Mjk Pty Ltd & Klobas v Upjay Pty Ltd No. DCCIV-98-191

MJK PTY LTD trading as KLOBAS PROPERTY GROUP
AND MICHAEL JOHN KLOBAS v UPJAY PTY LTD
[2000] SADC 70

HIS HONOUR JUDGE DAVID
CIVIL JURISDICTION

Both plaintiffs in this matter at all relevant times were registered as agents pursuant to Section 6 of the Land Agents Act 1994. The 2nd plaintiff was at all material times the Managing Director of the 1st plaintiff and was engaged in the business of property development, leasing and sales. Mr Mario Minuzzo was at all relevant times an authorised officer of the defendant Company in relation to all transactions which are the basis of the present actions. The plaintiffs claim that there was an oral agreement made between the 2nd plaintiff acting on behalf of the 1st plaintiff and Mr Mario Minuzzo representing the defendant to the effect that the defendant would pay to the 1st plaintiff commission in the sum of $300,000.00 if a company called Harvey Norman Holdings Limited committed itself to take a lease of a property in the southern suburbs of Adelaide being a property controlled by the defendant. The plaintiffs allege that the agreement was constituted by a series of conversations in June of 1996 between the 2nd plaintiff and Mr Mario Minuzzo, the effect of which was that if the pre‑commitment described above was established then the fee of $300,000.00 would be paid by the defendant to the plaintiffs.
The undisputed historical background leading up to that agreement, the terms of which are in dispute, was that Harvey Norman Holdings Limited who have now been established in South Australia was a substantial electrical goods retailer which in the years 1994 and 1995 had a number of outlets throughout Australia but not in South Australia. There was undisputed evidence from the 2nd plaintiff that he formed an association with a Mr Norman Field who was a Property Manager of Harvey Norman and agreed to look out for an appropriate site for Harvey Norman to commence business in South Australia. This was to be without fee. It followed from those investigations that the 2nd plaintiff took up the matter with Mr Mario Minuzzo who was representing the defendant Company and eventually introduced him to Mr Norman Field from Harvey Norman. At the same time the plaintiffs had introduced other property owner developers to Harvey Norman all for the purpose of looking out for appropriate sites for them to establish a business in South Australia.
A number of sites both to the northern part of Adelaide and the southern part of Adelaide were investigated. Eventually particular interest was focused upon plans for a site at Marion Road. This site consisted of three properties known as the “OMOND” property, the “CSR” property and the “BICE” property. In particular the use of the CSR property as an appropriate site and the commission the plaintiffs claim in their dealings with that property are the subject of the present action. In June of 1996 there were discussions between Mario Minuzzo and the 2nd plaintiff as to the fee in relation to the CSR property if it was bought by the defendant and there was a lease secured on that property to Harvey Norman. It is the terms of that discussion which are vital to the present case. What was agreed upon and what had to be done by the plaintiffs to earn their fee is in dispute. However there is undisputed evidence that at the end of the day two properties namely the CSR property and the BICE property were bought and developed and are now occupied by Harvey Norman. The OMOND property was eventually discarded as a potential site because of the difficulty of removing a large number of tenants.
On the 28th April 1997 by way of letter from Harvey Norman to Mario Minuzzo there was an agreement to lease the CSR property. After that there was also an agreement to lease the BICE property after the defendant had obtained an option over that land. However after those agreements to lease had been entered into the relationship between the defendant and Harvey Norman changed. Instead of the defendant purchasing the land and leasing it to Harvey Norman both businesses entered into a joint venture to purchase and develop both of those blocks of land. Eventually the defendant’s interest in that joint venture was sold to Harvey Norman.
The plaintiffs case is that the agreement between the 2nd plaintiff and Mr Mario Minuzzo representing the defendant was simply that once there was a pre‑commitment to a lease between them and Harvey Norman then the fee of $300,000.00 was due and owing. It is the plaintiffs case that this occurred in April of 1997 when there was a letter from Harvey Norman to Mr Mario Minuzzo agreeing to lease the CSR property (Exhibit P28).
The defendant’s case, in short, is that there was an agreement by way of conversations between the 2nd plaintiff and Mr Mario Minuzzo acting on behalf of the defendant for the plaintiffs to receive a fee of $300,000.00 but there were certain pre‑conditions before that amount was due and owing. Not only did the plaintiffs have to negotiate the terms of a lease between the defendant and Harvey Norman, the defendant would then have to sell or develop the site to an investor and receive payment from the sale of that developed site. On the defendant’s case unless these pre‑conditions were met there was no money owing at all. The plaintiffs argued as a matter of fact that was not the agreement but also argued that even if the agreement was as the defendant alleges by the defendant being paid out their interest in the joint venture that is in reality the same as selling the developed property to an investor and being paid.
There are other issues in the matter to be decided which will become apparent later in this judgment. The most important of those is if there is a concluded contract between the parties for the amount of $300,000.00 in terms that the plaintiff has alleged nevertheless is that contract unenforceable because it offends Section 6 of the Land Agents Act 1994 it not being in writing. I turn however to the question of the terms of the agreement.

