Gray and Gorman P/L v Wimco Properties P/L
[2011] QDC 245
•21/10/11
DISTRICT COURT OF QUEENSLAND
CITATION:
Gray and Gorman P/L v Wimco Properties P/L [2011] QDC 245
PARTIES:
GRAY AND GORMAN PTY LTD ACN 131 691 480
(Plaintiff)V
WIMCO PROPERTIES PTY LTD ABN 70 075 429 360
(Defendant)FILE NO/S:
D 343/09
DIVISION:
Trial
PROCEEDING:
Civil
ORIGINATING COURT:
District Court, Maroochydore
DELIVERED ON:
21.10.11
DELIVERED AT:
Maroochydore
HEARING DATE:
5.10.11& 6.10.11; submissions received up until 17.10.11
JUDGE:
J.M Robertson DCJ
ORDER:
Judgment for the Plaintiff. Counterclaim dismissed.
CATCHWORDS:
CONTRACT- TERMS- where dispute between real estate agents over commission payments and other expenses-where contract was an oral agreement between real estate agents- where terms of contract disputed- where defendant admits it owes commission to the plaintiff but claims that the plaintiff received commissions to which it was not entitled- where terms pleaded as a set off and as a counterclaim for unjust enrichment.
Cases
Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27
COUNSEL:
Mr S. Gerber for the plaintiff
Mr M. Jones for the defendant
SOLICITORS:
Schultz Toomey O’Brien Lawyers for the plaintiff
Butler McDermott Lawyers for the defendant
Introduction
This case concerns a dispute between real estate agents over commission payments and other expenses. The plaintiff company is controlled by Anthony Gorman (Anthony) and the defendant is, on the evidence, controlled by David Wimhurst and/or his wife Loren Wimhurst (Loren).
It is common ground that the defendant acquired the Ken Guy Real Estate franchise at Maroochydore in approximately August/September 2006. Prior to that Loren and Anthony had worked as a team (called a “pod”) of real estate agents on behalf of Ken Guy Mooloolaba. Loren was then by far the most experienced of the two and specialised in “high end” waterfront property sales. Essentially, the pod operated on the basis that the agency would receive the whole commission on the sale and would retain (usually 50%) and the agents responsible for the sale and/or listing working in the pod would divide the balance between themselves as agreed.
Anthony and Loren worked at Maroochydore in a pod and shared commissions on a 50/50 basis i.e. 25% each of the total commission payable to the defendant, with some exceptions, for example, when other agents obtained a buyer of a property listed by either Anthony or Loren.
In June 2008, after advice from his accountant, Anthony caused the plaintiff to be formed and it then acted as a contractor with the defendant to supply his services as a real estate salesperson and auctioneer, and he ceased being an employee although he did sign an REIQ Employment Authority after that (on 22 August 2008) which suggested he was still an employee then but it is agreed that he was not.
Each party alleges that a different oral agreement was then forged between the plaintiff and the defendant and it will be necessary for me to make findings as to the terms of that agreement on the balance of probabilities. The plaintiff claims it is owed commissions on sales achieved (with one exception) while it was working as a contractor to the defendant; while the defendant claims that although it does owe some commission to the plaintiff, the plaintiff has been paid more than it was entitled pursuant to the commission agreement and has incurred unauthorised expenses the total which exceeds the admitted indebtedness of the defendant to the plaintiff.
What is not in dispute
In its further amended claim filed 17 May 2010, the plaintiff claims unpaid commissions on five properties:
“5. The Plaintiff made sales of properties on behalf of the Defendant for which commissions have not been paid by the defendant to the plaintiff.
PARTICULARS
Property at 4/49 River Esplanade, Mooloolaba: $18,711.00
Property at 47 Adelong Crescent, Buddina: $14,547.50
Property at 13 Mooloolah Island, Minyama: $19,500.00
Property at 9 Kumbada, Minyama: $5,080.55
Property at 8 Birubi, Minyama: $11,605.00Sub-Total: $69,445.05” (my calculations are $ 69444.05)
In its further amended defence and counterclaim filed 4 April 2011, the defendant admits that the commissions claimed for three properties, namely, 47 Adelong Crescent, 13 Mooloolah Island and 9 Kumbada, Minyama, and part of 8 Birubi Street are owing. The pleading then alleges that in respect of 11 properties sold subject to the oral agreement between the plaintiff and the defendant, the plaintiff has been overpaid $81,832.25, part of which is pleaded as a right to set off against the amounts admitted to be owing and any monies found to be owing by the plaintiff pursuant to the agreement.
