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- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Teis v Matrix Global Real Estate Pty Ltd & Ors  QDC 163
GARRY NEVILLE TEIS
MATRIX GLOBAL REAL ESTATE PTY LTD (ACN 603 282 444)
LIN LIN DU
District Court. Southport
17 July 2020
3 to 4 June 2020
Kent QC DCJ
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – TERMS ESSENTIAL TO ENABLE PERFORMANCE – where the plaintiff was engaged by the defendants to work as a sales person at their real estate agency – where the defendant was to pay the plaintiff upon various contingencies being met, including 10 percent of the gross commissions attributable to any salespeople trained by the plaintiff ‘for the next 3 years from the date hereof’ – where the real estate agency ceased trading 14 months after the date of the agreement – whether the agreement contained an implied undertaking or condition that the first defendant would keep the business operating for 3 years.
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the plaintiff was engaged by the defendants to work as a sales person at their real estate agency – where the defendant was to pay the plaintiff upon various contingencies being met, including 10 percent of the gross commissions attributable to any salespeople trained by the plaintiff ‘for the next three years from the date hereof’ – where the real estate agency ceased trading 14 months after the date of the agreement – where payment to the plaintiff was contingent upon commissions to be collected by the first defendant becoming payable within the 3 year period – whether there was an obligation to pay the plaintiff after the business terminated operations notwithstanding the failure of contingencies contemplated by the agreement coming to fruition - whether the first defendant had promised to continue trading for the 3 year period.
CONVEYANCING - THE CONTRACT AND CONDITIONS OF SALE - AGENT’S COMMISSION - where the plaintiff was engaged by the defendants to work as a sales person at their real estate agency - where the plaintiff was involved in a conjunction sale for premises in New South Wales - where the plaintiff introduced the seller - where an appointment signed between the owner and the first defendant was not procured - where the first defendant was unable to collect its commission on the transaction - whether it was the plaintiff’s duty to procure the signed appointment.
The plaintiff was self-represented
S Lim (solicitor) for the defendants
The plaintiff was self-represented
Regis Legal Pty Ltd for the defendants
- This is a claim for money said to be owing under a contract, described as a “deed of agreement” dated 20 April 2018 between the plaintiff and the first defendant. It arises out of commercial arrangements between the plaintiff and the defendants concerning a real estate business at Paradise Waters on the Gold Coast.
- The background is that the plaintiff was a real estate agent with extensive experience on the Gold Coast. At a time leading up to 2018, the defendants were conducting a real estate business from premises at Admiralty Drive, Paradise Waters and had been in business together for some time. The first defendant was a corporate real estate license holder, and the second and third defendants also held licenses and were directors of the first defendant.
- As at 2017 the plaintiff was at least semi-retired from practice as a real estate agent and lived in the area. He had been acquainted with another person who had previously operated the relevant real estate office. It seems common ground that the plaintiff met the second and third defendants in late-2017. It was agreed between them that the plaintiff would commence work with the defendants as a sales manager and be paid for that work pursuant to the agreement, which is referred to in these proceedings as Document 1, and is the first attachment to Exhibit 1, which is the plaintiff’s written statement prepared for the trial and was admitted into evidence largely as the plaintiff’s evidence-in-chief.
- Pursuant to the agreement the plaintiff, being experienced in real estate in the area, would undertake training of new staff members, as well as other managerial type duties, rather than being directly involved in the selling of real estate himself, although he remained licensed apparently at the relevant time.
- The agreement was prepared by Mr Teis without the assistance of any legal advice, apparently, and is brief. It is styled as a deed, and for purposes of clarity is attached as Appendix 1 to these reasons. Its essential elements include recitals to the effect that the plaintiff is a licensed real estate agent and auctioneer, registered in Queensland; the first defendant has established the office referred to above; and the first defendant wishes to obtain the services of the plaintiff as sales manager/auctioneer. The first defendant was to pay to the plaintiff 10 per cent of the gross commissions paid to the “Matrix Office” as a result of sales made by any salespeople that the plaintiff trains. Then, importantly, the following sentence appears: “This amount is to be paid for the next three years from the date hereof.” It was to be paid monthly.
- The plaintiff was also to be paid $500 for each auction that he conducted and 60 per cent of gross sales commission for sales that he made.
- The agreement further continued that the first defendant agreed to conduct six “conjunction” sales with the plaintiff (three with each of the directors) in Paradise Waters or similar where the gross commission split would be 50/50 with the plaintiff, such sales to be “actioned” within three months of the date of the agreement.
- The agreement was signed by the plaintiff and by Ms Du on behalf of the first defendant on 20 April 2018.
- It is common ground that the business conducted by the first defendant came to an end on 25 June 2019. On 24 June 2019 the first defendant sent an email to the plaintiff informing him of this. It is Document 2 to Exhibit 1 and essentially sets out that the directors could no longer work together, so the first defendant was to be closed down and new separate companies to be commenced. The trading name of “Matrix Global Real Estate” was to be retained by Ms Dong. The first defendant was to continue in existence only until commissions owed to it were received. It was not otherwise to continue trading after 25 June 2019 and any future sales contracts would be signed without reference to that entity. It was further indicated that the current business premises would be continued to be used by the directors under their two new separate businesses until 31 August 2019 (it is common ground that, in an administrative sense, dealing with the relevant state government regulatory agencies, some time was necessary to have the new arrangements up and running).
- It may immediately be seen that the genesis of the plaintiff’s claim is his disappointment that, having apparently entered into an agreement whereby he would receive a share of the commissions earned by staff trained by him for a three year period, the arrangement came to an end after only 14 months. The question in these proceedings is whether, in a legal and factual sense, he has any enforceable remedy in respect of that disappointment.