Plaintiffs Case as to the terms of the agreement for commission

The plaintiffs called one witness namely Mr Michael Klobas the 2nd plaintiff in the matter. Mr Klobas gave extensive evidence of his background and the agreed facts leading up to the conversations in June of 1996 which form the basis of the present action. He told the Court of his extensive activities in relation to commercial real estate in Adelaide mainly through his operation of the 1st plaintiff Company of which he and his wife are Directors. In late 1994 and early 1995 he gave evidence of making contact with Mr Norm Field, an employee of Harvey Norman, for the purpose of trying to look for real estate sites in South Australia that might suit the needs of that Company. He was told by Mr Field that they wanted to have two stores in Adelaide, one in the northern suburbs and one in the southern suburbs. The 2nd plaintiff then gave evidence that he entered into an unwritten agreement with Mr Field that he would spend many hours looking for such sites and as a result of that was given a document by Mr Field setting out the type of requirements for which they were looking (Exhibit P2). It was made clear that any work that the plaintiff did in this capacity would not be remunerated.
The 2nd plaintiff gave evidence that he had known Mario Minuzzo since the 1980s. In early 1995 he mentioned the topic of Harvey Norman, he knowing that Mr Minuzzo was a planning and building developer. He told him about Harvey Norman’s proposals for sites in South Australia and he gave evidence that he became involved in seeking to interest Harvey Norman in a property at Windsor Gardens in which Mr Minuzzo had an interest. He told the Court that he eventually introduced Mr Field to Mr Mario Minuzzo in about June 1995. There was then a discussion between the three of them about what Harvey Norman were looking for, the terms of a lease and according to the 2nd plaintiff, Mr Field emphasised that Harvey Norman wanted to be a tenant on a long term lease basis. Mr Field also indicated to Mr Minuzzo that he was looking for one site on the north of the City and one site on the south of the City. The 2nd plaintiff gave evidence that after that meeting he continued to look for sites for Harvey Norman and eventually became aware that a property on Marion Road had been identified as feasible. That was the property known as the CSR site. He gave evidence that Mr Minuzzo advised him of that potential site. He gave evidence that this was around the middle of 1996. He then gave evidence that negotiations began in earnest in relation to the possible acquisition and development of that site for the purposes of leasing it to Harvey Norman. This included much correspondence between Minuzzo and Field but also involving the 2nd plaintiff. It was also established at this stage, according to the 2nd plaintiff, that Mr Minuzzo was also willing to buy the OMOND property which was to the south of the CSR site on Marion Road. However that transaction did not eventuate. The 2nd plaintiff then gave evidence that sometime in June of 1996 he had discussions with Mario Minuzzo concerning remuneration the plaintiff would earn in connection with the transaction between Harvey Norman and Mr Minuzzo’s company. He said that this was a face to face conversation he had with Mario Minuzzo in the latter part of June. I set out his evidence on that topic:-
“Q.... How did it come about.
A.I was in the car, from memory, that day with Mr Field, visiting some properties. We ultimately ended up at Mr Minuzzo’s office in the course of travel during the day, I’m not sure what time, and we met in the boardroom and Mr Minuzzo and I excused ourselves to - there’s a second meeting room in their office, at which we had a discussion, which I raised with Mr Minuzzo the issue of confirming a fair arrangement should a successful transaction or lease arrangement occur between his company and Harvey Norman.
Q...... You said you raised a topic with Mr Minuzzo. Can you tell us what you said and what he said or is your recollection not -
A.I can recall the conversation quite clearly. I said to Mr Minuzzo that we now need to formalise the fee arrangements relating to a successful transaction between them and Harvey Norman. He said ‘What do you consider is an appropriate fee?’ to which I responded ‘$300,000 per successful lease of Harvey Norman’. In other words, if there were two transactions, I be paid $300,000 for each transaction. Mr Minuzzo took a deep swallow and responded by saying - he said he thought that was a bit high, but given the circumstances, was happy to wear that. It was then left in my court.
Q...... What was said.
A.After he said -
Q...... Yes.
A.I then said that I would confirm that in writing. He said ‘That’s fine, do that’. We shook hands and agreed that was the arrangement on which we were working.
Q...... Can we backtrack a little; you told us that you put a fee of $300,000 per transaction to Mr Minuzzo.
A.Yes.
Q...... In the course of the conversation did you tell Mr Minuzzo or did he ask how that was calculated.
A.No.
Q...... Had you reached that figure by a process of calculation or was it plucked out of the air.
A.No, I had arrived at that figure by way of calculation in my mind which was based on the then recommended scale of charges approved by the Real Estate Institute of South Australia and that was based on a formula which said that a leasing fee was payable at a rate of 10% of the annual rental of a - payable under a lease. If that lease went beyond three years, there was an additional 1% paid per each year beyond three, to a maximum of 15%. So in our case it was a 10 year lease, so we had effectively 10% for the first three years and 5% for the remaining seven years. The recommended scale went on to say if the lease was a pre‑commitment that the fee was 200% of the above calculation or that calculation. I had in my mind done a simple maths exercise, saying that’s 30% on a pre‑commitment, 10,000 square metre building, give or take, it’s a million dollars, so 30% of that is $300,000.
Q...... I will come back to that conversation in a moment. You have told us how the conversation ended. You said that you and Mr Minuzzo shook hands.
A.Yes.
Q...... What did you do then.
A.I think from there I went back to the boardroom with Mr Field. We had sort of turned up a bit unexpectedly on Mr Minuzzo that day. He was busy. He was coming and going from the boardroom. I think, from memory, we had another chat after that conversation with Mr Field, and then Mr Field and I left the office.”

There was further questioning of the 2nd plaintiff by his counsel in relation to that conversation which is the basis of the present claim, at page 93:-
“Q.... Can I put a number of matters to you about the conversation that you have told us about, this is the conversation between you and Mr Mario Minuzzo in the meeting room. In the course of that conversation was there any reference to you or your company MJK being an agent. Was that topic referred to.
A.No.
Q...... Was there any reference to the topic of you or your company MJK acting exclusively for Mr Minuzzo in trying to locate properties suitable for Harvey Norman.
A.No.
Q...... Was anything said which related to whether the arrangement was between you and Mr Minuzzo as human beings or between two companies, and in particular MJK on your side and Upjay on the other. Was anything said about that.
A.No.
Q...... Was anything said in the course of this particular conversation on the topic whether you would get the fee only if you found a particular site.
A.No.
Q...... Was anything said in the course of this particular conversation on the topic of whether you were entitled to the fee only if and when Mr Minuzzo or his company sold the site to an investor.
A.No.
Q...... Was anything said on this particular occasion between you and Mr Minuzzo on the topic of you being entitled to the fee only if Mr Minuzzo or his company sold the site and received the proceeds of sale.
A.No.”

The 2nd plaintiff then gave evidence of how he became an agent for the sale of the BICE property for a fee of $25,000.00 and offered that property for sale to the Minuzzos. This obvious conflict of interest is the basis of part of the defendant’s counter‑claim and indeed the plaintiff through his solicitor has agreed that if there is judgment for the plaintiffs the amount of the judgment should be reduced by $25,000.00. An option to purchase that property by the Minuzzos was signed in July of 1997.
The 2nd plaintiff then gave evidence that in his view the original agreement for his fee had nothing to do with the on‑selling of the freehold of the CSR property. He was involved to that time in trying to sell the freehold of the property but his evidence was that would be for a separate fee. It is the plaintiffs case that the letter of the 28th April 1997 from Harvey Norman Holdings Limited to Mr Mario Minuzzo of Upjay Pty Ltd is the event that triggers the agreement that was formed in June of 1996 and on that letter being received the fee becomes due and payable. I set that letter out in full:-
“Mr Mario Minuzzo
Upjay Pty Limited
298 Payneham Road
PAYNEHAM SA 5070
BY FACSIMILE: 08 8362 8721
Dear Sir

RE: LESANDU SA PTY LIMITED - PROPOSED LEASE OF PREMISES AT MARION ROAD, MARION
I refer to my recent telephone conversations with Steven Minuzzo.
I confirm that the Lessee agrees to enter an agreement to lease the Premises on the following terms and conditions:
1. Conditions Precedent
The Agreement is conditional on:
1.1... The settlement of the “Readymix Contract” (providing your Company is not in default under that Contract): and
1.2The granting of relevant planning and development approvals.

2. Area
The Premises are to be of approximately 7,065 square metres in area, constructed for retail purposes substantially in accordance with a preliminary site plan annexed.

3. Warehouse
Should your company seek to purchase the “Bice Mellory” Land, it must first offer to lease to the Lessee warehouse premises to be constructed on the Land, which offer the Lessee may accept or refuse at its absolute discretion.

4................ Carparking

The Lease is to include approximately 200 car spaces for the use of the customers, staff and invitees of the Lessee.
5. Other Terms
The Agreement for Lease and Lease or otherwise to be on the terms agreed to date. In this regard it is noted that the agreement has yet to be reached as to the method of rent review and the matters raised in the letter from the Lessee’s solicitors, Norman Waterhouse to Nigel Thomson of Minter Ellison dated 20 December 1996.

