Newham Business Brokers Pty Ltd ACN 605 068 719 v Inferno Cheer And Dance Pty Ltd ACN 609 245 678 & Anor (Civil Dispute)

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

NEWHAM BUSINESS BROKERS PTY LTD ACN 605 068 719 v INFERNO CHEER AND DANCE PTY LTD ACN 609 245 678 & ANOR (Civil Dispute) [2025] ACAT 6

XD 952/2024

Catchwords: CIVIL DISPUTE – claim of payment for commission arising from sale of a business – brokerage agreement – Australian Consumer Law – breach of contract –claim against second respondent as guarantor- respondent to pay applicant’s commission– respondents counterclaim dismissed

List of Legislation: ACT Civil and Administrative Tribunal Act 2008 s 48
Australian Consumer Law (ACT) ss 20, 21, 22, 23, 24, 25, 151, 156

List of Cases: Guy Forsyth as Trustee for Endure Trust Trading as Alignity Consulting v Finite Group APAC Pty Ltd CAN 085 406 300 Trading as Finite Recruitment (Appeal) [2022] ACAT 42

Tribunal:Member W Hawkins
Date of Orders:  31 January 2025
Date of Reasons for Decision:      31 January 2025
Date of Publication:  7 February 2025
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 952/2024
BETWEEN:
NEWHAM BUSINESS BROKERS PTY LTD ACN 605 068 719
Applicant

AND:

INFERNO CHEER AND DANCE PTY LTD ACN 609 245 678
First Respondent
EMMA KATE SQUIRE
Second Respondent

TRIBUNAL:Member W Hawkins
DATE:31 January 2025

ORDER

The Tribunal orders that:

The respondents are to pay the applicant the sum of $11,056 as follows:
(a)$10,670 being the balance of commission
(b)$366 ACAT filing fee
(c)$20 search fee
Also within 28 days, in addition to the amount payable in paragraph 1, the respondents are to pay interest on the balance of the commission of $10,670 on and from 1 July 2024 to the date of this decision.
The respondents’ counter claim is dismissed

………………………………..

Member W Hawkins

REASONS FOR DECISION

Introduction

The applicant, Newham Business Brokers Pty Ltd (Newham Business Brokers or the applicant), is a business brokerage firm based in Canberra, ACT. It is the ACT and South West NSW franchisee of Finn Franchising Australia Pty Ltd based in Brisbane, Queensland. Michael Newham (Newham) is the sole director of the applicant. The first respondent is Inferno Cheer and Dance Pty Ltd (Inferno) and the second respondent is Emma Kate Squire (Squire), the sole director of Inferno (collectively the respondents). The applicant claimed payment of the balance of a commission from the respondents arising from the sale of the respondents’ dance studio business at Prospect, NSW which settled on about 30 January 2024. The application dated 24 July 2024 claimed $11,056 comprising unpaid commission of $10,670, ACAT filing fee of $366 and a search fee of $20. The applicant also claimed statutory interest on and from 1 July 2024.
The respondents denied the claim and relied upon breaches of the Australian Consumer Law (ACL) and breach of contract. The respondents made a counter claim of $3,084.62, comprising a brokerage overpayment of $2,912.62; legal costs of $1,100 and ACAT filing fee of $172. The respondents did not claim interest. At the hearing, the respondents correctly withdrew the claim for legal costs after a discussion about section 48 of the ACT Civil and Administrative Tribunal Act (the ACAT Act). As a result, the counter claim was reduced to $3,084.62.
The application and counter claim were heard by me on 21 November 2024. The respondent was represented by Newham pursuant to an authority to act and Newham appeared in person. The respondents were represented by Charlene Euripidou, a solicitor from Milestone Legal of Lakemba, NSW who appeared remotely with Squire.
The applicant and the respondents both tendered a number of documents. I do not intend to individually identify the tendered documents, but I will refer to them as necessary in this decision. Both Newham and Squire gave evidence and were cross examined and also answered questions from me. Both parties filed written submissions and provided oral submissions at the conclusion of the evidence.

