Creative Academy Group Pty Ltd v White Pointer Investments Pty Ltd

[2024] NSWCA 133

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Creative Academy Group Pty Ltd v White Pointer Investments Pty Ltd [2024] NSWCA 133

Hearing dates:

21 February 2024

Decision date:

31 May 2024

Before:

Meagher JA at [1];
White JA at [40];
Adamson JA at [59]

Decision:

(1)   Allow the appeal in part.

(2) Set aside the judgment in order (1) of the orders made by Rees J on 25 July 2023 and, in lieu thereof order judgment against the first defendant in the amount of $567,250, together with interest under s 100 of the Civil Procedure Act 2005 (NSW).

(3)   Otherwise dismiss the appeal.

(4)   Order the appellants to pay 75% of the respondents’ costs of the appeal.

Catchwords:

CONTRACTS — formation — consideration — where new promise made in context of pre-existing contract — whether new promise is no more than promisor already bound to do — whether new promise was a bona fide compromise of a disputed claim

CONTRACTS — illegality — illegal contracts — contracts contrary to public policy — whether it is incongruent with public policy to allow unlicensed agent to retain monies paid to it in breach of agency legislation

RESTITUTION — ineffective transactions — unenforceable contracts — restitution of money paid — where payee in breach of obligation to be licensed under Property and Stock Agents Act 2002 (NSW) and Agents Act 2003 (ACT) — whether payor entitled to restitution of monies paid under contract despite payee’s breach — where legislation expressly excludes quantum meruit claims — where legislation does not provide for recovery of amounts already paid

RESTITUTION — mistake — restitution of money paid — whether payor entitled to restitution of monies paid under mistaken belief that payee could enforce claim to recover such payment — whether payment made as a result of mistaken belief

STATUTORY INTERPRETATION — Agents Act 2003 (ACT) — whether respondent “carries on business as a real estate agent” — meaning of “induce”

Legislation Cited:

Agents Act 2003 (ACT), ss 8, 18, 23, 99, 100

Builders Licensing Act 1971 (NSW), s 45

Civil Procedure Act 2005 (NSW), s 100

Property and Stock Agents Act 2002 (NSW), ss 8, 9, 55

Uniform Civil Procedure Rules 2005 (NSW), r 36.16

Cases Cited:

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424; [1954] HCA 20

Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11

Beaton v McDivitt (1987) 13 NSWLR 162

Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Colbron v St Bees Island Pty Ltd (1995) 56 FCR 303

Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70

Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418; [1970] HCA 31

Gnych v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23

Guan v Lui [2021] NSWCA 65

Jenkins v Kedcorp Pty Ltd [2002] 1 Qd R 49; [1999] QCA 452

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309; [1985] HCA 48

Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6

Registrar of Titles (WA) v Franzon (1975) 132 CLR 611; [1975] HCA 41

Scott v Commercial Hotel Merbein Pty Limited [1930] VLR 25

Wigan v Edwards (1973) 1 ALR 497

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; [1978] HCA 42

Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65

Texts Cited:

Australian Capital Territory Legislative Assembly, Parliamentary Debates (Hansard), 13 March 2003

JD Heydon, Heydon on Contract: the General Part (2019, Lawbook Co)

JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5th ed, 2007, LexisNexis Butterworths)

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 May 2002

Category:

Principal judgment

Parties:

Creative Academy Group Pty Ltd (First Appellant)
Wonderschool (Conder) Pty Ltd (Second Appellant)
Wonderschool (Dickson) Pty Ltd (Third Appellant)
Wonderschool (Taylor) Pty Ltd (Fourth Appellant)
Wonderschool (Throsby) Pty Ltd (Fifth Appellant)
Wonderschool (Woden) Pty Ltd (Sixth Appellant)
Simon Larcombe (Seventh Appellant)
White Pointer Investments Pty Ltd (First Respondent)
Hilton Hedley (Second Respondent)

Representation:

Counsel:
B Walker SC / P Reynolds (Appellants)
R G McHugh SC / C E Bannan (Respondents)

Solicitors:
Shanahan Tudhope Lawyers (Appellants)
Keypoint Law (Respondents)

File Number(s):

2023/265994

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity – Commercial List

Citation:

White Pointer Investments Pty Ltd v Creative Academy Group Pty Ltd [2023] NSWSC 817

Date of Decision:

25 July 2023

Before:

Rees J

File Number(s):

2021/161182

HEADNOTE

[This headnote is not to be read as part of the judgment]

In or about October 2017, White Pointer Investments Pty Ltd (White Pointer) entered into an oral agreement with Creative Academy Group Pty Ltd (CAG) pursuant to which White Pointer’s director, Hilton Hedley, would assist CAG to identify and lease sites to operate childcare centres in NSW and the Australian Capital Territory (ACT) in return for a fee of $2,000 per child’s place at each centre plus GST (the Moncur Agreement).

Subsequently, on 14 March 2020, CAG proposed a different arrangement under which it would pay less than $2,000 per child’s place, provide what it labelled “advance payment” in respect to some sites and be entitled to a refund of amounts it paid to White Pointer for childcare centres that never opened (the Settlement Proposal).

Mr Hedley sourced a number of childcare sites for CAG, including in Hurstville, NSW (the Hurstville site) and at various locations in the ACT (the ACT sites). CAG made payment or part-payment in relation to some of the sites sourced but not others.

On 4 June 2021, White Pointer commenced proceedings against CAG and its associated companies (the appellants) claiming amounts alleged to be owed to it under the Moncur Agreement. The appellants resisted the claim and, by way of cross-summons, sought restitution of all amounts they had paid to White Pointer under the Moncur Agreement. They argued that White Pointer had breached the Property and Stock Agents Act 2002 (NSW) (the NSW Act) and the Agents Act 2003 (ACT) (the ACT Act) (both of which required providers of real estate agent services to be licensed, which Mr Hedley was not) such that the Moncur Agreement was illegal or unenforceable, or that the amounts were paid under a mistaken belief that White Pointer could enforce claims for their fees against the appellants.

Rees J (the primary judge) found in favour of White Pointer and, on 25 July 2023, ordered the appellants to pay White Pointer $747,650 plus interest.

The appellants appealed on the basis that:

1. the primary judge erred in finding that the Moncur Agreement was binding and enforceable;

2. the primary judge erred in finding that the Settlement Proposal was not binding because it lacked consideration;

3. the primary judge erred in finding that White Pointer could recover its outstanding fees in respect of the ACT sites as (despite not being a licensed real estate agent) it was not required to be licensed by the ACT Act; and

4. the primary judge erred in finding that CAG was not entitled to restitution of amounts it had paid to White Pointer given the terms of the NSW Act and the ACT Act.

The Court held (Adamson JA, White JA agreeing, Meagher JA dissenting on the application of the ACT Act and availability of restitution) allowing the appeal in part:

Whether the Moncur Agreement was binding

1. The minor disparity between the particular (that the Moncur Agreement was made as the result of a single conversation) and the primary judge’s finding (that agreement about the timing of payments was made after agreement as to the amount) does not give rise to any practical injustice. The Moncur Agreement was binding and enforceable: at [40] (White JA); [87]-[91] (Adamson JA).

Whether consideration was provided under the Settlement Proposal

1. The Settlement Proposal was an attempt by the appellants to gain an unfair advantage by threatening to withhold performance under the Moncur Agreement and rebadge their part-performance of an existing payment obligation as a benefit (labelling payment of $47,650 as an “advance” where more than this amount was outstanding in relation to another site at the time). There is no error in the primary judge’s finding that the Settlement Proposal lacked consideration: at [128]-[129], [153], [157]-[158] (Adamson JA).

   Wigan v Edwards (1973) 1 ALR 497, applied.

2. There was no bona fide dispute about the terms or operation of the Moncur Agreement which the settlement proposal purported to resolve. Its terms were clear and any dispute was manufactured by the appellants: at [13]-[14] (Meagher JA); [40] (White JA); [134]-[143], [157] (Adamson JA).

Whether White Pointer or Mr Hedley was required to be licensed by the ACT Act

1. Section 8(2)(b) of the ACT Act is concerned with the “outward-facing conduct” of a real estate agent. That is whether White Pointer negotiated with, induced or attempted to induce the owners of the ACT sites or their agents to lease their premises to CAG: at [21]-[22] (Meagher JA); [44] (White JA); [187] (Adamson JA).

   Guan v Lui [2021] NSWCA 65, applied.

Per Adamson JA, White JA agreeing:

1. At the Throsby, Conder and Woden sites, Mr Hedley merely introduced CAG to the owners’ agent and, as such, did not carry on business as a real estate agent within the meaning of s 8(1). The primary judge correctly found that White Pointer could recover their outstanding fees for these sites: at [50], [53], [57] (White JA); [196], [207]-[208], [213]-[215], [222]-[226] (Adamson JA).

2. The primary judge erred in finding that Mr Hedley did not carry on business as a real estate agent at the Red Hill, MacGregor, Taylor and Dickson sites. His dealings with the owners’ agent at these sites (making offers higher than those he knew were made by competitors, asking the owner’s agent to delay going to market to allow CAG to make an offer and drawing a competitor’s financial troubles to the owner’s attention) constituted negotiation and attempts to induce: at [47], [51]-[52], [56] (White JA); [201]-[206], [210]-[212], [216]-[221] (Adamson JA).

3. As Mr Hedley was not licensed, White Pointer cannot recover their fees for the Red Hill, MacGregor, Taylor and Dickson sites. The judgment sum must be reduced to $567,250 (the amount outstanding referable only to Throsby, Conder and Woden): at [227] (Adamson JA).

Per Meagher JA:

1. The primary judge correctly found that there was no conduct by Mr Hedley in relation to any of the ACT sites that constituted carrying on business as a real estate agent within the meaning of s 8(2)(b): at [24]-[25], [27], [30], [32]-[33], [35], [36]-[38] (Meagher JA).

Whether restitution was available

Per Adamson JA, White JA agreeing:

1. Restitution is not available on the basis that the Moncur Agreement is unenforceable or illegal. It is not incongruent with public policy, having regard to the purpose of the NSW Act and ACT Act, that White Pointer (despite not holding the requisite real estate agent’s licence) retain amounts paid by CAG pursuant to the Moncur Agreement: at [233]-[238], [241]-[242], [243]-[244], [246] (Adamson JA).

2. In circumstances where the appellants have not proved that they would not have paid White Pointer if they had known, at the time of payment, that White Pointer or Mr Hedley was required to be licensed, there is no error in the primary judge’s finding that restitution was not available for monies paid by CAG under a mistaken belief that White Pointer could enforce their right to recover them: at [250]-[251] (Adamson JA).

Per Meagher JA:

1. As White Pointer did not provide a “real estate agent service” within the meaning of the ACT Act, the appellants’ claims to restitution in respect of the ACT sites is not made out. Nor, for the reasons given by Adamson JA, could those claims have been made out if White Pointer was required to be licensed in the ACT: at [3]-[5], [7]-[9] (Meagher JA).

JUDGMENT

1. MEAGHER JA: I have had the benefit of reading Adamson JA’s reasons for judgment. What follows assumes a familiarity with those reasons. I agree with her Honour’s conclusions with respect to all issues except those relating to whether any of the services provided by White Pointer in relation to the ACT sites constituted a “real estate agent service” within s 8(2)(b) of the ACT Act. It is not controversial that fees with respect to such services could not be recovered by the bringing of proceedings because of the operation of s 23 of that Act. In my view, none of the services provided in relation to those sites answered that description.

2. In addition to explaining my reasoning for this conclusion, in what follows I first summarise the consequences for the restitutionary claims of that conclusion. I then make some further observations for my agreement that ground 1 (whether the Settlement Proposal was unenforceable for want of valuable consideration) should be dismissed.