- The statement of claim sets out the above narrative and, indeed, attaches the agreement referred to. It is pleaded in paragraph 5 that at the time of ceasing operation, the first defendant had 10 sales staff from whom the plaintiff was entitled to a percentage of the commissions until (under the agreement) 19 April 2021. The way in which the statement of claim proceeds is to essentially allege that the termination was wrongful. Although damages are not expressly sought based on the cause of action of breach of contract, a demand letter is attached to the statement of claim which endeavours to quantify the claim. That letter, which is dated 15 July 2019, sets out, inter alia: “your company terminated my agreement on 28 June 2019 with no mention of payment for breach of the original contract dated 20 April 2018.” This should be interpreted as a claim for damages for breach of contract; essentially the plaintiff is saying that the termination of the agreement was a wrongful repudiation of the ongoing contract, and he had no choice but to accept the repudiation and sue for damages for the breach.
- There is then a quantification of the loss, based on assumptions of ten sales staff having continued to work into the future for 1.75 years, and even if the sales staff earned only the minimum wage of $44,850.00 per annum that would require each of them earn $96,600.00 in commissions for each year and the plaintiff’s percentage of that would be $9,966.00 per sales person per year, which extrapolated out to 1.75 years amounts to $174,415.00. This is the first part of the claim.
- There is then a calculation in relation to the second part of the agreement concerning conjunction sales. In essence, it is said that only one of the expected six sales occurred. For the five outstanding sales the plaintiff assumes that the average sales price for property in Paradise Waters would be “a minimum of $3m”. Working on an average commission of 2.5 per cent this amounts to $75,000.00 commission per sale, thus, for the plaintiff, $37,500.00 from each of the five sales amounting to $187,500.00. Thus the total claim is $361,915.00.
- The letter concludes with a “without prejudice” offer to accept $148,500.00 within a seven day period. Although this part of the correspondence is headed “without prejudice”, it was attached by the plaintiff to his pleadings, which are, of course, a filed document, i.e. publicly available (and available to the trial judge), and in that sense, if there were any privilege attaching thereto, it would be taken to have been waived by the plaintiff by this action. In any case, nothing really turns on that section of the correspondence. The letter does make clear the way in which the plaintiff’s claim is formulated and in that sense is a helpful part of the plaintiff’s pleading.
- It may be immediately seen that the nature of the plaintiff’s claim involves a number of contingencies. This will be further analysed below.
The defence of the First Defendant
- The agreement is admitted. It is pleaded that the plaintiff was engaged as an independent contractor and that he did not work full-time for the first defendant. It is also pleaded that when it ceased operations it had less than 10 sales staff in its employment. The basis of the calculations in the letter of demand are also contested. It is pleaded that the losses claimed by the plaintiff were for the loss of future income. Further, many of the sales staff who had been trained by the plaintiff earlier, had either left or had their contracts expire by the time the first defendant ceased business; thus the plaintiff was not entitled to a share of commissions from such a source. It is pleaded that any commissions owed to the plaintiff were duly paid. As to the proposed conjunction sales with the second and third defendants, it is pleaded that they were intended to be a collaborative effort between the parties; the second and third defendants had obtained relevant listings, however the plaintiff had not obtained buyers for those listed properties, which was said to be a breach of his obligation.
- An issue was raised on the pleadings as to withdrawal of monies by the second and third defendants from the funds of the first defendant prior to the closure. These were said to have been repayment of advances by the second and third defendants and ultimately, it seems nothing really turns on this point.
- The defendants advance a counter-claim against the plaintiff based on a transaction concerning a property at 18 Kildare Drive, Banora Point in New South Wales (“the Kildare Drive property”). The first defendant pleads that the property was sold to a purchaser (Trottcorp Pty Ltd) introduced by Rebecca Jose, a sales staff member, in conjunction with the plaintiff, and that the transaction settled on 29 January 2019. However the complaint is that the first defendant was unable to collect its commission on the transaction because the plaintiff (who had introduced the seller, broadly described as the Buggy family) did not procure an appointment signed between the owner and the first defendant (often referred to as a Form 6) which was said to be the plaintiff’s obligation. As a result of this omission, which is expressed as the plaintiff’s negligence, the first defendant was denied its commission and suffered a loss of $14,274.00 being its 65 per cent proportion of the relevant sales commission after deducting the plaintiff’s 35 per cent share.
- The defences filed separately by the second and third defendants are in essence similar to that filed by the first defendant, although the point is underlined that the plaintiff’s agreement was with the first defendant only and the second and third defendants were not parties thereto.
Notices to Admit
- The plaintiff delivered a notice to admit facts to the defendants on 11 October 2019 which was not responded to, and accordingly the contents are treated as deemed admissions (UCPR 189). This notice included the facts that: the plaintiff worked as the sales manager for the defendants from 6 February 2018 until terminated on 28 June 2019; he advertised for real estate consultants and screened the applicants’ resumes, organized appointments and conducted the interviews of the majority of the applicants. It is also set out that on 25 June 2019 there were 13 people registered as sales consultants working under the corporate real estate license of the first defendant.
- There were further notices to admit facts which were not responded to within the prescribed time and thus the facts alleged are taken to be admitted. The first of these, Court File Document Number 25, was directed to the first defendant only. Further relevant admitted facts include that: there was no independent contractor agreement between the plaintiff and the first defendant; a contract of sale for 18 Kildare Drive, Banora Point showing the first defendant as the effective agent does not exist (the details of this are set out below); further, that as at 25 June 2019 ten named persons had independent contractor agreements with the first defendant (these are the agreements that the sales persons signed, and examples form part of the exhibits). Further, importantly, between 6 February 2018 and 25 June 2019, no sales staff ceased working for the first defendant because the contract period of their independent contractor agreement ended. The relevance of this is that the independent contractor agreements were generally intended to stay in force for one year only; the point of the admission is that this had not operated to terminate those agreements at that stage.
