Greg Roughsedge Realty Pty. Ltd. v Whitecross
[2000] QDC 360
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- Unreported Judgment
- Greg Roughsedge Realty Pty. Ltd. v Whitecross[2000] QDC 360
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Greg Roughsedge Realty Pty. Ltd. v Whitecross[2000] QDC 360
Greg Roughsedge Realty Pty. Ltd. v Whitecross[2000] QDC 360
DISTRICT COURT OF QUEENSLAND
CITATION: | Greg Roughsedge Realty Pty Ltd v. Whitecross [2000] QDC 360 |
PARTIES: | GREG ROUGHSEDGE REALTY PTY LTD (Plaintiff) v. RAYMOND JOHN WHITECROSS (First Defendant) And SHARON BRENDA WHITECROSS (Second Defendant) |
FILE NO/S: | Plaint 233 of 1996 |
DIVISION: |
|
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court Maroochydore |
DELIVERED ON: | 22 December 2000 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 25 September 2000 |
JUDGE: | McGill D.C.J. |
ORDER: | Judgment that the first defendant pay the plaintiff $58,387.50 together with interest. Claim against second defendant dismissed |
CATCHWORDS: | AGENCY – commission – real estate agent – time at which licence must be held – whether commission payable – terms of engagement – whether engagement in writing – Auctioneers and Agents Act 1971 s. 76(1)(b), (c) Meier v. Wordell [1924] QWN 19 - considered F J Richards Pty Ltd v. Mills Pty Ltd [1995] 1 Qd.R. 1 – considered Salamon Nominees Pty Ltd v. Moneywood Pty Ltd (Appeal 4852/98, Queensland Court of Appeal, 22.12.98, unreported) – applied Anderson v. Densley (1953) 90 CLR 460 - followed Butts v. O'Dwyer (1952) 87 CLR 267 – followed Kennedy v. Vercoe (1960) 105 CLR 521 Re: Henry Lawson Development Pty Ltd (1970) 91 WN (NSW) 624 - followed Bradley v. Adams [1989] 1 Qd.R. 256 at 261 - cited L J Hooker Ltd v. W. J Adams Estate Pty Ltd (1977) 138 CLR 52 - considered |
COUNSEL: | M W Jarrett for the plaintiff D J Kelly for the defendants |
SOLICITORS: | Elias Mumford for the plaintiff Garland Waddington for the defendants |
- [1]By this action the plaintiff claims commission as a real estate agent from the first and second defendants. By a contract in writing dated 13 March 1995, the first and second defendants agreed to sell certain land to M E Harrison Investment Co Pty Ltd: Exhibit 8. That contract was ultimately not completed, the parties entering into a later contract by which the earlier contract was mutually released. Nevertheless, the plaintiff alleges that, under the terms of its retainer, it is entitled to commission in respect of that contract.
Facts
- [2]At the relevant times the first defendant was the registered proprietor of Lots 7 and 8 on registered plan 851041 and lot 3 on registered plan 92714, county of Canning, parish of Maroochy. The first and second defendants were registered as proprietors of lot 18 on registered plan 26855, county of Canning, parish of Maroochy. The contract of 13 March 1995 identified the land sold as “that part of lots 7, 8, 3 and 18 hatched in black” on the plan annexed to the contract. At the relevant time the land was in the rural zone for the purposes of the town planning scheme of the Maroochy Shire Council, the relevant local authority.
- [3]In 1994, Mr. Roughsedge, the person behind the plaintiff company, saw details of a new strategic plan for the area including the defendants’ land, which appeared to provide for its rezoning: p.8. As a result, he made contact with the defendants. According to Mr. Roughsedge at the first meeting the first defendant took him over the land, and showed him the boundaries in relation to certain roads. At that stage Mr. Roughsedge did not have plans of the land which were obtained subsequently: p.8. The defendants indicated a willingness to sell provided they obtained the right price; indeed they had already been offered a contract by another agent at a price which was acceptable, but it was on conditions which were not satisfactory because they went on for too long: p.9.
- [4]Mr. Roughsedge then made contact with a developer, Mr. Harrison, and suggested that he come up and look at the land. Mr. Harrison controlled one or more companies which were in the business of developing land for subdivision, and was the sort of person who was likely to be interested in such land: p.68. Mr. Harrison came up to Mr. Roughsedge a day or two later, looked over the strategic plan, and other plans of the area, and then went up to the defendants’ property, where he was shown the land from the existing roads, and walked over the property: p.9. There were then some negotiations with the defendants, either that day or the next day. As a result, on 19 December 1994, the first defendant, Mr. Harrison (on behalf of M E Harrison Investments Co Pty Ltd) and Mr. Roughsedge all signed a document which Mr. Roughsedge referred to as an option: Exhibit 6. The document contemplated that a contract of sale would be drawn up; whether it is properly characterised as an option does not, I think, matter. The document was signed only by the first defendant because it referred only to lots 7 and 8 on registered plan 851041.