The restitutionary claims

3. A consequence of my conclusion that White Pointer did not provide any “real estate agent service” in the ACT is that s 23 of the ACT Act did not apply. It follows that the two bases on which the appellants contended they were entitled to restitution of payments already made in respect of those sites could not be made out. Those claims as made were to recover payments for which there had been a total failure of consideration, or as made under a mistake of fact or law.

4. Each of these bases of claim proceeded on the assumption that White Pointer was required to be licensed because it was supplying services which were within s 8(2)(b) of the ACT Act. The total failure of consideration was said to follow because the Moncur Agreement was unenforceable and void for illegality. The relevant mistaken belief was that White Pointer was licensed as required, and that the agreement between it and CAG was legal and enforceable.

5. In relation to the ACT sites and payments sought to be recovered, the underlying assumption that ss 8(2)(b) and 23 were engaged was not made out before the primary judge, and in my view is not made out in the appeal.

6. In relation to the Hurstville site in New South Wales, the primary judge concluded that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the provisions of the NSW Act. I agree, for the reasons given by Adamson JA at [229]-[238] below, that the appeal from that aspect of the primary judgment should be dismissed.

7. The primary judge also concluded that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the relevant provisions of the ACT Act, but did so for the reason that White Pointer was not required to be licensed. Applying similar reasoning to that applied with respect to the provisions of the NSW Act, Adamson JA (at [239]-[244] below) concludes that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the provisions of the ACT Act, notwithstanding that White Pointer was required to be licensed.

8. It follows from Adamson JA’s reasoning that neither of the ways of putting the restitutionary claim in respect of the ACT sites is made out (and irrespective of whether White Pointer was required to be licensed). Although I have reached the same conclusion on the basis that s 8(2)(b) was not engaged, I nevertheless agree with her Honour’s reasoning that, if it was engaged, the Moncur Agreement was not thereby rendered unenforceable or void for illegality.

9. Finally, in respect of the claims for restitution on the basis of mistake, the primary judge held that the appellants had failed to prove that the mistake relied on was "causative" of the payments (J [324]). That finding is the subject of appeal ground 8, which in my opinion is not made out for the reasons given by Adamson JA at [246]-[251] below.

The Settlement Proposal

10. There was no contest before the primary judge that the offer constituted by the making of the proposal in Mr Larcombe’s email of 14 March 2020 was accepted and that, objectively, the parties intended to be bound in the terms of that offer (J [234]). The only issue was as to whether their agreement was supported by consideration. The primary judge held that the agreement, which was to replace the existing agreement with one imposing different and far less favourable payment and other terms (including in respect of childcare sites already sourced), was not binding for want of consideration (J [238]-[248]).

11. In Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 456-457; [1954] HCA 20, the High Court accepted the bargain theory of consideration (see Beaton v McDivitt (1987) 13 NSWLR 162 at 168-169 (Kirby P) and 181-182 (McHugh JA); and generally JD Heydon, Heydon on Contract: the General Part (2019, Lawbook Co) at [5.80], [5.90]; JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5^th ed, 2007, LexisNexis Butterworths) at [6-09]-[6-11]). That theory treats a contract as a bargain struck between the parties by an exchange and requires that “consideration must be satisfied in the form of a price in return for the promisor’s promise or a quid pro quo. The price can be in the form of an act, forbearance or promise” (Beaton v McDivitt at 168 (Kirby P)).

12. The contract said to arise from the Settlement Proposal is a bilateral one. From the appellants’ perspective, it may be expressed in terms of promises exchanged between CAG and its associated SPV companies, on the one hand, and White Pointer and Mr Hedley, on the other, as follows:

In consideration of you [White Pointer] agreeing to be bound by these new terms relating to our existing and future dealings, and giving up your rights under our original agreement in respect of those existing dealings, we [CAG and SPVs] agree to be bound by these new terms in respect of our existing and future dealings, which are to apply in place of the terms of our original agreement.

13. One of the arguments made by CAG was that the Settlement Proposal resolved a bona fide disputed claim or claims arising out of differences as to the proper construction and application of the Moncur Agreement.

14. As Adamson JA observes at [140]-[141] below, the terms of the Moncur Agreement, though limited, were clear. I agree with her Honour that there was “no room for the implication of terms requiring a refund or limiting the time within which a childcare centre had to open”. To the extent that there were questions as to whether the amount of the second tranche should be adjusted if the number of places in the childcare centre as opened were different from those stipulated in the original DA, they were discussed and addressed in the course of the parties’ dealings. That was the case in February 2020, when Mr Hedley accepted that “if things changed after the Lease Signing and DA approval”, the fee would be altered in the second tranche.

15. On 7 February 2020 Mr Larcombe sent an email at Mr Hedley’s request confirming the outstanding fees in respect of each of the identified centres at the agreed rate of $2,000 per place. As at 14 March 2020, CAG had made no payment to White Pointer since September 2019, and it was clear that White Pointer was seeking and requested payment urgently. For example, on 19 February 2020, Mr Hedley said to Mr Larcombe “Also I need some of my invoices paid and still need to invoice you for Conder can you pay anything today please it’s now critical”.

16. In its terms, Mr Larcombe’s 14 March 2020 email makes no reference to there being any genuine dispute as to any amounts payable under the Moncur Agreement. Rather, it proceeds from the premise that the terms of that agreement were no longer commercially acceptable to CAG. This is reflected in the reasons given for the changes to the payment and other terms proposed to be applied to each of the already-introduced childcare centres. The $2,000 per place fee agreed in respect of the Hurstville, MacGregor and Red Hill centres was described as no longer justifiable because the development of those centres had “dragged out”; the fee in respect of Dickson was described as no longer justifiable because there was “No government guaranteed take out”; and the fee in respect of Throsby and Conder was described as no longer justifiable because there had been “building issues” or excessive costs variations. In these cases, the proffered replacement fees ranged between $500 and $1,650 per place.

13. The contextual evidence as to the making of the Settlement Proposal does not suggest that there were any particular claims or disputes which had been made or responded to, and the proposal itself had not been the subject of any earlier negotiation. What was proposed was a “full and final settlement”, which described CAG’s final position in respect of the payments it was prepared to make in relation to the parties’ past and future dealings.

14. Mr Hedley’s evidence was that before receipt of the email of 14 March 2020 no one had questioned the basis on which the calculations in White Pointer’s invoices were made or raised any disputes. The primary judge considered this not to be “strictly correct” (J [239]):

“… Issues arose from the first invoice for the Hurstville site… as to precisely when the first tranche was due, to the extent that the deal then remained conditional in some way. Mr Larcombe gained some traction on this point when negotiating to pay the first tranche of the Red Hill and Macgregor fees in sub-tranches of 25% each, with the second 25% payable once conditions of the agreement for lease had been met, being confirmation of finance and satisfaction of the conditions of development consent…. Mr Larcombe sought to extend the notion of ‘conditionality’ in September 2019…, with some success when Mr Hedley agreed to defer the second 25% of the Throsby fee until additional places were approved. However, Mr Hedley rejected any broader requirement that the sites had to be ‘unconditional’ before payment was due and re-stated the terms of their original agreement in February 2020.”

19. Although there were such issues, they did not give rise to a bona fide dispute which CAG sought to resolve by means of the Settlement Proposal. Rather, CAG decided to give White Pointer an ultimatum in the form of a “full and final” offer as to the terms to which it would agree in respect of past and future dealings. As the primary judge held, the email of 14 March 2020 was “another attempt to re-negotiate the oral contract on more favourable terms, rather than an offer to resolve a bona fide dispute” (J [240]).

Whether White Pointer was prohibited from bringing proceedings to recover monies alleged to be due in relation to childcare centres in the ACT

20. Section 8(2) of the ACT Act is set out in Adamson JA’s reasons at [165] below.

21. The primary judge held that s 8(2)(b) was directed towards the conduct of an agent with respect of the vendor/lessor of a site, which was described in submissions as “outward-facing conduct”. I agree with that construction of s 8(2)(b) for the reasons given by the primary judge at J [285]-[286], and add the following observation.

22. Section 8(2)(a) describes transactional activities relating to the acquisition or disposal of an interest in land in relation to which a real estate agent may provide a service for a principal. That principal will be on one side or other of the relevant transaction and accordingly either acquiring or disposing of the relevant interest in land. Section 8(2)(b) describes conduct of the agent directed to achieving the outcome sought by the principal in such a transaction. Where the principal is acquiring, that conduct is directed to the person who is disposing of the interest sought to be acquired. Where the principal is disposing of the interest in land, that conduct is directed to the person acquiring that interest. That is to say, whereas par (a) describes the transactional activity from the perspective of the principal as moving party, par (b) describes conduct of the agent interacting with or directed to the proposed counterparty in the transaction with the principal. Thus, the “person” in s 8(2)(b) is the, or a, counterparty of the principal.

23. There were seven childcare centre sites in the ACT. The primary judge found that, in his dealings with Mr Randell and his principals, Mr Hedley (acting as White Pointer) did not engage in any of the activities described in s 8(2)(b) of the ACT Act. The primary judge made findings as to the underlying facts with respect to those dealings, and they are not challenged on appeal. Those sites include Red Hill, MacGregor, Taylor, Conder and Dickson. Adamson JA has concluded that White Pointer was required to be licensed in the ACT in respect of the services provided for the Red Hill, MacGregor, Taylor and Dickson sites, and that the primary judge erred in holding otherwise. For the reasons below, I consider that the primary judge did not err in holding that White Pointer did not as agent for CAG engage in conduct which fell within s 8(2)(b) of the ACT Act with respect to those four sites.

24. As to the Red Hill site: Section 8(2)(b) describes conduct whereby in the interests of its principal an agent relevantly “attempts to induce” the counterparty to make or accept an offer to enter into a contract such as a lease. That is, the attempt to induce must be undertaken by the agent and directed to the counterparty. In relation to this site, the only inducement, if any, was constituted by the terms of CAG’s offer, which Mr Hedley delivered to Mr Randell. The findings do not include that in delivering the offer Mr Hedley said or did anything to elaborate upon or “spruik” the terms of the offer. Merely delivering the offer did not amount to an attempt to induce.

25. For this reason, the primary judge correctly concluded that there was no conduct on the part of Mr Hedley in relation to the Red Hill site that constituted providing a “real estate agent service” for CAG for reward within the meaning of s 8(2)(b).

26. As no part of the respondents’ primary claim included an amount in respect of Red Hill, this conclusion has no effect on the judgment sum. It does, however, follow that the respondents are not precluded from recovering any amount in respect of the second tranche if a childcare centre opens at Red Hill.

27. As to the MacGregor site: Mr Randell informed Mr Hedley that this site was available for lease with 150 places. Mr Hedley advised Mr Larcombe that that was too many places, and that the site should be leased in stages. As Adamson JA records at [204] below, “CAG prepared an offer, which was provided to Mr Hedley, who then ‘forwarded’ that offer to Mr Randell. At the same time, Mr Hedley suggested to the appellants that they check whether there were other obligations which they would be required to meet in respect of 150 places, notwithstanding that their offer was based on 120 places…”. None of this involved Mr Hedley negotiating with Mr Randell or his principals or inducing or attempting to induce Mr Randell or his principals to make or accept an offer to enter into a contract to lease.

28. What is described above involved the requesting and communication of information relevant to the preparation of an offer, the formulation of that offer by CAG, the communication by Mr Hedley of that offer to Mr Randell, and the proffering of advice by Mr Hedley to CAG and its directors. Mr Hedley’s forwarding of CAG’s offer to Mr Randell did not of itself involve any negotiation with Mr Randell or his principals in which Mr Hedley was communicating as agent for CAG. Nor did it involve inducing or attempting to induce Mr Randell’s principals to accept that offer.