Applicant’s evidence

Newham provided a statement and gave evidence. In essence, his evidence was:
(a)From about late January to early May 2023, he had a series of communications with Squire concerning the sale of Inferno and Squire provided him with financial material.
(b)On 1 May 2023, he emailed Squire and attached an appraisal which included the three ways or packages in which the applicant could assist in the sale of Inferno. The first was advertising only at $85 per week plus GST. The second package was a low fee service which cost $3,000 plus GST for six months. It provided the advertising, added the screening of enquiries and then forwarding to Squire the ‘buyers’ for her to deal with. The third package was a full brokerage service, which in addition to the above, included the preparation of a business profile and due diligence package which had a success or commission fee of $12,500 or 7% of the total sale price (whichever was the greater). Each of the packages in the appraisal had a hyperlink for additional information.
(c)On 3 May 2023, a video meeting was held where the business value and sale process were discussed and debated.
(d)On or about 26 May 2023, an Agency Agreement (the agreement) was forwarded to Squire. Squire was named as ‘the client’ and Squire as a director of the first respondent agreed to guarantee and indemnify the applicant in circumstances where the first respondent failed to pay monies to the applicant that might be owed under the agreement. The front page recommended that Squire obtain legal advice before signing the document. Each page of the agreement required Squire to place her initials at the foot of the page. The document listed the applicant’s estimated selling price as between $45,000 and $85,000.
(e)On or about 28 May 2023, the respondents signed the full brokerage service agreement with the applicant to sell Inferno. Part 4 of the agreement described the listing as an exclusive agency agreement with a start date of 2 June 2023 for 6 months. Part 5A referred to the agent’s remuneration based upon the full brokerage service. Relevantly, clause 3 set out the appointment and role of the agent; and clause 9 stipulated that the respondents were responsible for the listing price. Clause 22 referred to acknowledgements about potential representations and warranties and the need for the client to seek legal and financial advice and that the agent did not offer legal and financial advice. Clause 29 stated that the governing law of the agreement was that of the ACT (or NSW) and that the parties submitted to the courts of that Territory. The applicant signed the document on 30 May 2023.
(f)On about 30 May 2023, the applicant sent the respondents an engagement letter. The letter had a number of links including a ‘seller’s checklist-business sale’. The checklist set out information regarding due diligence and settlement considerations. It included advice that the respondents should check with their solicitor concerning settlement.
(g)On 5 June 2023, Squire emailed the applicant and advised that they wanted to look closer at a selling price that was closer to $200,000.
(h)On or about14 June 2023, Newham forwarded to Squire documents including a ‘Business Profile’ of Inferno. The profile included Inferno’s financials, the ‘asking price’ as $149,000 and a return on investment or ‘ROI’ analysis. The ROI analysis concluded that ordinarily the asking price should be around 2 to 3 times its annual adjusted net profit. The net profit was determined to be $27,257.16.
(i)By 6 September 2023 Inferno had not been sold and Squire emailed Newham and raised concerns about what was happening. Newham responded that this was due to Squire not accepting his original advice to list Inferno at a lower price and he had only listed Inferno at a higher price to acquiesce with Squire’s instructions. In the same email Newman raised potential purchasers and the need for Squire to provide updated financials and for her to work with him around price and be guided by his suggestions.
(j)On 7 September 2023, Newham suggested to Squire that the agreement could be changed to the low fee option. Squire replied setting out her personal difficulties and that she was assisting wherever she could but declined Newham’s proposal. She said that she did not have the time or the expertise to liaise with individual buyers (more than she already was) and emphasised that this was the reason that she had engaged the applicant.
(k)On 10 October 2023, Newham emailed Squire and suggested that an alternative might be to sell only the assets and equipment and not the business, and that if Squire wanted to change the price back to a higher price, then the applicant would do so, but that they advised against it.
(l)During the course of the campaign, the applicant prepared vendor reports and provided these to the respondents. These recorded that the first enquiry was on 16 June 2023 and that there had been a total of 37 enquiries. The reports included the source of the enquiry and to where the enquiry had progressed to. A prospective buyer had to first sign a non-disclosure agreement before a fact sheet containing more critical information was provided. If discussions progressed, a ‘discovery tour’ of the business was arranged and this necessitated a meeting and walk through of Inferno by the potential purchaser and Squire.
(m)On 8 November 2023, the applicant emailed Squire and advised her of a potential buyer Kimiko Wotherspoon-Smith (KWS). On 13 November 2023, Newham emailed Squire and informed her that KWS wanted to meet Squire and discuss the finer details of the business at a discovery tour a few days later. There were some exchanges of emails back and forth between the parties and the meeting was confirmed. A link to a video on recommended advice when conducting the meeting was provided.
