Mackenzie Real Estate P/L v Cenna P/L - [2007] SADC 101

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MACKENZIE REAL ESTATE P/L v CENNA P/L
[2007] SADC 101
Judgment of His Honour Judge Herriman
4 October 2007
CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - RIGHTS OF AGENT AGAINST PRINCIPAL - REMUNERATION OR COMMISSION - TRANSACTION CONTEMPLATED NOT COMPLETED
Plaintiff land agent claiming commisson on contract for sale of property on which vendor failed to settle. Vendor disputing validity of written sales agency agreement, asserting execution obtained by trickery and mistake, and asserting earlier oral agreement that commission not payable if property not sold.
Taylor v Johnson (1982-1983) 151 CLR 422; Cielo v Kailis Gulf Fisheries Pty Ltd (1991) 104 FLR 189; Parker v South East Railway Co. [1877] 2 CPD 416; Bell v Lever Brothers Ltd [1932] AC 161; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, applied.

MACKENZIE REAL ESTATE P/L v CENNA P/L
[2007] SADC 101
Introduction

The plaintiff is a land agent and sues for the recovery of agent’s commission and other costs associated with a contract it obtained for the sale of the defendant’s property, but which was not settled upon. The claim is made pursuant to para. 6.4 of a Sales Agency Agreement (“the SAA”) executed by the parties and dated 5 March 2004.
It is not in dispute that the plaintiff was the vendor’s agent for the purposes of selling the commercial property owned by the defendant and situated at 337 Hancock Road, Fairview Park (“the property”), that the plaintiff introduced buyers who were ready, willing and able to complete that purchase and who executed a contract offering to do so, and that the defendant accepted that contract. Subsequently, the defendant, for its own reasons, chose not to settle upon it, whereupon the purchasers terminated and later successfully recovered from the defendant compensation for their losses.
Further, it was not contested at trial that, were the SAA a valid contract, then, by virtue of the provisions of clause 6.4 and the defendant’s default in not settling, the plaintiff would ordinarily have been entitled to recover what it claimed.
But the defendant contended that the SAA could not be relied upon by the plaintiff because its (the defendant’s) execution of that document was a mistake, that it did not consent to the terms contained in it and that the plaintiff well knew of that mistake and wrongfully took advantage of it. It claims that in those circumstances, it would be unconscionable for the plaintiff to enforce the SAA. Further, it pleads that the true agency agreement between the parties was an oral one concluded in late 2003 or early 2004, whereby a commission was only to be paid if the property was sold, which I infer from its case was intended to mean a completed sale.
The plaintiff is controlled by its director, Robert Mackenzie senior (“Bob Mackenzie”) and employs Robert Mackenzie junior (“Mackenzie”) as a sales agent. It is common ground that the principal dealings between the parties were between Mackenzie and Reza Samvat (“Samvat”), the director and authorised officer of the defendant company.
Mackenzie and Samvat had had professional dealings in the past.
In about 2001, Samvat had purchased a residential property from a client of the plaintiff, which he had later subdivided. With the assistance of the plaintiff, that property was then placed on the market in two separate lots, the plaintiff, through Mackenzie, acting as Samvat’s selling agent. Both lots were sold and, pursuant to a written sales agency agreement, the plaintiff was paid an agent’s commission of 3% on each sale plus advertising expenses. Those transactions were completed in the year 2002.
Later in that same year, Samvat appointed the plaintiff, again in writing, to act as his agent, in respect of the sale of an allotment at 480 Seaview Road, Henley Beach. Ultimately, the plaintiff, through Mackenzie, procured a buyer for the sum of $680,000, but the sale did not proceed without incident. Due to the failure of the plaintiff to properly serve a particular form of notice upon the purchaser, that party was able to successfully terminate it. In the event, the property was re‑listed for sale by the plaintiff and was sold for $660,000. Because of the plaintiff’s default, it was agreed it would pay Samvat interest on the value of the property over the intervening time. Additionally, the plaintiff did not claim an agent’s commission of 3% on the sale, as it would otherwise have been entitled to do under the written agreement. On a sale price of $680,000, that commission would have been an amount of $20,400.
On the basis of those figures, it would appear that Samvat was adequately compensated for his lost opportunity to secure and settle upon the first contract.
In early 2003, the defendant, through Samvat, entered into a written residential sales agency agreement with the plaintiff to sell another property at Henley Beach South. A buyer was obtained through Mackenzie, settlement proceeded and, pursuant to that agency agreement, the plaintiff was paid a commission of 3% plus advertising costs.
At a later time in 2003, Samvat again appointed the plaintiff to act as his agent to sell a property at Esplanade, Henley Beach. Once again, the agreement was in writing and the commission rate agreed was 3%. A buyer was obtained by Mackenzie, the sale was completed and the plaintiff received that commission plus expenses.
