Floyd v Nevgold Pty Ltd[2024] QDC 199

Contents

SUMMARY3

THE WITNESSES4

THE FACTS5

Background5

The negotiation of the Option6

Findings on 13 and 22 September meetings11

Events leading to the contract of sale13

THE EFFECTIVE CAUSE CLAIM16

The Law16

Analysis21

THE BREACH OF DUTY CLAIMS23

54. SUMMARY

54. [1]
    The plaintiff (Mr Floyd) is a real estate agent. The defendant (Nevgold) was, until 2023, the owner of the four blocks of adjoining land in Cairns (the properties). The South Cairns motel was located on one of the properties (the motel). Mr Brian Jorgensen is the controller of Nevgold.

54. [2]
    From time to time up to September 2021, Mr Jorgensen tried to sell the motel, but without success. In September 2021, Mr Floyd formed the view that he had a potential buyer for the properties. He approached Mr Jorgensen and obtained appointment as agent for Nevgold pursuant to a Form 6 Appointment of Agent dated 2 September 2021 (the agency agreement). The agency agreement, by clause 5.1, relevantly provided that Mr Floyd was entitled to commission where he was the effective cause of a completed contract of sale.

54. [3]
    Mr Floyd introduced OneFin Property Pty Ltd (Onefin) as a buyer. There were successful negotiations in September 2021; however, Onefin did not enter into a contract of sale. Rather, the parties entered into Call Option Deed dated 14 December 2021 (the Option) by which Onefin obtained an option to purchase the properties. The Option required Onefin to pay a $20,000 option fee on signing, and a further $500,000 on confirming due diligence inquiries were complete. The last date for exercising the Option was 18 August 2023. The Option provided that Onefin or its nominee could exercise the Option and enter into the contract of sale provided for under the Option (the contract of sale). If the contract of sale was entered into, the purchase price was $6 million, with the $520,000 option fees credited to the purchase price. If the Option was not exercised, the option fees would be retained by Nevgold.

54. [4]
    Onefin decided not to exercise the Option. Rather, it retained its own agent (HTL) to find a buyer for the properties who would acquire them as nominees under the Option. HTL found a buyer (RRAF3) willing to acquire the properties by that method and, necessarily, on the terms of the contract of sale negotiated with Nevgold. Onefin and RRAF3 entered into a nomination deed, Onefin exercised the Option and nominated RRAF3, and RRAF3 entered into the contract of sale. RRAF3 completed the contract of sale.

54. [5]
    Mr Floyd claims that he is entitled to a commission under the agency agreement because he was the effective cause of the contract of sale with RRAF3. Nevgold defends that claim on the basis that the work done by HTL to introduce RRAF3, as nominee and purchaser, broke the chain of caustion between Mr Floyd’s introduction of Onefin and the contract of sale ultimately entered into for the properties.

54. [6]
    Nevgold, in turn, counterclaims against Mr Floyd for damages arising out his alleged failure to disclose to Nevgold a willingness expressed to Mr Floyd by Mr Paul of Onefin that it might have been willing to pay an option fee which was in addition to the purchase price under the contract of sale, rather than being paid on account of the purchase price. Mr Floyd disputes Nevgold’s claim on the basis that the information was passed onto Nevgold and, in any event, even if it was not passed on, it resulted in no loss to Nevgold.

54. [7]
    For the reasons which follow, I find that:

3. (a)
   Mr Floyd was the effective cause of the sale of the properties;

3. (b)
   Mr Floyd disclosed to Mr Jorgensen the willingness of Onefin to consider some part of the option fee being in addition to the purchase price under the contract of sale; and

3. (c)
   In any event, even if he did not, the value of the opportunity to negotiate was minimal.

54. [8]
    Mr Floyd is entitled to judgment on his claim, and the counterclaim is dismissed.

54. THE WITNESSES

54. [9]
    It is convenient to say something about the witnesses before turning to making detailed findings.

54. [10]
    In the plaintiff’s case, Mr Floyd gave evidence, along with Mr Jones and Mr Paul from Onefin.

54. [11]
    Mr Floyd was a reliable witness. He made concessions which were consistent with a witness trying to give an accurate account, but who recognised the potential for him to be mistaken. For example, when challenged on a point of detail relating to his discussions with Mr Paul about terms of Onefin’s offer, where his oral evidence was inconsistent with his contemporaneous email, he conceded the email must be correct. Similarly, he recognised that his recollection of key phone calls on the day of the important 13 September meeting might be incomplete, though he maintained the accuracy of what he did recall. Further, I did not find his account to be substantially inconsistent with his affidavit evidence in chief, nor to be inherently unlikely. It was broadly consistent with the contemporaneous documents. Mr Floyd was effectively cross examined, but for those reasons I found him to be generally reliable, allowing for the effect of the passing of time.

54. [12]
    Mr Jones gave evidence for Onefin. He is one of the controllers of Onefin and its corporate group. He gave evidence about Onefin’s decision making through the transaction. Mr Jones clearly considered that it was unfair that Mr Floyd was not paid a commission. However, nothwithstanding that, he was a careful and precise witness. He occasionally seemed a little reluctant to make concessions (particularly where it might have reflected on his business acumen and skill), though, ultimately, he did make reasonable concessions. I found him to be a reliable witness.

54. [13]
    Mr Paul was the development manager for Onefin who dealt directly with Mr Floyd in the negotiations in September 2021 which led to the Option. While I had no reason to doubt his evidence, his recollection of events was limited.

54. [14]
    Mr Jorgensen gave evidence for Nevgold. Nevgold also called evidence from two officers of HTL, who were involved in negotiating the deal between Onefin and RRAF3. The officers of RRAF3 were not required for cross examination and their evidence was uncontentious in any material respect.

54. [15]
    Although Mr Jorgensen was not a dishonest witness, he was not a reliable witness.

