Ken Wolf Real Estate Pty Ltd v O'Halloran

[2012] NSWSC 993

Supreme Court

New South Wales

Medium Neutral Citation:	Ken Wolf Real Estate Pty Ltd v O'Halloran [2012] NSWSC 993
Hearing dates:	19 July 2012
Decision date:	29 August 2012
Jurisdiction:	Common Law
Before:	Beech-Jones J
Decision:	Amended Summons dismissed.
Catchwords:	JUDICIAL REVIEW - Local Court appeal - contracts - construction of Real Estate Institute of NSW's standard agency agreement - whether agreement provides for payment of multiple commissions in relation to the sale of a single property -no finding made that agent "effectively introduced" vendor and purchaser - whether defendant required to file cross appeal or any notice of contention - Anshun estoppel - costs.
Legislation Cited:	- Civil Procedure Act 2005 - s 9 - Contracts Review Act 1980 - Local Court Act 2007 - s 39(1), s 40(1), s 41 - Property, Stock and Business Agents Act 2002 - s 36 - Property, Stock and Business Agents Regulation 2003 - Schedule 8, clause 1 - Supreme Court Act 1970 - s 75A - Uniform Civil Procedure Rules 2005 - r 50, r 51.40
Cases Cited:	- Abbott Laboratories v Corbridge Group Pty Ltd [2002] FCAFC 314; 57 IPR 432 - Amaca Pty Ltd v State of New South Wales [2003] HCA 44; 77 ALJR 1509 - Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 - BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 - Brennan v New South Wales Land and Housing Corporation [2011] NSWCA 298 - Cachia v Isaacs (1985) 3 NSWLR 366 - Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2008] NSWSC 801 - Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; 75 NSWLR 245 - Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337 - Edyp v Brazbuild Pty Ltd [2011] NSWCA 218 - HIA Insurance Services Pty Ltd v Kostas [2009] NSWCA 292 - Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210; 48 NSWLR 709 - Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 - Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390 - Kukolovski v Georges [2011] NSWSC 359 - Milner v Staffordshire Congregational Union (Inc) [1956] Ch 275 - Minister for Immigration and Ethnic Affairs v Baker (1997) 73 FCR 187 - Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; 202 CLR 351 - Penrith Whitewater Stadium Ltd v Lesvos Enterprises Pty Ltd [2007] NSWCA 131 - Pettigrew v Klumpp [1942] St R Qd 131 - Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589 - Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 282 ALR 604
Category:	Principal judgment
Parties:	Ken Wolf Real Estate Pty Ltd (Plaintiff) Stephen Charles O'Halloran (Defendant)
Representation:	Counsel: Ms V. Culkoff (Plaintiff) S. Duggan (Defendant) Solicitors: Steven Klinger (Plaintiff) O'Halloran Deal Lawyers (Defendant)
File Number(s):	11/395785

Judgment

1. The plaintiff is a real estate agent appointed by the defendant, Mr Stephen O'Halloran, as his agent in relation to the sale of his property located on the Pacific Highway at Lindfield ("the property"). Mr O'Halloran exchanged contracts on the property, rescinded the contract and then later exchanged and settled on a further contract with the same purchasers. The plaintiff contended that, on the proper construction of the agency agreement between it and Mr O'Halloran, two commissions were payable. It sued Mr O'Halloran in the Local Court for recovery of a second commission. The Local Court dismissed its case. The plaintiff has appealed to this Court against that dismissal.

Background

1. The following facts are taken from the judgment of the Local Court or are otherwise common ground between the parties.

1. On 21 May 2009, the plaintiff and Mr O'Halloran entered into an exclusive agency agreement ("the agency agreement"). For the period 21 May 2009 to 2 July 2009 Mr O'Halloran appointed the plaintiff as his exclusive agent in respect of the sale of the property. The terms of the agency agreement are central to the resolution of the appeal. They are set out below (at [24]).

1. On or about 3 June 2009, Mr O'Halloran exchanged on a contract to sell the property with Mr and Mrs Cheung (the "first contract"). The purchase price was $1.738 million including a deposit of $173,800.00. Next to the entry "GST: Taxable Supply" on the cover sheet of the contract a box was completed indicating "yes in full". This was confirmed by a stamp on the contract which stated that the price included GST of $158,000.00.

1. Mr O'Halloran contends that the form of the contract exchanged on this occasion was incorrect and that the plaintiff bears some responsibility for that. No findings were made by his Honour to that effect.

1. On 7 July 2009, Mr O'Halloran and Mr and Mrs Cheung executed a Deed of Rescission rescinding the first contract for sale effective from that date. They entered into a new contract for sale with a purchase price of $1,689,020.00, but it was backdated to 3 June 2009 (the "second contract"). The cover page to that contract included an entry "GST: Taxable Supply", to which the answer was now "yes to an extent". A further box indicated that the sale was "GST free in part because the sale is supply of a going concern under s 38-325" (of the GST legislation). A stamp on the contract indicated that the "price includes GST of $109,020".