(n)On 21 November 2023, Newham emailed Squire and indicated that he believed that KWS had insufficient funding to buy the business, and that KWS might not be approved by the landlord. He also said that KWS had informed him that she had a discussion with Squire about vendor finance over the coming year. Newham sought confirmation of the discussion and whether Squire was open to such a proposal. Squire replied and expressed concerns about the landlord approval and that she was prepared to accept the $40,000 to be paid over four instalments of $10,000 in 2024. Squire also sought clarification on what parts of the sale Newham would cover and what was left for Squire to do. Squire also raised how the commission would work as she had “worked really hard to get this client interested in the walk through and negotiated the payment plan and price.” In a separate email of the same date Squire sought cancellation of the ongoing advertising.
(o)On 23 November 2023, Newham emailed Squire the formal expression of interest by KWS and also sought contact details of the landlord so that the landlord’s approval of the assignment of the lease could be obtained. Squire provided names but not an email addresses and sought information about what the process entailed. Newham replied and said that he would liaise with the landlord until settlement and would let Squire know when she should deal with the lease assignment and the “solicitor side of things.”
(p)On 28 November 2023, there were a number of email exchanges between the parties which included the property agents for the landlord. Newham considered that the sale could be settled by the end of January 2024. Squire indicated that things had to be moved closer to mid-December 2023 and at the latest “very early January”. Newham informed Squire that with the various parties including “3 solicitors” and it usually takes a month, and it was unlikely to be completed before Christmas. Newham suggested that to speed up the process, Squire should engage a solicitor to draw up the contact of sale as soon as possible. Squire replied to the email that she was not sure how the lease and sales agreement fitted together and that she was not sure what Newham meant when he suggested that she needed to “engage” with a solicitor and sought clarification. Newham responded, explaining the role of the solicitor in the transaction and after a further series of emails, Squire said that this was the first time that she was hearing that she needed a solicitor and that it was her understanding that the applicant was a “one stop shop” and that they would deal with everything. In response, Newham emailed Squire and referred to the Agency Agreement and advised Squire to engage a solicitor and also that in his opinion, Squire’s desired settlement date was not achievable.
(q)On 29 November 2023, Squire emailed Newham and confirmed that she did not have a solicitor and sought to have a discussion with him.
(r)On 30 November 2023, the landlord’s agent sought a number of documents from Newham pertaining to KWS including her past business experience and financial documents including some past tax returns. Newham responded advising that he would provide the documents as soon as possible.
(s)On 4 December 2023, Squire emailed Newham and (incorrectly) assumed that the landlord’s agent was seeking business documents from her rather than KWS. Newham replied on 6 December 2023 and advised her that no documents were sought from the respondents and that a proposed guarantor of KWS had withdrawn and that this would likely make it more difficult for the landlord to approve the lease transfer to her.
(t)On 6 December 2023, Newham emailed the landlord’s agent the requested information including KWS’ lease assignment application form, her resume, and her relevant certificate in small business. He explained that as she was an employee, there were no profit and loss statements.
(u)Between 11 December and 21 December 2023, there were multiple email communications between the landlord’s agent and Newham. In these emails agreement was reached about various conditions which enabled KWS to acquire the business. On 21 December 2023, Newham informed Squire of the agreement and on the same day Squire provided details of her solicitors to Newman.
(v)Between 21 December 2023 and 31 January 2024, there were communications between Newham and the respondents’ solicitors and the sale settled on about 1 February 2024. By email dated 10 January 2024, the respondents’ solicitors proposed a reduction in the applicant’s commission to 7% on the sale price or about $2,800 plus GST. By email dated 11 January 2024, Newham declined the offer but advised that he was prepared to reduce the fee from $12,500 plus GST to $10,000 plus GST on the basis that $2,800 plus GST was paid on settlement and the balance would be paid by 30 June 2024. By email dated 31 January 2024, the respondents’ solicitor requested the applicant’s invoice for part payment of $2,800 plus GST to be paid on settlement. Newham forwarded his invoice that day. The invoice was paid, but the respondents have refused to pay the balance of $10,670.
In cross examination or in response to questions from me, Newham stated the following:
(a)The basic and full fee service involved different levels of work by the broker and the agreement was an exclusive agency agreement.
(b)Potential buyers are not provided with financials and other confidential information until they sign a non-disclosure agreement (NDA) and the formal expression of interest is signed well after that by the potential buyer and the seller and potential buyers are followed up if they were not responding to communications.
(c)There was some delay with KWS because the lessor was not originally willing to transfer the lease to her, but this was resolved by having KWS’ father act as guarantor.
(d)Regarding other potential buyers, there were 37 enquiries and 32 were sent a business profile.
(e)In response to whether the applicant represented that there were 900 buyers for Inferno, Newham denied this and said, that the applicant’s website is referring to 900 business buyers generally and not 900 specific buyers for Inferno.