29. This conclusion will not preclude the respondents from recovering any amount in respect of the second tranche if a childcare centre at the MacGregor site ever opens.

30. As to the Taylor site: At the time Mr Hedley asked Mr Randell not to go to market, no offer had been made by CAG, and there was no standing or other offer from Mr Randell’s principals. By making this request, Mr Hedley was seeking to encourage Mr Randell’s clients to provide the opportunity for CAG to make an offer. In doing so, he was not inducing or attempting to induce Mr Randell’s principals to make an offer to CAG or to accept an offer made by CAG to enter into a lease.

31. Furthermore, in communicating the appellants’ initial offer to Mr Randell, and later conveying their amended offer, Mr Hedley was thereby not undertaking any negotiation on behalf of CAG with respect to either of the written offers that he “forwarded” on. It follows that the respondents are not prohibited from bringing proceedings to recover $121,000, being the first tranche of the commission due with respect to the Taylor site. Nor are they prevented from bringing proceedings to obtain payment of the second tranche of $121,000, which became due on the opening of the childcare centre at that site and after the judgment at first instance was ordered.

32. As to the Dickson site: The circumstances in which Mr Hedley saw and responded to an article in the Australian Financial Review (AFR) concerning Edhod are set out in Adamson JA’s reasons. I agree that Mr Hedley’s intention in sending the newspaper article to Mr Randell was to discourage Mr Randell’s principals from proceeding with a lease to Edhod. That was calculated to provide an opportunity for the appellants to make an offer.

33. The purpose of the email was not to induce or attempt to induce the owners of the Dickson site to make or to accept an offer to enter into a lease agreement with CAG. It was querying whether there was at that point an opportunity for CAG to make an offer, the terms of which were not specified. Whether the owners might subsequently be induced to accept that offer obviously depended upon the terms of the offer, which would come from CAG and not Mr Hedley, and what might be said in elaboration of it. None of this involved conduct by Mr Hedley falling within s 8(2)(b). Mr Hedley’s action in sending the AFR article disparaging the current proposed tenant provided the context in which he was able to “introduce” the site to CAG, as the primary judge effectively found (J [297], [309]).

34. The respondents claimed $59,400 (in addition to the first tranche payment of $90,000), which took account of an agreed adjustment to the first payment to reflect the circumstance that the Dickson centre only had 72 child places. As there was no conduct within s 8(2)(b) in respect of this site, the respondents were entitled to recover that amount of $59,400.

35. I agree with Adamson JA’s conclusions and reasoning in respect of the Throsby, Conder and Woden sites. With respect to the Conder site, I make the following observations in support of her Honour’s conclusion.

36. As to the Conder site: In mid-May 2019, the appellants were reviewing an offer which had not yet been made. Mr Larcombe sent that offer for Throsby to Mr Randell for his comments. Mr Randell asked whether the appellants were interested in making an offer for the Conder site (also referred to as the “second Throsby site”). Mr Larcombe responded to Mr Randell that he would “give Conder a miss”. In the same conversation, Mr Hedley asked Mr Randell whether the Conder owner would be interested in a differently structured deal where rent was payable as places were filled (J [133]).

37. At this time, Mr Hedley was advising the appellants that they “need to send the message [to Mr Randell] that you are still expanding in Canberra and keen for more stock”. In this context, Mr Hedley said to CAG that he still wished to “explore Conder and believed [CAG] could get the deal they wanted” (J [134]). However, on 17 May 2019, and after he had provided a final offer for the Throsby site to Mr Randell, Mr Larcombe emailed Mr Randell and Mr Hedley, setting out the appellants’ position on the various childcare sites in Canberra, including Conder (which he described as “not for us”) and Throsby (“we are keen on this”).

38. None of this identified any act on the part of Mr Hedley which constituted negotiating or inducing Mr Randell and his principals within s 8(2)(b). The reference to Mr Hedley asking Mr Randell whether the owner of Conder might be interested in a “differently structured deal” (J [296]) did not constitute or involve any negotiation of any existing proposal. Nor did it involve inducing or attempting to induce Mr Randell’s principal to “make or accept an offer to enter into” a contract of lease. At that time, no offer had been formulated or made in respect of Conder. Sometime later on 3 July 2019, Mr Larcombe provided an executed offer for the Conder site to Mr Randell, and to Mr Hedley. The primary judge did not find that Mr Hedley had participated in any negotiations in June 2019 with Mr Randell which preceded that outcome in early July 2019 (J [148]-[150]).

Conclusion

39. In the result, I would increase the judgment at first instance from $747,650 to $868,650, as the childcare centre at the Taylor site has now opened. More generally, it would follow that the appeal should be dismissed, and that there should be judgment in that amount, together with interest, against the first defendant.

40. WHITE JA: The issues on this appeal are explained by Adamson JA at [67]-[73] in her Honour’s reasons for judgment. I agree with Adamson JA that, for the reasons her Honour gives, the Moncur Agreement was binding and enforceable and neither ground 10 nor ground 11 has been established. I also agree with Adamson JA’s conclusion that the Settlement Proposal did not involve the resolution of a bona fide dispute and was not binding for lack of consideration and with her reasons for that conclusion. I also agree with the additional reasons of Meagher JA for that conclusion.

41. I also agree with the reasons of Adamson JA and Meagher JA that, irrespective of whether White Pointer was required to be licensed under the Agents Act 2003 (ACT) (“the ACT Act”), Creative Academy Group Pty Ltd (“CAG”) is not entitled to restitution for the moneys paid to White Pointer for its services in relation to sites in the Australian Capital Territory. I also agree, for the reasons given by Adamson JA, that CAG is not entitled to restitution for the moneys paid to White Pointer in respect of the Hurstville site.

42. Meagher JA and Adamson JA take different views on whether White Pointer was required to be licensed under the ACT Act in respect of the services it provided in connection with CAG’s purchase or leasing of sites in the ACT.

43. This turns on the construction of s 8 of the ACT Act that is quoted in the reasons for judgment of Adamson JA at [165].

44. Meagher JA and Adamson JA are agreed that the “person” referred to in s 8(2)(b) is the, or a, proposed counterparty in the transaction with the principal (at [22], [182]). I agree, for the reasons their Honours give. The question then is whether, on the basis of the primary judge’s uncontested findings of fact as to Mr Hedley’s dealings with Mr Randell on behalf of the owners of the sites, Mr Hedley was negotiating with the counterparty or was attempting to induce the counterparty to sell or lease, or to make an offer to do so, or to accept an offer from any of the appellants to buy or lease the relevant land.

45. Mr Hedley’s perceived, and no doubt actual, credibility with Mr Randell is relevant to that characterisation.

46. Clearly, the appropriate characterisation of Mr Hedley’s conduct as to whether it involved negotiation with the counterparty or attempting to induce the counterparty to sell or lease, or to make or accept an offer, is something on which minds may legitimately differ. The relevant facts are stated in the reasons of both Meagher JA and Adamson JA. I will deal with each site seriatim.

Red Hill

47. In respect of the Red Hill site, the primary judge found (J [292]) that Mr Hedley forwarded the appellants’ initial offer to Mr Randell. After Mr Randell provided feedback on the offer and Mr Hedley had made suggestions to CAG as to how a revised offer should be presented, Mr Hedley then provided the revised offer to Mr Randell. He arranged a meeting with his clients in Canberra with Mr Randell and liaised between Mr Randell and the appellants for further offers for the site. He inspected the site with Mr Randell and the appellants. I agree with Adamson JA that Mr Hedley was thereby attempting to induce the owners (through his dealings with Mr Randell) to make an offer to sell or lease the Red Hill site to the appellants within the meaning of s 8(2)(b) of the ACT Act. He was not merely delivering an offer. Rather by his dealings with Mr Randell and his attendance at the meeting between his client and Mr Randell he was using his personal connection with Mr Randell, which amounted to an attempt to induce the owners to sell or lease the site to the appellants or to make a counter offer.

MacGregor

48. The primary judge found (J [293]) that in respect of the MacGregor site, Mr Hedley’s dealings with Mr Randell were limited to enquiring whether, if the appellants built a smaller centre with 90 places rather than the 150 places for which the site was advertised for sale, a new development application would need to be lodged. He arranged a meeting between Mr Randell and the appellants. He forwarded the appellants’ offer for the site to Mr Randell. He received the ACT developers’ response to the offer and passed on an amended offer. He attended a site inspection with Mr Randell and the appellants.

49. In relation to this site, I agree with Meagher JA that the mere forwarding of the appellants’ offer to Mr Randell did not of itself involve any negotiation with Mr Randell or his principals. Nonetheless, I would characterise Mr Hedley’s dealings with Mr Randell as an attempt by Mr Hedley to induce Mr Randell’s principals to sell the site to CAG.

Throsby

50. I agree with Adamson JA’s reasons in respect of the Throsby site.

Taylor

51. The primary judge found (J [295]) that having obtained information from Mr Randell in relation to what was an appropriate market rate per child in the area and having obtained updated plans for the site from Mr Randell, Mr Hedley asked Mr Randell not to go to market as he was sure that his clients would take the site. Mr Hedley inspected the site with Mr Randell and the appellants. He forwarded the appellants’ offer to Mr Randell. Having passed on Mr Randell’s advice that the offer was insufficient, he forwarded an amended offer. He arranged for the owners’ designer to start talking with the appellants’ architect. He forwarded a revised offer for the site.

52. In my view, these actions constituted an attempt by Mr Hedley to induce the owners to lease the land to the appellants.

Conder

53. I agree with Adamson JA and Meagher JA that the evidence did not establish that there was any contravention of s 8(2)(b) of the ACT Act in respect of this site.

Dickson

54. As Adamson JA explains, the primary judge found that Mr Hedley provided both Mr Larcombe and Mr Randell with an article in the Australian Financial Review which indicated that the proposed lessee of the Dickson site was in financial trouble. Mr Larcombe advised Mr Hedley that he was obviously keen to get the site. There was already an existing agreement in place with the proposed lessee. Mr Hedley asked Mr Randell whether it was “worth putting an offer under the owner’s nose as an alternative given all the bad press” about the then current proposed lessee. Adamson JA has set out the terms of that email (at [217]). The primary judge found (J [297]) that Mr Hedley explored the possibility of leasing the site with Mr Randell as Mr Larcombe was keen to pursue the opportunity.

55. The primary judge found (J [310]) that all Mr Hedley sought to do was to persuade the owner to entertain an offer from the respondents to lease the site where the owner may have already agreed to lease the site to another party. Her Honour characterised this as no more than an introduction of the defendants to the owner for the owner’s consideration.

56. I agree with Adamson JA that Mr Hedley’s conduct went beyond the mere introduction of his client to the owner for its consideration. In the knowledge of his client’s intention to make an offer for the lease of the site, Mr Hedley’s disparagement of the then proposed lessee is properly characterised as an attempt by Mr Hedley to induce the owners (through Mr Randell) to accept an offer to lease the Dickson site to the appellants.

Woden

57. I agree with Adamson JA’s reasons in respect of the Woden site.

Conclusion

58. For these reasons I agree with Adamson JA’s proposed orders 1 and 2. I also agree with her Honour’s proposed orders in relation to the costs of the proceedings below and of the appeal.