54. [16]
    First, it was evident that Mr Jorgensen bore considerable animus towards Mr Floyd. This was evident not only from his disrespectful mode of referring to Mr Floyd as “Floyd”, but also from his eagerness, unjustifiably, to characterise Mr Floyd’s conduct as improper. For example, his suggestion that, in obtaining the agency agreement, Mr Floyd conned him. He also tried to suggest Mr Floyd pressured him when asking him to sign documents. The objective evidence was that Mr Jorgensen was not easily pressured. His attitude to Mr Floyd made his recollection of matters relating to Mr Floyd’s conduct questionable.

54. [17]
    Second, his evidence about when and how the proposal for Onefin to take the Option rather than a contract of sale was inconsistent with the contemporaneous documents, his own evidence in affidavit form, and the evidence of the Onefin witnesses. He was also very vague about what discussions occurred at the key 12 September 2021 meeting. My strong impression is that he had no meaningful recollection of what occurred at that meeting, despite his affidavit evidence. The objective evidence all points one way: that the proposal that there be a call option with two option fees of $20,000 and $500,000 was raised on or about 12 September 2021. Mr Jorgensen’s vague insistence that these matters were raised months ago is clearly wrong, and wrong in a self-interested way (see paragraph [37] below).

54. [18]
    Third, Mr Jorgensen was wrong about relatively uncontentious matters which one would expect him to recall. For example, he did not recall if the option fees totalled $520,000 or $480,000. That was an important and uncontentious fact. It was troubling that he was unable to recall that detail.

54. [19]
    Fourth, another example of Mr Jorgensen’s animus to Mr Floyd arose in his evidence: that he considered Mr Floyd, at the time of the 22 September meeting at which the Onefin’s written offer (ultimately accepted) was presented, to be his enemy and to be working for Onefin. However, when challenged as to why he would then simply accept Mr Floyd’s statement that Onefin had indicated they would not pay more than the offer amount, he altered his evidence to explain that he still considered Mr Floyd his agent. This evidence was reconstructed, self-serving evidence on a key issue.

54. [20]
    I do not accept Mr Jorgensen’s evidence unless it is consistent with other evidence I do accept, or it involves non-contentious issues.

54. THE FACTS

54. Background

54. [21]
    Mr Jorgensen is a businessperson of long experience in the Cairns region. He had considerable experience in property dealings, though I accept he tended to buy and hold his large investments. Those investments included three motels, including the motel in this case. From about 2017, he had tried intermittently to sell the motel, but without success. He had tried various agents including, coincidentally, HTL. As at 2021, he had retained a Mr Mullins to sell the motel. At that stage only the motel and its site were offered for sale.

54. [22]
    In about June 2021, Mr Paul, on behalf of Onefin, was looking for development sites in Cairns. He approached Mr Floyd for assistance. The motel site was identified (precisely how is irrelevant). Mr Floyd approached Mr Jorgensen as to his interest in selling, and Mr Jorgensen referred him to Mr Mullins. There were unsatisfactory dealings between Mr Mullins and Mr Floyd; again, precision as to what occurred is not required. Mr Paul did make a written offer for just the motel property in July. It appears there was negotiations between Mr Mullins and Mr Floyd as to sharing commission if a sale resulted. There is some debate as to the circumstances in which that offer was dealt with. It is unnecessary to resolve that issue. The offer did not progress, and Mr Paul did not pursue the matter further at that time.

54. The negotiation of the Option

54. [23]
    On 27 August 2021, Mr Paul approached Mr Floyd again. Mr Paul had identified that Nevgold owned three adjoining parcels to the motel site which made a useful development site. He inquired whether the owner would sell all four sites together. Mr Floyd then contacted Mr Jorgensen directly soon after. Mr Floyd told Mr Jorgensen of the interest of his buyer in all four sites. Mr Jorgensen told him that Mr Mullins’ appointment as agent had expired. Mr Jorgensen said he was willing to appoint Mr Floyd as his agent to sell all four properties and told Mr Floyd to meet him at a restaurant to sign the documents that day (3 September 2021).

54. [24]
    On 3 September 2021, Mr Paul sent Mr Floyd an email confirming interest in the four properties and asking for the owner’s price for three different scenarios: a shorter settlement with no development approval (DA); a longer settlement period, but with no DA; and a settlement subject to a DA being obtained. At this stage there was no suggestion that the transaction would be a call option rather than a contract of sale.

54. [25]
    Mr Jorgensen’s evidence about this meeting was unsatisfactory. He was inconsistent as to where it occurred. He made the unjustified allegation of conning by Mr Floyd in relation to this meeting. Further, Mr Jorgensen gave evidence that he refused to see the numerous agents who contacted him with a view to listing his motels. However, he did see Mr Floyd and appoint him as agent, even though Mr Floyd understandably kept the identity of his potential buyer to himself until after the appointment was executed.

54. [26]
    Mr Floyd presented two Form 6 appointments. One was for the motel, and one was for the other three properties. The fact there was two is irrelevant; they are in materially identical terms. For convenience, I will refer to the Form 6 for the motel. Mr Jorgensen reviewed the documents with care, annotating them to ensure that he could not be exposed to an obligation to pay two commissions if a sale arose. This reflected a person with a very good grasp of how agency agreements worked and where his self-interest lay. Mr Jorgensen’s attempt in cross examination to minimise his experience in property dealings also did not reflect well on his reliability.

54. [27]
    The two agency agreements specified a total price of $6,000,000, allocating $5,000,000 to the motel and $1,000,000 to the other three properties. The only relevant provision of the agency agreements is clause 5, which provides:

3. 5. ENTITLEMENT TO COMMISSION – SALE

3. 5.1
   The Client agrees to pay the Agent Commission as specified in Part 7 of the Appointment of Property Agent if a Contract of Sale of the Property is entered into with a Buyer, whether within the Term or after the Term, where the Relevant Person is the effective cause of the sale within the Term, provided that:

3. 5.1.1
   the Contract of Sale of the Property is completed; or

3. 5.1.2
   the Client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or

3. 5.1.3
   the Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or

3. 5.1.4
   the Contract of Sale is terminated by mutual agreement of the Client and the Buyer.