Respondents’ evidence

Squire provided a statement and gave evidence. A statement was also provided by Taryn Moore (Moore). Moore was not available to give evidence. The respondents also provided what appeared to be redacted texts to and from KWS but no statement was provided from her. The parties were informed that it would be a question of what weight, if any, could be placed upon the Moore statement and the redacted texts.
In essence, Squire’s evidence was:
(a)Around 1 May 2024, she saw the respondent’s advertisement. It only referred to a “low fee $3300 flat rate service all inclusive.” As a result, she contacted the applicant.
(b)The reason she entered into the agreement, and the biggest incentive for her, was that she believed that the applicant was a “one stop shop, that I was getting a beginning to end all inclusive, all services, that wouldn’t have to lift a finger”.
(c)Although she had co owned another business it had ended and was deregistered and not sold. Inferno was the first business that she had owned by herself.
(d)On 5 July 2023, after forwarding some requested information to the applicant, she received an email from Newham advising her, amongst other things, that the applicant could sell her business and a meeting was arranged. The email set out the three levels of assistance from advertising only, low fee, and full brokerage. The email also advised that there were “just over 900 buyers looking for a business right now”.
(e)By 7 September 2023, her confidence in the applicant had deteriorated. Newham emailed her on 7 September 2023 indicating that as Squire may not be happy with the current arrangements, there was the option of changing the arrangements to a low fee option. There were other emails around this time discussing a price reduction of Inferno and that Squire had dropped the price to Newham’s original estimate of $80,000, and also raised the concern that the commission would stay the same and that this would financially impact Squire but not the applicant.
(f)On 21 September 2023, Newham emailed Squire and recommended that the price be reduced to $30,000 and also recommended that the respondents should let their clients know as they could be potential buyers.
(g)On 28 November 2023, Squire emailed Newham and said that there had been “no guidance” and although she acknowledged there was a contract, she did not think that there had been effective communication and believed that Newham was refusing to call her.
(h)On 21 December 2023, the respondents’ solicitors emailed Newham and referred to him as ‘the acting agent’ in the sale and advised that they would prepare the contract of sale and assignment of the lease and confirmed that the purchase was vendor financed.
(i)On 10 January 2024, the respondents’ solicitors proposed to the applicants a 7% commission on the sale price being $2,800 plus GST and the amount be payable on settlement (which was expected to be on or around 1 February 2024). The proposal was rejected by the applicant and the applicant offered a counter proposal of $10,000 plus GST with $2,800 plus GST payable on settlement with the balance payable by 30 June 2024.
(j)On 31 January 2024, the respondents’ solicitors by email requested an invoice for ‘part payment’ of $2,800 plus GST as well as banking details so payment could be made on settlement.
(k)At best, the applicant did minimal work, and there was a lack of assistance by Newham. He did not accept feedback from her or from potential buyers; he did not respond adequately to her health and personal circumstances; he mismanaged the listing and pricing; there were communication breakdowns; he did not provide proactive management and the respondent’s commission was approximately 30% of the sale, whereas the industry standard ranges between 5 and10%.
(l)If the business had sold for $85,000, she would have been happy to pay the commission of $12,500 plus GST.
(m)She wanted the listing to be a silent listing and had telephone conversations about this with the applicant.

During cross examination or in response to questions from me, Squire stated the following:
(a)She believed the appraisal provided by the applicant was “severely inadequate. It was looking basically at figures on the books, rather than the actual equipment and assets.”
(b)She agreed that she had received notification of 34 of 37 potential leads, but about two of the leads were direct referrals from her. The eventual purchaser, KWS was not a direct referral although she had been an Inferno employee in the past.
(c)She understood that the applicant’s fee would be a fixed price or a percentage, but at the time of signing the agreement, the listing price had not been settled upon.
(d)Agreed that she approved the advertisements for the sale of Inferno but there was some changes to the original wording.
(e)Agreed that she approved the sale documents, the business profile and the due diligence, but understood the documents to be “evolving documents” as information was still being provided by her and that in her mind she was signing off on the process rather than the final product.
(f)She dealt with 5 of the 37 enquiries, and two of these were her direct referrals and agreed that Newham arranged the discovery tour with KWS.
(g)She “skimmed” the agreement before signing it, and focussed upon the bold parts of the agreement including the front page where there is a warning to obtain legal advice before signing the document; part 4 dealing with listing type and terms; part 5A agent’s remuneration; part 5B commission sharing; and said that there “was a lot there”; and part 9 which recommended that the signatory obtain legal advice and that the terms of the agreement, including the commission, could be negotiated. She agreed that she had signed each page of the agreement.
(h)After the walk through with KWS, KWS had raised the question of vendor finance, and she was referred back to the applicant.

