Oliver Hume (Vic) Pty Ltd v Santa Monica (Aust) Pty Ltd
[2017] VCC 1138
•23 August 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-05251
| Oliver Hume (Vic) Pty Ltd (ACN 076 196 408) | Plaintiff |
| v | |
| Santa Monica (Aust) Pty Ltd (ACN 105 665 067) | Defendant |
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JUDGE: | HIS HONOUR JUDGE WOODWARD | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12, 13 and 14 July 2017 | |
DATE OF JUDGMENT: | 23 August 2017 | |
CASE MAY BE CITED AS: | Oliver Hume (Vic) Pty Ltd v Santa Monica (Aust) Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1138 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Agreement to share estate agent’s commission – whether obligation to share arose – application of rule in Jones v Dunkel – whether commission payment prohibited by Estate Agents Act 1980 (Vic)
Legislation Cited: Estate Agents Act 1980 (Vic) s48, s49A, s50; Civil Procedure Act 2010 (Vic) s41, s42
Cases Cited:Jones v Dunkel (1959) 101 CLR 298; Trkulja v Markovic [2015] VSCA 298; RPS v R (2000) 199 CLR 620; Shum Yip Properties v Chatswood Investment & Development (2002) 40 ACSR 619; Fabre v Arenales (1992) 27 NSWLR 437; Melbourne Coach Terminal Pty Ltd v Wyss [2003] VSC 122; Icon Property Pty Ltd v Wood [2008] VSCA 123
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D F McAloon | Strongman & Crouch |
| For the Defendant | Mr P W Lithgow | Ascot Solicitors |
HIS HONOUR:
Introduction and parties
1 Plumpton is a suburb in a part of outer metropolitan Melbourne known as the “western growth corridor”. It is just to the north of the busy Western Highway and immediately to the west of the now densely populated suburb of Caroline Springs. It is an area that is ripe for development and is therefore the subject of keen interest from property developers and estate agents alike.
2 The plaintiff (“Oliver Hume”) is one such estate agent. It is part of the Oliver Hume group and specialises in land subdivisions in growth areas. Its head office is in central Melbourne. This proceeding concerns a commission sharing arrangement between Oliver Hume and the defendant, which trades as First National Real Estate Agents, Borg & Associates, Deer Park (“First National”). As its trading name suggests, First National is a real estate agent based in Deer Park, a suburb south-east of Plumpton.
3 Oliver Hume claims $135,000 pursuant to that commission sharing agreement in respect of the sale by First National’s client Mr Nguyen to Sekhon Associates Pty Ltd (“Sekhon”) of a property at 68 to 88 Sinclairs Road, Plumpton (“Sinclairs Road”). Oliver Hume alleges that it introduced Sekhon to First National and thus crystallised First National’s obligation under the commission sharing agreement to pay a commission to Oliver Hume. First National agrees that there was a commission sharing agreement, but denies that it is liable to pay anything to Oliver Hume under that agreement.
4 Oliver Hume was represented throughout its dealings with First National by Mr Robert Demian who, at the time, had the title Senior Executive, Development Site Sales & Acquisitions. Mr Demian resigned from Oliver Hume in March of this year after suffering a neck injury and is currently unemployed. First National was represented by its director, Joseph Borg. The principle of Sekhon is Sabjit Brar, who is occasionally referred to in the documents as Sabjit Singh Brar or just Sabjit Singh.
5 Finally, a third (former) estate agent’s representative, Rajesh Jaswal, was also involved in dealings in relation to Sinclairs Road. Mr Jaswal is associated with B3 Global Pty Ltd (“B3”). First National alleges that it was Mr Jaswal who introduced Sekhon, not Oliver Hume, and that it paid B3 $80,000 as B3’s share of commission on the sale of Sinclairs Road to Sekhon.
6 The issues in this case are simple. They are:
(a) Did Oliver Hume introduce Sekhon to First National as purchaser, and thus crystallise First National’s obligation to pay $135,000 to Oliver Hume under the commission sharing agreement?
(b) If so, is Oliver Hume nevertheless precluded by ss49A and 50 of the Estate Agents Act 1980 (Vic) (“EA Act”) from claiming the commission?
For the reasons below, my answers to those questions are: (a) yes and (b) no.
Background to the commission sharing agreement
7 Mr Demian first contacted Mr Borg in September 2013. He was working in the western corridor and heard Mr Borg’s name mentioned by numerous vendors, especially in the Rockbank area. Oliver Hume was based in Southbank at the time and it was hard to cover a lot of ground from there. It made sense to establish connections with selected local agents to assist in finding suitable properties for Oliver Hume clients looking for development opportunities in the area.
8 Mr Demian met with Mr Borg in Mr Borg’s office in Deer Park probably in the few days before 20 September 2013. The meeting was mostly a “meet and greet”. They discussed the market in the area and broad acreage land that may be available for sale. One such parcel of land was Sinclairs Road. Mr Borg explained to Mr Demian that Sinclairs Road had recently been purchased by a client of Mr Borg’s who was keen to on-sell it because he was looking for a better project. Mr Borg told Mr Demian during this initial meeting that the price his client wanted for Sinclairs Road was $4.5 million and whoever purchased it would have to fit in with his client’s contract. The client’s intention was to effect the sale by nominating the purchaser as substitute purchaser under his existing contract.
9 There is a divergence in the evidence about what Mr Borg said to Mr Demian at this initial meeting about how long the term of the contract needed to be to “fit in” with Mr Borg’s client’s existing contract. Mr Demian’s evidence was that Mr Borg told him the period was 12 to 14 months, whereas Mr Borg gave evidence that “it would be about six months or so…[to] fit in within the date of the contract.”
10 At the time he gave this evidence, Mr Borg could recall that the term of his client’s existing contract was two years, but could not recall the date of the contract. There was no signed version of that contract among the materials. It was later established from other documents that the settlement date under the original contract was 25 October 2014, being a little more than 13 months after the initial meeting between Mr Demian and Mr Borg. Accordingly, Mr Demian’s evidence that Mr Borg told him the contract needed to be 12 to 14 months did in fact (at least in part) fit within the date of the contract.