As of late 2003, the plaintiff had thus sold four properties for Samvat and one property for the defendant, and in respect of each transaction, save for the one identified, it had been paid an agent’s commission of 3% pursuant to a written residential sales agency agreement.
The subject transaction
Samvat is a chiropractor and, up to about the time of these events, had conducted his practice from the property. It had other tenants, too, health care consultants who had close affiliations with him – indeed, on his account they derived specific benefits from their associations with his practice. The property presented itself as a health care centre known as “Inspiring Choices Health Clinic”.
Samvat was then in the process of establishing an interstate practice and he was acutely sensitive to the impact that his sale of the property and limited presence there might have on those tenants.
The circumstances in which the property was first offered for sale are contentious.
Both Mackenzies say that they went with Samvat to inspect it and then conferred with him as to the manner in which it might be sold. Samvat denies that Bob Mackenzie was there and says that he went with the son only. At all events, Samvat’s wish was that that property be sold subject to existing tenancies and he was thus concerned to see that secure tenancy arrangements were put in place, particularly having regard to his own practice plans. Whether it was with both Mackenzies or the son only, there was then discussion about how to present the property for sale in a discreet manner so as not to alarm the tenants and how to introduce interested parties and assure any intending purchaser of a full rental income. It was appreciated by both Mackenzie and Samvat that putting secure tenancy agreements in place would take some time.
Samvat, either then or perhaps later in February 2004, became interested in creating a head lease, so as to transfer the risk of individual tenancies away from the intending purchaser and assure that party of a continuing income stream. He had it in mind that his practice manager, Mrs Tess Boyd, might become a head tenant and she, too, was interested in that idea, but, for her part, too, needed the assurance of firm subtenancy arrangements. Because of those uncertainties and the delays they entailed, Samvat later decided to become the initial head tenant, but with a view to ultimately transferring that interest to Mrs Boyd.
But all of that is jumping ahead in time.
In November 2003, at the defendant’s request, the plaintiff placed two advertisements in the paper relating to the property. The plaintiff says this was done as part of a sale proposal advanced by the defendant, but on Samvat’s account, it was done only to “test the market”.
Mackenzie’s evidence was that it was unusual for the plaintiff to arrange advertising without having in place a written sales agency agreement, but that it nevertheless did that because of its past association with Samvat and because, by this time, it was mainly dealing with him over the phone, due to his interstate commitments. Even so, Mackenzie says, he then had discussions with Samvat about agency terms and they agreed that normal terms would apply, that the commission rate would be 3% but that the plaintiff was to be limited to no more than $1,000 by way of advertising expenditure.
For his part, Samvat says that they did, indeed, orally agree upon those terms, not in November 2003, however, but later, at a time he could not specify and prior to March 2004 when further advertisements were placed. Further, he said it was specifically part of that agreement that there was to be no written agency agreement executed and that an agent’s commission would only be paid if the property were sold. He says that that oral agreement was the only agency agreement ever concluded with respect to the sale of the property by the plaintiff.
The November advertisements did not produce any immediate response and, indeed, with the intervening holiday season, nothing occurred until February 2004, when, on Mackenzie’s account, Samvat handed him a written proposal to purchase completed by Abigroup Contractors Pty Ltd dated 5 February 2004 and directed to its own agent, Mr Andrew Turner of Commercial SA Property Group. Samvat denies that he gave that letter to the plaintiff and says the plaintiff actually gave it to him.
The Abigroup was, in any event, expressing an interest in purchasing the property for $1 million on the basis of vacant possession. On Mackenzie’s account, he was directed by Samvat to liaise with Andrew Turner over this proposal. Samvat denies this, saying that he was never interested in vacant possession. At all accounts, the proposal was never significantly advanced and the conflicting evidence goes to credit only.
Subsequently, after some further advertising in February 2004, a Mr Pegoli sent to the plaintiff a “letter of intent” (Exhibit P1.3 dated 2 March 2004) offering to buy the property for $800,000 and on the basis there was to be in place a five-year head lease with rights of renewal and a fixed rental income equivalent to 10% of the purchase price. As Samvat was then residing interstate, Mackenzie telephoned him and told him of that offer. It was well below the $850,000 sum the defendant was then seeking. They agreed it was too low and Mackenzie says he was then instructed to go back to Pegoli to seek a better offer, which he did. Mackenzie says that they also then discussed an appropriate commission rate were the price of $850,000 not to be obtained, and they agreed that, were an offer of less than $850,000 to be accepted by the defendant, the plaintiff would reduce its commission from the agreed rate of 3% to 2.5%. As of that date, Samvat had not signed any written sales agency agreement.