The Agreement
(a)What is the pleaded by the plaintiff
The contract pleaded by the plaintiff is set out in paragraph 3 of its further amended Statement of Claim:
“3. The Contract entered into between the Plaintiff and the Defendant was:-
(a) Entered into orally between Anthony Gorman on behalf of the Plaintiff on the one hand and Loren Wimhurst on behalf of the defendant;
(b) Contained material terms that:-
(i) Plaintiff (by its servant and agent Anthony Gorman) would provide Real Estate Agent services and Auctioneer services to the Defendant;
(ii) That the Defendant would pay the Plaintiff an auctioneer fee of $385.00 per auction conducted by Anthony Gorman for the Plaintiff (such sum inclusive of GST);
(iii) That the Defendant would pay to the Plaintiff a commission of 50% of commissions earned by the Defendant on sales of property made by the Plaintiff (and Anthony Gorman on its behalf);
(c) Not reduced to writing but is evidenced by pay records that were maintained by the Defendant which will be
disclosed in the course of the action.”
(b)What is the pleaded by the defendant
The terms of the contract pleaded by the defendant in its further amended defence and counterclaim filed on 4 April 2011 are as follows:
“3. From on or about September 2006, the Defendant employed Mr Gorman (in his personal capacity) as a real estate agent working together in a “pod” with Ms Loren Wimhurst.
4. It was a term of Mr Gorman’s oral contract of employment that he would be paid on the basis of commission upon the sale of real property, rather than pursuant to an hourly wage or salary, his entitlement to commission being calculated on the sale of any property listed for sale with the defendant as follows:
(a) 50% of the gross commission to the Defendant;
(b) 25% of the gross commission to Ms Wimhurst;
(c) 25% of the gross commission to Mr Gorman.
5. In or about the middle of 2008, Mr Gorman (on behalf of the Defendant) said to Ms Wimhurst words to the effect that he wished to pay less tax, that he had taken advice from his accountant to the effect that he should provide his services to the Defendant through a corporation as a contractor, and asked whether he could instead work for the Defendant through a corporation of which he would be a director.
6. In response to that request the Defendant (by Mr David Wimhurst) and Mr Gorman agreed that from 1 July 2008:
(a) Mr Gorman would charge commission, and be paid commission, through the Plaintiff;
(b) The contract of employment between the Defendant and Mr Gorman was terminated by mutual agreement;
(c) The commission payable to the Plaintiff would be calculated in the same manner as pursuant to the contract of employment as pleaded at paragraph 4 hereof, save that the Plaintiff would be required to also charge GST.
7. It was an implied term of the Commission Contract pleaded above that the Defendant and the Plaintiff could, from time to time, make special arrangements with respect to individual properties listed for sale whereby the commission would be payable otherwise than in accordance with the calculation pleaded in paragraph 4 hereof.
PARTICULARS
The term is implied to give business efficacy to the Commission Contract, and is further to be implied from the subsequent course of dealing between the Plaintiff and the Defendant as pleaded below.”
As can be seen from the amended pleading, the agreement pleaded at 3(b)(iii) of the Statement of Claim was originally admitted by the defendant at paragraph 4 of the amended defence and counterclaim filed 5 February 2010, on the basis that although the plaintiff was entitled to 50% of the commission “only where the Plaintiff was the sole agent employed by the Defendant responsible for the sale of the property, but not in cases where it (or Anthony Gorman as its representative) was one of two agents employed by the Defendant” as set out in particulars (a), (b), (c) and (d) of the earlier pleading; all of which (along with paragraph 4) was abandoned by the defendant upon the filing of its further amended defence and counterclaim on 4 April 2011 by leave of this Court. This significant change of position is explained by a) the original solicitor misunderstanding the defendant’s instructions which were initially not given by the Wimhursts but by Ms Johns (the accounts manager) and b) the new solicitor (Mr Boyce) receiving instructions from Loren and David Wimhurst.
The Evidence
Anthony’s evidence was given in affidavit form which became Exhibit 1. At the start of the trial, Mr Jones objected to this course given that the lengthy affidavit had only been sworn and served the day before the trial commenced, and no order had ever been sought by the plaintiff for evidence to be presented in this form. As the terms of the oral agreement is the central issue in the dispute, I determined that the paragraphs of the affidavit dealing with the agreement (agreed to be paragraphs 5-26) would not be admitted as part of the Exhibit, and that the plaintiff would be required to give oral evidence of those matters. None of the extensive bundle of exhibits to the affidavit were a surprise to the defendant as they all came from its business records.
