Advanced Realtors Pty Ltd v Prada Corp Developments Pty Ltd
[2015] WADC 52
•8 MAY 2015
ADVANCED REALTORS PTY LTD -v- PRADA CORP DEVELOPMENTS PTY LTD [2015] WADC 52
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 52 | |
| Case No: | CIV:1780/2011 | 23 - 25 FEBRUARY 2015 | |
| Coram: | STAUDE DCJ | 8/05/15 | |
| PERTH | |||
| 29 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff | ||
| PDF Version |
| Parties: | ADVANCED REALTORS PTY LTD PRADA CORP DEVELOPMENTS PTY LTD MONT APPLECROSS PTY LTD |
Catchwords: | Contract Authority to auction Claim for agent's commission Whether seller liable to pay commission Whether seller sought to avoid liability by deferring contract of sale of land Whether land sold during exclusive rights period Whether seller introduced buyers Whether plaintiff entitled to recover whole commission |
Legislation: | Real Estate and Business Agents Act 1978 |
Case References: | Alpha Trading Ltd v Dunnshaw-Patten Ltd [1981] QB 290 Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd (2005) NSWCA 117 Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805 [67]; (2006) 157 FCR 229 LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52 Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
PRADA CORP DEVELOPMENTS PTY LTD
First defendant
MONT APPLECROSS PTY LTD
Second defendant
Catchwords:
Contract - Authority to auction - Claim for agent's commission - Whether seller liable to pay commission - Whether seller sought to avoid liability by deferring contract of sale of land - Whether land sold during exclusive rights period - Whether seller introduced buyers - Whether plaintiff entitled to recover whole commission
Legislation:
Real Estate and Business Agents Act 1978
Result:
Judgment for the plaintiff
Representation:
Counsel:
Plaintiff : Mr C Sweeney
First defendant : Mr L Hager
Second defendant : No appearance
Solicitors:
Plaintiff : Eastwood Sweeney Law
First defendant : Metaxas & Hager
Second defendant : Not applicable
Case(s) referred to in judgment(s):
Alpha Trading Ltd v Dunnshaw-Patten Ltd [1981] QB 290
Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd (2005) NSWCA 117
Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805 [67]; (2006) 157 FCR 229
LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52
Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351
- STAUDE DCJ:
Introduction
1 The issue in this action is whether the first defendant is liable to pay an agent's commission to the plaintiff in respect of the sale of a residential property.
The agency agreement
2 On 29 September 2010 the first defendant, being the registered proprietor of apartment 12, 4 Scott Street, South Perth (the property) appointed the plaintiff and the first defendant as its joint agents to sell the property.
3 The appointment was documented in a form approved by the Real Estate Institute of Western Australia (Inc) headed 'Authority to Auction' (the agency agreement). The agency agreement was made with respect to the property and three other apartments at the same address. This case is only concerned with the property.
4 The agency agreement by cl 1 authorised the agent to offer the property for sale at public auction on 6 November 2010. It also provided by cl 9 that if the property did not sell at or before auction the agent would have an exclusive right to sell the property by private treaty for a period until midnight on 31 December 2010, referred to in that clause as the exclusive rights period.
5 The agency agreement relevantly provided for payment of an auction/selling fee of 3% of the selling price of the property (the commission) in the event the property was sold in any of a number of prescribed circumstances set out in the following clauses.
6 Clause 8.2:
The agent's auction fee shall be paid by the seller to the agent in the event of:
(a) the property is sold or transferred prior to the auction or at the auction;
(b) at any time, up to and including the date of the auction, a buyer introduced to the seller or the property, contracts to purchase the property or gets another person to or entity to purchase the property, or otherwise becomes a legal or beneficial owner of the property;
(c) the property is sold to a buyer in any of the abovementioned circumstances and the sale is not completed owing to the fault of the seller.
7 Clause 9.2:
If the seller has granted the agent an exclusive agency under this clause then the agent's selling fee should also be paid by the seller to the agent in the event of:
(a) during the exclusive rights period the property is sold or transferred; or
(b) at any time a buyer introduced to the seller or the property, during the exclusive rights period contracts to purchase the property, or gets another person or entity to purchase the property or otherwise becomes a legal or beneficial owner of the property; or
(c) the property is sold to a buyer in any of the abovementioned circumstances and the sale is not completed owing to the fault of the seller.
8 Clause 9.1:
Sale takes place after the exclusive rights period
The seller agrees to pay to the agent the agent's selling fee in circumstances where the sale of the property to a buyer introduced to the property by the agent during the exclusive rights period does not take place until after the expiration of the exclusive rights period provided that the sale takes place within a period of 30 days following the expiration of the exclusive rights period.
9 Clause 10:
Seller introduces buyer
The seller(s) agree to pay the agent's auction fee or agent's selling fee on the terms set out in this agreement PROVIDED THAT, regardless of anything contained in those terms, the seller(s) and agent agree that if, prior to the auction or where applicable, during the exclusive rights period, the seller(s) introduce the ultimate buyer of the property to the property themselves the seller(s) will be liable to pay the agent's auction fee or agent's selling fee to the agent.
The parties
10 The plaintiff at the material time carried on business as a licensed real estate agent under the style Esze Berryman Realtors. Mr Tom Esze is a director of the plaintiff. That the plaintiff was at the material time duly licensed is proved by the certificate of Melissa Sutton dated 2 July 2014 issued pursuant to s 134(4) of the Real Estate and Business Agents Act 1978 (exhibit 1, page 279), and the unchallenged evidence of Mr Esze in this regard.
11 The second defendant, Mont Applecross Pty Ltd, is the other agent named in the agency agreement. It is joined by reason of the operation of O 18 r 4(2) of the Rules of the Supreme Court 1971. As the plaintiff is claiming relief to which the other agent is jointly entitled, it must be a party to the action. As it did not consent to being joined as a plaintiff, it was made a defendant in accordance with r 4(2). It is likewise proved by the certificate of Melissa Sutton dated 2 July 2014 issued pursuant to s 134(4) of the Real Estate and Business Agents Act 1978 (exhibit 1, page 280) that the second defendant was at the material time duly licensed.
12 The first defendant at the material time carried on business as a property developer. It obtained development approval for, and constructed, the apartments at 4 Scott Street, South Perth. It dealt with the plaintiff and the first defendant through its director, Mr Elio Monzu.