As to that conversation, Samvat says he was not interested in the $800,000 offer, as tenancy arrangements were still not resolved, and that he said as much to Mackenzie. He denies that there was then any discussion with Mackenzie about adjusting the commission rate or about seeking a better offer.
Some three days later, however, on 5 March 2004, Pegoli sent to Mackenzie a written offer of $820,000 on similar terms (see Exhibit P1.4). Mackenzie says he telephoned Samvat about that second offer and, indeed, produced a mobile telephone record of a call made to Samvat’s mobile number on that day (Exhibit P10). He said Samvat was then visiting Adelaide and, in consequence, they arranged to meet later that day at Kibbi’s Café in King William Road, Hyde Park (“Kibbi’s”) to discuss it.
Mackenzie says he prepared for that meeting by writing up a commercial sales agency agreement, which he then took with him. As had previously been discussed and agreed between them, he said, he incorporated in it a commission rate of 2.5% plus GST and a limit on advertising costs of $1,000. Further, the minimum sale price nominated in it matched the sum then offered by Pegoli, namely, $820,000.
On Mackenzie’s account, they met at Kibbi’s and sat side by side for some 15 or 20 minutes. He showed Pegoli’s offer (Exhibit P1.4) to Samvat and, as well, the sales agency agreement he had prepared. He then went through that agency agreement with Samvat. They did not then discuss its “Terms and Conditions”, but did discuss each of the items in its schedule, that is to say, its first four pages.
I pause here to observe that the printed Terms and Conditions of the SAA are identical to those contained in the four domestic sales agency agreements previously executed by Samvat, save and except for clauses 1.4 and 3.1.9, which vary as to matters not relevant to this dispute.
Mackenzie says that in the course of those discussions, Samvat told him that he was prepared to sell at the offered price of $820,000, but that he first wanted to secure his tenancies. He said he was proposing to become head lessee of the property and was making the necessary arrangements for that. Mackenzie says that Samvat then asked him to send a copy of the Pegoli offer to his accountant.
On Mackenzie’s account, he then invited Samvat to execute the SAA on behalf of the defendant. Samvat at first signed that document at the foot of page 8 and in an inappropriate place against a credit card authorisation. Mackenzie pointed out that error to him and Samvat thereupon struck out that signature, initialled the correction and then signed it where the proper execution clause is located. Mackenzie had previously dated the document on that day, so he then simply countersigned it. That is the document SAA Exhibit P2.
Samvat rejected Mackenzie’s account of that meeting and their discussions. He said there was never any such meeting at Kibbi’s, nor did he recall their then meeting anywhere about the sale of the property. He had spoken, separately in evidence, of social contact he had had with Mackenzie and others at a gym facility located in a “Wellness” clinic at Unley, where he was then consulting, and of going on occasions with Mackenzie and others to have coffee in King William Road, but he had never heard of Kibbi’s Café, which was itself on that road. When the premises were described to him, he denied ever meeting Mackenzie there.
He denied that he had knowingly signed the SAA on that day or, indeed, at any time. He acknowledged that both signatures on that page of P2 were his, but said that he signed the document unwittingly and that that likely occurred much later than 5 March. Necessarily, he could not say when that was but he suggested this was likely to have happened on 28 May when Mackenzie presented for his signature a bundle of sale documents for the property. Even so, he said that the initials at the foot of that document were not his. There was no other evidence put before the court and capable of supporting his claim that the SAA had likely been signed by him on that date.
It was put to Mackenzie in cross-examination that, at their meeting on 28 May when the ultimate sale contract had been signed, he had surreptitiously included the SAA or its execution page in a bundle of loose contract papers which Samvat had then to endorse. Mackenzie denied that and adhered to his account of the execution of the SAA taking place at Kibbi’s on 5 March 2004.
Returning then to the Pegoli offer of $820,000, Samvat said in evidence that he was not then interested in it and that he told Mackenzie so. Further, he said, he did not instruct Mackenzie to send that offer to his accountant. Specifically, he denied ever consciously entering into the SAA or any oral or written agreement to pay a reduced commission rate of 2.5%.
As to the dispute over the initials on page 8 of Exhibit P2, I should say that I did not find it to be of any direct relevance in the matter, except in so far as it went to credit. Plainly on his own account, Samvat had first signed page 8 incorrectly, then struck out his signature and placed it correctly against the execution clause. Whether that correction was initialled can never have been a matter of contractual significance.
Even so, the defendant sought at trial to call expert handwriting evidence as to authorship of the initials. I refused that application, first, because it was plainly a collateral issue and, secondly, whilst that conclusion is not necessarily determinative, I was not persuaded that I should exercise any residual discretion in the defendant’s favour. The plaintiff, too, was ready to adduce expert evidence on the matter and the possibility of lengthy and detailed expert evidence (as it promised to be) on an issue so plainly collateral, merely exemplified one of the primary purposes of the finality rule.