- The notice to admit facts directed to the second defendant was filed on 20 November 2019. The admitted facts include that the second defendant did not obtain six listings or more in Paradise Waters between 6 February 2018 and 28 June 2019. The conjunction sales between the plaintiff and the second defendant mentioned in the agreement were to provide the plaintiff with a part payment for his work under a sales merger for the first defendant. Again, it is said that the sales staff did not cease working because of the expiry of their independent contractor agreement.
- The plaintiff also filed a notice to admit facts to the third defendant on 20 November 2019 (again, not responded to). Relevantly, those facts include that the plaintiff did not sell any property in Paradise Waters that was listed by the third defendant. The remaining facts are not particularly relevant, although it is also said that on 15 May 2019 the third defendant sent the plaintiff an email attaching a police complaint and statement she was apparently making against the second defendant. As discussed below, this is indicative (indeed, a stark example) of the increasing rift between the second and third defendants.
- Finally, the plaintiff filed a reply to a request for further particulars of the statement of claim on 15 October 2019. This response sets out quite a lengthy narrative broadly in line with the details set out above, although also including a number of other facts of varying degrees of relevance. What seems reasonably clear from that document, as was canvassed in the evidence, was that the relationship between the second and third defendants – obviously an important aspect of this matter - began to break down from about January 2019.
Introduction and the agreement
- In his evidence, Mr Teis described how he had known the previous person that operated the office in Paradise Waters, and when it changed he called in to introduce himself. This was in approximately October 2017. He said that the second and third defendants were previously experienced, but mostly in selling projects under development off the plan and focussed on the Chinese community on the Gold Coast and in Brisbane. They wanted to broaden their business and become a general agency and so were interested in an Australian such as himself for this purpose, and also wanted to do auctions. Thus the agreement was entered into. According to the plaintiff, all parties understood that this would produce little income for him for the first 12 months, so the three year term was important. Moreover, the advantage for the defendants was that it kept their overheads low, compared, for example, to his usual annual salary in such a position of $150,000.
- Then after the relationship commenced, in the first three months, during the period when the proposed conjunction sales were to be conducted, the energies of the parties were diverted to a Westmark project at Milton in Brisbane, which assisted the profile of the agency but from which he did not receive (and, as I understand his evidence, he concedes he was not entitled to) any commission. He agreed that he received $10,932.21 as payments from the salespeople’s commissions for people he had trained. For the second part of the agreement, which contemplated the six conjunction sales, his evidence at its highest seemed to be that the 2nd and 3rd defendants should have been more active in obtaining listings.
- He became aware of differences between the 2nd and 3rd defendants, but thought the arrangement would continue in some way and was taken by surprise by its sudden end in June 2019; this denied him the benefit of the balance of the three year term.
- Although the plaintiff included in his documents some evidence of the way in which award payments are made to real estate salespersons, these were simply as an example and he did not contend that he was actually employed by the defendants (although this became less clear in cross examination – see below).
- In relation to the counterclaim, the plaintiff’s evidence was that it is the licensee – that is, not himself – who has the duty of care to make sure that they have the appropriate sales agreement. He pointed out that the first defendant should have been included on the contract of sale as the vendor’s agent and this did not happen, nor was the appointment signed. The plaintiff explained the somewhat convoluted dealings with the vendors in that case but insisted that the responsibility for the formalities was with the licensee, not himself. He described the difficulties with the transaction, including that the solicitor involved (apparently on instructions) had deliberately not put the agent’s details in the contract; and the agent was not holding a cash deposit because the transaction involved the exchanging of properties rather than money. He said that the invoice was sent out for the commission on 1 February 2019, which was after the transaction had settled. Thus he denied any responsibility for the loss.
- In cross-examination Mr Teis agreed that he worked at Matrix Global on a commission only basis. He was paid auction fees for conducting auctions by Matrix Global. It was put to Mr Teis, and he agreed, that he was paid commission pursuant to the agreement whilst Matrix Global was trading; see for example, Exhibits 3 and 4 which are the relevant invoices. This included invoices which were rendered, and paid, after the date of closure of the business. He also agreed that any of the salespersons he trained were free to leave the business on one month’s notice and, obviously, having done so would no longer produce any commissions in which the plaintiff could share. The theme behind this was, presumably, the inherent uncertainty of any expected return for the plaintiff from the agreement, considering that the salespersons could leave at any time.
- There were clearly differences between the parties about the nature of the independent contractor agreement upon which salespersons were to be engaged. Exhibit 5 includes an email trail between 7 April 2019 and 8 April 2019. Clearly Ms Dong at least, apparently on legal advice, was concerned that the agreements which were being offered would be interpreted as employment agreements, according to legal advice as to the perspective of the Fair Work Commission. The result would have been wages claims and other consequences. Therefore Ms Dong was not prepared to persist with this course. This was enlarged upon later in Ms Dong’s evidence, and seems to have been consistent with the gradual disintegration of the business. Also the tenuous nature of the retention of those trained staff was, again, an underlining of the uncertainty of the plaintiff’s expectations from the agreement.