The buyers
13 The buyers of the property were Mr Barry Lewis McRostie and Mrs Janice Maria McRostie. Mr and Mrs McRostie gave evidence at the trial for the plaintiff.
14 Initially, they entered into a contract for the sale of land by offer and acceptance on 13 October 2013 to buy the property for $3,200,000 subject to certain conditions (first contract). Pursuant to the first contract the buyers paid a deposit of $100,000. At Mr Monzu's suggestion they appointed the first defendant's lawyers, MGB Legal, to act for them on the settlement of the purchase.
15 The contract made on 13 October 2010 was cancelled by written agreement on 26 October 2010 (cancellation agreement), but there was no return of the deposit. A further contract by offer and acceptance was made 4 January 2011, a matter of four days after the expiration of the exclusive rights period (second contract). Settlement occurred on 14 January 2011.
16 The second contract stipulated the consideration to be $3,050,000, but there was a collateral contract whereby the buyers agreed to pay the first defendant a further sum of $150,000 for interior decoration, furniture, artworks and the fitting of café blinds to the roof deck area, the subject of a tax invoice dated 4 January 2011 (exhibit 1, page 242). The buyers paid duty on the aggregate price of $3,200,000 (exhibit 1, pages 213, 217).
17 With respect to their purchase of the property the buyers dealt with Mr Monzu.
The plaintiff's position
18 The statement of claim pleads that the first defendant is liable to pay the commission on the following bases:
(a) Pursuant to cl 10 of the agency agreement, as the buyers were introduced to the property by the seller prior to the auction date (par 19);
(b) Pursuant to cl 8.2(a) of the agency agreement, as the property was sold prior to the auction date (pars 20 - 21); and
(c) Pursuant to cl 8.2(c) of the agency agreement, as the property was sold prior to the auction date and the sale was not completed due to the fault of the first defendant (pars 22 - 23).
19 In the alternative, the plaintiff claims damages for breach of contract in the same amount as the commission, as follows:
(a) The first defendant breached an implied term of the agency agreement that, having entered the first contract it would not then agree to cancel that contract (pars 24 - 25);
(b) The first defendant breached an implied term of the agency agreement that, having cancelled the first contract, it would not defer entering into the second contract for the purpose of avoiding payment of the commission (pars 26 - 27); or
(c) The first defendant, by entering the cancellation agreement and deferring the making of the second contract in order to avoid paying the commission, breached an implied term of the agency agreement that the parties would act in good faith towards each other (pars 28 - 29).
20 Although the statement of claim pleads breaches of three different implied terms, it seems to me that the first two, as pleaded in pars 24 and 26 of the statement of claim, are subsumed in the implied term of mutual good faith pleaded in par 28.
21 Essentially, then, the plaintiff's position is that the buyers were introduced to the property during the period of the agency agreement and the property sold to them in that period. Alternatively, if the express terms of the agency agreement do not impose a liability to pay the commission, the first defendant is liable in damages for breach of the agency agreement because it acted in breach of the implied term of good faith by selling the property in a manner that avoided liability to pay the commission.
The first defendant's position
22 The first defendant contends that the first contract contained a special condition which could not be satisfied prior to settlement, namely the installation by the seller of bi-fold doors on the roof deck area of the property. To have enclosed the roof deck with bi-fold doors would have increased the plot ratio floor area in breach of the development approval issued by the City of South Perth. Accordingly, it was necessary to cancel the first contract.
23 Mr Monzu's evidence to that effect is in his statement dated 28 July 2014 (exhibit 6(a), par 28). It is not disputed that the installation of bi-fold doors would have breached the terms of the development approval, although it is a salient fact that the bi-fold doors were eventually installed by the first defendant post-settlement.
24 The first defendant says that the non-completion of the sale of the property pursuant to the first contract was not due to any fault on its part for the purposes of cl 8.2(c).
25 The first defendant contends, in relation to cl 10 of the agency agreement, that it did not introduce the buyers to the property; rather, they were introduced by Mr David Lomax of MLG Realty, or their friend Mr Peter Caporn.
26 The first defendant denies the existence of the implied terms pleaded by the plaintiff and says that it was under no obligation to enter into a contract to sell the apartment during the exclusive rights period and that, in any event, the reason for the second contract was (as pleaded in par 13A.3 of the defence), as follows:
(a) The plaintiff was looking for buyers and if the plaintiff had found a buyer prepared to offer more than Mr and Mrs McRostie ($3,200,000 including furniture for the apartment) then the first defendant would have accepted that offer;
(b) The first defendant thought that if somebody was going to approach it about purchasing the apartment then it would occur in spring/early summer as these are the best months in the roof deck area of the apartment before it gets too hot in late summer;
(c) Elio Monzu of the first defendant went away over Christmas and when he returned there were no potential buyers for the apartment or any other apartments in the complex so he had the McRosties sign a contract to purchase the apartment before they went away on holidays on 5 January 2011.
27 The first defendant also disputes that the plaintiff is entitled to claim the whole commission as it was appointed jointly with the second defendant.
The trial
28 Pre-trial directions were given by the principal registrar requiring the parties to settle an agreed bundle of trial documents and to exchange witness statements and responsive statements. In accordance with the directions a trial bundle was prepared by the plaintiff (exhibit 1).
29 There was an issue with respect to the admissibility of the offer and acceptance constituting the first contract, which, although cancelled, was a transaction record of a dutiable transaction that had not been duty endorsed in accordance with the Duties Act 2008. After hearing from the parties I directed the plaintiff's solicitors to transmit the name and address of the persons liable for duty in respect of that transaction record, namely the buyers, pursuant to s 279(2)(ii) of the Duties Act.
30 The parties agreed that the witnesses' statements and responsive statements could stand as evidence-in-chief. Accordingly, there was no substantial examination-in-chief of the witnesses who, upon verifying their statements, were cross-examined.
31 The witnesses for the plaintiff were Mr Tom Esze, Mr Barry McRostie and Mrs Janet McRostie. The first defendant called Mr Elio Monzu and tendered the witness statement of Mr Ugo Landro by consent.
Factual issues
32 The main factual controversy arising from the evidence at trial concerned the reasons for the cancellation agreement and the making of the second contract after the expiration of the exclusive rights period.
33 The issues of fact in this regard fall to be resolved upon a consideration of the evidence of Mr Monzu on the one hand, and Mr and Mrs McRostie on the other, and the inferences to be drawn from facts determined on the basis of their evidence, or objectively established by the documentary evidence.