Returning then to Mackenzie’s account, he said that he rang Pegoli later that same afternoon, 5 March 2004 (and he referred to a mobile record entry confirming a call to Pegoli’s number – P10), and told him that his offer was accepted subject to the tenancy question being satisfactorily resolved. Further, in compliance with Samvat’s request, on that day he sent a copy of the Pegoli offer to Mr Henry Peterson of the firm PFA Chartered Accountants, the defendant’s accountant, with an accompanying letter, Exhibit P11, which reads as follows:
Just forwarding on letter of offer on above mentioned property I have not formalized it into contract form as Reza wished to talk to you about it. I mentioned to Reza settlement dates to be as he requires. If you have any further questions please feel free to contact me.
Samvat not only denied that such a request was ever made, but said that Mr Peterson had ceased to be his personal accountant in the year before and another member of the firm of PFA was now assisting him. Even so, he did not challenge the claim that such a letter had been sent, nor did he call anybody from that firm as to receipt of the letter or any response made to it, notwithstanding his recognition of their then professional relationship. In those circumstances, I would not have regarded the calling of evidence on that issue as merely collateral and, in the absence of any denial from Samvat or evidence from his accountant, I am disposed to find the letter was, indeed, sent.
Whatever of those matters, that proposed purchase did not proceed very far because, on the following Monday, 8 March, Pegoli withdrew his offer (Exhibit P1.13).
There was some dispute between the parties as to just what was discussed between them after then or how it should be interpreted. On Mackenzie’s account, he was asked to continue to try to sell the property, but on Samvat’s account, he then told Mackenzie to proceed to procure a buyer, the implication being that, up to that time, he had never given Mackenzie firm instructions, let alone a formal agency, to sell it.
However that interaction should be viewed, there is no doubt that, one way or the other, the plaintiff continued to advertise the property and seek out potential buyers.
Ultimately, in April 2004, three property trusts (“the Property Trusts”) offered to purchase it for the sum of $855,000 on the footing that Samvat or a nominee became the head tenant on terms proposed in a draft lease. That offer was accepted by Samvat on the defendant’s behalf on 7 May 2004 (Exhibit P15).

It is common ground that, in consequence of that acceptance, the defendant had to hurry to complete the task of securing the subtenancies, whether it was to be Mrs Boyd or Samvat who would become head lessee. That could not be done within the settlement period, however, so, rather than let the sale lapse, as it threatened to do, Samvat executed a fresh contract on 28 May 2004, with those same purchasers but nominating his own company, Samvat Chiropractic Clinic Pty Ltd, as the head lessee for a five-year term and at an annual rental of $85,000 (see P1.14). He was still anticipating that the remaining tenancies would be secured within a short time after then so that his arrangements with Mrs Boyd could go forward. His company could then assign the head lease to her.
Samvat then described the events which preceded his execution of that contract on 28 May. He said he had flown from Melbourne to Adelaide on that day and Mackenzie had picked him up from the airport and driven him to his Unley consulting rooms. When they were parked in Mackenzie’s car, Mackenzie had given him each of the individual (and then, he said, unattached) pages of that contract (P1.14) to variously initial and sign – which he did.
He suggested, though he could claim no specific memory of this, that the SAA or its execution page must have been in amongst those papers and therefore accidentally signed by him whilst he was in the process of signing the sale contract itself.
For his part, Mackenzie agreed that, on that day, the sale contract was executed and had likely been signed in his car after he had picked up Samvat from the airport, but he said it had been stapled together as one document. He rejected altogether the suggestion put to him that he had then presented the SAA, or its execution page, to Samvat for signature, whether surreptitiously or at all.
Prior to the settlement date, the plaintiff sent to the solicitors representing the defendant on the sale, a copy of its Story Sheet (see P12 and P20), which evidenced an intention to claim a 3% commission. It received no response or objection to that claim. When so much was put to Samvat, he could not recall seeing or discussing the document with his solicitors. Nothing much turns on that, however, as, on his own evidence, he had then expected that the commission claimed would be 3%, albeit subject to completion of the settlement.
Settlement was, by that second contract, scheduled for 11 June, but it did not take place. There were conflicting accounts as to how and when Mackenzie was told that the intending purchasers had terminated the contract, but at all events, that occurred and the defendant later entered into an agreement with the purchasers to pay them damages in the sum of $15,000.
Samvat explained that the defendant did not complete the contract because, at some time prior to the settlement date, one of the significant tenants had withdrawn from renewal negotiations and that was going to seriously impact on the head lessee’s financial position.
