Ghassemi-Far v Geo Kennedy Pty Ltd No. DCCIV-99-95 Judgment No. D94

GHASSEMI-FAR v. GEO. KENNEDY PTY. LTD.
[1999] SADC 94

Judge Burnett

Civil

This is an application for review of a judgment delivered by Mr. Hiskey S.M. on 4th January, 1999. The action in which the judgment was pronounced was a dispute between the Plaintiff (a licensed land agent) and the Defendant (a vendor of a house property) over commission.
The claim and judgment were for an amount less than $5,000 and the matter was, therefore, a minor civil action pursuant to the provisions of the Magistrates Court Act, 1991 (as amended) (“the Act”). Section 38 of the Act sets forth what I might call special provisions which are applicable to the trial of a minor civil action and I will refer to those provisions again later.
At the trial of the action, the parties appeared in person. Evidence was taken from both sides at considerable length and the learned Magistrate took time to consider the result. On 4th January, 1999, he entered the judgment and gave careful written reasons for his decision. He awarded the Plaintiff the sum of $4,000 plus costs on summons and $150 for his attendances before the Court. The Defendant was dissatisfied with the result and filed an application for review of the decision. I will refer to him hereafter as the Applicant and the Plaintiff as the Respondent. The application contained seven grounds of complaint but, at the hearing before me, only one ground (number 5) was pressed, the others were abandoned.
At the hearing before me, both parties were represented by counsel.
Although the Applicant did not accept the learned Magistrate’s findings of fact, he did not challenge them before me and it is, therefore, useful to recite some of them to provide the background to the dispute:-
“1..... Upon the 26th day of August 1997 the vendor signed a sales agency agreement with the plaintiff using the standard form of retainer prepared by the Society of Auctioneers and Appraisers (SA) Inc.
2.The agency was a sole agency for one month from the date of the agency i.e. the sole agency expired upon the 26th day of September 1997.
3..... In between those two dates the plaintiff found a prospective purchaser Andrew Johnson who signed a written offer to purchase the subject property for a price of $103,000. That purchaser did so upon the 18th day of September 1997.
4.The offer made by the purchaser Johnson on 18 September 1997 was presented to the vendor who refused to accept same and who did not sign a contract at that price.
5..... Subsequently the plaintiff altered the figures shown on this document (Exhibit D2) by striking out the figures and words $103,000 and substituted therefore the figures and words $106,500.
6.Neither the vendor nor the prospective purchaser signed that contract at that price.
7..... In early October (the date is in dispute) the defendant wrote to the plaintiff stating ‘Please be advised that the agency agreement to sell above property has now expired and we (no) longer wish to sell through your company’. (Note: I have added the word “no” in brackets to the quotation from exhibit GWK2 exhibited to the affidavit of George William Kennedy sworn on the 29th day of December, 1997. The word is omitted (no doubt accidentally) from the quotation in the judgment.)
8.Upon the 9th day of October 1997 the defendant entered into another agency agreement with LJ Hooker, Happy Valley. That agency was a sole agency. It was expressed to run until the 21st day of October 1997 (14 days) and the price specified for the sale of the subject property was $109,000 and the professional fee was fixed at $500.
9..... On 9 October 1997 the vendor signed a contract offering to sell the subject property to the earlier mentioned prospective purchaser Andrew Johnson for a price of $109,000.
10.On 10 October 1997 the prospective purchaser signed a contract at that price.
11.... Upon 29 December 1997 the contract between vendor and prospective purchaser was cancelled by mutual consent.
From that brief recital of events which plainly occurred two things emerge of an unusual character. Firstly, the sales agency agreement with LJ Hooker is very unusual. The commission rate is a fraction of what one would ordinarily expect it to be. The period of the agency is very short. Secondly, here we have a situation where the plaintiff found a would be purchaser during the course of the sole agency. Within a very short time of the agency expiring, the vendor entered into this unusual agreement with another agent and within two days of that a contract was signed with the prospective purchaser whom the plaintiff had found.”