- [5]On the same day, the first defendant also signed a form of appointment to act as real estate agent in favour of the plaintiff, in respect of lots 7 and 8: Exhibit 7. By this, the first defendant agreed to:
“pay you commission of 5% of the first $18,000 and 2½% of the balance if you introduce a purchaser who enters into a valid and enforceable contract of sale confirmed by me for such property, and who completes such contract; or who does not complete such contract in circumstances where the deposit or some part thereof is forfeited; or who does not complete such contract pursuant to any default, act or omission by me; or I do not complete such contract; or I subsequently agree to release the purchaser from further obligation under such contract.”
According to Mr. Roughsedge, when this was signed there was some discussion about what the amount of the commission would be: p.11. On 19 December 1994, the plaintiff issued a trust account receipt for $1,000 to Mr. Harrison’s company: Exhibit 9.
- [6]Subsequently Mr. Harrison instructed his solicitor, Mr. Knapp, to draw up a contract: p.49. Mr. Knapp had some negotiations with the solicitors for the vendors, which led to the final form of Exhibit 8. Negotiations over the terms of the contract continued until March; it was finally signed on behalf of Mr. Harrison’s company on 2 March 1995, prior to all the terms being accepted by the solicitors for the defendants: Exhibit 14, letter 3 March 1995. The execution of the contract was evidently organised by someone on behalf of the purchaser, since the purchaser’s solicitors forwarded executed copies to the vendor’s solicitors, with a request that the triplicate copy be forwarded to the agent, under cover of a letter of 13 March 1995: Exhibit 14. On 1 March 1995 the plaintiff issued a trust account receipt for $19,000 to Mr. Harrison’s company for the balance of the deposit: Exhibit 9. That receipt identifies the property sold as being part of lot 3 on registered plan 92714 and part of lot 18 on registered plan 62855, as well as lot 7 and 8 on registered plan 851041, the only property identified in the earlier receipt.
- [7]Although Mr. Harrison did not have the funds immediately available to complete the contract, his usual practice in such matters was to obtain the necessary consents for rezoning and subdivision, and then arrange for the necessary finance to enable the contract to be completed, and he believed that had he been able to obtain those approvals in the present case he would have been able to arrange for the necessary finance to enable the contract to be completed: p.60. There is no reason to doubt this evidence.
- [8]The contract, Exhibit 8, identified the plaintiff as the vendors’ agent. The contract incorporated the second edition of the standard residential conditions for a contract for the sale of land which included clause 30 in the following terms:
“In the absence of any specific appointment, the vendor by executing this contract confirms the appointment of the vendor’s agent (jointly with any other agent in conjunction with whom the vendor’s agent has sold) as the agent of the vendor to introduce a buyer.”
By special condition 6, the deposit of $20,000 was to be paid to the defendants immediately and was “non-refundable”. The deposit has been paid by the plaintiff to the defendants, although the plaintiff, with the agreement of the defendants, deducted $1,500 which was applied in part satisfaction of its entitlement to commission: p.15. That was the only amount by way of commission that the plaintiff has been paid: p.17.
- [9]The contract, Exhibit 8, was not unconditional. By special condition 1, completion of the contract was conditional upon the land being rezoned from rural to residential A, and consequent amendment of the Maroochy Shire Council strategic plan, and registration of a plan of subdivision of the land into five lots substantially in accordance with an identified plan. Rezoning and amendment of the strategic plan were to occur no later than 18 months from the date of the contract, although there was a provision for an extension in the event of an appeal by the purchaser against a failure of the council to approve rezoning of the land on terms and conditions which the purchaser regarded as reasonable. The purchaser was to apply to the council for such rezoning and do all things lawful and necessary within its power to procure the rezoning and other consents.
- [10]After that contract was signed, the purchaser made inquiries about obtaining the rezoning and subdivision approvals and lodged an application with the council: p.60. There were numerous meetings with the council, and a large number of objections to the proposal were received (p.32) but it appeared to Mr. Harrison that he would be able to obtain an approval under the ordinary conditions for such subdivisions. However, there was difficulty with the Drainage Board: p.61. Mr. Harrison was not very clear about just what the requirements of the Drainage Board were, and perhaps the Board never identified them specifically, but they were evidently more substantial than Mr. Harrison had expected, and this led him to want to include more land in the area to be rezoned and subdivided: p.62. This led to further negotiations with the defendants. The purchaser’s position was that it had fulfilled its obligations under the original contract and intended to continue to fulfil those obligations, but believed that because of difficulties which had arisen, the special conditions would not be complied with in the time allowed for that under the original contract: p.53. In about mid-1995, the second defendant asked Mr. Roughsedge to speak to Mr. Harrison about the contract as she was concerned about his commitment to it: p.33. Mr. Roughsedge said that he was told by Mr. Harrison that they were only able to get 275 blocks out of the land originally sold, instead of the 300 blocks they had planned, and that the development did not stack up on that basis, so that there was to be a new contract between the parties: p.36. This cannot be correct, as Exhibit 8 provides for only 275 blocks.