The first contract
34 The manner of the sale of the property to Mr and Mrs McRostie was unorthodox. Mr Monzu was an experienced property developer. He had used real estate agents on prior occasions. He, on behalf of the first defendant, had appointed the plaintiff and the second defendant to sell the property. Yet he saw fit to deal directly with Mr and Mrs McRostie, rather than refer them to one of the two appointed agents, as one would expect, having regard to the terms of the agency agreement.
35 Mr Esze's evidence was that he had previously dealt with Mr Monzu and the first defendant with respect to the sale of various properties. At a meeting with Mr Monzu on 20 September 2010 he was informed that the first defendant wished to appoint his firm and the second defendant as joint agents to sell a number of apartments at auction. He was instructed by Mr Monzu to 'do whatever you have to do to sell them'. He proposed a form of advertisement of the auction to Mr Cary Kailis and Mr Matthew Podesta, the principals of the second defendant. He and his staff otherwise took steps to market the apartments to be auctioned.
36 On 13 October 2010 Mr Monzu, on behalf of the first defendant, agreed to sell apartment 13 for $3,150,000 to Mr Peter Caporn and Mrs Kerry Caporn, who were friends of Mr and Mrs McRostie (exhibit 1, page 138). The Caporns were referred to Mr Monzu by Mr David Lomax, a real estate agent with whom Mr Monzu had dealt previously, and who, it appears, had an authority to sell apartment 2 (not owned by the first defendant). Mr Lomax drew up the offer and acceptance (exhibit 1, page 138, ts 95 - 96).
37 Mr Caporn told Mr Monzu that his friends Mr and Mrs McRostie might be interested in apartment 12.
38 By way of background, according to Mr McRostie, in 2010 they were living in a house in Mount Pleasant and decided to 'downsize' to an apartment in South Perth. Mr and Mrs Caporn to their knowledge were looking to do the same thing.
39 In July 2010 Mr and Mrs McRostie happened to drive by 4 Scott Street and noticed a home open sign which prompted them to inspect a ground floor apartment which was being marketed by Mr Lomax. The ground floor apartment did not suit them. Mr Lomax offered to show them apartment 12 in an unfinished and unfurnished state. It was common cause that Mr Lomax did not have an authority to sell apartment 12. In any event, Mr and Mrs McRostie told him that they were not interested.
40 In September 2010 Mr and Mrs McRostie were informed by the Caporns that the apartments at 4 Scott Street had been completed and furnished and that they had put in an offer to purchase one of the penthouses. It may be inferred that it was 12 October 2010. This led to Mr and Mrs McRostie viewing the property with Mr Monzu on 13 October 2010. The Caporns were present at this time.
41 The following day, 13 October 2010, Mr McRostie telephoned Mr Monzu and made an offer to purchase the property for $3,200,000. Mr Monzu informed him that the price was acceptable. There was a discussion as to the conditions to be included in the contract. Mr and Mrs McRostie wanted the furniture as inspected to be included, a front loading washing machine to be installed, café blinds to be installed on a balcony, bi-fold doors to be installed on the roof deck area and a screen to be installed on the outer edge of the roof top. The offer was unconditional as to finance. Mr and Mrs McRostie then met Mr Monzu who produced an offer and acceptance which they signed that day.
42 At Mr Monzu's suggestion, they appointed the first defendant's lawyers, MGB Legal, to act for them on the settlement of the purchase. They agreed to pay a deposit of $100,000. The first contract stipulated a settlement date of 15 December 2010.
The 14 October 2010 email
43 Mr Esze was not informed of the first contract. On 14 October 2010 he received an email from Mr Monzu which was copied to Mr Podesta. It was in the following terms:
Hi Tom,
Can you please take the penthouse off the market for the auction process, since I have an offer on mine and will probably hold it till next year.
I'm thinking of carrying out further work to enhance the roof deck.
Please give me a call should you wish to discuss.
Confirming to proceeds [sic] with all the others.
Cheers.
Elio Monzu
44 Mr Esze understood, and Mr Monzu in the course of cross-examination agreed, that 'the penthouse' was a reference to the property and that the words 'I have an offer on mine' referred to apartment 13.
45 In his evidence-in-chief, Mr Monzu said (exhibit 6(a), par 22):
At the time I sent that email, I thought there may be an issue with installing the bi-fold doors … which would mean the sale to the McRosties would fall over and push any sale of apartment 12 into the New Year.
46 Mr Monzu explained how he came to the conclusion that the terms of the development application did not permit the first defendant to enclose the roof deck area of the property (exhibit 6(a), par 28). He then stated at par 32:
I was not prepared to let Prada Corp install the bi-fold doors whilst it was the owner of apartment 12 as I considered this would place it in breach of the development application. I was aware that this was against the law and could result in big penalties.
47 In cross-examination, Mr Monzu reluctantly conceded that he had entered the first contract only the day before the 14 October 2010 email, yet he denied that he deliberately omitted to tell Mr Esze that the property had been sold. He said his omission of that fact was inadvertent. He said he was prompted to send the email because Mrs McRostie drew to his attention on the morning of 14 October 2010 that there was an auction sign at 4 Scott Street advertising apartment 12 for sale. This, he said, made him realise that he had to notify Mr Esze. Yet he could offer no cogent reason for not telling Mr Esze that the property had been sold. He rejected the suggestion that he had deliberately not told Mr Esze of the sale, but conceded 'perhaps, I should have told him'.
48 Mr Monzu rejected the suggestion that he did not want to pay commission on the sale to Mr and Mrs McRostie. He would have paid commission if Mr Esze had sold the apartment (ts 110). He denied that he had in fact sold the apartment himself, yet admitted preparing the offer and acceptance and signing it on behalf of the first defendant. He rejected the suggestion that wording of the email demonstrated that at that time he had formed the intention to terminate the first contract and to defer entering a further contract until 2011.
49 Mr Monzu's evidence in relation to the 14 October email is unacceptable. The email was clearly disingenuous. Mr Monzu had sold the property. He was not proposing to hold the property until 'next year'. He was not 'thinking of carrying out further work to enhance the roof deck'. Rather, he had agreed to conditions of sale which required the first defendant to do specific works, including the installation of bi-fold doors.