Applicant’s submissions dated 21 September 2024

The applicant relied upon the terms of the agreement. The applicant referred to clause 3 which sets out the appointment and role of the agent, the client and the client’s solicitor. The applicant also relied upon clause 2.2 and the acknowledgement that the client had read and understood the agreement and that the client had the opportunity to obtain legal advice in relation to the agreement. The applicant also referred to clause 22 and the acknowledgement by the respondents that the agent had not made any representations as to the value of the business and that pursuant to clause 9.2 the listing price was set by the client. Clause 22(f) states that the agent does not offer legal and financial advice.
More generally, the applicant referred to the front page of the agreement that provided a ‘warning’ that the client should obtain legal advice before signing the agreement. The applicant submitted that part 3A of the agreement stipulated that it was an estimated value only and that the client should seek independent advice from a valuer if required. He also stated that part 4 in a highlighted box referred to the type of listing and terms and was specific that it was an ‘exclusive agency’ and that the agreement stipulated that as a result the client may have to pay the commission even if another agent (or even the client) sells the business or introduces a buyer who purchases the business. The part also stressed that the client should obtain legal advice if they were unsure of the legal implications of an open listing, sole agency or an exclusive agency.
Respondents’ submissions dated 21 October 2024 and oral submissions at the hearing.
Generally
The respondents submitted that respondent Squire had no experience in buying or selling a business. The applicant made representations to Squire prior to her signing the agreement. The applicant valued the business at around $80,000 but listed it at $145,000 to test the market. The respondents accepted the full brokerage fee, but at the time strongly believed that Inferno would sell for around $145,000, so the commission was not an issue at that time. When Squire complained about the lack of action of the applicant, Newham only advised her to reduce the price and didn’t consider other options. The respondents should only have been charged the flat rate service fee for the work done by the applicant.
The respondents submitted breach of the Australian Consumer Law (the ACL) and in particular sections 21: unconscionable conduct; section 23(1) and 23(2A): unfair terms; section 156 and 151 1(b): misleading and deceptive conduct and 151: misrepresentation of services. The respondents also alleged breach of contract. Squire conceded that she did not read the agreement properly. The respondents further submitted that the agreement should be ‘voided’ on the basis of unclear terms.
Unfair terms
The respondents argued further that the terms were unfair because the estimate had a ‘significant’ range of almost 50%. Regardless of the price Inferno sells for, the commission remains the same. There is no incentive for the broker to sell for a higher price and the commission was 30% of the sale price, whereas the industry standard is 7% and as a result, the applicant’s commission is a ‘shark’ rate.
Misleading and deceptive conduct
The respondent said that the applicant misled the respondents in representing that Newham would take care of everything, and even though the respondents agreed to the full brokerage service they only received the low fee service. The applicant also said that they had 900 active buyers looking for a dance studio/gym. By September 2023, Squire had only received one lead by November 2023, the applicant had failed to follow up another lead. Squire was not aware that the applicant was not based in Sydney, and as a result she could not arrange personal meetings. Although Squire received a settlement checklist in May 2023, she did not read the attachments as a potential settlement was a long way off and it was only when she received an email in December 2023 referring to a need for a solicitor to finalise the transaction that she became aware of the need for a solicitor. As a result, she was “extremely misled”. Although the agreement said that the respondent “should obtain legal advice before signing this agreement”, there was no clear representation that the respondents needed a solicitor to complete the transaction. Squire understood this to mean that the solicitor could go over the terms of the agreement and that as Squire believed she understood the agreement, she did not need a solicitor.
Misrepresentation
The respondents contended that the applicant misrepresented and exaggerated their services to induce the respondents into signing the agreement. Newham led the respondents to believe that there were thousands of purchasers waiting to buy her business. Prior email communications emphasized ‘completing the transaction.’ The applicant’s website is misleading and understates the role of the client and their solicitor in the business transaction. The applicant (even after offering to reduce their fee to the flat rate on 7 September 2023), did not advise the respondents that they would need a solicitor and otherwise the respondents would have accepted the offer.
Unconscionable conduct
The respondents said that they were not aware the applicant was based in the ACT and as a result, the respondents could not have face to face meetings. Squire also had to conduct the discovery tour even though the respondents had paid for the full brokerage service. The respondents did not know that they needed a solicitor and believed that it was not necessary as the applicant was a ‘one stop shop’. It was unconscionable for the applicant to only advocate dropping the selling price and Newham then “pushed” Squire into agreeing with the reductions. The applicant recovered the same fee even if the price was reduced. The applicant was “lazy” and did not follow up on leads and encouraged Squire to tell her clients of the price reduction(s). KWS was not confident in the broker. The commission was “tremendously higher” at 31.25% of the sale price compared to industry standard of 5 to 10%. By September 2023, the respondents had only one lead and Newham was not interested and did not accept feedback. Newham also acted unconscionably when potential buyers were also offered other businesses to purchase rather than Inferno.
Breach of contract
The applicant did not fulfill their obligations under the contract and did not deliver on their claims and representations. The applicant sent only two leads in 6 months and did not offer finance to purchasers including KWS. The respondents’ lawyers had to negotiate the sale with KWS’ lawyers.

