Dalton v Greatbatch No. Scgrg-00-647

DALTON V GREATBATCH & ANOR

[2000] SASC 387

Civil

1................ LANDER J....... This is an appeal, pursuant to s 38(2) of the Commercial Arbitration Act 1986, (the Act) from an award of an arbitrator.

The appellant sought leave to appeal pursuant to s 38(4), of the Act and I granted leave to appeal pursuant to s 38(5) of the Act, being satisfied that the determination of the question of law concerned on the appeal could substantially affect the rights of one or more of the parties to the arbitration agreement and that there was a manifest error of law on the face of the award. Leave to appeal was granted unconditionally.
Both the appellant and the respondent are registered real estate agents. On 20 June 1998 the appellant sold his business, known as Weston Raine & Horne Nairne, including all plant and equipment to the respondent for $10,000, the respondent to take possession on 1 July 1998. It was a condition of the sale agreement that the appellant would become an employee of the respondent.
The sale and purchase agreement provided in Clause 4 of the agreement for conditions of commission payable by the respondent to the appellant after 1 July 1998. Commission was to be paid to the appellant upon the following basis namely:
(1)... 25 per cent commission for a listing listed by the employee and sold by the Principal;
(2)50 per cent for a listing listed by the employee and sold by the employee; and
(3)... 25 per cent for a sale made by the employee but listed by the Principal.
It was a further term of the conditions of employment of the appellant that:
“Every assistance shall be given by the respondent to the appellant to encourage ... sales.”
Prior to the sale of the appellant’s business to the respondent Ms Dianne Barron-Davis appointed the appellant as sole agent for the sale of a property in Stirling known as Olivet House.
The Sales Agency Agreement was entered into on 24 November 1997 and provided inter alia that Ms Barron-Davis appointed the appellant in the name of his business as the vendor’s agent to effect a sale of the property at the price specified in the schedule to the Sales Agency Agreement or at such other price as the vendor after consultation with the agent might nominate. In the event that the agent effected a sale of the property Ms Barron-Davis had to pay the professional fee immediately upon the completion of the sale.
Clause 6.2 of the Sales Agency Agreement provided:
“For the purpose of this Agreement, the Agent is deemed to have effected a sale of a Property if either (sic):
6.2.1during the continuance of the agency the Agent introduces or otherwise procures a Vendor or a Purchaser; and
6.2.2the Vendor enters into a contract (conditional or unconditional and including an option to purchase) for the sale of the property to that Purchaser within six calendar months of the introduction or procurement of that Purchaser by the Agent; and
6.2.3the Vendor completes the sale of the Property to that purchaser (or the Purchaser’s assignee or nominee) as substantially the transaction contemplated by the contract referred to in clause 6.2.2; or if
6.2.4during the Term of the sole agency the Vendor enters into a contract to effect a sale of the Property whether through the agency of the Agent or otherwise.”
In July 1998 the appellant received an enquiry from a Mr Tay who expressed an interest in the purchase of Olivet House. The Sales Agency Agreement, previously referred to, was amended but only for the purpose of increasing the sale price to $1.9 million.
In December 1998 a contract for the sale and purchase of Olivet House was executed by Mr and Mrs Tay but not executed by Ms Barron-Davis. In January 1999 a further contract for the sale and purchase of Olivet House was executed by Mr and Mrs Tay but again not executed by Ms Barron-Davis.
On 4 May 1999, in a letter received by the appellant on 18 June 1999, Ms Barron-Davis terminated the Sales Agency Agreement. On 24 June 1999 Ms Barron-Davis entered into a further agreement with the appellant which was evidenced by a Deed dated 24 June 1999. The recitals to that date acknowledged that the vendor and the appellant had entered into a Sales Agreement on 4 December 1997 in respect of the sale of Olivet House; that the Sales Agency Agreement had been terminated by way of a letter dated 4 May 1999 received by the appellant on 18 June 1999; that the appellant was entering into final negotiations with Mr and Mrs Tay for the purchase of Olivet House; that Mr and Mrs Tay were introduced to Ms Barron-Davis by the appellant during the period of the Sales Agency Agreement; that Ms Barron-Davis wished the deposit payable by Mr and Mrs Tay to be paid directly to herself rather than the appellant’s trust account; and that the parties had agreed as to payment of the professional fee and wished to record the agreement in writing.
The Deed then provided that, on the date of settlement, Ms Barron-Davis should pay to the appellant the sum of $40,000 which sum the appellant would accept in full satisfaction of Ms Barron-Davis’s obligations as the payment of professional fees under the Sales Agency Agreement.
On 28 June 1999 a contract for the sale and purchase of Olivet House was executed by Ms Barron-Davis as vendor and Aust Asia Finance Corporation Pty Ltd, a company under the control of Mr and Mrs Tay, as purchaser.
The respondent witnessed the purchasers’ execution of the agreement. The appellant did not physically take the contract to the purchasers and witness the purchasers’ execution of the agreement because the respondent suffers from agoraphobia and was unable to travel to Adelaide. He therefore asked the respondent to assist him by taking the contract to Mr and Mrs Tay and having them sign it. The respondent obliged in that regard. Whilst attending on the purchasers the respondent contacted the appellant on three occasions seeking clarification of the details of the contract. That information was provided by the appellant to the respondent.