Anthony gave evidence that from around July 2004 he went to work as a real estate salesperson at Ken Guy Mooloolaba where he met Loren. Eventually he and Loren worked together in a pod, with the agency dividing the commission on each sale by them as a team 50% to it, and 50% to them which was divided equally between them. Loren told me that she married David Wimhurst in February 2006, and it is common ground that his company (the defendant) acquired the Ken Guy franchise at Maroochydore in August/September 2006 and Anthony and Loren both moved there and continued to work in the same pod arrangement. Anthony said that in late 2007, Loren was becoming less interested in selling real estate and more interested in the management and other businesses in which the defendant had become involved, namely a real estate publication known as “My Property Preview”, the acquisition and running of another Ken Guy franchise at Noosa purchased by the defendant; and a business venture known as “IM Property” with a man named Pointon in Brisbane. He says that they (that is Loren and Anthony) eventually agreed to split their 50% of the commissions 60/40 in favour of Anthony subject to some exceptions depending on “the story” involved with the particular property. Loren agreed she did get involved in these businesses, but disputed a loss of interest in sales work, however, she does agree that eventually Anthony wore her down and she agreed to a 60/40 split between them. Her evidence was that the 60/40 split continued even after the plaintiff was formed and continued until Anthony left the business in October 2009 to start his own agency known as “Place”. She was uncertain of the time this new arrangement commenced but for reasons I’ll expose later I am satisfied it commenced in late 2007.
David Wimhurst says he recalls a discussion with Anthony in May/June 2008 when Anthony told him that he had advice from his accountant that he would pay less tax if he operated through a company, or as Mr Wimhurst recalled “an ABN”. Essentially, Mr David Wimhurst gave evidence in support of the oral contract pleaded by the defendant i.e. 50% of the commission to the defendant, 25% to Loren and 25% to Anthony’s company on which it would have to pay GST.
Mr Wimhurst acknowledged frankly that he had nothing to do with the general operation of the real estate business, and relied on others who had transferred over from Ken Guy Mooloolaba with Loren and Anthony to set up the “model” for the real estate business when the defendant acquired Ken Guy Maroochydore. He acknowledged that he had other substantial business interests including cattle and sheep properties in Western Queensland to which he would commute weekly, and a construction company. Loren said that her husband was a builder and it is clear that the only reason he became involved in real estate was at the behest of his wife and because he thought it would be a good business. On the one hand, he told me that although he was not involved in day to day operations of the business and relied on others and certainly did not see or approve invoices, nevertheless he had to approve personally any expenditure outside the normal operation of the business, for example, where the defendant was to carry marketing costs for a property until sale or withdrawal from sale as opposed to the usual case where the sellers were responsible to the defendant for such costs. He says all these expenses had to be approved by him but he acknowledged that most came to him via Loren. He also said that he was the ultimate decision maker if there was to be any change in the usual rate of commission.
Remarkably, he told me in cross-examination that he had no knowledge of, or interest in, the apparent agreement between his wife and Anthony to split commissions 60/40 (on all sales Anthony says; on all sales based on new listings Loren says), as that was a private agreement between agents and the defendant was not a party to it. I will return to this important evidence later.
The plaintiff called two other witnesses primarily to give evidence relevant to the terms of the agreement between the plaintiff and the defendant. Alvia Turney worked as a real estate salesperson for the defendant from 31 October 2006 and knew soon that Anthony and Loren were in a pod. She supported Anthony’s evidence to the extent of recalling that prior to him leaving the defendant, he worked on his own, had his own office and employed his own personal assistant. She said that when she returned from overseas in January 2009, Loren suggested that she (Ms Turney) work in a pod with Anthony. She was not challenged about this evidence. She said she did approach Anthony but he was not interested. The plaintiff also called Daniel Barrios. He worked for the defendant as a salesperson from 20 December 2006 until he left in October 2010. That employment was interrupted when he worked as group sales manager for the defendant from February 2009 to September 2009. He worked on a 50/50 rate with the defendant in relation to commission but did have a pod at some stage with his wife.
He said that when he first started with the defendant, Loren and Anthony were in a pod but recalls (from what he was told by Loren and Anthony) that around about the involvement of the defendant in My Property Preview and IM Property in 2008, Loren stepped back somewhat from sales and became more involved in the businesses, and that Anthony was going out on his own. He said that although Loren attended all auctions conducted on behalf of the office (as did all available sales people), and attended open homes, she was not involved in sales after 2008. He was not directly challenged about this, and for reasons I’ll expose later, I think he is mistaken to some extent. He told me that he had a dispute with the defendant at the present time.
Discussion
It is always a difficult task for a court to determine the terms of a disputed oral agreement particularly in circumstances, as exist here, where there is no basis on which it could be found that any of the key witnesses who gave evidence in relation to this issue had been deliberately dishonest.
However, resort to the documentary records, in my view, comfortably satisfies me that on the balance of probabilities, Anthony’s evidence as to the actual terms of the agreement is to be preferred. Exhibit 3 is a Schedule prepared by the plaintiff which both parties agree fairly reflects the actual percentages of commission shared between the defendant, Loren and Anthony, which includes after 18 June 2008 (when it was formed) the plaintiff.
The defendant does say that its records are not accurate and that its systems for checking invoices and making payments of commission to the plaintiff were inadequate but that can hardly be held against the plaintiff.
