Holden Holdings Pty Ltd v Alliance Finance and Property Pty Ltd
[2025] QDC 146
•21 October 2025
DISTRICT COURT OF QUEENSLAND
CITATION:
Holden Holdings Pty Ltd v Alliance Finance and Property Pty Ltd [2025] QDC 146
PARTIES:
HOLDEN HOLDINGS PTY LTD
(plaintiff)
v
ALLIANCE FINANCE AND PROPERTY PTY LTD
(defendant)
FILE NO/S:
BD 3593/24
DIVISION:
Civil
PROCEEDING:
Claim and statement of claim
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
21 October 2025
DELIVERED AT:
Brisbane
HEARING DATE:
22 September 2025 and 10 October 2025
JUDGE:
Grigg DCJ
DECISION:
Separate question answered “Yes”.
The defendant is to pay the plaintiff's costs of the separate question on the standard basis, such costs to be agreed or taxed.
CATCHWORDS:
CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the plaintiff and defendant entered into a consultancy agreement to provide credit services – where the plaintiff claimed it is owed trailing commissions under the agreement and after termination of the agreement – where the proper construction of the agreement concerning trailing commissions heard separately from the trial – whether the plaintiff had accrued rights – whether the obligation to pay trailing fees had already arisen at the date of termination of the agreement, or whether the obligation was instead contingent on future events that had arisen at the date of termination.
INTERPRETATION – ADMISSIBILITY OF EXTRINSIC EVIDENCE IN RELATION TO INSTRUMENTS – MATTERS PARTICULARLY RELATING TO CONTRACT – RELEVANT PRINCIPLES – where extrinsic material is relied on by the defendant to support its contended construction of the agreement – whether there is sufficient uncertainty or ambiguity in the agreement to justify departing from the fundamental rule that the parties' intention must be determined from the language they used, interpreted in light of the relevant factual context.
LEGISLATION:
National Consumer Credit Protection Act 2009 (Cth)
Uniform Civil Procedure Rules 1999 (Qld) r 704
CASES:
2620 Ipswich Road Pty Ltd v DN Holdings Qld Pty Ltd [2022] QCA 49; (2022) 10 QR 439
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 277 CLR 445
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337
Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 54; (1920) 28 CLR 305
DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511, considered
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; 261 CLR 544
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340
Lucas Drilling Pty Limited v Armour Energy Limited [2013] QCA 111
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 383 ALR 577
McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, followed
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104
Price v Spoor [2021] HCA 20; (2021) 270 CLR 450
Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 277 CLR 115
Re Golden Key [2009] EWCA Civ 636Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; (1936) 54 CLR 361, considered
APPEARANCES:
H Clift for the plaintiff (instructed by McBride Legal)
Defendant self-represented
On or about 23 July 2014 the plaintiff and defendant entered into a consultancy agreement (Agreement), under which the plaintiff agreed to provide certain credit “Services” (as defined) to the defendant in return for the payment of “Fees” (as defined).
Under the Agreement, the plaintiff was appointed as an authorised credit representative of the defendant to engage in, amongst other things, the introduction of loans.
On 18 March 2024, the defendant terminated the Agreement. The effective date of the termination was on or about 18 April 2024.
As at 31 March 2024, there were several customers, introduced by the plaintiff, for whom a trailing commission had already been paid to the plaintiff. The plaintiff contends that it continues to be owed trailing commissions from those customers post-termination of the Agreement. The defendant denies any obligation to continue to pay trailing commissions to the plaintiff in relation to those clients after the effective termination date of the Agreement.
The plaintiff commenced proceedings by Claim and Statement of Claim for the outstanding monies said to be owed to it pursuant to the Agreement.
On 17 July 2025, Barlow KC DCJ ordered that the proper construction of the Agreement concerning trailing commissions (not including liability in respect of customers) be heard separately from the trial of the other issues in this proceeding. This is the determination of that separate question relating to the proper construction of the Agreement.
The separate question is whether (Separate Question):[1]
The defendant is to pay to the plaintiff 50% of all up-front and trailing commissions paid to the defendant in relation to customers referred to or introduced to the defendant, by the plaintiff, between 23 July 2014 and 18 April 2024?
[1] As per declaration sought in paragraph 3 of the Amended Claim.
Undisputed Facts
There is little disagreement between the parties as to the underlying facts.