11 On Friday, 20 September 2013, Mr Demian emailed Mr Borg following on from their meeting, requesting details for Sinclairs Road. The email read: “When can you send me the details for this site ‑ I might have an Asian buyer”. Later that day, Mr Borg sent by email to Mr Demian a copy of the Section 32 statement for the property that had been provided to Mr Borg’s client on his purchase of the property in 2012.
12 Over the course of the next two weeks Mr Demian and Mr Borg exchanged emails and text messages concerning potential purchasers identified by Mr Demian. These included Mr Demian’s “Asian buyer” who was a Mr Lim, a Mr Dhilharan and Mr Brar. An offer by email from Mr Dhilharan comprising 3 options was forwarded by Mr Demian to Mr Borg on 3 October 2013. On 6 October 2013, Mr Demian forwarded to Mr Borg by email a further offer at a price of $4 million with a settlement term of 6 months. The email commenced: “As discussed, one of my prospects has registered their interest in purchasing the above-mentioned property”. Mr Demian gave evidence that the “prospect” he was referring to in this email was Mr Brar.
13 Mr Demian had first met Mr Brar through Mr Jaswal earlier in 2013. Mr Jaswal had told him that he had worked for real estate agents Raine & Horne in Werribee, but had been cheated on commissions and not paid his entitlements. He had also had a heart attack. He felt the industry was too high pressure for him and that his new path was going to be in the childcare centre space. Mr Jaswal told Mr Demian that Mr Brar was an associate and they were together seeking childcare opportunities.
14 Mr Demian later assisted Mr Brar with an offer on a childcare centre site in Truganina. However, Mr Brar had decided not to proceed with the purchase. Mr Demian was in the process of seeking to recover Mr Brar’s holding deposit on that proposed purchase when he told Mr Brar about the opportunity to purchase Sinclairs Road. Mr Brar gave no indication that he was already aware of Sinclairs Road, but did express interest in it. The details of Sinclairs Road were confirmed by Mr Demian in an email to Mr Brar dated 27 September 2013. The email relevantly states:
“Hi Sarbjit
The address is 68-88 Sinclair’s Road, Plumpton
The site is 13.14 ha in size being 32.46 acres
The purchaser of the site now wants to get out of it and is happy to let it go based on $4,500,000 but it needs to settle on 12 to 14 months basis”
15 The $4 million offer by Mr Brar emailed by Mr Demian to Mr Borg on 3 October 2013 was proposed by Mr Brar at a meeting with Mr Demian that day. Mr Demian’s evidence was that Mr Brar was aware that this was not the price the vendors were looking for, but Mr Brar wanted Mr Demian to put the offer to see if it was possible to get a discount. On 7 October 2013, Mr Demian emailed Mr Borg details of a further offer for Sinclairs Road at a price of $5.5 million with a settlement term of five years. Mr Demian gave evidence that this was a revised offer from his client Mr Dhilharan. He knew this offer was well outside the terms that Mr Borg’s client required, but nevertheless considered it appropriate to pass on the offer.
16 It appears that about the same time, Mr Brar had decided to make an offer on Sinclairs Road on the terms that Mr Demian had told him were acceptable to the vendor. On 7 October 2013 at 12.31pm, Mr Brar sent a text message to Mr Demian requesting that Mr Demian call: “so I can put offer in writting [sic]”. Mr Demian gave evidence that when he later spoke to Mr Brar, Mr Brar had asked him to provide a form document that Mr Brar could complete for submission to the vendor. Mr Demian arranged for his assistant to email to Mr Demian a blank Expression of Interest form (“EOI form”) for him to forward to Mr Brar. Mr Demian explained in evidence that these forms are normally completed by Oliver Hume with details of the property and the vendor and are included in hard copy in a document pack that is provided to prospective purchasers as part of a marketing campaign for a particular property. He nevertheless considered that this would serve Mr Brar’s purposes and forwarded the form to Mr Brar at 2.20pm on 7 October 2013.
17 At 4.13pm that day, Mr Brar sent an email to Mr Demian attaching the completed EOI form, incorporating Sekhon’s details as “Registrant”, and offering a proposed purchase price of $4.5 million with the settlement period of 14 months and a deposit of $100,000. The EOI form was signed by Mr Brar under the name “Sarbjit Singh”, and dated 7 October 2013. It appears from text messages exchanged between Mr Brar and Mr Demian later that afternoon that Mr Demian did not receive Mr Brar’s email sent at 4.13pm. Mr Brar re-sent the email and it was received by Mr Demian at around 6.26pm.
18 Mr Brar’s email stated: “Please get the signs on the contract and let’s finish this off, I mean prepare the contract of sale and signs on that, this expression of interest sometimes drags things too much”. In a text message sent by Mr Brar to Mr Demian at 6.12pm, Mr Brar stated: “Have u got my email and u r planning to get signatures today from vendor?” It is clear from these communications that Mr Brar was anxious to get the vendor’s written acceptance quickly and that this would have been apparent to Mr Demian.
19 I pause at this point to observe that, apart from the issue above about what Mr Borg told Mr Demian about the term his vendor was seeking, there is no substantive dispute about the evidence to this point. Notably, it is not in dispute that Mr Demian was actively engaging with Mr Brar to elicit an offer from him that met what he understood the vendor required, and that he succeeded in securing that offer in the form of the signed EOI form that Mr Brar was anxious for Mr Demian to pass on to the vendor.
20 Mr Demian gave evidence that, having received the signed EOI form, he was very concerned to ensure that Mr Borg would arrange an exclusive listing with the vendor, including provision for Oliver Hume’s share of the commission, before any details of the proposed purchaser were provided to the vendor. In substance, he wanted to ensure that Mr Borg went to the vendor with the offer accompanied by an authority for an exclusive listing. According to Mr Demian, he considered the best way to achieve that was to meet with Mr Borg in person to provide the completed EOI form and discuss arrangements for securing the exclusive listing. Mr Demian’s evidence was that this was the first deal that Mr Borg and Mr Demian had worked on together, so Mr Demian was “providing the goodwill to Joe by giving it [the EOI form] to him as I received it, and then it was up to Joe how he was going to present it to the vendors”.