That Schedule clearly shows that by reference to the defendant’s own records, the evidence of David Wimhurst as to the 25/25 split between Loren and Anthony prior to 18 June 2008 cannot be accepted. I think he is mistaken, and this is confirmed by his own evidence in cross-examination that he had no interest in, or knowledge of, the arrangements between Loren and Anthony prior to or after 18 June 2008. It simply does not make sense that if this was his state of mind at the time he had the critical conversation with Anthony, why he would even refer to the split between the plaintiff and Loren.
I also conclude (from Anthony’s evidence and Ms Turney’s evidence), and the records produced from the defendant and annexed to Exhibit 1, that David Wimhurst has overstated his day to day involvement in the decisions to be made about commission and other expenses as has Loren. Ms Turney clearly regarded Loren as the boss; even Mr Wimhurst said that sales people would talk to Loren about these matters. He is not a real estate person, and although he was the financial force behind the defendant, he had many other interests through his cattle and sheep properties in Western Queensland and his construction company. It is not clear on the evidence at what times Loren was a director and/or shareholder of the defendant, but I am satisfied that she played a much greater role in making decisions about the real estate business of the defendant than did her husband. Exhibit 5 contains a number of Australian Workplace Agreements all made under the previous federal legislation which nominates Loren as the person to whom sales persons should report on behalf of the defendant. Later agreements in the same bundle entered into by sales people and the defendant in 2009 provide at cl 3.1:
“You’ll report to David and Loren Wimhurst (Directors) and work under their direction …”.
This appears to conflict with David Wimhurst’s evidence that Loren was a director for a few months from June to September 2008 and then stood down.
I am satisfied that Loren clearly had authority to enter into the oral agreement with the plaintiff as alleged by Anthony in his evidence.
The other issue in dispute between Loren and Anthony concerns a term of the agreement after the involvement of the plaintiff as a contractor, and that is whether or not the 50% of the commission payable by the defendant from its receipt of 100% of the commission on sales was to be calculated by reference to new listings or sales. Again Exhibit 3 on its face seems to strongly support the plaintiff’s contention that it was to receive 100% although there was some exceptions. Loren of course says that the 60/40 pod arrangement continued until Anthony left in October 2009, but the documentary evidence clearly does not corroborate her, rather it supports Anthony’s evidence of the arrangement. In relation to the 11 properties below the line marked 18.6.2008 in Exhibit 3 in which the defendant claims money back from the plaintiff, the plaintiff submitted a tax invoice for its commission and that invoice was paid. This occurred over a period from 5 June 2008 to 23 September 2009 without anyone noticing on behalf of the defendant. The defendant says its accounting procedures were slack and it was not until it went through its records for the purposes of providing instructions to Mr Boyce for the further amended defence and counterclaim that it discovered these alleged overpayments. It points to the Contract Summary Sheets (prepared by the Contracts Administrator who was not called), and says in none of the 11 disputed property commissions has a “manager” initialled the “Commission Break-up” section. One such contract sheet is at p. 131 of the exhibits to Exhibit 1, and relates to 25 Neerim Drive in which the split between the plaintiff and Loren was 60:40 but the defendant is claiming it should have been 50:50. Mr Jones was not able to point to any of these sheets (part of the records of his client), even those in relation to undisputed sales where a manager has ever initialled. The accounts officer at the relevant period was Patricia Johns. To process payments of commission she would receive the Contracts Folder from the Contracts Administrator and would act on the information set out in the Contract Summary Form. She said if she saw anything unusual she would go to the office manager, Sue Niittyaho or to the agent or agents involved. She noticed claims of 100% after the plaintiff was formed and on occasions would not speak to Anthony because she knew from the marketing and the 22a PAMD form that Anthony was both the lister and the seller. She says that she would not approach David or Loren Wimhurst because of “threats and intimidation” from the office manager, Sue Niittyaho, and she was afraid she would lose her job. Neither Wimhurst was asked about this very surprising evidence, nor was Anthony questioned about this and Sue Niittyaho was not called. Apparently she has left the employment of the defendant.
I think the disputed issue can be resolved readily by looking at the first of the disputed sales after the plaintiff entered into its contractual arrangement with the defendant. It is common ground that 8 Adaluma Avenue, Buddina had been listed with the defendant well before the formation of the plaintiff. Anthony says in relation to this sale in Exhibit 1 the following:
“1. 8 Adaluma Avenue, Buddina
59.This property had been on the market for a long period of time. On or about 26 October 2006, Wimco took the listing over from another agent, Mr Mark Unkel from PRD Realty.
60.It was originally jointly listed with Loren and I, because we were working together at that point in time. We conducted an auction which was unsuccessful.
61.Sometime later in 2008, I noticed that it reappeared for sale on the internet with Mark Unkel as the listing agent. At that point in time Wimco still held a listing authority, but only as an open listing. At this time I was no longer working with Loren has she had gone across to her administration and management role.
62.After I saw the property advertised on the internet with PRD Realty, I telephoned the vendor to ask why it was that they weren’t happy with me. The vendor told me that there was no particular issue, and that they had just decided to also give the listing to PRD Realty as well.