Applicant’s submissions in reply

Generally

In this part of the decision, I will set out arguments made by the applicant in reply but not repeat issues raised by the applicant in its original submissions. The applicant relied upon the agreement and argued that clause 20 provided an indemnity and as a consequence the respondents were precluded from making their claim. The applicant denied making the alleged representations and relied upon the specific terms of the agreement and had valued Inferno at around $30,000 based upon past financial performance. The respondents wanted at least $85,000 and as a result the applicant listed the range at $45,000 to $85,000. Squire was advised to read the agreement and obtain legal advice. As a result of the applicant’s marketing there were 37 leads. Most of the leads dropped out due to Inferno’s financials and high price. The applicant offered to change the agreement to a low fee service twice and this was rejected by the respondents as Squire said she did not have time to deal with enquiries.
Unfair terms
The applicant said the respondents set the selling price and not the applicant. It was an estimate based upon what Squire had valued the plant and equipment. The agreement stipulates that it is an estimate and not to be relied upon. The respondent were never advised that the business would sell for $80,000 and this was confirmed by emails, the appraisal, and the agreement. The respondents chose to have a full brokerage rather than a flat rate and to have the applicant spend time and effort in dealing with enquiries rather than Squire.
Misleading and deceptive conduct
The applicant stated that they complied with their obligations and “got the job done” by formalising the agreed terms of sale, liaising for the lease transfer and providing information to the respondents’ solicitor on the sale. The applicant’s inhouse finance broker was available, but this was not followed up by the respondent or by KWS. Although Squire was advised not to negotiate the sale terms during the discovery tour, she did so including vendor finance. The respondents received the full brokerage service and not the low fee service as confirmed by the evidence. Squire’s assertion that by mid-September 2023, there had only been one lead and that Newham showed no interest is false and contrary to the evidence. The respondents ignored appropriate feedback from beginning to end. The fact that the applicant is based in Canberra and not in Sydney had no bearing on the relationship and the respondent was informed in the quote/proposal that the applicant would screen potential buyers and the respondent would meet the serious ones should they wish to do an inspection. Following the inspection, the applicant performed their obligations to complete the transaction. The agreement clearly sets out that the respondents would need a solicitor. Apart from not reading all of the agreement, Squire also chose not to read attachments to communications which contained relevant and important information.
Misrepresentation
The applicant denied misrepresenting to the respondents the extent of the services that they could provide and specifically denied misrepresenting that they provided legal services. The applicant’s website specifically refers to briefing client and purchaser’s solicitors. At no time were the respondents advised that that there were thousands of buyers for Inferno, but rather, a large data base of buyers to purchase businesses in general.
Unconscionable conduct
The respondent denied unconscionable conduct and referred to their previous submissions. If Squire was not experienced in selling a business and needed to protect her own interests in such an important transaction, then it is her responsibility to properly read the agreement. It is common practice to recommend to a client to let their customers know that the business is for sale, as often customers purchase a business that they know. Concerning the brokerage fee, the respondents chose the full fee service and not the low fee and declined the applicant’s offer to change to a low fee service. Calculating the brokerage fee as a percentage of the sale fee in this instance is misleading. The respondents attempted to rely upon persons who did not give evidence or in some cases provide a statement and such material should have little or no weight.
Breach of contract
The applicant denied the assertions of the respondents.

Consideration and findings

The essential question for me is whether Newham Business Brokers is entitled to the full brokerage fee or a lesser flat fee arising from the sale of Inferno. To a significant degree the facts are not in dispute. It was not in issue that the agreement was entered into and that the agreement provided that the laws of the ACT (or NSW) apply and therefore the ACAT has jurisdiction to hear and determine the matter.
The agreement names Squire as the client of the applicant. As a director of the first respondent, Squire agreed to guarantee and indemnify the applicant in circumstances where the first respondent failed to pay monies to the applicant that might be owed under the agreement.
The applicant’s case is straight forward. If the applicant establishes that the agreement entered into on 28 May 2023 and commencing 2 June 2023 was for an exclusive agency and for the full brokerage service, then once Inferno was sold the applicant would be entitled to the brokerage fee. The fee pursuant to the agreement was $12,500 plus GST (or 7% plus GST of the total business sale price whichever is the greater). It was not in issue that the agreement was still in force at the time of the relevant sale to KWS. If there had been a part payment, as there was here, then the applicant would be entitled to the balance of the brokerage fee.