On Mackenzie’s account, when he became aware that the contract had fallen through, he rang Samvat and asked for his commission. Samvat told him that he should contact his (the defendant’s) lawyers. Samvat gave a different account of that conversation, saying that he rang Mackenzie at that time and asked him to re‑market the property but Mackenzie refused and asked for his commission, saying he was legally entitled to it. Samvat said he was shocked at that request, but he did not claim to have then asserted to Mackenzie that their oral agency agreement absolved him of any liability. Mackenzie, for his part, denied that Samvat asked him to re‑market.
In evidence, Samvat said that because of the events which led to the collapse of the sale, he had then felt that the plaintiff should receive something for its efforts, but an amount less than a full commission, and that he wanted to and would have negotiated and paid something, but as Mackenzie was insisting on payment of his full commission, their relationship broke down.
A caveat was later lodged and these proceedings were instituted.
Credibility
Although there were significant conflicts in the respective accounts given by Mackenzie and Samvat, I was not persuaded that either of them was seeking to deliberately mislead the court.
Even so, I am obliged to say that I found myself quite unable to rely upon the evidence of Samvat, as it appeared to me to be very much the product of a failed memory and which he had sought to resurrect by a process of speculation and reconstruction aided by a strong desire to put matters in a light most favourable to his cause.
He faced a difficult task in seeking to explain away the existence of the SAA which he had signed and which, on its face, bound him to pay the amount sought by the plaintiff. He said he had no recollection whatsoever of signing it and I am prepared to accept that claim. I do, however, have great difficulty with his process of reasoning from that point on.
Effectively, he argued that, because he had no such recollection, it must follow that Mackenzie had tricked him in some manner into signing the SAA. The only occasion he can fix upon as being the likely time when that occurred is when he visited Adelaide on 28 May 2004, because on that day, he says, he signed the sale contract in the informal setting of a car and in circumstances in which its individual pages (which he separately endorsed) were loose. He does not claim any memory of then executing another or any separate document, but simply concludes that that is when he must have signed the SAA and that, accordingly, Mackenzie must have tricked him into signing it on that day by mixing it up with the loose pages of the sale contract.
He advances no reason for Mackenzie to have done that. Mackenzie denies it.
The two of them had had a reasonably long professional relationship up to that point and, as well, had mixed socially – indeed, Mackenzie was a guest at his wedding. There had been no falling out. There is no suggestion that, at that time, the contract was likely to collapse so as to deprive Mackenzie (on Samvat’s version of their agreement) of a commission – indeed, the trick was allegedly perpetrated at the very moment Samvat was committing to the sale. Nor did Samvat advance any explanation or suggestion as to why the SAA, if executed on 28 May, would have:
(1)referred to the amount of the Pegoli offer ($820,000) when the contract he was then signing was for $855,000;
(2)contained a commission rate below the 3% they had previously discussed as appropriate to a sale of $850,000 or more.
Whilst I am prepared to accept Samvat’s claim that he has no recollection of signing the SAA, there is not a scrap of evidence to support his assertions that he signed by mistake or in circumstances whereby his signature was obtained by trickery.
By way of contrast, the evidence of Mackenzie was clear, plausible and consistent with the objective facts.
There was, in fact, a considerable body of evidence which supported Mackenzie and, conversely, made Samvat’s account of events unlikely. I refer to the following:
(1)The defendant had pleaded that an oral agency agreement had been concluded in late 2003 or early 2004 but, in evidence, Samvat claimed that it was reached early in 2004. That explanation seems to me to be somewhat unlikely in the context of the plaintiff having previously (in November 2003) expended moneys advertising the subject property for sale. Notwithstanding their previous dealings, it seems improbable to me that the plaintiff would have accepted instructions to advertise the property without reaching some agreement with Samvat about commission and costs.
(2)There was conflicting evidence about some issues such as whether Bob Mackenzie once visited the property with his son and Samvat, whether the initial advertising was merely to “test the market” or to sell and whether the Abigroup offer came through Mackenzie or Samvat and what was said about it, but I do not find it necessary to make any findings about those issues as they are largely peripheral.
(3)There are then the dealings involving the Pegoli offers and the conflicting evidence of the parties as to what then occurred. It is common ground that, at that time, the defendant was seeking $850,000 or more for a sale subject to tenancies and that Pegoli first offered $800,000, and later $820,000, subject to those conditions.
I am satisfied that Samvat was not interested in the $800,000 offer but I am persuaded that he was, indeed, attracted to the $820,000 offer and said as much to Mackenzie. I so find for these reasons:
(a)I am satisfied on Mackenzie’s evidence, corroborated as it is by his telephone records, that he did speak to Pegoli later on that day and tell him his $820,000 offer would likely be accepted subject to the finalisation of tenancy arrangements. Had Pegoli’s offer been rejected out of hand, as Samvat says it was, and had Mackenzie then told Pegoli that, it seems to me a little less likely that Pegoli would have later formally withdrawn his offer, as, indeed, he did on the following Monday. This is not a strong point, as I accept that a prudent offeror might still have seen such a need, but I take some account of it.