63.At this time, I had been showing various properties to a surgeon, Dr Bernard Tamba-Lebbi and his wife, Emily Njeri Tamba-Lebbi. I had shown them about four waterfront homes.
64.Dr and Mrs Tamba-Lebbi were also looking at properties with other agents. Dr Tamba-Lebbi rang me one morning to tell me that he had seen the property at 8 Adaluma Avenue through Mark Unkel. Dr Tamba-Lebbi told me that he did not want to deal with Mark Unkel anymore…Dr Tamba-Lebbi asked me whether I could negotiate with the vendor.
65.I then telephoned the vendor of the property, who told me that he was more than happy for me to try and negotiate a sale because he just wanted the property sold.
66.I then set about trying to get the parties to reach an agreement, which I was able to achieve. A contract was entered into with a purchase price of $1,680,000.00. That contract ultimately settled on 14 July 2008 (see the Sales Book at page 28 of the bundle).
67.The total gross commission payable to Wimco was $46,000.00. Initially the plaintiff submitted an invoice for half of the total commission, being $23,300.00, however after receiving that invoice, Loren informed me that there was some advertising that had to be paid by me (meaning the plaintiff) from the commission and requested that I resubmit an invoice for $18,480.00 to take into account the advertising that she said I was responsible for. I did not keep a copy of the original invoice as when the account was amended on MYOB, the old one was written over and not saved. I was never given any particulars of exactly what the advertising costs were, but they were almost $5,000.00. I have seen the defendant’s file in relation to the property at 8 Adaluma Avenue which shows on the contract checklist that there is “outstanding advertising” of some $4,893.32. That is approximately the amount that has been deducted from my share of the commission ($23,300.00) to arrive at the figure of $18,480.00 which was the amount Loren told me to submit an invoice for.
68.In paragraph 17 of the defendant’s counterclaim, it is alleged by the defendant that the correct amount payable to the plaintiff should have been only $11,673.75, and that the plaintiff was overpaid by the sum of $6,806.25.
69.The defendant has made no mention of the fact that after the plaintiff was paid the commission it was required to pay half of it back to the defendant because a claim was made by Mark Unkel of PRD for half the commission.
70.When I had negotiated the contract I received advice from the defendant’s lawyer that Mark Unkel had no “leg to stand on” in claiming half of the commission on that sale. However, when Mark Unkel lodged a claim through the REIQ, the outcome was that the REIQ determined that Mark Unkel was entitled to half the commission of $23,300.00. Accordingly, the plaintiff was required to write a cheque out for half of what it had been paid by Wimco and Wimco paid the other half.
71.This is obviously consistent with what the agreement that the plaintiff was to receive 50/50 per cent commission split with Wimco, rather than a 25/25/50 (between the plaintiff Loren Wimhurst and Wimco) as now alleged by the defendant.”
Loren gave evidence about this property and her relationship with the vendors, and her involvement with the ultimate purchaser.
There is no dispute that on the sale Wimco received 100% of gross commission and that the plaintiff received 50% less one half of the advertising expenses incurred by the defendant on behalf of the vendor. Anthony was not challenged on this aspect of his evidence. The defendant’s case is that Loren was actively involved in the sale.
There is no dispute that after settlement Mark Unkel claimed he was entitled to commission and that the dispute was referred to the REIQ for mediation. Loren gave evidence, that she David and Anthony attended the mediation in Brisbane with Mark Unkel and it was determined that Mark Unkel was entitled to 50% of the commission. Loren said in answer to questions from her own counsel at 1-125 line 55 – 1-126 line 3 of the transcript:
“The REIQ arbitration, they don’t dictate, they like agents to come to an agreement together and we all agreed just to cut it 50/50 because he did have some input into the sale of the property as did we. And then when Anthony and David and I were sitting there together, when it was agreed that you know, Mark was going to have to get 50%, we all just said “look lets just, you know, we’ll just split it. Anthony you give a cheque back; we’ll give a cheque back” so – and then, straight after that, David dropped us to the airport because we went to Tasmania for five days”.
It must have been blindingly obvious at that point to both David and Loren (both obviously astute and intelligent people) that the plaintiff was agreeing to pay 50% back not 25% or 30% depending on which version of the contract given in evidence by the Wimhursts, and this was clearly in relation to a property that was listed before the plaintiff was formed and sold just after. Again the defendant says it didn’t know anything about the actual accounting but having observed both Wimhursts they are clearly clever, successful business people, I think the only reason they are now seeking to argue for a different agreement is to counteract the claim made by the plaintiff, made after he had left the defendant and formed his own real estate agency business in competition with the defendant.