3. 5.2
   For the purposes of Clauses 5.1 a Relevant Person is, where the Appointment of Property Agent is for:

3. 5.2.1
   an Exclusive Agency, any person (including the Client); or

3. 5.2.2
   a Sole Agency, any person other than the Client; or

3. 5.2.3
   an Open Listing, the Agent only.

54. [28]
    At the 3 September meeting, Mr Floyd raised the issues flagged by Mr Paul’s email. The result of that conversation was recorded in his email to Mr Paul on 3 September 2021, sent after the meeting where the agency agreement was signed. It provides:

3. Hi Mitch

3. I hope you are well.

3. The owner has agreed to the sale of all four properties.

3. Cairns Southside International Motel – 3330m2 - $5,000,000 (+GST, if applicable) Currently a going concern. – Lot 3 RP 121854 – http://www.cairnssoutshideinternational.com.au/

3. 11 Herries Street Earlville – 679.7 m2 – Currently an open shed/carport – to be osld with 13 and 15 Herries Street and only in conjunction with a sale of Cairns Southside International Motel

3. Lot 16 RP 717516

3. 13 Herries Street Earlville – 679.0 m2 Crrently a residential house on a lease – to be sold with 11 and 15 Herries Street and only in conjunction with a sale of Cairns Southside International Motel

3. Lot 17 RP 717516

3. 15 Herries Street Earlville – 683.0 m2 – Currently a residential house on a lease (on the corner) – to be sold with 11 and 13 Herries Street and only in conjunction with a sale of Cairns Southside International Motel

3. Lot 18 RP 717516

3. The three properties (two houses and a shed) are being sold in a line and are listed at $1,000,000 (+GST, if applicable)

3. I have attached a plan of the properties for reference.

3. The total for all properties is $6,000,000 (+GST, if applicable). The total area of all the properties is (approx) 5,371.7 m2. Settlement would be preferred to be under 6 months, I understand.

3. The owner has advised that he is not interested in contract subject to DA.

3. The owner’s motivation wavers, so I would suggest that a move is made on this as soon as reasonably possible.

54. [29]
    There was apparently further discussions between 3 and 12 September by which Mr Paul proposed to Mr Floyd that Onefin enter into a call option with an exercise period of 18 months. Further discussions are not in evidence, though there was likely further terms proposed by Mr Paul, because on 12 September 2021, Mr Floyd sent an email to Mr Paul, as follows:

3. Hi Mitch,

3. I am am meeting with the owner of Cairns Southside Motel at 11 am tomorrow.

3. He is a bookie and both he and his motel have had a very good weekend…Anyway, I said I needed to discuss the proposal face to face as it was not as straightforward as he would like. He said he was not hopeful. He is also just as likely to decide to re-evaluate what price he would sell for.

3. Before I discuss this with him, has anything changed as to what you are prepared to present, which is, as I understand, an upfront payment of an agreed amount released unconditionally to him now, in return for a call option for 18 months. Would this become part of the purchase price in the event you were to proceed, as part of the deposit, or is it a signing fee that allows for price movement in an extended settlement (in effect $6m+ Upfront Payment as purchase costs)?

3. Prefer option fee to be applied to settlement amount but I guess it could be extra if it gets him over the line

3. The purchase price would be $6,000,000 (+ GST, if applicable). Settlement could occur at any point in this period if results were as required for your uses. Yes we would settle settle straight ASAP despite the long timeframe.

3. Am I able to give any indication of your planned uses so he would believe they should be achievable? If so, how would you like this conveyed?)

3. Preferably not, although you can point to projects we have done previously and pseculate something similar is likely.

3. At what point would you be prepared to come up to meet with him if he was agreeable?

3. As soon as we can get there if he is agreeable.

3. Remember as a backup we could do an unconditional contract but with 90 days DD and 15 months settlement.

54. [30]
    Mr Paul responded that evening, interlineating his responses. Those responses are in italics, above.

54. [31]
    I make the following observations about this email exchange:

3. (a)
   First, Mr Floyd introduces the idea that the up front payment fee might be a signing fee on top of the purchase price;

3. (b)
   Second, there is no suggestion as to the amount of such an upfront payment, and nothing to suggest it would be a large sum;

3. (c)
   Third, in its context, I consider Mr Paul has in mind a relatively modest sum and, further, his comment is equivocal. It commits to nothing. I do not consider that the possibility of the upfront payment being extra was necessarily something raised by Mr Paul with Mr Jones or Mr Griffith.

54. [32]
    Mr Floyd had indeed arranged to meet Mr Jorgensen on 13 September to present the Onefin offer, as the email says. Mr Jorgensen said, in his long affidavit, that he was told by Mr Floyd about the basics of the offer, being a call option with 18-month exercise period, before the 13 September meeting. I accept some such conversation occurred. However, I do not accept Mr Jorgensen said he told Mr Floyd he would not entertain an option period for 18 months. If Mr Jorgensen had rejected an 18- month option period, it would surely have been referred to in the email, along with the other feedback from Mr Jorgensen passed on by Mr Floyd.

54. [33]
    We now come to one of the principal areas of factual controversy: what passed at the 13 September meeting between Mr Floyd and Mr Jorgensen.

54. [34]
    Mr Floyd’s account was as follows:

3. (a)
   He brought with him a copy of the 12 September emails;

3. (b)
   He gave a copy to Mr Jorgensen, which he saw Mr Jorgensen write on;

3. (c)
   He telephoned Mr Paul on four occasions. The first two were as follows:

3. (i)
   At 11.03am, to make sure Mr Paul was available to take calls during the meeting; and

3. (ii)
   At 11.13am, after speaking to Mr Jorgensen and ascertaining his requirements. Mr Floyd believed at that point Mr Paul mentioned Onefin would be seeking a due diligence condition, and probably an option, rather than going straight to contract.