21 To that end, and consistently with the need for urgency apparent from the communications from Mr Brar, Mr Demian sent a text message to Mr Borg at 8.20pm in the evening of 7 October 2013, asking to see Mr Borg “tomorrow morning”. It appears that Mr Borg did not read that text message until shortly after 10.00am the following morning, and replied suggesting a 9.00am meeting, apparently understanding Mr Demian’s reference to “tomorrow” as meaning 9 October 2013. Mr Demian replied immediately, explained that he had sent his text message yesterday and asking Mr Borg to call him.
22 Mr Demian’s evidence initially was that he and Mr Borg met that afternoon (8 October 2013), when Mr Demian gave Mr Borg the completed and signed EOI form. Mr Demian said that he suggested to Mr Borg that he should not give details of the prospective purchaser to the vendor until the vendor had provided an exclusive sales authority for Sinclairs Road. Mr Demian gave evidence that Mr Borg responded by saying that he could do even better. He suggested that to make sure that the vendor did not go to the purchaser directly before providing an exclusive sale authority, he would “white-out” the purchaser’s details on a copy of the EOI form to be given to the vendor. From what Mr Demian could recall, the whiting-out was done in his presence.
23 The timing of the meeting with Mr Borg is potentially important, given the evidence about the preparation of the exclusive sale authority dated 8 October 2013, discussed below. When asked in cross-examination when he said that he presented the offer to Mr Borg, Mr Demian responded: “I believe the date was – when I got it in front of Joe was the 9th”. Counsel for the defendant asked: “The 9th, you’re quite sure about that?”. Mr Demian responded: “Ah, it was 2013, but I’m fairly sure based on the documentation it reminded me that it was the 9th.” He later clarified his evidence, saying he could not recall if Mr Borg was free on 8 October 2013 and went over that day, or whether it was the following day. He said he had asked Mr Borg in his text message to call, and he thought they had “shared a call” and he later went to Mr Borg’s office, and it could have been on either 8 or 9 October 2013.
24 This is the point where the key factual dispute in this proceeding arises. Mr Borg’s evidence was in substance that he was not given the signed EOI form by Mr Demian. His evidence was: “I never seen that document”. He said he first saw it when it came to his lawyers in the context of this litigation. He said that it was not given to him by Mr Demian, and nor was it sent to him. He added that if he had seen it, he would have raised the fact that the $100,000 deposit and 14 months settlement period were not what his vendor wanted.
25 Consistently with Mr Demian’s evidence, on 12 October 2013 the receptionist of Mr Borg’s real estate agency sent by email to Mr Demian (copied to Mr Borg) the first page of a four page Exclusive Sale Authority dated 8 October 2013 signed by Mr Borg and by Mr Nguyen as vendor (“ESA”). The commission box on that first page contains the following handwritten term, apparently initialled by Mr Nguyen:
“TOTAL COMMISSION INCLUDING
GST AS FOLLOWS:
OLIVER HUME VIC PTY LTD
$135,000------
FIRST NAT BORG & ASSOC.
$50,000
TOTAL $185,000”
26 Mr Borg’s evidence was that he prepared the ESA following a meeting with Mr Demian in “early October”. Mr Borg’s evidence about this was somewhat disjointed. However, the effect of it was that Mr Demian called Mr Borg and told him about an “Asian buyer”. According to Mr Borg, Mr Demian said that the “Asian buyer” “had a real good interest…and that he [Demian] had put the thing to them and he want to discuss it”. Mr Demian then met with Mr Borg and said (about the “Asian buyer”) that, “he got good interest right and he’s going to work on them and he’s going to come with an offer, with an offer, but he needs to seek the authority”. I note that the so-called “Asian buyer” had in fact first been mentioned by Mr Demian to Mr Borg in one of their earliest communications: an email from Mr Demian to Mr Borg dated 20 September 2013.
27 Mr Borg said he then told Mr Demian that he would get the authority, and the ESA in evidence was the authority he prepared as a result of the conversation. He also said Mr Demian was present when he prepared the ESA and that: “I was supposed to give him a copy of the authority signed” and then Mr Demian would get the offer. This evidence might be consistent with Mr Borg and Mr Demian having met on 8 October, but Mr Demian had earlier denied he was present when Mr Borg completed the ESA. Mr Borg’s evidence was that he sent the ESA to Mr Demian on 12 October 2013, and he received an email from Mr Demian the following day, setting out the terms of the offer from the “Asian buyer” (namely, Kim Soon Lee Pty Ltd) that he had been expecting. While the offer was not unconditional, the terms were what his vendor was looking for so he told Mr Demian to “push on to it.”
28 Mr Borg’s evidence to the effect that he prepared and arranged for his vendor to sign the ESA after Mr Demian told him that the “Asian buyer” had “good interest right and he’s going to work on them and he’s going to come with an offer”, does not sit comfortably with other evidence about the point in the process when Mr Borg anticipated asking his vendor for an authority. Mr Demian gave evidence that he understood the vendor had said he would only give an exclusive authority when there was a deal in principle. Mr Borg’s evidence-in-chief was consistent with this. He said he told his vendor: “Once I get somebody, right, I will get the authority from you.” In cross-examination, he said:
“I said [to the vendor] when he approached me about the thing I was looking for some – he left it open to me and I left it open. I didn’t ask him for an authority. I was telling, I was saying, you know, I try to get somebody through and then we go get the authority…when we had a deal you know.”
29 The information that Mr Borg said that Mr Demian gave to him at their meeting in early October about the interest of the “Asian buyer”, even accepting Mr Borg’s evidence about this, is a long way short of having “a deal”. Indeed, it does not seem to go much beyond what Mr Demian said he told Mr Borg about his “Asian buyer” in late September 2013. In contrast, the signed EOI form appears to fit comfortably within Mr Borg’s description of a deal sufficient to justify approaching his vendor for an exclusive sale authority. Even on Mr Borg’s evidence of what his vendor required, the only matters that may have required some further negotiation were an increase in the amount of the deposit and shaving a few months off the settlement period.