- The point was also made in cross-examining the plaintiff that the agreement did not specify which parties had exactly which obligations in relation to the achievement of the conjunction sales. The stance of the plaintiff seemed to be that the second and third defendants would obtain the listings because the majority of the owners in Paradise Waters were Chinese (as are the second and third defendants) whereas the plaintiff would assist in how to market and possibly auction the properties. The proposition advanced by the defendants in cross-examination was that the sales would have to come to fruition before commission was payable to anyone, a proposition which (although apparently obvious) the plaintiff appeared not to accept. His most definitive response, it seemed, was at T1-57, l 35:
“I’m definitely not doing the lion’s share of the work. You are correct that I’m definitely needing to be paid for the fulltime job I’m doing for the first defendant. That’s exactly why it was supposed to be that way. I do the minimum amount of work and still get 50 percent of the commission.”
- Even on this narrative, it seems inevitable that the sales would need to come to fruition such that commission was payable before the plaintiff could share in any such commission; these things simply did not eventuate.
- Another topic which was somewhat contentious was the plaintiff’s employment status. As noted above, he produced some documents from the Fair Work Commission dealing with the way in which real estate salespersons are employed and remunerated. However, earlier he had said that he was not an employee. When pressed on this he confirmed that his claim was not one which was susceptible to resolution in the Fair Work Commission. However, shortly thereafter he was asked:
“So is it your case that you were employed by Matrix? … I thought I was.”
He was, with respect, somewhat inconsistent on this issue.
- He agreed that he was never paid any superannuation nor was there any PAYG tax withholding, nor any paid annual leave. Rather he invoiced the first defendant for the commission that he collected (the invoices bearing his ABN) and was paid. The plaintiff finally said that he was not 100 percent an employee and not 100 percent an independent contractor.
- In relation to the counterclaim, and lack of a written appointment as agent for the Kildare Drive property with the Buggy family, the plaintiff again said that it was not his responsibility, rather it was the responsibility of the licensee in charge of the business. It was clearly established by at least 12 February 2019 that the solicitors acting for the vendor of that property (which by that time was Parker Constructions Pty Ltd rather than members of the Buggy family; ownership had changed hands during the course of this convoluted transaction) were taking the stance that there was no written confirmation of the appointment of the first defendant as selling agent and as such commission was not payable. This was in response to the attempt by the second defendant to render an invoice for the commission.
- The plaintiff’s case on the counterclaim was essentially that whatever happened the commission would be difficult or impossible to recover. Mr Buggy had apparently claimed that he always had an exclusive agency with another real estate agent at Pottsville in New South Wales and as such no commission was payable to the first defendant (hence any fault by the plaintiff, which was denied, would in any case not have been causative of loss). There were proceedings drafted to initiate action in the New South Wales Local Court on this topic, but not proceeded with on legal advice.
- The ownership change referenced above was a further complication. The plaintiff’s evidence on his resistance to the counterclaim was really summarised by the following passage at the very conclusion of his evidence:
“Viv (Ms Dong) is the New South Wales licensee and as such she is to double check those things. Bec (Ms Jose) is a fully qualified real estate agent. She is not just a salesperson. Once again, she is equal to what I was in qualifications. And so we’ve got a licensee in charge, we’ve got two licensee salespeople and we’ve got a very devious vendor.”
- Thus the plaintiff’s case is that in all of those circumstances it was not his sole obligation to ensure that the appointment was signed; there is no guarantee that in any circumstances one could have been signed; and the claim for commission was being strongly resisted by the seller of the property at all times. This is demonstrated by the email exchange, Exhibit 12. Thus any omission by him, which was denied, was not causative of loss.
Evidence in chief – the agreement
- The first witness for the defendant was Xiayou (“Vivienne”) Dong, the second defendant. She described the arrangements with the plaintiff broadly consistently with the other evidence. The plaintiff’s agreement was with the company, and she herself had never signed any agreement with him. The salespeople were trained by him, but mostly they were unsuccessful as salespersons. Those that were successful in concluding sales entitled the plaintiff to his share of the commission pursuant to the agreement. These payments were made. The salespeople were free to leave on a month’s notice, which some of them did. She was opposed to actually employing any of the salespeople on wages, because the company’s turnover could not afford it. The independent contractor agreement (for the salespeople) was introduced by Mr Teis and drafted by a solicitor. Her view of the plaintiff’s role was that he was a sales manager and also an auctioneer. The idea of him training staff came from the plaintiff, as a way of him earning some money.
- In relation to the conjunction sales, her view was that each party to such an agreement should contribute to the conclusion of the sale. The one conjunction sale which was concluded pursuant to the agreement, a property at 54 Gull Place, West Tweed, was a situation where the plaintiff had introduced the seller and Ms Du had introduced the buyer; this was the normal process of conjunction sales. Mr Teis had issued an invoice for his share of the commission and was paid.
- In relation to the property at Kildare Drive, it was Ms Dong’s evidence that Mr Teis was the listing agent and thus responsible for the appointment which did not occur.
- In cross-examination she expressed the firm view that Mr Teis was an independent contractor. It was an admitted fact that he worked at Matrix Global fulltime as a sales manager (this would not, of course, prevent a conclusion that he was an independent contractor). There was a slight tension in this regard with paragraph 2 of the second defendant’s defence which pleaded that he was an independent contractor, as sales manager/auctioneer, but did not work fulltime for the first defendant. This distinction is not particularly significant.
- It did become clear that tension had developed between Ms Dong and Ms Du, at least partly in relation to a sale of a property at St Lawrence in North Queensland, from late 2018 onwards.
- Ms Dong agreed that she had thought the agreement with the plaintiff would persist for three years. She also conceded that when new salespeople were being trained it would take time for them to earn money. She agreed generally that the agreement with Mr Teis was to compensate him for his work on a commission sharing basis rather than paying him a wage. This seems an accurate description of the arrangement.