50 It made no sense for Mr Monzu to say in evidence that if the sale to Mr and Mrs McRostie fell over it would 'push any sale of apartment 12 into next year' when the property had, up to that point been listed for auction on 6 November.
51 I infer from the 14 October email that Mr Monzu intended at that time to conceal the fact of the first contract from Mr Esze with a view to avoiding liability for the commission.
52 Incidentally, Mr Esze wrote to Mr Monzu on 14 October 2010 confirming the auction date and informing him that the marketing programme for apartments 9, 11 and 12 was underway. The letter enclosed a tax invoice for $8,348.30 being the marketing expenses stipulated in cl 5 of the agency agreement.
The 15 October 2010 meeting
53 A specific factual issue on the pleadings was whether there was, on 15 October 2010, two days after the first contract was made, a further meeting between Mr and Mrs McRostie and Mr Monzu in which the first contract was amended to vary special condition 4 by deleting 'bi-fold doors' and inserting 'café blinds' (the 15 October 2010 meeting). The fact of the meeting is pleaded in par 15 of the statement of claim and denied in par 5B of the defence.
54 Mr McRostie's evidence-in-chief in this regard was as follows (exhibit 3(b)):
8. In addition to what I've stated already in my first statement in relation to the meeting between Elio, Jan and me that occurred on the afternoon of 13 October 2010, I can recall that that meeting occurred at our home at 3 Gunbower Road Mount Pleasant, as is said in paragraph 9 of the witness statement of Elio Monzu.
9. In addition I can recall that Elio, Jan and I had a subsequent meeting on or about 15 October 2010 at Jan's and my home.
10. At that meeting, Elio said to me words to the effect 'I'm unable to install bi-fold doors on the roof deck because I am the developer'.
11. Elio said words to the effect 'I will install café blinds on the roof deck instead'.
12. Based on this, I agreed, on behalf of Jan and myself, that Elio should install café blinds, rather than bi-fold doors, on the roof deck.
13. I can recall that Elio then produced the first contract that Jan and I had signed two days prior to the meeting of 15 October 2010.
14. Elio crossed out the words 'bi-fold doors' in condition 4 in the special conditions on page 2 of the first contract and inserted the words 'café blinds'.
15. Elio, Jan and I initialled the alteration on the contract.
16. I do not have in my possession any copy of the first contract which shows that alteration.
17. This meeting occurred before the cancellation of the first contract.
18. Elio did not mention the prospect of cancelling the first contract during this meeting.
…
25. In paragraph 51 of my first statement, I referred to Jan and me having paid the deposit of $100,000 into the trust account of MGB Legal.
26. I can now recall handing Elio a cheque in the sum of $100,000 made out to MGB Legal for payment of the deposit at the meeting referred to in paragraph 9 above.
55 Mrs McRostie's evidence was in the same terms (exhibit 4(b)).
56 Mr Monzu's evidence-in-chief (exhibit 6(b)) was, relevantly:
2. [Paragraph 9] I never met with Barry and Janice on 15 October 2010 or after 13 October 2010 (when the first contract of sale was signed) and on 20 October 2010 when I met Barry at apartment 12 (see paragraph 33 of my primary witness statement).
3. [Paragraphs 10 – 12] The meeting did not occur and there was no agreement to install café blinds instead of bi-fold doors.
4. [Paragraphs 13 – 15] The meeting did not occur and the first contract of sale was never amended.
5. [Paragraph 16] Barry does not have a copy of the first contract of sale with the alteration because it does not exist. Had the first contract of sale been amended then my standard practice with selling property for Prada Corp would have been:
5.1 have Ugo Landro countersign the amendment whose signature appears with mine on the first contract of sale dated 13 October 2010, the cancellation of the first contract of sale dated 26 October 2010 and the second contract of sale dated 4 January 2010 [sic];
5.2 date the amendment; and
5.3 provide the purchaser/s with a photocopy or the original amended contract of sale for stamp duty lodgement; and
6. [Paragraph 18] The meeting did not occur.
7. [Paragraphs 25 - 26] Barry and Janice did not hand me a cheque for $100,000 and the meeting on or about 15 October 2010 did not occur. I accept that Barry and Janice must have paid the deposit to MGB Legal after the first contract of sale was signed on 13 October 2010 and before it was cancelled on 26 October 2010 but I do not recall having a cheque or being provided with a cheque.
57 Mr Monzu was very certain in his evidence that the 15 October 2010 meeting did not occur. He produced his work diary in which he said he recorded all his meetings (exhibit 7). He also produced some contemporaneous telephone records (exhibit 8). These, he argued, supported his evidence. Yet, when cross-examined, he agreed that he did not record all meetings. In fact, the diary was kept at his office. If he had a meeting at another location, as he did on 13 October 2010 when the first contract was signed, the meeting would not be recorded. His evidence shifted from diarising 'all important meetings', which he admitted was an overstatement, to doing so in 'most cases'. In my view, no inference can be drawn from the absence of a diary entry of the 15 October 2010 meeting, or from the telephone records.
58 It is apparent from the history of the pleadings that there were a number of amendments made to the statement of claim. The last such amendment was made with leave on 15 August 2014 after the plaintiff had obtained the responsive witness statements of Mr and Mrs McRostie (exhibits 3(b) and 4(b)).
59 No document evidencing the variation described by Mr and Mrs McRostie was produced. Mr and Mrs McRostie said they did not receive a copy of the amended contract. Mr McRostie said in cross-examination that the document was taken away by Mr Monzu. That is consistent with Mr Monzu's evidence that had the contract been amended it would have to be countersigned by Mr Landro, although Mr Landro denies that he did so (exhibit 5, par 5). One explanation of Mr Landro's evidence is that he did not in fact see the amended first contract because Mr Monzu decided in the meantime to cancel it.
60 In dealing with this issue, I am mindful that the occurrence of the 15 October meeting is not a fact on which the plaintiff's claim depends. The meeting was not pleaded until the plaintiff was informed of Mr and Mrs McRostie' recollection of it. The occurrence of the 15 October 2010 meeting is, nevertheless, consistent with the plaintiff's case that there was no reason for the first defendant to cancel the first contract as Mr and Mrs McRostie, as buyers, were agreeable to the substitution of café blinds for bi-fold doors, and at all times willing to complete. It is inconsistent with the first contract being cancelled for the reason that bi-fold doors could not be installed.