54. [35]
    The third call is the most important. Mr Floyd said this call followed more detailed discussions with Mr Jorgensen after the 11.13am call. Mr Jorgensen said that if he was going to give them 18 months extended settlement, then he would want some part of the purchase price to be made non-refundable. Mr Jorgensen nominated $500,000. Mr Floyd then called Mr Paul, and he had his phone on speaker, and put to him Mr Jorgensen’s proposal. Mr Paul said he would get instructions and revert if an offer was going to be made. Mr Floyd said it was communicated that Mr Jorgensen wanted a $20,000 fee on signing, and $500,000 upon satisfaction of due diligence. He maintained this account in cross examination. The fourth call is not material.

54. [36]
    Mr Jorgensen said, in his long affidavit, that at the 13 September meeting he told Mr Floyd that he would only consider a call option if Onefin agreed to pay a non- refundable option fee of $500,000, in addition to the purchase price of $6,000,000. He said he wanted that fee as an extra amount to account for a potential increase in value during the option period. He said Mr Floyd said he would discuss it with Onefin.

54. [37]
    In cross examination Mr Jorgensen denied that Mr Floyd handed him a copy of the 12 September emails. However, his evidence about what did happen was defective. He had seemingly confused events which occurred in September 2021 with the earlier failed approach by Onefin in May/June 2021.^[1] His evident confidence in his clearly mistaken evidence told against his reliability as a witness.

54. [38]
    Before resolving this difference, I will deal with events through to signing of the terms upon which the Option was based.

54. [39]
    After the discussion on 13 September 2021, there was no substantive communications between Onefin and Mr Floyd until the 22 September offer. However, there was some deliberation in Onefin, recorded in an email exchange on 17 September 2021 to 20 September 2021, as follows:

3. (a)
   Mr Paul to Messrs Jones and Griffin:

3. Hi Gents,

3. As discussed with Will, the owner is open to two options for the $6M purchase price:

3. 1.
   18 Month Call Option

• In order to get behind this he has suggested a large Option Fee (circa 500k) is what he’d need to see

3. 2.
   Long Contract

• Under this arrangement I suggested 90 days DD; then unconditional with 15 months to settle
• He wants to see sizeable non-refundable deposits at signing of the contract and then (in the order of 5% of PP) at satisfaction of DD

3. I am running to ground the possibility of childcare along the resi boundary as a transition from the residential zone into our use.

3. (b)
   Mr Jones, in response:

3. On option 1 is there a DD period? What is the timing of payment of the 500k? Is the 500k a part payment of 6m or in addition to?

3. (c)
   Mr Paul, in response:

3. Hi Steve,

3. Yes I would suggest we request any DD period we would need. The Seller understands there would be one.

3. I suggest if we go with Option 1 applying the Option Fee against the settlement amount.

54. [40]
    It might be thought that Mr Jones’ response suggested a willingness to consider a large additional payment not credited to the purchase price. His evidence in cross examination convinced me of the opposite. He said he had no need to be stridently opposed to that idea until it was made clear that was being considered as an offer. I formed the view from his evidence that, at the time, he would have been willing to consider a relatively small option fee, which was in addition to the purchase price, if the option was exercised, perhaps up to $50,000; but no more. This is consistent with the tone of Mr Paul’s 12 September email, which might reflect a discussion with Mr Jones or, just as likely, an appreciation by Mr Paul of Mr Jones’ likely attitude, based on previous experience.

54. [41]
    The next step was the provision of the written offer by Onefin. It was provided by email to Mr Floyd, who printed it out and took it to a meeting with Mr Jorgensen. Again, recollections differ. Mr Floyd’s evidence seems to accept that Mr Jorgensen asked why the $500,000 was not in addition to the $6 million purchase price. He goes on to swear that he said that the offer indicated that the $6 million was the highest amount they were prepared to pay, and that they were not prepared to pay the $500,000 in addition. Mr Jorgensen’s evidence is similar, but he says Mr Floyd told him that Onefin would not pay any mony in addition to the $6 million purchase price, and the offer was the best they were willing to make.

54. [42]
    Mr Jorgensen signed the offer. It provided for a call option at a purchase price of $6 million, with a call option fee of $500,000. It provided for a $20,000 “initial deposit”, to be applied as a deposit. It provided for the small amount to be paid at signing. It provided a due diligence period of 60 days, and for the $500,000 to be paid on notification of satisfaction of due diligence, to be applied against the purchase price. It provides for a call option period for 18 months from the due diligence notification. It was non-binding.

54. [43]
    Thereafter, the Option was negotiated and signed on those commercial terms, on 15 December 2021. The Option contained a contract of sale giving effect to the commercial terms. It provided that the Option could be exercised by Onefin providing a signed Notice of Exercise of Call Option (in the form attached to the Option) and serving a signed contract in the form attached executed by Onefin or its nominee. Notably, the $500,000 Option Fee is agreed not to be a deposit (presumably, to avoid an unintended creation of an instalment contract arising from the two payments under the Option). The Option also provided for immediate release of the $500,000 on notification of due diligence satisfaction. The Option made specific provision for the mechanics of nomination of a nominee purchaser under the contract in clause 9. The contract of sale attached to the Option provided for settlement 60 days after entry into the contract.

54. Findings on 13 and 22 September meetings

54. [44]
    Before moving on to the events leading to the sale contract, I will make specific findings about the 13 September and 22 September meetings.

54. [45]
    As to the 13 September meeting, I find as follows.

54. [46]
    First, I find that Mr Floyd provided a copy of the 12 September email exchange to Mr Jorgensen.