- [11]There were then some negotiations between Mr. Harrison and the defendants in which some town planners and surveyors, Ken Hicks & Associates, were involved on behalf of the defendants: p.64, 66. This led to a meeting on 15 August 1995, as a result of which there was an oral agreement, subsequently confirmed in writing (Exhibit 13) for the contract to be varied. It is not entirely clear from the correspondence that I have seen which party proposed that there be a new contract rather than a variation of the existing contract. Mr. Harrison thought that it was the defendants who wanted a new contract: p.63. The defendants had received some legal advice as to tax issues in relation to the question of whether there would be a new contract or an amendment: p.45. In the event, however, a fresh contract was executed between the parties dated 26 November 1995: Exhibit 10.
- [12]During August 1995, there was some discussion between the defendants and their solicitor, Mr. Nevison, as to whether the plaintiff should be included as the agent on the new contract, but Mr. Nevison could not recall the content of this discussion: p.45. On 31 August, the second defendant advised that the purchaser’s solicitor would be discussing this matter with Mr. Nevison, and that she would go along with whatever decision Mr. Nevison made: Exhibit 16. Mr. Nevison thought, however, that it was unlikely that he would have made a decision without discussing the matter further with her, and obtaining further instructions: p.46. Mr. Harrison had instructed his solicitor, Mr. Knapp, to deal with the question of amendment of the contract (p.51) and as a result Mr. Knapp wrote to the defendants’ solicitors on 19 September 1995 setting out the amendments which appeared to him were required to the contract as a result of this further agreement: Exhibit 14. Evidently there was then some approval from the purchasing company and the defendants, and Mr. Knapp drafted the new contracts which were forwarded under cover of a letter dated 2 November 1995, which explained some minor additional drafting changes: Exhibit 14.
- [13]Subsequently, the defendants’ solicitors spoke to the defendants on 14 November 1995, and a number of matters about the terms of the contract were raised. One was that the defendants did not want the plaintiff referred to in the contract as the agent: Exhibit 17. As a result, the defendants’ solicitors wrote to the purchaser’s solicitors on 15 November raising a number of matters including that the plaintiff’s name was not to be included in Item B of the contract: Exhibit 11. In the reply from Mr. Knapp this was noted: Exhibit 14. In other respects, Mr. Knapp sought to resist the changes being sought by the defendants, but the defendants remained insistent: Exhibit 12. There were then some further oral negotiations on 22 November 1995, after which a further version was suggested by Mr. Knapp (Exhibit 14, letter 23 November 1995) which refers to a meeting between clients, presumably Mr. Harrison and the defendants, which led to an agreement. Hence the contract of 26 November 1995 (Exhibit 10) which does not identify any agent.
- [14]Apparently at this time Mr. Harrison told Mr. Roughsedge that the plaintiff would not be referred to on the new contract. As a result, Mr. Roughsedge spoke to the defendants; he said that he was told that they did not think he had done enough work and did not deserve to receive commission: p.16-17. There was no reason for the purchaser to be concerned about whether or not the plaintiff’s name was on the contract; the omission of the name from the second contract, Exhibit 10, must have been the result of a decision by the defendants. Prior to the execution of the second contract, there was no attempt by either party to the first contract, Exhibit 8, to terminate that contract: p.47.
- [15]Under the new contract there was some additional land sold, as it appears to me the balance of lot 18. The purchase price remained the same, but there was also provision for an existing house property on lot 18 to be included in a block of a certain size which would be transferred back to the defendants following subdivision. As well, the price was payable in stages as the development proceeded: p.63. Special condition 10 provided as follows:
“It is hereby agreed by the parties upon the execution of this contract by both parties the contract executed by the parties and dated 13 March 1995 shall be deemed to be cancelled in all respects it being acknowledged that the deposit paid under that contract shall be deemed to be the deposit paid under this contract.”
Exhibit 10 provided for a deposit of $20,000, as did Exhibit 8. On 14 December the solicitor for the defendants wrote to the plaintiff advising that the contract of sale dated 13 March 1995 “did not proceed due to the purchaser”. It stated there was a new contract between the parties but refused to provide a copy: Exhibit 14. There were still difficulties however in obtaining the necessary rezoning, and ultimately the land was not rezoned (p.50) and the second contract, Exhibit 10, also was not completed.
