PDB Project Management Australia Pty Ltd v Home Buyer Deposit Assist Program (Australia) Pty Ltd - [2016] SADC 90

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PDB PROJECT MANAGEMENT AUSTRALIA PTY LTD v HOME BUYER DEPOSIT ASSIST PROGRAM (AUSTRALIA) PTY LTD & ANOR
[2016] SADC 90
Judgment of Her Honour Judge McIntyre
1 August 2016
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
The plaintiff and the first defendant entered into an agreement on or about 7 June 2011 for the provision of services by the plaintiff to the first defendant (“the first agreement”) in relation to a building development in Middlemount Queensland. Subsequently the parties, including the third defendant who is a director of the first defendant, entered into a supplementary agreement concerning directors’ guarantees (“the second agreement”). The plaintiff says that it rendered services in relation to the Middlemount project to the first defendant between about June 2011 and March 2014 under the terms of the first agreement. The plaintiff says that it was paid for some but not all of those services. The plaintiff claims the sum of $174,750 plus costs on an indemnity basis against the first defendant under the terms of the first agreement and against the third defendant under the terms of the supplementary agreement.
The defendants denied liability to make the claimed payments contending that the first agreement was vague or uncertain and should be held void for uncertainty. In the alternative it was contended that the plaintiff had not complied with the terms of the first agreement and in the further alternative that the plaintiff was precluded from recovering under the first agreement by virtue of the Property Agents and Motor Dealers Act 2000 (QLD).
Held:
1.The first agreement, whilst poorly drafted, was not void for uncertainty. The parties well understood its meaning and conducted their business accordingly over a number of years and transactions.
2.The plaintiff did comply with the terms of the first agreement.
3.The plaintiff was not precluded from recovering under the terms of the Property Agents and Motor Dealers Act 2000 (QLD).
4.The plaintiff is entitled to judgment against the first defendant and the third defendant jointly and severally for the sum of $174,750.
5.The plaintiff is not entitled to indemnity costs under the terms of the agreements.
Property Agents and Motor Dealers Act 2000 (Qld) s.128, 133, 140(1); A New Tax System (Goods and Services Tax) Act 1999 (Cth) s29.70; Property Occupations Act 2014 (Qld) s.237, referred to.
Toll (FGCT) Pty Ltd v Alphapharm Ltd and Others (2004) 219 CLR 165; [2004] HCA 52; York Air-conditioning and Refrigeration (A/Asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; Agius v Sage [1999] VSC 100; Sultana Investments Pty Ltd v Cellcom Pty Ltd (2008) QCA 357; Micarone v Perpetual Trustees Australia Ltd (No 2) [1999] SASC 533; Adelphi Hotel Ltd (1953) 1 WLR 955, considered.

PDB PROJECT MANAGEMENT AUSTRALIA PTY LTD v HOME BUYER DEPOSIT ASSIST PROGRAM (AUSTRALIA) PTY LTD & ANOR
[2016] SADC 90
Introduction

These proceedings relate to a property development in Middlemount, Queensland. The plaintiff and the first defendant entered into an agreement on or about 7 June 2011 for the provision of services by the plaintiff to the first defendant (“the first agreement”). Subsequently the parties, including the third defendant who is a director of the first defendant, entered into a supplementary agreement concerning directors’ guarantees (“the second agreement”).
The plaintiff says that it rendered services in relation to the Middlemount project to the first defendant between about June 2011 and March 2014 under the terms of the first agreement. The plaintiff says that it was paid for some but not all of those services. The plaintiff claims the sum of $174,750 plus costs on an indemnity basis against the first defendant under the terms of the first agreement and against the third defendant under the terms of the supplementary agreement.
For the reasons that follow, I find that the plaintiff is entitled to judgment against the first defendant and the third defendant jointly and severally for the sum of $174,750 but not to indemnity costs under the terms of the agreement. I will hear the parties as to the question of costs and interest.
Issues
Did the plaintiff supply services to the first defendant in accordance with the first agreement?
At what stage or stages did payments become due to the plaintiff?
Did the plaintiff render valid invoices in accordance with the first agreement?
What, if any, amounts are owed to the plaintiff under the first agreement?
Is the plaintiff precluded from claiming payment under the terms of the agreements by virtue of the Property Agents and Motor Dealers Act 2000 (Qld)?
Is the plaintiff entitled to indemnity costs under the terms of the agreements?
The trial and procedural matters
The defendants were represented by solicitors and counsel throughout the extensive interlocutory history of this matter. Shortly prior to trial the defendants terminated the instructions of their legal representatives. Mr Sondergeld, the third defendant, sought and obtained liberty to appear for the first defendant under Rule 27 of the District Court Rules.
The plaintiff originally brought proceedings against a second defendant, Mr Byrne, a former director of the first defendant. Mr Byrne settled his dispute with the plaintiff and accordingly proceedings were discontinued against him. Mr Byrne gave evidence on behalf of the plaintiff.
The plaintiff’s case consisted of evidence from Mr Byrne, the plaintiff’s sole director Mr Bieg and a large volume of tendered material. The defendants’ case comprised evidence from Mr Sondergeld and further tendered material. The trial took place over five days.
None of the witnesses were particularly sophisticated in terms of their understanding of the legal complexities surrounding their business arrangements. Records were not well maintained and agreements were not properly documented. Not surprisingly, in view of the large number of transactions between the parties, the witnesses had difficulty remembering precisely what occurred some years earlier. In general terms I found both Mr Bieg and Mr Byrne to be cogent witnesses. Their evidence was mostly congruent with the contemporaneous documents unlike that of Mr Sondergeld. Making all due allowance for the fact that he was unrepresented I found Mr Sondergeld’s evidence to be confusing and unhelpful. His manner of expression was far from clear particularly given his repeated use of the word “we,” when he meant “I” or “me,” but more importantly he appeared unable or unwilling to clearly explain certain critical issues such as the role played by various parties to the development. I prefer the evidence of Mr Bieg and Mr Byrne where there is conflict.
The First Agreement
Negotiation & Execution
The plaintiff and the defendants had worked together on property developments in Western Australia and Queensland prior to the development that gives rise to this matter; the Middlemount project. Mr Bieg gave evidence that the defendants knew that, as a mortgage broker, he had a large database of investors pre-approved for finance who were looking for cash flow positive investments. He had referred such investors to the defendants in relation to other property development projects.
Mr Bieg said that he had discussions with Mr Byrne and Mr Sondergeld in relation to the Middlemount Project. They suggested that he could refer investors to the first defendant and receive a referral fee if the investor proceeded to purchase property. This was much the same proposal as the previous projects they had worked on together. Mr Bieg said that there had been a written agreement in place for those prior projects but he considered it to be what he termed, “a loose agreement”. He said that he had been unhappy about how some aspects of the past projects had been managed and he was nervous about proceeding with Middlemount without a proper agreement. Mr Bieg therefore instructed the plaintiff’s then solicitors to prepare an agreement.
Once drafted by the plaintiff’s solicitors, the agreement was presented to the first defendant. The directors of the first defendant, Mr Byrne and Mr Sondergeld, made one amendment to the agreement by deleting a default interest clause. They signed the agreement on or about 7 June 2011. Mr Bieg said that he was not happy about the deletion of the default interest clause by Mr Byrne and Mr Sondergeld but that he was prepared to accept this so that they could all move forward with the project.
It does not appear that there was much negotiation or discussion about the content of the agreement. Mr Bieg described the negotiations as informal.[1] He said that initially he was offered $15,000 plus GST per referral. He was prepared to accept that figure but subsequently Mr Byrne told him that the first defendant was prepared to increase that amount to $20,000 plus GST making a total payment of $22,000. Mr Bieg was unsure when that increase was offered.[2] Mr Bieg said that the amount to be paid and the timing of payment was not strictly speaking negotiated by him. He said he was told what the first defendant was prepared to pay and at what stage; he could either take it or leave it.[3]
[1] Transcript 44.
[2] Transcript 41 – 42.
[3] Transcript 45.
Whilst Mr Byrne’s evidence was not entirely clear as to when this occurred he said that there was discussion about the amount Mr Bieg would be paid for each referral and the stage at which it would be paid.[4] His evidence on that topic was consistent with that of Mr Bieg that he, on behalf of the first defendant, proposed the amount and timing of the payment to the plaintiff. Mr Byrne said that Mr Bieg would not move forward without a written agreement. He said that the defendant had its own agreement but that Mr Bieg was not happy with it and presented his own document. Mr Byrne said that he and Mr Sondergeld signed the agreement. He did not give evidence about the deletion of the default interest clause other than to identify his initials.
[4] Transcript 234-5.
Mr Sondergeld’s evidence on this topic was somewhat confusing but ultimately he said:
QOkay, how did the plaintiff company become involved in Middlemount from your perspective.
AEssentially Home Buyer was set up because in Queensland, commissioners regulated the maximum commission that was payable, for example on a $400,000 house it was 2.5% plus GST plus another $900 plus GST. Essentially it worked out at 2.7 plus 495 GST inclusive. It was just under 3%. The maximum you could charge to sell property in Queensland would be $12,000. We were collecting upwards of 57 to 90 something thousand.
QYes I still don’t follow how – what I’m trying to understand is how you say the plaintiff became involved in the Middlemount project.
AAnd the Home Buyer entity job then was to package up and sell all the properties on one bulk so that the builder could build on scale, so your job was to engage other parties to sell the properties and then we entered contracts with various entities to sell whatever we could take out to the marketplace. So the plaintiff was engaged to sell properties on our behalf.
QAnd when do you say that that engagement took place.
AIt was very – we had very irregular arrangements. We didn’t actually live or attend Middlemount, we did it all remotely. The contract document we did receive a document, I think one was signed and we never actually saw a signed version for years.
QSorry I think we are at cross-purposes here; when did you reach the arrangement that you say you arrived at with the plaintiff.
AEssentially we contacted him and said ‘You can sell the properties. This is the commission payable’. And he was given a small portion at the start, everyone would be given a few lots at a time.
QAnd when do you say that happened in relation to what we’ve got as Exhibit P1, the commission sales agreement.
AThe date of the document was dated 7 June. Academically that is the date of the agreement, although I actually doubt that anyone actually had a copy of it at that date but essentially it was dispersed and circulated.
QI’m sorry, I don’t follow what you mean by that. You’ve got this agreement, the commission sales agreement that the first defendant and the plaintiff have signed and you and Mr Byrne signed it on behalf of the first defendant.
AYes, correct.
QNow what I’m asking is when you say that happened and when in relation to your engagement of the plaintiff did that happen.
AI suppose once we’d started, we had a standard document we always gave to people. The plaintiff didn’t want to sign the standard document, he wanted to do his own document so he supplied a document to Home Buyer.
QWhen you say he supplied a document, do you mean this document.
AYes, correct.
QAnd we’ve heard some evidence that you and Mr Byrne crossed out para.13.3.
AYes, correct.
QBut otherwise you accepted this document and signed it on behalf of the company.
AYes. [5]
[5] Transcript 284 – 5.
The amount of the payment and the timing of the payments appears to have been a take it or leave it proposal put by the first defendant to the plaintiff and, I infer from Mr Sondergeld’s evidence, to others. That conclusion is supported by the evidence and documents which suggest that two other entities engaged to perform the same role as the plaintiff were paid the same amount per lot and at the same stages.[6] In any event, the plaintiff’s proposed agreement was accepted, with one alteration, by Mr Byrne and Mr Sondergeld in their capacity as directors of the first defendant.
[6] Exhibit P38.
The Content
The first agreement is a poorly drafted document. The agreement is titled, “Commission Sales Agreement”[7]. Whilst it is uncontroversial that the agreement was entered into in the context of the Middlemount project, that project is not specifically referred to in the agreement. The plaintiff is described as the Sales Representative and the first defendant as the Principal.
[7] Exhibit P1.
Clauses 4 and 5 of the agreement provide that the plaintiff is an independent contractor and that it is not, inter alia, an agent or partner of the first defendant. Further those clauses state that the parties are not in a joint venture. The recital to the agreement says: ‘The Principal has agreed to engage the Sales Representative on a commission basis to provide the Services upon the terms and conditions set out in this Agreement.’
The services to be provided by the plaintiff are described in Schedule One as follows:
1.   Identification of prospective customers for the Principal
2.   The notification of prospective customers to the Principal in the form of the Second Schedule; and
3.   Assisting the Principal to establish a relationship with such prospective customers.
Clause 1 provides that the agreement will be for the “Term” unless it is terminated earlier in accordance with the agreement. “Term” is defined in clause 14.1 as: ‘The period commencing on the Commencement Date and ending on the Termination Date.’
Whilst the commencement date is specified in Schedule One as 7 June 2011 nowhere in the agreement is there a termination date.
Clause 3, entitled “Payment Method”, refers to “commission” or “service fees” interchangeably and provides as follows:
3.1     Commission
The Parties agree that in consideration of the Services provided by the Sales Representative, the Principal will pay the Commission to the Sales Representative from time to time in accordance with this Agreement. The Commission is exclusive of GST.
3.2     Payment Method
Payment of the Service Fees shall be made without any withholding or set off (except as made by the Service Provider) and shall be due and payable by the Principal within the Payment Period.
3.3     Tax Invoice
The Sales Representative must provide the Principal with a valid tax invoice before the Principal pays any Commission.
Service fees are not defined nor is the quantum of any service fee or commission set out in the agreement. “Commission” is defined as: ‘In respect of each introduction, the commission set out in the introduction.’
The term “introduction” is defined as: ‘the introduction of a prospective customer to the principal by the sales representative providing the form set out in the second schedule.’
The term “Payment Period” is defined as: ‘In respect of an Introduction, the payment period set out in the Introduction.’
The Second Schedule is entitled ‘Prospective Customer Introduction’ and is a blank pro-forma document. The uncontentious evidence establishes that this document was completed by the plaintiff as to each prospective customer. Mr Bieg said that he would insert the agreed commission amount and time at which payment was to be made by reference to a stage of the building process. This was not contested by the defendants. The defendants rather take issue with the manner in which the plaintiff completed these documents saying that it was not adequate. I will deal with this in context. What is clear is that the document was then submitted to the directors of the first defendant; Jason Byrne, the former second defendant, and Ross Sondergeld, the third defendant. They would then sign the document on behalf of the first defendant.
The plaintiff contends that if it is successful in these proceedings it is entitled to indemnity costs under clause 10.4 of the first agreement which provides:
The Principal will indemnify and hold harmless the Sales Representative, its related bodies corporate, and the officers, employees, successors, licensees and assigns of the Sales Representative and its related bodies corporate from and against any and all Claims incurred or suffered by them as a result of:
(c) a breach of this Agreement by the Principal;
(d) any act or default of the principal, its employees or its agents; or
(e) any activity carried out by the Principal which relates to this agreement.
“Claims” is defined in clause 14.1 to mean: ‘claims, damages, liabilities, losses, costs and expenses of every kind and nature including legal fees.’
The Second Agreement
Negotiation and Execution
Mr Bieg gave evidence that as time went on he became concerned about the manner in which the Middlemount project was proceeding. There were considerable delays. In particular he was concerned about the financial viability of the first defendant and its ability to meet its obligations as he saw them under the first agreement. He was aware that the first defendant had no value or assets and thought that if there was a dispute he would have no practical redress. He obtained legal advice and determined to seek directors’ guarantees from Mr Byrne and Mr Sondergeld. Again he had the plaintiff’s then solicitor prepare documentation to that effect. The result was what is entitled “Supplementary Deed relating to Home Buyer Deposit Assist Program (Australia) Pty Ltd”.[8]
[8] Exhibit P35.
Mr Bieg said that he presented this document to Mr Sondergeld and Mr Byrne. He told them that he was not prepared to do any more work without a guarantee of payment by them. He said that at the time they were still all friendly and that Mr Sondergeld and Mr Byrne agreed to sign the guarantee. The second agreement is not dated. Mr Bieg could not say when the second agreement was signed other than that it was possibly in late 2011.[9]
[9] Transcript 122-3.

Mr Byrne and Mr Sondergeld gave similar evidence about delays in the project. Mr Sondergeld said that there was “a lot of paranoia” about payment of commission. I infer from the context of his evidence that he was referring to Mr Bieg. Neither Mr Byrne nor Mr Sondergeld could remember when Mr Bieg approached them about directors’ guarantees but each gave evidence that Mr Bieg told them he would not refer any further potential customers if they did not personally guarantee payment. The tenor of the evidence of both Mr Sondergeld and Mr Byrne was that they felt they had to sign the agreement to personally guarantee payment by the first defendant in order to ensure that the plaintiff continued referrals to the Middlemount project. Mr Byrne thought that the document was signed in summer 2011/12; Mr Sondergeld said that he had absolutely no idea when it was signed other than that it was “2012-ish”.[10]
[10] Transcript Mr Byrne 239-40; Mr Sondergeld 285-6.
Content and effect
The second agreement makes a limited alteration to the first agreement that is not relevant for present purposes. The date of execution is not clear but it seems likely that it was signed in early 2012. What is however clear in the document is that Mr Sondergeld and Mr Byrne each provide a personal guarantee and indemnity in respect of the performance of the first agreement by the first defendant.
Clause 2(d) inter alia provides that the guarantee and indemnity remains effective until the plaintiff received 100c in the dollar of all payments due from the first defendant under the first agreement. Clause 2(e) provides that the guarantee and indemnity binds each director and the first defendant jointly and severally.
The evidence given by both Mr Sondergeld and Mr Byrne makes it plain that they understood the agreement to have that effect and that they were both prepared to sign it in order to ensure that the plaintiff continued making referrals under the first agreement. This was a commercial decision that they chose to make. There was a suggestion in Mr Sondergeld’s evidence that he did not read the second agreement however even if this was the case it does not assist him in the circumstances. Having signed the document knowing it contained contractual terms, absent any vitiating factor, he is bound by it.[11]
[11] Toll (FGCT) Pty Ltd v Alphapharm Ltd and others (2004) 219 CLR 165
I further note that the defence admits the supplementary deed as pleaded by the plaintiff. The gravamen of the defence case as pleaded appears to be that the plaintiff is not entitled to the amounts claimed under the first agreement and that therefore there is no claim under the second agreement.
Accordingly I find that if the plaintiff is successful in its claim against the first defendant under the first agreement then, relevantly, Mr Sondergeld is liable for that claim jointly and severally with the first defendant.
The Plaintiff’s claim
The plaintiff contends that it is entitled to payment where it has provided the services set out in the first schedule of the first agreement, when the necessary build stages identified in the second schedule have been reached and where it has provided a valid tax invoice to the first defendant.
In summary, the plaintiff says that it provided the necessary services to the first defendant in relation to 36 lots of the Middlemount project. The plaintiff says that it introduced the prospective customers to the first defendant, that it provided the prospective customers’ contact details to the first defendant including by way of second schedules and in so doing assisted the first defendant to establish a relationship with prospective customers. It is uncontentious that all of those lots proceeded to completion. The plaintiff says that it was entitled to an agreed amount of $22,000 for each of those 36 lots and that valid tax invoices were provided in respect of all lots. The plaintiff was paid in full for some lots but says it is owed a half payment of $11,000 in respect of 20 lots and the full amount of $22,000 for three lots. After deductions made for the settlement amount agreed with Mr Byrne, the plaintiff’s claim is for the amount of $174,750 plus costs on an indemnity basis.
Uncertainty or Inadequacy of the First Agreement
The defendants contend that the first agreement was not a complete agreement and that no amount could be due under it unless there was a further agreement reached. The defendants also submitted that the agreement was vague and uncertain and should be held to be void for uncertainty. It was put that there were no provisions that defined what the plaintiff was to do and how the plaintiff was to be paid; specifically it was said that the services to be provided were not specified in the agreement and whilst the second schedule referred to potential commissions and payment periods it was blank as to amounts. Mr Sondergeld’s characterisation of the agreement as “very strange”[12] has some force. However, these submissions do not sit comfortably with what actually happened. The parties apparently operated under the terms of the agreement from the time it was signed until these proceedings were issued without the necessity for further agreement or any apparent misunderstanding as to what it meant. It is uncontroversial that the first defendant paid the plaintiff a total amount of $473,000 in relation to the Middlemount project. The evidence of Mr Byrne and Mr Bieg is that this account was paid under the first agreement. The evidence of Mr Sondergeld was less clear as to the basis for payment but he did agree that considerable sums were paid to the plaintiff for the Middlemount project.
[12] Transcript 401.
Mr Byrne said that he made most of the payments to the plaintiff on behalf of the first defendant in respect of the Middlemount project. Mr Sondergeld agreed that this was the case albeit that Mr Byrne sometimes asked him to approve payment. Mr Byrne’s evidence indicated that he had a clear understanding what services were to be rendered by the plaintiff, the amounts to be paid to the plaintiff for those services and the stage or stages at which the plaintiff was entitled to be paid. The evidence of both Mr Byrne and Mr Sondergeld indicated that payments were often delayed due to the first defendant’s cash flow issues. There is no suggestion that payments were delayed for other reasons. I accept the evidence of Mr Byrne and Mr Bieg that payments were made to the plaintiff under the first agreement.
In York Air-conditioning and Refrigeration (A/Asia) Pty Ltd v. The Commonwealth[13] Latham CJ said:
When the parties have shown by their conduct that they understand and can apply the terms of a contract without difficulty, a court should be very reluctant indeed to pay no attention to such conduct by holding that the terms of the contract are unintelligible by reason of uncertainty.[14]
In Toll (FGCT) Pty Limited v Alphapharm Pty Limited[15] the High Court said:
This Court, in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[16]
[13] (1949) 80 CLR 11
[14] At paragraph 53.
[15] [2004] HCA 52; (2004) 219 CLR 165
[16] At paragraph 40.
In Agius v Sage[17] Byrne J considered whether an agreement had been reached in a restaurant between two businessmen involved in a property development. There had been a discussion of terms, a handshake and a recording of the discussion on a placemat. In considering this issue Byrne J said:
The parties must agree with sufficient certainty upon such terms as are, in the circumstances, legally necessary to constitute a contract. This means that, whatever the negotiators might have thought and, more importantly, whatever the reasonable bystander might infer as to their state of mind, the law will not find a contract exists unless it has been relevantly established that the essential and critical terms of the bargain have been agreed upon: Vroon BV v Fosters Brewing Group Ltd. This is the burden which the plaintiffs must discharge: Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd. This said, I approach my task with a strong disposition to give effect to the intentions and expectations of the negotiators who by their handshake signified that they had concluded a binding agreement. This means that I should strive to overcome any uncertainty in such a case: Hawthorn Football Club Ltd v Harding. It is necessary to observe, too, that at this level I am not concerned with the question whether the note or memorandum is sufficient; it is whether the parties agreed on all the necessary terms at their meeting in the restaurant on the evening of 5 February. [18] (Citations omitted)
[17] [1999] VSC 100
[18] At paragraph 51.
In this case I am satisfied that there was an agreement as to critical and important terms and that, whilst the written document is somewhat deficient in terms of its recording of that agreement, its terms and meaning are sufficiently clear and were moreover well understood by the parties.
No further agreement was necessary to complete the first agreement. The parties have demonstrated by their conduct that they were clear what services were to be performed by the plaintiff in order to be paid. The first agreement whilst not fulsome on the topic of the services to be provided is consistent with what the parties expressed in their evidence. It is further clear that there was agreement as to the amount to be paid for each lot. I accept the evidence of Mr Bieg and Mr Byrne that the first defendant set the amount for payment and that the plaintiff accepted what was offered.
Mr Sondergeld submitted that there was a lack of clarity about the second schedule and in particular the timing of payments. Generally it appears from the second schedule documents tendered that the agreed $22,000 payment was broken down into two payments of $11,000. The second of those two payments was to be made upon completion of each residential premises for the prospective customer. This was the same for each such payment. The timing of the first payment was however less clear. All three witnesses gave evidence of the six stages of a building project being deposit, slab, frame, enclosed, fixing and completion. On some of the second schedule documents the first payment was stated to be due ‘upon commencement of the erection of the framework for each residential premises for the prospective customer’. However, other documents used the word ‘fixing’ and others referred to payment being due upon ‘enclosed’.
Mr Bieg says that it was initially agreed that first payment was due on erection of the framework but that he later agreed to Mr Byrne’s request that the plaintiff would be paid at a later stage of building to assist the first defendant’s cash flow. The agreed stage was he said payment of the initial payment on ‘enclosed’. It is not clear on his evidence why the word ‘fixing’ was sometimes used. I note however that, even where the word ‘fixing’ was used on the second schedule, the invoices for the first payment referred to payment on ‘enclosed’.
Mr Byrne initially gave evidence that payment was agreed to be 50% on frame and 50% on completion. Later in his evidence however he referred to the first payment being due on ‘enclosed’ and gave evidence of using the notation ‘enclosed’ when making payment for that stage by way of electronic funds transfers. He did not explain how that came about.
Mr Sondergeld’s evidence on this topic was far from clear but I note that Mr Sondergeld’s email to Mr Bieg dated 21 January 2013[19] indicates that he wanted invoices for payment on ‘enclosed’ rather than some earlier stage of proceedings. Further, the schedule prepared by Mr Sondergeld setting out details of outstanding commissions on the Middlemount project for the plaintiff and two other entities indicates two payments of $11,000, the first of which was on enclosed and the second on completion[20]. I infer from this that the first defendant adopted a standard procedure of paying the first payment as “enclosed” and the second on “completion” for the plaintiff and the other two entities which provided similar services.
[19] Exhibit P39.
[20] Exhibit P38.
I find that the initial agreement was for the first payment to be made upon the erection of the frame but that subsequently the plaintiff agreed to accept payment at a later stage; enclosed. I do not consider that the plaintiff’s flexibility as to the timing of payment should be used to suggest that there was any vagueness or lack of clarity about the agreement. In any event, I note that there are only three lots for which the plaintiff claims the first payment: lots 1, 26 and 69. The first defendant has paid the first payment on all other lots. Accordingly whatever stage payment was due it seems that there was little confusion at the time.
Accordingly, whilst the first agreement is somewhat unusual it is my view that the parties well understood its meaning and intent and conducted their business accordingly. The defendants’ defence based on uncertainty or vagueness in the first agreement cannot be sustained in those circumstances. To conclude I consider that that the plaintiff is entitled to payment under the first agreement where it can establish that:
It has provided services set out in the first schedule.