- When Ms Dong was asked about the termination of the agreement and what would happen with her salespeople she responded:
“It was not my intention to separate with my business partner and I – as a business owner, a director of the company, I do not plan to fail. But, when things happen, I have to deal with it. And, as an owner of the business and my – I’d have a discussion with Lin Du and we offered the salesperson back then – they had the choice to have a discussion with myself or Lin to choose which company they want to work with after this – their agreement with Matrix Global terminated. That was the best we could do.”
- Her version of events essentially was that the relationship between she and Ms Du had broken down over some months which made it impossible to continue the business, despite the commentary in the agreement about the three year period. There was an offer to continue the payments to the plaintiff in relation to salespersons he had trained and who continued on in the separate businesses in the future, however it seems that this did not eventuate.
- Ms Du confirmed that she signed the agreement with the plaintiff, on behalf of the first defendant. She said that pursuant to the agreement the plaintiff could conduct auctions for outside parties or indeed do conjunction sales with other parties; he was not strictly limited to working with the defendants. He was to be paid the 10 percent of commission for salespeople recruited and trained by him. The salespeople were paid commission only. They did not all remain working at the business. An example was given in Exhibit 8 (a series of text messages) of one of the salespersons, Elaine, leaving the business and moving to Melbourne. One of the other salespersons apparently went with her.
- In relation to the independent contractor agreement for the salespeople, Ms Du said it was discovered that this was undesirable for their purposes; the effect of it could be that the salespeople were in fact employees. This was pursuant to advice from a company called Employsure.
- As to the conjunction sales, she explained her understanding of the term “conjunction”:
“Conjunction means more than one salesperson – most likely two salespersons. One is listing agent who is not the seller. The other one who is finding the buyer. So they work together to get the deal done and they share the commission. It’s called conjunction.”
- It required all parties to do something to contribute to the sale. This was her understanding of the arrangement with Mr Teis.
- In relation to the counterclaim, like Ms Dong, she considered it the responsibility of the listing agent to obtain the signed appointment, Form 6. She confirmed that for 18 Kildare Drive, the commission could not be claimed because the Form 6 had not been signed.
- It was acknowledged by Ms Du in cross-examination that at the time leading up to the cessation of the first defendant trading, she had made enquiries about buying other office premises so that her own business could continue. In the end, she was outbid by a group of doctors. During her cross-examination, the plaintiff introduced Exhibit 9, which is an email of 25 June 2019 from the plaintiff, following the email notification that the business was closing, and enquiring of the defendants whether staff would be invited to join either of them in the new businesses and what would be the terms of any such offer. The main relevance from the plaintiff’s point of view of this document seems to be that it was responding to an email which went to a large number of staff, indicating that those persons were still on staff as at 25 June. This is somewhat at odds with the evidence of the defendants to the effect that few of the original staff remained.
- What became slightly clearer in re-examination was that the business premises did remain open in a practical sense until 30 August 2019, although the first defendant ceased trading as contemplated from 25 June. The second and third defendants and some of the staff occasionally used the premises during that time purely for administrative type reasons (i.e. not for sales by the first defendant).
- After the business closed down, Ms Du conducted her new business under the name of AveNew Realty. This seems to be conducted from the same previous premises in Paradise Waters.
- The next witness for the defendants was Rebecca Jose. Her evidence largely dealt with the counterclaim. She joined Matrix Global as a salesperson and was trained by the plaintiff. The training continued for two weeks and then the plaintiff was available for guidance where necessary. She described him as her point of contact. She signed an independent contractor agreement with the first defendant on 21 May 2018. Ms Jose did not have previous experience in real estate.
- She was involved in the sale of the property at Kildare Drive in that she was the agent for the purchasing party (a Mr Sullivan) who swapped properties with the owner of Kildare Drive to conclude the transaction. It was Mr Teis who obtained the listing for Kildare Drive. She thought this was in about early August 2018. She was aware of the Buggys’ company, Parker Constructions, taking over the property from late August, early September. There was a contract of sale signed which seems to have been executed on 26 September 2018. Included in the contract is a search from the New South Wales Land Registry Services indicating that as at the search date of 3 September 2018, the registered proprietor of the land was Parker Constructions Pty Limited. There is provision in the contract document for insertion of the vendor’s agent, however this was left blank.
- In respect of her client’s properties (at Falconer St, Southport) she had an agency appointment signed. In respect of the Kildare Avenue property she became aware there was no such document and the invoice for the commission went unpaid.
- Ms Jose also confirmed that there was extensive and heated correspondence about this topic as outlined above. The vendor, through Mr Buggy, was very clearly indicating that he had an exclusive agency with The Professionals at Pottsville, Roger McLeod being the licensed agent, and that he resisted the paying of any commission to the first defendant.
- In cross-examination of Ms Jose, she agreed that, if the vendor did in fact have an exclusive agency with The Professionals at Pottsville, it was curious that the agency did not appear on the contract of sale.
- Ms Jose said that she was surprised to hear about the other exclusive agency at Pottsville and would have expected Mr Buggy to tell her about that, which apparently he had not. This was despite having some discussions with him when she showed him through the properties he was acquiring, as a result of the transaction, in Falconer St Southport.
- Ms Jose did confirm that her client had visited the subject property. He told her there was an agent from the area present who could have been Roger and Ms Jose’s impression was that there had been some discussions with her client; however this is of course hearsay and should be disregarded if it were relied on to establish the truth of those propositions. She never met the other agent, if that person existed or was named Roger. She only heard of his purported existence after the settlement. Ms Jose confirmed that she was not the agent for the owner of 18 Kildare Drive, rather Mr Teis was.