Was The Plaintiff Licensed At the Relevant Time?
- [16]The first issue which arises is whether any entitlement to commission on the part of the plaintiff is excluded because the plaintiff was not at the relevant time the holder of a corporation licence under the Auctioneers and Agents Act 1971. Section 76(1) of that Act, formerly s. 70(1), relevantly provides:
“No person shall be entitled to sue for or recover or retain any fees, charges, commission, reward or other remuneration for or in respect of any transaction as an auctioneer, real estate agent, a commercial agent, or a motor dealer, unless –
…
- (b)being a corporation, it was, at the time of the transaction, the holder of a corporation licence under this Act and complied with the requirements of this Act relating to the carrying on by a corporation of the business of an auctioneer, real estate agent, a commercial agent, or a motor dealer, as the case may be …”
The plaintiff was in existence as a corporation from 19 August 1994 (Exhibit 1), and held a Real Estate Corporation licence under the Act which was in force from 2 February 1995 until 12 July 1996: Exhibit 3. The requirement that that corporation have a director who holds a real estate agents licence was satisfied because Mr. Neville held a real estate agents licence (Exhibit 4) and was a director of the company at the relevant time: Exhibit 2. Mr. Roughsedge was the holder of a certificate as a real estate sales person from 10 February 1994: Exhibit 5.
- [17]It was submitted on behalf of the defendants that the relevant transaction in relation to lots 7 and 8 commenced on 19 December 1994 when the plaintiff put the first defendant in touch with Mr. Harrison and the “option agreement” Exhibit 6 was signed. On the other hand, the plaintiff submitted that the relevant transaction was the execution of the contract (Exhibit 8), and the later agreement to release the purchaser from obligation under that contract, these being the matters which under the retainer (Exhibit 7) gave rise to the contractual entitlement to commission.
- [18]The defendants rely on the decision of Walsh J (with whom Barwick CJ agreed) in Freehold Land Investments Ltd v. Queensland Land Estates Pty Ltd (1970) 123 CLR 418 at 443 where His Honour said:
“In my opinion, one must look at the whole transaction which is on foot. In the present case it was a transaction under which the appellant was authorised to bring about a sale of land which belonged to the respondent and was to get remuneration, in accordance with the terms of the agency authority which I have described above, which was given to it by the respondent. The appellant was engaged throughout (at least at all times after it had obtained the authority) in the process of seeking to negotiate that sale. Every step which it took which could aid in the achievement of a completed sale was a step in the transaction of negotiating the sale.”
His Honour had earlier (p.437) said:
“A further point to be noticed concerning the agency authority is that the agent did not become entitled to remuneration simply by finding a person who was able and willing to buy the property or even by procuring the signature of a prospective purchaser to a form of contract. The only remuneration of the agent was to be derived from purchase money “received” in excess of the amounts which would be payable to the vendor in accordance with the proforma contract.”
- [19]His Honour concluded that it was not possible to take the view that the appellant’s functions were at an end as soon as it had carried out negotiations with a prospective purchaser and obtained the signature of that purchaser to a form of contract; it also had to take all steps necessary to bring about an actual completed sale: p.438. The significance of this distinction is that the former acts were conducted out of the State of Queensland and hence did not contravene the prohibition then found in an earlier Act against acting as a real estate agent without a licence. His Honour in that case was not concerned with what is now s. 76, and was therefore speaking about the transaction not by reference to the term as it is used in that section, but as a description for what it was that the agent was doing for its principal. What was done after the form of contract was signed was part of that transaction and because it was done in Queensland, it was done in contravention of the Queensland Act so commission was not recoverable.
- [20]Counsel for the defendant also referred to Meier v. Wordell [1924] QWN 19. That was a case where the agent made contact with the vendor and obtained an engagement to sell a farm on commission, prior to the commencement of the 1922 Act. Shortly thereafter the agent located a purchaser who was desirous of making the purchase, and it appears that the transaction was ultimately carried through, with the assistance of a company which held the mortgage over the farm, in March 1923. The agent was not licensed under the then new Act until May 1923 and it was held that the agent was therefore not entitled to obtain commission and had to pay an amount which had been purportedly retained. That judgment, however, does not throw any light on the question of what is the relevant transaction for the purposes of s. 76.