59. ADAMSON JA: The first appellant, Creative Academy Group Pty Ltd (CAG), the second to sixth appellants, CAG’s associated companies, which operated as special purpose vehicles (SPVs), and the seventh appellant, Simon Larcombe, a director of CAG (together, the appellants) appeal against a judgment ordered by Rees J (the primary judge) on 25 July 2023 in favour of the first respondent, White Pointer Investments Pty Ltd (White Pointer), in the sum of $747,650 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

60. In the Court below, White Pointer claimed monies alleged to be owed to it by the appellants pursuant to an oral contract it made with CAG in or about October 2017 for services provided by White Pointer’s sole director and secretary, Hilton Hedley, the second respondent. It was common ground that, by about September 2017, CAG wanted to lease and develop a site at Hurstville for a childcare centre (the Hurstville site) as well as to lease sites for childcare centres in the Australian Capital Territory (the ACT sites). CAG acknowledged that it lacked connections to obtain sites for that purpose. Mr Hedley, who was familiar with the market for childcare centres, offered to identify sites for CAG and assist it to lease them in return for a fee.

61. White Pointer alleged, and the primary judge found, that there were discussions in around late September 2017 regarding the proposed arrangement between Mr Hedley, Mr Larcombe and Glenn Dumbrell, a business associate of Mr Larcombe who had worked with Mr Hedley in the past. These discussions took place at the Woollahra Hotel. On 20 September 2017, following the first of these discussions, CAG (then under a different name) was incorporated and Mr Larcombe and Jim Mascitelli, who was the Managing Partner of Mazars, an accounting firm, were appointed as its directors. Mr Mascitelli acted as CAG’s accountant. Mr Dumbrell was appointed CAG’s executive general manager.

62. The shareholders of CAG are, so far as is revealed by the evidence, as follows:

Name of shareholder	% shareholding	Ultimate holder	Role of ultimate holder in CAG
Zamat Pty Ltd	55%	Simon Larcombe	Worked in business
AWBrooks Pty Ltd	15%	Anthony Brooks	None revealed
Jim Mascitelli	15%	Jim Mascitelli	Provided accounting services to CAG and its SPVs
B Larcombe Pty Ltd	15%	Sean Larcombe	Simon Larcombe’s brother

63. In about September 2017, Mr Hedley started to do some work for CAG with a view to obtaining the Hurstville site for it, although no agreement as to his remuneration had yet been concluded.

64. The primary judge found that in or about October 2017, either in the course of a lunch at Bistro Moncur (located in the Woollahra Hotel) or shortly thereafter, an oral contract was entered into between White Pointer and CAG (the Moncur Agreement) on the following terms:

1. Mr Hedley would source sites suitable for childcare centres for CAG;

2. in return for Mr Hedley’s services, CAG would pay White Pointer a total of $2,000 plus GST for each child place at each childcare centre of which:

1. 50% would be paid upon the execution of an agreement for lease (AFL) of the relevant site and the grant of a Development Approval (DA) for the development of the site as a childcare centre; and

2. 50% would be paid upon the opening of the childcare centre.

65. Subsequently (as set out in more detail below), on 14 March 2020, after Mr Hedley had introduced a number of such sites, CAG, by email from Mr Larcombe to Mr Hedley, proposed a different arrangement (the Settlement Proposal) which, if accepted, would result in a substantial diminution of White Pointer’s remuneration. Under the Settlement Proposal, CAG proposed that it pay less than $2,000 per child’s place at various centres and that it provide “advance payments” of these lesser amounts, which White Pointer would be obliged to repay if the relevant centre did not actually open. CAG alleged, and the primary judge accepted, that White Pointer had agreed to the Settlement Proposal. However, the primary judge found that the Settlement Proposal was not binding as it was not supported by consideration.

66. On 4 June 2021, White Pointer commenced proceedings against the appellants in the Commercial List of the Equity Division of the Supreme Court, claiming amounts alleged to be outstanding under the Moncur Agreement.

67. The appellants resisted the claim on the following four bases:

1. White Pointer had not proved the Moncur Agreement as alleged;

2. Because White Pointer had breached the Property and Stock Agents Act 2002 (NSW) (the NSW Act), the appellants were not liable to White Pointer in respect of any of the childcare centres in NSW;

3. White Pointer was prohibited from bringing proceedings to recover the amounts outstanding in respect of the ACT sites by reason of s 23 of the Agents Act 2003 (ACT) (the ACT Act) as the services which White Pointer had provided through Mr Hedley were “real estate services” within the meaning of s 8(2) of the ACT Act, for which he was required to be, and was not, licensed; and

4. the Settlement Proposal was binding and, accordingly, CAG was liable only for a much lesser amount, which took into account a refund of $79,200 (including GST) which it had paid White Pointer in respect of the Hurstville site (which the Settlement Proposal provided White Pointer had to repay if no childcare centre opened at that site).

68. In their cross-summons filed on 10 June 2022 against White Pointer and Mr Hedley (the respondents), the appellants claimed to be entitled to recover the amount of $79,200 paid in respect of the Hurstville site either on the basis of the Moncur Agreement or, in the alternative, on the basis of the Settlement Proposal.

69. The appellants also claimed restitution of all amounts paid to White Pointer, alleging that the services which the respondents had provided to the appellants constituted work for which the respondents were required to have been licensed as real estate agents under the NSW Act (for the Hurstville site) and under the ACT Act (for the ACT sites). The appellants’ claims for restitution were founded on two bases:

1. that the amounts had been paid on the basis of the appellants’ mistaken belief that the respondents had all requisite licences and could enforce any claim for commission or fees against the appellants; and/or

2. that the Moncur Agreement was illegal, unenforceable or ineffectual and it was incongruous with public policy and the purpose of the relevant legislation that the respondents be permitted to retain any commission paid to White Pointer pursuant to that agreement.

70. The primary judge, in her Honour’s detailed and considered reasons, found:

1. the Moncur Agreement was valid, binding and enforceable (J [214], [216]-[218]);

2. neither White Pointer nor Mr Hedley was required to be licensed to source the ACT sites and, therefore, White Pointer was not prohibited from bringing proceedings to recover the amounts outstanding under the Moncur Agreement (J [311]);

3. the Settlement Proposal was not binding as CAG had not provided any consideration (J [248]);

4. the appellants were not entitled to restitution of the $79,200 paid in respect of the Hurstville site because:

1. the payments had been made pursuant to a contractual obligation and the contract had not been set aside or rendered void by statute (J [323]); and

2. the appellants had not discharged their onus of proving that they were mistaken when they made the payments or that the payments were made as a result of a mistaken belief (J [324]);

5. the appellants were not entitled to restitution of the amounts paid in respect of the ACT sites because:

1. the ACT Act did not require White Pointer to be licensed in respect of the services it provided to CAG in the ACT (J [311]); and

in any event,

2. the payments in respect of the ACT sites had been made pursuant to a contractual obligation and the contract had not been set aside or rendered void by statute (J [323]);

3. there was no incongruence between the public policy and the purpose of the ACT Act and the retention by White Pointer of monies already paid (J [320]);

4. as the Moncur Agreement was not rendered unenforceable per se by the ACT Act, there was no failure of consideration in respect of monies paid to White Pointer (J [320]); and

5. the appellants had not discharged their onus of proving that they were mistaken when they made the payments or that the payments were made as a result of a mistaken belief (J [321], [324]).

71. The appellants challenge each of these findings. They accepted, as they did in the Court below, that, if the Moncur Agreement was not enforceable, CAG was obliged to comply with the Settlement Proposal, even if this Court did not overturn the primary judge’s finding that the Settlement Proposal was unenforceable. Mr Walker SC, who appeared with Mr Reynolds on behalf of the appellants, indicated that the appellants would continue to rely on the Settlement Proposal to claim refunds in respect of monies already paid for sites where, ultimately, no childcare centre actually opened.

72. The evidence before this Court does not permit a conclusion to be drawn whether the Settlement Proposal would, ultimately, lead to future net payments to the respondents because of the uncertainty regarding centres which have not yet opened and which may never open, in respect of which the first tranche has been paid.

The grounds of appeal

73. The appellants appeal on a total of 11 grounds, which can conveniently be grouped as follows:

1. the primary judge erred in finding that the Moncur Agreement had been concluded and was binding, given the disparity between the particulars of the pleaded case and the primary judge’s finding (grounds 10-11);

2. the primary judge erred in finding that the Settlement Proposal was not binding because it lacked consideration (ground 1);

3. the primary judge erred in finding that White Pointer was not precluded from recovering its fees in respect of the ACT sites because it did not have a real estate licence under the ACT Act (grounds 2-5); and

4. the primary judge erred in finding that White Pointer was not obliged to repay monies which it had been paid (grounds 6-9), either:

1. because restitution was available given the terms of the NSWAct and ACT Act and given that there was a total failure of consideration in respect of the Moncur Agreement; or

2. on the basis that CAG and associated companies made those payments as a result of a mistaken belief (that White Pointer was not in breach of the NSW Act or the ACT Act).

74. I propose to address grounds 10, 11 and 1 first, which relate to the pleading of the Moncur Agreement and the Settlement Proposal, before turning to the effect of the NSW Act and the ACT Act.

Grounds 10-11: whether the Moncur Agreement was binding and enforceable

The pleading of the Moncur Agreement

75. In its amended Commercial List Statement filed on 10 April 2022, White Pointer alleged:

“10    In or around October 2017, Creative Academy entered into an agreement with White Pointer whereby, in return for White Pointer sourcing sites for child-care centres on behalf of Creative Academy or subsidiaries to be incorporated by Creative Academy (Future SPVs), Creative Academy or the Future SPVs (when incorporated) would pay White Pointer a fee (the Agreement).

Particulars

(a)    The Agreement was partly express and oral and partly to be implied from the circumstances in which it was entered into.

(b)    The Agreement consisted of a conversation between Mr Hedley on behalf of White Pointer and Mr Larcombe on behalf of Creative Academy.”

(Emphasis in italics added.)

76. White Pointer made an alternative allegation in similar terms in paragraph 10A of its amended Commercial List Statement that Mr Larcombe had entered into an agreement on behalf of or for the benefit of a company or companies to be registered (which was designed to cover the SPVs).

77. White Pointer alleged in paragraph 11 of its amended Commercial List Statement that the terms of the Moncur Agreement included the following:

“(a)    White Pointer would source sites for child-care centres (Centre(s)) for Creative Academy and/or the Future SPVs (Service);

(b)    in return for the Service, White Pointer would be paid a fee by Creative Academy and/or the Future SPVs (Total Fee);

(c)    the Total Fee was $2,000 (plus GST) per placement, per Centre as at the date of the opening of such Centre;

(d)    50% of the Total Fee was payable when the lease for a Centre was signed and development consent for the Centre had been obtained (if development consent had not already been given) (Initial Fee);

(e)    the remaining 50% of the Total Fee was payable when the Centre opened (Final Fee); and

(f)    in the event the number of placements changed between the time of the signing of the lease for a Centre and the opening of that Centre, then an adjustment was to be made in relation to the Final Fee to accord with paragraph 11(c) above.”

The evidence in support of the Moncur Agreement

78. Mr Hedley was the only witness to give evidence in the Court below. His evidence was to the effect that an agreement was reached at or around the time of a lunch at Bistro Moncur in Woollahra in October 2017 and that subsequent correspondence (which included invoices and payments of invoices) confirmed the existence of the agreement. When he was cross-examined by CAG’s trial counsel on whether he considered that there was a binding agreement following that lunch, Mr Hedley responded by saying that there was no doubt in his mind that there was such an agreement in the terms alleged (as set out in the pleading). Although an affidavit of Mr Larcombe, who was present at the lunch, had been served, it was not read and he was not called as a witness. The respondents had served an affidavit of Mr Dumbrell. That affidavit was not read and he was not called to give evidence.

Submissions made in the Court below about the Moncur Agreement

79. CAG’s trial counsel submitted that the agreement which was reached at the Bistro Moncur lunch was that Mr Hedley would source sites for childcare centres for CAG and could claim a fee, which CAG would pay if it considered it to be reasonable, and, if there had to be negotiations about the amount, such negotiations would take place as part of the arrangement between long-standing associates. Thus, the gist of the defence was that, whether or not fees and tranches had been discussed, there was no intention to create legal relations as the discussions gave rise to no more than a loose arrangement.