Yours faithfully
Richard Champion
In-House Solicitor
Gerald Harvey Michael Harvey
Director Director”

The 2nd plaintiff gave evidence that sometime after August of 1997 he learnt from Steven Minuzzo about the suggestion of a joint venture between Upjay Pty Ltd and Harvey Norman. This was instead of a situation where the Marion Road properties would be leased. As far as the plaintiff was concerned that was really not his concern as he had earned his fee. It was relayed to the plaintiff in 1997 that Harvey Norman as part of the joint venture were refusing to pay any pre‑existing fee to the plaintiff. In a letter from the defendants to Harvey Norman Holdings Limited dated the 18th August 1997 (Exhibit P38) concerning the proposed joint venture under the head “ADDITIONAL CONSIDERATION” the defendants wrote thus:-
“4..... In our costing for the development we committed an amount of $400,000.00 payable to Michael Klobas which covered an introduction fee, leasing fee and fee for locating the sites and negotiating with owners and tenants. I believe this cost should be a Joint Venture cost.”

The 2nd plaintiff when questioned denied any knowledge of that letter until it was discovered in these proceedings. He also denied having any input into that letter. There was a further letter from Upjay Pty Ltd to Harvey Norman dated the 22nd August 1997 which dealt specifically with the plaintiff’s fee. I set out that letter in full:-
“22nd August 1997  SGM:CHAMPION.LO3:gr
Mr Norm Field
Harvey Norman Holdings Limited
A1 Richmond Road
FLEMINGTON NSW 2140  FAX NO: 02/9746 5124
Dear Norm,
MICHAEL KLOBAS’ FEE ARRANGEMENTS
Further to my correspondence dated 18th August 1997 and a conversation today I write to elaborate on our agreement with Michael Klobas. I was not a party to the agreement and as Mario is unavailable Michael has provided the following information.
Site Acquisition
n.. CSR..................................................................................... 1,100,000
n.. Bice Melory............................................................................ 880,000
Total............................................................................. $1,980,000
Real Estate Institute of SA recommended fee structure is 3.2% of sale price.
n.. Fee:    $1,980,000 @ 3.2% = $63,360.
Leasing Fee (based on rent)
n.. Net rental - 9,586 m2 @ $100/m2 = $958,600 per annum.
The recommended leasing fee recommended by the Real Estate Institute of SA (refer to attached) is based on a percentage of average gross rent, being 10% for a tenancy of one to three years, plus 1% for each additional year in excess of three years to a maximum fee of 15%. If the tenancy is precommitted the fee is 200% of the above calculation based on the average gross annual rental for the term of the lease.
n.. $958,600 @ 30% = $287,580. Allowing for average gross rental over 12 years gives a fee of, say $325,000.
Other Costs
Michael has been involved extensively in all other negotiations relating to negotiations with existing lessee’s and negotiations with Omond. This work was agreed to on the basis of a flat fee of $25,000 plus other out of pocket expenses (i.e., telephones, travel, facsimile costs, LTO search fees, etc.). The majority of this work is now completed.
This arrives at a fee of $413,360 which was rounded to $400,000.
Yours sincerely
STEVEN G. MINUZZO”