Consideration - The issues
The claim for commissions pursuant to the agreement
- (a)The 10% for three years (the “overriding commissions”)
- The plaintiff seeks to recover money, as outlined above, pursuant to a contract which involved a number of contingencies. As submitted by the defendants, these “overriding commissions” as the parties refer to them, were payable if:
- (a)The salespeople concerned had been trained by the plaintiff;
- (b)They remained as salespersons of the first defendant;
- (c)Sales were successfully completed by those salespersons;
- (d)Commission in respect thereof was paid to the first defendant;
- (e)The preceding four steps occurred within three years from the date of the agreement.
It was no doubt the intention and hope of the parties, at the time when the agreement was signed, that the arrangements would continue for three years. In the event, they did not. So the first issue, in terms of construction of the contract, is the status of that provision; what was the contractual force of the reference to three years?
- In my view, it is to be understood as an obligation to pay the commissions to the plaintiff when the first defendant collected the gross commissions, during the timeframe set out, in accordance with the above contingencies. That is, any payment to the plaintiff was contingent upon the commissions to be collected by the first defendant becoming payable, from the efforts of staff trained by him, in the time frame. If those payments did not arise, then there was no obligation to pay the plaintiff, simply because the contingency (or condition precedent) was not satisfied.
Promissory nature of the term?
- The obligation to perform a contract may be subject to a contingency for which neither party has undertaken to be liable. In Perri v Coolangatta Investments Pty Ltd a contract for the sale of land was expressly stated to be “entered into subject to Purchasers completing a sale” of another property. Fulfilment of this contingency was a condition of the obligation to complete the contract, but not a promise: “Though the stipulation specifies the event on which the obligations cease to be contingent, the stipulation contains no promise that the event will occur.” In such a case, it follows that non-fulfilment of such a condition is not itself a breach of contract. It is not a “promise” or “promissory condition” obliging a party to do something to ensure completion; rather it is a condition, or contingent condition, which must occur to enable completion (or oblige performance) but which neither party is obliged to bring about. In this case, the contract may be understood as obliging the plaintiff to train the salespersons, and the defendants to facilitate them doing their work, but as the fulfilment of the condition, namely the bringing about of sales, by trained salespersons, whereby commission is payable entitling the plaintiff to share therein, within the timeframe, was not within the control of the parties, they could not be regarded as promising to have this occur; a reasonable person would not conclude the first defendant was so warranting. Statements of opinion or intention, hope or desire may be distinguished from promises; thus in Savage v Blakeney a statement “Estimated speed 15 mph” was a statement of opinion based on a rough assessment of probability, rather than a promise.
- What was really being expressed, in my conclusion, was a hope (or, as discussed below, and as the defendants submit, a maximum rather than minimum period), rather than a contractual promise. Non-fulfilment of the conditions, or any of them, simply excused the defendants from the obligation to pay a share of commissions which were not earned.
An undertaking to trade for three years?
- Secondly, as to this term, the plaintiff’s case seems to be that the agreement should be construed as containing an undertaking, or a condition of the contract, by the first defendant to keep the business operating for three years, during which time the entitlement to commissions would arise; and that the first defendant breached this by closing after 14 months. He submits, in effect, that the agreement is to be understood in this way because it was always going to take time for the trained salespersons to get up to speed in terms of results, and thus the time guarantee was necessary to properly compensate him for his expertise, where such compensation was necessarily, to a degree, deferred.
- Even if such an undertaking could be implied, compensation to the plaintiff would still be contingent on future sales being made and completed, as outlined above, or, more accurately, in the present case, an exercise in the valuation of the loss of a chance to benefit from such possible future sales would need to be undertaken. In any case, such a claim involves the implication of a term to this effect. In my view, this is a difficult proposition for the plaintiff to establish.
- It is certainly true that there is an implied duty upon the parties to a contract to co-operate in its performance. A familiar passage is from Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd:
“But it is common ground that the contract imposed an implied obligation each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:
‘As a general rule… where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.’
It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v McDonald …:
‘It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.’
It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under a contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party’s obligations and are not fundamental to the contract. Then the question arises whether the contract places a duty to co-operate on the first party or whether it leaves him at liberty to decide whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.”
- However, this duty has limits; it requires performance only of acts necessary to preserve “the benefits of the contract” – not “the benefit of the party”; it depends on the nature and terms of the contract in question, not an absolute obligation to look after the benefit of the other party. Thus, in a case which has some parallels to the present, in Australis Media Holdings Pty Ltd v Telstra Corp Ltd Australis entered a contract with Telstra for a 25 year period, and a year later contracted with a third party for a joint venture which took over its satellite network. Telstra relied on the implied duty of co-operation to argue Australis was precluded from ceasing to be the operator. This failed; a contract may “contemplate” many benefits, for the parties, but each can only call on the other to provide, or co-operate in providing, benefits promised by that party.
- Approached on this basis, the plaintiff’s case would have to be that the implied duty to co-operate imposed on the first defendant (for this first limb of the agreement) an undertaking to continue trading for three years. This idea of an implied undertaking is vigorously contested by the defendants. In my view, such an implication is not essential to performance of the first defendant’s obligations, nor fundamental to the contract. Nor is it, in my view, necessary for the business efficacy of the contract (as discussed below) and it is not necessarily implied pursuant to the obligation on a contracting party to co-operate in doing all that is necessary to be done for performance of the obligations. The plaintiff’s case has to be that there was such a promise which was breached. This is not correct. Rather, in my view, what occurred on this occasion was a supervening event, namely the unforeseen falling out of the second and third defendants, which made it impossible for the business to continue and in effect frustrated performance of the contract (in a way not contemplated at the time of the contract).