The defendant is the holder of an Australian Credit Licence.
Pursuant to the Agreement, the plaintiff, through a Nominated Individual, was engaged as an independent contractor to provide the Services for a Fee.
The terms of the Agreement relevant to the determination of the Separate Question are as follows.
The “Term” means the period from the date of the Agreement to the date of termination of the Agreement in accordance with clause 9 (clause 1.1).
For the Term of the Agreement the plaintiff was appointed as an authorised Credit Representative of the defendant, pursuant to the National Consumer Credit Protection Act 2009 (Cth) (the NCCPA) (clause 3.1). Pursuant to this authorisation, the plaintiff was entitled to engage in Credit Activities as specified in clause 3.3, and for no other purposes (clause 3.2). For clause 3.2, the Credit Activities that the plaintiff was authorised to engage in are the introduction of loans except for the provision of "credit services" as defined in the NCCPA, which are to be made on a referral basis only (clause 3.3).
“Services” means the Services as set out in Schedule 1 (clause 1.1), which are:
·The provision of Credit Services as specified in clause 3;
·Collation of required information as required from time to time in order to process loans;
·Liaising & timely follow up of clients to advise loans progress;
·Retention & keeping of accurate diary notes to accompany the clients file(s).
“Fee” is defined to mean the fee for the Services performed by the Consultant as described in clause 4.2 (clause 1.1).
Payment of the Fee is governed by clause 4 of the Agreement, which provides:
In consideration of the Consultant performing the Services, Alliance must pay to the Consultant the Fee for the period during which the Services are provided within 30 days after receipt of a valid tax invoice issued by the Consultant in accordance with the GST Law (subject to schedule 1) (clause 4.1).
The Fee payable to the plaintiff by the defendant for performing the Services is set out in Schedule 1 (clause 4.2). In Schedule 1, the "Fees" are defined as:
50% of all up-front and trailing commissions paid to NMB Pty Ltd for the Services provided by the Consultant.
It is not in dispute that the reference to NMB Pty Ltd in the definition of “Fees” was a drafting error and should be read as a reference to the defendant.
Termination and the consequences of termination are set out in clause 9 of the Agreement as follows:
Subject to clause 9.2, this Agreement commences on the date of this Agreement and continues until either party gives to the other one months' written notice to the other. Alliance may, in its absolute discretion, make payment of Fees in lieu of some or all of any notice given (clause 9.1).
On or about 18 March 2024, the defendant gave the plaintiff notice that it had terminated the Agreement pursuant to clause 9.1 of the Agreement.
The plaintiff identifies that the fundamental point of difference between the parties is crystallised by the allegation at paragraph 11(c) of the Amended Statement of Claim, which relevantly provides:
[...] any Fees payable to [Holden Holdings] pursuant to the Consultancy Agreement, including Fees payable after the date of termination, in relation to customers referred to or introduced to Alliance by [Holding Holdings] prior to the date of termination, survived termination of the Consultancy Agreement.
The defendant denies this allegation and contends:
(a) it is only liable to pay the Fee (including trailing commissions) for the period during which the plaintiff provided the Services; and
(b) the plaintiff ceased providing the Services on 18 March 2024 (when notice of termination was given) or, at the very latest, on 18 April 2024, when termination of the agreement was effected.
The plaintiff contends the defendant is under an obligation to pay the plaintiff 50% of all up-front and trailing commissions paid to the defendant in relation to customers referred to or introduced to the defendant by the plaintiff between the date of entering into the Agreement and the effective termination date of the Agreement.
Relevant Legal Principles
Contract Construction
The principles governing the interpretation and construction of contracts were summarised by the High Court in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104:[2]
[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.
[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.”
[emphasis added] (citations omitted)
[2] Cited and followed in 2620 Ipswich Road Pty Ltd v DN Holdings Qld Pty Ltd [2022] QCA 49; (2022) 10 QR 439 at [18]; subsequently approved by the High Court in Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 per French CJ and Kiefel, Bell, Keane and Gordon JJ at [51]; see also Price v Spoor [2021] HCA 20; (2021) 270 CLR 450 at [27].