As can be seen that letter on the plaintiffs case contains a number of deliberate and admitted lies. The 2nd plaintiff admitted that he had an input into that letter and gave the following evidence on that topic:-
“Q.... Do you see that’s a letter from Mr Stephen Minuzzo to Mr Field, of 22 August 1997.
A.Yes.
Q...... Did you see that letter, or a version of it, in August 1997, or did you first see it as part of discovery.
A.No, I saw it in August 1997.
Q...... Did you see it, as you understood it, before or after it had been sent.
A.Before.
Q...... Tell his Honour how it came about that you saw a version of this letter before it was sent.
A.I was involved with Stephen Minuzzo in, I can describe as, settling this letter, in terms of final wording and presentation of it.
Q...... How did that come about; did he phone you, did you phone him, what happened.
A.He phoned me and indicated that - he said - he phoned me and said that they were having some trouble getting Harvey Norman to agree to a fee, or any fee payable to me under the joint venture agreement. We arranged to meet and at the time we met he advised me that they had indicated to Harvey Norman that a fee of $400,000 was what they relayed to Harvey Norman was due and payable, and we had discussion about, I guess, the structure of my fee, my original leasing fee, which is described in this letter, and some additional fees, to make the equation marry between that and the original correspondence.
Q...... You see that the letter begins by referring to correspondence dated 18 august 1997.
A.Yes.
Q...... You would understand that now to be reference to the document Exhibit P38 at p. 158 -
HIS HONOUR: Before we drop into detail.
HIS HONOUR
Q.Did you have a discussion, or were you told that there was going to be an attempt to get Harvey Norman to pay part of your fee. Did you have some sort of discussion with the Minuzzos about that.
A...... Yes.
Q.Was that because, and you tell me if I’m wrong, they were having trouble paying it.
A...... No, their problem wasn’t capacity to pay, from my understanding, it was - I think they were trying to lose it in the joint venture cost to defray their cost.
Q.They told you they wanted to do it a different way to the agreement.
A...... Yes.
Q.When I say ‘different way’, how you got the money didn’t concern you as to the original agreement, but they were going to do it with the joint venture business.
A...... Yes.
Q.They told you that.
A...... Yes.
Q.You were happy to go along with that.
A...... Yes.
XN
Q...... I asked you about the first line of the letter, which refers to correspondence dated 18 August 1997. Do you see that.
A.Yes, I do.
Q...... You’d understand that to be reference back to the document P38 at p.158.
A.Yes, I would.
Q...... On the occasion when you saw a draft of the letter at 163, was that on 22 August, so far as you can recall.
A.Sorry, just -
Q...... The occasion that you are telling his Honour about, when you saw a draft of the letter at 163, was that on 22 August.
A.Yes, it was.
Q...... On that occasion did you notice that the draft letter referred to an earlier letter of 18 August.
A.No, I didn’t take notice of that.
Q...... Can I take you through the calculations. First of all, there’s a reference, you see, to a fee for site acquisition.
A.Yes.
Q...... Did you agree, at any stage, with either Mr Mario Minuzzo or Mr Stephen Minuzzo, to the effect that a fee would be due to you on the Minuzzos acquiring a site.
A.No.
Q...... Do you see the letter then goes on to refer to the CSR land and the Bice Melory land.
A.Yes, it does.
Q...... The price, you understand, to be contractual prices.
A.Yes.
Q...... Then there’s a reference to the Real Estate Institute of South Australia.
A.Yes.
Q...... Then, dealing with that topic, do you see a few lines down under the heading ‘Leasing Fee’ there’s a reference to an attachment.
A.Yes.
Q...... Looking at p.164.
A.Yes.
Q...... That’s a photocopy of a document.
A.Yes, there is.
Q...... Which seemed to have been faxed. Have you seen that page before.
A.Yes, I have.
Q...... Did you see that on the occasion that you are telling his Honour about.
A.Yes, I did.
Q...... How did that come about.
A.I was aware - that was the - I made a phone call to the Real Estate Institute office on Greenhill Road and asked them to fax over to me a copy of the then recommended rate of fees and charges for leasing activity, and they faxed that direct to me, care of Mr Minuzzo’s office.
Q...... The page that’s been faxed relates to lettings. Do you see that.
A.Yes.
Q...... It doesn’t relate to fees on acquisition. Do you follow that.
A.Yes, I do.
Q...... Taking you back to the heading ‘Site Acquisition’, do you see there’s a line ‘Real Estate Institute of South Australia, recommended fee structure is 3.2% of sale price’. Do you see that.
A.Yes.
Q...... What was the source of that information.
A.The Real Estate Institute’s previous scale of fees was a sliding scale that started at a higher rate - a higher per cent rate, and reduced to 3.2% at a certain level, so 3.2% was often adopted as a flat fee on larger transactions.
Q...... Is this the position: that was something you knew as at 22 August.
A.Yes.
Q...... Did you relay that percentage figure to Mr Stephen Minuzzo.
A.Yes.
Q...... Then there’s the leasing fee, which refers to the following page, 164.
A.Yes.
Q...... You see on 164 somebody has put some brackets around para.2.3.2.
A.Yes.
Q...... Who did that.
A.I think I did.
Q...... Then you see the information below the heading ‘Leasing Fee’ includes information about the terms and conditions of a lease, doesn’t it.
A.Where the bullet point is?
Q...... Yes, the two bullet points.
A.Yes.
Q...... As of 22 August, on this occasion you were having a discussion with Mr Stephen Minuzzo; the source of that information, was that something you already knew, or was it something that was already in the draft letter when you saw it.
A.No, it was something that Mr Minuzzo relayed to me at that time. If I can just add there, probably from ‘Site Acquisition’ down, on this letter of p.163, the bulk of that I probably drafted, just in handwritten draft on a piece of paper, which then Mr Stephen Minuzzo finalised and put into a letterhead and settled the letter.
Q...... You drafted it in handwriting in Mr Minuzzo’s presence.
A.No, it wasn’t in his presence. I think I sat in a spare meeting room and did that.
Q...... You see the letter then concludes with the heading ‘Other Costs’.
A.Yes.
Q...... It said that Michael - that’s perhaps a reference to you - has been involved extensively in all other negotiations relating to negotiations with existing lessees, and negotiations with Omond. Was that proposition in the letter when the draft of it was first shown to you, or was that something you wrote out in draft.
A.I don’t recall whether I wrote that or it was already written, or subsequently written.
Q...... Is that proposition true or false.
A.That’s false.
Q...... The proposition beginning ‘Michael has been involved’.
A.Yes.
Q...... Why is that false.
A.Because I was never retained for -
Q...... You misread it. It says ‘Michael has been involved extensively’.
A.Sorry, that proposition is true.
Q...... Looking at the next sentence, and reading that to yourself.
A.Yes.
Q...... Is that proposition true or false.
A.That’s false.
Q...... Who wrote that out; was that in the draft you prepared or in the letter when you first saw it.
A.I can’t recall the answer to that, I am sorry.
Q...... Did you ever agree with either Mario or Stephen Minuzzo to do certain work on the basis of a flat fee of $25,000.
A.No.
Q...... What was the state of affairs when this meeting between you and Stephen Minuzzo concluded. You told his Honour that he called you in, you had a discussion, and you then wrote things out.
A.Yes.
Q...... What happened; and as part and parcel of that, something came in from the REI.
A.Yes.
Q...... What was the state of affairs when you left; was the letter still in handwritten draft, or had it been typed up.
A.No, it was only in handwritten draft when I left.
Q...... You told his Honour that the bit that you composed in handwriting, you did in a meeting room.
A.Yes.
Q...... Did, having written it out, you discuss it with Mr Stephen Minuzzo.
A.Yes, I did.
Q...... What was said, and by whom.
A.I said that I had, following on from our earlier conversation, looked at the issues to do with the site acquisition fee, the leasing fee, and I can’t recall about the other costs, so I’ll leave that unanswered at the moment, and that I’d drafted theses paragraphs. He said ‘Thanks for doing that’, and he would finalise the letter and send it off to Harvey Norman.
Q...... When you gave him the draft letter, it contained false information, did it.
A.Yes, it did.
Q...... In particular, the claim for a fee due to you on acquisition of sites was a false claim.
A.Yes, it was.
Q...... Was there a reason why you assisted Mr Stephen Minuzzo in formulating a false claim on Harvey Norman.
A.I think it related back to this letter of 18 August, and the suggestion of a $400,000 fee.
Q...... Would you explain that to his Honour.
A.At the moment I don’t know that I have an explanation for that.
Q...... What did you mean by that answer; you had Mr Minuzzo giving you information about what the Minuzzos had been saying to Field.
A.I think, on the morning of 22 August, when we first spoke, I think that was indicated to me by Mr Minuzzo.
Q...... What did he say to you.
A.I can’t recall the exact comment, the exact wording, but it was something I gleaned from the conversation.
Q...... The substance of it was.
A.That they were attempting to justify a fee of $400,000 to Harvey Norman for the joint venture.
HIS HONOUR
Q.So you were going to cheat Harvey Norman out of $400,000, is that the idea.
A...... Well, I was at a meeting with Stephen, and that was what the discussion was about, I guess.
Q.You agreed to that, is that the situation.
A...... I guess, in effect, I did.
Q.Not only agreed to it, you were part of it.
A...... Yes.
Q.What was going to happen to the $100,000 over; what did you understand the situation to be.
A...... I didn’t.”

I have set that evidence out in full because of the importance of that letter and the importance of the explanations of all parties given in relation to it. I will deal with the defendant’s version of events later in my judgment.
The 2nd plaintiff gave further evidence that at a meeting on the 29th August 1997 he was told by Mr Mario Minuzzo that the joint venture would pay a fee of $75,000.00 for the work done by the plaintiff. The 2nd plaintiff gave evidence that he was not prepared to accept that as full and final payment but would take a part payment.
I observed the 2nd plaintiff carefully both in evidence in chief and in his extensive cross-examination. There are areas of his credibility which concern me, as I must hasten to add, there are areas of the credibility of both Mario and Steven Minuzzo which also concern me. What concerns me the most as far as all of the parties in this case are concerned are the letters of the 18th August 1997 and the 22nd August 1997 from Upjay Pty Ltd to Harvey Norman. Even if the plaintiff had no involvement with the letter of the 18th August 1997 he was heavily involved in the formulation of the letter of the 22nd August 1997 and of course that letter contained a series of admitted, clear cut lies. The criticism however relates to all parties and all of their explanations are unsatisfactory. If, on the plaintiffs case, he was owed $300,000.00 by the defendant nevertheless in trying to extract that amount of money from the joint venture parties by being a party to exaggerating the amount owed and fabricating the reasons why it was owed does not fill me with confidence in his credibility. The same criticisms also apply to the credibility of the Minuzzos. I turn to the defendant’s case on the question of the terms of the agreement.