(b)If I am wrong in that, there remains the question of why Mackenzie sent a copy of the $820,000 offer to the defendant’s accountant with a letter in the terms quoted, albeit to the wrong person in that firm, when, on his own account, Samvat had made it clear that he was not accepting it. The fact that he did so attracts no sensible explanation other than that provided by Mackenzie, and it tends to corroborate his claim that the defendant was, indeed, interested in that offer.
(c)Such an interest is also corroborated by Mackenzie’s evidence that he prepared, and Samvat then signed, the SAA, nominating a selling price of $820,000. Why else would he have then prepared such a document nominating, as it did, a minimum sale price equivalent to the amount offered and a reduced commission sum? The document is dated on that very day and is consistent with Mackenzie’s evidence that because the Pegoli offers were for less than $850,000, he and Samvat discussed and agreed upon a reduction in the commission rate from 3% to 2.5%.
(d)Conversely, if, as is suggested by Samvat, the SAA was only signed by him on 28 June 2004, it is difficult to see what purpose was sought to be achieved by the plaintiff in then presenting it in a form showing a minimum sale price of $820,000 (when there was already in existence a written offer for $850,000) and incorporating a commission rate which, on their respective accounts, was less than the rate the parties had discussed as appropriate to a sale in excess of $850,000.
All in all, the timing and amount of the Pegoli offer, the date on the SAA and the reduced rate of commission, combine to corroborate Mackenzie’s account of just what occurred on that day.
(4)In cross-examination, Samvat gave a curious answer. When asked whether, had he been presented with the SAA on 28 May and had appreciated what it was, he would have then signed it, he replied in the affirmative.
Elsewhere, he had expressed an awareness of the terms and conditions of the SAA and, plainly, by the time of the trial, he well understood them. He had read identical terms in the residential sale agency agreements he had previously signed. He can therefore be taken to have known, in giving that answer, that had he knowingly signed the SAA on 28 May, he would have waived his asserted right to avoid the payment of commission if the sale did not complete.
That position was totally inconsistent with his other evidence.
(5)I was left to wonder at the conflict over how the initials “RS” came to be placed at the foot of page 8 of the SAA. They bore a superficial similarity to Samvat’s initialling in other documents and, if they were not made by him, one could fairly readily conclude that another person had sought to copy them in such a way that they appeared to be Samvat’s own handwriting – indeed, Samvat sought to say that that happened.
Whoever put them there assumes no significance at all in terms of any potential liability under that agreement, yet, for reasons which I can only assume went to the question of credit, Samvat sought to infer that Mackenzie was responsible for it.
Mackenzie denied that and there was no evidence of any kind supporting that inference; indeed, it is difficult to discern just what could have been Mackenzie’s purpose or motive in adding them to that document – the error in placing the first signature was corrected and nothing turned on its placement, anyway.
Samvat had, at first, pleaded that the full signature at the foot of that page was not his own, but he had later changed that position in his evidence.
(6)Further to that, Samvat claimed no recollection whatsoever of signing page 8 of the SAA, yet it was plainly not a process which had proceeded without incident. He had first signed in the wrong place, he had, on Mackenzie’s account, been told of that, he had then crossed out his signature and he had had his attention directed to the execution clause, where he had there signed. Those circumstances argue somewhat against his claim to have mistakenly or accidentally completed that document.
(7)There was a measure of inconsistency in the evidence he gave as to his desire to provide Mackenzie with some compensation following the termination of the sale contract. On his own account, there was a clear oral agreement between them that Mackenzie would not be paid any commission if the sale was not completed, yet he said he was later intending to offer Mackenzie some unspecified recompense for his services.
(8)Samvat struck me as a very careful person and, indeed, he spoke at some length about the care that he had taken in reading and considering contractual documents previously put before him by Mackenzie. Mackenzie, for his part, corroborated this; in particular, regarding the schedules of the four previous agency contracts and more so with respect to Samvat’s execution of the SAA itself.
That claimed level of attention to detail conflicted with his assertion that he must have unwittingly signed the SAA and, further, with his evidence that he had previously told Mackenzie he did not want a written agency agreement. Indeed, I found his evidence as to the latter question to be quite odd. In circumstances where there had been previous transactions between the parties and where the agency agreements had always been written, why would he be so concerned that there be no written agency agreement with respect to this sale?
(9)It may well be that he signed the SAA in circumstances where he was in a hurry and therefore forgot he had done so – indeed, so much was put to him by the plaintiff’s counsel.
