16 PM   #1
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[EDIT BY ADMIN]

This post was removed from the board earlier and contact was made with the author. She insists that the post be returned and her email reply/instruction (in part) is as follows:

"
In my post we gave our email address indicating that if anyone wants backup documentation we can provide such for all incidents mentioned in our post. Because of this statement we are backing up our post and absolving Cruiserlog of any wrongdoing by publishing our post. Should you as moderator like to see our backup please advise and we will provide multiple documents.

Regards

Terry and Iris McMahon."



I personally think that the most important issue here is that this could happen anywhere in the world and that we cruisers should all learn from this and be prepared in the future.

It should be noted that the Brokers and all concerned have been notified of this post and invited to respond on this free, open discussion forum.

[END EDIT]

Selling a boat in Australia.



For anyone hoping to buy or sell a boat in Australia: WARNING!!!! Buyer Beware and Seller Beware!

There is very little, if any, regulation of boat brokers and there are no teeth in Australia's consumer protection laws. To sell a boat in Australia, the owner of a boat can list with as many brokers as he chooses, he can even advertise and sell his boat without the broker if he makes the first contact with the buyer. Also, there is NO requirement for a broker to have a trust account. An unscrupulous broker can tap into a deposit and use it in any way he or she sees fit.

In the state of Queensland there is an association for boat brokers called the BIAQ, Boat Industry Association of Queensland. Their listing agreement called an "Authority To Sell" states that the Vendor (the seller) shall pay the Broker Commission on the completion of the sale. The "Agreement For Sale Of Vessel" states the Broker can deduct the brokerage commission from ANY Security Deposit. In other words, once the contract has been signed the broker can take the position that he has earned his commission. Closing and funding of a contract is executed through the broker, they have control of all funds. Doesn't that sound like a Conflict of Interest?

The brokers at the Reilly & Associates office in the Bundaberg Port Marina office, had signs on the windows and throughout the office saying BIAQ Member, they used BIAQ contracts stating BIAQ Membership. Reilly & Associates, owner Stewart Pascoe, also in Gladstone and Yeppoon is not a member of the BIAQ. The two brokers in the Reilly & Associates Bundaberg office, Jill Fleming and Paul Cocks are not members of the BIAQ. According to a BIAQ board member this is Misrepresentation!!!!

Here is a very brief description of our nightmare. The contract presented to us for the sale of our Hylas 46, Leprechaun, was written in Australian dollars with a two and a half month delayed closing. Our question to the broker was "how can we protect our bottom line in the event the Australian dollar declines against the US dollar prior to closing?" Our boat is a US flagged vessel, we are Americans, we have a one year Australia multiple entry visa and our boat was advertised in US dollars. Paul Cocks with Reilly & Assoc. went to great length explaining how we could buy a Foreign Exchange Contract, about his experiences in dealing with Foreign Exchange Contracts, and that it would be easy. We knew nothing about a Forward Exchange Contract and told him so. He guided and directed us in what to do. However, the information he gave us was flawed and the process was extremely difficult. As soon as possible after we set up the foreign exchange account we approached Paul Cocks about the discrepancies. His various responses were: "you are wrong," " it's your money," "you signed the contract," "you misunderstood me," "there's nothing I can do about it." At one time Jill Fleming accused us of doing something illegal. The brokers were protecting the buyer! We were paying the commission and sincerely believed they should have been working for our benefit. Did we miss something?

Immediately after signing the contract and before we were aware of the flawed information given to us by Paul Cocks, we told him that the bank's International Foreign Currency department required a 10% deposit assigned to the bank. Paul Cocks was the expert and we needed guidance. He said "OK" and deposited buyer's deposit into our bank account. He then went back to the buyers, without our knowledge, telling them Reilly & Assoc. needed another deposit to cover the commission. We fully expected to be required to sign a release for the funds but there was no such requirement. The buyer's did not sign a release. We never requested or acknowledged the money Paul Cocks deposited into our account. The buyer was given a receipt for his additional deposit which we never saw, it was never written into the contract.

Within three weeks of signing the contract the Australian dollar began dropping against the US dollar, in another four weeks the rate dropped two and a half cents. That may not sound like much until you figure we would lose thousands of dollars for each one cent drop. Three times we called Stewart Pascoe the owner of Reilly & Assoc. for assistance thinking he was an honorable business person. Three times he said he would investigate our complaint, that his company did not deal in foreign currency and that he would get back with us. We never heard from him. With the brokers office in the marina office we had almost daily contact with them and the tension was almost unbearable.

We tried filing a complaint with the BIAQ. That didn't work because they weren't members. As you can imagine, we went to a solicitor. The solicitor said if we didn't close we could be sued for specific performance. Our options weren't good. If we closed at a lower exchange rate we would lose thousands of dollars, if we didn't close we could be sued. We were in a bind. Another WARNING to consider. In Australia there are unwritten laws of "Intent" that can supercede a contract, whatever "Intent" means.