80. CAG’s trial counsel did not suggest in cross-examination to Mr Hedley that there had been no agreement at the Bistro Moncur lunch about the amounts being paid in two tranches.

81. In the Court below no submission was made to the effect that White Pointer ought be held to its particulars that the agreement was made as a consequence of a single conversation as distinct from more than one conversation. Had such a submission been made, it can be expected that White Pointer would have applied to amend the particulars to its amended Commercial List Statement and that the amendment would have been granted unless the appellants could establish irremediable prejudice.

The primary judge’s findings about the Moncur Agreement

82. The primary judge accepted that Mr Hedley told Mr Dumbrell (at the Woollahra Hotel but before the lunch at Bistro Moncur) that he was already sourcing sites for childcare centres on behalf of another business, Kids Club Childcare, for a fee of $2,000 per child’s place plus GST and would be happy to do the same for CAG (J [209]. Her Honour found that Mr Hedley’s actual recall of the conversation was “slight” (J [210]).

83. The primary judge found, in accordance with Mr Hedley’s evidence, that at the Bistro Moncur lunch he, Mr Larcombe and Mr Dumbrell had discussed the sourcing of childcare centres. Her Honour also had regard to what she described as “contemporaneous documents” and, in particular the following exchange of text messages between Mr Larcombe to Mr Dumbrell of 14 June 2018, which read as follows:

“Mr Larcombe:    Hilton has agreed mate

Mr Dumbrell:      Great work so fee for the 5%? How much cash?

Mr Larcombe:      Mate

It was always $2000 per kid.

So around $184k

Half at execution and DA

Other half once open”

(Emphasis added.)

84. The primary judge also found, contrary to Mr Hedley’s evidence but on the basis of Mr Larcombe’s text message of 14 June 2018, that the agreement that the fee would be paid in two tranches and not as a single payment was made after the Bistro Moncur lunch. It is plain from her Honour’s reasons that her Honour construed the reference to $2,000 per child as something which had been agreed before the agreement about the money being paid in two tranches (which appears to have been a concession by Mr Hedley and not something which he offered to Kids Club).

85. The primary judge concluded at J [214]:

“I am satisfied, however, that the plaintiff offered to ‘source’ childcare sites for the defendants for a fee. Mr Hedley proposed a fee of 5% (of what is not known) but the parties agreed on ‘a straight fee’ of $2,000 a place. Whether this happened at or after the lunch is unknown and immaterial. The defendants accepted this offer. The parties later agreed that the fee would be paid in two tranches.”

The alleged denial of procedural fairness

86. Mr Walker submitted that the primary judge’s finding that the figure of $2,000 had been agreed before there was any agreement about when it would be paid amounted to a denial of procedural fairness because the finding went beyond the case as pleaded and particularised. Mr Walker placed particular emphasis on the circumstance that the particulars, as they appeared in the Commercial List Statement as originally filed, relied on “conversations” but that the amended Commercial List Statement deleted the “s” to rely only on a single conversation which is said to have occurred “in or around October 2017” and not, for example, in June 2018 when Mr Larcombe sent his text to Mr Dumbrell. Mr Walker submitted, on this basis, that in so far as it alleged breach of the Moncur Agreement, White Pointer’s claim ought to have been dismissed.

Consideration

87. One of the purposes of a statement of claim (or in this case a Commercial List Statement) is to put a defendant and the court on notice of the way in which a plaintiff puts its claim and the material facts relied on in support of the causes of action pleaded. It must be sufficiently clear to permit the defendant to file a defence and, thereby, to indicate what matters are in issue. The pleadings define the issues and determine admissibility on the grounds of relevance: see generally, Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70; Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (Mason CJ and Gaudron J); [1990] HCA 11. Pleadings and particulars are an important aspect of procedural fairness in the context of adversarial litigation.

88. In the present case, the principal issue between the parties regarding the Moncur Agreement was whether there was a binding agreement between CAG and White Pointer as to the amount and timing of payment (as White Pointer contended) or whether there was a loose arrangement between them, the details of which would be worked out from time to time (as the appellants contended). Although Mr Hedley’s evidence was that both the amount and timing of the payments had been agreed at the Bistro Moncur lunch, the primary judge was entitled to prefer the inference to be drawn from Mr Larcombe’s text of 14 June 2018 (that the timing of payments was agreed after the agreement as to amount) over Mr Hedley’s recollection.

87. That the text was sent on 14 June 2018 did not mean that the agreement as to timing of payments was not concluded until June 2018; the text was consistent with there being an agreement as to the timing of payments after the lunch but still “in or around October 2017”.

88. Further, the timing of the payment or payments was a necessary integer in the concluding of an agreement. The Moncur Agreement, as pleaded, was only concluded when there was agreement as to that matter. In these circumstances, it is difficult to see how any denial of procedural fairness occurred as a result of the particularisation of a single conversation rather than two conversations. Although Mr Walker intimated that the decision not to call Mr Larcombe was the consequence of the reference to a single conversation in the particulars of the Moncur Agreement, the submission appeared to be no more than conjectural and may have been no more than a narration of the sequence of events. I do not accept that the minor disparity between the particular and the primary judge’s finding gave rise to any “practical injustice”: Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [38] (Gleeson CJ).

89. For the reasons given above, neither ground 10 nor ground 11 has been made out.

Ground 1: whether the Settlement Proposal was binding

92. The primary judge made detailed findings of fact in relation to the dealings between the parties following the making of the Moncur Agreement, none of which was in serious contest on appeal. The facts germane to ground 1 are summarised below.

The relevant facts

Mr Hedley’s understanding of his role

93. Mr Hedley deposed in his affidavit sworn 25 March 2022:

“I considered that White Pointer's main value to companies operating under the Wonderschool brand was that, because of the relationships I had and could establish due to my 27 years of experience as an agent and consultant, I was able to introduce and recommend them as tenants to landlords and/or their agents so that they could lease sites on which to operate child-care centres and establish the Wonderschool brand. In my view and based on my experience in the commercial property industry, without these relationships and the work done by White Pointer, through me, the Defendants, particularly in 2018 and 2019, had little chance of securing sites to operate child-care centres. This was particularly so for the sites that White Pointer, through me, sourced for the Defendants in the Australian Capital Territory.”

94. Mr Hedley accepted that he was not merely “sourcing” sites for CAG and its SPVs, but that he was also helping them to secure these sites by recommending them as tenants to the landlords/owners. He said:

“I put the tenant [CAG] forward to the [owner’s] agent in their most positive light. It was the agent on behalf of the landlord that decided whether or not to proceed with them.”

The Hurstville site

95. The first invoice issued by White Pointer was to “Wonderschool (Hurstville)” for the Hurstville site. “Wonderschool” is a business name owned by CAG. The invoice was issued on 9 November 2018 (J [61]), after the AFL had been entered into and the DA had been granted for 72 places in the childcare centre. The invoice claimed $79,200 (72 places x $2,000 x 50% plus GST) and was paid in full on 6 December 2018 (J [69]). Subsequently, in July 2020, CAG terminated the lease for the Hurstville site, with the result that the second tranche did not become payable as the proposed childcare centre did not open.

The ACT sites

96. Mr Hedley had a professional relationship with Guy Randell, a commercial real estate agent at Burgess Rawson in Canberra (J [15]). Mr Randell’s clients were owner/developers, some of whom were obtaining development consent and constructing or leasing sites, including for childcare centres. From 2018, Mr Randell contacted Mr Hedley, with a view to identifying potential tenancies for the childcare centres which Mr Randell’s clients were developing (J [15]). As time went on, the appellants had greater direct contact with Mr Randell and, accordingly, the benefit to them of Mr Hedley’s connections diminished.

97. In early March 2019, Mr Dumbrell suggested to Mr Larcombe that CAG’s shareholders’ agreement be changed to provide that if he found a site, the fee that CAG would otherwise pay Mr Hedley ought be added to Mr Dumbrell’s own equity (J [104]-[105]). The primary judge found at [106]:

“Mr Larcombe did not embrace Mr Dumbrell’s suggestion, replying on 3 March 2019: (emphasis added)

Put [Mr Hedley] to the side he is getting paid a fee of $2k per pax on all these deals we are doing and has no interest in the business think that's he asked original for 5% with no fee so that what he thought was fair and now gone to straight fee which is simpler for all of us.”

98. On 20 March 2019, White Pointer issued invoices in respect of sites at MacGregor and Red Hill in the ACT, as an AFL had been exchanged and a DA granted in respect of each (J [110]-[111]). The invoice for MacGregor claimed $165,000 (150 places x $2,000 x 50% plus GST) and the invoice for Red Hill claimed $132,000 (120 places x $2,000 x 50% plus GST).

99. In respect of each of the MacGregor and Red Hill invoices, CAG asked White Pointer to issue revised invoices for half of the amount of the first tranche, with an invoice for the remaining half of the first tranche to be rendered six weeks later. White Pointer was prepared to grant these indulgences. On 28 March 2019, Mr Hedley sent through invoices in Microsoft Word format for Mr Larcombe to amend. The revised invoice for MacGregor was for $82,500 and for Red Hill for $66,000 (being half of the first tranche). These changes were confirmed by email on 28 March 2019. Both revised invoices were paid on 29 March 2019. On 14 June 2019, CAG issued further invoices in respect of MacGregor for $75,000 and Red Hill for $60,000, both of which incorporated a 10% discount for prompt payment and which were paid on 18 June 2019 (J [146]).

100. White Pointer, through Mr Hedley, continued to source sites in the ACT for CAG, including in Conder, Dickson, Taylor, Throsby and Woden. When the AFL was entered into and the DA granted for each site, White Pointer rendered an invoice for the first tranche. For each of these sites, CAG incorporated a wholly owned subsidiary, which operated under the name “Wonderschool” as an SPV for each childcare centre. The second to sixth appellants are these SPVs. Their names indicate the site with which each is associated. At some point CAG asked White Pointer to address its invoices to the relevant SPV instead of rendering the invoice to CAG itself.

101. In respect of the Throsby site, White Pointer issued an invoice to Creative Academy (Throsby) Pty Ltd, dated 30 July 2019 in the sum of $121,000 for the first tranche (110 places x $2,000 x 50% plus GST) (the Throsby invoice). By email sent on 19 August 2019, Mr Larcombe asked Mr Hedley to revise the invoice to send it to the SPV for that site, Wonderschool (Throsby) Pty Ltd (the fifth defendant at first instance and the fifth appellant on the appeal). A revised invoice was sent.

102. On 5 August 2019, White Pointer issued an invoice dated 2 August 2019 to Creative Academy (Dickson) Pty Ltd for the Dickson site in the sum of $99,000 (90 places x $2,000 x 50% plus GST), being the first tranche. On 19 August 2019, Mr Mascitelli asked Mr Hedley to issue revised invoices for Wonderschool (Dickson) Pty Ltd, the SPV for the Dickson site (the third defendant at first instance and the third appellant on the appeal). Mr Larcombe arranged for a part-payment of $90,000 to be made on 19 August 2019.

103. On 9 September 2019 at 12.35pm, Mr Hedley sent CAG a reminder about the outstanding Throsby invoice which he described as being “a while overdue”. On 26 September 2019 at 10.19am, Mr Hedley emailed Mr Mascitelli about the Throsby invoice and said that “Simon” (Mr Larcombe) had confirmed that the invoice would be paid that day or the next.