- [21]The same applies to the other case relied on, F J Richards Pty Ltd v. Mills Pty Ltd [1995] 1 Qd.R. 1. This was a case where the agent did not, at any relevant time, hold a corporation licence and therefore was not entitled to recover in contract, nor did a claim in quantum meruit succeed. In that case, however, Kelly SPJ said at p.8-9:
“The transaction to which the agreement relates is the sale of the hotel by means of two contracts, one between the first defendant and Girvans and the other between the second defendant and Girvans. There were two requirements which had to be satisfied before the plaintiff became entitled to its remuneration under the agreement, the first being the making of the two contracts, and the second being the completion of those contracts. It becomes necessary to consider the involvement of the plaintiff in this transaction, and in particular whether or not that involvement was as a joint venturer.”
The argument in that case was not that the licence was held at a relevant time, since it was admitted that the plaintiff was not at any material time the holder of a corporation licence (p.8), but that the plaintiff was not acting as a real estate agent for the purposes of the Act.
- [22]In my opinion, the question turns on the proper construction of the section. It speaks of an entitlement to sue for or recover remuneration “for or in respect of any transaction” and that, in my opinion, identifies the relevant transaction as that for which the entitlement to remuneration would otherwise arise. That depends on the terms of the retainer. Here the entitlement to commission arose on the basis of the matter set out in Exhibit 7, which I have already quoted. What the plaintiff had to do was to introduce a purchaser who satisfied the further requirements of that exhibit; the purchaser had to enter into a valid and enforceable contract of sale and one of a number of other things had to occur. What is not so clear is whether the relevant transaction is the transaction between the agent of the client, or the transaction between the client and some third party in respect of which the entitlement to commission arises. Walsh J spoke of the transaction between the agent and the client, but Kelly SPJ in Richards spoke of the transaction as the contract between the client and the third party in respect of which commission was sought.
- [23]Some guidance to the interpretation of the provision can be obtained from the next paragraph of the subsection, which provides:
“(c) The engagement or appointment to act as … real estate agent … in respect of such transaction is in writing signed by the person to be charged with such fees, charges, commission, reward or remuneration, or the person’s agent or representative …”.
The reference to “transaction” in that paragraph must be a reference to the same transaction referred to in para. (b), because it is a reference back to the word where it is used in the introductory words in the subsection, which are common to both paragraphs. The meaning of the term “transaction” in para. (c) is clearly established as a reference to the transaction between the vendor and purchaser, not the transaction between the vendor and the agent. The authorities in this area were discussed by McPherson JA in Salamon Nominees Pty Ltd v. Moneywood Pty Ltd (Appeal 4852/98, Queensland Court of Appeal, 22.12.98, unreported) where a number of authorities were referred to including a statement in the judgment of the High Court in Anderson v. Densley (1953) 90 CLR 460 at 468 that the relevant statutory provision was complied with “if some writing or connected writings exist evidencing the creation of the relationship of principal and agent in respect of the transaction pursuant to an oral contract”. His Honour in that case was dissenting but not as to whether the “transaction” was one between the vendor and purchaser, or between the vendor and the agent; he differed as to whether the particular document relied on there was in respect of the particular transaction between the vendor and principal which ultimately came to completion.
- [24]It is clear from the judgment of Chesterman J, with whom de Jersey CJ agreed, that His Honour was also speaking of the transaction as one between the vendor and the purchaser. Accordingly, the “transaction” in the introductory words, and therefore the “transaction” in para. (b), must be a transaction between the principal and the purchaser, in this case between the defendant and Mr. Harrison’s company. Accordingly, it is the time of that transaction which is relevant for the purposes of para. (b). The “transaction” sued on in the present case is that embodied in Exhibit 8, and the time of that transaction was 13 March 1995, or perhaps a period beginning on that date and extending until the date on which the further step occurred which under the retainer entitled the plaintiff to commission. At the time Exhibit 8 was entered into, the plaintiff held a corporate licence. It follows that at the relevant time s. 76(1)(b) had been complied with.
Was There An Entitlement To Commission?
- [25]The judgment of McPherson JA in Salamon Nominees contains a helpful analysis of the legal requirements for a real estate agent to sustain a claim for commission. It must establish:
- That the defendant had agreed to pay commission to the plaintiff;
- That the plaintiff had done what was required to earn that commission; and
- That its appointment to act as a real estate agent in respect of the transaction was, within the meaning of s. 76(1)(c) of the Act, in writing and signed by the defendant.