1. The reason for the rescission of the first contract and the entry into of the second contract with the altered purchase price and GST amount was explained in a letter from the solicitors for Mr and Mrs Cheung to their clients dated 16 July 2009 which was tendered at the hearing in the Local Court:

"We note that during the course of the transaction it was determined that the original Contract for Sale dated 3 June 2009 did not reflect the true situation in relation to the GST implications on the purchase. The purchase should have been partially a purchase of a going concern given that there is a Commercial Lease in place for the suites on the top floor of the building.

We confirm our advice at that time that there should be a rescission of the original Contract and that you should enter into a new Contract in which the GST is reduced as a result of the part purchase of a going concern, relating to 31% of the property, being the upstairs premises."

1. The second contract specified that settlement was to occur on 15 July 2009. It seems that settlement occurred sometime around that date.

1. On 21 July 2009 the plaintiff sent Mr O'Halloran a tax invoice recording the payment of commission calculated by reference to the gross sum payable under the first contract ("the first commission"). This amount had been deducted from the deposit retained by the plaintiff.

1. In July 2010, Mr O'Halloran commenced proceedings against the plaintiff in the Consumer Trade and Tenancy Tribunal ("the CTTT"). He sought recovery of $1,077.56, being the difference between the commission payable under the agency agreement, calculated by reference to the purchase price in the second contract, and the first commission that he had paid to the plaintiff.

1. On 9 August 2010, the CTTT dismissed the application because Mr O'Halloran did not appear. This turned out to be erroneous because proper notice had not been given to him. In a process that was not fully explained, it appears the CTTT allowed him to lodge a further application which was heard on 17 February 2011. The CTTT rejected Mr O'Halloran's claim for a refund. Its reasons were comprised of six paragraphs. Paragraph 5 stated:

"I am satisfied that, by virtue of clause 8 of the Exclusive Agent Agreement, given that the applicant and the purchaser mutually agreed to not proceed with the first contract and to rescind it and enter into a new one nevertheless the respondent is entitled to the fee calculated on the purchase price in the first contract."

1. Six days later, on 23 February 2011, the plaintiff issued a further tax invoice to Mr O'Halloran. It sought the payment of a further commission calculated by reference to the gross purchase price stated in the second contract (the "second commission"). Mr O'Halloran declined to pay.

The Local Court proceedings

1. In April 2011, the plaintiff commenced proceedings in the Local Court seeking recovery of the second commission.

1. On or about 7 June 2011, Mr O'Halloran filed his defence. He pleaded seven substantive matters. First, he denied that on the proper construction of the agency agreement the plaintiff was entitled to a second commission. Second, he contended that an accord and satisfaction had been reached by reason of the plaintiff's acceptance of the first commission. Third, he contended that an issue estoppel arose out of the CTTT proceedings preventing the plaintiff from recovering the second commission. Fourth, he contended that an estoppel of the kind considered in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589 prevented the plaintiff's claim for the second commission. Fifth, he contended that it was an implied term of the agency agreement that the plaintiff would only be entitled to a single commission. Sixth, he sought relief under the Contracts Review Act 1980 if, on its proper construction, the agency agreement required payment of the second commission. Seventh, he pleaded that the plaintiff's claim for a second commission was barred by s 36 of the Property, Stock and Business Agents Act 2002. It is unclear whether the second and seventh of these defences were ultimately pursued at the hearing, and it does not matter. They were not resolved in Mr O'Halloran's favour and he does not seek to agitate them in this Court.

1. The proceedings were heard on 14 October 2011. His Honour gave ex tempore reasons for judgment on 11 November 2011. After referring to the undisputed facts concerning the entry into of the two contracts and the completion of the sale, his Honour referred to the CTTT proceedings. His Honour found that the CTTT had not determined whether a fee was payable on both contracts:

"On consideration of the information before the court, I again state that on that issue I do not consider that the CTTT was determining that fact. That is, that a fee was payable on both contracts."

His Honour continued:

"... it is noted that the plaintiff has raised issues of estoppel - that the defendant is stopped from challenging the payment of the first commission on the final contract on the basis of principles of res judicata and issue estoppel. For the reasons that I have set out above as to the distinct separate issue, which was determined by the CTTT, I do not consider that there are any estoppel issues preventing the commission issue, as originally pleaded, being considered in these proceedings."

1. His Honour then turned to the plaintiff's claim. His Honour found:

"The main distinguishing feature of the matter before the court is the fact that there is only one sale transaction, i.e. the sale of the Lindfield property, and notwithstanding the first contract was rescinded, the sale did go through on the second contract and a commission was paid to the plaintiff who was the agent entitled under cl 8. The parties, that is, the purchaser and the vendor, were the same."

1. His Honour then discussed various cases and continued:

"I do not consider it would be appropriate that on entering into an agency agreement such as the matter which is before this court that the vendor would be confronted with the possibility of an agent earning a double commission for the sale of the same property involving the same vendor and purchasers basically for the performance of the same work performed by the agent which brought about his services as set out in the agreement, even though in this instance the contract has been required to be re-executed as a result of certain advice or a contract has been the subject of rescission.

...

However, I would consider that the circumstances of this case could lead to an implied term and I will accept the proposition of the defendant that there could be a term implied in this agency agreement that states that the agent may earn his commission in various way, but he is only entitled to a single commission in relation to the sale of the property.