104. At 11.46am that day Mr Larcombe sent an email to Mr Hedley in which he said:

“Had a look at payments to date and these ones aren’t in bag as yet.. close but no cigar

$72k Hurstville no lease no deal

$67.5k red hill and MacGregor meant to start construction next month and still no finance approval so conditional

When these are unconditional then payments will follow think that fair in both sides as per Dickson payment

So that cancels out Throsby invoice for the time being both being reasonable

Happy to catch up tomorrow and talk about it”.

105. Mr Hedley responded at 11.59am by email as follows:

“Throsby is unconditional and about to open and was invoiced 8 weeks ago.

Red Hill and Mcgregor are both DA approved and leases signed which is the basis of our agreement and the commencement of construction is imminent.

… Given Conder & Mitchell signing is also imminent (and unconditional) Taylor as well are we not able to defer payments on those instead? Also Googong, Woden and Bungendore …”

(Emphasis added by primary judge) (J [163])

106. Later that day (26 September 2019), Mr Larcombe proposed that half of the fee for the Throsby site, $60,500, be paid forthwith with the balance to be paid at a future date. The primary judge inferred that Mr Hedley agreed to this indulgence, CAG having paid the $60,500 on 26 September 2019 (J [242]).

107. On 4 December 2019, the lease for the Conder childcare centre commenced (J [166]). On 11 December 2019, Mr Hedley enquired of Mr Larcombe by email when he would be paid the outstanding balance of $60,500 for the first tranche for the Throsby site.

108. In or around February 2020, the Throsby childcare centre opened, which triggered CAG’s liability to make the payment of $121,000 as the second tranche for that site.

Mr Hedley’s urgent requests for payment of outstanding sums

109. On 5 February 2020, Mr Larcombe sent Mr Hedley a text message in which he informed him that funds would only be released to him when a bank loan to CAG had been approved (J [169]). On 6 February 2020, Mr Hedley responded to Mr Larcombe by text, saying that it was “not really the text [he] was expecting.”. Mr Hedley explained in his text that he really needed a statement from CAG as to what was owing and that he “was prepared to accept just $20k today on the basis that the rest came by the end of Feb.” Mr Hedley sent a further text saying:

“$20k is peanuts in the scheme of things but would keep me going and keep the wolves at bay for a few weeks as long as everything was sorted at the end of Feb or sooner when CbA [CAG’s bank loan] lands.”

110. In a subsequent text sent on the same day, Mr Hedley said in part:

“I just need that email with the fees and timeline please asap and if u can spare 20k until late feb then that would be great.

I have been waiting since December and it[‘]s now February.

Cheers”

111. On 7 February 2020 (the following day), Mr Larcombe sent Mr Hedley an email in which he said:

“As discussed $50k of your fees due will be paid in March

Apologies for the delay as always thankyou”

112. The following text messages were subsequently exchanged between the two men:

Mr Hedley:   “Mate your email is ridiculous.

You know it is

Why are u doing this when you know the fees are about 6 x that”

Mr Larcombe:   “Gee mate it was just an email saying you would get paid part in March what’s wrong with that?

How about you write the email and I’ll send it back to you.”

Mr Hedley:    “Ok I[’]ll send it now”

113. At 11.08am on 7 February 2020, Mr Hedley sent an email to Mr Larcombe in accordance with his request, in which he drafted an email for Mr Larcombe to send back to him, as follows:

“Hi Hilton

As per our most recent discussion I thought [I’d] send an email outlining what has been paid to date and what Is owing to you for deals completed and impending deals relating to Wonderschool.

These fees are based on paying the agreed rate of $2k per licensed place.

$1k upon lease signed, DA Approval and becoming unconditional, the remaining $1k to go towards equity in the business.

Please note that the shareholders agreement outlining equity splits are being drafted and will be sent short[l]y.

What has been paid to date is:

Dickson: $90k paid (nothing further owed other than equity)

Hurstville: $72k (nothing further owned other than equity)

Red Hill: $60k (a further $60k is owing once unconditional) + equity

M[ac]gregor: $75k (a further $75k is owing once unconditional) + equity

Throsby: $55k (a further $55k is owing once the additional places are approved)

Conder: $109k owing now + equity

We are awaiting further finance from the Commonwealth Bank which we are anticipating will be paid towards the end of February.

All outstanding amounts will be paid upon our finance being paid. We also expect Red Hill and McGregor to be unconditional within weeks.

Regards

Simon.”

114. It was common ground that the references in this draft email to “equity” related to discussions between Mr Hedley and Mr Larcombe as to the possibility that White Pointer would obtain equity in CAG instead of being paid for the second tranche. However, this possibility did not eventuate as the appellants never agreed to the respondents receiving any equity in their business.

115. Mr Larcombe responded by email at 12.18pm that day, saying, in part, that he “could redraft” that email. However, at 12.20pm, Mr Larcombe sent the email back to Mr Hedley without variation in accordance with the latter’s draft. At 12.27pm, Mr Hedley replied by email as follows:

“… You know they will all be unconditional.

Is Jim [Mascitelli]

Paying me $20k today.

Please?”

116. Further text messages were exchanged between Mr Hedley and Mr Larcombe on 19 February 2020 in which Mr Hedley asked if Mr Larcombe could “pay anything today please it[’]s now critical”. Mr Larcombe assured him that when “cba finance” came through and the Red Hill and MacGregor sites became “unconditional”, funds would be released. Mr Hedley continued to press for payment and asserted that both the MacGregor and Red Hill sites were “unconditional”.

117. The following day, 20 February 2020, Mr Hedley again raised the need for payment in text messages to Mr Larcombe. He said that he was “prepared to be creative with the overall amounts and equity” but that he “can[’]t go another week without a significant payment made.” Mr Larcombe responded that there was not much he could do. A further exchange of text messages ensued between them as follows:

Mr Hedley:    “There is a distinct mis-understanding of how I am supposed to be paid. This is why I have always wanted an agreement in writing, to avoid this. I am supposed to be paid on Lease Signing and DA approval. If things change after the fact, the fee is altered on the back end. That is the payment is split into two parts. You are the only one that tries to pay this way.

Not Guardian

Not Little Learning School

Not Kids Club

This is out of my hands now

…

You talk about unconditional yet I have not even paid for a centre that is trading and one that is about to open. Im truly sorry but you don’t seem to understand the way it works. Why would any agent in their right mind agree to deals being unconditional. Where the hell did you get that from.

Sorry but I think its all over”

Mr Larcombe:   “That’s an awful text threatening me mate I don’t know why you would do it”

(Emphasis added to indicate that the parties had agreed to an adjustment to the amount of the second tranche if there was a change to the number of child places.)

118. Mr Larcombe told Mr Hedley that he planned to meet with Mr Mascitelli on 10 March 2020 and that he wanted to meet with Mr Hedley beforehand to “sort out [their] ongoing relationship.” (J [178]). When the two men met, Mr Larcombe showed Mr Hedley a ledger of invoices that had been paid and told him that he would send him an agreement in writing as to what was owed when he had spoken to Mr Mascitelli. The two exchanged texts after their meeting.

119. Later that day, Mr Larcombe said in a text message to Mr Hedley:

“Probably absolute shit time to be hitting us for cash have a board meeting at 3 and will have doc over to you this morning.. keep your car keys handy :)”

120. After the board meeting, Mr Larcombe texted Mr Hedley and said:

“Ive got to send you a doc which I’ve got to amend take me 10min then agree and will send you $50k your already in advanced credit by $350k so get off my back.”

121. On 12 March 2020, the ACT Government approved the Conder site for 107 children (J [180]).

The Settlement Proposal

122. There is no challenge to the primary judge’s findings as to the communications which the appellants contended, at trial and on appeal, made the Settlement Proposal a binding agreement which superseded the Moncur Agreement (assuming that agreement to be binding). It is convenient to set out her Honour’s factual findings in full:

“181   On 14 March 2020, Mr Larcombe sent a lengthy email to Mr Hedley, which began:

This is the arrangement between yourself personally and White Pointer Investments and Creative Academy Group (and associated companies being Wonderschool associated companies). Advance payments have been made on below projects and if they don’t proceed for any reason funds are to be refunded.

182   This was the first time that it had been suggested that the plaintiff would refund fees. Mr Larcombe set out the current position on each of the childcare sites. In respect of the Hurstville site:

Wonderschool Hurstville proposed 72 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021

This has dragged out so $1,500 per place plus GST total fee

We paid $79,200 incl GST on the 6/12/18 in advance which shall be refunded if it doesn't proceed

Fee to pay 3 months after child care centre is open and trading with 72 pax being $39,600 incl GST

183   In respect of MacGregor:

Wonderschool MacGregor proposed 150 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021. This centre is to[o] big for the area and will likely never fill to 150 places so fee will be based on 120 places which is still to[o] big

This has dragged out so $1,500 per place total fee plus GST for 120 pax

We paid $82,500 incl GST on the 29/3/19 in advance which shall be refunded if it doesn't proceed

We paid $75,000 incl GST on the 18/6/19 in advance which shall be refunded if it doesn't proceed

Fee to pay 3 months after child care centre is open and trading with min 120 pax being $22,500 incl GST

184   In respect of Red Hill:

Wonderschool Red Hill proposed 120 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021

This has dragged out so $1,650 per place total fee plus GST for 120 pax

We paid $66,000 incl GST on the 29/3/19 in advance which shall be refunded if it doesn't proceed

We paid $66,000 incl GST on the 18/6/19 in advance which shall be refunded if it doesn't proceed

Fee to pay 3 months after child care centre is open and trading with min 120 pax being $85,800 incl GST

185   In respect of Dickson:

Wonderschool Dickson proposed 90 pax centre which looks like its proceeding although service approval will not be easy with CECA not liking level 1 child care centres. We are working our way through these issues likely open November/December 2020

No government guaranteed take out for any kids so fee $1,500 per place total fee plus GST for 90 pax

We paid $99,000 incl GST on the 19/8/19 in advance which shall be refunded if it doesn't proceed

Fee to pay 3 months after child care centre is open and trading with min 90 pax being $49,500 incl GST

186   In respect of Throsby:

Wonderschool Throsby proposed 110 pax centre which is open and have service approval for 80 pax.

201. As no part of the respondents’ primary claim included an amount in respect of Red Hill (as the first tranche was accepted as having been paid and the second tranche has not yet become payable), my view has no effect on the judgment sum, although it will preclude the respondents from recovering any amount in respect of the second tranche if a childcare centre at the Red Hill site ever opens.

The MacGregor site (J [293])

204. Mr Hedley obtained information from Mr Randell, which he provided to the appellants, that the site was for sale with 150 places. Mr Hedley told Mr Larcombe that 150 places was too many and that the site should be leased in stages or, if purchased, the number of places ought be reduced. Mr Hedley asked Mr Randell whether, if the appellants built a smaller centre with 90 places, a new DA would be required. CAG prepared an offer, which was provided to Mr Hedley, who then “forwarded” that offer to Mr Randell. At the same time, Mr Hedley suggested to the appellants that they check whether there were other obligations which they would be required to meet in respect of 150 places, notwithstanding that their offer was based on 120 places and passed on the ACT developer’s response and the appellant’s amended offer.

205. I consider that, in communicating the appellants’ offer to Mr Randell, which was based on 120 places, Mr Hedley was “negotiating with” the owners (through their agent, Mr Randell), on behalf of the appellants, to make or accept an offer to enter into a contract to sell land within the meaning of s 8(2)(b) of the ACT Act. Thus, I consider that her Honour’s findings of primary fact lead to the conclusion that the respondents are prohibited from bringing proceedings to recover the amount of commission claimed in respect of the MacGregor site.

206. As with Red Hill, no part of the respondents’ primary claim included an amount in respect of the MacGregor site (as the first tranche was accepted as having been paid and the second tranche has not yet become payable). Accordingly, my conclusion does not affect the judgment sum, although it will preclude the respondents from recovering any amount in respect of the second tranche if a childcare centre at the MacGregor site ever opens.