Where there is uncertainty or ambiguity, the High Court in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 has provided the following guidance as to the correct construction approach:
[98] Poor drafting may justify a court in being more ready to depart from the natural and ordinary meaning of the terms of a contract, and no doubt, the poorer the drafting, the less willing a court should be to be "driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention". But poor drafting provides "no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language they have used interpreted in the light of the relevant factual situation in which the contract was made". Where there is ambiguity which permits of two alternative and semantically not improbable interpretations, construction in accordance with what it may be supposed would be the approach of honest and reasonable businesspersons may assist in choosing one such alternative over the other. But where, as here, the language and surrounding circumstances of a commercial contract present a choice between, on the one hand, a plain, ordinary and commercially not irrational meaning of a clause and, on the other, a meaning which is significantly removed from the natural and ordinary meaning of the terms of the clause, which ill-accords with other provisions of the agreement, and which in the end produces an outcome that is more commercially acceptable from one of the parties' point of view only, the precept runs out of application. Unless the Anglo-Australian objective theory of contract is now to be cast aside, the commercial approach to construction is not a licence to alter the meaning of a term that is "clear and fairly susceptible of one meaning only" to achieve a result that the court may think to be reasonable. The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract to which they have agreed. Where, as here, all things considered, the words of a clause are fairly susceptible of only one meaning, they must be given that effect.
[emphasis added] (citations omitted)
A court is entitled to approach the task of interpretation of a commercial contract on the basis that the parties intended to produce a commercial result unless a contrary intention is indicated. The High Court in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 said at [35]:[3]
“The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean.”
[3] Citing Re Golden Key [2009] EWCA Civ 636, at [28].
Extrinsic material is usually inadmissible unless there is ambiguity (i.e. where there is a constructional choice) and that evidence is necessary to determine the proper construction where there is a constructional choice.
Accrued Rights
This separate question centres on what rights, if any, continue post-termination. These rights are often referred to as accrued rights in that they are rights that have been earned prior to termination and are enforceable post-contract.
The leading High Court decision on accrued rights following termination of a contract is that of Dixon J in McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 (McDonald), at 476-477, who said:
When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.
[emphasis added].
This decision was summarised by the Queensland Court of Appeal in Lucas Drilling Pty Limited v Armour Energy Limited [2013] QCA 111 at [53] (per Margaret McMurdo P and White JA and Daubney J) as follows:
15 Where a contract is terminated, the parties are not divested of such rights as they had already ‘unconditionally acquired’
(citations omitted)
Accrued rights are generally only unenforceable in specific situations, such as where rights are waived, or released, or they are rendered unenforceable by statute.[4] These situations do not arise here.
[4] Price v Spoor [2021] HCA 20; (2021) 270 CLR 450; Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 54; (1920) 28 CLR 305 at 326; Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 277 CLR 445.
Submissions - Summary
The plaintiff submits:
(a)the right to payment of the trailing commissions under the Agreement arises when the services have been provided, and a reasonable business like construction supports this contention;
(b)it has provided the relevant services entitling it to the claimed commissions;
(c)the right to claim these commissions survives the termination of the agreement; and
(d)the defendant’s suggested construction of the agreement is inconsistent with the Agreement terms and leads to an absurd result.
The defendant initially submitted that the Agreement does not provide for any entitlement to the payment of trailing commissions following termination. However, it became clear at the hearing that the defendant was not contending that the plaintiff’s accrued rights were unenforceable but rather that the rights to trailing commissions had not in fact been unconditionally acquired prior to termination.
The defendant relied on the following contentions in support of its submission:
(a)no clause expressly entitles the plaintiff to ongoing payments post-termination;
(b)following termination, the plaintiff was no longer covered by the defendant’s Australian Credit Licence and did not hold any professional indemnity insurance;
(c)following termination, the plaintiff no longer provided any “Services” under the Consultancy Agreement; and
(d)the definition of “Services” in Schedule 1 of the Agreement includes liaising with and following up clients and keeping notes to accompany files.
In addition, the defendant stated that the plaintiff:
(a)is a commercially experienced operator, having engaged in business activity and consultancy across the financial services sector for many years;
(b)had every opportunity to obtain independent legal advice before entering into the Agreement; and
(c)did not have the terms imposed unilaterally or under duress or undue influence, and no evidence has been led to suggest any ambiguity or misunderstanding as to its terms.
I note there has been no suggestion by the plaintiff that it acted under duress or, indeed, any misunderstanding of the contract terms.