I do not consider it is necessary to consider the other matters contained in the various pleadings and in relation to the proceedings which are before the court I enter a verdict for the defendant."

The plaintiff's appeal

1. Sub-sections 39(1), 40(1) and 41(1) of the Local Court Act 2007 provide:

"39 Appeals as of right

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

...

40 Appeals requiring leave

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

...

41 Determination of appeals

(1) The Supreme Court may determine an appeal made under section 39 (1) or 40:

(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or

(d) by dismissing the appeal.

..."

1. Section 75A of the Supreme Court Act 1970 provides:

"Appeal

(1) Subject to subsections (2) and (3), this section applies to an appeal to the Court and to an appeal in proceedings in the Court.

...

(4)  This section has effect subject to any Act.

(5)  Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing.

(6)  The Court shall have the powers and duties of the court, body or other person from whom the appeal is brought, including powers and duties concerning:

(a)  amendment,

(b)  the drawing of inferences and the making of findings of fact, and

(c)  the assessment of damages and other money sums.

(7)  The Court may receive further evidence.

(8)  Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds.

(9)  Subsection (8) does not apply to evidence concerning matters occurring after the trial or hearing.

(10)  The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires."

1. The plaintiff's amended summons identified three errors of law in the Magistrate's reasons. First, it contended that his Honour failed to properly construe the agency agreement in so far as he denied the plaintiff's claim. Second, it is said that his Honour erred in relying upon an implied term as a basis for denying the plaintiff recovery. Third, it was contended that his Honour erred in:

"... holding that the principles of res judicata and issue estoppel did not apply to the CTTT proceedings with respect to the first contract, despite expressly finding that

(i)  the CTTT judgment had specifically referred to the first contract [reference omitted]; and

(ii)  the CTTT was not determining that a fee was payable on both contracts [reference omitted]."

1. In its written submissions in support of this third ground, the plaintiff submitted that the CTTT judgment meant that both parties were "estopped from raising the payment of commission on the first contract ..." I do not understand this contention. The fact of the payment of the first commission was not in issue in the Local Court. Mr O'Halloran's defence to a claim for recovery of the second commission was not inconsistent with the CTTT judgment. His Honour did not deny the plaintiff's claim because of any finding of estoppel arising out of the CTTT judgment. To the contrary, his Honour rejected Mr O'Halloran's claim that the plaintiff was estopped from pursuing his claim for the second commission by reason of the CTTT judgment.

1. Mr O'Halloran has also filed a notice of contention. His notice of contention seeks to uphold his Honour's decision on the basis of either an issue estoppel or Anshun estoppel arising out of the CTTT proceedings, or the claim under the Contracts Review Act. The debate over this notice of contention raised a number of related issues concerning the scope of this Court's powers and functions on an appeal under ss 39 to 41 of the Local Court Act and its inter-relationship with s 75A of the Supreme Court Act. I will defer consideration of those matters and first deal with the central issue in the appeal, namely, the plaintiff's claim to seek recovery of the second commission.

1. There was in substance no dispute over the primary findings of fact necessary to give rise to the plaintiff's claim for recovery of a second commission. They have been set out above. Further, it is not in dispute that the agency agreement was one that was wholly in writing. It follows that the proper construction of that agreement is a question of law (Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210; 48 NSWLR 709, at [11]; Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, at 147). It further follows that, at least in relation to this issue, I am in as good a position as the Magistrate to determine this aspect of the plaintiff's claim.

1. I have referred above to the terms of the agency agreement. The critical parts of the agreement are clauses 3 and 8:

"Agency Period

1.  In consideration of the Agent promising to use their best endeavours to sell the subject Property, the Principal hereby grants to the Agent exclusive selling rights of the Property for a period from 21/5/09 to 02/07/09 [handwritten] inclusive now called the 'Exclusive Agency Period'.

2.i In addition to the exclusive selling rights granted to the Agent under Clause 1, the Principal also grants to the Agent non-exclusive selling rights of the Property commencing on the expiry of the Exclusive Agency Period specified in Clause 1 and until such time as either the Property is sold or this agreement is terminated by either party giving notice in writing, but without prejudice to either party's rights accrued or obligations incurred prior to the effective termination, now called the 'Continuing Agency Period'.

ii  If the exclusive agency period is for a fixed term exceeding 90 days, then the Principal can terminate this agreement without penalty at any time after the end of the first 90 days by giving 30 days notice in writing (this clause does not apply where the contract for sale provides for the construction by the Principal of a dwelling on the Property).

Agent's Remuneration

3.i  The Exclusive Agent shall be entitled to a fee of

$2.0% + GST = 2.2% [handwritten]

if during the Exclusive Agency Period the Property is sold either:

(a)  by the Agent; (b) by any other agent; or (c) by the Principal.

ii  The Agent shall be entitled to a fee at the agreed amount if at any time following the expiration of the Exclusive Agency Period the Principal enters into a Contract for the Sale of the Property to a purchaser effectively introduced to the Principal or the Property during the Exclusive Agency Period by the Agent, by any other agent or by the Principal.

iii  The Agent shall be entitled to a fee at the agreed amount if during the Continuing Agency Period the Agent effectively introduce[s] to the Principal or the Property a purchaser who subsequently enters into a binding contract.

iv  The Agent's fee is calculated on the selling price. If the sale is subject to GST then the Agent's fee is calculated on the GST inclusive selling price.

v  The Agent's remuneration in the event of a sale at the Agent's estimate of selling price would equate to

$28,000 + GST = $30,800 (GST incl) [handwritten]

IMIPORTANT:  This is an exclusive agency agreement. This means you may have to pay the agent commission even if another agent (or you) sell the property or introduce a buyer who later buys the property.