In due course the respondent paid $100,000 to the trust account of the respondent’s business, $40,000 of which represented the commission payable by Ms Barron-Davis on the sale of the property. In due course the respondent paid the sum of $10,000 to the appellant as commission and retained $30,000 for himself.
A dispute arose between the appellant and respondent as to the division of the $40,000 commission.
The appellant contended that he was entitled to $20,000 because he had listed the property and sold the property and in accordance with paragraph 4(b) of the agreement of 20 June 1998 he was therefore entitled to 50 per cent of the commission.
On the other hand it was the respondent’s contention that, whilst the appellant had listed the property, it was the respondent who had sold it and the appellant was therefore only entitled to 25 per cent of the $40,000 in accordance with paragraph 4(a) of the agreement of 20 June 1998.
The agreement of 20 June 1998 contains the following clause:
“7..... A client register will be maintained at all times and kept in an accessible place for the employee. All clients registered in the client register are the sole qualification for commission and in the event of a dispute, the sole arbitrator in the dispute will be the chief franchisor for the Weston Raine & Horne Group Mr Chris Weston or his nominee.”
It is not entirely clear whether the clause has the effect of submitting to arbitration any dispute about the client register and the commission payable thereon or any dispute about the commission itself and the amount of that commission. However I will take the most benevolent view and assume that the clause operated to submit this dispute to arbitration.
Apparently the respondent, without the knowledge of the appellant, called upon the second defendant, Mr Christopher Weston, to arbitrate the dispute.
It is the appellant’s uncontradicted evidence that the respondent requested Mr Weston to arbitrate the commission dispute. The appellant had no knowledge of the request until the respondent told him that he had spoken to Mr Weston and that the appellant was only entitled to $10,000 and no more. The respondent gave the appellant a cheque for $10,000 and at that time the appellant said: “I’ll complain. ” The respondent said: “I couldn’t care less.”
The appellant then contacted Mr Weston and complained. Mr Weston said that the appellant should: “Come in for a chat.”
Subsequently the appellant saw Mr Weston. Mr Weston did not at any time meet with the appellant and respondent jointly but apparently met with each separately. In any event when they met the appellant produced to him the Deed executed by Ms Barron-Davis and the appellant.
Mr Weston said: “This puts an entirely different light on things.”
He still heard nothing from either Mr Weston or the respondent so he obtained legal advice. On 19 October 1999 he instructed his solicitors to commence proceedings in the Magistrates Court at Mount Barker seeking payment of the $10,000 representing the balance of his claim for commission against the respondent.
The respondent filed a Defence claiming that the matter had been submitted to arbitration and that the arbitrator had made an award in favour of the respondent.
When the matter came on for hearing before a Magistrate at Mount Barker on 11 April 1000 Mr Weston was in the Court, at least for part of the proceedings. The respondent took as a preliminary issue the point that the matter had been submitted to arbitration and an award made. The matter was adjourned to allow Mr Weston to provide copies of all documents he had relevant to the alleged arbitration and for argument.
Between 12 April 2000 and 17 May 2000 the appellant’s solicitors sought all documents from Mr Weston. The appellant’s solicitors wrote three letters, dated 12 April 2000, 20 April 2000 and 2 May 2000 before they received a reply from Mr Weston advising that he was “now looking into this matter and searching for the appropriate papers.”
On 17 May 2000 Mr Weston wrote:
“I can confirm that the documents to which you refer in your letters dated 12th April & 20th April were in a file under my desk for many months in the latter part of last year. However I regretfully have to inform you that having spent 3 hours (personally) searching my office I have been unable to locate the said documents. I viewed and kept a copy of these documents, as arbitrated, when Henry Dalton and Phillip Greatbatch came into my office to discuss and present their separate cases on this matter.”
Not surprisingly the appellant’s solicitors were not satisfied with the arbitrator’s reply.
They therefore sent to Mr Weston the agreement between the appellant and respondent of 20 June 1998, a letter from the appellant’s previous solicitors and replies from the respondent’s solicitors.
They then asked Mr Weston a number of questions.
I will set out only the last seven which are more relevant for the purpose of this appeal:
“23    Did you communicate your decision to both parties?
24     How did you communicate your decision to both parties?
25     When was your decision communicated to both parties?
26     Did you make a final determination of the dispute?
27     Did you provide a final determination in written form?
28     Where is your final determination?
29     Did you forward a final determination to both parties?”
They wrote in that letter that they were not in possession of any determination from Mr Weston. They brought to his attention s 29 of the Act.
That section provides:
“29(1)... Unless otherwise agreed in writing by the parties to the arbitration agreement, the arbitrator or umpire shall -