As to the first of these, what is pleaded is that the agreement to pay commission arose from an appointment of the plaintiff by the defendants, relying on the appointment by the first defendant in Exhibit 7 in respect of lots 7 and 8, and the appointment by the first and second defendants in Exhibit 8 in respect of lots 3 and the relevant part of 18, or in the alternative an appointment by both defendants in respect of all the land on or about 19 December 1994. There was no evidence, however, in support of any agreement to appoint on 19 December 1994 in respect of land other than lots 7 and 8. It is clear that at that stage the parties believed that they were talking about a transaction involving just those two lots; both Exhibit 7 and Exhibit 6 are confined to that land. In those circumstances there is no reason for the first and second defendants to be agreeing to appoint the plaintiff as agent for the sale of any more land, and there was no express evidence from Mr. Roughsedge to the effect that there was any oral agreement on that day which covered more land than lots 7 and 8.
- [26]It follows that the plaintiff can rely only on the agreement to pay commission in Exhibit 7 and the agreement to pay commission in Exhibit 8. As to the former, it is clear that that amounts to an agreement by the first defendant to pay commission in respect of the sale of lots 7 and 8. The specific terms of clause 30 in Exhibit 8 are that it operates “in the absence of any specific agreement” and in view of this and in the light of its clear function as explained by Chesterman J in Salamon Nominees, in my opinion it would not have the effect of superseding a prior specific appointment such as that found in Exhibit 7. Rather, its function is to constitute both an appointment and the written evidence of the appointment if and to the extent that there is not already such an appointment or such evidence.
- [27]In my opinion, however, there is nothing in clause 30 to indicate that it picks up the specific terms of Exhibit 7 and applies them to the whole of the land. It is not necessary for the purposes of s. 76(1)(c) that the whole terms of the agency relationship be evidenced in writing; all that is necessary is that the engagement or appointment to act as real estate agent in respect of the transaction be in writing. In Salamon Nominees the relevant clause did not reproduce the oral agreement as to commission, but McPherson JA regarded it as sufficient to satisfy the statute. If there is a prior oral agreement to pay commission on certain terms, therefore, something in the terms of clause 30 would be sufficient. But in the present case there is no evidence of any express prior agreement by the second defendant, or by the first defendant in respect of the land other than lots 7 and 8.
- [28]In so far as it becomes necessary to determine the rate at which commission is payable, I do not think that there is a great deal of difficulty. I accept that there was some discussion of the rate of commission payable under Exhibit 7 in the presence of the second defendant on 19 December 1994. Although Mr. Roughsedge said he had no specific recollection of such a conversation, he said that it was usual practice (indeed, he suggested inevitable practice) for there to be some discussion about the rate of commission and what commission would be payable when an appointment to act as real estate agent was signed, and that evidence, in the absence of any evidence to the contrary, supports an inference that it is more likely than not that on this particular occasion when this particular document was signed there was such a discussion. In those circumstances, it is, I think, reasonable enough to treat the appointment contained in clause 30 as including an implied term to pay commission at the same rate. In the alternative, if there was no agreement as to a particular rate for commission, the law would imply an obligation to pay commission at a reasonable rate, and in the circumstances prevailing here I think that it would be reasonable to look at the terms of Exhibit 7 as evidence of what was in the circumstances a reasonable rate. It is not necessary however for me to decide those matters, for reasons I shall set out.
- [29]A more difficult issue is whether the terms of Exhibit 7 which define the circumstances under which commission becomes payable can be treated as incorporated in the retainer acknowledged by the execution of the contract included in clause 30. This is not merely a matter of saying whether it would, in all the circumstances, be reasonable to pick up the specific terms in Exhibit 7 because that document related to the retainer by one of the parties to the contract in respect of the bulk of the land covered by the contract. Clause 30 refers to an appointment “as the agent of the vendor to introduce a buyer”. In a context where this appears in the form of contract, it is not difficult to interpret this as meaning “buyer” in the sense of one who buys, and that means not merely one who signs a contract to purchase, but one who actually completes that contract: Anderson v. Desley (1953) 90 CLR 460 at 467. If the failure to complete is due to the fault of the vendor, there may be some other remedy, perhaps for damages for breach of an implied term not to act so as to defeat the entitlement to commission, but this is not in my opinion consistent with an agreement to pay commission under the further circumstances set out in Exhibit 7. In my opinion, notwithstanding the circumstance that the transaction in Exhibit 8 built on the transaction contemplated in Exhibits 6 and 7, the appointment of the plaintiff by the first and second defendant achieved by the execution of Exhibit 8 was an agreement to pay commission if that contract was completed. Since that did not happen, that agreement cannot assist the plaintiff.
- [30]On the other hand, it was submitted on behalf of the plaintiff that the requirements for commission in Exhibit 7 have been satisfied, because Mr. Harrison’s company had entered into a valid and enforceable contract of sale, and the first defendant subsequently agreed to release the purchaser from further obligation under the contract. In the alternative, the entitlement might have arisen because a deposit was forfeited. There is no doubt the purchaser entered into a contract, and it was not submitted on behalf of the defendant that the plaintiff was not the effective cause of the purchaser entering into the contract, Exhibit 8. For practical purposes that was achieved by introducing Mr. Harrison to the land. It was submitted that the plaintiff was not the effective cause of the later contract, Exhibit 10, but it is unnecessary to decide that question if only because the plaintiff does not plead any entitlement to commission in respect of that contract.