WARNING:  Have you signed an agency agreement for the sale of this property with another agent? If you have you may have to pay 2 commissions (if this agreement or the other agreement you have signed is a sole or exclusive agency agreement).

...

Principal's Fee Obligation

8.  The fee to which the Agent is entitled shall be due and payable on completion of the sale or upon demand if the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract or if after the making of the contract the Principal and the purchaser mutually agree not to proceed with the contract." (emphasis added)

1. It is not clear whether the struck through portions of the above text were in that form at the time the contract was entered into. A footnote to this agreement indicates that it is distributed by and printed and produced by the Real Estate Institute of NSW.

1. Both parties referred me to various authorities concerning the proper approach to construing contracts. The plaintiff emphasised the primacy of construing the written words of the agreement (see for example Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 at [58] to [62] per Macfarlan JA, Young JA and Tobias AJA agreeing). Further, although not referred to by the parties, I note that I can only have regard to the "objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting" if there was an "issue [as to] which of two or more possible meanings is to be given to a contractual provision" (Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337, at 352 per Mason J; see Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 282 ALR 604).

1. In order to recover the second commission, the plaintiff relied on that part of cl 8 which provides that the "The fee to which the Agent is entitled shall be due and payable on completion of the sale". The plaintiff contends that, as the sale was completed, its entitlement to the second commission followed. It submits that this entitlement is independent of the right it had to recover commission on the first contract. This is because the first contract commission flowed from the occurrence of the third event described in cl 8, namely, principal and purchaser mutually agreeing not to proceed with the contract. The plaintiff contended that this involved reading the word "or" in cl 8 conjunctively and submitted that the use of the word "or" in cl 8 can quite commonly and grammatically have a conjunctive sense (Minister for Immigration and Ethnic Affairs v Baker (1997) 73 FCR 187 at 195).

1. The plaintiff referred me to the decision of Barrett J in Kukolovski v Georges [2011] NSWSC 359 in which his Honour considered the construction of a similar printed form of agency agreement produced and distributed by the Real Estate Institute of New South Wales in August 2003 (at [6]). The purchaser had defaulted and the vendors terminated the contract and forfeited the deposit (at [9]). The agent sought recovery of their fee. Clause 10 of the agency agreement in that case was similar to cl 8 of the agreement in this case. It provided that the fee was due and payable on the occurrence of the first two events referred to in cl 8 (i.e. completion or non-completion due to the principal's default; the third event referred to in cl 8 was not referred to in cl 10 of the agreement considered in Kukolovski.)

1. Barrett J considered that clauses 3 and 10 (equivalent to clauses 3 and 8 in the present case) "were intended to identify both the circumstances creating an entitlement to commission and the time at which the commission was payable" (at [16]). His Honour found that the agent could not recover as neither of the conditions in cl 10 were satisfied (at [27]). The plaintiff emphasised the following passage from his Honour's judgment (at [14]):

"... the obligation of the principal actually to pay the fee to which the entitlement relates, and accordingly, the right of the agent actually to receive it arise only if one of the clause 10 events happens - that is, if the sale under that contract is completed or if the principal (as vendor) defaults in completing and a demand for payment is therefore made by the agent. In other words, does the clause 10 specification regarding the point at which the fee is 'due and payable' qualify the clause 2(i) entitlement so that it is in truth an entitlement to receive only that which clause 10 makes due and payable?" (emphasis in plaintiff's submission).

1. I do not see how this passage advances the plaintiff's case. One matter that was not in issue before the Local Court or on appeal was the plaintiff's entitlement to the first commission. Any doubt about that entitlement was determined by the CTTT judgment. The first commission became payable on the occurrence of the third event in cl 8. The question in this case is whether the plaintiff also had an entitlement to a second commission.

1. Counsel for Mr O'Halloran, Mr S. Duggan, conceded that cl 8 operated so that there were various ways in which in a commission might be payable but submitted that "there was only ever one commission to be earned". He contended that there needed to be a clearly expressed intention for the agency agreement to be construed as allowing for the recovery of two or more commissions. To the extent necessary, he sought to uphold his Honour's finding that there was an implied term to the effect that the "agent is only entitled to a single commission in relation to the subject property".