Defendant’s Case on the Terms of the Agreement

The defendant called two witnesses, Mr Mario Minuzzo and his son, Mr Steven Minuzzo. Both of them are principals of the defendant Company. Mario Minuzzo gave evidence of his version of the June 1996 conversation with the 2nd plaintiff in which the 2nd plaintiff’s fee was discussed. Steven Minuzzo was not present at that conversation and can give no direct evidence about it. I turn to Mario Minuzzo’s evidence.
As I have already indicated there is common ground between the parties that the plaintiff involved the defendants in discussions with Harvey Norman about them obtaining a site or sites in South Australia. Mario Minuzzo gave evidence that the CSR site was identified by him in May of 1996 and he went with the 2nd plaintiff to inspect it. He was aware at that time of what Harvey Norman’s requirements were. After that visit to the site at Marion Mario Minuzzo gave evidence there was a meeting with the 2nd plaintiff at Mario Minuzzo’s office which involved Norm Field as well. After an initial meeting between the three of them there was a meeting between Michael Klobas and Mario Minuzzo in the absence of Norm Field in which, according to Mario Minuzzo, Michael Klobas’ fee was discussed. I set out his evidence in chief on that topic (page 384):-
“Q.... Are you able to remember now exactly what words he used.
A.Michael put a proposal to me that he wanted a fee of $300,000.
Q...... Can you remember what words he used or are you only able to recall the substance of the conversation.
A.I can recall that he put a fee proposal of 300,000 and I said ‘That’s a lot of money, what do I get for that’.
Q...... Do you recall what his response was to that question.
A.I went on and said ‘Do I get a lease, a 12 year lease at $105 a square metre signed off. Do you find the sites’.
HIS HONOUR
Q.You are saying that.
A...... I’m saying this. ‘We build the building’, and I said ‘Have you got an investor for the on‑sale’.
XN
Q...... That’s all you said at that moment.
A.I also said that that proposal would have to be put before Stephen for his approval.
Q...... Stephen being your son Stephen.
A.My eldest son Stephen.
Q...... How did Mr Klobas respond to that.
A.On the issue of investors he said that he had a few in Adelaide and a couple in Sydney.
Q...... Did he say who they were.
A.No, but later Michael -
Q...... Just concentrate on the meeting for the moment. At the time of the meeting he didn’t mention any names.
A.No.
Q...... Did he respond other than as you have described relating to investors.
A.No.
Q...... What else did he say.
A.I then talked about a cap rate of about 9.35%.
Q...... What was the purpose of talking about a cap rate.
A.The cap rate is related to the margin and profit, and obviously the higher the rent, and the lower the cap rate, the higher the profit margin.
Q...... Can we perhaps just go back to the meeting. You have told his Honour what you said and you have told his Honour that Mr Klobas responded by saying what you said he said about investors. Did Mr Klobas make any other response to what you had said.
A.Yes. I said ‘Can you deliver’ and he said ‘Yes, I can deliver’.
Q...... Was there anything else said about what individuals might do or might be required to do.
A.Yes. He talked about the $300,000 fee covering the introduction to Harvey Norman.
Q...... Anything else.
A.And the lease.
Q...... Can you remember the words that Mr Klobas used or are you only able to now to generalise.
A.I can only generalise.
Q...... Was anything more said in that meeting in relation to his fee proposal.
A.Not that I can recall.
Q...... How long did this meeting take, this is the one between you and Mr Klobas in the other meeting room.
A.Approximately 15 minutes.
Q...... What did you do after you had had the discussion you have described.
A.Michael said that he would put it in writing and I said ‘That’s fine’. We went out of the room and Michael had closed the door of the room. He went out of the room and back into the boardroom.
Q...... Where Mr Field I take it was still waiting.
A.Yes.
Q...... At any time after that meeting did Mr Klobas present you with anything in writing in relation to what you had been discussing.
A.No, I didn’t receive or see anything in writing.
Q...... In the course of the meeting did you agree to pay that fee as a consequence of those discussions.
A.If he delivered everything that I had asked for, yes.”

He gave further evidence as to what he understood what the result of that conversation. I set out that evidence (page 392):-
“HIS HONOUR
Q...... Can I just ask a question. I am taking you out of kilter. If we can go back to the original agreement in 1996, June 1996, with the plaintiff, about his fee, what did you understand, from what was said between the two of you, had to be done before that fee was paid.
A.I had to receive a lease with a 12 year term and $105 a square metre, that the project had to be built and it had to be on-sold.
Q...... If we could take Marion as an example, which is what you were talking about, wasn’t it.
A.Yes.
Q...... You had to have a lease to Harvey Norman -
A.Fully documented and signed.
Q...... Yes, and not only that, your freehold in that had to be on-sold.
A.Yes.
Q...... When all of that was done, and I assume you made a profit, then that was what his $300,000 was for; is that the situation.
A.That’s right. That’s it.
Q...... And anything less than that, as far as you understood that conversation, there was no fee; is that right.
A.Yes, no delivery, no fee.”

Mario Minuzzo gave further evidence that when he heard from his son about the possibility of a joint venture with Harvey Norman a major point to be discussed was the payment of the commission to Michael Klobas. A conference was set up in relation to that topic between the two Minuzzos and representatives from Harvey Norman. The end result of that conference was that Harvey Norman, as part of the joint venture, did not want to pay any money at all for previous work done by Klobas as an agent. However according to Mario Minuzzo after further pushing by the Minuzzos they got representatives from Harvey Norman to agree to pay the amount of $75,000.00 towards Klobas’ fee. That was in fact the work that he had done up until the date of that conversation which was sometime around August of 1997. The reason that Mario Minuzzo gave for pushing as hard as he could for a fee for Michael Klobas was that he thought he had a moral obligation to do so. It is clear that on the defendant’s case he need not have done so because on Mario Minuzzo’s version of the conversation with Klobas about fees he had no legal obligation to pay Klobas anything at all because there had been no on‑selling.
In cross-examination the letter signed by Steven Minuzzo from the defendant’s to Harvey Norman dated the 18th August 1997 (Exhibit P38) was put to him. Mario Minuzzo said he saw that letter sometime in August of 1997 and when questioned about paragraph 4 of page 3 of that letter, namely the paragraph in which it was stated that $400,000.00 was owing to Michael Klobas for his fees, he gave the following evidence:-
“Q.... When you first read the letter, did you read the paragraph numbered 4 on p.160 on the last page of the letter.
A.Yes.
Q...... When you read that, you realised, didn’t you, that it was false.
A.That was a conversation between Michael Klobas and Stephen. I was away at the time, and Stephen did know the facts of what I had agreed.
Q...... What’s the answer to my question though.
A.Sorry, can I have it again?
Q...... Yes. When you read that paragraph, you realised that it was false.
A.It was inflated.
HIS HONOUR
Q.False.
A...... False.
XXN
Q...... Let’s not mince words.
HIS HONOUR
Q...... False in two ways: false to the amount, and false, on your story, as to what Michael had to do to get the money.
A.Yes.
XXN
Q.If we just pursue what his Honour was putting to you; the letter is false where it says on the first line of para.4 ‘We committed an amount’. Do you understand what the word ‘committed’ means.
A...... Yes, I do.
Q.What does it mean.
A...... It means to commit.
Q.To be contractually obliged.
MR STRAWBRIDGE: Not necessarily, with respect. It’s a legal question.
XXN
Q...... The reference to an amount of $400,000 is incorrect, isn’t it.
A.Yes.
Q...... You used the word ‘inflated’. Why did you use that word.
A.Because the fee I had agreed with Michael was $300,000.
Q...... Did you know that your son had deliberately inflated the fee.
A.No. He came to a meeting with Michael Klobas and Michael wanted to put that fee.”