Every day we called the bank for an update on the rates. During the two weeks prior to the scheduled closing the US dollar declined sufficiently and unexpectedly against the Australian dollar. We called the buyer and worked a deal with him.

02/28, Wednesday – Closing with our solicitor, the Buyer, Buyers solicitor, and ourselves. Everything was amicable, the money and papers exchanged hands. At the closing table, the Buyer agreed we could stay on Leprechaun a reasonable amount of time to pack and move. We had already packed as much as possible but with the possibility of not closing hanging over our heads we still had lots to do. We told the buyer we would like at least a day to clean, we wanted to turn over Leprechaun in the best condition possible.

We all left the solicitors office arm in arm, we walked together to Customs, we paid the GST and signed the import forms. We walked together to the bank, the buyer knew we needed to deposit our checks, I thought we were all very happy. But wait, the worst of the nightmare was yet to come. I endorsed the checks and prepared to leave the bank for the Post Office to send off for Visa's for Thailand. The buyer approached saying he wanted to go look at the boat, where could he find the key? At the solicitors office we agreed we would meet him at the boat prior to 3:00 P.M. We needed to buy boxes before returning to the marina. I didn't think there was any reason not to tell the buyer where he could find the key. As soon as he knew where to find the key he immediately said we had to move off the boat by 4:00 P.M. I tried to reason with him saying we had an agreement. He pointed to his head saying he didn't understand what was being said. His cell phone rang, he handed it to me. It was Jill Fleming with Reilly & Assoc saying we had to hand over the key and be off the boat by 4:00 P.M. Hadn't she been paid at closing? Wasn't she supposed to be representing us? The next 48 hours was a blur. The buyer walked as far as the Post Office with me telling me over and over we had to get off the boat by 4:00. I ran back to the bank and together we ran to our solicitor. No, we couldn't give back the money, it was a done deal. The solicitor said he would work out something with the buyer's solicitor. He said we couldn't be forced off the boat without a court order because it was a Civil matter. We rushed back to the marina, on our way we received a call from the buyer, we had until 5:00 P.M. on Friday to move off the boat. When we arrived at the marina the key was gone, we were locked out of the boat. We found the buyer eating lunch on Paul Cocks boat, together they nonchalantly walked down the dock, climbed aboard, the buyer unlocked the boat. We went in, called movers, travel agent, started making lists, organizing. The buyer said he would be sleeping on the boat that night and we would be his guests. The situation was deteriorating, I was becoming frightened. Terry was livid. The buyer, Paul Cocks and Jill Fleming sat on the deck laughing and smoking. We called our solicitor asking what we should do, we were being harassed. Around 8:30, the buyer tried to come into the cabin without knocking, when he realized it was locked he began banging on the companionway. A few minutes later there were flashlights shining into the boat with more banging on the companionway, we tried calling the police but it was the police. We were ordered off the boat. We called our solicitor who talked with the police, no luck, we had to leave the boat, NOW! We put together a few belongings. The buyer told the police we could come back at 9:00 the next day to get our personal belongings but would have to be finished by 4:00. We were humiliated, having to be evicted by the police. We couldn't sleep.

03/01, Thursday – Arrived back to Leprechaun at 9:00. The Buyer said, you must be off boat by 1:00, no exceptions. We couldn't think, what should we take, what should we leave? We were throwing things into boxes, it was exhausting work. At 11:30 I began crying in heaves and shaking. I was becoming physically ill. There was no way we could be finished by 1:00. The buyer relented saying he could see that 1:00 was impossible, that he would give us more time but the pressure was still on. We took things we should have left, we left things we needed to take. Some of Terry's tools were missing, there is no telling what else was missing, there was no time to check anything. The buyer and his son did help move our 35 boxes onto the dock. With the help of the marina personnel our boxes were stored in an empty space. We had always taken pride in Leprechaun during the five years we owned her, keeping her as clean and shining as possible. There was no time to clean, after we left she looked as if she had been pitch poled.

03/02, Friday – We had an opportunity to check our email. We had a message from our solicitor with an attached letter from Jill Flemings Solicitor stating she was rescinding the agreement made between the buyer and ourselves concerning when we were to move off the boat, she was giving us until 1:00 P.M. on Thursday to vacate. What gave Jill Fleming the right to rescind our agreement with the buyer? Also, her solicitor was the same solicitor at closing. He wasn't the buyers solicitor, he was Jill Flemings solicitor! He did not reveal to us who he was representing! Why was Jill Fleming of Reilly & Assoc. interfering, telling us we when we had to vacate the boat? Didn't we pay Reilly & Assoc. their commission? We went back to the marina, taped our boxes, filled out paper work for the movers, finalized our bill.