Consideration
As the authorities provide, the rights of parties to a contract are to be determined objectively and in accordance with the understanding of a reasonable businessperson. What is important about this is that intentions, desires or misunderstandings are not relevant to that determination.[5]
[5] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 277 CLR 115 at [15] , [43], [47] and [72] (Kiefel CJ and Gageler J).
I do not find any ambiguity in the language used in the Agreement. Both parties expressly contended there was nothing ambiguous in the Agreement’s terms, albeit then differing on its interpretation. A day prior to the resumed hearing the defendant sought to refer to the following extrinsic material as an aid in support of its contended construction:
(a)A template (unsigned) agreement referred to as a “full member agreement” between Connective Services group of companies (a broker aggregation services company) and a “connective full member”; and
(b)Tables of figures called “illustration of trail variability”.
As I have found that there is no ambiguity and no construction choice to be made, the extrinsic material is inadmissible for objectively construing unambiguous terms and cannot be used to contradict the Agreement's language.[6] Even if that material was admissible, the connective agreement is a template and has no direct or apparent indirect application to the Agreement under consideration here. It is an agreement entered into by different parties and concerns different arrangements. The “illustration of trail variability” also does not assist in the interpretation of the plain words of the Agreement.
[6] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337.
It is commonplace for some contract clauses to survive termination. One obvious class of clause would be confidentiality obligations. Another example, and one that is present here, is the restraint of trade obligations.
Pursuant to the Agreement, the plaintiff was entitled to 50% of upfront commissions and trailing commissions paid to the defendant resulting from the services provided by the plaintiff.
It is trite to say that the obligation to pay for services rendered under a contract would generally survive termination. This was accepted by the defendant at the hearing.
As referred to earlier, following submissions and discussion, it became apparent that the defendant’s argument was not that the plaintiff should not be paid for services already performed as at the date of termination, but rather that the plaintiff could not be paid trailing commissions with respect to ongoing client loans into the future as it was not permitted, and had no obligation to, continue to service those clients. This argument contends that the continued right to trailing commissions is dependent on the ability to provide services in an ongoing way. The defendant submitted that the commissions continue to be received, provided a borrower is not in breach of its loan repayment obligations. In circumstances where a borrower is not meeting its loan repayments, the defendant says it is incumbent upon it to manage the client, and it is only when the client resumes performance of its repayment obligations that the trailing commission becomes payable. The defendant says that because the plaintiff will no longer be able to manage those clients, it should no longer be entitled to the trailing commission moving forward.
The central issue in this case is whether the obligation to pay trailing fees (being ongoing commissions paid for services they have provided) had already arisen at the date of termination, or whether this obligation was instead contingent on future events that had arisen at the date of termination.
It does not matter that the agreed Fee has not been paid. The point is that the fact of its having accrued before the termination date makes it payable whether it is paid at termination or after.
Trailing commissions are commissions which are or become payable after settlement of the loan, for the life of the loan, until such time as the loan is repaid in full or refinanced.
Whether a trailing commission is payable is determined at the end of each relevant period, that is, it accrues periodically. The question therefore becomes whether a trailing commission not yet payable in relation to a client loan referred and arranged by the plaintiff can be said to be an accrued right of the plaintiff. The contract does not expressly address this other than to provide that the plaintiff is entitled to 50% of what the defendant receives for the work it has performed. There is no temporal condition.
An analogous case is that of DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511 (Tridant). In Tridant, DPN solutions entered into a consultancy agreement to provide IT consultancy services to Tridant. Relevant terms of the consultancy agreement included the right of either party to terminate the giving of one month's written notice and a consultancy fee that included a daily base component and variable components in respect of software sales and services sales. Following the termination of the consultancy agreement, DPN claimed that the proper interpretation of the agreement entitled it to the variable component for all software sales and service sales after termination of the agreement which arose from the services provided to Tridant by DPN prior to termination. DPN claimed entitlement in perpetuity, 12 months or for a reasonable time. The basis upon which DPN contended it was entitled to the unpaid variable component was largely because the sale had concluded before the termination of the consultancy agreement. DPN argued not only as a matter of express contract terms but also that there was an implied term and/or industry practice to support its contention. Other matters raised are not necessary to consider here.