Loren is clearly well versed in the details of the 11 disputed sales, but a little piece of her own evidence suggests again to me that by the time the plaintiff started operating she was less involved in sales than she made out. She told me that when she first entered the pod with Anthony back in 2006 at Ken Guy Mooloolaba and at about the time she married David, she and her sister Karen always had 80 or so exclusive listings, but only 40 went into the original pod arrangement with Anthony. She said in her evidence in chief that after June 2008 she had 10-12 listings in her name at any given time. This on its own is suggestive of a number of things including a drop in the market, and also the fact that she was becoming more involved in the business side and less in sales. At some time after she married David she became an employee of the defendant and received a salary she said of $35,000 which she later agreed in cross-examination was $52,000 and her “share” of any commissions earned by herself and Anthony in the pod was, in effect, retained by the defendant. Mr Jones submits that it is simply absurd that a highly successful agent such as Loren would simply agree to give up 20% (her version) 25% (David’s version) of commission at the time the plaintiff was formed for no reason. Of course by then she was clearly involved in other businesses; not to the extent asserted by Anthony, but certainly more than she asserts; was married to the owner of the business and receiving other “benefits” such as a fine car (she told me at present she is driving at $300,000 Audi) and living in a beautiful home at Alexandra Headland. Even accepting her evidence about her involvement in the 11 disputed sales, the documentary records of the defendant clearly support Anthony’s version of the agreement with the plaintiff. Her diary does show many phone calls and attendances at open homes and contacts with vendors and sellers involved in some of the disputed sales, but it also shows her interest in these other businesses, and her own evidence of a reduced number of listings suggest, at least to some extent, a curtailing of her sales activities and a drop in her interest in that area.
Mr Gerber makes the telling point that simply looking at the red areas in Exhibit 3 which it is accepted does reflect accurately the commission payments from the defendant’s records, which involves 21 properties where the plaintiff has claimed 50% commission and been paid, only 11 of which are disputed and three of which are admitted; simply does not support either David Wimhurst’s evidence of the agreement or Loren’s. Anthony has given a satisfactory explanation for the variations in the four properties after 18 June 2008 where the plaintiff has not claimed the whole 50%.
The plaintiff also claims $18,711.00 as its share of commission payable on the sale of 4/49 River Esplanade, Mooloolaba which it claims to have sold after Place was formed, but which was a listing with the defendant and its claim is based on a 70/30 conjunction agreement entered into between the parties prior to sale after the plaintiff had concluded its contract with the defendant.
The plaintiff deals with this issue at paragraphs 30 to 38 of Exhibit 1. The further amended defence and counterclaim raises two issues in relation to this particular sale:
“10.The Defendant in response to the allegations in Paragraph 5 of the statement of claim, admits the Plaintiff acted as selling agent in respect of the sales of the properties as particularised therein, but denies that such commissions are due to be paid by the Defendant as alleged on the basis that the actual commissions which would otherwise be due and payable to the Plaintiff by the Defendant if not for the matters pleaded below, total $46,091.13 calculated as follows:
(a) The commission payable with respect to the property at 4/49 River Esplanade, Mooloolaba is $nil for the reasons pleaded in paragraph 11 hereof, or alternatively $13,200 being 30% of the agreed commission of $44,000, pursuant to a special agreement between the Plaintiff and the Defendant as pleaded at paragraph 7 hereof;”
In paragraph 11 in relation to the claim for commission by the plaintiff with respect to the sale of 4/49 River Esplanade, Mooloolaba the defendant pleads at 11(d):
“When Mr Gorman and/or the Plaintiff established a new real estate agency under the style “Place Mooloolaba”, Mr Gorman deleted all of the Defendant’s records of the ultimate purchaser of this property;”.
The defendant made no effort to prove this serious allegation, and in fact it was abandoned by Mr Jones. It is trite to observe that such a serious allegation made without apparently any evidence to support it does not reflect well on the defendant, particularly a defendant who now relies on its poor records and poor accounting checks and balances in its set-off and counterclaim.
The Conjunction Agreement referred to in the pleading is at p. 16 of the exhibits to Exhibit 1. There is no suggestion from the defendant that Ms Niittyaho who signed on its behalf did not have authority to so sign. The agreement provides that the plaintiff was entitled (by applying the percentages therein expressed) to $18,711.00 being 30% of the commission (payable under the Conjunction Agreement).
The implied term pleaded in para 7 of the further amended defence and counter-claim must give way to the express terms of the separate written agreement between the parties. As Anthony swears in Exhibit 1, it was only after disclosure of the defendants’ records for the purposes of the legal proceedings that he realised that the defendant had agreed with the seller to reduce its commission to $44,000.00. This was done unilaterally and without his knowledge or consent. Ms Turney was one of the listing agents involved in the sale on behalf of the defendant when the plaintiff was trading as “Place” and it was Anthony who introduced the ultimate purchaser. She told me when being questioned by Mr Jones that when she first spoke to Anthony about a conjunction, a percentage of 60/40 in favour of the defendant was discussed, but she was directed by Loren that the split was to be 70/30 and Anthony agreed to this and entered into the conjunction agreement on that basis. The plaintiff is entitled to 30% of commission as calculated by reference to the conjunction agreement and not by reference to the actual commission paid which was less as a result of a decision made by the defendant without the agreement of the plaintiff.