At this point let me say that three other boat brokers knew of our difficulties with Stewart Pascoe, owner of Reilly & Assoc, Paul Cocks, and Jill Fleming. They wanted to help us because they do not want Australian boat brokers to have a bad reputation with foreign cruisers. They tried to give advice on how we might resolve the issues. They are Ian MacKenzie of MacKenzie International Brokerage, David Flynn of Yacht Domain and especially Nick Cox of Sunshine Coast Yacht Sales. Nick is a member of the BIAQ board and even offered to mediate a settlement.

What is written here is only part of the story. From the beginning of this nightmare we kept a diary, documenting dates, what was said, by whom, etc. We have letters and email. We even recorded the conversation when we were accused by Jill Fleming of trying to do something illegal. For more specific information please contact us at (joema02 AT earthlink.net). It is our hope that we can prevent other boat owners and cruisers from experiencing the grief and nightmare we had to endure in selling our boat in Australia.

As a addendum to this letter, both Paul Cocks and Jill Fleming are on a boat called the "Baroness" presently located in Bundaberg

.
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Old 04-17-2007, 02:06 AM   #2
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I sympathise with your plight over the sale of your cruising home. It is unfortunate that unscrupulous brokers operate in EVERY marketplace including the US. I was aware of this when a Darwin broker tried to fleece me over the purchase of a yacht some years ago, and still it cost me $2500. He even wanted to charge me $250 to take the boat for a test sail. I am happy to reveal this twerp's name to anyone who contacts me privately and who may be considering buying a boat in Darwin.

'Intent' clauses in a legal system can in fact be a good thing. It means that if someone signs a contract to buy, or sell, or perform a service etc., but their intent is clearly not within the spirit of the contract, or if the contract agreement contravenes laws or morality; or if someone tries to avoid a 'right' by signing waivers, the contract can be deemed null and void. In other words contracted parties can be forced to do the right thing irrespective of what appears in a contract. Most countries, including the US, will observe the rules of intent even if their laws do not specifically make concessions to this ideal.

Again, you have my sympathy but there are a few areas where I feel you have been a little naive and perhaps a little arrogant. If you want to sell your boat for american dollars, you must sell the boat in America. Any area of agreement you seek in a foreign country, that binds locals to operate to US law, or pay, in what to them is a foreign currency, is simply arrogant. Demanding that an Australian, or South African, or someone in any other country indemnifies you against international financial fluctuations is a ridiculous concept that should make those dealing with you very suspicious indeed. It appears to me that this one blunder is more responsible for precipitating this chain of events, than any other single factor.

Having said that though, I feel (according to your reporting), that you have been wronged in some basic areas and you deserve to be compensated. Obviously several local brokers have come to the same conclusion. Unfortunately we have learned from others closer to your home, that law suits are mainly profitable for lawyers and the legal outcomes can be of secondary importance. So the difficulty for you is in determining at what point you declare an end to the arguments.

I hope you go on to clobber the broker in question; but knowing how much that would cost I would probably tell the world about him (which you have effectively done), let the tyres down on his car, poop on his doorstep and shoot through.

Bad operators exist everywhere and unfortunately Australia is not an exception to that. It will be of little comfort to you, but please take heart from the fact that by publicising your experiences, you may save someone else from a similar fate. The broker in question is aware of these postings, but so far has declined an offer to respond on this forum.

Best wishes for the future

David.
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Old 04-17-2007, 05:53 PM   #3
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This really sounds like a nightmare, and my sympathies go out to you. There is no solace in knowing that this experience can be a learning example for others, but I think that there are things that can be learned from this. I don't have any great experience in selling boats, but lots of experience in buying and selling real estate, some of which experience can be applied to any sales transaction.



"The contract presented to us for the sale of our Hylas 46, Leprechaun, was written in Australian dollars with a two and a half month delayed closing. Our question to the broker was "how can we protect our bottom line in the event the Australian dollar declines against the US dollar prior to closing?" Our boat is a US flagged vessel, we are Americans, we have a one year Australia multiple entry visa and our boat was advertised in US dollars. Paul Cocks with Reilly & Assoc. went to great length explaining how we could buy a Foreign Exchange Contract, about his experiences in dealing with Foreign Exchange Contracts, and that it would be easy. We knew nothing about a Forward Exchange Contract and told him so. He guided and directed us in what to do. However, the information he gave us was flawed and the process was extremely difficult. As soon as possible after we set up the foreign exchange account we approached Paul Cocks about the discrepancies."


Hiring a solicitor to look out for your interests as soon as you are presented with a legal document to sign is something our lawyer, and our friends and associates in the real estate business hammered into our heads. When one is operating in a foreign country, this is even more important, I think. Although I agree that the broker should be representing the seller, and have his best interests in mind, all brokers are buffeted by the conflicts between the seller's interests and the broker's need to sell the property in order to make any money! For that reason, seller needs to pay someone to have his, and only his, interests at the forefront.