One of the issues for determination was whether DPN was entitled to be paid any amount representing the variable component on service sales made after termination. The difference between that case and the present is that it was expressly provided in the DPN consultancy agreement that the variable component was to be paid in arrears quarterly following the payment of the software sale. That is, the accrued rights to payment of the variable component termination remained due and payable and that this provision was not negated by the fact that the agreement was stated to operate and remain in effect from commencement to termination. As here, the question for the court was what amounts had accrued at termination. Tridant contended that no entitlement arose until an invoice was rendered to the client for services sales or payment was made. The difference between the Tridant matter and this matter is the contract expressly provided for the timing of the variable component and how the variable component was calculated. DPN succeeded because of its express term case, but not on its other argument that it was an implied term of the agreement that would be paid variable component in perpetuity. The court found that further sales to existing clients will involve further work and that work would then be performed by Tridant employees not the consultant, and that Tridant would be liable for commissions to bring about those sales. In that case also, the court had the benefit of evidence establishing industry practice. No evidence was led in this matter concerning industry practice. The plaintiff confirmed at the commencement of the hearing that it was not relying on any argument that it was an implied term that it be entitled to commissions in perpetuity.
Practically here, if the relevant customer loan remains under the management of the defendant, the defendant will continue to receive the trail commission. If the trail commission was transferred to another advisor/consultant or another firm, neither the plaintiff nor the defendant would be entitled to continue to receive any further trail commission with respect to that loan.
If the customers are in default of their loan repayments or the loan agreements come to an end, no trail commissions will be payable from that moment on. The liability to pay would not arise. That is, the liability to pay into the future is an inchoate liability until the necessary condition of a loan agreement has been satisfied.
The entitlement to receipt of a trailing commission is inchoate until loan repayments are made.[7] The liability to pay is only contingent on the customers’ performance.
[7] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457.
The primary consideration here is when the right to trailing commissions arose and whether it crystalised prior to the termination of the Agreement. There is no argument that the Agreement was invalidly terminated.
The principles in McDonald were applied by the High Court in Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; (1936) 54 CLR 361 (Westralian). In Westralian, the plaintiff was the agent of an American manufacturer of tractors and entered into an agreement with the defendant allowing the defendant to purchase those tractors on payment of a fixed price to the manufacturer, and a percentage commission to the plaintiff. The commission was payable on the arrival of each consignment in Australia; the tractors being sent directly by the manufacturer to the defendant in response to orders from the defendant. The agreement provided expressly that it would immediately terminate if the agreement between the plaintiff and the manufacturer was determined. That in fact occurred on 3 February 1925. Prior to then, the defendant had ordered and taken delivery, in America, of several tractors, but they did not arrive in Australia until after the termination of the agreement. The defendant denied that it was liable to pay commission to the plaintiff under that agreement. Dixon and Evatt JJ in a joint judgment, said at pp 379-80:
“When a contract comes to an end by reason of the occurrence of an event upon which the parties have by an express provision made it terminate, the question whether an inchoate liability arising thereunder does or does not become enforceable must in the end be governed by the intention of the parties. It is a rule of law that when a simple contract is discharged by the election of one party to treat himself as no longer bound after the other has committed a breach of the contract, rights and obligations which have already arisen from the partial execution of the contract shall remain unaffected (see McDonald v. Dennys Lascelles Ltd.). […] if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or is contingent upon some event, not involving further performance of the contract, does not prevent it maturing into an immediately enforceable obligation.
In the present case the thirty-two tractors had been delivered before the termination of the contract. On behalf of the respondent company, which under the agreement occupies the position of a vendor, the price payable to the vendor's supplier had been paid by the appellant company and the property had under the agreement passed to it. In point of law the percentage formed part of the price payable to the respondent company as vendor. Its payment, however, was by the terms of the contract deferred until the arrival of the goods at Fremantle. This contingency depended upon external events constituting no part of the performance of the contract. The right to payment, no doubt, was at the time of the termination of the agreement contingent but it was a debt otherwise completely vested in the respondent company as creditor. The termination of the agreement did not prevent it becoming absolute on the occurrence of the contingency.
For these reasons we are of opinion that the determination of the agreement affords no answer to the respondent company's claim.”