Marketing Expenses
The defendant’s claim for marketing expenses is pleaded in paragraphs 19-20 of its further amended defence and counter-claim :
“19. It was an implied term of the contract pleaded at paragraph 6 hereof that the Plaintiff would not incur or purport to incur any property marketing expenses in respect of properties listed by the Defendant for sale on behalf of the Defendant without its prior permission.
Particulars of the implied term
The term is implied in order to give business efficacy to the contract.
20. In breach of the said implied term, the Plaintiff failed to collect and pay, and instead without permission caused the Defendant to pay, marketing costs in the sum of $31,727.80 and the Defendant claims that sum as damages against the Plaintiff for breach of Contract as follows:
(a) The Plaintiff caused the Defendant to incur marketing costs for the client Michael Rigby, which the client ought to have paid pursuant to the terms of the appointment, in the amount of $3,000.00
(b) The Plaintiff, by Mr Gorman, said to the vendor of 20 Balyarta Crescent, Mooloolaba, words to the effect that the vendor did not have to pay marketing costs, and instead caused the Defendant to pay those costs in the amount of $7,540.72.
(c) The Plaintiff, by Mr Gorman, said to the vendor of for 8 Mooloolah Drive, Mooloolah Island words to the effect that the vendor did not have to pay marketing costs, and instead caused the Defendant to pay those costs in the amount of $11,962.08;
(d) The Plaintiff caused the Defendant to incur marketing costs for the vendor of 30 Adaluma Avenue, Buddina which the client ought to have paid pursuant to the terms of the appointment, in the amount of $9,225.00
$31,727.80”.
Having rejected the terms of the contract pleaded at paragraph 6 it would follow that no implied term of the kind alleged in paragraph 19 could be found on the probabilities. It is clear on all the evidence that agents did purport from time to time to incur marketing expenses prior to sale with the permission of Loren who was regarded as the boss. In most cases the defendant entered into marketing agreements with the seller who paid such expenses up front, but in some cases the defendant agreed to carry the expenses and deduct them from the sale proceeds on settlement.
The defendant’s claim relates to 4 properties which it listed, marketed, incurred expenses but did not sell. The way in which the plaintiff is said to be liable to the defendant (as opposed to the seller), is based on Loren’s evidence that the plaintiff (through Anthony) agreed with the sellers that the defendant would carry these expenses without the defendant’s consent. Anthony flatly denies this and says that it was Loren who was responsible for the arrangement with the sellers. Once again, the defendants’ own records disclosed during the proceedings strongly supports Anthony’s version.
The First claim relating to Michael Rigby
Exhibit 9 is a series of invoices issued by Ken Guy Noosa (I infer) on behalf of the defendant to Mr Rigby for marketing expenses and a report to Trish Schultz (now Trish Johns) dated 23 April 2009 (i.e. at a time when the plaintiff was still contracted with the defendant) to the effect that $13,000.00 had been obtained from Mr Rigby and “we had been advised that full and final payment has now been received”. In other words, the defendant compromised its total claim of $16,516.00 plus $1,985.05 costs by accepting $13,000.00 without any reference to the plaintiff.
As Mr Gerber properly submits there is no evidence, (apart from some hearsay evidence from Loren and her disputed evidence of some conversations with Anthony) that supports the defendant’s claim for these expenses. In relation to the other claims as with the Rigby expenses the documents produced from the defendant’s records from the debt collector (see pp. 142 and 143 of the bundle to Exhibit 1) strongly support Anthony’s evidence that it was Loren who authorised the carrying of expenses in relation to the claim particularised in 20(b). In relation to the claim particularised in 20(c) again the debt collecting information (pp 149(a) to 149(l) to Exhibit 1) strongly supports Anthony’s evidence. It appears from the letter dated 14 October 2008 to the vendors Mr and Mrs Carter from Loren as “owner” of the defendant that it was Loren who made any agreement with the sellers about the carrying of such expenses. In relation to the final claim under this particularised in 20(d) I prefer Anthony’s evidence to the effect that it was Loren who incurred the expenses and not him. That the debt was one between the defendant and the vendors is supported by the documents from the debt collectors, and as I remarked to Mr Jones, his client’s failure to call even one vendor to support what the defendant says is the reason the plaintiff is liable for these expenses is telling. Although the requirements for the making of a Jones v Dunkel inference are not satisfied, it means that the defendant’s case depends on me accepting Loren’s evidence on the balance of probabilities over Anthony’s which is supported to some significant extent by the defendant’s own records. I do not and the defendant must also fail in this aspect of its counterclaim.