54. [47]
    I reject Mr Jorgensen’s denial that he received it as unreliable. I consider that Mr Floyd would be likely to have provided it in writing. His evidence that Mr Jorgensen liked to see things in hard copy seemed consistent with my impression of Mr Jorgensen as a person who worked rather informally and liked to be able carefully to scrutinise documents. I reject the suggestion that providing a hard copy was inconsistent with Mr Floyd’s practices. There was insufficient dealings between Mr Floyd and Mr Jorgensen for any practice to develop, although providing a hard copy was consistent with what he did with the 22 September offer. I also think it likely he wanted to present the proposal in a way he could manage Mr Jorgensen’s reaction, as it was plain from what communications there are in evidence that he had some trepidation as to Mr Jorgensen’s response.

54. [48]
    Second, I find that, thereafter, the focus of the discussion between Mr Floyd and Mr Jorgensen became how much Mr Jorgensen could get as an upfront payment for the Option, released to him at an early stage in the 18-month period if due diligence was confirmed.

54. [49]
    Third, I find Mr Floyd discussed exactly this with Mr Paul in the third telephone conversation he refers to in his affidavit. The suggestion of a $520,000 payment being raised for the first time (as it was) was a very significant commercial demand which would be central in any negotiation. Further, there is no obvious way Mr Paul would have found out about that demand other than in a call on 13 September.

54. [50]
    Fourth, I find that the possibility of that $500,000 being in addition to the purchase price was suggested in that telephone discussion. That is consistent with Mr Jorgensen’s affidavit evidence at paragraph 32. It is also consistent with one of the few parts of Mr Jorgensen’s evidence which I did think reliable; being his evidence that he queried Mr Floyd on 22 September as to why the option fee was not in addition to the purchase price. He would only have done that if he had sought such a term. I do not think Mr Floyd’s lack of evidence of that particular statement stands against the inference. He said his recollection of the call might be incomplete, albeit what he recalled was accurate.

54. [51]
    I do not think the vague nature of Mr Paul’s communications about the option fee being in addition to the purchase price in his emails to Mr Jones stands against the finding. Frankly, I doubt Mr Paul paid much attention to that proposal, rightly considering it unlikely to be seriously considered by Mr Jones. It was certainly far beyond what was contemplated by Mr Paul’s tentative suggestion in the 12 September email of a sum in addition to the purchase price to get the matter over the line.

54. [52]
    As to the 22 September meeting, I accept Mr Floyd’s version set out in paragraph [41]. Apart from my general views as to reliability, I think it likely Mr Floyd would have made the comment he did. The issue had been raised, and the written offer was the result. He had not had any significant discussions with Onefin in the meantime. His comment that the offer indicated their response is simply a correct comment on the circumstances at the time. There has been a suggestion in submissions that I ought to interpret the events in the light of an aggressive determination in Mr Floyd to get the sale over the line, and that he allowed self-interest to dominate his conduct. I do not accept that submission. An agent for a seller always has that nascent self-interest when being paid only for a successful contract. That does not mean every act of the agent must be viewed through the prism of that self-interest. I did not find Mr Floyd to present as being so motivated to get a sale as to deceive his client, nor is there anything in the evidence that suggests he conducted himself in that manner.

54. Events leading to the contract of sale

54. [53]
    Onefin notified the fufillment of the due diligence condition within time and paid the $500,000 on 14 February 2022. That left Onefin 18 months, to 14 August 2023, to decide whether to exercise the Option, or not. Ultimately, Onefin chose to exercise the Option, but did so by nominating RRAF3 as the buyer. RRAF3 was not a related entity of Onefin. It was an arms’ length entity which agreed to be nominated as the buyer so as to acquire the properties for its own purposes. There are two issues relating to that process relevant to this proceeding:

3. (a)
   First, how RRAF3 came to be the purchaser under the contract of sale attached to the Option deed; and

3. (b)
   Second, if Onefin’s had not reached an agreement with RRAF3, whether it would have exercised the Option, in any event.

54. [54]
    Both issues are relevant to the ultimate question of whether Mr Floyd can establish that he was the effective cause of the sale comprised in the contract of sale between Nevgold and RRAF3.

54. [55]
    There is no real controversy about the first issue. It is likely that Onefin had begun to consider not pursuing its contemplated development on the properties in the second half of 2022. In October 2022, it appears to have first made contact with an agent with a view to finding a third-party buyer.

54. [56]
    Whatever the state of Onefin’s intentions at that time, by April 2023 it began to energetically seek a third party. At that time, Mr Jones of Onefin contacted Mr Simarro of HTL, a specialist accommodation agency. He told Mr Simarro about the circumstances of the Option and told him that Onefin did not want to exercise the Option in its own favour, and that he wanted to engage HTL to market the properties so as to find a buyer to be nominated under the contract.

54. [57]
    HTL was engaged on 20 April 2023. It signed a Form 6 with Onefin. At that time, given Mr Jorgensen’s refusal to extend the option period, a nomination had to occur by about 14 August 2023. Mr Simarro and his principal, Mr Nyholt, conducted a sale process.

54. [58]
    On 16 May 2023, Mr Jones met with Mr Jorgensen and told him that Onefin was intending to “on-sell” the right to purchase the properties. He asked if Mr Jorgensen would agree to extend the option period. On 25 May 2023, Mr Jones sent an email offering to pay $20,000 per month for an extension of four months. Mr Jorgensen refused. That refusal inevitably put some pressure on the search for another buyer by Onefin, because the option period expired in 3 months time, on 14 August 2023.

54. [59]
    The particulars of the marketing campaign by HTL are not relevant, except to this extent. Mr Floyd was not involved in it, beyond providing some names of local service providers which HTL considered engaging. His offer to enter a conjunct commission arrangement was not accepted, nor were his offers to participate in the marketing process. HTL introduced RRAF3 as a potential buyer.

54. [60]
    Onefin and RRAF3 reached substantive agreement on written terms for RRAF3 to acquire the properties on 7 July 2023. It is unclear whether those terms were immediately binding, though the better view is that they were not (though the exclusive dealing agreement attached to the terms probably was). However, the key terms appear complete and, as it turned out, the formal documentation occurred quickly and seemingly without difficulty. In broad terms, RRAF3 paid Onefin a nomination fee of $170,000 and reimbursed it for the $520,000 option fees paid, and otherwise RRAF3 executed the contract of sale in the form attached to the Option.