1. Mr Duggan referred me to the following passage from the judgment of Young CJ in Eq (as his Honour then was) in Challenger Group Holdings Ltd v Concept Equity Pty Ltd [2008] NSWSC 801 at [11]:

"There is no need to recite all of the numerous cases which Mr Marshall relied on for the proposition that ordinarily, unless the relevant contract of agency clearly specifies otherwise, where a real estate agent is involved, commission payable to an agent on the basis that he or she has introduced a purchaser is only payable if the purchaser completes the contract and the agent is the effective cause of the sale. One reason for this is that it is said that, commercially, people expect to pay the commission out of the proceeds of sale. In Midgley Estates Ltd v Hand [1952] 2 QB 432 at 435, Jenkins LJ said:

'So far as any general principle is deducible from the authorities, their effect may, I think, be thus summarised: The question depends on the construction of each particular contract, but prima facie the intention of the parties to a transaction of this type is likely to be that the commission stipulated for should only be payable in the event of an actual sale resulting ...' " (emphasis added)

1. A logical consequence of the emphasised part of this passage is that if settlement of a property to a buyer introduced by an agent has occurred, then the usual expectation is that the agent will receive one commission notwithstanding that at some point two contracts with the same purchaser have been entered into. However this passage cannot be taken too far. First it is clear that it is all dependent on the language of the agreement in question. Second, his Honour was discussing the situation where commission is earned on the basis of an introduction by an agent which in this matter is only the case after the exclusive agency period has expired (see cl 3(ii) and 3(iii)). Third, on one view Young CJ in Eq was only addressing the commercial background to such an agreement so that, consistent with Codelfa, those comments are only relevant to resolving an identified ambiguity.

1. The concept of the commission generally being payable out of the proceeds of sale is, however, reflected by clause 8 of the agency agreement. It specifies three circumstances in which the agent's commission becomes payable, namely, completion of the sale and demand following non-completion due the principal's default or mutual agreement not to proceed with the contract. The agency agreement expands the circumstances in which the fee becomes payable beyond those envisaged by Young CJ in Eq in Challenger. However the expanded circumstances only concern circumstances where settlement does not occur because of the fault of the agent's principal or with their consent. One set of circumstances in which a fee does not become payable are those considered in Kukolovski, namely, where the purchaser defaults and forfeits his deposit to the vendor. Even though the form of agreement has been modified since that decision, it is still the case that the agent cannot recover any part of his or her commission in the event of a purchaser defaulting and consequently forfeiting the deposit. Presumably this reflects a lack of success on the part of the agent in providing a purchaser who can complete. The omission reinforces the prima facie applicability of Young CJ in Eq's observation in Challenger to this agreement.

1. As I have stated, cl 8 refers to three events in which the "[t]he fee to which the Agent is entitled" is due and payable, namely, completion of the sale, demand following non-completion due the principal's default, "or" mutual agreement not to proceed with the contract. On its face the clause does not provide that "the" fee is payable two or three times over, for example, in a case where the principal and purchaser mutually agree not to proceed with the contract but then later complete the sale. Such a construction would be counter-intuitive or at least contrary to commercial expectations (Challenger). It would require clear words to support it. It is not clear to me that the plaintiff's construction does involve reading "or" conjunctively. However, just because "or" could mean "and" in cl 8 does not mean it should. The plaintiff referred the Court to the example given by Full Court of the Federal Court in Abbott Laboratories v Corbridge Group Pty Ltd [2002] FCAFC 314; 57 IPR 432 at [39] per Lee, Emmett and Hely JJ that the phrase, "I need a computer for use at home or in the office" conveys that the computer should be suitable for both uses. This may be so, but a statement that a party will pay "the" fee in the circumstance of events of (a), (b) or (c) occurring does not ordinarily convey the proposition that a separate fee will be paid each time one of them occurs.

1. As I have stated the plaintiff's case was focused entirely on cl 8. If the inquiry was limited to that clause it could not succeed. The opening word of cl 8 being "The fee to which the agent is entitled" are suggestive of their being only one fee payable with the payment obligation crystallising on the occurrence of one of three conditions.

1. However Barrett J's analysis in Kukolovski directs attention to cl 3. The "entitlement" that cl 8 speaks of is to be found in cl 3. Even though it was not argued by the plaintiff, it could be the case that cl 3 creates more than one "entitlement" to a fee which cl 8 then makes payable on the occurrence of one of three events.

1. Sub-clauses 3(i) to 3(iii) each identify a circumstance in which the agent becomes entitled to "a fee". Clause 3(i) identifies that circumstance as the property being "sold" during the exclusive agency period whereas clauses 3(ii) and 3(iii) are triggered by the entry of a purchaser into a "Contract for the Sale of the Property" and a "binding contract" respectively. This suggests that "sold" in clause 3(i) means exchange (see Milner v Staffordshire Congregational Union (Inc) [1956] Ch 275). If "sold" in clause 3(i) referred to settlement rather than exchange, then in a scenario where exchange occurred during the exclusive agency period but settlement occurred afterwards an agent would not receive any fee because neither 3(i) nor 3(ii) would give rise to any such entitlement. Such a result could not have been intended. This conclusion is consistent with the CTTT's finding of an entitlement on the part of the plaintiff to the first commission. After the first contract was entered into the property was "sold" giving rise to an entitlement to a fee under clause 3(i). This fee became payable on the happening of the third event referred to in clause 8 namely mutual rescission.