- The arrangements were, of course, always beset with such imponderables (not provided for in the contract): another example would have been if none of the salespersons trained by the plaintiff remained in the business for the required three years; he would again have been left without a right to the share of commissions (even if the business had otherwise continued), and such a development would have been beyond the power and duty of the defendants to co-operate. These features tend against the implication of the term contended for. Again, as outlined above, the term is difficult to interpret as a promise to keep the business open for three years.
Principles as to Implication of a term
- For the plaintiff to succeed, as submitted by the defendants, he must establish that the implied duty to keep the business trading for three years was imposed consistent with the tests enunciated in Codelfa Construction Pty Ltd v State Rail Authority (NSW). The relevant passage in the judgment of Brennan J, dealing with the implication of a term other than what is necessary “to make the written contract work, or conversely, in order to avoid an unworkable situation” is as follows:
“If it appears from the written contract that a term is to be implied, there are conditions which any proposed term must satisfy. They were stated by the majority judgment in BP Refinery and adopted by Mason J with the concurrence of the other members of this court in Secured Income Real Estate v St Martins Investments Pty Ltd (supra). Those conditions are:
‘1. It must be reasonable and equitable;
2. It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
3. It must be so obvious that ‘it goes without saying’;
4. It must be capable of clear expression;
5. It must not contradict any express term of the contract.’”
- In my view, the contended undertaking to trade for three years should not be implied pursuant to the above conditions. Firstly, the allegedly implied term was not, in the factual circumstances, reasonable and equitable; even at the time of execution of the agreement, it does not seem reasonable and equitable to impose on the first defendant an undertaking to trade for three years at the very beginning of such a relationship and without any extensive commercial history or experience in the relationship. As the first defendant points out, for example, it may have become economically not viable for it to continue trading; as events unfolded, it was a different problem which arose.
- This is particularly so when one considers what remedy the plaintiff seeks. Given the quantification of the damages, the term contended for could perhaps in truth be understood as containing an undertaking “to trade for three years and, despite the earnings of actual sales by staff trained by the plaintiff, to guarantee to the plaintiff a level of income during that time calculated as he has set out, even if a lesser amount or indeed no commissions become payable”. This is so far outside what the parties contemplated, it needs only to be stated to be rejected. As the defendants point out, such a term would not have been agreed to if suggested during negotiations.
- Secondly, it was not necessary to give the business efficacy to the contract. The terms did operate for the 14 months the business was in existence and the plaintiff did receive some commissions by way of its mechanisms.
- Thirdly, it is not so obvious that it goes without saying, in my view. Bearing in mind that the agreement was drafted by the plaintiff, the relevant sentence may easily be understood as simply an expression of the parties’ intention that the upper limit for the plaintiff’s entitlement to receive his share of commissions is a three year period (as opposed to, for example, five years or indefinitely), rather than, conversely, it being an undertaking of a minimum period by the first defendant.
- Although the alleged implied term may well be capable of clear expression, in my view, it is not consistent with the express terms of the contract which, in my view, merely provide a maximum rather than a minimum period for the relevant undertaking. The alleged term to be implied is not necessary and generally, does not meet the tests outlined above.
- Rather, in my view, the obligation to pay commission to the plaintiff was subject to the various contingencies outlined above, which did not come to pass, other than for the transactions in respect of which the plaintiff has been paid commission; and the first defendant had not promised to meet those contingencies in a contractual sense. Thus there was no breach of a contractual term and the claim for payments under the 10% clause fails.
- It remains to note that in final submissions the plaintiff endeavoured to advance a case in the alternative based on the idea that he was really employed, and should be paid for lost wages. It needs only to be observed that such a case was not pleaded and is not supported by the evidence. On the evidence outlined above, I could not find the plaintiff was an employee.
- If the above conclusion is wrong, quantum of the plaintiff’s claim in this regard should be assessed. As already noted, it is really a claim for loss of a chance. This is necessarily somewhat speculative; the degree of probability of the relevant future events occurring ranges from just above the speculative to just below the certain.
- Doing the best I can, the evidence is that in the 14 months the system was operating, the plaintiff’s income from the overriding commissions was $10.932.29. Even assuming that a number of the trained staff had stayed on (or he trained new ones who became productive), if that figure were doubled, his income from that source may have been $20,000 p.a., or $385 per week. For the ensuing two years (from the date of the breach; in fact it was slightly less than this), the present value of that future loss discounted on the 5% tables was $38,476.90. In my view, that figure should be further discounted for contingencies, as outlined above; e.g. risk of the business closing for other reasons, or trained staff leaving and not being replaced. This discounting factor I conclude should be 50%, thus the calculated damages under this head, had the plaintiff succeeded, is $19, 238.45.
- (b)The conjunction sales
- The conjunction sales are more straightforward. There was a hope that sales in conjunction (in Paradise Waters or similar) would be made within three months. Only one of the six occurred, and the plaintiff was paid for that one. Again any payments were contingent on several things not within the direct control of the parties, namely the hoped-for sales coming about; thus it is difficult to see the term as constituting a promise in a contractual sense as outlined above. The second and third defendants were somewhat distracted by the project in Brisbane, but the plaintiff did not insist on the three month limit. The parties, despite what in my conclusion were reasonable efforts, did not achieve the sales, and thus the conditions precedent to performance, that is sharing of commission with the plaintiff, were never satisfied. Thus no obligation to pay commission arose.
- If the plaintiff’s case on this clause is in truth that the second and third defendants were under an implied obligation to make further or better efforts to achieve such sales (pursuant to the implied obligation to co-operate in the performance of the contract, outlined above), I do not accept that they were in breach of that obligation. They impressed me as honest witnesses who were doing their best to make the business successful. There is no contemporaneous documentary or other evidence to the contrary.