54. [61]
    The transaction was formally documented by a Deed of Nomination in relation to the Option, which was executed on 10 August 2023. On 14 August 2023, the Option was exercised by Onefin, nominating RRAF3 as the buyer and the contract of sale under the Option was executed by RRAF3 with Nevgold. The contract of sale settled on about 3 November 2023.

54. [62]
    HTL was paid a commission by Onefin on the sale.

54. [63]
    I now turn to the second issue. The issue has importance because Nevgold submits that if the Court concludes that Onefin would not have exercised the Option if RRAF3 had not agreed to buy the property, then the Court should conclude that the real cause of the sale was the efforts of HTL.

54. [64]
    Mr Jones said in his affidavit that as at 16 May, when he contacted HTL, it was his preference for Onefin to on-sell the rights under the Option, but that he did not intend for Onefin to walk away from the transaction if it could not find a buyer, because to do so would result in the loss of the $520,000 paid.

54. [65]
    However, his oral evidence demonstrated an evolving series of reasons which indicated that Onefin was reluctant to pursue the development contemplated for the site.

54. [66]
    At the time of reaching final agreement with RRAF3, Mr Jones gave evidence that Onefin was in the following position:

3. (a)
   It had lodged a development application in April 2022. However, it lodged a notice pausing assessment of the development application on 20 December 2022. That had the consequence that, as 14 August 2023 approached, Onefin was in the position where it did not know whether it could get development approval, or on what conditions, a situation which could not easily be reversed. Onefin was therefore in a position where the risk associated with the development application remained inchoate;

3. (b)
   Onefin had not actively pursued funding to settle the sale contract, or to fund the development. As 14 August 2023 approached, therefore, time to secure cost-effective finance from Onefin’s establish bankers was running out. Onefin could have likely accessed finance from private lenders, though at a higher cost;

3. (c)
   Onefin intended to develop the site with a mixture of debt and equity. Mr Jones said that by August 2023, at least, he did not wish to apply the capital necessary to the development of the motel. He said this in the context where Onefin had many developments underway from time to time;

3. (d)
   The construction costs of the project had increased significantly over the option period; and

3. (e)
   Onefin could not obtain the return it wanted from going ahead with the project.

54. [67]
    Nevgold also relies on further matters:

3. (a)
   Mr Jones in cross examination ultimately said that it was more likely than less likely that Onefin would have walked away if a purchaser was not found;

3. (b)
   On 25 July 2023, Mr Griffin sent an email to Mr Jones and others dealing with documentation of the deal with RRAF3 with the subject line “Cairns will cost us $500,000 if we don’t get this done today”;

3. (c)
   While not exercising the Option would have resulted in a $520,000 loss, on the other hand the sale to RRAF3 involved a loss of some $400,000 on the whole transaction, so there was a loss either way; and

3. (d)
   Exercising the Option would have added some $300,000 in stamp duty to the costs of the project, which would be avoided if the Option was not exercised.

54. [68]
    Nevgold submitted that these factors taken together make it more likely than not that if RRAF3 had not been introduced as buyer, Onefin would not have exercised the Option.

54. [69]
    It is with some hesitation that I find that, from at least about early July 2023, Onefin would not have completed if RRAF3 had not reached terms by then. I hesitate for these reasons.

54. [70]
    Mr Jones’ concession came after he had refused to speculate on at least two occasions. His concession was, in my view, an opinion about what he might have done in the light of matters as they appeared to him at trial. However, some important matters were not examined at trial. For example, if RRAF3 had pulled out in early July 2023, and the Option was exercised, Onefin did not need to have funds to settle until mid-October 2023, when settlement was due under the sale contract. I have little doubt that Mr Jones could have procured funding in that longer period, including from Onefin’s banks. Further, Mr Jones struck me as a person who determinedly avoided making losses.

54. [71]
    However, ultimately, I consider on the balance of probabilities that if RRAF3 had not come to terms in early July 2023, Onefin would have not exercised the Option. Not only because of the practical issues, but because it seems to me that Onefin had lost interest in, and enthusiasm for, the entire project.

54. [72]
    However, what Onefin would have done if no buyer had been found is another matter entirely. I consider that, as of May 2023, Mr Jones did intend to complete if no buyer was found, and that his inclination reduced as time passed and the exercise date approached. If no buyer had been found, I cannot make a reliable finding as to what would have occurred.

54. THE EFFECTIVE CAUSE CLAIM

54. The Law

54. [73]
    There have been numerous cases, including cases in the High Court, where the broad question of whether an estate agent has earned a commission on a sale of property. Those cases frequently focus on the question of whether the agent was the effective cause of the sale. There are warnings in the authorities, however, that attention must be focused on the particular contract between principal and estate agent to identify what the agent must do to become entitled to a commission.

54. [74]
    In this case, however, clause 5.1 of the agency agreement conditions the entitlement to commission for Mr Floyd on Mr Floyd being the effective cause of the contract of sale. Authorities on the meaning of that phrase are generally applicable here.

54. [75]
    Recent summaries of the legal principles to be applied have been provided in two intermediate court of appeal decisions. The first is Outerbridge v Hall (2020) 102 NSWLR 921, where Beech-Jones JA (with whom Leeming JA and Emmett AJA agreed) observed (footnotes omitted):

3. 59
   The contractual provision governing the appellants’ right to a commission is set out above. Both before this court and the primary judge, the parties devoted little attention to its terms. Instead, they treated the operation of the clause as synonymous with the discussion of “effective cause” in the case law dealing with agent’s recovery of commission under an implied term (see LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52 at 54–55 and 61 (Barwick CJ); [1977] HCA 13). I will do likewise with the consequence that the following discussion does not address any particular issue of construction that may arise in relation to clause 3.1 in the future (which is probable given that clause 3.1 is part of a standard form agency agreement). In particular, I note that neither before the primary judge nor in this court was it contended that the words in brackets in the opening part of clause 3.1 (that is, “where the Licensee is the effective cause of the sale”) impose some requirement that is separate from and additional to the necessity for an “effective introduction” by the Licensee. Instead, subject to one matter, it was common ground between the parties before the primary judge and in this court that the concept of “effective cause of the sale” informed the concept of “effective introduction”; that is, unless an “introduction” was the, or an, “effective cause of the sale” then it was not an “effective introduction”.