- [31]It was submitted however that the contract Exhibit 8 was not enforceable because of its various conditions, and because Mr. Harrison’s company did not have the capacity to complete the contract. In my opinion, “enforceable” here does not mean unconditional, it means enforceable by specific performance. The conditions were not conditions precedent to contract; there was a contract although in certain circumstances a right arose in the purchaser to terminate the contract. But unless and until that situation arose, the purchaser had a clear obligation under clause 2 of the special conditions to apply for the rezoning and do everything necessary and lawful in connection therewith to procure the rezoning and to use its best endeavours to proceed as quickly as possible to have the land rezoned. No doubt there was a similar obligation on the purchaser to use its best endeavours to secure the satisfaction of the other conditions precedent to completion. The fact that completion is conditional upon some consent or approval by a third party is not a barrier to specific performance of a contract: Butts v. O'Dwyer (1952) 87 CLR 267; Kennedy v. Vercoe (1960) 105 CLR 521. That is so even if the condition relates to the approval of subdivision of land by a local authority: Pejovic v. Malinic (1959) 76 WN (NSW) 744; Re: Henry Lawson Development Pty Ltd (1970) 91 WN (NSW) 624. In my opinion, the contract Exhibit 8 was enforceable for the purposes of Exhibit 7.
- [32]It is, in my opinion, not to the point that the purchaser, and possibly the defendants, came to believe by August or September 1995 that the conditions were not going to be satisfied, or indeed that it was in fact the case that the conditions were not going to be satisfied. There was no right under the contract in the purchaser to terminate prior to the expiration of the time periods specified in clause 3 in the event that it appeared likely that the conditions were not going to be met. Obviously, a contract which is enforceable may cease to be enforceable because of changing circumstances; if notwithstanding the purchaser’s using its best endeavours the application for rezoning was not successful within the time fixed by the contract, the purchaser had a right to terminate and thereupon the contract became unenforceable (unless the purchaser elected to waive the benefit of that provision). But that does not mean the contract entered into was not enforceable; it was enforceable when it was entered into. It would simply mean that a purchaser, although entering into a valid and enforceable contract of sale, did not complete the contract.
- [33]With regard to the financial position of the purchaser, in my opinion it is not to the point that at the time the contract was signed the purchaser did not have the full amount of purchase price immediately available. I have already referred to Mr. Harrison’s evidence as to the way in which his company operated, and as to his expectation that if the necessary approvals had been forthcoming from the local authority he would have been able to arrange the appropriate finance. I accept that evidence and there is no reason therefore to think that, had the situation arisen where the purchaser was obliged to complete, it would not have been able to do so. In any case, a contract for the sale of land is not rendered either invalid or unenforceable by the purchaser’s lack of the funds necessary to complete.
- [34]It was submitted that the contract, Exhibit 8, was terminated by agreement between the parties prior to the negotiation of the new contract, but there is simply no evidence of that. On the contrary, the new contract expressly provided for the release of the earlier contract. By entering into that contract the first defendant agreed to release the purchaser from further obligation under the contract, Exhibit 8. That was one of the further requirements for commission to become payable under the agreement, Exhibit 7.
Was There An Engagement In Writing?
- [35]The third requirement identified by McPherson JA is that the appointment be in writing in satisfaction of s. 76(1)(c). On behalf of the defendant it was submitted that the effect of Salamon Nominees was that the appointment, Exhibit 7, was not applicable to the subsequent sale, because the appointment had to be specific to the transaction identified, and the transaction identified in Exhibit 7 was the sale of two particular blocks of land, whereas Exhibit 8 involved the sale of additional blocks of land. In relation to this aspect of the matter, the operative part of the decision is the judgment of Chesterman J. His Honour did not, as I read his judgment, say that any appointment which would satisfy the requirement of the statute had to relate to a specific transaction. His Honour said at para. 25:
“An appointment may by its terms refer to a number of specified transactions or to transactions described in general terms or by reference to a defined category. If there were a sale of property falling within the category or within the general terms then section 76 would be satisfied. It is in each case a question of construction whether there is an appointment in respect of the transaction from which commission is claimed.”
What His Honour went on to determine was whether the appointment found in clause 30 was specific to the particular sale on the terms and conditions found in the contract which included that clause 30, and concluded that it was: para. 27. In this respect the decision is consistent with the approach adopted by Connolly J in Bradley v. Adams [1989] 1 Qd.R. 256 at 261.