The Throsby site (J [132]-[140] and [294])

207. The findings of the primary judge with respect to the Throsby site show that, although Mr Hedley gave advice to the appellants, the communications between the appellants and the lessors (either on their own account or through Mr Randell) or with the developers of the site were conducted by the appellants themselves rather than through Mr Hedley. For example, the primary judge found at [132]:

“… On 13 May 2019, Mr Randell advised Mr Hedley and Mr Larcombe that he was instructed to receive offers on both Throsby sites. Mr Hedley provided his initial thoughts [to the appellants] on this opportunity, suggesting that the [appellants] would need to be happy with the design for the childcare centre being built and acquire a first right of refusal for the second site ‘That way u have 3 years to fill it.’”

208. The evidence does not establish that any communication was made by Mr Hedley to the owners or their agent (Mr Randell) in respect of the Throsby site. The appellants did not establish that the respondents were acting other than as introducers in respect of the Throsby site.

209. As the appellants have not established that the respondents were providing a “real estate agent service” within the meaning of s 8 of the ACT Act, the respondents are not prohibited by s 23 from bringing proceedings to recover their commission in respect of the Throsby site. As the centre was opened, the respondents are entitled to $115,500 (subject to other defences addressed below), as found by the primary judge. As referred to above, this agreed figure takes account of the reduction in child places from 110 (as specified in the DA) to 80 places, as was the number when the childcare centre opened before 14 March 2020.

The Taylor site (J [295])

210. Apart from communications between Mr Hedley and his principal (the appellants), the primary judge found that Mr Hedley did the following:

1. asked Mr Randell to tell him an appropriate market rate per child in the area and communicated this to the appellants (J [295]);

2. asked Mr Randell not to go to market as he was sure that his clients would take the site (J [90] and [295]); and

3. communicated the appellants’ initial offer to Mr Randell and, when informed by Mr Randell that the offer of $3,500 per child was “insufficient” (to stop the appellants from going to the market), conveyed that information to CAG and later received an amended offer from Mr Dumbrell, which Mr Hedley provided to Mr Randell (J [93]).

211. I consider that, in asking Mr Randell not to go to market, Mr Hedley was attempting to induce the owners (for whom Mr Randell acted) to make an offer to sell or lease the land to the appellants within the meaning of s 8(2)(b) of the ACT Act. In communicating the appellants’ initial and amended offers to Mr Randell, Mr Hedley was negotiating with the owners to induce them to lease the land to the appellants within the meaning of s 8(2)(b) of the ACT Act. Thus, I consider that her Honour’s findings of primary fact lead to the conclusion that the respondents are prohibited from bringing proceedings to recover the amount of commission claimed in respect of the Taylor site (Cf. J [307]).

212. The respondents’ primary claim included an amount of $121,000 in respect of the Taylor site (as the first tranche, which was due in March 2021, was not paid). Accordingly, this amount must be deducted from the judgment sum as the respondents were not entitled to bring proceedings to recover it. In so far as the respondents maintain a claim for a further $121,000 based on the circumstance that, since the judgment was ordered, the childcare centre at the Taylor site had opened, they are not entitled to make that claim. In conclusion, the effect of s 23 of the ACT Act is that the respondents are not entitled to bring proceedings for any of their fees in respect of the Taylor site.

The Conder site (J [296])

213. Apart from communications between Mr Hedley and the appellants, the primary judge found that Mr Hedley “explored [with Mr Randell] whether the owner would be open to a differently structured deal” (J [296]). However, the primary facts found by the primary judge do not indicate that there was any particular act or conduct of Mr Hedley with the owner or its agent (Mr Randell) which was designed to have that effect. Indeed, her Honour found, at [134], that Mr Hedley told Mr Larcombe and Mr Dumbrell that he “wished to explore Conder and believed they could get the deal they wanted” but then detailed the communications between Mr Larcombe (on behalf of the appellants) and Mr Randell (on behalf of the owner), which resulted in a lease and DA being granted on 12 March 2020 at the latest.

214. In these circumstances, the appellants have failed to prove that there was any act on the part of the respondents which fell within s 8(2)(b) of the ACT Act such that the respondents are prohibited by s 23 from recovering their commission in respect of the Conder site.

215. As the childcare centre at Conder opened at about the end of March 2020, the respondents are entitled to both tranches (totalling $235,400), from which a deduction of $47,650 is to be made (to take account of the payment attributed to that site), leaving an agreed balance of $187,750.

The Dickson site (J [151], [297])

216. The primary judge found that Mr Hedley saw an article in the Australian Financial Review on 4 July 2019 which indicated that Edhod, the proposed lessee of the Dickson site, was in financial trouble. He drew it to the attention of Mr Larcombe and Mr Randell, asking the latter to send it to the owners of the Dickson site (J [151]). Mr Hedley asked Mr Larcombe to draft an offer to Mr Randell but Mr Larcombe responded by email that he would leave it to Mr Hedley and Mr Randell to discuss.

217. Mr Randell responded by saying that it was a “tight lease” and there was “zero room for negotiation”. At 10.15am on 4 July 2019, Mr Hedley replied to Mr Randell:

“Ok thanks

Guy is it worth putting an offer under the owners nose as an alternative given all the bad press about Edhod...?

There is about to be more bad press, including staff not being paid their entitlements and suppliers not being paid, including shopfitters, builders and suppliers of play equiptment [sic].

Im flagging this because im guessing a government of any kind cant be seen be involved in any way in a company that operates in such a bad manner.

Imagine dickson opening as an edhod and a couple of samoans rocking up to repossess a see-saw with little johnny falling off and busting his knee in the process

Not a good look.

Thats just one of the things that will happen if you proceed with Edhod

Cheers”

218. After this communication, there is no evidence of Mr Hedley having any further communication about the Dickson site with Mr Randell. Mr Larcombe communicated with Mr Randell on and from 5 July 2019.

219. It can be inferred that Mr Hedley’s intention in sending the newspaper article about Edhod’s financial difficulties to Mr Randell was to disparage the appellants’ competitor for the Dickson site. This intention is made even clearer by the terms of the later email in which Mr Hedley spelled out the possible consequences for the owners of proceeding to contract with Edhod, rather than dealing with the appellants with respect to the Dickson site. As such, Mr Hedley’s intention was to discourage Mr Randell’s principals from proceeding with a lease to Edhod. That raised the opportunity for the appellants to put “an offer under the owners’ nose as an alternative”.

220. I consider that Mr Hedley’s communications with Mr Randell on 4 July 2019 constitute attempts to induce the owners (through Mr Randell) to make or accept an offer to sell or lease the Dickson site to the appellants within the meaning of s 8(2)(b) of the ACT Act. Accordingly, s 23 precluded White Pointer from recovering its commission in respect of the site.

221. The appellants paid the respondents $90,000 for the first tranche of the commission with respect to the Dickson site (it was agreed that no more was owed for the first tranche although the invoiced amount was $99,000), which was based on 90 places. The respondents claimed a further $59,400 in the proceedings, which took account of an agreed adjustment to reflect the circumstance that the centre at the Dickson site was only for 72 child places. Accordingly, the amount of $59,400 must be deducted from the judgment sum as the respondents were not entitled to bring proceedings to recover it.

The Woden site (J [298])

222. The primary judge summarised her findings regarding the Woden site as follows (J [298]):

“Finally, in respect of the Woden site, Mr Hedley enquired about this site from Mr Randell. The site was then ‘on hold’ for Kids Club. Notwithstanding this, Mr Hedley suggested that the defendants make an offer, which they submitted to Mr Randell. Mr Randell was not interested, but when Kids Club withdrew from the site, Mr Hedley suggested that the defendants secure Woden as soon as possible. Mr Randell provided Mr Hedley with the latest plans and offer. Mr Hedley inspected the site with Mr Randell and the defendants. Mr Larcombe provided Mr Randell with an offer for the site. Relations between the parties dissolved before the plaintiff had issued an invoice.”

223. The primary judge’s more detailed findings about the Woden site include that, when Mr Hedley enquired of Mr Randell on 16 April 2019 about the development of the Woden site, Mr Randell told him that the site was “on hold for Kids Club” (J [125]). However, Mr Randell also told him that “[i]f it gets a hint of going bad [Kids Club] is out” and that any offer would need to be “better than [$]4800 [per child’s place].” Mr Hedley passed on this information to the appellants and discussed what they should do. Mr Larcombe instructed Mr Hedley to “[p]ut [his] foot on it”, following which Mr Hedley texted Mr Randell that he was sending through an offer. On 23 April 2019, Mr Hedley contacted Mr Randell who told him that there was “nothing for Woden … there is a wait and see on this” (J [129]). On 29 April 2019, it was Mr Larcombe who communicated the appellants’ offer for the Woden site.

224. In May 2019, Mr Hedley discussed the Woden site further with Mr Larcombe and Mr Dumbrell (J [134]). In June 2019, Mr Randell told the appellants that Kids Club had withdrawn from the Woden site. Mr Randell provided Mr Hedley with the latest draft plans and offer in respect of the Woden site (J [140]). On 18 June 2019, Mr Larcombe inspected sites, including the Woden site (J [148]). On 15 July 2019, Mr Larcombe provided Mr Randell with an executed offer for the Woden site (J [153]).

225. By February 2021, the AFL for the Woden site was executed and the DA granted. Ultimately, the Woden Centre opened on 17 May 2021 with 120 places (J [199]).

226. The appellants have failed to prove that in respect of the Woden site the respondents provided a real estate agent service within the meaning of s 8(2) of the ACT Act. Although Mr Hedley communicated on occasions with Mr Randell, none of these communications amounted to negotiations or attempts to induce the owners to make an offer to sell or lease the Woden site. The appellants have made no payments in respect of the Woden site. Subject to other defences raised by the appellants (which will be addressed below), the sum of $264,000 remains outstanding, as the primary judge found.

Summary of the consequences of grounds 2-5 having been made out in part

227. For the reasons given above, the judgment sum needs to be reduced to take account of the reductions for the Dickson and Taylor sites. The effect on the judgment of these findings on appeal is as follows:

Site	Amount awarded under primary judgment ($)	Amount of judgment not enforceable (by operation of the ACT Act) ($)	Adjusted judgment sum ($)
Hurstville	0	N/A	0
Conder	187,750	0	187,750
Dickson	59,400	59,400	0
Taylor	121,000	121,000	0
Throsby	115,500	0	115,500
Woden	264,000	0	264,000
MacGregor	0	N/A	0
Red Hill	0	N/A	0
TOTAL	747,650	(180,400)	567,250

Grounds 6-9: whether the appellants were entitled to restitution from White Pointer of monies paid

228. Ultimately, there were two bases for the appellants’ claim for the restitution of monies it had paid to White Pointer in respect of the ACT sites and the Hurstville site: first, as monies paid for which there had been a total failure of consideration (grounds 6 and 9); and second, as monies paid under a mistake (grounds 7 and 8). As to the total failure of consideration, it is said that the Moncur Agreement was illegal, contrary to public policy, unenforceable and inherently ineffectual, resulting in that total failure of consideration (J [313]-[314]). As to mistake, it was said that the appellants believed or assumed that White Pointer held the necessary licences legally to provide its services, was entitled to charge for its services, and that the oral contract was legal.

Ground 6: alleged unenforceability in respect of the Hurstville site (ss 8(2) and 9(2) of the NSW Act)

229. Because of the primary judge’s finding that the respondents were not in breach of the ACT Act, it was necessary for her Honour to address only the payment of $79,200 made in respect of the Hurstville site (in respect of which the respondents accepted that they were in breach of the NSW Act because they were not licenced). Her Honour, after addressing the relevant authorities, found that the matter was to be resolved as a question of statutory construction and referred to Mason J’s observation in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 429; [1978] HCA 42 as follows:

“There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished.”