3. 60
   The one matter of exception concerned the debate alluded to earlier about whether it was necessary for the appellants to demonstrate that their actions were “an effective cause” of the sale or “the effective cause” of the sale and whether there was any difference between the two. A test requiring proof of “effective cause” is different from and more stringent than the test of proximate cause which is often applicable to insurance contracts which in turn is more stringent than the “but for” test of causation: Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351; [2001] HCA 2 at [83] (Gummow J). However, it does not mean the sole cause in the sense that it is possible that two agents acting independently of each other can both be an effective cause of a sale: LJ Hooker at 61 (Barwick CJ), and at 86 (Jacobs J); Berben v Hedditch (1982) NSW ConvR 55-081 at 56,482 (Hutley JA). In LJ Hooker (at 86), Jacobs J observed in relation to an implied term for the payment of agent’s commission that “it probably does not matter in the long run whether the definite or indefinite pronoun is used before the words ‘effective cause’ ” and that it is not necessary that either be the “one effective cause” or sole cause: see also Moneywood at [182] (Callinan J). Those observations are applicable to the opening words of clause 3.1 of the Agency Agreement.

3. 61
   In LJ Hooker, Jacobs J described the relevant “inquiry [to determine effective cause as] whether the actions of the agent really brought about the relation of buyer and seller”; that is, “whether a sale is really brought about by the act of the agent” (at 86). Although his Honour was in dissent in the result in LJ Hooker, this statement accords with the approach of the rest of the court (at 58–59 (Barwick CJ), at 67–68 (Gibbs J), at 76 (Stephen J) and at 90 (Murphy J)) and has been followed since: Moneywood at [27] (McHugh J) and at [85] (Gummow J).

3. …

3. 64
   As the determination of effective cause is ultimately a question of fact, it follows that the enunciation of specific rules as to when such cause may or may not have been established should be avoided. Thus this passage from Emmons should not be treated as establishing any general principle but instead it stands as an example of a case in which a “consideration and evaluation of all circumstances which may have had some causal relationship with the sale” (Berben at 56,480 (Moffitt P)), including the role played by a second agent, led to the conclusion that effective cause had not been shown.

54. [76]
    I included [59] above because, in this agency agreement, the phrase “the effective cause” is used. Like his Honour, I consider that the use of the definite article does not create a different test from the use of the indefinite article.

54. [77]
    The other recent decision is Moore v Luxury Boar Holdings Pty Ltd [2020] WASCA 144. In that case, the Court summarised the law as follows (footnotes omitted):

3. 46
   On the judge's approach to the construction of the Agency Agreement (upon which the Owner's grounds of appeal are premised) LBH had to establish that it was an effective cause of the sale as that concept is understood in the case law concerning agency commissions. The concept of effective cause has often been called in aid to entitle an agent to commission in cases where, instead of the straightforward case of the introduced party becoming the purchaser, a more complex fact situation has arisen. One example is where, after the expiry of the original agency agreement, the principal directly or through another agent manages to sell the property.

3. 47
   An effective cause is established where the relation of buyer and seller is really brought about by the act of the agent, even though the actual sale has not been effected by the agent and it is seldom conclusive that there were other events which could each be described as a 'cause' of the sale. It is not enough that the engagement of the agent to find or introduce a purchaser was itself 'a step without the taking of which the sale would not have been effected', or merely to establish that 'the transaction probably would not have been entered into but for the original introduction by the agent'. Rather, the agent's efforts must have 'continued to influence' the purchaser in the decision to buy or have 'flowed through' to the purchaser so as to cause the ultimate sale. That situation may be contrasted with one where there is such a discontinuity between the act of the agent and the later sale of the property that the agent's initial introduction, as between the agent and his or her principal, cannot be said to be an effective cause of the sale. Nevertheless an introduction may be regarded as an effective cause of the sale even though the principal may not be aware when selling that the buyer was introduced to the property by the agent and even though the principal's own efforts, directly or through another agent, have effectively contributed to the resulting sale. An agent may also be the effective cause of sale even though the principal sells to the purchaser introduced by that agent at a price lower than the limit that had been given to the agent.

3. 48
   Like all questions of causation, what is the effective cause of the sale is ultimately a question of fact. In Berben v Hedditch, Moffitt P observed:

3. The question is whether what the agent did brought about the particular sale, as it in fact occurred. This requires a consideration and evaluation of all circumstances which may have had some causal relationship with the sale.

3. The introduction may be the critical factor in some cases, as where the sale is of an unusual nature in which the vendor's problem was to find a person who may be interested in the particular property. In very many cases this will not be so, as where there are many properties of the same general class in one area on the market and there are many persons actively seeking to buy a property of that class in such area and procuring the sale depends on the efforts of a particular agent in persuading one of the interested persons to buy the particular property on the terms that are or are made available. While an introduction to the property must precede any purchase, on an examination of the forces which led to the sale it may be found that the introduction had nothing to do with procuring the sale and was not an effective cause of it.