Also he gave the following further evidence:-
“Q.... You say the claim for $400,000 was inflated, but have you looked at the second and third lines of para.4 yet.
A.2 and 3.
Q...... No, sorry, the second and third lines of para.4; just read the whole of para.4 to yourself.
A.Yes.
Q...... That contains incorrect information, doesn’t it.
A.Yes, it does.
Q...... And information that you knew to be incorrect at the end of August 1997.
A.That wasn’t complete.
Q...... It’s not merely not complete, it’s incorrect, isn’t it.
A.It’s incorrect.
Q...... Because, on your case, nothing was due to Klobas at all, correct.
A.Yes.
Q...... Nothing, not a penny.
A.Not until the project was sold.
HIS HONOUR
Q.When this letter was written, nothing was due to him at all; no debt to him at all.
A...... No.
XXN
Q...... You had not committed a penny to Mr Klobas as of 18 August 1997.
A.We had not paid Michael anything.
Q...... You had not committed; you had no commitment to pay him a penny on 18 August 1997.
A.That’s right.
HIS HONOUR
Q.At that stage you didn’t owe him anything, did you.
A...... We didn’t owe him anything, that’s right.
XXN
Q...... And you hadn’t paid him anything.
A.That’s right.
Q...... And you haven’t paid him anything.
A.No.
Q...... You had no commitment to pay Mr Klobas a fee for locating sites.
A.I did have a commitment to pay.
Q...... You had no commitment to pay Mr Klobas a fee for locating the sites on Marion Road.
A.Yes.
Q...... Did you.
A.That’s right.”

Mr Steven Minuzzo gave evidence that he was told by his father of the conversation which his father had with the 2nd plaintiff about fees. His recollection of what his father told him about that conversation was (page 514):-
“HIS HONOUR
Q...... Not your reaction, but what was said.
A.It was payable out of the proceeds of the development, the sale of the development, so he told me that for that, Michael Klobas was going to find the sites for us, he was going to negotiate the terms of the lease that Harvey Norman had signed, and then he would sell the development for us, and then, as I said, his fee was payable out of the proceeds.”

This of course is not evidence of what was said nor is it evidence that can bolster Mario Minuzzo’s evidence on the topic but it is important to explain Steven Minuzzo’s state of mind in relation to the negotiations that took place from then on. In relation to the sum of $400,000.00 being mentioned in the letter of the 18th August 1997(Exhibit P38) he gave the following evidence:-
“Q.... Why did you write a letter saying $400,000.
A.Well Michael Klobas is a salesman and a very persuasive man, and in hindsight it was a stupid thing to do I suppose.
Q...... You say he talked you into it, well they’re my words.
A.Yes he did. That’s what I’ve said, I suppose.
Q...... When you’ve got here - talking about the $400,000 - which covered an introduction fee, a leasing fee and fee for locating the sites and negotiating with owners and tenants - do you see that.
A.Yes.
Q...... Was that your understanding of what he was to do to get his $300,000 or was there more to be done.
A.There was more to be done, he was to sell it, but obviously that was of no use to Harvey Norman, the selling of the development.
Q...... So that wasn’t true, what you said then.
A.No, and I rationalised it like this -
Q...... I don’t want you to rationalise it, I just want to know what the evidence is. Tell me this, what if you were paid $400,000, what were you going to do.
A.Firstly we would never have been paid 400,000 -
Q...... No, but what if you were - just say you struck lucky and they believed you and paid $400,000. Was there any contingency plan for that.
A.Well we would never have been paid 400 because before we’d even -
Q...... What if you were. You’ve asked for $400,000, now what if you were paid $400,000. Did you have a contingency plan in case that happened.
A.If Harvey Norman had said they would accept 400 we would have had to have been embarrassed and said ‘No, it wasn’t 400’. We would have told them before it went any further than that.”

In relation to the letter of the 22nd August 1997 (Exhibit P39) in which there was a further elaboration of this fee, Steven Minuzzo gave the following evidence:-
“Q.... Did there come a time when the letter of 22 August’97 was written, that’s at p.163.
A.Yes, on 22 August that was written.
Q...... You signed the letter didn’t you.
A.Yes I did.
Q...... What parts of the letter, the whole or any part, did you pen yourself.
A.Well obviously the date, address, down to the first paragraph and then from yours sincerely onwards.
Q...... When you say down to the first paragraph, do you say -
A.Including the first paragraph.
Q...... So you did that one.
A.Yes.
Q...... Now the part of the letter beginning Site Acquisition.
A.No.
Q...... From thereon down, when did you so to speak come back into the penmanship.
A.Where it says yours sincerely.
Q...... Who to your knowledge drafted the piece in between.
A.Michael Klobas.
Q...... Do you know where he did that.
A.That was in our office.
Q...... Can you describe to us the circumstances in which that happened.
A.As I said Harvey Norman came back with a response of ‘How could you justify this fee?’ That, I don’t think, was the response that Michael was expecting nor - well it just wasn’t the response expected. I think it was expected that they would just come back with a lower fee. So I rang Michael and told them that this is the information, that they’d asked for some justification which I said ‘We can’t justify it’ so he came in and breezed into my office like he was wont to do, and put his thinking cap on to try and come up with some sort of way he could justify it.
Q...... What happened after he came into your office.
A.Well he had this schedule which is not attached to the copy I’m looking at, from the REI, which he started scribbling notes on a bit of paper trying to work out how he could come up to or around a $400,000 amount and he had a couple of scribbles and then had another couple of scribbles and kept doing that until he got to a figure that was higher, which he then rounded off.”

Also on the topic of that letter of the 22nd August 1997 he gave further evidence:-
“HIS HONOUR
Q...... Up until this letter of 22 August 1997 as far as you understood the agreement there was no money to be paid, the $300,000, things hadn’t happened so that that had to be paid.
A.I understood that, yes.
Q...... I just want to get your state of mind clear at this time. If the joint venture had taken place there was never going to be any money to be paid to Michael Klobas, irrespective of the fact that he might have done some work, is that the situation.
A.His work as he did for the northern sites was purely on speculation.
Q...... So the answer is I’m correct in saying that was your state of mind.
A.Yes.
Q...... Please correct me if I’m wrong, this is your understanding, that because your father thought he had a morale obligation - he’d done some work - that’s why you were trying to get it out of Harvey Norman when entering into the joint venture, is that the situation.
A.The situation was that in our opinion, Mario’s and myself discussing it, Adelaide is a small place and it’s not the sort of place where you need enemies in our assessment, that Michael Klobas might have another deal another day, that if he was out of sorts with us, he’d go and speak to someone else first. It was something that might happen in the future. He had also done some work -
Q...... So a bit of goodwill.
A.It was a bit of goodwill. We’ve done it with a couple of other -
Q...... I’m not criticising you, I just want to understand. Someone might suggest that this letter of 22 August 1997 really is an admission by you that you did, in fact, owe Mr Klobas $300,000 at least on that occasion. What would you say about that if that was put to you.
A.If that was put to me, well, we were happy for Michael to receive more than less, we certainly weren’t negotiating for him to get nothing. We were negotiating for him to get something, and the more he got the better goodwill we might have earnt. So at that stage, the original deal had well and truly fallen over, but I still needed somebody, I believed, to help us to make the deal work, to deal with these Bice tenants. That could have gone on for some time, and we were still trying to do a northern site. While all this was happening that was still going on, and Michael knew every bit of detail, down to the minutest detail of what we were doing with the northern site and Broadview land. We really didn’t need people going out who had an issue causing other problems. So we thought, fair enough, we’ll try and get some sort of amount of money in the joint venture for Michael.
Q...... Why didn’t you tell Harvey Norman the truth and just say look, we’ve got a moral obligation to Michael for an amount of money far less than $300,000. Could you please contribute or something like that instead of being part of this pack of lies here.
A.Well firstly I’d already been talked into it for the 400 so that had already happened. We then got to the stage of how do you justify it. I as I said, Michael was a very convincing person, he’s a salesman. Mario was away, the best I was able to do as a disclaimer was the paragraph that I put in as the first paragraph on that letter. That was my as it turns out, not good enough attempt at a disclaimer of responsibility for really what was going in that letter.”