Those findings and observations are well and truly open on the evidence before the learned Magistrate and I am content to accept them in their entirety as a factual basis for my decision. However, there is more to the case than that. The Magistrate found that, during the currency of the sole agency agreement between the parties and at a stage when Mr. Johnson was first found as a potential purchaser, the Applicant told the Respondent that he would accept $110,000 for the house. That information was passed on to Johnson. Later again, and after discussions between the parties, the Applicant agreed to accept the sum of $108,500 for the house. Next, the Magistrate found that Mr. Johnson was prepared to increase his offer to $106,500. At that stage, the Respondent indicated his willingness to reduce his commission by half. Obviously, this was done to attain a sale and would have resulted in the same net gain to the Applicant as a selling price of $108,500 would have produced in ordinary circumstances. The Magistrate found as fact that both the Applicant and Mr. Johnson accepted the proposed arrangement and the proposed sale price and that the deal was done. However, when the Respondent produced a written contract of sale to the Applicant he refused to sign the document. It is history that, shortly after, the house was sold to Mr. Johnson in somewhat unusual circumstances and the Respondent was not paid anything.
That is sufficient background material to enable the review process and its result to be understood. Ground 5 of the Application for Review, somewhat enigmatically, reads:-

“5..... The plaintiff had represented he would accept $2,000 commission, if sold.”

Mr. Di Fazio (for the Applicant) explained to me that the ground was to be approached in two alternative ways. The first was that, as a matter of law, there was a variation of the agency agreement between the parties, namely, a reduction of the commission to the sum of $2,000. Therefore, the Magistrate was wrong in awarding $4,000 rather than $2,000. The second was that, were I to be against the Applicant on the first argument then, as this was a minor civil review and to be approached in the same manner as the action, I should, as a matter of “equity, good conscience and the substantial merits of the case”, reduce the judgment to the sum of $2,000. The words in quotes come directly from section 38(1)(f) of the Act. I was content to hear the application on that basis.
The first contention depended upon construction of the agency agreement between the parties and its relationship to the facts as the learned Magistrate found them to be. The agency agreement was exhibit P1 before the Magistrate.
The first page of the agreement provides that the agency is a sole agency for one month from the date of the agreement and that the “vendor does not retain the right to sell privately”. The “Gross Asking Price” is specified as $114,950. The term “Gross Asking Price” is not defined in the document but I think that Mr. Di Fazio is right when he says that “it means the price being sought by the Applicant as vendor before any deductions are made from it”.
Page 3 contains a provision entitled “Professional Fee” which reads:-

“PROFESSIONAL FEE
In the event the Agent effects a sale of the Property the Vendor shall pay the agreed professional fee to the Agent.
Basis of Professional Fee
Calculated as follows Fixed fee of $4,000 ”

Page 3 of the agreement provides that the agent is entitled to a professional fee if he effects a sale of the property and paragraph 5 on page 4 defines a “deemed sale” which, so far as it relates to this case, reads:-

“5 DEEMED SALE
The Agent shall be deemed to have effected a sale of the Property:
(a).... if during the term of the Agency the Agent introduces a prospective Purchaser who does not settle on the Property as a result of the Vendor failing to enter into a contract or failing to use its best endeavours as required by Clause 13 of this contract,”

The term “best endeavours” is defined on page 5 of the agreement in this way:-

“13 BEST ENDEAVOURS
In the event the Agent introduces a prospective Purchaser offering to purchase the property at or above the gross asking price, the auction reserve price or such lower price as may be agreed by the Vendor, the Vendor undertakes to enter into a contract of sale of the Property. The Vendor further undertakes to observe, perform and carry out any contract of sale of the Property effected by the Agent and shall use its best endeavours to ensure that settlement occurs.”

The Applicant contends that the Respondent succeeded before the Magistrate because it was accepted that the Applicant did not use his best endeavours in that he agreed to a price for sale but later declined to sign a contract. The argument proceeds that the Applicant really agreed to the reduced price for sale but on the basis of a reduced commission. There were, in fact, it was argued, two separate agreements, one between Mr. Johnson and the Applicant as vendor and one between the parties which varied the commission by $2,000 on the basis that the Applicant agreed to the reduced sale price. In other words, there was a variation of the agreement as it related to commission. I hope that I do not over simplify the argument.
The learned Magistrate dealt with the agreement and its ramifications but he did not refer specifically to the argument that I have just summarised - probably because it was not put to him.
I do not accept the argument on the simple ground that, if there was a variation of the agreement as to commission, that variation was on the basis of the Applicant accepting and signing the agreement at a price of $106,500. I do not think it open to find otherwise. What happened was a “one off” situation which did not come to fruition because the Applicant, having accepted the price, reneged and refused the offer. The evidence of the Respondent makes the position plain.
The second limb of the Applicant’s argument is rather inconsistent with the first. Whereas the first limb required me to interpret a document and apply law to fact, the second limb invites me to take a much more liberal and “equitable” view of things.
The second limb of the Applicant’s argument depends upon the fact that the case involves a minor civil action and review and is to the effect that, because s.38 of the Act requires me, and required the learned Magistrate at the trial of the case and the review, to determine the trial in accordance with “equity, good conscience and the substantial merits of the case” and, accordingly, that I should award the Respondent only the sum of $2,000 regardless of what the legal position might be.
I begin by saying that, for the reasons mentioned by the learned Magistrate and on the evidence given at the hearing, if there is one party who does not have clean hands in this matter, it is the Applicant. It is an all too obvious inference that he went behind the Respondent’s back, entered into a private arrangement with Mr. Johnson for the sale of the house and then engaged other agents to bring the deal to fruition for a much smaller fee than would be expected, having in the meanwhile made enquiries as to whether he could avoid his obligation to the Respondent by having contracts and the like prepared by brokers. He set out to avoid payment to the Respondent at all.
If the law permitted me to deal with the case other than on its legal merits and dispense some “palm tree” justice, I would decline to do so in the case of this Applicant. However, it is also my view that such an approach would be wrong and is impermissible.
That is sufficient to dispose of the Applicant’s arguments but, out of respect for the careful arguments mounted by counsel on this point, I will add a few words on the second leg of the argument.
The point is debatable, there are a number of authorities which support the view that, if a Court or a Tribunal is required to act “in accordance with equity, good conscience and the substantial merits of the case” (I would have thought that all judicial or quasi-judicial arbiters would always act in that way), those words mean that a Court or Tribunal could make decisions different to that which would result from the application of strict law. I have read the cases to which I was referred but, in the context of the Applicant’s case, I will refer specifically to two.
The first is a case of Russito Pty. Ltd. v. Russo (1993) 173 L.S.J.S. 14. That was a landlord and tenant dispute heard by the now defunct Commercial Tribunal. The case raised the question squarely. It was the tenant’s main argument. The reasons for judgment were written by Judge Noblet (who was then Chairman of the Tribunal). His Honour delivered a careful, reasoned, analytical set of reasons which reached the conclusion that I have referred to. The reasons laid down some six “general principles” which the learned Judge thought should “guide the Tribunal in the future”. His Honour took great comfort from the decision of Olsson P. (as he then was) in Walkley v. Dairy Vale Co-Op. [1972] S.A.I.R. 327. The legislation governing both Tribunals contained words very similar to those employed in section 38 of the Act.
There have been several cases since, where approval, lack of disapproval or tacit acceptance of those authorities has emerged. However, if one reads the six “general principles” laid down by Judge Noblet in Russito (supra) carefully, one can see that the approach recommended by the learned Judge is really a quite limited and restricted mandate for possible departure from decisions that should be made according to law. They are by no manner of means advocating “palm tree” justice.
Whilst I am of the view that the words of section 38(1), and particularly sub paras (1)(e) and (f), are not to be read down to virtually deprive them of any meaning, I do not think that they justify the wide conclusions and interpretation to which I have referred.
I think that the words “equity etc.” must be interpreted in the context of each Act in which they appear. They have no special legal meaning independent of the statute employing them. In the case at bar, it is not entirely without significance that s.38 commences by applying the words to the trial of a minor civil action. I think that they apply to the trial process, the hearing not the decision making.
One of the main purposes of the law is to create and maintain certainty. The citizens of a State are entitled to know what the law is and how they must conduct themselves in accordance with law. They are entitled to that. Surely, we cannot have a situation where a case may be decided contrary to law because some Court or Tribunal thinks it is “equitable” so to do. That simply creates uncertainty and worse.
In my view, the words of the section relate almost entirely to things procedural and things said and done at trial. They may well mean, for example, that, in approaching the evidence and the facts, a Court may choose to take a more generous or sympathetic view of some conduct or events that emerge strictly from the evidence or it may apply to my allowing this review to go on when it is based upon arguments not put to the learned Magistrate. However, I do not think that they give Courts authority to move away from a decision required by law even within the limits set for the Commercial Tribunal by Judge Noblet.
A number of cases were referred to by counsel (particularly Mr. Blumberg) which tend to support my view. Again, I choose to refer to but two. The first is South Australian Commissioner for Prices and Consumer Affairs v. Charles Moore (Aust.) Ltd. and Others (1975) 12 S.A.S.R. 214. At page 220, the late Bray C.J. said:-

“But Mr. Matheson argued that the Tribunal was in a different position because of the provisions of s. 21(5) of the Consumer Credit Act which reads as follows:
‘In any proceedings the Tribunal shall act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms and, subject to subsection (6) of this section, it shall not be bound by the rules of evidence, but may inform itself on any matter in such manner as it thinks fit.’

Reliance was placed particularly on the last words empowering the Tribunal to inform itself in any manner it thinks fit.
These words, however, in my view, are clearly directed to the way in which the Tribunal can elicit information, not to the use it can make of it when it is elicited.”

That is a clear and unequivocal statement of the words as they related to the relevant provisions in the Consumer Credit Act. Judge Noblet referred to those words in Russito. He limited their application to the process of a Tribunal informing itself in any way it sees fit. With respect to the learned Judge, I do not agree. The words in their context have a wider meaning. They are directed to proceedings under the Consumer Credit Act where the words employed closely resemble those used in section 38 of the Act.
The second case is that of the Full Court in Ory and Ory v. Betamore Pty. Ltd. (In liquidation), Farrow Mortgage Services Pty. Ltd. (In liquidation) and The Commercial Tribunal of South Australia (1993) 60 S.A.S.R. 393. This was a case concerning a decision reached by the Commercial Tribunal and again the words “equity etc.” were raised for consideration. At page 414, Duggan J. said:-

“DUGGAN J. I agree with Legoe J that questions A, B, and C should be answered in the manner suggested by him. I also agree with the reasons he has given in support of the answers.
Question D requires consideration of the effect of s 13(1) of the Commercial Tribunal Act 1982 which provides as follows:
‘The Tribunal shall act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms and, subject to subsection (2) and the provisions of any other Act, is not bound by the rules of evidence, but may inform itself on any matter in such manner as it thinks fit.’

The court has been asked whether, in the circumstances of the present case, it is open to the Commercial Tribunal to apply the subsection so as to reach a decision other than that which would be dictated by the application of established legal principles.
The subsection cannot have the effect of excluding altogether the application of all legal principles which would otherwise be applicable. In the light of the broad range of commercial matters within the jurisdiction of the Tribunal it is highly unlikely that the legislature intended to remove the degree of certainty which the law attempts to bring to such transactions. The relevance of these legal principles is also demonstrated by the Tribunal’s power to state a case on any question of law for the opinion of the Supreme Court (s 19) and the appeal as of right to the Supreme Court on a question of law (s 20).
In Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [1978] 1 Lloyd’s Rep 357 at 363, Goff LJ, when interpreting a similar provision in an arbitration agreement, said that it enabled the arbitrator ‘to view the matter more leniently and having regard more generally to commercial considerations than would be done if the matter were heard in Court’. I think the same can be said of the effect of this subsection.

In this case the principles discussed by Legoe J in his judgment provide a resolution of the matters in dispute and I am not persuaded that a different result is required by the application of the considerations referred to in s 13(1) of the Act.
In my view question D should be answered as follows:
‘The requirement that the Commercial Tribunal shall act according to equity, conscience and the substantial merits of the case without regard to technicalities and legal forms should not, in the circumstances of the case stated, lead to a resolution of the dispute between the parties other than that which would result from the application of the established legal principles referred to in support of the answers to questions A, B and C.’”

With respect, I think that what Duggan J. wrote is the law on this topic. I can do no better than to, respectfully, adopt his words as my own.
I have reviewed this case as required by law. The learned Magistrate conducted the matter in a manner which I describe as impeccable. There is no defect in process, nor error of law or fact, and the issues raised on review by the Applicant have no validity. Accordingly, the review is refused and the orders made by the learned Magistrate stand.
I will hear counsel as to costs and as to moneys paid into Court by the Applicant.

[1999] SADC 94

16 July 1999