54. [78]
    Both cases ultimately refer, with approval, to the formulation by Jacobs J in LJ Hooker Limited v W J Adams Estates Pty Limited (1977) 138 CLR 52 at 86. The whole passage is as follows (footnotes omitted):

3. The phrase that is time honoured in this context is "effective cause" or "efficient cause", that the agent was an effective cause or the effective cause. See Anderson v. Densley. The inquiry is a factual one and it probably does not matter in the long run whether the definite or indefinite pronoun is used before the words "effective cause". Thus, in Burchell v. Gowrie and Blockhouse Collieries Ltd. Lord Atkinson used the phrases "the effective cause" and "an effective cause" without distinction between them. In almost any factual situation a result will have more than one cause and if there could only be one effective cause in relation to a sale within the meaning of the implication, then there are plenty of events in this case which would have strong claims for the title in competition with the appellant's actions. "Effective cause" means more than simply "cause". The inquiry is whether the actions of the agent really brought about the relation of buyer and seller and it is seldom conclusive that there were other events which could each be described as a cause of the ensuing sale. The factual inquiry is whether a sale is really brought about by the act of the agent: Green v. Bartlett quoted in Burchell's Case.

54. [79]
    LJ Hooker is instructive. In that case, the agent introduced buyer A. The seller entered into separate negotiations with buyer B. Buyers A and B discovered eachother’s existence, though they did not tell the agent or the owner of that fact. Buyers A and B decided to co-operate rather than compete in acquiring the property from the owner. B continued the negotiations and, ultimately, became a purchaser under a contract of sale. A and B had separately agreed that A would obtain a half share in the property, which Jacobs J (with whom Murphy J agreed) concluded gave rise to an equitable interest in the property. A and B did not tell either the agent or the owner of their agreement.

54. [80]
    The learned trial judge had found that the agent was entitled to commission. The Court of Appeal of NSW had reversed that decision but was divided 2:1 on the issue. The High Court was divided 3:2 in dismissing the appeal from that decision. That course of litigation reflects the potential for reasonable minds to differ in the application of the principles to particular facts; ultimately, the many learned judges involved ended up split 5:4 against the agent.

54. [81]
    The situation raised in this proceeding is where two agents, or an agent and the owner, were involved in a single contract of sale. The successive agents situation is a very common one which leads to litigation. Each of the cases cited already involved that situation, as did Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571, referred to by the defendant, and as did many cases referred to in those authorities.

54. [82]
    Factors which have been relied upon in that circumstance as particularly relevant include the following from LJ Hooker:

3. (a)
   Whether the first agent introduced the actual purchaser and, if not, whether the agent was the effective cause of the particular sale which occurred (Barwick CJ at 58 to 60 in LJ Hooker). His Honour decided against the agent because the particular sale was the result of the agreement between A and B, and the introduction of A by the agent was not sufficiently causative;

3. (b)
   Whether, as a result of introduction of A by the agent, A introduced B to the sale with the result that B entered into a contract of sale (Gibbs J in LJ Hooker at 69). His Honour decided against the agent because he did not introduce B, who entered into the contract, and it was B that ultimately purchased, albeit by a secondary agreement with A;

3. (c)
   Stephen J in LJ Hooker reasoned similarly to Gibbs J, concluding that the agent did not introduce B, the buyer, nor was the agent the effective cause of the sale to B by introducing A. That was caused relevantly by A and B reaching their own separate agreement not by the agent introducing A.

3. (d)
   Jacobs J, as I have noted above, concluded that the agent was the effective cause, because the agent introduced A, who then became aware of B, and joined with B in purchasing the property by the joint venture agreement (See pp 86 to 87).

54. [83]
    In Outerbridge, there were successive agents involved in a sale of a boat. The first agent introduced the ultimate purchaser’s trusted boatman to the boat in question. The term of the first agent’s appointment ended. Some months later, the owner approach another agent directly, who showed him over the boat and secured the sale. The Court concluded that the first agent was entitled to commission because it accepted that the introduction to the trusted boatman and the influence of that person on the owner was a continuous influence on the eventual decision of the owner to purchase the boat.

54. [84]
    In Rasmussen, the first agent introduced the purchaser, but the resulting contract failed because of the inability of the purchaser to obtain finance. Later, a second agent was involved who assisted the purchaser to obtain finance and the contract completed. The Court found that first agent did not earn a commission, because the first contract had not completed and the work of the second agent broke the causal link between the introduction by the first agent, and eventual sale contract which did complete. The Court focused on the conclusion that the efforts of the first agent were exhausted or complete with the failure of the first contract.

54. [85]
    There are numerous other authorities. It is not helpful to continue to multiply examples. The parties did rely particularly on two passages.

54. [86]
    The plaintiff relied particularly on a statement by Justice McHugh in Moneywood Pty Limited v Salamon Nominees Pty Limited (2001) 202 CLR 351 at [30]:

3. 30
   In determining whether the agent's conduct was an effective cause, the law looks at the substance of the matter. If the sale could not have occurred until the vendor or another agent arranged finance on terms, not otherwise available to the purchaser and not contemplated at the time of the introduction, the proper conclusion will ordinarily be that the introducing agent was not the effective cause of the sale. On the other hand, the agent will be the effective cause where the person introduced nominates another person to buy the property — at all events where the person introduced directs the property to be transferred into the name of the actual purchaser.

54. [87]
    There is obviously an analogy between this case where nomination occurred under the Option, and nomination under a contract of sale. The defendant submitted that this cannot be a statement of binding principle because each case will depend on its circumstances and, further, that the case was not concerned with a nominee contract. So much can be accepted. That does not mean the case does not provide some guidance.

54. [88]
    It was also submitted that the authority relied upon by McHugh J did not sustain his proposition. A case relied upon was Lord v Trippe (1977) 51 ALJR 574. It supports his Honour’s statement. In that case an agent was entitled to commission on a sale contract wherein it had introduced A as a buyer in circumstances where, upon settlement of the sale with A or its nominee, it would be entitled to commission. There was a rearrangement of the sale contract to account for issues arising in respect of the lease but, ultimately, the property was sold to a third party related to the owner so as to facilitate the ultimate transaction on terms materially the same as the the contract negotiated through the agent. It is sufficient to set out the result as articulated relevantly in the head note:

54. Held by Barwick C.J. and Mason J., Aickin J. dissenting: