Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall

[2019] NSWDC 724

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall [2019] NSWDC 724
Hearing dates:	16-17 September 2019; 12-13 November 2019
Date of orders:	03 December 2019
Decision date:	03 December 2019
Jurisdiction:	Civil
Before:	Dicker SC DCJ
Decision:	(1) Judgment for the defendants against the plaintiffs. (2) The plaintiffs are to pay the defendants’ costs of the proceedings as agreed or assessed. (3) Liberty to the parties to apply within 14 days for a different costs order to that set out in (2) above.
Catchwords:	Contract – principal and agent – action for recovery of commission by real estate agent – sale of property – whether agent was the effective cause of sale – form and effect of agreements signed by real estate agent – effect of conduct by unlicensed real estate agent – whether unlicensed real estate agent entitled to claim commission – whether unlicensed real estate agent paid commission - whether estoppel established
Legislation Cited:	Property, Stock and Business Agents Act 2002 (NSW) Property, Stock and Business Agents Regulation 2014 (NSW)
Cases Cited:	Berben v Hedditch (1982) NSW Conv R 55-081 Caringbah Investments Pty Ltd v Caringbah Business & Sports Club Ltd (in liquidation) [2016] NSWCA 165 Cherry v Steele-Park [2017] NSWCA 295 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 Management Services Australia Pty Ltd t/as Peak Performance PM v PM Works Pty Ltd [2019] NSWCA 107 Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179
Category:	Principal judgment
Parties:	Noel Outerbridge trading as Century 21 Plateau Lifestyle Real Estate (First Plaintiff) Lynette Outerbridge trading as Century 21 Plateau Lifestyle Real Estate (Second Plaintiff) Brian Richard Hall (First Defendant) Marlene Ann Bentino (Second Defendant)
Representation:	Counsel: D Rayment (Plaintiffs) M Southwick (Defendants)   Solicitors: Jemmeson & Fisher (Plaintiffs) Heydons Lawyers (Defendants)
File Number(s):	2018/00154851

Judgment

1. In these proceedings, the plaintiffs, who are partners in a real estate agency business known as Century 21 Plateau Lifestyle Real Estate at Alstonville in New South Wales, claim against the defendants the sum of $108,086 as damages for breach of contract. The defendants were in 2017-18 the vendors of a property known as [xxx] Road Brooklet New South Wales (“the Property”). That Property was sold in early 2018 to Julie Ann Weis for $4,913,000. The plaintiffs claim an entitlement to a real estate commission on the sale of the Property calculated as a fee of 2.2% (inclusive of GST) of the final sale price of the Property together with interest. The plaintiffs say that they were the effective cause of the sale of the Property to Ms Weis.

2. The defendants dispute the claim, and say that on the basis of the agreement entered into, the plaintiffs are not entitled to the commission they seek. The defendants say that the Property was sold by another agent Unique Estates Australia Pty Ltd (“Unique”). Unique was not licensed as a real estate licensee when the sale occurred. The defendants say they did not know Unique was not licensed as real estate agents at the time. It is not in dispute that Unique is now in liquidation. The defendants in substance say that any claim the plaintiffs have is against Unique and not them. The defendants say that the usual 10% deposit of the purchase price was paid into a trust account of Unique as the selling real estate agent. When the deposit moneys were not available following Unique being placed into liquidation, the defendants sought compensation from the New South Wales Department of Fair Trading. Compensation was agreed but does not include the agent's commission of 2.2%. There is no dispute that a contract was exchanged for the sale of the Property with Ms Weis as purchaser on 11 January 2018 at the purchase price referred to above of $4,913,000.

The pleadings

3. By a Statement of Claim filed on 17 May 2018, the plaintiffs seek recovery of the amount of commission together with interest. The plaintiffs’ case as pleaded is in summary as follows:

1. At all material times, the plaintiffs were members of an unincorporated partnership trading under the registered business name of Century 21 Plateau Lifestyle Real Estate and held a real estate agent’s licence;

2. At all material times, the defendants were the registered proprietors of the Property;

3. On 10 August 2015, the plaintiffs and the defendants entered into a Sales Inspection Report and Open Selling Agency Agreement for the sale of the Property (“the Agreement”). That Agreement is dated 10 August 2015;

4. Express terms of the Agreement are pleaded including that the defendants granted to the plaintiffs selling rights in relation to the Property for the period commencing 10 August 2015 to the date of sale of the Property or seven days after written notice of termination is provided by one to the other;

5. The plaintiffs are entitled to a fee of 2.2% (inclusive of GST) of the final sale price of the Property;

6. The plaintiffs were entitled to the commission where they were the effective cause of the sale;

7. During the agency period, the plaintiffs effectively introduced Ms Weis who was the ultimate purchaser to the Property;

8. Ms Weis signed a contract to purchase the Property on 11 January 2018 for the purchase price of $4,913,000;

9. Pursuant to the Agreement and in accordance with its terms, the plaintiffs performed their services for the defendants by listing and selling the Property;

10. In the Statement of Claim the plaintiffs set out in detail the tasks which they performed for the defendants in relation to the sale of the Property (paragraphs 9-38);

11. These included beginning negotiations with Ms Weis, taking Ms Weis for an on-site inspection of the Property on 20 December 2017, arranging a meeting between Ms Weis and the defendants’ farm consultant (the Property included a macadamia nut farm) and conveying offers between the parties;

12. On 22 December 2017, the plaintiffs say they communicated an offer by Ms Weis to the defendants which the defendants accepted being for the sum of $4,700,000 including additional equipment and the 2018 macadamia nut crop. It is pleaded that this was accepted by the defendants on 22 December 2017;

13. On 25 December 2017, prior to exchange of contracts, the defendants withdrew their acceptance of the offer from Ms Weis and indicated that they required a higher purchase price. This was conveyed to Ms Weis;

14. From 27 December 2017, the plaintiffs had pre-arranged annual leave. It is pleaded that this was communicated to Ms Weis and the plaintiffs’ mobile telephone was provided to another member of staff at the plaintiffs’ office so that negotiations could continue between the defendants and Ms Weis. It is also pleaded that the plaintiffs were available via email at all material times;

15. On 11 January 2018, the plaintiffs attempted to continue the negotiations on their return from holidays but were informed that a sale of the Property had occurred through Unique;

16. It is pleaded that the defendants have failed to pay the commission to which the plaintiffs are entitled and that this amounts to a breach of contract.

4. By an Amended Defence filed with leave on 16 September 2019, the defendants deny that they have any liability to the plaintiffs. In substance, the defendants plead as follows:

1. While they admit that on 16 August 2015 the first plaintiff and the first defendant signed the Agreement for the sale of the Property, the Agreement was in conjunction with two other agents including Unique;

2. They do not admit that the plaintiffs effectively introduced Ms Weis to the Property;

3. The defendants deny that the plaintiffs performed their services for the defendants by listing and selling the Property pursuant to the Agreement;

4. The defendants do not admit the plaintiffs undertook numerous activities in relation to selling the Property;

5. The defendants admit requiring a higher price for the Property but deny withdrawing their acceptance;

6. The defendants deny that they are under any obligation to pay the commission as claimed by the plaintiffs to them;

7. The defendants say that by signing the Agreement, the plaintiffs also agreed to act in conjunction with Unique and George & Fuhrman Holdings Pty Ltd (“GNF”);

8. They agree that on 11 January 2018 contracts for the sale of the Property were exchanged;

9. The defendants say that the deposit under the contract for sale of the Property was paid to Unique as required;

10. The defendants say that on 15 March 2018 the sale of the Property was completed;

11. By reason of Clause 5.3 of the Agreement, the defendants say that the plaintiffs are not entitled to claim commission even if they were the effective cause of the sale. It is pleaded that the plaintiffs’ claim if any is pursuant to the conjunction agreement against Unique;

12. The defendants say that the plaintiffs are estopped from denying the various agreements were in full force and effect including the conjunction agreement.

5. In a Reply filed on 16 January 2019, the plaintiffs:

1. Deny that the Agreement was executed on 16 August 2015 and say it was executed on 10 August 2015;

2. Deny that the Agreement was in conjunction with Unique and GNF as a matter of law;

3. Deny that they are bound by the terms of the co-agency agreement dated 16 August 2015 as alleged by the defendants;

4. Deny that Unique was at the material time a licensed real estate agent;

5. Deny that there was any authority for an unlicensed agent to deduct any commission or remuneration from a deposit paid and held by the unlicensed agent;

6. Deny that at the time of entry into the Agreement that Unique was a licensed agent;

7. Deny that the plaintiff knew that Unique was dealing with Ms Weis or that it was unlicensed;

8. Deny that it is estopped in making the claim for the commission.

6. At the commencement of the final hearing, counsel for the plaintiffs handed up an outline of submissions. It was submitted by the plaintiffs that the Agreement that was signed by the parties was an “open”, that is a non-exclusive, agency agreement. It was submitted that at the time the Agreement was entered into, there were two other agents who also had non-exclusive rights to list the Property being Unique and GNF. It was submitted that there are three issues in the proceedings which are as follows:

1. Whether the plaintiffs “effectively introduced” Ms Weis as the purchaser to the Property under the Agreement. It is submitted that the answer to this issue will turn on a qualitative assessment of the work done by Mr Outerbridge against that performed by Ms Van Wijngaarden from Unique and the proximity in quantum of offers and in time of Mr Outerbridge's work against agent from Unique. It is submitted that the plaintiffs’ efforts flowed through to the immediate benefit of Unique and may be properly regarded as the effective cause of the sale;

2. Whether the Agreement was a conjunction agreement between the plaintiffs, Unique and GNH. The plaintiffs submit that the Co-Agency Agreement alleged by the defendants is devoid of any substantive contractual provision which might in any way alter or modify the content of the Agreement or have the effect contended for by the defendants. The Co-Agency Agreement was not signed by the two other agents or by the defendants and is an agreement which is not capable of regulating the rights of the defendants and the three agents. It is further stated that the Co-Agency Agreement provides that each agent would be bound by the terms of “the attachment Exclusive Agency Agreement” and there was no such attachment to the Agreement. Further, it is submitted that under the Agreement the words “is payable by the Principal” in Clause 5.3 of the Agreement refer to the principal's liability to pay in accordance with the entitlement of the relevant agent. As Unique was not licensed, the payment to Unique by the defendants did not discharge a liability owing to Unique;

3. The plaintiffs are not estopped from making the claim for the commission.

The affidavit evidence

7. The following affidavits were read by the parties:

1. The plaintiffs: affidavit of Noel Outerbridge, the first plaintiff, sworn 10 September 2018;

2. The defendants:

1. Affidavit of Brian Richard Hall, the first defendant, affirmed 8 November 2018; and

2. Affidavit of Julie Ann Weis affirmed 9 November 2018.

Outline of the facts

8. The affidavits of Mr Outerbridge and Mr Hall exhibit a voluminous quantity of documents. It will be necessary to refer to some of these documents in some detail. Many facts do not appear to be in issue between the parties. From the affidavit evidence and the other material before the court, a number of background facts may be set out and determined. Unless I indicate to the contrary, what follows are the court’s factual findings in the matter.

9. At all relevant times, the plaintiffs acted in an unincorporated partnership known as Century 21 Plateau Lifestyle Real Estate at Alstonville in New South Wales. Mr Outerbridge was a licensed real estate agent. The partnership of which the plaintiffs were partners carried on business selling real estate among other activities. The plaintiffs run a family owned and operated business with five employees. They are the main income producers in the business and find it difficult to take time away from the business, with the only real time that the plaintiffs can take off from the business being over the Christmas holiday period. Mr Outerbridge also manages a farm management business which specialises in the management of macadamia farms. Mr Outerbridge has personally sold hundreds of macadamia farms during his time as a real estate agent.

10. On 30 January 2008, the defendants completed the purchase of the Property for $4.18 million. The Property was known as [xxx]. It was a valuable property, having panoramic views of Lennox Head and the Byron Bay hinterland, consisted of 55 acres, had a prestige house built on it and was home to a working macadamia plantation with a number of thousands of mature trees.

11. The affidavit of Mr Hall sets out a number of agency agreements in relation to the sale of the Property entered into by the defendants and details the promotion of the Property.

12. In about November 2012, Mr Hall approached Unique to act as agents on the sale of the Property. He spoke at relevant times with Nicolette Van Wijngaarden who informed him that she was the principal of Unique. Unique was registered as a corporation on 26 August 1997 and was placed in liquidation pursuant to a creditors' voluntary winding up on 21 May 2018. On 6 November 2012, the defendants and Ms Van Wijngaarden signed a sales inspection report and exclusive agency agreement. The price at which the Property was to be offered for sale under this agreement was $5.5 million. The exclusive agency period was 6 November 2012 to 6 May 2013 with a non-exclusive agency existing after that period expired.

13. On 24 January 2013, the defendants signed a sales inspection report and exclusive selling agency agreement with Byron Bay Property Sales Pty Ltd. Under that agreement the agent’s estimate of the selling price or price range was $5-$5.5 million. The exclusive agency period under that agreement was 24 January 2013 to 30 April 2013 with a non-exclusive agency occurring after the expiry of the period. In 2013 and 2014, Ms Van Wijngaarden from Unique undertook activities in relation to the sale of the Property including arranging for photographs to be taken, arranging for a sales brochure to be prepared in relation to the Property and having the Property included in a magazine.

14. On 6 July 2014, the defendants signed a sales inspection report and open agency agreement with GNF. The agent’s estimate of the selling price or price range was $5 million plus. The non-exclusive period was from 6 July 2014.

15. On 8 July 2014, the defendants signed a sales inspection report and exclusive agency agreement with Unique. Under that agreement, the price at which the Property was to be offered was for “offers over $5 million”.

16. On about 9 July 2014, Mr Hall received a document entitled “Co-Agency Agreement” from Ms Van Wijngaarden. This document is at pages 49-50 of the exhibit to Mr Hall's affidavit and is a significant document in the proceedings (at the time of receipt by Mr Hall the writing on the bottom half of page 50 was not on the document). The conditions of that agreement (on page 50 of the exhibit) were as follows:

“Conditions of Co-agency Agreement

1.  All advertising, negotiations, offers, submissions and communications to or from the Vendor can be conducted by either agent, with a courtesy phone call to the other agent as soon as possible after presenting an offer to the owner.

2.  This conjunction agreement shall be terminated

a)  If the agency agreement with the listing agent is terminated in writing by the Vendor either before or after the expiry of the agreement.

b)  By mutual agreement, subject to the Vendor's concurrence.

3.  Each Agent shall be bound by the conditions and terms of the attachment Exclusive Selling Agency Agreement.

4.  A conjunction will not be given to a third agent unless agreed to by both agents.”

17. The first page of the Co-Agency Agreement indicated that the commission was 2.2% with the selling agent receiving 100% of the commission.

18. In 2015, there was email correspondence between Ms Van Wijngaarden and Mr Hall in relation to prospective purchasers inspecting the Property. In an email dated 27 April 2015, Mr Hall told Ms Van Wijngaarden that offers under $5 million “will definitely not be of interest”.

19. On 14 August 2015, Mr Hall sent an email to Ms Van Wijngaarden indicating that the defendants wished to add Mr Outerbridge “to the Co-Agency Agreement”. Ms Van Wijngaarden by an email dated 14 August 2015 said that to her that was “fine” but suggested that it may be better to give all three agents an open agency. Mr Grant of GNF also agreed to Mr Outerbridge being added to the agency agreement on 14 August 2015. However, no formal document was thereafter signed between the three agents including the one forwarded by Ms Van Wijngaarden to Mr Hall on 9 July 2014. This was despite the fact that the Co-Agency Agreement dated 9 July 2014, which had been previously forwarded by Unique, had been amended by Mr Hall and sent to the three agents, Unique, GNF and the plaintiffs, by email dated 16 August 2015. The amended document added:

“Third agent added 16/8/15

Century 21 Alstonville

Agent signatures

1.

2.

3.

Principals.”

20. Shortly prior to this time, Mr Hall contacted Mr Outerbridge regarding the plaintiffs listing the Property for sale. On 10 August 2015, Mr Outerbridge attended the Property and met with the first defendant. Each of Mr Outerbridge and Mr Hall has a different version of the conversations and acts which occurred on 10 August 2015. Mr Outerbridge states that he informed Mr Hall that he could co-list the Property with the other two agents via an open agency agreement and that his (Mr Hall’s) proposed selling price of around $5million was a little high and that $4.7million was more achievable. Mr Hall states that he told Mr Outerbridge that the defendants had a conjunction agreement with Unique and GNF for the sale of the Property and that the plaintiffs would have to be added and that the asking price was $5 million or more. Mr Hall says that there was no suggestion from Mr Outerbridge that the Property required a lot of work to achieve a sales price of $5 million. Mr Hall denies that there was any discussion with Mr Outerbridge where he suggested the selling price should be $4.7 million. Mr Hall also states, as set out above, that at the time he sent the Co-Agency Agreement to the three agents on 16 August 2015 he added the words to the Co-Agency Agreement “Third Agent Added 16/8/15 Century 21 Alstonville” (Affidavit paragraph 29). He says he inserted that date because he expected the agents to sign and return the document the following day. Mr Outerbridge says the Agreement without the Co-Agency Agreement page (consisting of four pages) was signed by the parties including Mr Hall on 10 August 2015.

20. Mr Hall also states in his affidavit that on about 16 August 2015, Mr Outerbridge returned to the Property, placed the document headed “Conditions of Co-agency Agreement” on the table and signed the second page of the Agreement on behalf of the plaintiffs. Mr Hall says he added the words “In Conjunction with Unique Estates and GNF Real Estate (see Agreement)” to the front page of the Agreement before signing the Agreement (consisting of five pages - this is inferred from paragraph 30 of Mr Hall’s affidavit). Despite what was originally in his affidavit, in his evidence in chief Mr Outerbridge agreed the words were added by hand by Mr Hall.

21. Accordingly, Mr Outerbridge has the Agreement without the Co-Agency Agreement page signed on 10 August 2015 and Mr Hall has it signed with the Co-Agency Agreement page on 16 August 2015. Which version is correct is a factual issue which is considered further below.

22. The Agreement signed was between the defendants and the partnership of the plaintiffs and had as an agent’s estimate of the selling price, $5 million. It was dated 10 August 2015. On the third page of the Agreement the following was stated in relation to the agency appointment and the remuneration:

“A.  AGENCY APPOINTMENT

The Licensee is appointed and authorised to sell the Property on behalf of the Principal, as: non-exclusive agent for the period (“the Agency Period”) commencing on 10.8.2015 AND terminating upon the sale of the Property or upon termination by seven days prior written notice given by the Licensee or the Principal to the other.

…

C.  REMUNERATION [clause 3.1, 3.2]

The Licensee's GST inclusive remuneration shall be calculated on the GST inclusive selling price in the following way:

2.2% on the final sale price

(e.g. % of sale price; flat fee; formula e.g. a combination of % and flat fee)

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

24. The Agreement was only signed by Mr Hall and not Ms Bentino, the other defendant and registered proprietor (and Mr Hall’s wife), but no issue was taken against the proposition that he had authority to sign on behalf of both defendants.

25. Page 4 of the Agreement was headed “Part 3/TERMS AND CONDITIONS OF THE RURAL OPEN SELLING AGENCY AGREEMENT”.

26. These terms included the following:

1.0  DEFINITIONS

…

1.2  “Introduced” - A person shall be deemed to have been “introduced” to the Principal or the Property by the Licensee if the fact that the Property is available for sale is made known to that person by or through the Licensee and, without limiting the generality of this paragraph, a person shall be deemed to have been introduced to the Property by the Licensee if that person becomes aware that the Property is available for sale as a result of reading any advertisement, notice or placard referring to the availability of the Property for sale, published or erected by or in the name of the Licensee.

…

1.4  The word “Licensee” and the word “Agent” where appearing mean the same and may be used interchangeably in this Agreement.

…

3.0  REMUNERATION, EXPENSES AND CHARGES

3.1  Remuneration - The Licensee shall be entitled to the remuneration set out in Item C of the Particulars (“the Remuneration”) in the following circumstances (where the Licensee is the effective cause of the sale):

(a)  If a person has been effectively introduced to the Principal or the Property by the Licensee during the Agency Period, (including another person who is introduced to the Principal or the Property by such person), and that person, either during the Agency Period or thereafter, enters into a contract to purchase the property or an interest in the property (which Includes by way of exercise of an option; and includes whether it be alone or jointly with another or others), or

(b)  If the Principal is a corporation then in addition, if a person has been effectively introduced to the Principal or the Property by such person, either by way of exercise of an option) to acquire by allotment, or to purchase (either alone or jointly with another or others) one or more shares, or an interest in one or more shares, in the capital of the Principal.

3.2  When Remuneration is Due and Payable - The Remuneration is due and payable by the Principal to the Licensee:

(a)  Immediately upon completion of the sale of the Property, or

(b)  the Principal and the Purchaser entering into a mutual agreement (whether written or verbal) to terminate or rescind the contract or otherwise not proceed with the sale; or

(c)  If the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract; or

(d)  upon the termination of the contract by the Principal as a result of the default of the Purchaser and the Remuneration is the same or less than the amount of the deposit which Is forfeited to the Principal.

WARNING: The term immediately above provides that a commission is payable under this agreement even if the sale of the property is not completed.

…

5.3  Conjunction Agents - The Licensee may allow other licensed real estate agents to sell the Property in conjunction with the Licensee provided only one amount of Remuneration is payable by the Principal.”

27. In his affidavit, Mr Outerbridge sets out detailed evidence in relation to the promotion of the Property including by marketing. He also states he undertook numerous inspections of the Property with various prospective purchasers prior to the interest from the ultimate purchaser, Ms Weis.

28. In late 2015, a company associated with Mr Outerbridge, Northern Rivers Macadamia Management and Contracting Pty Ltd, took over the management of the defendants’ macadamia farm at the Property.

29. Mr Hall gives evidence in his affidavit of steps taken by the defendants to promote the Property including placing a promotion on a television programme called Real Estate News and creating a website to market and promote the Property. Mr Hall also gives evidence about taking steps to improve the Property including removing some of the macadamia trees to increase the light to the trees on the Property and so increase the yield of macadamia nuts (Affidavit paragraphs 33-37). In 2016 and 2017, the defendants received invoices from the company associated with Mr Outerbridge for the management of the Property for substantial sums and these were paid.

30. On 4 December 2017, Ms Weis first made contact with Mr Outerbridge in relation to the Property. In December 2017, Mr Outerbridge had a number of telephone conferences with Ms Weis in relation to the Property in which she sought more information about the Property. The interactions between Mr Outerbridge and Ms Weis are set out in paragraphs 37 and following of his affidavit and I accept Mr Outerbridge's evidence set out in those paragraphs. In his affidavit and exhibit, Mr Hall attaches a volume of email correspondence from Mr Outerbridge in relation to the Property and queries from Ms Weis. I find that that the email correspondence was sent and received as indicated in the Exhibit.

31. In my view, the material referred to in Mr Outerbridge's affidavit and the emails exhibited to Mr Hall's affidavit, show that the plaintiffs undertook extensive activities to advance the prospect of purchase by Ms Weis of the Property.

32. On 20 December 2017, Mr Outerbridge met with Ms Weis at the Property (Hall affidavit paragraph 46). I accept that Ms Weis was introduced to Mr Hall on 20 December 2017 and that Mr Outerbridge spent approximately 2½ hours showing Ms Weis and her partner the Property. I also accept Mr Outerbridge’s evidence that on 20 December 2017, he met with Ms Weis and the defendants’ farm consultant on site at the Property.

33. Mr Hall and Mr Outerbridge set out in their affidavits the recollections which they have in relation to a series of offers and counter offers which Ms Weis and the defendants made as to the Property.

34. I accept paragraph 58 of Mr Outerbridge's affidavit that on 21 December 2017 Ms Weis made an offer of $4.5 million to purchase the Property and in the conversation, Mr Outerbridge informed Ms Weis that he would be going away on holidays from 27 December 2017 but that there could be communication by email. I also accept the accuracy of the conversation between Mr Hall and Mr Outerbridge on 21 December 2017 as set out in paragraph 47 of Mr Hall's affidavit. I accept that an email was sent by Mr Hall to Mr Outerbridge on 21 December 2017 as referred to in paragraph 48 of Mr Hall's affidavit, rejecting the offer of $4.5 million and making a counter offer of $4.8 million with certain machinery and the macadamia crop not included.

35. I accept Mr Outerbridge's evidence that on 22 December 2017 he telephoned Ms Weis to advise her to increase her offer and she said that she would increase the offer to $4.7 million inclusive of additional equipment and the 2018 macadamia crop. I also accept that Ms Weis informed Mr Outerbridge that the offer would stand until 5pm the next Friday and that at 5pm on that date she would withdraw her offer.

36. I accept Mr Outerbridge's evidence in paragraph 61 of his affidavit that he communicated the increased offer for $4.7 million including additional equipment and the 2018 macadamia crop to Mr Hall. There is an issue whether Mr Outerbridge told Mr Hall about the time limit for the offer. It is not necessary to determine this.

37. On 22 December 2017 at approximately 4:55pm, the defendants accepted the purchaser’s increased offer of $4.7 million with the additional equipment and the 2018 macadamia crop. This is consistent with paragraph 62 of Mr Outerbridge's affidavit and Ms Weis’ oral evidence. This is also consistent with later email correspondence from the defendants in effect withdrawing the acceptance. There appears to be an issue on the evidence as to whether the offer of $4.7million plus the equipment and the 2018 crop was actually accepted by the defendants on 22 December 2017. Ms Weis in her affidavit affirmed 9 November 2018 states that she told Mr Outerbridge to make a $4.7 million offer including the machinery and macadamia crop. She also has in paragraph 18 her saying that “the deal is off”. However, shortly after that Ms Weis has Mr Outerbridge telling her “the vendors have accepted your offer” as occurring on 23 December 2017. Having regard to all the affidavit evidence, it seems that Ms Weis is mistaken and that the offer was accepted by the defendants on 22 December 2017. See the email from Mr Outerbridge to Ms Weis and partner sent on 22 December 2017 at 10:53pm asking for purchasers’ details at a sale price of $4.7million which is consistent with a sale occurring on 22 December 2017 and paragraph 62 of Mr Outerbridge’s affidavit. I find on this evidence that the offer was accepted by Mr Hall on behalf of the defendants on 22 December 2017 (cf Hall affidavit paragraph 51).

38. On 23 December 2017, there was correspondence between Mr Outerbridge and Mr Hall in relation to what the sale included and issues such as GST. The emails are attached to the exhibit to Mr Hall's affidavit.

39. In paragraph 57 of his affidavit, Mr Hall states that at no time did he receive a sales advice regarding the proposed sale of the Property to Ms Weis from Mr Outerbridge and that no sales advice was forwarded by Mr Outerbridge to the defendants’ solicitor. That does not appear to be disputed by the plaintiffs. A document asking for purchaser’s details at a sale price of $4.7m was sent by Mr Outerbridge to Ms Weis on 22 December 2017 and an amended version was sent the next day.

40. On 25 December 2017 at 7:49pm, Mr Hall sent an email to Mr Outerbridge to be forwarded on to Ms Weis (Hall affidavit paragraph 58). That email was in the following terms:

“Hope your Christmas Day has been wonderful. Please pass the following message along to your purchasers without alteration. Look forward to chatting with you when you get back from your vacation trip.

“Rod & Julie, many thanks for your interest in our property and for your purchase offers. On reflection, we find we cannot accept your latest offer of $4.7m including all machinery and 2018 macadamia crop. Unfortunately, the offered price does not come anywhere near the investment we have in the property, or the replacement cost, and unfortunately “comparable” sales in this area take no account of the uniqueness of our property. We are quite prepared to negotiate a price somewhat lower than our benchmarks, but we are under no pressure and very happy to continue enjoying beautiful [xxx] until we find the buyer who shares our appreciation of its worth. We wish you all the best for the holiday season and very good luck in your ongoing property search.”“

41. Mr Outerbridge sets out in paragraph 69 of his affidavit a conversation which he had with Ms Weis on 27 December 2017. Although this is slightly different from paragraph 14 of Ms Weis's affidavit, I do not think the difference is relevant. Mr Outerbridge forwarded the defendants’ email to Ms Weis effectively withdrawing the acceptance of the offer on 27 December 2017.

42. In paragraph 72 of his affidavit, Mr Outerbridge states that he told Ms Weis on 27 December 2017 that he would be away on annual leave, he was leaving that afternoon, that he was available via email and he was leaving his mobile phone with one of his staff so he was contactable 24 hours a day. Ms Weis denies this in paragraph 15 of her affidavit. I prefer Mr Outerbridge on this issue as it is consistent with Mr Outerbridge wanting to obtain the sale and his commission. In paragraph 17 of her affidavit, Ms Weis sets out a conversation which she claims she had with the secretary at Mr Outerbridge's office. There is no evidence disputing that conversation and I accept it. It is also consistent with the file note prepared by Ms Thomas, an employee of the plaintiffs, at page 102 of the exhibit to Mr Outerbridge's affidavit.

43. The affidavits of Ms Weis and Mr Hall set out dealings which each had with Ms Van Wijngaarden of Unique in the period from 28 December 2017 to 11 January 2018. I accept that evidence. In particular, I accept the evidence that on 11 January 2018 the defendants and Ms Weis exchanged contracts with a purchase price of $4,913,000 which included a $12,000 adjustment for the cost of the repair of a pond at the Property.

44. In paragraph 21 of her affidavit, Ms Weis states as follows:

“I was of the view after the 27th December 2017, there was nothing I could do to re-engage negotiating with the owners through Noel, as he was in New Zealand, and I believed the owners were also going overseas. I believed on that date that there was nothing further to do with the [xxx]”.

45. I accept this evidence of Ms Weis which was consistent with her oral evidence.

46. The evidence establishes that on 11 January 2018, Ms Weis paid the deposit under the contract of $491,300 to Unique which was to be held in its trust account. This followed an email to Ms Weis’ solicitor on 2 January 2018 attaching a sales advice including details of Unique’s trust account bank details (Hall exhibit pages 140-145). A trust account receipt was issued by Unique for that sum (Hall exhibit page 240).

47. Mr Hall gives evidence that on 11 January 2018 he received a telephone call from Mr Outerbridge which he did not answer and later text messages. Ms Weis states that she did not receive a telephone call from Mr Outerbridge when he got back from New Zealand but did receive an email.

48. On 14 February 2018, Mr Hall was informed by a neighbour that Unique was having financial difficulties and had “closed the doors”.

49. Unique’s licence as a real estate agent ceased on 2 December 2017. Accordingly, it was not a licensed real estate agent at the time Ms Van Wijngaarden undertook activities in relation to the Property in December 2017-January 2018. From 2 December 2017, Unique could no longer trade as a licensed real estate agent lawfully. I find that Mr Outerbridge, the defendants and Ms Weis were not aware of that fact.

50. Because of difficulties in recovering the deposit from Unique, the defendants made a claim on the Department of Fair Trading for compensation. In due course, the Department of Fair Trading approved a claim which included the sales deposit and interest less a commission of 2.2% in the sum of $108,086.

51. As of the date of his 8 November 2018 affidavit, Mr Hall states that he has not received any payment by way of compensation from the Department of Fair Trading or any part of the deposit from Unique or any other party (Hall affidavit paragraph 88). It seems it has been paid since: Exhibit 4.

52. In paragraph 90 of his affidavit, Mr Hall states that at no time prior to 14 February 2018 was he aware that Unique did not have a current and valid licence to practice as a real estate agent. He says that he would not have allowed the deposit to be paid to Unique if he had any reason to believe Unique would not operate the trust account in accordance with the law. I accept that evidence as it accords with common sense and Mr Hall was generally an impressive witness.

53. In paragraphs 92-94 of his affidavit, Mr Hall sets out his recollection that Ms Van Wijngaarden from Unique arranged to have 12 potential purchasers through the Property between November 2012 and December 2017, Mr Grant of GNF had brought at least four potential purchasers to the Property and Mr Outerbridge arranged to bring at least five potential purchasers to the Property. He states that he never received any written reports from Mr Outerbridge about those inspections. I accept that evidence which is not apparently disputed by Mr Outerbridge.

The relevant statutory provisions

54. “Agency agreement” is defined in s 3(1) of the Property, Stock and Business Agents Act 2002 (NSW) (“the Act") as follows:

“3   Definitions

(1)  In this Act:

“agency agreement” means an agreement pursuant to which a licensee performs or agrees to perform services in the capacity of a licensee.”

55. Section 32 of the Act provides as follows:

“32   Duty of licensee and person in charge to properly supervise business

(1)  A licensee must properly supervise the business carried on by the licensee.

(2)  A licensee employed by another licensee (the principal licensee) as the person in charge of business at a place of business of the principal licensee must properly supervise the business of the principal licensee carried on at that place.

(3)  The requirement to properly supervise the conduct of business includes the following requirements:

(a)  a requirement to properly supervise employees engaged in the business,

(b)  a requirement to establish procedures designed to ensure that the provisions of this Act and any other laws relevant to the conduct of that business are complied with,

(c)  a requirement to monitor the conduct of business in a manner that will ensure as far as practicable that those procedures are complied with.

(4)  The Director-General may from time to time issue and notify to licensees guidelines as to what constitutes the proper supervision of the business of a licensee. A failure to comply with the requirements of any such guidelines in connection with the supervision of a business constitutes a failure to properly supervise the business.

Maximum penalty:

(a)  200 penalty units in the case of a corporation, or

(b)  100 penalty units in any other case.”

56. Section 34 of the Act provides as follows:

“34   Non-commercial subagency agreements to be in writing

(1)  An agreement between licensees to share any commission, fee, gain or reward paid or payable to a licensee in respect of any services performed by him or her as a licensee is unenforceable unless the agreement is in writing, is signed by the licensees and contains such terms (if any) as may be prescribed by the regulations.

(2)  Any provision in, or applying to, such an agreement and purporting to exclude, modify or restrict the operation of the terms (if any) required by this section to be contained in the agreement has no force or effect.

(3)  A licensee who enters into an agreement a provision of which is unenforceable because of this section is guilty of an offence.

Maximum penalty: 50 penalty units.

(4)  This section does not apply to:

(a)  an agreement between licensees who are in partnership with one another or in the relationship of employer and employee with one another, or

(b)  an agreement, transaction, circumstance or person prescribed by the regulations as exempt from this section or an agreement, transaction, circumstance or person of a class or description prescribed by the regulations as exempt from this section, or

(c)  an agreement in respect of services relating to commercial land, being land used or intended to be used solely or principally for commercial, business or industrial purposes, but not including land used or intended to be used solely or principally for agricultural or pastoral purposes.”

57. Section 55 of the Act provides as follows:

“55   No entitlement to commission or expenses without agency agreement

(1)  A licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless:

(a)  the services were performed pursuant to an agreement in writing (an agency agreement) signed by or on behalf of:

(i)  the person, and

(ii)  the licensee, and

(b)  the agency agreement complies with any applicable requirements of the regulations, and

(c)  a copy of the agency agreement signed by or on behalf of the licensee was served by the licensee on that person within 48 hours after the agreement was signed by or on behalf of the person.

Note.

Section 55A allows a court or tribunal to order that commission and expenses are recoverable in certain circumstances despite subsection (1).

(2)  The regulations may make provision for or with respect to regulating the form of agency agreements and the terms, conditions and other provisions that an agency agreement must or must not contain. Without limiting this subsection, the regulations may prescribe one or more standard forms of agency agreement.

(3)  Without limiting the means by which a copy of the agency agreement may be served on a person, it may be served by means of facsimile transmission or by such other means as the regulations may allow.

(4), (5)    (Repealed).”

58. Regulations 8 and 41 of the Property, Stock and Business Agents Regulation 2014 (NSW) provide as follows:

“8   Contents of agency agreements

(1) For the purposes of section 55 of the Act, an agency agreement must comply with the requirements of Schedules 7–14 as to the terms, conditions and other provisions that an agency agreement must or must not contain, with the application of those Schedules to be as follows:

(a) Schedule 7 applies to all agency agreements (in addition to any other Schedule that may be applicable to the agency agreement),

(b)  Schedule 8 applies to an agency agreement under which the agent will act for the seller on the sale of residential property,

(c)  Schedule 9 applies to an agency agreement under which the agent will act for the buyer on the purchase of land,

(d)  Schedule 10 applies to an agency agreement under which the agent will act for the seller on the sale of rural land,

(e)  Schedule 11 applies to an agency agreement under which the agent will act for the seller on the sale of a business or professional practice (with a reference in that Schedule to a business including a reference to a professional practice),

(f)  Schedule 12 applies to an agency agreement under which the agent will provide property management services in respect of the leasing of residential property or rural land,

(g)  Schedule 13 applies to an agency agreement under which the agent will act for the owner of residential property or rural land in relation to the entering into of a lease of the residential property or rural land,

(h)  Schedule 14 applies to an agency agreement under which the agent will exercise the functions of a strata managing agent or community managing agent.

(2)  A reference in Schedules 7–14 to property (other than as a reference to residential property) includes a reference to any land.

(3)  An agency agreement must not contain any term, condition or other provision that is inconsistent with a term, condition or other provision that the agency agreement is required to contain by this clause, but otherwise the terms, conditions and other provisions that an agency agreement can contain is not limited by this clause.

(4) For the purposes of section 55 (3) of the Act, each of the following methods of service is prescribed as a means by which an agency agreement may be served on a person:

(a)  for service on an individual:

(i)  delivering it personally to the person, or

(ii)  leaving it at the person’s place of residence, or at an address provided in the agency agreement as the person’s address for service, with a person who apparently resides there and who has apparently reached the age of 16 years, or

(iii)  sending it by post to the person at the person’s residential address or postal address as disclosed in the agency agreement or at an address provided in the agency agreement as the person’s address for service, or

(iv)  transmitting it electronically to an email address provided in the agency agreement as the person’s address for electronic service,

(b)  for service on a body corporate:

(i)  delivering it personally to the secretary of the body corporate or any other person concerned in the management of the body corporate, or

(ii)  leaving it at the body corporate’s principal place of business with a person who is apparently employed there and who has apparently reached the age of 16 years, or

(iii)  sending it by post to the body corporate at the address of its principal place of business or postal address, as disclosed in the agency agreement, or

(iv)  transmitting it electronically to an email address disclosed in the agency agreement.

(5) Subclause (1) does not apply to an agency agreement entered into before the commencement of the Act (on 1 September 2003).

(6) An agency agreement entered into before the commencement of the Act must contain such terms (if any) as it was required to contain under section 42AA of the Property, Stock and Business Agents Act 1941 at the time the agreement was entered into.

…

41   Subagency agreements

Each of the following classes of agreement is exempt from section 34 (Non-commercial subagency agreements to be in writing) of the Act:

(a)  agreements between licensees who are members of a multiple listing organisation,

(b)  agreements between licensees who are parties to a franchise agreement,

(c)  agreements for services relating only to livestock.”

Oral evidence from Mr Outerbridge

59. As stated above, the affidavit of Mr Outerbridge's sworn on 10 September 2018 was read in the plaintiffs' case.

60. In chief, Mr Outerbridge expanded slightly on his affidavit evidence. In relation to paragraph 21 of his affidavit, Mr Outerbridge gave evidence that the words “In conjunction with Unique Estates and GNF Real Estate (see agreement)” on the first page of the Agreement (page 26 of the exhibit to Mr Outerbridge's affidavit) were written on the Agreement by the first defendant, Mr Hall.

61. Mr Outerbridge also gave evidence that the Agreement at pages 26 to 29 of his exhibit was signed by the parties on 10 August 2015. This should be contrasted with the evidence of Mr Hall that it was signed by him on behalf of the defendants on 16 August 2015.

62. In relation to the Conditions of Co-Agency Agreement document at page 30 of the exhibit to Mr Outerbridge's affidavit, Mr Outerbridge gave evidence that he saw that page on 17 August 2015 and it was signed by him either on 17 August 2015 or thereafter. Mr Outerbridge stated that 16 August 2015 was a Sunday and he did not see the document until 17 August 2015. He said he had no actual recollection of signing it. He confirmed that the agreement at pages 26 to 29 of the exhibit to his affidavit was signed at a different point in time to his signature being placed on the Conditions of Co-Agency Agreement at page 30 of his exhibit.

63. Mr Outerbridge also gave evidence that on 22 December 2017 he communicated Ms Weis' increased offer to Mr Hall. He said that he said to Mr Hall words to the effect that he had received an increased offer of $4.7 million which included the additional equipment and the 2018 macadamia crop. He also stated that he informed Mr Hall that Ms Weis had given him a deadline of 5pm to accept the offer otherwise she would withdraw the offer.

64. In cross-examination, Mr Outerbridge confirmed to counsel for the defendants that the Agreement being the agreement at pages 26 to 29 of the exhibit to his affidavit was signed by him and the first defendant on 10 August 2015. Mr Outerbridge accepted, as set out in paragraph 18 of his affidavit, that Mr Hall contacted him regarding listing the Property for sale with him and in a conversation on 10 August 2015 informed him that he wanted the plaintiffs to co-list with Brian Grant of GNF and Unique. Mr Outerbridge also confirmed that he suggested to Mr Hall that he could do this through an open agency agreement.

65. In relation to paragraph 20 of his affidavit, Mr Outerbridge said the Agreement was prepared on 10 August 2015 and that he took copies of an open agreement with him when he went to the Property to see Mr Hall. He said he prepared what he could in the Agreement and then went through the Agreement and gave it to Mr Hall to complete the parts relevant to him. Mr Outerbridge confirmed that the words “In conjunction with Unique Estates and GNF Real Estate (see agreement)” were added by Mr Hall after he had filled out the parts which he could and signed it on 10 August 2015. He said that Mr Hall took a copy of the signed agreement on his fax machine. Mr Outerbridge confirmed that as at that time he had had no contact with Brian Grant of GNF or with Ms Van Wijngaarden of Unique in relation to the Property. When it was put to Mr Outerbridge that he allowed Mr Hall to place those words on the first page of the Agreement, Mr Outerbridge said that Mr Hall placed the words on the document before he signed it. He also agreed that he understood that the words were added by Mr Hall before he had discussions with Unique and GNF in relation to the Property. He said he left it to Mr Hall to have discussions with them. Mr Outerbridge said the effect of the addition of those words was unclear to him.

66. Mr Outerbridge accepted that the situation where there was an exclusive agency agreement was also usually the situation where a conjunction agreement was needed between agents as it was relevant to an entitlement to commission. Mr Outerbridge confirmed that he was not aware that previously Unique or GNF had exclusive agency agreements with the defendants. However, he accepted that usually a conjunction agreement was only needed if there was an exclusive agency agreement with more than one agent. He also accepted that a conjunction agreement was usually an agreement between agents. When asked why he allowed Mr Hall to put the words on the Agreement, Mr Outerbridge said it was Mr Hall's decision to put them on the Agreement. He said Mr Hall put them on the Agreement after he signed it and said that if Mr Hall had asked him to initial it he would not have done so as there was no agreement as referred to attached. Mr Outerbridge confirmed that while Mr Hall had spoken about a conjunction agreement between GNF and Unique, as at 10 August 2015 he had not sighted any other agreement. Mr Outerbridge confirmed that he listed the Property for sale not long after the agency Agreement was signed but said he could not recall precisely when this was. Mr Outerbridge said that no further attachment was sighted by him until 17 August 2015 at the earliest.

67. When it was put to Mr Outerbridge that on 10 August 2015 his intention was that the plaintiffs would act in conjunction with GNF and Unique, Mr Outerbridge said that this was spoken about but an open agency agreement was signed and he did not think that any conjunction agreement would apply to it. He said at that time he had not spoken to any representative of GNF or Unique. Mr Outerbridge said that as at 10 August 2015, he was not aware of Clause 5.3 of the Agreement.

68. Mr Outerbridge confirmed that shortly before the trial he had read the exclusive agency agreement between the defendants and Unique which was at pages 45 to 48 of the exhibit to Mr Hall's affidavit. He said this was an exclusive agency agreement but the exclusive period had expired. Mr Outerbridge said that he had also seen the Co-Agency Agreement between GNF and Unique in relation to the Property.

69. Mr Outerbridge was taken to paragraph 22 of Mr Hall's affidavit in the light of paragraph 18 of his affidavit. He accepted that he had the conversation with Mr Hall set out in paragraph 22 of Mr Hall’s affidavit and, in particular, that part where Mr Hall said we have a conjunction agency with Unique and GNF for the sale of the Property and “I will have to add you”. However, Mr Outerbridge stated that at the time of the conversation he had not sighted the Co-Agency Agreement between GNF and Unique. Mr Outerbridge did not accept that on 10 August 2015 he had a conversation with Mr Hall at the Property where Mr Hall said to him “I won't sign it until Unique and GNF agree to you joining”. Mr Outerbridge confirmed that when he gave the Agreement to Mr Hall at pages 26 to 29 of his exhibit that he had already signed it and dated it: T46.43.

70. Mr Outerbridge was asked why he put an agent's estimate of the selling price in the Agreement of $5 million (his exhibit page 26) in the light of the conversation he set out in his affidavit in paragraph 19 where he said that $4.7 million was more achievable. Mr Outerbridge said that he thought closer to $5 million could be achieved with some work done to the property: T48.1. He said the macadamia farm was in a worse position than he had anticipated when he saw its income.

71. Mr Outerbridge was then asked a number of questions about a series of emails that in due course became Exhibit 3 in the proceedings. The first email was between Mr Outerbridge and Mr Hall and was sent on 13 August 2015 at 12.07pm and was to the following effect:

“Hello Brian.

Following on from our conversation a few minutes ago regarding the open agency agreement for the listing of your property.

Please forward to us the signed agreement as soon as possible and processer nut in shell printouts of yearly tonnage for the last 3 seasons.

As soon as I receive these details I will be able to send it on to my prospective purchaser.

Kind Regards”

72. The second email was sent from Mr Hall to Mr Outerbridge on 14 August 2015 at 6:06pm and was to the following effect:

“Noel:

Look forward to working with you on Monday.

Both Nicky and Brian have given the OK to add you to the co-agency agreement. However, Nicky asked wouldn't it be better to give all three of you an open agency. I couldn't care less, so long as I don't pay commission more than once. You mentioned it also the other day. What is the advantage and what do we need to do to action it?

Regards,

Brian”

73. The third email was from Mr Outerbridge to Mr Hall which was sent on 14 August 2015 at 6.38pm and was to the following effect:

“Good Evening Brian

The Open Agency agreement that I left there for you is fine, just sign it and send it back.

With an Open Agency agreement: The agency that sells the property receives all the sale commission.

Kind Regards”.

74. See also Exhibits 1 and 2.

75. When Mr Outerbridge was shown the 13 August 2015 email, he confirmed that he had received it and said that he requested after Mr Hall had signed the Agreement on 10 August 2015 for him to arrange for the second defendant, Ms Bentino, also to sign the Agreement and forward it to Mr Outerbridge's office. Mr Outerbridge confirmed that this discussion with Mr Hall was not referred to in his affidavit. He said he had Mr Hall's signed copy of the Agreement and he wanted the Agreement also signed by Ms Bentino.

76. Mr Outerbridge was then taken to the 14 August 2015 email set out above from Mr Hall and initially he did not recall receiving it, although later he accepted that he did receive the email from Mr Hall. Mr Outerbridge said that he had signed an open agency agreement and had not sighted the Conditions of Co-Agency Agreement at page 30 of the exhibit to his affidavit until about 17 August 2015.

77. Mr Outerbridge was then taken to the later email sent by him to Mr Hall on 14 August 2015. Exhibit 2 confirms that this was sent at 6.38pm. Mr Outerbridge confirmed that he sent the email and that it was a reference to Ms Bentino signing the Agreement and returning it.

78. It was put to Mr Outerbridge that the reason he said the words “just sign it and send it back” in the later 14 August 2015 email was because Mr Hall had not signed the Agreement on 10 August 2015 as Mr Outerbridge had asserted. Mr Outerbridge rejected that suggestion and said that he had left instructions with Mr Hall for Ms Bentino also to sign the Agreement.

79. Mr Outerbridge was taken to the emails between Mr Hall and Ms Van Wijngaarden and Mr Hall and Brian Grant of GNF requesting their agreement to Mr Outerbridge being added to the Co-Agency Agreement. Mr Outerbridge said that he could not recall being told by Mr Hall of his email with Ms Van Wijngaarden and said he was not personally aware of the contact with Mr Grant. Mr Outerbridge was then taken to an email from Mr Hall to himself, Ms Van Wijngaarden and Mr Grant sent on 16 August 2015 which was in the following terms (page 66 to the exhibit to Mr Hall's affidavit):

“Brian, Nicky, Noel:

Attached is a modified copy of the co-agency agreement that Nciky [sic] drew up previously. Could i ask that each of you sign below the modifications & return to me so that we have a complete set of documents?

Thanks in anticipation.

Regards”.

80. Mr Outerbridge said that he sighted that email on 17 August 2015. He said he recalled that page 68 of Mr Hall's exhibit was attached to the email and accepted that page 67 could also have been attached to the email but raised the question whether it applied to an open agency agreement. Mr Outerbridge accepted that paragraph 3 of the document headed “Conditions of Co-Agency Agreement” (page 68 of the exhibit to Mr Hall's affidavit) referred to the “conditions and terms of the attachment Exclusive Selling Agency Agreement”. Mr Outerbridge said that he did not believe there was an exclusive selling agency agreement as he had signed an open agency agreement and the reference could not have been to that agreement. When it was put to Mr Outerbridge that he understood that Mr Hall wanted him to co‑list with Unique and GNF as referred to in paragraph 19 of his affidavit, Mr Outerbridge said that he could not understand why Mr Hall wanted that where what had been executed was an open agency agreement.

81. Mr Outerbridge was then taken to Mr Hall's 14 August 2015 email in Exhibit 3 where he said, “I couldn't care less, so long as I don't pay commission more than once.” Mr Outerbridge said that you would not do that with an open agency agreement. He accepted that Mr Hall was concerned only to pay commission once on the sale. Mr Outerbridge said that he believed both Unique and GNF had open agency agreements. Mr Outerbridge said that he was not aware of the exclusive agency agreement at page 45 of the exhibit to Mr Hall's affidavit between Unique and the defendants at the time but said that in any case the exclusive period had expired and it had become an open agency agreement. Mr Outerbridge said that while he understood that GNF and Unique had been engaged by the defendants, he was not aware if there was a co-agency or a co-exclusive agency agreement in existence. When it was put to Mr Outerbridge that he needed to know if there was an exclusive agency agreement as this may have entitled Unique or GNF to the commission, he said that he had asked Mr Hall and he said he was happy to sign an open agency agreement.

80. Mr Outerbridge confirmed that he sighted the document headed “Conditions of Co-agency Agreement” on 17 August 2015, but he did not regard it as applicable to the agreement which had been signed by him and Mr Hall and that it was an old document.

81. It was expressly put to Mr Outerbridge that Mr Hall had put the words “In conjunction with Unique Estates and GNF Real Estate (see agreement)” on the first page of the Agreement (Outerbridge exhibit page 26) on 16 August 2015 or 17 August 2015 and he rejected it. He also rejected that the Agreement on pages 26 to 30 of the exhibit was signed by the parties not on 10 August 2015 but on 16 or 17 August 2015. Mr Outerbridge said that the documents in his exhibit at pages 26 to 29 and the document at page 30 were not signed at the same time. He said the document at page 30 of his exhibit was signed on 17 August 2015 or soon after. He could not recall where he was when he signed the document at page 30 of his exhibit. He accepted that he did not say in his affidavit that he signed the document at page 30 of his exhibit separately to pages 26 to 29. It was also pointed out to him that the emails in Exhibit 3 were not referred to in his affidavit. Mr Outerbridge said that Mr Hall assured him on 10 August 2015 that Ms Bentino would sign the Agreement and he would forward it to Mr Outerbridge.

82. Mr Outerbridge was taken to paragraph 23 of his affidavit in which he states that Mr Hall said to him on 10 August 2015 that he was authorised to sign on behalf of Ms Bentino. Mr Outerbridge confirmed that Mr Hall said that. He was asked why if Mr Hall said that to him, he was following up with Mr Hall as he claims in relation to the signing of the Agreement by Ms Bentino. Mr Outerbridge said that that was standard practice within his firm. He said that Mr Hall said he would forward the Agreement signed by Ms Bentino to him. It was then put to him that after 17 August 2015 he never followed up the issue of the second defendant signing the Agreement. He agreed with this. He denied that pages 26 to 30 of his exhibit were all signed by Mr Hall on 16 August or 17 August 2015 and he then listed the Property for sale. Mr Outerbridge was taken to paragraph 24 of his exhibit where the market history for the Property showed that it was listed by him on 17 August 2015. Mr Outerbridge accepted that and said it was listed after he had taken some further photos of the property.

83. Mr Outerbridge was then asked some questions in relation to his dealings with Ms Weis. He confirmed that he had a number of dealings with Ms Weis both by telephone and by email in December 2017 in relation to the Property. Mr Outerbridge confirmed that he received an email from Mr Hall on 25 December 2017 at 7:50pm, as set out at page 99 of the exhibit of Mr Outerbridge's affidavit. He also confirmed that he forwarded the email to Ms Weis on 27 December 2017 at 12:34pm. He stated that he had a conversation with Ms Weis on 27 December 2017 in relation to the email from Mr Hall. He agreed that on the afternoon of 27 December 2017 he went on his annual leave. Mr Outerbridge confirmed that he had a conversation with Ms Weis on 27 December 2017 in which he told her that he could not make contact with the vendors: T72.15. He also agreed that Ms Weis replied that she could not do business that way and she was “out”: T72.24. This is consistent with paragraph 14 of Ms Weis's affidavit.

84. It was put to Mr Outerbridge that he did not tell Ms Weis about his holiday. Mr Outerbridge said that he told her that he was going away. It was put to him that he did not say how long he was going away for. Mr Outerbridge said he believed he did. He also rejected the suggestion that he did not have the telephone conversation with Ms Weis as set out in paragraph 72 of his affidavit about him being available by email.

85. Mr Outerbridge was challenged in relation to the file note from Ms Corelle Thomas of the plaintiffs' agency which is at page 102 of the exhibit to Mr Outerbridge's affidavit. While Mr Outerbridge confirmed that the note was incorrect to the extent it said that he would be back to the office the following week, he said the note was created by his secretary Ms Thomas. Mr Outerbridge said that he returned to the office on either 9 or 10 January 2018. He denied that the file note was fabricated to assist him in the case.

86. Mr Outerbridge also confirmed that at no time did the plaintiffs send a notice terminating any part of the agreement being pages 26 to 30 of his affidavit and in particular in accordance with Clause 2 of the document headed “Conditions of Co-agency Agreement” on page 30 of his exhibit.

87. In general terms, I accept that Mr Outerbridge was on most occasions attempting to give his evidence truthfully and to the best of his ability. However, I found his evidence in relation to the 13 and 14 August 2015 emails relating to the signing of the Agreement to be unimpressive. In particular, I did not accept his evidence that the emails were pursuing a copy of the Agreement signed by the second defendant. Mr Outerbridge readily made concessions, particularly as to conversations referred to in the affidavits of Mr Hall and Ms Weis, but I formed the impression that this was because he did not have a good recollection of the conversations, particularly in August 2015. Accordingly, some real caution should be shown in relation to his evidence concerning the central issues in the case. In my view, preference should be given to contemporaneous documents where they are inconsistent with Mr Outerbridge's recollections.

Evidence for the defendants

Oral evidence of Ms Weis

90. The defendants read an affidavit of Ms Julie Weis, the ultimate purchaser of the Property, affirmed 9 November 2018.

91. In cross-examination, Ms Weis confirmed that she first came to observe the Property after speaking to Mr Outerbridge and that he introduced her to the Property. She agreed that having seen it she decided to buy it: T76.30. She accepted that she conducted a lot of dealings with Mr Outerbridge and had numerous discussions with him in relation to the Property. These were over the telephone and by email. She agreed that she was highly motivated to buy the Property through Mr Outerbridge if she could get it for the right price: T76.47. She said there were two components to the Property - the land including the house and the equipment for the Macadamia farm. She agreed that she had made an offer through Mr Outerbridge to the vendors/defendants for the land and the house for $4.7 million: T77.7.

92. Ms Weis said that she understood that her offer was accepted by the defendants and then they withdrew their acceptance. She said this was a shock to her (T77.23) and accepted that she received from Mr Outerbridge the email at page 101 of the exhibit to Mr Outerbridge's affidavit. Ms Weis said that she was alarmed by that document and regarded it initially as the end of the opportunity to secure the Property: T78.45. Ms Weis said that she had a telephone conversation with Mr Outerbridge prior to the receipt of the email in which he told her that the defendants' acceptance of her offer had been withdrawn: T79.5. Ms Weis said that she was told by Mr Outerbridge that he had had trouble getting in contact with the vendors. When it was put to Ms Weis that she had discussed the Property with her family and thought about it and decided that she still wanted to buy the Property, Ms Weis said that she wanted to understand what the vendors were thinking in relation to the Property and to determine whether in fact they were still interested in selling it: T79.50. Ms Weis said that she wanted to know whether the vendors really wanted to sell and she assumed that they wanted more money: T80.14.

93. When Ms Weis was taken to paragraph 17 of her affidavit where she says, “I then decided I wanted to re-engage”, Ms Weis said that she was annoyed by the withdrawal of the acceptance by the defendants and wanted to understand what the vendors’ position was and whether they still wanted to sell: T80.35-38. She said at that stage she was not sure whether it was something she wanted to pursue: T81.7.

94. Ms Weis confirmed that the first action after she decided she wanted to “re-engage” was to ring the mobile telephone number of Mr Outerbridge and said that it was answered by a lady. She said that she was told that Mr Outerbridge had left the country and was in New Zealand on vacation. She accepted that it was possibly the case that she had been told that Mr Outerbridge was only away for a week. However, she said that her view was that she and the vendors were not going to wait that long in relation to the Property. Ms Weis said that she wanted to have a discussion with the vendors about the Property as at that stage she did not trust the vendors. She agreed that following the discussion, ideally she wanted to buy the Property pending the outcome of the discussion: T82.23-.36.

95. Ms Weis said that she did not think of contacting Mr Outerbridge by email as she wanted a face-to-face discussion with the vendors: T82.46. She said she “shut down on the whole opportunity”: T82.46; T83.5. Ms Weis confirmed that she then had a discussion with Ms Van Wijngaarden from Unique and spoke about the Property. She confirmed that she was told that Ms Van Wijngaarden knew the owners. At that stage the position in relation to the Property was “up in the air” and she had begun to look at new properties: T83.36.

96. Ms Weis was taken to the email sent to her from Ms Van Wijngaarden on 29 December 2017 at 3:59pm and her response which was to confirm the offer of $5 million for the Property plus $125,000 plus GST for certain machinery (see page 136 of the exhibit to Mr Hall's affidavit). She agreed that two days before these emails she was trying to get in contact with Mr Outerbridge and only two days after that was making an offer through Ms Van Wijngaarden to buy the Property. She agreed that the period that she thought she had lost the Property was limited and she was highly motivated to secure her chance to buy the Property: T85.3.

97. It was put to Ms Weis that the limited involvement Ms Van Wijngaarden had was for her to tell Ms Weis that she knew the owners and she (Ms Weis) used her to put a further offer to buy. Ms Weis said that there was more to it than that: T85.9. She said Ms Van Wijngaarden had told her that the list price was not $5 million as Mr Outerbridge had said but $5.5 million. She then understood why her $4.7 million offer had been rejected. She was also told by Ms Van Wijngaarden that the vendors had indicated that they had never listed the Property with Mr Outerbridge at $5 million but it was always listed with agents at $5.5 million which was the amount they wanted. This made sense to her: see T85.17-.37.

98. Ms Weis confirmed that if she had known of this information earlier that she would probably have made a higher offer at an earlier stage. Ms Weis said she felt she had been misinformed as to the original list price but once she understood that the vendors’ list price was $5.5 million it made sense to her why they had withdrawn their acceptance: T87.31. Ms Weis said that while she wanted to understand the issues which the vendors had in relation to the Property and her initial offer which they had withdrawn the acceptance of, she did not care which agent she achieved the negotiation through: T89.22.

99. When it was put to Ms Weis that she could have made the ultimate offer which was accepted through a different agent other than Ms Van Wijngaarden, Ms Weis said that Ms Van Wijngaarden was able to clarify the issues the vendors were concerned about. She was not clear whether another agent could have done that: T89.44; T90.1. She agreed that probably if Mr Outerbridge had said the listing was $5.5 million she would have offered the same $5 million offer through him as she had made through Ms Van Wijngaarden: T90.34. Ms Weis said that the price for the Property was an element which was relevant to her and she had “room to move” but she did not want to go through another process of an offer being accepted and the acceptance withdrawn: T91.7. She doubted that she would likely have said to the secretary of Mr Outerbridge that she wanted to persuade Mr Hall as to the price: T91.20. She said she was thinking that she wanted a conversation with the vendors which may involve increasing the amount of the offer: T91.21.

100. Ms Weis was taken to part of the exchanged contract which is at page 151 of the exhibit to Mr Hall's affidavit where in Clause 34 a warranty was given that she had not been introduced to the Property nor the vendor by any agent, whether as sole or conjunction agent other than by the vendors’ agent specified (being Ms Van Wijngaarden) and the clause added: “The Vendor agrees that any claim by Century 21 Plateau Lifestyle Real Estate of Alstonville, shall not be subject to the warranty herein by the purchaser.” Ms Weis said that she made her solicitor aware that Mr Outerbridge had introduced her to the Property and that there was some significant chance of a claim by the vendors and she did not want to have an exposure to an indemnity for this reason. She stated that Mr Outerbridge had a part to play in her interest in the Property and had got her to a position of making an offer. She agreed that she was very much hoping to buy the Property as result of Mr Outerbridge's efforts: T92.27. She said her primary objective was to get the issues clarified as to the vendors such that she understood what the vendors wanted in relation to the Property. She agreed that provided matters were clarified by any agent she would have proceeded through them: T92.45.

101. Overall, I formed the view that Ms Weis was a truthful witness who was doing the best she could to give her evidence correctly and completely: see also T90.27. Although she did not have a comprehensive command of the detail of the documents when asked about them, she was willing to make concessions as appropriate and recognised documents when they were brought to her attention. In general terms, I accept her as a witness of truth.

Oral evidence of Mr Hall

102. Mr Hall accepted in cross-examination that an issue before the court was what documents were executed on 10 August 2015. He agreed that his case was that he did not sign the Agreement at pages 69-72 of his exhibit and dated 10 August 2015 on 10 August 2015. Mr Hall rejected the proposition that Mr Outerbridge had signed the contract at page 71 of the exhibit to his affidavit in front of Mr Hall on 10 August 2015. Mr Hall denied that Mr Outerbridge attended his premises on 10 August 2015 and completed the details in the Agreement by hand with him on that day. Mr Hall said that Mr Outerbridge left the document with him to complete and that part of the handwriting in the Agreement was his and his wife's handwriting. He agreed that the words at the top of page 69 of the exhibit “In conjunction with Unique Estates and GNF Real Estate (see agreement)” were in his handwriting. He also accepted that part of the handwriting in the Agreement was that of Mr Outerbridge but denied that he put that handwriting in the Agreement on 10 August 2015 in front of Mr Hall. Mr Hall said Mr Outerbridge arrived with the Agreement already partially completed in his handwriting.

103. Mr Hall gave evidence it was not his practice to sign documents which were incorrectly dated. He said the Agreement was already dated by Mr Outerbridge “10.8.2015” when it was provided to him. He said he did not rule out the date and did not sign it on 10 August 2015.

104. Mr Hall was taken to the document at page 73 to the exhibit to his affidavit, being the page headed “Conditions of Co-agency Agreement.” He agreed that this was one page which he took out of an earlier agreement with two other agents. He said Ms Van Wijngaarden had signed the agreement in 2014 and he added the handwriting in the lower part of the page (see exhibit page 68). He also agreed that he added this on 16 August 2015 and accepted that the document at page 73 of his exhibit did not exist as at 10 August 2015 but only came into existence as at page 73 of the exhibit on 16 August 2015. Mr Hall also agreed that he did not sign the document at page 73 of his exhibit. He accepted that to his knowledge the only person who signed page 73 of his exhibit was Mr Outerbridge but he was told that the other two signatories had signed it. He accepted that was not in his affidavit but could not explain why. He agreed that the only document in his possession was that signed by Mr Outerbridge. He agreed that he sent this document to the other two agents requesting that they sign it and send it back to him but he did not receive the signed document from them and he did not sign it himself. He disagreed with the proposition that he did not regard the document at page 73 of his exhibit as part of a binding agreement.

105. Mr Hall agreed that he signed the document at page 71 of his exhibit and he intended to be bound by the Agreement and had given his assent to it. Despite the word “Principals” on page 73 and him leaving a space for a signature, he accepted he did not sign it even though he was one of the principals. However, he denied that he did not intend to be bound by the document at page 73 of his exhibit. He said that when he signed the document at page 71 of the exhibit he added the words which appear on the top of page 69 of the exhibit.

106. Mr Hall was then taken to the various emails at pages 63-68 of his exhibit. In particular, he was taken to the response from Ms Van Wijngaarden at page 64 of the exhibit to the following effect: “That's fine Brian. Isn't it better just to give all three of us an open agency?”

107. Mr Hall accepted that his response to that was sent to Mr Outerbridge in an email dated 14 August 2015 at 6.06pm which is part of Exhibit 3. He denied that Mr Outerbridge’s response “With an Open Agency agreement: The agency that sells the property receives all the sales commission”, satisfied him.

108. He said that the word “open” agency agreement was not clear to him as being the same as “exclusive” agency agreement. He denied that he understood that he had an open agency agreement and said that he expected and trusted the other agents to sign the agreement which he had prepared at page 68 of his exhibit. He also denied that he was content to have an open agency agreement with each of the agents. Mr Hall said that after he had received the two emails from Ms Van Wijngaarden and Mr Grant (exhibit pages 64-65) he thought they were bound to the agreement and it was a mere formality for them to sign it.

109. Mr Hall was then cross-examined in relation to paragraphs 23 and 24 of his affidavit and denied that they inaccurately stated what had occurred between him and Mr Outerbridge.

110. When asked why he did not sign as a principal on page 73 of the exhibit, Mr Hall denied that it was because he had already signed the Agreement on 10 August and said that he regarded it as an agreement between the real estate agents. He said he was of the view that once Mr Outerbridge signed it, the defendants’ interests were protected as the other two agents had already signed the agreement. Mr Hall also maintained the accuracy of what he states in paragraph 50 of his affidavit. Mr Hall stated that he did agree orally to accept Ms Weis’ offer and gave those instructions to Mr Outerbridge to convey.

111. Mr Hall was then cross-examined in relation to paragraph 2 of the Defence filed by the defendants on 13 June 2018 and verified by him which admitted paragraph 3 of the Statement of Claim which asserted that the Agreement was entered into on 10 August 2015. This admission was altered in the Amended Defence filed with leave on 16 September 2019. The plaintiffs made no issue of the fact that no application had been made formally to withdraw the admission and said that the cross-examination went only to Mr Hall's credit. Mr Hall accepted that his evidence was contrary to paragraph 2 of the Defence filed on 13 August 2018 and stated that his explanation was that he believed at the time that this was the case but then realised having looked at the documents that it was not the case. Despite this, he said that he did have a memory of what had occurred on what date. Mr Hall said that he did not believe that he went into that level of detail when the original Defence was filed and denied that the admission in the original Defence was correct.

120. I therefore accept paragraphs 10-11, 17, 21 and 24 of the written submissions of counsel for the defendants as to the date of signing by Mr Hall of the Agreement and page 73 of his Exhibit.

Consideration

Effective cause of the sale

122. The plaintiffs submit that the activities of Mr Outerbridge as the real estate agent for the defendants constituted “the effective cause of the sale” within Clause 3.1 of the Agreement. It is submitted that Ms Weis was “effectively introduced” to the defendants and the Property by Mr Outerbridge during the agency period under the Agreement. Under the Agreement, the agency period commenced on 10 August 2015 and had not been terminated by the plaintiffs or the defendants. There is no issue in the present case that Mr Outerbridge introduced Ms Weis to the Property by making known to her that the Property was available for sale within Clause 1.2 of the Agreement. Further, the evidence establishes that after being introduced to the Property Ms Weis entered into a contract to purchase the Property and the contract was settled.

123. The defendants dispute that Mr Outerbridge was “the effective cause of the sale” within the Agreement. They submit that the effective cause of the sale was the effort of Ms Van Wijngaarden from Unique who obtained a clarification of the defendants’ position and an increase in the purchase price.

124. It is clear on the evidence and I find that:

1. The Agreement was in force at the time Ms Weis first contacted Mr Outerbridge;

2. Mr Outerbridge introduced Ms Weis to the Property;

3. Mr Outerbridge had substantial telephone and email contact with Ms Weis in relation of the Property;

4. Ms Weis accompanied Mr Outerbridge on an inspection of the Property;

5. Mr Outerbridge provided Ms Weis with substantial information in relation to the Property including in relation to the macadamia farm at the Property;

6. Ms Weis made offers to buy the Property through Mr Outerbridge;

7. I have found that the defendants accepted one of the offers from Ms Weis to buy the Property made through Mr Outerbridge but later withdrew their acceptance;

8. Ms Van Wijngaarden was able to secure a higher price for the defendants for the Property from Ms Weis.

125. The evidence also establishes in my view and I find the following:

1. Mr Hall sent an email to Mr Outerbridge on 25 December 2017 to be forwarded to Ms Weis withdrawing the defendants’ agreement to a sale of the Property to Ms Weis for $4.7 million including all machinery and the 2018 macadamia crop (Outerbridge exhibit page 91). This was forwarded to Ms Weis by Mr Outerbridge on 27 December 2017 (Outerbridge exhibit page 101);

2. It is important to note that the email from Mr Hall stated that the defendants were “quite prepared to negotiate a price somewhat lower than our benchmarks” but wished Ms Weis and her partner “very good luck in your ongoing property search”. In my view, this indicates that unless there was to be more than a modest increase in the offering price, that the defendants were content to stay in the Property and not sell it;

3. While Ms Weis remained very interested and motivated to buy the Property, she looked at two other properties in the period between 27 and 29 December 2017 on her evidence, which I accept: T88.15-.47;

4. On Ms Weis’ evidence she wanted a meeting with the defendants to understand whether she could trust them, what they were seeking to achieve, what their objectives were and whether they were still interested in selling;

5. It was through the involvement of Ms Van Wijngaarden of Unique that Ms Weis found that the defendants had been apparently seeking $5.5 million for the Property which provided clarity to her in relation to their desires concerning an offer on the Property;

6. Her previous belief that the price being sought by the defendants was $5 million led her to make offers under that figure;

7. Therefore, until Ms Weis understood that the defendants could be trusted, what the defendants wanted for the Property and altered her approach accordingly, if she still wished to purchase the Property, it was unlikely that a sale would occur.

126. In Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179, Bell JA (with whom Beazley JA and Mathews AJA agreed) stated the following at paragraphs 57-61:

“57  Mr Aldridge did not submit that the effective introduction of a purchaser to the property within the meaning of clause 2 of the agency agreement required no more than proof of the fact of introduction of the purchaser and of the subsequent contract. Prestige was required to prove that it was an effective cause of the sale: LJ Hooker Ltd v WJ Adams Estate Pty Ltd [1977] HCA 13; 138 CLR 52; Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2; (2001) 202 CLR 351. Each of the parties called in aid the judgment of Jacobs J in LJ Hooker v Adams at 86. His Honour was in dissent in the result, but this does not detract from his statement of the principles:

“The phrase that is time honoured in this context is ‘effective cause’ or ‘efficient cause’, that the agent was an effective cause or the effective cause. See Anderson v Densley [(1953) [1953] HCA 47; 90 CLR 460 at 467]. The inquiry is a factual one and it probably does not matter in the long run whether the definite or indefinite pronoun is used before the words ‘effective cause’. Thus in Burchell v Gowrie and Blockhouse Collieries Ltd [[1910] AC 614 at 625], Lord Atkinson used the phrases ‘the effective cause’ and ‘an effective cause’ without distinction between them. In almost any factual situation a result will have more than one cause and if there could only be one effective cause in relation to a sale within the meaning of the implication, then there are plenty of events in this case which would have strong claims for the title in competition with the appellant's actions. ‘Effective cause’ means more than simply ‘cause’. The inquiry is whether the actions of the agent really brought about the relation of buyer and seller and it is seldom conclusive that there were other events which could each be described as a cause of the ensuing sale. The factual inquiry is whether a sale is really brought about by the act of the agent: Green v Bartlett [(1863) 14 CB (NS) 681 at 685] quoted in Burchell's Case [supra, at 624].”

58  In the same case Barwick CJ said at 58:

“It is true that an agent to procure a purchaser of property in stated terms may earn the commission payable to him in various ways. But the commission is not fully earned unless there is a sale which has resulted wholly or partially from the efforts of the agent. The most common way of performing the agent’s task is to introduce to the principal a person who becomes the purchaser under a binding contract of sale. In terms of causation, the agent has thus been an effective cause of the sale. It is nothing to the point in such a case that that person would have become the purchaser without the intervention of the agent: or that the principal’s own efforts were also an effective cause of the sale.”

59  In Moneywood McHugh J said at 361, [30]:

“In determining whether the agent's conduct was an effective cause, the law looks at the substance of the matter [L J Hooker v Adams at 84]. If the sale could not have occurred until the vendor or another agent arranged finance on terms, not otherwise available to the purchaser and not contemplated at the time of the introduction, the proper conclusion will ordinarily be that the introducing agent was not the effective cause of the sale [Moran v Hull [1967] 1 NSWR 723; Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571; Bradley v Adams [1989] 1 Qd R 256].”

60  His Honour continued at 377, [86]:

“Questions respecting the sufficiency of a causal connection usually will arise, as was the case in L J Hooker, where the question is whether the agent introduced to the principal the party who eventually purchased the land; or where the question is whether the intention of the purchaser to purchase the land was brought about by the actions of the agent; or in the situation considered hypothetically by Jacobs J in L J Hooker where two agents separately introduce the same purchaser. In all of these cases the essential issue is whether the agent brought about a state of affairs giving rise to the contractual right to the commission.”

61  Her Honour’s finding that in the period between February and April Mr Casaceli (and those associated with him) were not willing to buy the property on terms that were acceptable to Mr Priddle (judgment, par 56) was not determinative of the question of whether Prestige’s efforts were in a real sense the cause of the sale. The finding that Mr Abbott’s negotiations were “probably the effective cause, if not the sole cause” of the sale (judgment, par 55) is confusing. Generally, the reasoning at pars 56-59 supports Mr Aldridge’s submission that her Honour failed to address the significance of the introduction of Mr Casaceli to the property and the subsequent negotiations carried out by Prestige: the question was not whether Gunning had received or was entitled to receive commission on the sale, but whether Prestige had established that it was an effective cause of the sale. In the circumstances, it was necessary to appreciate that in rare instances two agents may independently be an effective cause of sale: LJ Hooker v Adams per Barwick CJ at 61; Jacobs J at 86; and Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 per Stein JA (with whose judgment Giles JA agreed) at [48].”

127. See also Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 at [39]-[40] and [45]. As stated by Stein AJA at [39] “the agent claiming the commission bears the onus of proving he was the or an effective cause of the transaction…What the respondent has to show is that his efforts continued to influence the purchaser in its eventual decision to buy”. The plaintiffs also referred me to the unique nature of the Property: see Berben v Hedditch (1982) NSW Conv R 55-081 at 56,480 per Moffitt P. There Moffitt P stated that the question was “whether what the agent did brought about the particular sale, as it in fact occurred. This requires a consideration and evaluation of all circumstances which may have had some causal relationship with the sale”: at 56,480.

128. There has been no relevant further appellate consideration of the principles in New South Wales since Prestige.

129. It appears from Prestige and the cases referred to that the following general principles may be stated:

1. The effective introduction of a purchaser to a property requires more than the proof of the fact of introduction of the purchaser to the Property by a real estate agent and of the subsequent contract to purchase;

2. The real estate agent must establish that it was an or the effective cause of the sale;

3. The enquiry is a factual one and it does not matter whether the test is stated as the effective cause or an effective cause. However, it should be noted that the Agreement in the present case uses the phrase “the effective cause of the sale”;

4. “Effective cause” means more than simply “cause”. The enquiry is whether the actions of the real estate agent really brought about the relation of buyer and seller;

5. All the circumstances must be considered. The law looks at the substance of the matter. If the sale could not have occurred until the vendor or another agent undertook tasks not otherwise available to the purchaser and not contemplated at the time of the introduction, the proper conclusion will ordinarily be that the introducing agent was not the effective cause of the sale;

6. The essential issue is whether the agent brought about a state of affairs giving rise to the contractual right to the commission.

130. In my view, Mr Outerbridge played a very significant causal role in relation to Ms Weis purchasing the Property. He introduced her to it, provided substantial information to her in relation to it and took her on an inspection of the Property. He was the vehicle by which offers and counter offers were initially conveyed to and from the vendors. He also obtained an offer from Ms Weis for the Property which the defendants accepted and then rejected.

131. However, in my view Mr Outerbridge on the whole of the evidence was not the effective cause of the sale. On 27 December 2017 when Mr Outerbridge went on his annual vacation, the position was as follows. The defendants had withdrawn their acceptance of the offer and were apparently going overseas. While they mentioned the possibility by inference of accepting a higher price, they had wished Ms Weis “very good luck in [her] ongoing property search”. At that time, Ms Weis did not know whether the defendants were serious vendors and could be trusted and what they really wanted. She did not know what the “benchmarks” were of the defendants as referred to in the email she had received on 27 December 2017. In substance, she did not know at that time what the defendants wanted.

132. It is true that it was only two days later that Ms Weis confirmed an offer to buy in relation to the Property. However, in that period there had been the intervention of Ms Van Wijngaarden. Ms Weis had also looked at two other properties which showed that she was not wedded to the idea of purchasing the Property. It was only when Ms Van Wijngaarden clarified to Ms Weis what the defendants apparently really wanted and that they were serious sellers that she was able to alter the offer to more fairly accommodate their targeted sale price. The intervention of Ms Van Wijngaarden was, on the evidence, crucial. Until she provided the clarification of the defendants’ position, the sale apparently could not have occurred. In my view, whilst the conduct of Mr Outerbridge was very significant, he did not bring about a state of affairs giving rise to the contractual right to the commission. It was the conduct of Ms Van Wijngaarden which clarified to Ms Weis the position of the defendants. She also clarified to the defendants that Ms Weis was a genuine buyer. This allowed Ms Weis to consider and make a higher offer which took into account the defendants’ desired sale price. Ms Van Wijngaarden also brought about a higher sales price for the benefit of the defendants.

133. For all these reasons I find that Mr Outerbridge was not the effective cause of the sale of the Property within Clause 3.1 of the Agreement. I accept the defendants’ submissions on this issue. In determining the matter, I have taken into account not only Ms Weis’ evidence but also the objective evidence as to what Mr Outerbridge did and what Ms Van Wijngaarden did. No criticism can be levelled at the plaintiffs for taking a holiday when they did.

The contractual issue

134. I have found above that pages 26-29 of the exhibit to Mr Outerbridge's affidavit were not signed by Mr Hall until 17 August 2015 which occurred at about the same time that Mr Outerbridge signed the document headed “Conditions of Co-Agency Agreement” at page 30 to the exhibit to his affidavit (Hall exhibit page 73).

135. At the commencement of oral submissions, counsel for the parties were asked what they submitted the contract between the parties to consist of as far as documents were concerned.

136. Counsel for the plaintiffs said that the contract consisted of pages 69-72 of the exhibit to Mr Hall’s affidavit. Counsel for the defendants submitted the same and expressly rejected the suggestion that page 73 of the Hall exhibit was part of that contract. It was submitted that pages 73 and likely 67 constituted a separate contract between the three agents. It was also submitted that the words at the top of page 69 added by Mr Hall formed part of the first contract. The plaintiffs took a similar view but submitted (as their primary submission) that the words added, were meaningless and had no effect.

137. Having regard to my findings as to when the documents were executed, the contract as executed by Mr Hall and as finally signed by Mr Outerbridge and which was thus entered into by the parties consisted of the following:

1. Pages 26 to 29 of the exhibit to Mr Outerbridge's affidavit including the words “In conjunction with Unique Estates and GNF Real Estate (see agreement)” which were placed on the first page of the Agreement by Mr Hall before it was signed by him;

2. Not the document which is at page 30 of the exhibit to Mr Outerbridge's affidavit (Hall exhibit page 73);

3. Further, there was no attachment to the Agreement at the time it was signed being an exclusive selling agency agreement as referred to in Clause 3 on page 30 of the exhibit to Mr Outerbridge's affidavit.

138. The question therefore arises as to the proper construction of the contract between the plaintiffs and the defendants which I have found was entered into. A question also arises as to the effect of page 73 and perhaps page 67.

139. The following general principles as to contractual construction are relevant.

140. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, the majority of the High Court stated the following at paragraph [35]:

“[35]  Both Verve and the Sellers recognised that this court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.”

141. In Caringbah Investments Pty Ltd v Caringbah Business & Sports Club Ltd (in liquidation) [2016] NSWCA 165, Bathurst CJ (with whom McColl and Macfarlan JJA agreed) stated as follows at [93]:

“[93]  The relevant principles of construction are well established. In Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640, the plurality reaffirmed that the meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood them to mean. It requires consideration of the language used, the surrounding circumstances known to the parties and the commercial purposes or objects to be secured by the contract: at [35]; see also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 89 ALJR 990 at [46]–[52].”

142. In Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 the majority stated as follows at paragraphs [16]-[17]:

"[16]  It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.

[17]  Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement."

143. See also Management Services Australia Pty Ltd t/as Peak Performance PM v PM Works Pty Ltd [2019] NSWCA 107 at [59] per Sackville AJA (with whom Bathurst CJ and Gleeson JA agreed).

144. Having regard to my findings as to what constituted the contract between the parties, what would a reasonable business person in the circumstances have understood the terms of the contract to mean? This requires that the reasonable business person be placed in the position of the parties. The court must consider the circumstances surrounding the contract and the commercial purpose and the objects to be achieved by it. In considering the proper construction to be given to a contract, the court is entitled to consider evidence of the surrounding circumstances in which the contract was made. Ambiguity in a contract is not a precondition to the admissibility of evidence of surrounding circumstances: Cherry v Steele-Park [2017] NSWCA 295 at paragraphs 79 to 85 per Leeming JA (with whom Gleeson JA agreed).

145. The surrounding circumstances include the emails sent on 13 and 14 August 2015 between Mr Hall and Mr Outerbridge (see Exhibit 3) in which Mr Hall made clear that he did not care if there was an open agency agreement as long as he did not pay commission more than once and Mr Outerbridge stated that with an open agency agreement the agency that sells the Property receives all the sale commission. Further, in my view a reasonable business person seeing the words “In conjunction with Unique Estates and GNF Real Estate (see agreement)” would in the context interpret the Agreement as being entered into in the context of a specific conjunction agreement between agents.

146. Submissions were addressed to me in relation to the agency Agreement and the Co-Agency conjunction agreement. I will first deal with the conjunction agreement submissions.

147. The defendants submit that page 67 of the Hall exhibit also likely formed part of the conjunction agreement at page 73. The plaintiffs made no express submission on this issue. In my view, the defendants’ submission should be accepted. First, page 67 was part of the original Co-Agency Agreement between Unique and GNF (Hall exhibit pages 49-50). Secondly, Mr Hall sent by way of email page 67 together with page 68 to the three agents to sign on 16 August 2015 (exhibit page 66). The emails at exhibit pages 63-65 add support to this. Page 67 was objectively intended by the parties to be part of the conjunction agreement and contained the important terms as to the conjunction split and selling fee.

148. What about the reference to “Principals” on the Conditions of Co-Agency Agreement page? The plaintiffs submit that the document at page 30 of Mr Outerbridge’s affidavit (Hall exhibit page 73) shows on its face that it was objectively not intended to be valid and effective until it was signed by all the agents and the defendants as the principals. Mr Hall said in his oral evidence that he did not sign it next to “Principals” as it was a contract between the agents. The defendants submit the signatures of the defendants were not required as they were not parties to the contract.

149. In my view, the defendants’ submissions should be preferred. The emails at Hall exhibit pages 63-68 and in Exhibit 3 objectively establish that it was intended that the Co-Agency Agreement was to be between the three agents and not between the three agents and the defendants. The word “Principals” was therefore otiose. I do not see it as objectively indicating that the Co-Agency Agreement was not to be effective until the defendants signed the document.

150. As I have found that page 67 was part of the intended Co-Agency Agreement, were pages 67 and 73 a valid Co-Agency Agreement? The plaintiffs submit that they were not because s 34 of the Act and Schedule 7 of the Regulation were breached. In my view, it is clear from Regulation 8 and the definition of “agency agreement” in s 55(1) of the Act, that Schedule 7 is only relevant to s 55 of the Act. The Co-Agency Agreement is not an agreement to provide services by a licensee to a person. The defendants submit the Co-Agency Agreement was valid because either the three agents adopted the agreement or because of the operation of s 32(3) of the Act which obliges the agents including the plaintiffs to comply with the provisions of the Act.

151. First, in my view the Co-Agency Agreement consisting of pages 67 and 73 fell within s 34(1) of the Act as it was an agreement between licensees to share any commission, gain or reward paid or payable to a licensee in respect of services performed by him or her as a licensee.

152. Secondly, it was a new agreement and thus a different agreement to the one originally entered into by Unique and GNF (exhibit pages 49-50 without the words at the bottom of page 50). The plaintiffs had been added as a party. Section 34(1) of the Act required the agreement, that is the new agreement, to be in writing and signed by the licensees. The agreement was in writing but was only signed by Mr Outerbridge. The signatures on behalf of Unique and, it appears, GNF were the signatures to the original agreement. This is established by a comparison between the two documents. Thus s 34(1) was not satisfied and the sub-section states that the agreement is unenforceable.

153. The fact the other two agents appeared to adopt the new agreement is, in my opinion, not sufficient: see the emails at exhibit pages 63-66. They did not return signed agreements as Mr Hall had requested in his 16 August 2015 email and he never followed up on the issue.

154. I do not see s 32 of the Act as changing this result. It provides a penalty for non-compliance but does not seem to affect other rights or establish a statutory cause of action (and none is pleaded).

155. Accordingly, the Co-Agency Agreement breaches s 34(1) and is unenforceable. However, of course, the defendants were not parties to the agreement in any case. Further, that leaves for consideration the effect of the words at the top of page 69 of the exhibit.

156. If I am wrong in the above conclusion and the Co-Agency Agreement was binding on the three agents, then an issue arises as to condition 1 and the meaning of “communications.” The plaintiffs submit it does not allow directions as to payment of the deposit upon sale of the Property. In my view, it is sufficiently wide to include a communication as to the payment of the deposit and what then occurs with the deposit is for the defendants to decide. However, in my view it must be implied into the Co-Agency Agreement as a matter of law that the communication must be one which is given lawfully. As Unique Estates was not a licenced real estate agent it had no authority to communicate as a real estate agent the payment of the deposit. I accept paragraph 32 of the plaintiffs’ written reply submissions.

157. In the plaintiffs’ reply submissions dated 13 November 2019, a number of submissions are made by the plaintiffs in relation to the entitlements of the various agents to commission. I consider the scenario in relation to the entitlement to commission in the event that I am in error that the Co-Agency Agreement was not binding on the three agents because it was not properly executed by the two other agents other than Mr Outerbridge. First, I accept paragraphs 1-7 of the plaintiffs’ reply submissions that Unique Estates was not entitled to any commission upon the sale of the Property because it was not a person who acted or carried on business as a real estate agent as the holder of a real estate agent’s licence: ss 8 and 9 of the Act. Unique Estates ceased to be licenced as a real estate agent on 2 December 2017 and the only relevant dealings between Ms Van Wijngaarden and Ms Weis were on and following 27 December 2017.

158. Secondly, I also accept paragraphs 8-16 of the plaintiffs’ reply submissions that no sales commission has been paid to anyone. Unique issued a sales advice in relation to the Property on 2 January 2018 directing payment of the deposit and where the deposit was to be held. This was in the Unique Estates Australia Trust Account (Hall exhibit pages 140-145 especially at page 145). Unique was not entitled to retain any part of the deposit as commission as it was not entitled to the commission as it was an unlicensed real estate agent. The money was held in the trust account and appears to have been utilised by Unique Estates without an entitlement.

159. Thirdly, there is much force in paragraphs 17-19 of the reply submissions of the plaintiffs that as Unique Estates had no claim to recover any commission and has inappropriately utilised the funds, the case does not involve consideration of how the agency Agreement contemplated conjunction would operate. Unique Estates has no lawful claim to any commission and GNF has not undertaken any acts entitling it to any commission. The only issue is whether the plaintiff is entitled to the commission.

160. In the light of the above conclusions, it seems that the words at the top of page 69 to the exhibit to Mr Hall’s affidavit “In conjunction with Unique Estates and GNF Real Estate (see agreement)” become less relevant. GNF did not do anything to entitle it to commission. Unique Estates was not entitled to claim any commission. I therefore accept paragraphs 33-35 in the plaintiffs’ reply submissions that the handwritten annotation in the end had no work to do. There is no need to consider its operation in the event that Unique remained a licenced real estate agent. In the alternative, I accept paragraph 36 of the plaintiffs’ reply submissions that the work to be done by the handwritten words inserted by Mr Hall was to record as a notation the two other agents being Unique and GNF were marketing the Property under the terms of their respective agency agreements.

161. For the above reasons, I am of the view that the agreement between the plaintiffs and the defendants was constituted by pages 69-72 of the exhibit to Mr Hall’s affidavit. The only agent with an arguable entitlement to the commission is the plaintiffs. Unique is not entitled to the commission because at the time they performed their services they were not a licenced real estate agent. GNF, on the evidence, engaged in no activity which would arguably entitle it to the commission. Clause 5.3 of the agency agreement was binding between the defendants and the plaintiffs. Thus the real issue is whether the plaintiffs were the effective cause of the sale.

Estoppel

162. In paragraphs 36-40 of its Amended Defence filed on 19 December 2018, the defendants plead that the plaintiffs are estopped from denying the validity of the conjunction agreement with the other two agents. Reliance is placed on the obligations of the plaintiffs under s 32 of the Act as including a requirement to ensure that the provisions of the Act were complied with and under s 33 that the licensee would not act in conjunction with a person who was unlicensed. It is particularised that the plaintiffs failed to terminate the conjunction agreement with Unique when Unique’s licence was revoked and failed to inform the defendants of the revocation of the licence. It is also particularised that the plaintiffs failed to advise the defendants that they were not entitled to give full force and effect to the conjunction agreement should that have been the case.

163. It is not made clear in the pleading what type of estoppel is relied upon.

164. In the written submissions on behalf of the defendants, the position is not clarified further and the only submission appears to be in paragraph 89 that the plaintiffs cannot rely on their own failure to ensure Unique continued to hold a valid licence so as to require the defendants to pay the commission for a second time.

165. In my view, the estoppel defence should be rejected. Further, I accept the submissions of counsel for the plaintiffs in paragraphs 58 and 60 of his written reply submissions that the prohibition in s 33 of the Act is against entering into an arrangement with or acting in conjunction with a person that the licensee knows to be an unlicensed person. When Mr Outerbridge signed the document at page 73 of Mr Hall’s exhibit Unique was licenced as a real estate agent. There is no suggestion that the plaintiffs at any time which was relevant were aware that Unique was not licenced under the Act.

166. Accordingly, I do not consider that the estoppel argument has been established. There is no reason why the plaintiffs should have had any ongoing obligation to check on a regular basis whether Unique was registered. At the time Mr Outerbridge signed page 73 of Mr Hall’s exhibit Unique was licenced and I can see no basis to support the submission in paragraph 89 of the defendants’ written submissions that the plaintiffs cannot rely on their own failure to ensure Unique continued to hold a valid licence so as to require the defendants to pay the commission. Also I do not consider that this would be requiring the defendants to pay the commission for a second time. The moneys were paid into the Unique Trust Account by the defendants and as they were held on trust Unique would have required permission from the defendants to transfer what represented the commission to its office account. In my view, the plaintiffs cannot be blamed for any of these matters and there is no basis for the estoppel pleaded.

Determination

167. For the above reasons, I find that the plaintiffs were not the effective cause of the sale of the Property and therefore under the agency Agreement they were not entitled to the commission on the sale of the Property in circumstances where Ms Van Wijngaarden of Unique, although it was unlicensed, brought about the sale. I refer to my analysis above of the effective cause of sale issue.

168. I therefore order as follows:

1. Judgment for the defendants against the plaintiffs.

2. The plaintiffs are to pay the defendants’ costs of the proceedings as agreed or assessed.

3. Liberty to the parties to apply within 14 days for a different costs order to that set out in (2) above.

4. Exhibits to be returned in 28 days.

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Amendments

03 December 2019 - Amended name of case cited Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 to include "Ltd".

Decision last updated: 03 December 2019