1. The second contract was exchanged after the exclusive agency period had expired (although it was backdated). It follows that any "entitlement" to a fee in respect of that contract can only arise under sub clauses 3(ii) or 3(iii). However, there cannot be any entitlement under cl 3(iii) because the Continuing Agency Period expired when the property was "sold" (see cl 2(i)) which occurred when the first contract was entered into.

1. This leaves sub-clause 3(ii) as the potential source of the entitlement to a second commission arising out of the second contract. For the present I will assume that the purchasers were "effectively introduced" by the plaintiff during the exclusive agency period for the purposes of sub clause 3(ii). I will return to consider that assumption below. However, what is not expressly addressed by clause 3 is whether the fee entitlements are cumulative so that agents can accrue entitlements in successive periods if contracts are exchanged then rescinded and entered into again; i.e. can they obtain an entitlement to a fee under both clause 3(i) and 3(ii) On this the clause is unclear. Clause 3(i) does not state, for example, that the "Agent shall also be entitled to a fee" and the conjunctions "and" and "or" are not to be found at the end or beginning of each of clauses 3(i) to 3(iii). Of some assistance to the defendant is the notation at the end of the clause warning about the possibility of paying two commissions if two exclusive agency agreements are entered into or if, during the period of the exclusive agency agreement, another agent introduces the buyer. The possibility of the principal being obliged to pay multiple commissions by the cumulative operation of clauses 3(i) to 3(iii) is not adverted to. (Even though the inclusion of those clauses was mandated by cl 1 of Schedule 8 to the Property, Stock and Business Agents Regulation 2003, that does not mean that they do not have any significance in the construction of the agency agreement.) Further the fact that the Continuing Agency Period came to end when the property was "sold" is a strong counter-indication to an entitlement to two commissions.

1. Ultimately this returns attention to clause 8 which on its face only provides for when "The fee" is payable. It contemplates there only being an entitlement to one fee and only one such fee being payable under the Agency Agreement. Clause 3 does not alter that position. It simply identifies the alternative circumstances in which an entitlement to "[t]he Fee" referred to in clause 8 arises.

1. The form of the agency agreement suggests that it is a standard form agreement utilised by agents and prospective vendors across the state. If there is the potential for a vendor to pursue the sale of their property in a manner such as this and become liable to claims for multiple commissions, then it is to be expected that that would be made clear by the agency agreement. The vagaries of the course of sales of residential homes and commercial property are such that purchasers can be introduced and enter into agreements which can be redrafted, recast and rescinded. Clause 8 provides protection to agents in the case of conduct which operates to deprive agents of a commission where through the fault or consent of the vendor a completed sale does not proceed. However it is a further step to conclude that, although a vendor cannot complete a sale of the same property twice, the agency agreement confers an entitlement on their agent to multiple commissions.

1. Accordingly I find that, on its proper construction, the plaintiff cannot recover a second commission under the agency agreement. As this conclusion follows from my construction of the agency agreement, which is a determination of law and not fact, it is not necessary for me to consider his Honour's reasoning on this question. For the sake of completeness, however, I cannot see the basis as a matter of law for any implied term precluding the recovery of a second fee. The necessity to consider such an implied term would only arise if, on the proper construction of the written terms of the agency agreement, it provided for the recovery of a second fee. In that event it would be nonsensical to find an implied term prohibiting what the express terms of the contract were found to authorise. The chain of reasoning that led to a construction of the agency agreement to authorise recovery of more than one fee would have the consequence that no such term could be implied (see BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266, 283). It may be that the defendant could have contended for an implied term qualifying that right of recovery so that it did not occur in circumstances where the same purchasers triggered different entitlements to a fee. However an implied term to that effect was not pressed for by the defendant before the Local Court or this Court, and it is unnecessary to consider it further.

1. In [40], I referred to an assumption that the purchasers were effectively introduced by the plaintiff. Under clause 3(i), where the property is sold during the exclusive agency period it is not a pre-condition to the agent acquiring an entitlement to their fee that they effectively introduce the purchaser. In this case the property was "sold" during the exclusive agency period, being the first contract. It follows that to recover the first commission the plaintiff did not have to demonstrate that it had effectively introduced the purchasers.

1. The plaintiff conducted its case in the Local Court and in this Court on the basis that its entitlement to a second commission flowed from the operation of clause 8. I have rejected that contention. I have also concluded that clause 3 does not assist the plaintiff because it does not give rise to accumulating fee entitlements. If I was wrong in my conclusion about clause 3, then the plaintiff would still have had to identify within clauses 3(i) to 3(iii) the source of the entitlement to the second commission. For the reasons I have already addressed, the only source of that entitlement would be clause 3(ii). In that case the plaintiff would have had to demonstrate that the purchasers were "effectively introduced" to the defendant during the Exclusive Agency Period "by the Agent, by any other agent ...". The plaintiff bears that onus (Pettigrew v Klumpp [1942] St R Qd 131). As I have noted, it is not clear whether the words "by the Principal" in clause 3(ii) or "(or you)" in the section entitled "Important" were crossed out in the original agreement or these reflect a later mark-up. No finding either way was made by his Honour but on this scenario as it is a matter on which the plaintiff bore the onus I will proceed on the basis that it was crossed out at the time the contract was entered into.