61 Mr and Mrs McRostie were challenged with respect to their evidence of the 15 October meeting. It was suggested to each of them that they had given untrue evidence of it because they were 'angry' at the plaintiff (by which I understood counsel to mean 'spiteful towards'), by reason of getting less for the property when they later sold it than they paid for it. Each rejected the suggestion. It was patent that neither bore any antipathy towards the first defendant or Mr Monzu and that neither was lying. Furthermore, I am satisfied on the evidence of Mrs McRostie that their witness statements were made before the further sale of the property by them. They were not influenced by any disgruntlement or animosity.
62 The cross-examinations of Mr and Mrs McRostie failed to draw out any material inconsistency in their respective accounts. Ultimately, it was defence counsel's submission, properly made in all the circumstances, that they were both mistaken, rather than dishonest (ts 195). In this regard, defence counsel criticised the manner in which the witness statements of Mr and Mrs McRostie were obtained.
63 The initial witness statements of Mr and Mrs McRostie, as well as their responsive statements, are in virtually identical terms. Their evidence was that they met and conferred with the plaintiff's solicitors at the same time and were subsequently provided with draft witness statements for them to check.
64 They agreed that in their initial statements they did not mention a meeting at the property on 22 October 2010, which they agreed in their responsive statements had occurred, or the disputed 15 October meeting. Mr McRostie said his recollection was prompted by seeing the witness statement of Mr Monzu.
65 It was unfortunate that Mr and Mrs McRostie were not re-examined to any real extent in relation to the circumstances in which they provided their statements. Ultimately, when counsel for the plaintiff was called upon to respond to the criticism made of the manner in which the statements were obtained, he informed the court that although it was accepted that best practice required that witnesses be interviewed separately for the purposes of obtaining a statement, in this case Mr and Mrs McRostie were non-party witnesses who were not required to cooperate. It was a situation of 'taking what you get in terms of speaking to people'. Mr Sweeney conceded that the statements were obtained in imperfect circumstances, but pointed to the fact that the factual matters dealt with in their statements were not complex and related to a transaction in which they were both involved and which was important to them, such that you would expect them to have a similar recollection. It was the plaintiff's submission that the case did not turn on any factual issue as between Mr Monzu and Mr and Mrs McRostie.
66 The circumstances that resulted in Mr and Mrs McRostie giving statements in virtually identical terms are relevant to the court's assessment of the weight to be given to their evidence. They are not parties and have no interest in the action. It is clear that they only ever dealt with the plaintiff's solicitors in relation to their evidence. They did not meet Mr Esze until the first day of the trial.
67 They presented as mature, intelligent and sincere. My view is that they have given a joint account according to the best of their recollections. It is understandable that on the occasion of an initial conference with the plaintiff's solicitors they may have forgotten things that they later recalled had occurred, such as the 15 October 2010 meeting and the meeting on 22 October 2010. As Mr McRostie said, 'the grey matter continued to work'. It is not surprising that Mr Monzu's statement, which they were shown in consequence of the pre-trial direction permitting responsive witness statements to be lodged, prompted their memory as to certain details.
68 There is no basis for any suggestion that they have colluded in giving false testimony. Nor can it be reasonably suggested that they could each be so mistaken in their memory as to recall a meeting at their home at which the first contract was amended and initialled by them, and a $100,000 deposit paid, if no such meeting in fact occurred.
69 The circumstances of the 15 October 2010 meeting as recounted by Mr and Mrs McRostie are wholly consistent with Mr Monzu coming to a realisation, within a short time of the first contract, as he said he did, that the first defendant could not install the bi-fold doors as agreed. The logical thing to do in that situation would be to approach the buyers and seek a variation of the contract. That is what Mr and Mrs McRostie say occurred.
70 I am satisfied that the 15 October 2010 meeting did occur. Notwithstanding the criticism that has been made of their evidence, and the fact that the amended first contract, which I am satisfied was taken away by Mr Monzu, has not been produced, I accept Mr and Mrs McRostie's account of the meeting. I reject Mr Monzu's denial of it. Mr Monzu agreed that $3.2 million was a good price for the property (ts 129). The purpose of the meeting, I find, was to preserve the first contract by effecting a simple variation to the special conditions to which Mr and Mrs McRostie were agreeable. Despite his keeping Mr Esze in the dark as to the first contract, it had not occurred to Mr Monzu by that time to cancel it.
The cancellation agreement
71 According to Mr and Mrs McRostie's initial witness statements, on or about 26 October 2010, a couple of weeks after entering the first contract, Mr Monzu contacted them and said that he wanted to cancel the first contract. He told them that he wanted to separate the purchase of the real estate from the purchase of the furnishings in the apartment. He proposed $3,050,000 for the purchase price of the property and $150,000 for the furnishings.
72 He also informed Mr and Mrs McRostie that the bi-fold doors could be installed later as a separate job. He said he would draw up a new contract for $3,050,000 for the property and a separate contract for $150,000 for the furniture and completion of work at the apartment.
73 He did not say when the further contracts would be prepared. Mr McRostie was agreeable to his proposal. He said in his witness statement that he felt secure that the purchase would go ahead because they had paid a deposit. He and Mrs McRostie signed the cancellation agreement. Each said that they did so entirely at the request of Mr Monzu. According to their evidence they were willing and able to settle, as agreed in the first contract, on 15 December 2010. They put their Mount Pleasant residence on the market.
74 Mr Monzu's evidence was that Mr McRostie never agreed to café blinds in lieu of bi-fold doors. I prefer Mr McRostie's evidence in this regard. It is wholly consistent with Mr Monzu obtaining a quotation for café blinds from Kresta Blinds on 25 October 2010 (exhibit 1, page 153, exhibit 6(a), par 35). Mr Monzu said he knew from experience that the installation of café blinds would not affect the plot ratio floor area. I do not accept his evidence that he installed the blinds in order to persuade Mr and Mrs McRostie to buy the property (ts 135). Mr and Mrs McRostie had accepted café blinds in lieu of bi-fold doors, which they preferred, although as subsequent events show, they ultimately got what they wanted, obviously on the basis that the bi-fold doors would be installed after settlement.
75 According to Mr and Mrs McRostie's evidence, Mr Monzu, from November 2010 to March 2011, carried out work on the property as agreed, installing the walk-in robe, laundry cupboards, a dishwasher on the balcony, cupboards over the stoves, a stove on the rooftop and air extractors over the barbecue. No detail was given as to the timing of this work and Mr and Mrs McRostie were not cross-examined in this respect.