30 The date appearing on the ESA as the date of signing by Mr Borg (8 October 2013) is consistent with Mr Demian’s initial evidence of a meeting that day, but more difficult to explain if the meeting took place the next day. One possible explanation is that Mr Demian gave Mr Borg enough information about the offer from Mr Brar in advance of the meeting, to lead Mr Borg to arrange the ESA. The phone records in evidence show that Mr Demian made two short calls, first to Mr Borg’s mobile and then to the First National office, at 10.32am on 8 October 2013. The calls were of sufficient length for Mr Demian to leave messages for Mr Borg to return his call. At 2.09pm that day Mr Borg called Mr Demian and they apparently spoke for in excess of 16 minutes. This accords with Mr Demian’s evidence that he “shared a call” with Mr Borg on 8 October 2013.
Mr Jaswal
31 Mr Jaswal was called on subpoena by the defendant. He was unable to say anything about whether Mr Demian introduced Mr Brar to Mr Borg in relation to Sinclairs Road, and had no idea about whether Mr Demian provided Mr Borg with the signed EOI form. Accordingly, his evidence was at best peripheral to the key finding of fact that I need to make in this case. Having said that, it is appropriate that I make a few observations about Mr Jaswal’s role and his evidence, before turning to the matters directly in issue in the case.
32 It is uncontroversial that Mr Jaswal had dealings with Mr Brar and his associates in 2012 in relation to Sinclairs Road. He may have accompanied Mr Brar on an inspection of Sinclairs Road at about this time. It is also uncontroversial that Mr Jaswal had known and had dealings with Mr Brar for several years before this. However, the circumstances of Mr Jaswal’s involvement in the sale of Sinclairs Road to Mr Brar in September and October 2013, is where the facts become murky.
33 It is useful to start the discussion of Mr Jaswal’s evidence with an undated letter he wrote to Mr Borg on being told by Mr Borg that another agent was claiming commission on the sale to Sekhon. His evidence was that he wrote the letter in about October 2016. The letter begins by describing his involvement in attempts to sell Sinclairs Road in July and August 2012. It then says that, since then, he had visited Mr Borg several times to speak about land in Toolern, Tarneit and Melton and that, sometime in September 2013, Mr Borg mentioned to him that the buyer of Sinclairs Road may not be interested in settling. The letter states that Mr Borg asked Mr Jaswal if he still had a buyer interested in settling the property. Mr Jaswal then describes at length in the letter his “hard work” in identifying potential buyers. He says that he heard about other agents offering Sinclairs Road:
Therefore to make sure I have been dealing with right agent I requested for authority and COS. After 6-8 weeks, I introduced the buyer, Sarbjit Singh (Shekon [sic] Associates), and negotiated the price.
…
Even you [sic] might have been dealing with many agents while you are selling this property but I was the one who:
a) Arranged physical inspection of the property for buyer
b) Got the offer letter signed
c) Got deposit for the property
d) Got the paperwork sign personally [sic] with vendors and purchaser
34 On 23 March 2017, Mr Jaswal signed a statutory declaration, formally declaring to the truth of a number of the matters set out in his letter of October 2016, including setting out a similar list of activities that he performed as “selling agent”. The statutory declaration commences: “I am a certified Real Estate Agent Representative”. Similarly, on being asked his occupation at the commencement of his evidence he described himself as a “part-time real estate agent”.
35 Other evidence relevant to Mr Jaswal’s position and role is provided by a document headed “Conjuctional [sic] Agreement” dated 25 October 2013, which Mr Jaswal signed on behalf of B3. This was the document pursuant to which the commission on the sale of Sinclairs Road to Mr Brar totalling $130,000 was split $50,000 to Mr Borg and $80,000 to B3. Mr Jaswal gave evidence that he received “almost all the money, but in instalments”. He said he had no idea why B3 paid him in instalments. He later contradicted his initial answer that he had received “almost all” the money, agreeing that the whole of the $80,000 “ended up in his pocket”.
36 Mr Jaswal dissembled, both about his position and occupation and about his role and work in connection with the sale of Sinclairs Road. For example, it was put to him in cross-examination that he had never been a licensed estate agent and was not presently an authorised representative of a licensed estate agent. While he initially accepted this, he added: “I am just acting on my own. I’m freelancing”. He later backtracked, asserting that: “I’m [an] agent representative, but I’m not currently working under any agent”. He then appeared to assert that he did have a license as an agent representative and “can work under my ABN as a freelance”. He finally returned to his initial position that he is neither a licensed estate agent nor presently authorised as a representative of any other licensed estate agent.
37 Thus Mr Jaswal’s statement in his statutory declaration that he was a “certified Real Estate Agent Representative” as at March 2017, is patently false. Further, his assertion at the commencement of his evidence that he was a “part-time real estate agent” is at best misleading. Mr Jaswal also accepted that the statement in his letter and the statutory declaration that he “got the offer letter signed” was false; there was no offer letter. In relation to conducting “physical inspections” as stated in the letter and statutory declaration, Mr Jaswal began by asserting that he was including the “inspections done in 2012”. He later suggested that he was referring to “kerbside” inspections and that he had driven the purchasers past the property in 2013 while on the way to look at another property.
38 The true position on Mr Jaswal’s occupation at the time of the events in question, is that he worked as a vacuum cleaner salesman for a Godfrey’s outlet, which was owned by B3. But Mr Jaswal even dissembled about his role at B3. He agreed that he was neither a director nor shareholder of the company, but said that the directors approved him to sign the Conjunctional Agreement on their behalf. When asked how this happened, the following exchange occurred:
A: Ah, because I had [agreement] with them. Like, if I’m working with them full-time and I want to do my own business, this one, and meeting buyer and sellers, I have to declare them.
Q: So you are working with them full-time? Is that your evidence?
A: Yes
Q: So, were you a part-time real estate agent, or were you working for them full-time?
A: That’s right
Q: Which? You can’t be both?
A: Not full-time. But, I can do this business, as well. So, that means I can do part-time. Whenever I need to I can go.