- Thus this part of the claim also fails. If it had been successful, the loss of a chance incurred by the plaintiff would have been so beset by the contingencies that it would be valued at $10,000.
- As for the counterclaim, in my view it is the counterclaiming defendants who are on shaky ground. It is true that Mr Teis was the person with the relationship with the Buggy family and introduced them to the transaction, and in that sense could be seen as having the most direct interest and access to have the Form 6 signed. However, even assuming he failed in that responsibility, it is a further step to conclude this was causative of the loss of the potential commission. The Buggys were, on the evidence, determined to avoid paying commission. Exhibit 13 is informative. Their solicitor, presumably on instructions, omitted mention of any agent on the contract. When commission was requested, the solicitor requested a copy of the signed appointment, which did not exist.
- Mr Buggy then responded that he had an exclusive appointment with “Roger” and he (Buggy) thought that Mr Teis may be able to share in Roger’s commission (email 12th February 2019). Mr Teis then denied knowing of Roger’s exclusive appointment. Buggy responded that he had negotiated with Roger to give Mr Teis a “finder’s fee” out of his commission, but was rescinding that instruction. Mr Teis replied that he had been trying to help Mr Buggy sell the property since 2012. This produced a response that Mr Buggy had an exclusive appointment of Roger McLeod since 2016, of which he informed Mr Teis in 2017, and that McLeod had a written appointment; further if Mr Teis had asked for a written appointment he would have been referred to McLeod and Buggy would have refused to sign an appointment for Teis, and the transaction may not have proceeded (email 18th February).
- All of this is problematic in terms of findings, when Mr Buggy and Mr McLeod have not given evidence; nevertheless the contemporaneous email exchange is informative. Certainly Mr Buggy demonstrated a determination not to pay Mr Teis commission, nor to sign an appointment. Whether he was “devious” as Mr Teis suggested could not be concluded. However the evidence establishes, in my conclusion:
- (a)That it would have been difficult or impossible for Mr Teis to obtain the written appointment;
- (b)That Mr Buggy was determined not to pay commission to Mr Teis or the first defendant, when he was aware the first defendant was being paid commission by Mr Sullivan, and this may possibly have been supported by his alleged appointment of McLeod, although the evidence falls far short of a positive finding of such an appointment being in existence at the relevant time;
- (c)That in all the circumstances it cannot be found that lack of the form 6 was due to Mr Teis’ default, and in any case, that recovery of commission by the first defendant would have been otherwise likely. Nothing Mr Teis did or failed to do was causative of a recoverable loss by the first defendant.
- In all the circumstances the first defendant falls short of discharging its onus of proof to establish a right of recovery on the counterclaim, and the counterclaim is dismissed. If I am wrong as to this conclusion, the identifiable loss would have been minimal; I accept the plaintiff’s calculation that McLeod’s commission may not have exceeded $11,895.00; the first defendant’s share of this would have been $5,947.50; and after deducting the plaintiff’s share the loss would have been $3,865.87.
- Normally costs would follow the event, such that the defendants would be entitled to costs on the claim. On the counterclaim, Mr Teis, being self represented, is not entitled to a costs order. If any party wishes to advance a contention as to a different costs order, they should file and serve a two page outline of submissions within seven days of delivery of these reasons, to be responded to by the opposing party within seven days, upon which the issue will be determined on the papers.
 Of course, this makes no allowance for the normal discounting process to allow for the present value of a future loss; but in the result this has little significance, although it is dealt with below
 Including his written statement prepared for the trial, Exhibit 1, and attachments thereto, as well as his oral evidence
 T1-18, l 43.
 T1-19, l 12.
 For example, T1-20, ll 1-20.
 T1-20, l 44 to T1-21, l 16.
 T1-23, l 21.
 T1-28, l 25.
 T1-28, l 41.
 T1-68, l 4.
 T1-68, l 18.
 T1-69, ll 15-20.
 Exhibit 12
 And there does not seem to be a claim in this case based on a contract of employment
 See generally T1-103 to T1-106.
 T1-109, l 17.
 T1-111, l 40 to T1-112, l 17.
 See generally T1-114, l 26 to T-116, l 5.
 T1-117, ll 11-31.
 T2-14 ll 1-5
 T2-58, l 40 to T2-59, l 15.
 Exhibit 10.
 Exhibit 11.
 Exhibit 12.
 Exhibit 13.
 T2-80 l 27
 T2-94, l 43 to T2-95, l 14.
 T2-104, l 3.
 The court approaches the task of ascertaining the meaning of the term from an objective viewpoint; see Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 185 ALR 152 at ; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462; what would the document convey to a reasonable person with the parties’ relevant background knowledge, and the purpose and object of the transaction, at the time?
 The condition under discussion is a condition precedent to performance, not to formation of the contract
 (1982) 149 CLR 537
 Ibid at 565
McTier v Haupt  1 VR 653
 Of course, a promise need not be subjectively intended; Ellul v Oakes (1972) 3 SASR 377 at 381
 (1970) 119 CLR 435 at 442
 See also Ross v Allis-Chalmers Pty Ltd (1980) 32 ALR 561
 (1979) 144 CLR 596 at 607.
 (1998) 43 NSWLR 104
Ibid at 117
 (1982) 149 CLR 337.
 Codelfa at 374
Silverbrook Research Pty Ltd v Lindley  NSWCA 357 at 
 Malec v J. C. Hutton Pty Ltd (1990) 169 CLR 638 at 643
- Published Case Name:
Garry Neville Teis v Matrix Global Real Estate Pty Ltd, Xiaoyu Dong and Lin Lin Du
- Shortened Case Name:
Teis v Matrix Global Real Estate Pty Ltd
 QDC 163
17 Jul 2020