(a)make the award in writing;
(b)sign the award;
and
(c)include in the award a statement of the reasons for making the award.
(2)Where an arbitrator or umpire makes the award otherwise and in writing, the arbitrator or umpire shall, upon request by a party within seven days after the making of the award, give to the party a statement in writing signed by the arbitrator or umpire of the date, the terms of the award and the reasons for making the award.”
The appellant’s solicitors sought an answer by 24 May 2000; a request which to me does not appear to be unreasonable having regard to the proceedings that were then pending in the Magistrates Court.
They received a reply on 24 May 2000:
“In response to your letter dated 12th May and further to my letter dated 10th May.
Again I repeat, I have been asked to appear in court at Mt Barker at 0930 hours on 14th June. These issues are subject to court proceedings and it is therefore inappropriate to raise the said issues outside the proper due process of the court.
With all good intentions.
Yours faithfully”
Neither the appellant nor his solicitors ever received a copy of an award prior to 14 June 2000 when the preliminary argument before the Magistrate was heard.
On 20 June 2000 the Magistrate concluded that on the material before him proceedings brought by the appellant were incompetent in that the matter had already been submitted to and arbitrated upon.
Some days after the Magistrate’s decision the appellant received a document entitled:
“Written Reasons For Arbitration Decision Of Chris Weston In The Matter Of A Commission Dispute (“The Dispute”) In About September 1999 Between Phillip Greatbatch (“Phillip”) And Henry Dalton (“Henry”) Involving The Olivet House Sale.” The document is dated 29 June 2000 and apparently signed by Mr Weston.
In that document Mr Weston asserts that he arbitrated in the dispute in September 1999 at the request of the respondent although the request to arbitrate was agreed to by the appellant.
He said that he was provided with documentation which he has since mislaid. Each of the appellant and respondent, he said, gave him their respective versions of fact. He recited some of the facts and then said that following his perusal of the documentation and his separate meetings with each of the appellant and respondent he concluded that the respondent’s involvement was the effective cause of the eventual sale and that the appellant should not be entitled to his claim for 50 per cent commission.
He claimed, contrary to the sworn evidence of the appellant, that shortly after arriving at that conclusion he reported his decision to each of the appellant and respondent.
In my opinion, there was no evidence upon which the arbitrator could have arrived at a conclusion that the respondent had played any part in the sale of Olivet House to Mr and Mrs Tay.
In my opinion, on the facts as presented to this Court which are, as I say, not contradicted by the respondent or the arbitrator the sale of Olivet House was effected solely by the efforts of the appellant. True it is that the respondent witnessed the purchasers’ execution of the sale and purchase agreement but that, in my opinion, does not contradict the appellant’s claim that he was the person who brought about the sale of the property to the purchasers. To put it another way it was a listing which was “sold” by the appellant.
In the circumstances surrounding the sale of this property “sold” has the meaning of introducing the vendor and purchaser and effecting a binding contract for sale and purchase of the property. That is made clear by the Sales Agency Agreement itself.
In my opinion, the appellant was solely responsible for the transaction which was entered into by Ms Barron-Davis and the company controlled by Mr and Mrs Tay.
The Deed executed on 24 June 1999 was that authority for the appellant to sell the property as the vendor’s agent. The respondent had no separate authority: s 6(2) Land Agents Act 1994. The commission was paid in accordance with the terms of the Deed. The respondent received the deposit of $100,000 including that part which represented the commission in accordance with the terms of the Deed. The property was sold four days later. The only available inference is that Ms Barron-Davis appointed the appellant as her agent for the purpose of selling the property to Mr and Mrs Tay. Indeed Recital D says that the appellant is:
“Entering into final negotiations with Mr Alan Tay and his wife of Old Mt Barker Road Stirling as the purchaser of “Olivet House” (“the contract”).”
In those circumstances there is an error on the face of the award, namely a complete absence of evidence to support the award.
It is plain, in my opinion, that the appellant is entitled to 50 per cent of the commission paid by Ms Barron-Davis in respect of the sale of Olivet House. He has thus far received only $10,000 or 25 per cent of the commission.
The appellant has already been put to very great expense in seeking to recover the further $10,000 as yet unpaid. He has been put to the expense of proceedings in the Magistrates Court and proceedings in this Court by way of appeal from the decision of the arbitrator.
Ordinarily the court would be reluctant to vary the award where there would be any scope for the exercise of the arbitrator’s judgment in relation to the arbitration. However here it appears to me that justice would be done by this Court making an order varying the award so as to order that the respondent pay to the appellant 50 per cent of the commission paid by Ms Barron-Davis in respect of the sale of Olivet House.
That order will have the effect as if the award had been made by the arbitrator; s 38(7).
There will be an order accordingly.

[2000] SASC 387

24 November 2000