The long delay in closing was another problem that an experienced solicitor might have been able to address and help find some safeguards for.

Before signing the agreement and collecting the deposit, all the research should have been done and all the mechanics understood on that "forward exchange contract." I haven't a clue what it is or what it can do for you, and I wouldn't trust a yacht broker to be any smarter than me about them. That was a mistake on the seller's part, though the broker was a bit arrogant in his responses to later questions and comments by the sellers.

Such a long delay in closing made it even more important to obtain good legal and financial advice.

"At the closing table, the Buyer agreed we could stay on Leprechaun a reasonable amount of time to pack and move. We had already packed as much as possible but with the possibility of not closing hanging over our heads we still had lots to do. We told the buyer we would like at least a day to clean, we wanted to turn over Leprechaun in the best condition possible."

As soon as he (the buyer) knew where to find the key he immediately said we had to move off the boat by 4:00 P.M. ..........We were humiliated, having to be evicted by the police. We couldn't sleep."


This is a horrible experience for the sellers, but I can still see two sides to this. First, the sales agreement should have included provisions for the seller to remove their personal property, including how long after the sale they would have. The sales agreement should ALSO have carefully listed all items that were to stay with the boat (and perhaps it did, though with the other flaws in the contract, I think this, too might have been deficient).

I would severely castigate the broker for failing to provide advice to the sellers on this point, particularly since this was their home. Circumstances are certainly much different in such a situation than the usual boat sale where very little of an owner's personal possessions remain on board, and in those circumstances the owner is not usually very far from their home as well. The behavior of buyer and the broker immediately after the closing sounds downright malicious. I cannot understand such behavior, though at the end of this I provide another view more charitable to the buyer of this situation. Since the broker has had the opportunity to respond to this posting but refused to do so, no other information which might shed more light on the situation seems forthcoming and I can only express my sympathy to the sellers for a sale gone horribly bad.



"......The buyer and his son did help move our 35 boxes onto the dock. With the help of the marina personnel our boxes were stored in an empty space. "


Here the seller must accept some responsibility for any impatience on the buyer's part. Peter and I sold our beloved sv Watermelon in Malaysia after living on her for 17 years. All told, we took eight suitcases and four boxes off the boat, four of the suitcases were removed before the buyer had made an offer on the boat. They were huge suitcases, but I cannot imagine 35 boxes of stuff. The sellers should have packed more of their belongings sooner, and had it stored before the closing date. Uncertainty aside, with that much packed and left on the boat at the closing with more to be removed, I would be one very wary buyer expecting everything that I felt that I needed and had paid for to also come off the boat in that mountain of boxes.

In the end, if only half of the behavior of the brokers was exactly as described, I, too, would be very very unhappy. As our wonderful friend and lawyer once told us, your first priority when buying or selling anything of significant value should be the hiring of a lawyer to represent you.... and only you... in these transactions. And I'll add: and then telling him exactly what your circumstances are (this was your home, and will be your home until the money has changed hands) and what you would like him to do to protect you. And ask him what he thinks needs to be done to protect you.

A lot of lessons to be learned here.
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Old 07-31-2007, 06:03 AM   #4
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Reading the above story makes me sad and angry. Sure; the McMahons made some mistakes, but they were understandable mistakes and they did not deserve to be treated so shabbily. That they probably could win recompense in a court of law is neither here nor there; the cost of achieving satisfaction would probably make it an exercise in proving a point rather than achieving any sort of compensation.

I would like to emphasise what has already been said: This incident is not peculiar to Australia; there are sharks everywhere. I am not native to Australia, and have trvelled extensively, and in general, Australians seem more honest than most. Indeed, when I bought my boat, I didn't even deal with a broker - I found the owner, we agreed on a time for an inspection & test sail. I inspected & test sailed. I made him a offer subject to survey. He accepted, we shook hands. I transferred a nominal deposit, the boat was surveyed. I transferred the balance, he handed me the keys and papers and receipt of payment (and let me use his marina berth for a week while I prepared the boat for the 1000+ nautical mile delivery). We shook hands again and I sailed away. So it isn't always a bad experience.
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Old 07-31-2007, 11:16 PM   #5
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A high percentage of boat deals in Oz are sealed on a handshake through private treaty. To see what is available in Australia, take a look on boatpoint.com.au/ , enter your search criteria in 'used boats' and take a good look about.

David
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Old 07-31-2007, 11:37 PM   #6
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Am I missing something here? From what I read, the deal closed, everyone got paid, the ownership changed hands...is this not the case?

It seems to me the new owners simply wanted to make sure the old owners didn't take-off with the vessel since all 35 boxes of stuff were still on board and it didn't appear as though they were making a good effort to unload their belongings even though funds had been transfered.
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