I have set out those passages of evidence in relation to all of the main players in this case concerning those letters of the 18th August 1997 and the 22nd August 1997. In my view, despite there fraudulent nature, those letters are important to the resolution of the main question in this case. Steven Minuzzo gave further evidence that there were many more discussions after the letter of the 22nd August 1997 was sent with representatives from Harvey Norman about obtaining an amount of money for the 2nd plaintiff’s fee. It was established that they would only go as far as paying $75,000.00 towards the fee which Harvey Norman thought that Klobas had already earned as his contribution towards those matters which were the subject of the joint venture. In the joint venture agreement itself (Exhibit P65) there is an acknowledgment under the head of “DEVELOPMENT COSTS” that all amounts payable to Michael Klobas up to $75,000.00 are costs which are the responsibility of the joint venture.
I observed the three main witnesses very closely and in a sense found all of them to be unsatisfactory. I found Mr Mario Minuzzo’s evidence to be very vague on the topic of the conversation about the 2nd plaintiff’s commission. I found the answers of all of the witnesses as to why Exhibits P38 and P39 were sent to Harvey Norman to be unsatisfactory. However on the topic of where the truth lies concerning the conversations between Mario Minuzzo and Michael Klobas in June of 1996 about Michael Klobas’ fee, I prefer the evidence of Michael Klobas. The primary reason why I prefer his evidence is not so much that he himself impressed me as a witness of truth but the surrounding circumstances and behaviour of the parties leads me to the inexorable conclusion that his version is the correct one.
On the defendant’s case at a time when a fee was being vigorously negotiated by them from the other party to the joint venture for payment of Michael Klobas’ fee they in fact owed him no such fee. On their version of the conversation the fee would not be owing until much later, namely if and when there was an on‑selling of the freehold of the CSR property. I find it incomprehensible that the two letters exaggerating and lying about how much was owed to Michael Klobas would be sent when at that time the Minuzzos were of the view that they owed him nothing. I also find it incomprehensible that they would allow a clause in the joint venture agreement to reflect the fact that they had owed him a fee for work done when in fact no such fee was due and owing.
I therefore make the following findings of fact in relation to the conversations of June 1996 between Mario Minuzzo and Michael Klobas:-

a....... Sometime in June 1996 there was a discussion between Mario Minuzzo and Michael Klobas concerning Michael Klobas’ fee in connection with the transaction between Harvey Norman and the Minuzzo Company.

b.That the terms of the conversation were consistent with Michael Klobas’ evidence that he would receive $300,000.00 for every successful lease that was concluded between Harvey Norman and the defendant.

c.I find that there was no pre‑condition that the freehold of the CSR property was to be sold and the proceeds were to be received on sale.

d.There was an agreement to lease entered into between the company of Harvey Norman Holdings Limited and the defendant on the 28th April 1997 (Exhibit P28).

The defendant argued that even if I find in favour of the plaintiffs on the terms of the contract (which I have) nevertheless the contract which has been entered into and executed is unenforceable because it breaches the Land Agents Act 1994. I set out the important sections of the Act in full:-
“Meaning of agent
4.(1) A person is an agent for the purposes of this Act if the person carries on a business that consists of or involves—
(a).... selling or purchasing or otherwise dealing with land or businesses on behalf of others, or conducting negotiations for that purpose; or
(b)    selling land or businesses on his or her own behalf, or conducting negotiations for that purpose.
(2)    However, a person does not act as an agent in so far as—
(a).... the person sells or purchases or otherwise deals with land or businesses on behalf of others, or conducts negotiations for that purpose, in the course of practice as a legal practitioner; or
(b)    the person sells land or businesses, or conducts negotiations for that purpose, through the instrumentality of an agent; or
(c)    the person engages in mortgage financing.
...
Agents to be registered
6.(1) A person must not carry on business, or hold himself or herself out, as an agent unless registered under this Act.
Penalty:Division 5 fine.
(2)... A person required by this Act to be registered as an agent is not entitled to commission or other consideration for services as an agent unless the person—
(a).... is, at the time of rendering the services, registered as an agent; and
(b)    is authorised, in writing, to act as an agent by the person for whom the services are rendered or a person authorised to act on behalf of that person.
(3)... Any commission or other consideration paid or given to a person who is, under subsection (2), not entitled to it may be recovered from the person as a debt.”