The respondents case, including the counter claim is more complicated. They say, the agreement should be voided, primarily due to the operation of the ACL and of the general law applying to contract.
Neither party referred me to any relevant authorities in support of their claims or submissions.
The ACL is a body of Commonwealth, State and Territory statute law, covering, among other things the supply of goods and services in trade or commerce to consumers and small business. The respondents say that the applicant’s actions (or inactions) results in there being a breach of the ACL and this has resulted in an overpayment of monies as they have been invoiced for full brokerage fee rather than the flat fee.
Relevantly, the ACL section 23(4) essentially defines a small business contract as one in which at least one party to the agreement is a business that employs fewer than 100 persons and the party’s turnover is less than $10,000,000. On the evidence presented, I find that Inferno was a small business for the purposes of the ACL.
Unfair terms
Section 24(1) of the ACL establishes a three limbed test for unfairness, and each of which must be satisfied on the balance of probabilities if a term is to be considered unfair. Essentially, a term is ‘unfair’ if it would cause a significant imbalance in the parties’ rights and obligations under the contract; and it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied upon.
Section 25 of the ACL provides some examples of unfair terms, however it does so without limiting section 24. The examples refer to terms that for example, permit one party but not the other party to avoid or limit performance of the contract; permit one party but not the other party terminate or vary the contract; permit one party but not the other party to unilaterally determine whether the contract has been breached or to interpret its meaning; and permit one party but not the other party to limit one party’s right to sue another party or to limit the evidence one party can adduce in proceedings relation to the contract. The respondents did not refer to any of the examples of unfair terms in section 25 of the ACL and apply them to the circumstances in the application.
The respondents asserted the unfairness of the agreement essentially upon the basis that the range in the estimate of the proposed listed price of Inferno was significant and that, regardless of what Inferno might sell for within that range, the commission would be the same. The respondents did not refer to any authority in support of the submission.
I have considered the submissions and the evidence carefully and have also considered the decision of Acting Presidential Member (APM) Orr (as he then was) in Guy Forsyth as Trustee for Endure Trust Trading as Alignity Consulting v Finite Group APAC Pty Ltd CAN 085 406 300 (Forsyth). In that matter, APM Orr considered both section 24 of the ACL and referred to the examples of unfair terms in section 25. APM Orr dealt with the matter before him under section 24 of the ACL and did not have to consider section 25 of the ACL in detail. I find that the respondents’ concern only arose as the price dropped. I also find that in September 2023, Newham offered to vary the contract from a full broker service to a low fee option and hence a lower fee, but Squire declined the offer and continued on the full broker fee service.
I find that none of the examples stipulated in section 25 of the ACL apply to the present agreement. I now consider the three limbed test in section 24 of the ACL. My consideration of this provision is informed by the remarks of APM Orr in Forsyth that the underlying policy of the unfair contract legislation respects freedom or sanctity of contracts between parties. The respondents have not satisfied me that any particular term of the agreement causes a significant imbalance in the parties’ rights and obligations under the agreement or that a particular term is not reasonably necessary in order to protect the legitimate interests of the applicant. The respondents in essence argued that they had suffered a financial detriment when the amount of the commission is compared to the eventual sale price of Inferno. It is debatable whether this outcome constitutes financial detriment under section 24(1)(c) of the ACL. Nevertheless, section 24(1)(c) of the ACL requires that the financial detriment be suffered if it were to be applied or relied on. Squire was aware of the fee structure from the commencement of the agreement. She declined to vary the agreement when the applicant proposed a lower fee option. Therefore, there is no unfairness in the terms being applied or relied upon by the applicant. as a consequence of the above, the respondents have not established that the agreement as a whole or a specific term was unfair. If I had been convinced, that the three limb test for unfairness had been satisfied on the balance of probabilities by the respondents, then pursuant to ACL section 23(1), I could have declared a term or terms void, however the agreement itself could have continued, assuming that it was capable of operating without the offending term or terms. However, given what I have found, I am not required to consider this aspect further.
Misleading and deceptive conduct