- [36]There may be a separate written appointment, or written evidence of an appointment, which is specific to a particular transaction, that is a particular contract between the principal and the purchaser, but commonly an agent will obtain a signed appointment to act prior to the identification of any particular purchaser. That was the situation here. It does not identify a specific transaction; it appoints the plaintiff the real estate agent of the first defendant, authorises it to supply any person with particulars for the purpose of selling the property described, and agrees to pay commission if the plaintiff introduces a purchaser (i.e. any purchaser) who enters into a valid and enforceable contract for the sale of such property. Is that to be interpreted as a contract which includes that property and nothing else? I can see no reason why it should be so interpreted. It is well established that (apart from any complications introduced by a provision such as s. 76) an agent employed to sell property is entitled to commission if he sold part of it: L J Hooker Ltd v. W. J Adams Estate Pty Ltd (1977) 138 CLR 52 at 59. I can see no reason why the same should not apply in the other direction.
- [37]Anderson v. Densley (supra) is not authority to the contrary. In that case it was held that an appointment in a contract to sell two grazing properties without plant or stock, where the contract was not completed, was not a sufficient appointment to satisfy the requirement of the 1922 Act in respect of a later contract to sell the same properties with plant and equipment to the same purchaser, without any reference to the agent. That case turned on the proposition that the earlier appointment as agent, effected simply by reference in the contract to the agent being the agent for the vendor, was specific to the transaction involving that contract, and was not evidence in writing of the engagement or appointment of the agent in respect of the transaction involved in the second contract. The problem was that the first appointment was specific to that transaction. In the present case the appointment in Exhibit 7 is not specific to any particular transaction; it will be effective in respect of any transaction which falls within its terms.
- [38]There is in my opinion, no reason to limit that to a transaction where what is sold is the land identified by it and nothing else, any more than to exclude a transaction where only part of the land was sold. I can see nothing in the judgment of Chesterman J in Salamon Nominees which would prevent Exhibit 7 from satisfying the requirements of the section in respect of a transaction where the land referred to in Exhibit 7 was sold together with other land, or in respect of a transaction where only part of the land referred to in Exhibit 7 was sold. If the plaintiff had introduced a purchaser who entered into a valid and enforceable contract for lot 7 only, and then completed that contract (but assuming the contract did not include something like clause 30), I cannot see how one could avoid the conclusion that that was a transaction within the terms of Exhibit 7. I also cannot see why the contract to purchase that land together with other land is not a contract “for such property” and therefore within the terms of Exhibit 7.
- [39]In my opinion the transaction in Exhibit 8, insofar as it was a sale of lots 7 and 8 on registered plan 851041, was a transaction within the terms of the document signed by the first defendant, and therefore the requirements of s. 76(1)(c) were satisfied. Accordingly, all three requirements for a cause of action to recover commission are satisfied, but only in respect of the transaction so far as it involved the sale of lots 7 and 8.
Conclusion
- [40]It is apparent from a comparison of the plan attached to Exhibit 8 and the plan attached to Exhibit 10 that what was sold in Exhibit 8 was lot 7, part of lot 8, part of lot 3 and a relatively small part of lot 18. By special condition 8 the purchase price in Exhibit 8 is apportioned $60,000 to part of lot 18, $1 million to part of lot 3 and that part of lot 8 which was originally described and subdivided as subdivision 11, and $2,377,500 to the balance of the land sold. I take it that the reference to “part of lot 18” is a reference to that part of lot 18 which was sold under the contract, and the same applies to “part of lot 3”. A complicating feature is that part of the figure of $1 million is ascribed to part of lot 8, but there is no evidence before me to identify which part was originally described as subdivision 11. It appears that the reference to “balance of land hereby sold” is a reference to that which was all or part of lot 7 and lot 8. Accordingly, the plaintiff has proved that it is entitled to commission calculated by reference to that part of the purchase price, $2,377,500.
- [41]The rate of commission was 5% of the first $18,000 and 2½ % of the balance, which on my calculation comes to $59,887.50, less the $1,500 already paid, a balance of $58,387.50. The entitlement to commission arose on 26 November 1995, when Exhibit 10 was executed, but I am prepared to listen to submissions about the period in respect to which interest should be awarded under the Supreme Court Act, since it is not immediately obvious why it took so long to bring this matter to trial. I will also invite submissions in relation to costs, but on the face of it the first defendant should pay the plaintiff’s costs of the action to be assessed. The action against the second defendant is dismissed. It is not apparent that the second defendant had any costs other than costs incurred with the first defendant and I do not think any order should be made in respect of the costs of the second defendant, but I am prepared to listen to submissions on the point.