Q: So, are you a full-time employee at B3 Global?
A: Part-time
Q: Part-time?
A: I only do part-time, yeah.
Q: And what do you do for them?
A: Ah, I do for them the selling.
Q: Selling what?
A: Selling vacuum cleaners. And our, bring other jobs, as well…
39 Mr Jaswal went on to give evidence that he also had an accounting role at B3 and that he was therefore “an accountant, a real estate agent and a vacuum cleaner salesman”, who also had a finance role (for Mr Brar).
40 I have set out the passage of evidence above at some length because it includes a feature that repeated a number of times in the course of Mr Jaswal’s cross-examination. That is, he began by giving an unguarded initial response to a question (in this instance, he made an unsolicited statement that he worked “full-time” for B3, and affirmed it when it was put back to him), but then resiled from that initial answer as his responses developed, apparently realising that his initial response conflicted with his narrative of also working as a part-time real estate agent.
41 More generally, Mr Jaswal:
· said that he was unaware throughout the regular meetings he said he had with both Mr Borg and Mr Brar, until he received an email from Mr Demian dated 22 October 2013, that Mr Demian was seeking to find a purchaser for Sinclairs Road;
· said he was also unaware that Mr Brar had been separately negotiating with Mr Demian to buy Sinclairs Road;
· had apparently not spoken to Mr Demian for three or so weeks in the period up to 10 October 2013, but then called Mr Demian for 6 seconds on 10 October and then spoke to him for in excess of 24 minutes on 11 October 2013;
· initially gave evidence that during that conversation he discussed only childcare centres, later seemed to say that he also discussed “acreage properties” (although not Sinclairs Road) but then retreated to his initial evidence of having only discussed childcare centres;
· was inconsistent in his statutory declaration and his evidence about whether he believed Mr Borg had an exclusive sale authority from the vendor; and
· gave shifting evidence and evidence contrary to Mr Borg’s, about the frequency and nature of his dealings with Mr Borg and aspects of the settlement of the sale in late October, including the circumstances of the preparation and execution of the Conjunctional Agreement and payment of the deposit.
42 Mr Jaswal’s evidence concerning the telephone conversation with Mr Demian on 11 October 2013 is the one area where his evidence is directly at odds with the evidence of Mr Demian. Mr Demian’s evidence-in-chief on the timing and circumstances of that call was challenged under cross-examination, to some effect. However, the phone records make clear that there was a lengthy conversation between Mr Demian and Mr Jaswal on 11 October 2013, and it is understandable that, after almost four years, Mr Demian’s recollection of the timing of the call was imprecise.
43 As to the content of the call, Mr Demian gave evidence that he was having occasional contact with Mr Jaswal concerning childcare centres and, through those contacts, Mr Jaswal was aware of Mr Demian’s involvement in the possible purchase of Sinclairs Road by Sekhon. He said it therefore came as a surprise when he received a call from Mr Jaswal at about the time he gave the signed EOI form to Mr Borg, requesting a share of the commission on the sale of Sinclairs Road to Sekhon. His response to Mr Jaswal was to say that he should have raised it earlier and it would now be embarrassing to be asking Mr Borg for another commission. He said Mr Jaswal reacted with disappointment.
44 On this matter, I prefer the evidence of Mr Demian as discussed below. More generally, to the extent that First National relies on Mr Jaswal’s evidence to corroborate the evidence of Mr Borg and to discredit Mr Demian, that reliance is misplaced. On the whole, I found his evidence to be self-serving, contradictory and unreliable. Counsel for First National submitted that Mr Jaswal was an “independent” witness who has no reason to advance the interest of any particular party to the proceeding. I disagree. As a minimum, he had an interest in justifying in the eyes of at least Mr Borg and Mr Brar his conduct in displacing Mr Demian in effecting the sale and claiming commission. And he may also have been concerned that if Mr Borg were found liable in this proceeding to pay a commission to Oliver Hume, the commission paid to him is at risk.
Did Mr Demian take the EOI form to Mr Borg?
45 Resolution of this issue depends squarely on choosing between the evidence of Mr Demian and Mr Borg. To the extent that Mr Jaswal’s evidence has any bearing on the issue (and it is circumstantial at best), I am not assisted by it for the reasons above. So far as Mr Demian’s evidence is concerned, he presented as a reluctant, taciturn and sometimes evasive witness, but I am satisfied that on key issues, his evidence was truthful. He no longer appears to have any particular allegiance to Oliver Hume (which may explain his apparent reluctance).
46 First National was critical of Mr Demian for portraying to potential purchasers that he had authority to market Sinclairs Road and that Sinclairs Road was for sale through Oliver Hume’s office. There is no substance to this criticism. Mr Demian clearly did have authority to market Sinclairs Road and there is no basis for asserting that it was incumbent on him to disclose to his contacts (particularly in preliminary exchanges) that his authority came through First National. Why he was still doing so at a time when he had apparently been told by Mr Borg that Sinclairs Road had already been sold by the vendor is another matter, and I deal with that below.
47 In my view, First National’s other criticisms of Mr Demian’s evidence are also misplaced. I refer above to Mr Demian’s evidence about his phone call with Mr Jaswal regarding commission. His initial assertion that the call occurred as he arrived at Mr Borg’s office for the meeting on 8 or 9 October 2013, was over-confident, and was undone by the phone records. However, those records show that he did have a lengthy conversation with Mr Jaswal within two to three days of that meeting. I am unpersuaded that the inaccuracy of Mr Demian’s initial account, and evidence that he did not speak at length to Mr Jaswal on 6 (a Sunday), 7, 8, 9 or 10 October, had any real bearing on the veracity of his evidence about what was discussed during the lengthy conversation on 11 October 2013.
48 First National also relies on the difference between Oliver Hume’s assertion in paragraph 4 of its statement of claim (to the effect that First National sought Oliver Hume’s assistance in selling Sinclairs Road) and Mr Demian’s evidence that he approached Mr Borg. This is a surprising submission, given the gulf that existed between First National’s pleading and the case it ran at trial, as discussed below. In any event, the difference is inconsequential both in the context of this case and in contested litigation more generally and, in my view, does not reflect adversely on Mr Demian’s evidence as a whole.