76 Their evidence, which I accept, together with the evidence of the correspondence from MGB Legal to which I will refer in due course, supports an inference that there was, in fact, an agreement for the sale of the property that subsisted, despite the purported cancellation of the first agreement. That fact is consistent with the retention of the deposit, the first defendant carrying out work as requested by Mr and Mrs McRostie, the withdrawal of the property from the auction on 6 November 2010, and the steps taken by MGB Legal, after the cancellation agreement and before the second contract, towards settlement.
77 I do not accept Mr Monzu's evidence that he proposed the cancellation for the reason that the first defendant could not install the bi-fold doors. As I have found, that issue was dealt with on 15 October by a variation of the relevant conditions. He obtained Mr and Mrs McRostie's agreement to the cancellation in order to defer the sale until the expiration of the exclusive rights period with a view to avoiding liability for payment of the agent's commission.
78 Mr Monzu gave other implausible evidence about the purpose of the cancellation. He said that he wanted to obtain a better offer for the property.
79 He agreed, on the basis of his own evidence that Mr McRostie told him after the cancellation agreement that he and his wife would accept café blinds, that a new contract could have been made at that time. He said he could have entered into a new contract with Mr and Mrs McRostie, but did not wish to as he thought he could get a better price on the market. The problem with this explanation was that he had withdrawn the property from auction and had, by that time, on two occasions told Mr Esze that the property was off the market.
80 Confronted with this difficulty, Mr Monzu maintained, nonsensically in my view, that he was never keen on an auction (ts 143) and that it was his experience that agents work harder when they know a property is off the market (ts 144).
81 His answers to questions about the retention of the deposit were also unsatisfactory.
82 I do not accept that Mr Monzu had any intention of selling the property to anyone other than Mr and Mrs McRostie with whom I find he had made an advantageous contract. His actions in cancelling the first contract and purporting to make another on 4 January 2011 can only be explained in terms of his desire to avoid payment of the commission.
83 The submission was made on behalf of the first defendant that having secured a sale of apartment 13 to Mr and Mrs Caporn for $3.5 million the first defendant was not under pressure to sell the property. Apartment 13 was sold for $3,150,000 (exhibit 1, page 138; exhibit 6(a), par 15). It was submitted that once the first contract was cancelled, the first defendant was open to better offers. This explanation for the second contract not being made until 4 January 2011 flies in the face of objective facts of what occurred. On Mr Monzu's express instructions the property was not marketed beyond the point at which the first contract was made.
84 I am satisfied that there existed, from the date of the cancellation agreement or soon thereafter, and prior to the auction date, an agreement between the first defendant as seller and Mr and Mrs McRostie as buyers for the sale of the property for $3.2 million, $150,000 of which was to be paid on invoice for furniture and other items and works done by the first defendant as a condition of the sale. The separation of the price into two components was not proposed in the interests of the buyers as Mr Monzu maintained (Mr and Mrs McRostie paid duty on the aggregate price), but was agreed at the behest of the first defendant.
85 I do not accept Mr Monzu's evidence that the break-up of the price was mentioned by Mr McRostie 'closer to Christmas' and that 'he mentioned stamp duty as the reason'. Rather, I accept Mr McRostie's evidence that the break-up of the purchase price was mentioned by Mr Monzu on 26 October as the reason for cancelling the first contract.
86 The agreement was not reduced to writing until 4 January 2011, but as the later commentary on the evidence in relation to the steps taken by MGB Legal demonstrates, the document signed that day was a mere formality.
The auction
87 The auction of apartments 9 and 11 went ahead on 6 November 2010. Neither apartment was sold. On 8 November 2010 Mr Esze sent an email to Mr Monzu indicating that a person had proposed a purchase of apartments 11 and 12 for $3.5 million. He requested instructions as to whether the offer should be written up for presentation. Mr Monzu responded by email on 9 November 2010 (exhibit 1, page 161):
Hi Tom,
The group is only selling apartment 9 and 11 at this current moment as explained to you the western penthouse has been taken off the market and currently is not for sale.
As discussed the reserve prices of $1.9 and $2.1 mil respectively still are applicable, should you have any offers then you are to present to me for consideration.
…
88 By this time, of course, the first contract had been cancelled by agreement (exhibit 1, page 154). Mr Esze knew by the time of the auction that the first contract had been made, but was not aware of its cancellation.
MGB Legal
89 On or after 19 October 2010, Mr Esze received from the second defendant a copy of a letter from the first defendant's lawyers, MGB Legal, to the second defendant (exhibit 1, page 148). The letter read, relevantly:
Re sale of unit 21, 4 Scott Street, South Perth. Prada Corp Developments Pty Ltd to McRostie
We refer to the above and thank you for instructing us to act on behalf of the vendors in this matter.
We are writing to the vendors today to confirm the instructions.
Please provide a tax invoice for your commission to our office before settlement which is proposed for 15 December 2010.
90 Prior to receiving this letter, Mr Esze had been informed by Mr Podesta of the second defendant that the property appeared to have been sold. Mr Esze said he decided not to raise this with Mr Monzu, but intended to invoice him for the commission when the sale had gone through. The plaintiff did not send a tax invoice to MGB Legal as suggested in the letter.
91 Mr and Mrs McRostie both stated that from November 2010 they received a number of documents from MGB Legal relating to the settlement of the purchase of the apartment. No witness was called from MGB Legal. Nor was its file produced.
92 On 11 November 2010, two weeks after the date of the cancellation agreement, MGB Legal wrote to Mr and Mrs McRostie confirming their instructions to act for them on the purchase of the property (exhibit 1, page 202). The letter enclosed a form of appointment in which there was an acknowledgment that the firm acted for the vendor also (page 204). The letter requested money on account of costs and indicated that a transfer document would be prepared for their execution. The letter did not mention a settlement date.
93 MGB Legal's trust account statement dated 30 November 2010 shows that $300 was paid on account of costs on 16 November 2010 (exhibit 1, page 210). Also in evidence is a tax invoice for MGB Legal dated 7 December 2010 for professional fees of $2,970, including GST, plus disbursements (page 211). The schedule to the invoice particularises attendances on various occasions from 21 October 2010 to 7 December 2010.
94 A further letter from MGB Legal to Mr and Mrs McRostie dated 9 December 2010 (exhibit 1, page 213) is of particular significance. It enclosed a transfer of land document for their signature.