[emphasis added]
As in Westralian, the right to payment under the Agreement accrues in two different stages. The right to payment of the trail commission is conditional on the performance of a third party and not the plaintiff or defendant. This is what has been described as a conditional accrued right. It is not the act of following up a client or keeping a file note which triggers the obligation to pay a trailing commission, but the loan repayment itself. Once the repayment occurs, the accrued right is no longer conditional.[8] See also FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 where the NSW Court of Appeal said this of Westralian:
[192] […] Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 378-380 does not qualify this principle, although it provides some further context for its application. It makes clear a distinction between a right to payment in the future which is contingent upon an event which does not involve further performance of a contract and one which does. It is only in the former case that an accrued right can be said to have arisen. That distinction returns one to the terms of the contract in order to determine whether a future contingency depends upon the further performance of the contract. To the extent that the contingency in the present case requires the continued exercise of power by the superintendent, pursuant to clause 23, it requires the further performance of the contract by the principal whose obligation it is to see that there is a superintendent and that the superintendent discharges its functions in the prescribed manner. Where the relevant period has not expired, it is not possible to identify an “unconditional” right to a payment vested in the contractor, as at the date of termination in the sense identified in Dennys Lascelles . That right will only crystallize where the principal continues to ensure that the superintendent exercises its power. Not only does that power not outlive termination, but if it did, it would require continued performance by the principal.
[emphasis added]
[8] Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; (1936) 54 CLR 361, 386.
Although the Agreement lacks particularity, there are no clauses inconsistent with the notion of accrued rights (conditional or otherwise) continuing to be enforceable post-termination.
Clause 4.1 of the Agreement makes it clear that the payment is tied to the performance of Services. This does not mean no payment needs to be made after termination. Payment obligations with respect to the performance of the plaintiff during the term remain payable. It follows from the authorisation in clause 3.2 and the definition of “Services” in the Schedule, that the Services provided by the plaintiff under the Agreement were services related to the introduction of loan customers. The wording used in the definition of “Services” (“process loans” and “loans progress”) refers to all work done before a client executes a loan agreement. Once a loan agreement is complete, there is nothing which provides, as the defendant contends, that there are any further services for the plaintiff to provide. The trailing commission is an ongoing consideration for the successful loan introduction. Even if there are some additional administrative tasks, such as contacting a customer if they are in default of their repayments throughout the duration of the loan, these steps are not tied to the right to the trailing commission.
Clause 9 which sets out the consequences of termination makes no reference to the ceasing of the obligation to pay trailing figures upon termination. The Agreement was not void or of no effect upon termination.[9]
[9] McDonald v Dennys Lascelles Ltd [1933] HCA 25; 48 CLR 457, at 476-477; see also, Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 383 ALR 577, at [217].
In my view, an objective businessperson would find it unreasonable that, upon termination, particularly in circumstances where there has been no alleged breach, the plaintiff was no longer entitled to ongoing commissions in relation to loan contracts that they had helped to facilitate. As the counsel for the plaintiff identified at the hearing, to find otherwise would, at least in the context of this arrangement, lead to an absurd result whereby a party could effectively sign up hundreds of clients only to be deprived of the ongoing commission expected, by virtue of a unilateral termination of the contract terminating the agreement. Once the loan agreement was in place, the entitlement to the trail commissions, or share of that commission, arose. The trail commissions are potentially of a significant value, depending on the amounts received, given the longevity with which most loan agreements remain in place. In circumstances where the contract lacks some detail or precision, consideration favours an interpretation that produces a more reasonable commercial result.
The defendant argued that the plaintiff had not done all that was required arguing that there was an ongoing obligation to service clients while the loan facility was in place. There is no such obligation imposed on the plaintiff in terms of the services it had to provide, and it was clear from the terms of the contract that the right to both commissions arose on settlement, that is on settlement of a particular transaction. The plaintiff has conditional accrued rights.
To find the Agreement should be construed as the defendant indicated would be commercially unconscionable because the practical effect is that the defendant would retain moneys earned by the plaintiff. Under no circumstances would this be considered a commercial result.
If it was the intention of the parties that the plaintiff’s rights were to be extinguished on termination, then it should have been expressly provided for in the Agreement.
Conclusion
Pursuant to the Agreement, the defendant is to pay to the plaintiff 50% of all trailing commissions paid to the defendant in relation to customers referred to or introduced to the defendant by the plaintiff between 23 July 2014 and 18 April 2024.
Costs
The starting point is that costs usually follow the event and are ordered to be paid on a standard basis.[10]
[10] Uniform Civil Procedure Rules 1999 (Qld) r 702.
There is no reason to depart from the usual order as to costs.
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