49 Both Mr Borg and Mr Demian gave evidence consistent with them having a meeting at Mr Borg’s office on or around 8 October 2013. Mr Borg said the meeting was to discuss Mr Demian’s “Asian buyer” and prepare the ESA. Mr Demian said the meeting was arranged by him to deliver the signed EOI form and discuss the mechanics of presenting the offer to Mr Nguyen. Which is more likely? In my view, Mr Demian’s account is consistent with the objective evidence and surrounding circumstances:
· he had the signed EOI form from Mr Brar late on 7 October 2013, accompanied by Mr Brar’s request that he press-on with securing the vendor’s signature;
· the offer from Mr Brar met the vendor’s terms at least in Mr Demian’s mind, and was on any view much closer to it than earlier offers that Mr Demian had passed on to Mr Borg;
· Mr Demian sent a text message to Mr Borg within a few hours of receiving the signed EOI form seeking to arrange a meeting with Mr Borg the following morning;
· that meeting occurred either the next day or the day after;
· Mr Borg and Mr Demian spoke by telephone for in excess of 16 minutes at 2.09pm on 8 October 2013; and
· Mr Borg apparently signed the ESA on 8 October 2013.
50 But perhaps more compelling than all of the above objective facts, it simply makes no sense to suggest that Mr Demian would withhold the EOI form or its contents from Mr Borg. I agree with Oliver Hume’s submission:
“No rational explanation has been advanced as to why Mr Demian would have withheld the Sekhon EOI from Mr Borg. No attempt has been made in the defendant’s Outline to explain this feature of the defendant’s account. Tellingly, as became apparent during the re-examination of Mr Demian, the net commercial benefit to the plaintiff would have been greater if Sekhon’s offer had been accepted (compared to acceptance of the offer made by the other prospective purchaser that assumed prominence in the discussions between Mr Borg and Mr Demian, which would have entailed a sharing of the commission payable to the plaintiff). By contrast, the defendant had a commercial incentive to ignore its agreement with the plaintiff as in that event, on the defendant’s case, the defendant’s trusted vendor client (Mr Nguyen) paid $50,000 less in total commission on the sale.”
51 On the other hand, there is some force in First National’s submission that there is a complete absence of “follow-up” by Mr Demian with Mr Borg in relation to the EOI form:
“[A] fact that is particularly significant when on Mr Demian’s view this offer was sufficient to satisfy the vendors and in such circumstances “the deal was done” and commission would be payable to the plaintiff. There is no record (email or SMS) of any “follow-up” with the defendant in the days after the Sekhon EOI was allegedly delivered, nor any follow-up in the period after 22 October 2013 when Mr Demian was “touting” the property to others. Mr Demian’s explanation for the failure to follow-up is unconvincing and contrasts when [sic] his efforts in relation to the “Asian” buyer Kim Soon Lee [Pty Ltd].”
52 Oliver Hume submitted in response that there is evidence of regular and frequent telephone contact between Mr Borg and Mr Demian. While this is true, it is an incomplete explanation of why Mr Demian continued to pursue other offers on Sinclairs Road later in October, but apparently did nothing to elicit an improved offer from Mr Brar. Mr Demian’s evidence was that his failure to follow up is explained by the fact that Mr Borg told him “shortly after” 12 October 2013, that the vendor had sold Sinclairs Road. This too does not sit comfortably with the evidence of Mr Demian continuing to approach potential purchasers after 22 October (including his 22 October email to Mr Jaswal about Sinclairs Road).
53 While acknowledging these incongruities, on balance, I accept Mr Demian’s explanation of these approaches. That evidence was to the effect that he was not giving up hope on the possibility either that Mr Borg’s vendor Mr Nguyen might be stringing various agents along and thus still open to improved offers. Or that the party who purchased Sinclairs Road from Mr Nguyen might entertain a better offer. It is certainly plausible that an estate agent in the position of Mr Demian, having apparently lost an early opportunity of a $135,000 commission, would continue to try his luck.
54 Turning to Mr Borg’s evidence, it is clear that his recollection of events was hampered by the absence of his original file in relation to the transaction, which was apparently destroyed in a fire in 2015. Perhaps as a result, I was left with the impression that his evidence was at least in part a reconstruction of events, rather than genuine recollection. In particular, his recollection of detail was poor, except where he was able to create a narrative out of the contemporaneous documents exchanged between the parties in the course of the proceedings.
55 For example, his evidence referred to above that he prepared the ESA following information provided by Mr Demian in early October 2013, which Mr Demian confirmed in an email of 13 October, had the air of being contrived and rehearsed based on the existence and content of the email and the fact that the ESA predated the email. In view of Mr Borg’s evidence as to his discussion with Mr Nguyen about arranging an exclusive authority only when he “had a deal”, it is more likely that he would have deferred arranging the ESA for a deal involving the “Asian buyer” (or at least deferred sending it to Mr Demian) until after he received Mr Demian’s email. Accordingly, while I would not go as far as concluding that Mr Borg was deliberately lying, his account was contradictory and unconvincing.
56 There are two other factors that I have taken into account in reaching my conclusion that I prefer Mr Demian’s evidence about his provision to Mr Borg of the signed EOI form. Neither is decisive but both reinforce my conclusions above. First, I accept Oliver Hume’s submission that Mr Demian’s conduct after discovering in October 2016 that Sekhon had purchased the property is also consistent with him having provided Mr Borg with details of Sekhon’s offer. The conduct is summarised in Oliver Hume’s submissions as follows:
“Mr Demian obtained a title search on 12 October 2016. He confronted Mr Borg the following day, as recorded in an email sent by Mr Demian to the defendant on 13 October 2016 (that referred to the plaintiff having facilitated the sale to Sekhon) and a letter from the plaintiff to the defendant dated 20 October 2016. Mr Demian’s behaviour was not the conduct of a person that had fabricated a version of events in order to, as the defendant’s counsel contended, “insert himself into a transaction” that had occurred some three years earlier.”