The respondents also argued that the applicant made misleading and deceptive statements in representing that Newham would take care of everything but that in reality they only received the low fee service rather than the full brokerage service.
Considering the last contention first, even on Squire’s evidence, the service that the respondents received was more than the flat fee service. She agreed that she had received notifications of 34 of the potential 37 leads; that Newham arranged the discovery tour with the eventual purchaser; and when she was offered a fee reduction to the lower rate she declined; and that she would have been happy with the higher rate if the original sale price was obtained. Squire was unhappy with the service provided by Newham and wanted more from him, but dissatisfaction alone does not alter the service and fee that she had agreed to.
The argument that Newham would take care of everything is a mischaracterisation of what was agreed. Squire referred to the applicant’s website. In addition to Newham’s evidence, the applicant relied upon a schematic representation from their website of how the applicant would co-ordinate and liaise with key stakeholders including the respondent’s and buyer’s solicitors and accountants. Newham’s email to Squire of 1 May 2023 sets out the three levels of service and had hyperlinks for additional information. Clause 3 of the agreement sets out the role of the broker and refers to the broker liaising with the client’s and buyer’s solicitors to assist them where appropriate in the drafting and finalisation of the contracts of sale. Squire conceded that she did not read all of the material, had ‘skimmed’ it and focussed upon the bold parts of the document and acknowledged that there was a ‘lot there.’ Newman’s email to Squire of 30 May 2023 had seven attachments and these were not read or only cursorily read. Indeed, Squire had forgotten about them by the time a buyer had been found some months later. The agreement recommended that she obtain legal advice before signing the document. Squire’s evidence was that she interpreted this to mean that a solicitor could go over the terms of the agreement, but as she ‘understood’ it, she did not avail herself of the opportunity. I do not accept the respondents’ submission that it was only when she received an email from the applicant in December 2023 that she realised that she needed a solicitor. In my view, this was clear from the outset and emphasised in the applicant’s November 2023 emails to her. It is true that Squire was not obliged to read the documents, but if she did not read them, then she may nevertheless be bound by their legal effect.
In relation to the debated 900 buyers, having considered the advertisement, the evidence of the parties and their submissions, I do not accept that this statement could be interpreted as a representation that there was potentially 900 buyers for Inferno.
The respondents complained that they received proforma communications, and in my view, these emails including the ‘FAQ’s’ are part of a standardised response. Indeed, FAQ’s by their nature are not specific responses to specific questions, they are generalised responses to general or commonly asked questions. ‘Just over 900 active buyers in the ACT and NSW looking for a business right now’ (my emphasis). In my view, the wording is unambiguous. The use of the ‘a’ indicates that the response to the FAQ is referring to buyers looking for a business in general and not a dance studio or specifically a dance studio located in Prospect, NSW. The respondents’ argument may have been stronger if the wording had included a phrase such as ‘…a business like yours…’, but that is not what occurred here.
The respondents contention that, there had only been one lead by September 2023 was not supported by the evidence. Even if it had been correct, then it does not follow that the applicant has engaged in misleading and deceptive conduct.
The respondents also argued that as they were based in Sydney and the applicant in Canberra, as a result they could not arrange personal meetings. The agreement provides the address of the applicant in Canberra. Meetings between the parties appear to have generally taken place by telephone and the meeting notified in the applicant’s email of 1 May 2023, took place by video link. It is not clear why a personal meeting was necessary. It is more likely than not, that Squire was aware of the address of the applicant from the outset or at the latest, soon thereafter. In any event, I do not accept that the physical office address of the applicant is in some way misleading and deceptive in the present situation.
Misrepresentation
The respondents’ submissions in relation to misrepresentation are similar to the submissions for misleading and deceptive conduct, and in my view, for similar reasons, I do not accept them.
Unconscionable conduct
42. Some of the respondents’ submissions in relation to unconscionable conduct are similar to their submissions for misleading and deceptive conduct. As a result, in my view and for similar reasons, I do not accept them.
The respondents relied on section 21 of the ACL, statutory unconscionable conduct, rather than section 20 which provides for unconscionable conduct within the meaning of the unwritten law and this decision therefore will consider section 21 of the ACL only. Section 22(1) of the ACL provides various indicia in evaluating whether conduct is unconscionable. The section provides: Matters the court may have regard to for the purposes of section 21
(1)Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to:
(a)     the relative strengths of the bargaining positions of the supplier and the customer; and
(b)     whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
(c)     whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and
(d)     whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and
(e)     the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and
(f)      the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions between the supplier and other like customers; and
(g)     the requirements of any applicable industry code; and
(h)     the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and
(i)      the extent to which the supplier unreasonably failed to disclose to the customer:
(i)any intended conduct of the supplier that might affect the interests of the customer; and
(ii)any risks to the customer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and
(j)      if there is a contract between the supplier and the customer for the supply of the goods or services:
(i)the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and
(ii)the terms and conditions of the contract; and
(iii)the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and
(iv)any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and
(k)     without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and
(l)      the extent to which the supplier and the customer acted in good faith.
The respondents did not make specific reference to the indicia and the submissions do not appear to fall within the indicia of unconscionable conduct in section 22 in any event. The respondents specially relied upon the following: pushing the respondent into price reductions; the applicant receiving his full commission notwithstanding the price drop; and the 31.25 % commission on the sale price.
Having considered the indicia carefully and the evidence, in my view, none of the indicia are met. I appreciate that the indicia are not exhaustive, but there is nothing in my view to find that the applicant’s actions in relation to this transaction was unconscionable.
In my view, the price reductions were a necessary reaction to the response of the market which is consistent with Inferno’s listing price being too high. Further, the eventual sale price was reasonably proximate to the original range provided by the applicant as opposed to Squire’s assessment.
Finally, the respondents submitted that when potential buyers communicated with the applicant they were sometimes offered other businesses to purchase. With respect to the respondents, that does not amount to unconscionable conduct. There is no evidence that the applicant failed to engage with buyers who were genuinely interested in purchasing Inferno. It may be different if a potential purchaser upon enquiring about Inferno was immediately switched to another business, but there was no evidence that this occurred. In any event, in deciding whether such conduct constitutes unconscionable conduct would be dependent upon the specific circumstances of how the ‘switch’ occurred.
Breach of contract
48. The respondents asserted that there was a breach of the agreement by the applicant. The respondents’ submissions or particularisation of the alleged breach have generally been discussed above and in my view have not been proved. The actions of the respondents’ solicitors on the sale may have assisted the settlement, but it is not clear that they are relevant to the present application and would appear to be within the ordinary responsibilities of a solicitor’s obligations in acting for the seller of a business. The respondents’ claim under breach of contract is not established.

Conclusion

For the reasons set out above, I find that the applicant’s claim is established and the respondents’ counter claim is dismissed. As a consequence:
(a)the respondents are to pay the applicant the sum of $11,056 comprising:
(i)$10,670 being balance of commission
(ii)$366 ACAT filing fee
(iii)$20 search fee
(b)In addition to the amount payable in the preceding paragraph, the respondents are to pay interest on the balance of the commission of $10,670 on and from 1 July 2024 to the date of this decision.

Order

The Tribunal orders that:
1.The respondents are to pay the applicant the sum of $11,056 as follows:
a)       $10,670 being the balance of commission
b)      $366 ACAT filing fee
c)       $20 search fee
2.Also within 28 days, in addition to the amount payable in paragraph 1, the respondents are to pay interest on the balance of the commission of $10,670 on and from 1 July 2024 to the date of this decision.
3.The respondents’ counter claim is dismissed.

………………………………..

Member W Hawkins

Date(s) of hearing:	21 November 2024
Applicant:	Mr M Newham, authorised representative
Solicitors for the Respondents:	Ms C Evripidou, Milestone Legal

[2025] ACAT 6

31 January 2025

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Breach of Contract

Compensatory Damages

Interest

Costs