1. The concept of a real estate agent being an "effective cause" of a sale was discussed by Gummow J in Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; 202 CLR 351 at [80] to [86]. Effective introduction would have a similar meaning. It suffices to state that it does not necessarily follow from the fact that the plaintiff earned a fee for the first contract that it or another agent "effectively introduced" the purchasers. In this case, no finding to that effect was made by his Honour and, as far as I can ascertain, no such finding to that effect was urged upon his Honour. There was some evidence before his Honour from Mr O'Halloran about the negotiations that led to the first contract, but a finding of effective introduction by either the plaintiff or another agent was not mandated by that material. Thus, even if I was wrong in my conclusion that sub-clauses 3(i) to 3(iii) do contemplate an accumulation of fees, the plaintiff still does not have sufficient findings of fact in its favour to establish an entitlement to a further fee under clause 3(ii) which, on this supposition, might have became payable under clause 8. For that additional reason its appeal will be dismissed.

The Notice of Contention

1. In light of the above conclusion, it is not strictly necessary to address the notice of contention. However, in deference to the careful arguments made by counsel, I will address the issues raised.

1. At the outset two issues were raised concerning whether Mr O'Halloran should have filed a cross appeal instead of a notice of contention. I was referred to r 50 of the Uniform Civil Procedure Rules 2005 ("UCPR") which concerns appeals to the Court (other than the Court of Appeal) particularly UCPR 50.10, 50.11 and 50.16 which provide:

"50.10 Cross-appeal

(1)  If a defendant to an appeal wishes to appeal from the whole or part of a decision, that defendant must file a cross-summons.

...

50.11 Notice of contention

(1)  This rule applies if the defendant wishes to contend that the decision of the court below should be affirmed on grounds other than those relied on by the court below, but does not seek a discharge or variation of any part of that decision.

(2)  In the circumstances referred to in subrule (1), the defendant need not file a cross-summons but must instead file notice of that contention, stating, briefly but specifically, the grounds relied on in support of the contention.

...

50.16 Conduct of appeal

(1)  If the decision under appeal has been given after a hearing, the appeal is to be by way of rehearing.

(2)  The higher court has the powers and duties of the court, body or other person from whom the appeal is brought, including powers and duties concerning:

(a)  amendment, and

(b)  the drawing of inferences and the making of findings of fact, and

(c)  the assessment of damages and other money sums.

(3)  The higher court may receive further evidence.

(4)  Despite subrule (3), where the appeal is from a judgment after a trial or hearing on the merits, the higher court may not receive further evidence except on special grounds.

(5)  Subrule (4) does not apply to evidence concerning matters occurring after the trial or hearing.

(6)  The higher court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made." (emphasis added)

1. The plaintiff contended that by seeking to agitate his defences based on estoppel and the Contracts Review Act Mr O'Halloran was "appeal[ing] from the whole or part of a decision" of the Local Court in so far as it either rejected or did not address those defences and he was therefore required to file a notice of cross appeal rather than a notice of contention. I reject that submission. It wrongly treats the reference to a "decision" in the opening part of UCPR 50.10(1) as a reference to the reasons of the Local Court as opposed to the orders of that court. Rule 50.10(1) should be read in conformity with the equivalent rule for the Court of Appeal, UCPR 51.40 (Penrith Whitewater Stadium Ltd v Lesvos Enterprises Pty Ltd [2007] NSWCA 131 at [14]-[18], per Basten JA). In this case Mr O'Halloran has always sought the dismissal of the plaintiff's claim. He succeeded in obtaining orders to that effect from the Local Court. To the extent necessary he seeks to uphold that "decision" of the Local Court, i.e. the dismissal, in this Court on different grounds to those relied on by the Local Court. The appropriate means of doing so is by filing a notice of contention.

1. In pressing his client's notice of contention, Mr Duggan contended that, on the issues it raised, this Court could determine them de novo or at least in a manner similar to an appeal from this court at first instance to the Court of Appeal. He made this submission notwithstanding s 39 and s 40 of the Local Court Act that I have extracted above. He sought to rely on UCPR 50.16(1). Section 9 of the Civil Procedure Act 2005 enables the making of rules "necessary or convenient to be prescribed by rules for carrying out or giving effect to" that Act, which would embrace other legislation conferring jurisdiction on this Court. The making of UCPR 50.16 can be seen as giving effect to s 75A(5) of the Supreme Court Act 1970. However, s 75A(4) makes that provision "subject to any Act" which in this case is ss 39 to 41 of the Local Court Act. Thus, UCPR 50.16 cannot operate to alter the form of appeal that is created by ss 39 to 41 of the Local Court Act by giving either an appellant or respondent to an appeal either a rehearing or a hearing de novo.

1. In Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390 at [30] to [32] French CJ identified s 75A as a source of power for this Court to make at least some findings of fact, but only in circumstances where the Court determined an error of law on the part of the inferior tribunal, stating at [30]:

"Invocation of the ancillary jurisdiction and/or power conferred by s 75A(6) of the Supreme Court Act enables the court, inter alia, to draw inferences from facts found by the Tribunal or to find facts on materials before the Tribunal which were not in dispute. An occasion for the use of that power would arise, as in this case, where limited fact finding would avoid the need for a remitter to the Tribunal and the imposition upon the parties of additional expense and delay."