57 Secondly, First National’s departure at trial from its pleaded case was striking. In particular, the pleaded allegation to the effect that Sekhon was already known to First National long before October 2013 as it was first introduced to First National by Mr Jaswal in 2012, sits in stark contrast to Mr Borg’s evidence that he had not heard of Sekhon until the second half of October 2013. Mr Borg was unable to explain how his evidence departed so dramatically from First National’s case as pleaded (presumably on instructions). This unsatisfactory state of affairs is compounded by the fact that First National’s defence was not accompanied by any of the certifications required by ss41 and 42 of the Civil Procedure Act 2010 (Vic). Further details of First National’s departure from its pleaded defence are set out in Oliver Hume’s submissions and it is unnecessary to repeat them.
Jones v Dunkel
58 First National has submitted that Oliver Hume’s failure to call Mr Brar or any other representative of Sekhon as a witness, places Oliver Hume in the position that the inference ought be drawn that any evidence such witnesses could give would not be of assistance to the plaintiff, citing Jones v Dunkel[1] (“Jones v Dunkel”) and O’Donnell v Reichard[2]. However, First National did not identify any particular fact or matter in respect of which it submits that the inference arises. Oliver Hume submitted in response that there is nothing to suggest that Mr Brar would have been able to give relevant evidence as to whether or not Mr Demian had provided the signed EOI form to Mr Borg. I agree. In particular, there is no suggestion that Mr Brar took any part in giving of the EOI form to Mr Borg, beyond requesting by email and by text message that Mr Demian arrange to get the vendor to sign.
[1] (1959) 101 CLR 298
[2] [1975] VR 916
59 The only other issue that Mr Brar might conceivably have given relevant evidence about, is the apparent absence of follow-up between Mr Brar and Mr Demian concerning the signed EOI form in the days after 7 October 2013, when Mr Brar emailed the form to Mr Demian. However, one obvious explanation for that lack of follow-up at least by Mr Brar is that, within a few days of 7 October, Mr Brar was looking to Mr Jaswal to complete the deal. But precisely when Mr Jaswal first revealed to Mr Brar that he was in a position to broker the sale of Sinclairs Road to Mr Brar is far from clear.
60 Mr Jaswal’s evidence-in-chief was that he met with Mr Brar to tell him about Sinclairs Road at the end of September or in the first week of October 2013. In cross-examination, he first said that the meeting was in the first week of October, and confirmed this evidence when it was put back to him. And when counsel for Oliver Hume told Mr Jaswal that First National’s defence stated in effect that “throughout the months of September and October 2013”, Mr Jaswal worked with Mr Borg and Sekhon to secure the purchase of Sinclairs Road, and then put to Mr Jaswal: “It’s not quite true, is it”, Mr Jaswal responded “I agree”. However, when counsel then read the relevant passage from the defence word for word, Mr Jaswal contradicted his previous answers by asserting in effect that he did work with Mr Borg and Sekhon “throughout the months of September and October 2013” to secure the purchase of Sinclairs Road.
61 In my view, it is highly unlikely that Mr Jaswal was actively engaging with both Mr Borg and Mr Brar in relation to the purchase of Sinclairs Road at any time in September or even in the first week of October 2013. The dealings between Mr Brar and Mr Demian that are amply revealed in their correspondence and text messages until as late as 7 October 2013, are not consistent with any view of Mr Jaswal’s version of events. It is much more likely that Mr Jaswal first inserted himself into the transaction shortly after he spoke with Mr Demian on 11 October 2013 and learnt from that discussion that he had little or no prospect of receiving a commission on any sale of Sinclairs Road arranged by Mr Demian.
62 However, it is unnecessary for me to reach a concluded view on this question. Whether Mr Jaswal began promoting Sinclairs Road to Mr Brar in September 2013, the first week of October, or shortly after 11 October, his involvement sufficiently explains Mr Brar’s lack of ongoing engagement with Mr Demian from about 11 October, at the latest. Thus there is no evidence that otherwise provides a basis for concluding that Mr Brar did not follow up with Demian about the EOI form because, for example, Mr Brar somehow knew that Mr Demian had not passed the EOI form on to Mr Borg.
63 In Trkulja v Markovic[3] the court stated:
“[T]here are a number of limitations to the application of the rule in Jones v Dunkel. Relevantly for the purposes of this appeal, the rule does not permit an inference that the evidence not called by a party would have been adverse to the party. The rule also does not enable the absence of a witness to make up for any deficiency in a party’s evidence. The rule will not support an adverse inference unless the evidence otherwise provides a basis on which that unfavourable inference can be drawn. It has therefore been said that the rule cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into inference.” [emphasis added] [citations omitted].
[3] [2015] VSCA 298, per Kyrou and Kaye JJA and Ginnane AJA at [96]
64 A Jones v Dunkel inference does not operate at large, to bring into question all the evidence adduced by a party. Put simply, there must first be evidence to support a particular version of the facts, and then a failure to call a witness who would be expected to be able to give evidence relevant to those facts. In my view, there is no basis for drawing any inference adverse to Oliver Hume arising from its failure to call Mr Brar on the issues of the delivery of the EOI form to Mr Borg or the lack of follow up by Mr Brar after 7 October 2013. As noted above, First National has not identified any other issues in respect of which a Jones v Dunkel inference might operate. Indeed, it is arguable that Mr Brar could have given evidence to reinforce Mr Jaswal’s account of their dealings in relation to Sinclairs Road, and First National’s failure to call him should lead me to infer that his evidence would not support that account. However, I draw no inference against either party about the failure to call Mr Brar or any other representative of Sekhon.
65 For completeness, I note that Oliver Hume relied on a second ground for excluding any Jones v Dunkel inference, namely that there is no basis for suggesting that Mr Brar was in Oliver Hume’s “camp”, citing RPS v R (2000) 199 CLR 620 at [26]. I also agree with that submission. Thus even if Mr Brar might have given evidence relevant to an issue in dispute in this case, I would not have drawn an inference that Oliver Hume failed to call Mr Brar “because it feared to do so”.[4] In Shum Yip Properties v Chatswood Investment & Development[5] Austin J, observed that “[t]he significance of the inference depends on the closeness of the relationship of the absent witness with the party who did not call the witness.” Given how the transaction concluded, it seems to me that at least by the end of October 2013, Mr Brar was more in First National’s camp than Oliver Hume’s.