The defendant argued that the plaintiffs (both of whom were registered as land agents) and the work that they did for the defendant in relation to securing the lease with Harvey Norman Holdings Limited was the work of an agent within section 4 of the above Act. It is their contention that they were at the very least “dealing with land ... on behalf of others, or conducting negotiations for that purpose;”. If that is so pursuant to section 6 the contract entitling them to commission or other consideration for such services is not enforceable because the authorisation to sell it is not in writing.
In my view the defendant has clearly established that the plaintiffs were acting as an agent within section 4 of the above Act therefore the agreement between them and Mario Minuzzo is unenforceable as it contravenes section 6. It was argued that the plaintiffs were not conducting negotiations for the purposes of obtaining the lease because draft letters on that topic were sent to the Minuzzos who then sent them off to Harvey Norman. The plaintiffs argument is that it was the Minuzzos who were doing the negotiating and the plaintiffs function was something else, namely the introduction and bringing the parties together and perhaps assisting in the negotiations. I do not accept that argument. On the clear evidence before me the plaintiffs were part of the process of dealing with the CSR site and were part of the process of conducting negotiations for the purposes of obtaining a lease between Harvey Norman Holdings Limited and the defendant. That being so I find that the oral contract between the parties is legally unenforceable. I now turn to the question of unjust enrichment or quantum meruit.
It is common ground between the parties that on a finding that there was an executed agreement between the parties in which the plaintiffs were to receive a commission and that agreement was unenforceable because of the breach of the Land Agents Act then it would be appropriate for the plaintiffs to receive recompense for work done on the principle of unjust enrichment. I turn to that question.
It is clear that the plaintiff has done an amount of work for the defendant in relation to the CSR site. The process of how to remunerate him for that work consistent with the principles of unjust enrichment in this case are very difficult. I have virtually no evidence before me in which the day to day work done by the plaintiffs for the defendant can be costed in anyway. The plaintiff through his counsel admitted that this is too difficult and vague a task. What the plaintiffs put to me however is that work that he has done in bringing about the agreement to lease the CSR property has been costed out pursuant to the appropriate charges as set out by the Real Estate Institute of South Australia for 1995. On that basis the appropriate fee would be $323,000.00 but that amount should be reduced to the agreed fee of $300,000.00 because, according to the plaintiff’s argument, the fee claimed on quantum meruit cannot be more than the fee agreed on the unenforceable contract. Reference on this topic was made to the High Court decision of Pavey & Matthews Proprietary Limited and Paul 162 CLR 221. In that case a building contract which had been executed was unenforceable because it was not in writing contrary to section 45 of the Builders Licensing Act 1971 (NSW). Although the contract was unenforceable it was held that the builder could recover for work done on a quantum meruit. The High Court considered the principles as to how such a claim was to be quantified. In his judgment His Honour Justice Deane said at page 256:-
“The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution.
To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate. The circumstances in which the common law imposes an enforceable obligation to pay compensation for a benefit accepted under an unenforceable agreement have been explored in the reported cases and in learned writings and are unlikely to be greatly affected by the perception that the basis of such an obligation, when the common law imposes it, is preferably seen as lying in restitution rather than in the implication of a genuine agreement where in fact the unenforceable agreement left no room for one. That is not to deny the importance of the concept of unjust enrichment in the law of this country. It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case: see Muschinski v. Dodds (26); Goff & Jones, op. cit., p. 11ff. In a category of case where the law recognizes an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted, the general concept of restitution or unjust enrichment is, as is pointed out subsequently in this judgment, also relevant, in a more direct sense, to the identification of the proper basis upon which the quantum of remuneration or compensation should be ascertained in that particular category of case.
The fact that the action which can be brought on a common indebitatus count consistently with the Statute of Frauds is founded on an obligation arising independently of the unenforceable contract does not mean that the existence or terms of that contract are necessarily irrelevant. In such an action, it will ordinarily be permissible for the plaintiff to refer to the unenforceable contract as evidence, but as evidence only, on the question whether what was done was done gratuitously. In many cases, such as where the claim is for money lent or paid, the obligation to make restitution will plainly involve the obligation to pay the precise amount advanced or paid. In those cases where a claim for a reasonable remuneration or price is involved, the unenforceable agreement may, as Jordan C.J. pointed out in Horton v. Jones [No. 1](27), be referred to as evidence, but again as evidence only, on the question of the appropriate amount of compensation.”

In the present case I have to decide what is a reasonable remuneration or compensation for the benefit given by the plaintiffs to the defendant. As I have said the only evidence that I have before me is Exhibit P63 and the very terms of the agreement itself which although that agreement is unenforceable it can be used by way of evidence to decide what is a reasonable remuneration or compensation. The only other evidence on the topic is from Mr Mario Minuzzo who gave the very broad and vague evidence that he thought $75,000.00 was an appropriate compensation for the work done by the plaintiffs. I am of the view that a combination of the appropriate charges as indicated by Exhibit P63 and the evidence of the amount of the agreement itself indicates to me that the appropriate amount for reasonable remuneration is $300,000.00. I now turn to the question of accord and satisfaction and breach of fiduciary duties.
The defendant alleged in his pleadings that in about October or November of 1997 the joint venture partners had agreed to pay Klobas a fee of $75,000.00 and that on being told that by the defendant Klobas agreed to accept it. As a result it is argued that the plaintiffs are estopped from demanding any fee in excess of that sum. The factual basis for that submission is based upon the evidence of Mr Steven Minuzzo who on discovering that the 2nd plaintiff had a contract on a site at Broadview himself which the Minuzzos had wanted him to obtain on their behalf, the 2nd plaintiff said to Steven Minuzzo “and when you pay me the $75,000.00 fee I will give you control of this contract, I will assign it to you”. According to the defendant that is supported by a facsimile transmission sent from Steven Minuzzo to the 2nd plaintiff on the 22nd October 1997 in which he said (Exhibit P56) “Michael I need a copy of the contract you have signed for Broadview before I consider entering into the agreement you have requested”. On the defendant’s argument there is evidence that the plaintiffs offered to settle for $75,000.00 on certain conditions. An interpretation of Exhibit P56 urged upon me by the plaintiffs was that the agreement to be entered into was an assigning of the contract for Broadview and had nothing to do with $75,000.00. When cross-examined on the topic the 2nd plaintiff denied that he would assign the contract for Broadview to the Minuzzo group if he was paid $75,000.00. I find that on the evidence before me the plaintiffs have never agreed to accept $75,000.00 in full satisfaction of the work done by the 2nd plaintiff. In my view the 2nd plaintiff’s behaviour, despite areas of credibility which concern me namely his part in the false letters from Upjay Pty Ltd to Harvey Norman Holdings Limited in August of 1997 and his role in the sale of the BICE land, is quite consistent with him being unwilling to accept $75,000.00 in full satisfaction of this matter. I prefer his evidence that he has never agreed to accept such an amount in settlement of this matter and therefore the defence of accord and satisfaction or estoppel as it has been pleaded fails.
The final argument by the defendant is that there has been a breach of fiduciary duty as the plaintiffs were acting as an agent for the defendant and they breached their fiduciary duty to the defendant in their behaviour concerning the sale of the BICE land and dealings with the Broadview land. There is no doubt that pursuant to his task to find another appropriate site for the defendant in relation to Harvey Norman the 2nd plaintiff helped bring about an option to purchase the BICE land between BICE Melory and Upjay Pty Ltd. That option to purchase was signed on the 29th July 1997 and the sale of the property eventually took place on the 30th September 1997. Pursuant to an agreement between Mr Bice and the 2nd plaintiff, the 2nd plaintiff received $25,000.00 by way of an agreed commission for that sale. This was done without the knowledge of the defendant. As a result of that behaviour the defendant claims that there has been a breach of fiduciary duty which should be a bar from the present claim for commission on the CSR property. The plaintiffs position is that they accept that in arranging the commission for the sale of the BICE property without the defendant knowing should result in whatever judgment I give in favour of the plaintiffs being reduced by $25,000.00. In my view if there was a breach of fiduciary duty in the plaintiffs receiving a commission from Mr Bice when he was acting for the defendant, that has nothing to do with the present action. Consistent with my findings the settling of the BICE property was well after the agreement reached in June of 1996 which is the basis of the present claim and in my view is quite separate from it. Similarly the plaintiffs dealings with the Broadview property which took place in 1997 are also separate and independent of the present claim.
I find that there was an agreement, that the defendant pay the plaintiffs $300,000.00. As I have indicated that agreement was not enforceable because of a breach of the Land Agents Act but the plaintiffs are entitled to that amount of money pursuant to the principles of unjust enrichment. I subtract from that the amount of $25,000.00 which the plaintiffs admit should be deducted because of the commission he received on the sale of the BICE property. I have indicated however that that behaviour in relation to the BICE property and also to the Broadview property even if it had resulted in a conflict of interest was after and unrelated to the unenforceable contract which is the subject of the claim. In my view it is therefore not a bar to the plaintiffs recovering a reasonable remuneration for the work that has been done.
Consequently there will be judgment for the plaintiffs in the sum of $275,000.00.

[2000] SADC 70

9 June 2000