95 The letter informed Mr and Mrs McRostie that settlement was anticipated to take place on 14 January 2011. It can be inferred from the letter, and the fact that settlement of the sale of the property did in fact occur on that date, that the sale of the property had been the subject of agreement between the first defendant as vendor and Mr and Mrs McRostie as buyers prior to 9 December 2010 and therefore within the exclusive selling period.
96 It is also significant that the letter from MGB Legal stated:
We anticipate that the Office of State Revenue will aggregate the contract and the invoice for works together as one dutiable transaction and we have therefore based the stamp duty calculation on the total of $3,200,000. We anticipate stamp duty being $155,915.50. Kindly arrange to transfer that sum to our trust account and we will arrange for payment of stamp duty once the assessment issues.
97 It is clear from this part of the letter that by 9 December 2010 there was an agreement that the purchase price would be made up of two components. This is consistent with the evidence of Mr and Mrs McRostie that the reason given by Mr Monzu for cancelling the first contract was to make a new contract in which the price of the real estate was separated from the price for the furnishings.
98 A trust account receipt dated 14 December 2010 (exhibit 1, page 217) indicates that the requested amount for duty ($155,915.50) was paid to MGB Legal's trust account on that date. Furthermore, a trust account statement dated 14 January 2011 (exhibit 1, page 248) indicates that duty was in fact paid in that amount on 4 January 2011.
99 In a letter to Mr and Mrs McRostie dated 11 January 2011, MGB Legal advised that settlement was booked for 11.00 am on 14 January 2011. The letter enclosed a final settlement statement which indicated legal costs and disbursements in the same amounts as had been charged in the MGB Legal tax invoice dated 7 December 2010 from which I infer that the work for which those fees were charged was in respect of the same transaction.
100 Exhibit 1 also contains a letter from Mr McRostie to Westpac Private Bank dated 14 December 2010 authorising the bank 'to transfer funds as detailed in MGB Legal's settlement statement from our account to complete the purchase of apartment 12, 4 Scott Street, South Perth' (page 277).
101 Mr Monzu was unable to explain the MGB Legal correspondence and statements, even though he instructed MGB Legal on behalf of the first defendant. He was asked why MGB Legal should have written to Mr and Mrs McRostie on 9 December 2010 enclosing a transfer of land document if there were no agreement in place. His reply was 'Well, you would have to ask the solicitors'. Mr Monzu was simply unable to explain their actions. In terms of the first defendant's position, no explanation was available. Mr Monzu's denial (ts 157) that he knew, as early as 9 December 2010, that MGB Legal were working towards a settlement on 14 January was false.
102 The documents referred to above prove objectively, as a matter of inference, that the transaction which was settled on 14 January 2011 was in respect of an agreement made well and truly prior to 31 December 2010, and clearly before 9 December 2010.
The second contract
103 On 4 January 2011 Mr and Mrs McRostie and the first defendant executed a further offer and acceptance, being the second contract (exhibit 1, page 221). Mr and Mrs McRostie were given at that time the invoice of the first defendant for $150,000 (exhibit 1, page 242). The transaction was settled 10 days later on 14 January 2011. Mr and Mrs McRostie moved in on 22 February 2011. In March 2011 Mr Monzu arranged for the bi-fold doors that had been proposed for the roof deck area to be installed.
104 Mr Esze was not made aware of the second contract or of the settlement of that contract. On 4 February 2011, however, he discovered by reference to the REIWA website that the property had been sold (exhibit 1, page 194). He made enquiries which led to his discovery of the details of the transaction. He then raised an invoice for the commission.
105 It follows from my findings as to the existence of a contract for the sale of the property prior to 9 December 2010, that what I have described as the second contract was merely an instrument which gave effect to an agreement for the sale of the property which had already been made. That sale I find was made prior to auction in the terms of the first contract as amended.
106 That conclusion is consistent with and supported by the fact that settlement had been planned for 14 January 2011 as early as 9 December 2010, and that all the steps required to be taken by MGB Legal towards settlement, except for payment of duty, had been taken prior to 4 January 2011.
Clause 8.2: Was the property sold before auction and the sale not completed owing to the fault of the seller?
107 On the basis of my findings herein I am satisfied that the property was sold prior to auction on the terms of the first contract as amended on 15 October 2010. That contract of sale was not completed because the first defendant, through Mr Monzu, secured an agreement to cancel it, not because of impossibility, but because the first defendant wanted to defer the sale in order to avoid liability for the plaintiff's commission. The change in the form of consideration was merely incidental to that purpose.
108 The question is whether those circumstances amount to 'fault of the seller'.
109 Non-completion of the first contract as amended was not due to any act or omission on the part of the buyers, nor to circumstances for which neither party was responsible. It was brought about by the first defendant. I have not been referred to any authority on the construction of the expression 'the fault of the seller' and have found none relating to such an agency agreement. By reference to the natural and ordinary meaning of the word 'fault', as responsibility or culpability for something done wrongly, I have no difficulty in categorising the conduct of the first defendant in obtaining the cancellation agreement, by which completion of the contract was avoided, in that way.
110 The contractual requirement that the seller pay the agent's commission in the event that a sale of the property is not completed due to the fault of the seller means that the vendor may not do or omit to do an act with the effect of depriving the agent of its commission. In Alpha Trading Ltd v Dunnshaw-Patten Ltd [1981] QB 290 it was held that it was necessary to imply a term of the agency agreement to that effect (Brandon LJ (304)).
111 It is in this context that the plaintiff has pleaded in the alternative as implied terms of the agency agreement that the first defendant, having entered into the first contract, would not agree to cancel it (statement of claim par 24), that the first defendant would not defer entering into the second contract in order to avoid payment of the commission (statement of claim par 27), and that the parties would act in good faith towards each other in the performance of their contractual obligations (statement of claim par 28).
112 In my view the express obligation imposed by cl 8.2(c) on the first defendant to pay the commission where the sale is not completed due to its fault obviates any necessity to imply a term of good faith, or either of the other terms pleaded by the plaintiff, in order to give business efficacy to the agency agreement.
The 'introduction' issue
113 Although the plaintiff pleaded the operation of cl 10 which imposes a liability to pay the commission in the event that the seller itself introduces the ultimate buyer during the exclusive rights period, I have determined that the first defendant's liability arises from cl 8.2(c), the property having been sold to Mr and Mrs McRostie prior to the auction.