1. This is very different form of a review to there being an appeal by way of rehearing. It only enables fact finding at the point in which the Court has found legal error and is determining the outcome of the appeal. In any event, these comments were obiter as the plurality in Kostas expressly left open this question (at [88] per Hayne, Heydon, Crennan and Kiefel JJ) as had the High Court in Amaca Pty Ltd v State of New South Wales [2003] HCA 44; 77 ALJR 1509 (at [22] per McHugh, Gummow, Kirby, Hayne and Callinan JJ). Further, the Court of Appeal before, in and after Kostas has consistently held that the establishment of legal error in the decision appealed from does not enable an appellate court to make findings of fact for the purposes of determining what orders should be made (HIA Insurance Services Pty Ltd v Kostas [2009] NSWCA 292 at [120] to [128] per Basten JA; Edyp v Brazbuild Pty Ltd [2011] NSWCA 218 [53] per Allsop P, and [109], [124], [127] per Giles JA; Brennan v New South Wales Land and Housing Corporation [2011] NSWCA 298 at [123] to [127] per Handley JA). However, something similar to the approach outlined by French CJ in Kostas may still be appropriate in a case where the Court has granted leave under s 40(1) of the Local Court Act.

1. On an appeal under s 39(1) of the Local Court Act, the issues raised by a notice of contention will only arise for consideration at a point where either an erroneous decision by the Local Court on a question of law or, if leave has been granted, on a question of mixed law and fact has been established and the question arises as to what relief, if any, should be granted under s 41. If the notice of contention raises a pure question of law which is determinative of the case and is resolved in favour of the respondent to the appeal, then the appeal should be dismissed. If it only raises a question of fact determined adversely to the respondent by the Local Court then, consistent with the above authorities, it should not be entertained. If it raises a question of mixed fact and law then the same consideration that attends a grant of leave to an appellant under s 40(1) would attend the Court in considering the exercise of its discretion to grant relief and the form of that relief pursuant to s 41.

1. One matter raised by the notice of contention was a defence under the Contracts Review Act. Mr Duggan invited this Court to determine it de novo or at least as an appeal by way of rehearing. As this defence requires findings of fact, this is an invitation that must be rejected. However, if the plaintiff had succeeded on its construction argument, the fact that there was a defence that raised questions of fact that was not resolved by the Local Court would be a matter requiring the remittal to that court of at least so much of the matter as involved that issue rather than entering a verdict for the plaintiff.

1. The other ground of the notice of contention concerned the manner in which the Local Court addressed Mr O'Halloran's estoppel defences, namely, issue estoppel and Anshun estoppel. In so far as the Local Court rejected his contention that the CTTT judgment raised an issue estoppel in his favour on the claim for a second commission, then I do not consider that it erred in law. It was not in dispute between the parties that a CTTT judgment can give rise to an issue estoppel (see Cachia v Isaacs (1985) 3 NSWLR 366) although the informality of its processes can mean that it is difficult to isolate a relevant "issue" that was determined (see Cachia at 368-370 per Kirby P) or facts that were assumed (Cachia at 381D per Hope JA). The claim for a second commission was not expressly raised in the CTTT proceedings. I do not read any part of the CTTT judgment as purporting to determine the entirety of the plaintiff's commission entitlements, and nor is there any matter implicit or assumed by its decision that was inconsistent with a claim to recover the second commission.

1. Mr O'Halloran's Anshun defence effectively involved a contention that in the CTTT proceedings the plaintiff could have and should have brought a cross claim seeking recovery of the second commission (see Anshun pp 602 to 603). A complaint of an erroneous conclusion on that issue appears to go beyond raising a question of law and to involve a full assessment of the circumstances, including the factual context, in order to make a value judgment about whether it was unreasonable not to plead the issue in the earlier proceedings (Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; 75 NSWLR 245 at [3] per Allsop P). The passage that I have extracted in [15] involved a rejection of an Anshun defence. Although his Honour referred to "res judicata", that phrase embraces an Anshun (or Henderson v Henderson [1843] Eng R 917) style estoppel (Anshun at 598). Beyond inviting a reconsideration de novo or by way of rehearing, Mr Duggan did not identify any erroneous answer to a question of law on this issue, whether it be express or implicit in his Honour's reasoning (Kostas). Accordingly, I reject so much of the notice of contention that complains of an error by the Local Court in addressing and rejecting Mr O'Halloran's estoppel defences.

Conclusion

1. It follows that the plaintiff's amended summons will be dismissed.

1. Mr O'Halloran raised some issues in respect of which he was not successful, but overall his position has been vindicated. I will order that the plaintiff pay his costs. If either party seeks a variation of that order then they should apply within seven days of the publication of this judgment.

1. Accordingly the Court makes the following orders:

(1)   The Plaintiff's Amended Summons is dismissed.

(2)   The Plaintiff pay the Defendant's costs.

(3)   If either party seeks to apply to vary order (2) then any such application together with any submissions in support, which are not to exceed three pages, are to be filed and served within seven days hereof.

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Decision last updated: 29 August 2012