The Claim for Other Expenses
This claim is particularised at paras 21 and 22 of the further amended defence and counterclaim. Given my findings as to the contract terms between the parties there is no basis on which I could imply such a term as is pleaded at paragraph 21. The pleading is still incorrect as it refers to the defendant and not the plaintiff incurring the expenses in the defendant’s name. Anthony accepts in his evidence that after the plaintiff was engaged, expenses were incurred from time to time and he would be told to submit a tax invoice from the plaintiff to take these expenses into account. I do not intend to go through each of the many claims from eight different businesses which have been retrospectively claimed after the defendant changed solicitors. Anthony satisfactorily responds to these particular allegations at 149-171 of Exhibit 1 and he was not significantly undermined in cross-examination. Ms Johns admitted that some of the references to “Anthony” as being responsible for ordering flowers for example were only written in at the time of preparing for the pleadings, so the defendant’s documents in some respects are not original. Mr Gerber submits that the claims are trivial and in many respects they are. One example is of an invoice from the florist at p.158 of Exhibit 1 for $100 for flowers ordered on 29 May 2009 (on the face of the invoice by Sue Niittyaho) for Loren who was apparently sick at the time. In relation to a number of invoices on 12 September 2008 and 3 October 2008 it appears that the plaintiff was invoiced and paid 50% of these expenses. This does not mean that a term should be implied into the contract I have found to exist, and Anthony admits that the plaintiff did pay 100% when invoiced for flowers for his clients. Mr Jones made much of the handwritten note on the bottom of the document at p 154, but this is explained by the special arrangement in relation to 11 Kate Street which is the subject to a claim of overpayment of commission of only $1,378.87.00 by the defendant, on the basis of the contract alleged by David Wimhurst. It was the subject of a special arrangement between Anthony (on behalf of the plaintiff) and Loren (on behalf of the defendant), as set out in paragraphs 85 to 87 of Anthony’s affidavit which I accept.
As Mr Gerber submits claims for unjust enrichment are founded on an obligation of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff. In the circumstances here when considering the defendant’s counterclaim the plaintiff is in the position of a defendant. To succeed with such a claim the claimant must establish the following essential elements:
(a) That a benefit was obtained by the defendant;
(b) That the benefit was obtained by the defendant at the plaintiff’s expense and not at the expense of some other person; and
(c) An element of injustice, that is, some circumstance showing that it would be unfair, unjust, unconscionable or inequitable for the defendant to retain the benefit.
The High Court clarified the law in relation to unjust enrichment in Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27, where it was held that claims for unjust enrichment are subsidiary to claims for breach of contract. In the joint judgment of Gummow, Hayne, Crennan and Kiefel JJ it was stated:
“… The second point to be noted is that unjust enrichment was identified as a legal concept unifying ‘a variety of distinct categories of case’. It was identified as a principle which can be taken as a sufficient premise for direct application in particular cases. Rather, as Deane J emphasised in Pavey & MatthewsPty Ltd v Paul (1987) 162 CLR 221, it is necessary to proceed by “the ordinary processes of legal reasoning” and by reference to existing categories of cases in which an obligation to pay compensation has been imposed. ‘To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate.’ On the contrary, what the recognition of the unifying concept does is to assist “in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.”
At [85]:
“… to now impose on the Lumbers an obligation to pay builders would constitute a radical alteration of the bargains the parties struck and of the rights and obligations which each party thus assumed’. There is no warrant for doing that.”
At [127]
“The second observation to be made is more general. It is an identification of the rights and obligations of the parties, in this as in any matter, requires close attention to particular facts and circumstances of the case. Necessarily that requires close attention to what contractual or other obligations each party owes to the others.”
In this case it was admitted that there was a contractual relationship between the parties. In the circumstances the defendant cannot rely on the doctrine of unjust enrichment even if I accepted the evidence which they advance in support of their claim for such expenses. The relationship between the parties is solely governed by the terms of the contract. As Mr Gerber correctly asserts the defendant’s unjust enrichment claim must fail in law even if all of the facts alleged in its counterclaim were proved.
Clearly from my factual finding I do not accept Mr Gerber’s argument in paragraph [13] of his closing submission which arises out of Mr Wimhurst’s evidence. Clearly, commissions paid to the plaintiff were paid (or not paid in the case of the plaintiff’s claim) by the defendant after it had received the gross commission on sales on settlement. The argument was superficially attractive but does not bear up under scrutiny, as Mr Jones points out in his reply was not pleaded in the plaintiff’s reply.
In the circumstances the order of Court is that the judgment be entered for the plaintiff against the defendant for the sum of $74,844.05 inclusive of interest.
The plaintiff made an offer to settle (Exhibit 1) which it has bettered and r 360 comes into play and the defendant is ordered to pay the plaintiff’s costs of and incidental to the Claim and Counterclaim on the indemnity basis.
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