230. The primary judge said:

“316   As Gageler J explained more fully in Gnych at [63]-[75], a strong presumption of unenforceability has given way to approaching the matter by proper construction of the statute. ‘An agreement which is not denied legal operation by statutory force may still be unenforceable … by operation of the common law by reference to considerations of public policy. The cases in which that might occur, however, must now be closely confined’: at [70]. Further, at [73]:

It is not the function of the common law to seek to improve on a regulatory scheme by supplementing the statutory sanctions for its breach. If a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice.

317   Considerations of public policy may nonetheless dictate that the contract is unenforceable. Relevant considerations were expounded by Gageler J at [75]:

A court examining the application of that consideration of public policy to the enforcement of an agreement made in breach of a statutory prohibition will examine the intention of a person in entering into the agreement and in seeking to enforce the agreement. The court will recognise that, ‘whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken’. The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute seeks to advance and the means which the statute has adopted to achieve that end [and whether] the consequence of withholding the remedy [are] proportionate to the seriousness of the illegality and not incongruous with the statutory scheme. The moulding of an equitable remedy, if sought, might involve other considerations and permit of greater flexibility.”

231. The primary judge concluded that the appellants were not entitled to restitution on the ground that there was a total failure of consideration (J [320]):

“Here, the agreement was with a sophisticated client, with ready access to solicitors. The defendants received a benefit, which they acknowledged at the time. Whilst the legislation prevents the agent from using the processes of the Court to obtain payment on the remaining monies owed under the agreement, I do not consider it to be incongruent with public policy and the purpose of the Act to permit the agent to retain the monies already paid. Where breach of the legislation does not render the oral contract unenforceable per se, it follows that there is no failure of consideration for payments already made, which would qualify as a vitiating factor justifying restitution.” (Emphasis added.)

232. The appellants accepted that the primary judge was correct to approach this question as one of statutory construction. However, they submitted that the primary judge erred in not finding that restitution was justified in the present case and that her Honour ought to have found that it was incongruent with public policy and the purpose of the legislation to permit an unlicensed agent to retain monies already paid (for services which required their provider to be licensed) in circumstances where the agent was not entitled to bring proceedings to recover money owed under the contract. The appellants further submitted that it would be incongruous if an unlicensed agent could retain a fee paid for work for which the agent was required to be licensed when the situation might be the result of “accident, luck or consumer ignorance”.

233. Sections 8(2) and 9(2) make clear that an unlicensed agent, whether a natural person or a corporation, is not entitled to bring any proceeding to recover any commission, fee, gain or reward for any service performed by the person or corporation, unless he or she or the corporation was required to be and was the holder of a relevant licence. Thus, an unlicensed agent does not have the option of suing on a claim for quantum meruit since this would be prohibited by ss 8(2) and 9(2). However, the NSW Act does not provide that monies which have already been paid are recoverable.

232. The legislature, in enacting ss 8(2) and 9(2), can be taken to have made the choice to deprive an unlicensed agent of access to a court or tribunal to enforce payment of fees otherwise payable under a contract but not to have taken the extra step of requiring the unlicensed agent to disgorge or repay monies already received for work which required a licence.

233. Other legislative choices were available, as is demonstrated by the following examples taken from the ACT Act, the NSW Act and the Builders Licensing Act 1971 (NSW).

234. Sections 99 and 100 of the ACT Act (summarised above) provide that a licensed agent is not entitled to commission for services provided in relation to non-commercial or rural land unless there is a written agreement setting out the integers of such commission and estimating their amount. To similar effect, s 55 of the NSW Act provides that a licensee is not entitled to commission or expenses unless the services were performed pursuant to a written contract signed by the parties which complies with the regulations.

235. Section 45 of the Builders Licensing Act provided that a contract under which a licensed builder undertakes to perform building work was not enforceable against the other party unless the contract was in writing, signed by each of the parties and specified the building work to be undertaken. In Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5, the appellant builder sued the respondent client in quantum meruit as the contract, being oral, was not enforceable by reason of s 45 of the Builders Licensing Act. The Court (Mason, Wilson, Deane and Dawson JJ, Brennan J contra) held that s 45 did not prevent an action for the value of work done and materials supplied under an oral contract since this did not depend on the existence of an implied contract but, rather, on the basis of the principles of restitution.

236. It is not for a court to gainsay such a legislative choice by “topping” up the extent to which the legislative purpose of protection of the public is fulfilled by the legislation: see Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47 at [5] (Gleeson CJ) and Gnych v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 at [73] (Gageler J, extracted above). For these reasons, it was not incongruent with public policy, viewed through the lens of the statute, or the purpose of the NSW Act for the Court to refuse to order White Pointer to repay the $79,200 already paid by the appellants in respect of the Hurstville site.

Ground 6: alleged unenforceability with respect to the ACT sites (s 23 of the ACT Act)

239. As I have found above, White Pointer was required to be licenced in respect of the services it provided for the Taylor, Dickson, Red Hill and MacGregor sites. The appellants seek restitution of amounts they paid to the respondents referable to these sites on a similar basis to the Hurstville site, as addressed above.

240. Section 23 of the ACT Act makes it clear that an unlicensed agent is not entitled to bring a proceeding to recover commission, fee or reward in respect of work for which the agent was required to be licensed, whatever the cause of action. Thus, an unlicensed agent does not have the option of suing on a claim for quantum meruit since this would be prohibited by s 23 of the ACT Act. However, it is telling that as in the NSW Act, the ACT Act does not provide that monies which have already been paid are recoverable.

241. Therefore, for the reasons given above in relation to the Hurstville site, restitution is not available on the basis that the Moncur Agreement is unenforceable in respect of monies paid for the ACT sites.

242. The appellants have not established any error in the primary judge’s analysis. For the reasons above, grounds 6a, b and d have not been made out.

Ground 6: alleged illegality of the Moncur Agreement

243. The appellants allege in ground 6c that the primary judge erred in failing to find that White Pointer had contravened s 9 of the NSW Act and s 18 of the ACT Act by not being licensed. This ground overlaps with grounds 2-5, which have been addressed above, and has been made out in part (in respect of the Taylor, Dickson, Red Hill and MacGregor sites and the Hurstville site), for the reasons given above.

244. I am not persuaded that the contravention of these provisions results in the Moncur Agreement being void for illegality. In these circumstances the appellant has not established that it is entitled to restitution on that basis. For these reasons ground 6c has not been made out.

Ground 9: whether appellants entitled to restitution on the basis that the Moncur Agreement was unenforceable or illegal

245. Ground 9 alleges that the primary judge was in error in failing to find that the appellants were entitled to restitution of the monies they had paid White Pointer on the basis that the Moncur Agreement was unenforceable or illegal. For the reasons given above with respect to ground 6, this ground has not been made out.

Ground 8: whether White Pointer was obliged to repay monies because the appellants had paid them in the mistaken belief that White Pointer could recover them

246. Ground 8 alleges:

“The court below erred in failing to find that the Appellants made payments to the First Respondent in respect of the Hurstville and ACT sites pursuant to a mistaken belief that there was an enforceable obligation to pay those amounts (J[324]). This was the only available inference, or the inference that ought to have been drawn, based on the evidence before the Court and its own finding at J[240] that there was no bona fide dispute as to the First Appellant's obligation to pay $2,000 per approved child placement.” (Emphasis added.)

247. The primary judge found, at [324], that the appellants, in order to prove that they had made payments under a mistaken belief that White Pointer was entitled to enforce its claim for payment, were required to prove that they were mistaken as to whether White Pointer needed, and had, a real estate agent licence and that such a mistake was causative of payment. Her Honour was not satisfied that the appellants were relevantly mistaken or that any mistake was causative of the payment of the Hurstville fee. The primary judge referred to the absence of any mention of the issue in the contemporaneous documents as well as the circumstance that Mr Larcombe’s failure to give evidence led to the inference that his evidence would not have assisted the appellants’ case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.

248. The appellants accepted that the primary judge had stated the principle correctly but contended that her Honour had erred in failing to find that the appellants had discharged their onus of proof on this matter. Mr Walker submitted that the “only available inference” was that the appellants had paid in the mistaken belief that White Pointer could have enforced a right to payment. Mr Walker asked rhetorically: why else would the appellants have paid White Pointer except because they believed that they had to?

249. In my view, other explanations arise from the evidence. The appellants had a strong commercial interest in using the respondents’ services and obtaining the associated benefit from the connections which the respondents enjoyed in the market for sites for childcare centres. CAG was a new entrant to the childcare industry (J [216]). Without the respondents’ connections, the appellants would have been unlikely to secure any of the sites which they ultimately leased and developed. It cannot be inferred that the appellants cared whether the respondents were, or were required to be, licensed since all the appellants either wanted or needed from the respondents was their connections, a circumstance which may explain why there is no evidence that the respondents’ licence status was ever mentioned. The appellants, as the evidence in respect of later sites established, were commercially sophisticated and capable of negotiating on their own account and communicating with Mr Randell, without the respondents’ having any further involvement beyond introducing them to the owners of the sites.

250. In these circumstances, even if the appellants were in a state of ignorance (or were actually mistaken), they still needed to prove causation. In other words, the appellants were required to prove that they would not have paid the respondents if they had known, at the time of payment, that the respondents were required to be licensed, were not licensed and could not bring proceedings for their outstanding fees: Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 411 (Lord Hope of Craighead). Apart from the payment of $47,650 on 16 March 2020 (which the appellants endeavoured to present as consideration for the Settlement Proposal), the last payment made by the appellants to White Pointer was made on 26 September 2019. At that time, the appellants were still using the respondents’ contacts to connect them with owners of potential sites. I do not accept that they would have jeopardised their future business by not paying the respondents on the grounds that the respondents were required to be, and were not, relevantly licensed.

251. The appellants have failed to establish any error in the primary judge’s finding at J [324]. Accordingly, ground 8 has not been made out.

Ground 7: whether the contract needed to be set aside for mistake or illegality before the appellants could seek restitution on the grounds of mistake

252. This ground need not be addressed as the appellants have, for the reasons given with respect to ground 8, failed to prove that they were actually mistaken. The alleged illegality has been addressed above in the consideration of grounds 6 and 9.

Conclusion

253. For the reasons given above, the appeal ought be allowed in part to reduce the judgment sum to reflect the appellants’ partial success regarding amounts which were otherwise owing with respect to the Taylor site ($121,000) and the Dickson site ($59,400) and which were included in the judgment sum ordered by the primary judge. Although the childcare centre at the Taylor site has now opened, White Pointer is not entitled to the second tranche of $121,000 because of its conduct falling within s 8(2)(b) of the ACT Act because it is prohibited by s 23 of the ACT Act from recovering its commission in a proceeding.

Costs

254. The parties have not been heard on costs. There does not appear to be any reason why the reduction in the judgment sum ought affect the costs in the Court below. The appellants have had only modest success in this Court and have failed on most of their grounds. In these circumstances I consider that they ought be ordered to pay 75% of the respondents’ costs of the appeal. If any party seeks a different order, an application ought be made pursuant to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW).

Proposed orders

255. For the reasons given above I propose the following orders:

1. Allow the appeal in part.

2. Set aside the judgment in order (1) of the orders made by Rees J on 25 July 2023 and, in lieu thereof order judgment against the first defendant in the amount of $567,250, together with interest under s 100 of the Civil Procedure Act 2005 (NSW).

3. Otherwise dismiss the appeal.

4. Order the appellants to pay 75% of the respondents’ costs of the appeal.

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Decision last updated: 31 May 2024