114 Clause 10 would apply in circumstances where the property was found to have been sold after the exclusive rights period to a buyer introduced by the seller (as opposed to the agent) during that period, as would be the case if the second contract constituted the sale. It is consonant with the agency agreement affording the joint agents an exclusive authority to sell.
115 The plaintiff argues that the first defendant introduced Mr and Mrs McRostie to the property prior to the end of the exclusive rights period, i.e. 31 December 2010.
116 The first defendant disputes cl 10 liability on the basis that Mr and Mrs McRostie were not introduced to the property by it, but by either David Lomax or Peter Caporn, through whom they became aware of the property being for sale.
117 Neither Mr Lomax nor Mr Caporn gave evidence. Mr McRostie's evidence was that on 16 July 2010 he and Mrs McRostie drove past 4 Scott Street and noticed a 'home open' sign. They stopped and went into the building where they met Mr Lomax of MLG Realty. He showed them a ground floor apartment which did not interest either of them. Mr Lomax told Mr and Mrs McRostie that there were other apartments for sale in the building. He offered to show them apartment 12 which was then unfinished and unfurnished. They told Mr Lomax that they were not interested in buying that apartment either and left.
118 In late August 2010, following an overseas trip, Mr and Mrs McRostie were informed that an offer they had made on an apartment in the Esplanade at South Perth had not been accepted. In September 2010 they spoke to Mr and Mrs Caporn. They and the Caporns were friends. T he Caporns informed them that the apartment block at 4 Scott Street, South Perth had been finished and was furnished. They also informed them that they had made an offer to purchase one of the penthouse apartments in the building and suggested that they have another look at apartment 12. Mr Caporn said he would arrange this directly with Mr Monzu.
119 Subsequently, on 12 October 2010, Mr and Mrs McRostie viewed apartment 12 in company with Mr Monzu and Mr and Mrs Caporn.
120 Mrs McRostie's evidence was to the same effect.
121 The words 'introduce' and 'introduction' have acquired particular meanings in the context of real estate agency. There is no dispute as between the parties that to introduce a buyer means to be an effective cause of the sale to that person. This is clear from the definition in cl 18:
'Introduce', 'introduced' and/or 'introduction' used in this form means, or whether in the context of an introduction by the agent or the seller, that the entity who claims to have introduced the buyer concerned has been an effective cause of the relevant sale.
122 Clearly, this involves more than simply making a person who may be a potential buyer, aware of the availability of the property for sale. In Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd (2005) NSWCA 117, Stein AJA (Giles & Hodgson JJA) held that the key question is whether the person who is said to be an effective cause of the sale 'continued to influence the purchaser in its eventual decision to buy' such that its efforts 'flowed through' thus 'causing the ultimate sale'.
123 Thus, the question of whether an agent has introduced a buyer often turns on what action on the part of the agent may be said to have caused or brought about the sale. In Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351 [85], Gummow J cited the dictum of Jacobs J in LJ Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52, 69:
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.
124 Of course, most of the cases involve claims for commission by agents. In this case there is no dispute that the plaintiff did not introduce the buyers of the property. The agency agreement, however, provided that the plaintiff would be paid a commission in the event that the buyers were introduced by the seller itself. The question, then, is whether someone other than the first defendant introduced Mr and Mrs McRostie to the property.
125 On the evidence to which I have referred I find that the fortuitous showing of the property in its incomplete condition to Mr and Mrs McRostie by Mr Lomax was not an effective cause of the later sale. Mr Lomax was the not the agent of the first defendant. His showing of the property to Mr and Mrs McRostie on that occasion merely made them aware of it. It did not contribute causally to their later decision to buy the property.
126 Similarly, the referral of Mr and Mrs McRostie by their friend Mr Caporn to Mr Monzu was not an introduction to the property in the sense that it was an effective cause of the subsequent sale. Mr Caporn merely pointed Mr and Mrs McRostie in the direction of Mr Monzu who showed them the property and then wrote up their offer.
127 By whatever means Mr and Mrs McRostie became aware of the availability of the property, it was, as a matter of substance, Mr Monzu on behalf of the first defendant who introduced them to it, inasmuch as he showed them the finished property, discussed the proposed special conditions, and wrote up the offer and acceptance for presentation to the first defendant in exactly the same way as an agent would have done.
128 I find therefore as a matter of fact, taking into account the contractual definition and the principles contained in the cases on point, that the first defendant did introduce Mr and Mrs McRostie to the property.
Is plaintiff entitled to recover the commission in full?
129 The plaintiff accepts that it was appointed jointly with the second defendant such that there is a joint entitlement to the commission. The second defendant, though joined to the action, has played no part in it. It is submitted by the first defendant that the plaintiff may claim only half of the commission.
130 The law is conveniently summarised by Finkelstein J in Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805 [67]; (2006) 157 FCR 229, 248:
Joint claims cannot be 'split' because a promise made two or more persons jointly creates only one obligation. Accordingly, a joint promisee has no several right of action. Moreover, being joint, the cause of action will merge whenever it is pursued to judgment.
In Re Hodson; Beckett v Ramsdale (1885) 31 Ch Div 177, 189, Bowen LJ said that the old debt disappears and the judgment is left in its place. On this basis, if a joint promisee's claim is resolved there is no longer a debt for the remaining joint promisee to pursue. (other citations omitted)
131 The plaintiff and the second defendant are co-promisees in respect of the first defendant's contractual promise to pay the commission. As a matter of principle it is a single obligation, for breach of which the plaintiff is entitled to sue. The plaintiff concedes that it is liable to account to the second defendant in respect of its share of the commission.
Conclusion
132 It follows from the findings and conclusions herein that the plaintiff is entitled to payment of the claimed commission which I find to be $96,000 being 3% of $3.2 million, the consideration expressed in the first contract. It is awarded as a liquidated sum pursuant to the terms of the agency agreement. That the consideration was later agreed to be split into two sums totalling the same amount does not affect the computation of the commission.
133 The plaintiff is also entitled to interest on that amount pursuant to s 32 of the Supreme Court Act 1935 from the date of settlement, being 14 January 2011. I calculate interest at the statutory rate of 6% for four years, three months and 24 days (1,575 days) to be $24,855.
134 The plaintiff is entitled to judgment in the total sum of $120,855.
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