At that time, he had been to Queensland consulting, he was involved in writing a book, he was establishing a consulting practice in Melbourne and was travelling back and forth to his Adelaide clinic at Unley. He was attempting to secure all the subleases at Fairview Park and was negotiating with his manager Mrs Boyd over the head lease. The consensus that Mackenzie picked him up from Adelaide Airport on 28 May and that the sale documents were actually signed in a car in a car‑park suggests that he allowed himself limited time, indeed. It seems to me there is every likelihood that, against that background, he might well have a limited recollection of events that occurred on 5 March 2004 or at about that time.
(10)He denied any knowledge of having been to Kibbi’s or at Kibbi’s on 5 March 2004, but he did not go so far as to suggest that he was not in Adelaide on that day. Given the fact he was then conducting practices in Adelaide and Melbourne and that he was travelling between those cities at various times, I would have expected that he would have been able to produce clear evidence as to his whereabouts had he not then been in Adelaide. He did not elect to do that and I infer he did not contest he was in Adelaide on that day.
(11)I have considered the fact that the plaintiff’s Story Sheet containing a claim for 3% commission was sent to the defendant’s solicitors and was apparently received without objection, but I do not think that takes the matter very far because, even on the defendant’s account, he was prepared to pay that amount had the matter proceeded to settlement.
(12)It was not in dispute that, at about the time the settlement fell through, Mackenzie asked Samvat to pay his commission and Samvat responded that Mackenzie should speak to his solicitors. Just why Mackenzie would ask for his commission if he had explicitly agreed with the defendant that it would not be payable if the sale did not proceed to conclusion, was not put to him.
Even more significantly, I would have expected that Samvat, faced with such a claim, would have immediately responded by saying that it had been explicitly agreed that no commission would be payable if the sale did not complete. Neither on Mackenzie’s account nor his, did he say anything of the kind.
(13)The objective evidence which supported Samvat’s account of there being a single oral agency agreement, in the terms he spoke of, was limited:
(a)Both Mackenzie and Samvat said that initially (and whenever that was) they orally agreed upon a commission rate of 3%, so that much is not in dispute.
(b)It might be argued that the existence and continuation of that oral agreement is corroborated by the plaintiff’s claim, in its Story Sheet, of a 3% rate. There is some merit in that.
Mackenzie’s explanation for that later 3% claim was that the 2.5% rate had been agreed in writing at the time of the Pegoli offer and when the potential sale price was less than $850,000. He said that subsequently, when the Property Trusts offered $855,000, he and Samvat orally agreed to restore the original 3% rate, hence he claimed that rate in his Story Sheet. Even so, he said, when the plaintiff sued, it claimed at 2.5% because it was content to rely upon the written agreement, the SAA, rather than on a later oral variation.
I found that explanation to be a plausible one and, indeed, viewed from another perspective, had Mackenzie set out to engage in the suggested form of trickery on 28 May, there could have been no obvious reason for him to then specify a commission rate at the reduced figure of 2.5%.
(c)Otherwise, there was no evidence supporting Samvat’s claim that he specifically agreed with Mackenzie there would be no written sales agency agreement – indeed, the claim struck me as an odd one in the face of their prior history of dealings and the absence of any explanation for his wanting matters that way.
(d)Further, there was nothing which corroborated Samvat’s claim that it was further orally agreed that no commission would be paid if any contract did not complete. Again, such an arrangement had not been part of any of their previous dealings and I find it improbable that Mackenzie would have assented to such a proposition. Samvat’s claim that after the sale fell through he felt obliged to pay Mackenzie something, also belies it.
All in all, the objective evidence overwhelmingly favoured the plaintiff’s position.
For the reasons expressed, I found myself quite unable to rely upon Samvat’s recollection of events, not, as I say, because he sought deliberately to mislead, but because I am satisfied that he did sign the SAA on 5 March and now has no recollection of doing it. It is probable that he was very busy at the time and, being unable to explain his lack of recall, has sought, by speculation and unsupported inference, to reconstruct a series of events relating to his signature which would make sense to him. Whether he actually turned his mind to what he was signing on 5 March is not to the point, either, as there is no evidence of any kind supporting his assertion that Mackenzie knew of his “mistake” or in some manner tricked or deceived him. That assertion is nothing more than speculation.

By way of contrast, there is a history of prior dealings between the parties in which agency agreements have always been present and in writing and which have never contained any provision denying the agent commission if settlement did not proceed. Further, there is clear evidence from both parties that Samvat was careful to read legal documents. Here, it is apparent that Mackenzie performed the tasks usually expected of an agent and without any complaint from the vendor. The only unusual aspect of this particular arrangement was the agreement for a reduced commission rate in circumstances where it appeared the property might sell for less than the asking price.
For all these reasons, I have no confidence whatsoever in Samvat’s account of things.