[4]Fabre v Arenales (1992) 27 NSWLR 437 at 449-50 (per Mahoney JA, Priestley and Sheller JJA concurring)
[5](2002) 40 ACSR 619 at [64]
The EA Act
66 First National has alleged Oliver Hume failed to comply with s 49A of the EA Act. More specifically, it has alleged that the plaintiff has breached its obligations under s49A(1)(a) and 49A(1)(c) of the EA Act (requirement to hold a written engagement) and is therefore barred by s 50(1)(a) of the Act from recovering any commissions. It has also alleged that Oliver Hume has “not produced or obtained any Notice of Commission Sharing”, which I take to be an allegation that Oliver Hume has also failed to comply with s 48 of the EA Act.
67 Taking those sections in turn, s 48 provides in effect that if an estate agent agrees to share any commission with another estate agent who is not in the same firm as the first estate agent, the first estate agent must give their client a statement disclosing prescribed details of the sharing arrangement. Oliver Hume’s counsel has rightly noted that no reliance on s 48 is pleaded by First National. And the reference in the submissions of First National to the absence of a commission sharing agreement is both oblique and unsupported by authority or argument. In any event, reliance on the section to deny liability to Oliver Hume is misconceived.
68 In this regard, I agree with the submission by Oliver Hume that the “section contains no requirement of disclosure between the parties that will share or split the commission (as distinct from requiring disclosure to the party that has engaged the estate agent)”. I also agree that the effect of Mr Borg’s evidence was that he obtained all the necessary documents from Mr Nguyen to entitle First National to payment of the commission, including the commission sharing agreement, which formed part of a larger document also comprising the ESA. This is reinforced by the page of the ESA in evidence which, on its face (as extracted above), provides a breakdown of commission sharing, identifies Oliver Hume as the party entitled to share the commission and states the amount of its share. Mr Borg gave evidence that he executed the full ESA with Mr Nguyen and retained it, until it was later destroyed by fire.
69 I observe in passing that Oliver Hume appears to have a clearer entitlement under the EA Act to share commission with First National than B3. In Melbourne Coach Terminal Pty Ltd v Wyss[6] Hansen J considered the application of s48 stating:
“Section 48 is concerned to prohibit an estate agent from paying to an unlicensed person any part of his commission on a sale. The section operates on or in relation to the commission itself, not on that which might be produced or exist as a consequence of its receipt. The prohibition is to be understood in the context of the requirement that estate agents be licensed (s 12), and the provision prohibiting an unlicensed person from recovering a commission (s 50).”
[6] [2003] VSC 122 at [45]
70 Turning next to s49A of the EA Act, the section prohibits an estate agent from seeking payment from a person in respect of work done by or on behalf of the agent, or outgoings incurred by the agent, unless the agent holds a written engagement in the form prescribed by the section, including the various disclosures set out in s49A(1)(b) and (c). The effect of First National’s submission is that this engagement and disclosure regime applied to the relationship between Oliver Hume and First National, such that Oliver Hume was obliged to hold a written engagement or appointment from First National containing the details of, for example, commission and outgoings and a rebate statement.
71 I reject that submission, essentially for the reasons set out in Oliver Hume’s submissions. The section is concerned with disclosure by estate agents of information to their clients and does not oblige one estate agent to provide any disclosure to another agent in relation to a commission sharing arrangement between the two agents. Commission sharing arrangements are dealt with by s48 of the EA Act, discussed above. In Icon Property Pty Ltd v Wood,[7] the Court of Appeal described the scheme established by ss49A and s50 of the Act in the following terms:
“The purpose of the provisions is, presumably, to inform and so empower potential clients of estate agents to negotiate commission and expense arrangements. In those aims, it might be said to recognise an imbalance of bargaining power between estate agents and their prospective clients.”
[7] [2008] VSCA 123, per Dodds-Streeton JA and Osborn AJA at [70]
72 As Oliver Hume has submitted, this construction accords with the Explanatory Memoranda relating to the introduction of s49A of the EA Act. The section was introduced by s22 of the Estate Agents (Amendment) Act 1994 (Vic). The Explanatory Memoranda for that Bill states:
“Clause 22 provides that an estate agent is not entitled to any commission or outgoings unless the agent has informed his or her client that the commission and outgoings are subject to negotiation and has a signed written engagement or appointment. The engagement or appointment must contain certain information.” [emphasis added]
73 First National has cited no authority and advanced no argument (beyond mere assertion) to support its submission that s49A applies to commission sharing between estate agents.
Conclusion
74 For the reasons above, I find that Oliver Hume is entitled to judgment against First National in the sum of $135,000, plus interest pursuant to statute and costs. Given this finding, and for the reasons submitted by Oliver Hume, it is unnecessary for me to determine Oliver Hume’s alternative claim based on misleading and deceptive conduct.
75 My tentative view is that the orders should be in terms as follows:
(a) There be judgment for the plaintiff against the defendant in the sum of $135,000.
(b) The defendant pay the plaintiff interest on the judgment sum at the rate prescribed from time to time under s2 of the Penalty Interest Rates Act 1983 (Vic), on and from 25 October 2014 to the date of payment.
(c) The defendant pay the plaintiff’s costs of the proceeding (including reserved costs) to be taxed on the standard basis in default of agreement.
76 I have selected the date for the commencement of interest liability on the basis that 25 October 2014 is the date when the documents show that Sekhon was due to settle on the purchase of Sinclairs Road, and is thus the last date on which Oliver Hume’s share of the commission paid by Mr Nguyen would have been payable by First National to Oliver Hume. I will hear further from the parties on the terms of final orders.
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Certificate
I certify that these 27 pages are a true copy of the reasons for Judgment of His Honour Judge Woodward delivered on 23 August 2017.
Dated: 23 August 2017
Simon Bobko
Associate to His Honour Judge Woodward
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