Legal Issues
Prima facie, the SAA confers on the plaintiff the claimed entitlement to recover its commission on the subject sale.
The defendant’s response, however, is that the SAA is voidable and should be set aside on the footing that the defendant executed it by mistake, that the plaintiff was aware of that mistake (and, indeed, it was alleged at trial, procured it by a trick) and that Mackenzie failed to tell Samvat of the extent to which the SAA varied their prior oral agreement: accordingly, that it would now be unconscionable of the plaintiff to enforce the agreement.
In submissions before me, the defendant’s counsel made it plain that his client did not additionally seek to rely upon the defence of non est factum.
In Taylor v Johnson[1] the majority stated:
The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or apprehension. What we have said is sufficient to demonstrate the broad basis of support which the authorities provide for that proposition. Moreover, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates. In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party’s actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it. (my emphasis)
[1] (1982-1983) 151 CLR 422 at 432
However, if the other party is unaware of the first party’s mistake, there will be no entitlement to rescission (cf Cielo v Kailis Gulf Fisheries Pty Ltd[2]).
[2] (1991) 104 FLR 189
Further, in Parker v South Eastern Railway Co.[3], Mellish LJ observed:
In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents.
See also Bell v Lever Brothers Ltd[4]
[3] [1877] 2 CPD 416 at 421
[4] [1932] AC 161 at 224
Having stated those propositions, it must be allowed that they relate to the question of mistake as to a fundamental term in a contract. That is not quite the position here because the defendant is pleading that his entry into the actual contract was itself by mistake, a mistake of which the plaintiff was well aware. Even so, it appears to me that that distinction goes only to the question of remedy, that is, whether the contract was voidable or void ab initio.
In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[5], the High Court observed that where a contracting party signed a document which expressly invited him to read certain terms and conditions, but he chose not to read them, he could not, in the absence of any trickery, plead and rely upon mistake. At para. 45, the court observed:
It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
[5] (2004) 219 CLR 165
The court concluded, at 57.5:
The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.
Here, the plaintiff relies upon those observations in asserting that it is immaterial that Samvat has no recollection of signing the SAA. Even if he did not read it (and the plaintiff challenges that claim) and if, indeed, he signed it by mistake, the defendant is nonetheless bound by it.
On the basis of these authorities, it seems to me that for the defendant to succeed in this matter it must at least prove:
(1)that Samvat’s execution of the SAA was by mistake;
(2)that the plaintiff, through Mackenzie, was aware of that mistake (and here, Samvat goes further than that and contends Mackenzie actually tricked him into signing it).
It is further suggested by the learned authors of Cheshire and Fifoot[6] that a defendant should also be called upon to demonstrate that for the plaintiff to insist upon the fulfilment of the bargain would be unconscionable (paras 12.3 and 12.43).
[6] Seddon, N C & Ellinghaus, M P "Cheshire & Fifoot's Law of Contract", 7th Australian ed., 1997, Butterworths, Sydney
No authorities were cited on that last issue but, for reasons which will emerge, I do not find it necessary to resolve it. In any event, it may do no more than reflect the court’s observations as to fairness in Taylor v Johnson (supra) and the fact that the remedy sought by the defendant is in the nature of equitable relief.
I will focus, in my findings, upon whether the defendant has satisfied me as to the two criteria set out above.
I should say in passing that the defendant has not pursued any other remedy, such as rescission, based on its claim as to the plaintiff’s conduct at the time Samvat executed the SAA.
Findings
For all the reasons expressed above, I am satisfied and find:
(1)that Samvat on behalf of the defendant duly executed the SAA on the date it bears;
(2)that Samvat did not then or at any other time execute that document by mistake;
(3)even if I am wrong and it be considered that Samvat did execute the SAA by mistake, either then or on some other day, I am not persuaded that the plaintiff or Mackenzie was aware of that mistake. Further, there is no evidence nor ready inference that Mackenzie in any manner tricked Samvat into signing the SAA.
It follows and I am satisfied that the plaintiff can properly rely upon the SAA and recover the claimed commission of $23,512.50, together with advertising costs of $1,000, a total of $24,512.50, together with interest to date, which I assess on the basis of otherwise agreed calculations (Exhibit P13) under clause 8 of the SAA, at $7,389.
As a separate matter, the plaintiff in its claim sought recovery of pre-action legal costs of $5,261.04, contending that they formed part of its damages claim. No authority was advanced in support of that claim and I am not persuaded it is maintainable. In the ordinary course, it appears to me that pre-action costs properly incurred in connection with the proceedings are recoverable upon taxation, in the event of a favourable costs order.
There will be judgment for the plaintiff in the sum of $31,901.50, inclusive of interest, and I will hear the parties as to costs.