The necessary build stage as identified in the second schedules have been reached, and
It has provided an invoice to the first defendant.
Were the services provided?
Identifying customers
Mr Bieg gave evidence that he introduced prospective customers for each of the lots in respect of which the plaintiff claims. He said that these were introduced to the first defendant and that each of them went to completion on the relevant lot. Mr Sondergeld went through each lot in his evidence in chief and either agreed or did not dispute that the plaintiff identified the prospective customers of each of these lots. Further, the fact that this occurred is supported by contemporaneous documents including various second schedules, email correspondence between the parties[21] and Mr Sondergeld’s own spreadsheet.[22]
[21] Exhibits P6, P45, P47.
[22] Exhibit P38.
Notification of prospective customers in the form of the second schedule
The defendants suggest that the plaintiff failed to meet this requirement by failing to fully complete the second schedules. The second schedules contain the name of the prospective customer and the address of the lot that they were seeking to purchase. The form also included provision for telephone and facsimile numbers and email addresses. These are not completed on any of the second schedule forms relied upon by the plaintiff.
Mr Bieg gave evidence that he would provide full details of each potential customer to the first defendant including addresses, telephone numbers, facsimile numbers and email addresses by way of email prior to sending the second schedule. His evidence was that the second schedule was sent by him once the prospective customer became an actual customer in order to establish entitlement to payment of the plaintiff’s commission and the time at which it was to be paid. Mr Bieg said that because the defendants had the information about telephone numbers and email addresses prior to his completion of the second schedule he did not insert it into the form.
Mr Sondergeld did not dispute that this was the case in his evidence and the contemporaneous records confirm Mr Bieg’s evidence. By way of example, I refer to the transaction concerning Lot 5.[23] The second schedule contains the names of the prospective customers but not their contact details. This document was apparently signed by Mr Sondergeld and Mr Byrne on 29 September 2011. Whilst Mr Bieg’s initial email providing the contact details was not tendered there is an email from Mr Sondergeld to Mr Bieg dated 23 July 2011 asking whether either prospective purchaser had a middle name as he needed this for the land contracts. On the same day 23 July 2011, Mr Sondergeld completed a Contract Request form which is the document Mr Sondergeld said that he sent to the land owners’ solicitors for preparation of the land contract. This document contains contact details for the purchasers. Indeed for the lots where I have copies of Mr Sondergeld’s contract request forms these all appear to pre-date the signing of the second schedule by Mr Sondergeld and Mr Byrne. Plainly therefore the first defendant already had the information that has been omitted from the second schedule.
[23] Exhibits P11 & D7.
I further note that Mr Byrne and Mr Sondergeld signed the Schedules as they were presented without objection. I infer from the fact that they did so that they were happy to proceed on the basis of the information provided. I do not consider that the failure to fully complete the forms constitutes a failure to notify prospective customers as required under the first agreement.
There are three lots for which the plaintiff has not provided a second schedule signed by both Mr Byrne and Mr Sondergeld. These are lots 8, 26 and 69. Mr Bieg gave evidence that he had a signed second schedule for each of those three lots but that he had lost some of his work documents when he left his former workplace. Mr Sondergeld disputed that the plaintiff supplied schedules for these lots. It appeared to me that Mr Sondergeld’s position was based upon the plaintiff’s inability to produce signed documents rather than any actual recollection that schedules had not been signed for those three lots. I consider his evidence in that regard to be opportunistic. There is other contemporaneous material that indicates that a schedule was provided for each these three lots as follows:
Lot 8
The first payment was made to the plaintiff in accordance with the payment outlined in part two of the second schedule. I accept that where a payment was made the parties were satisfied that the requirements had been met. Moreover Mr Sondergeld’s spreadsheet[24] identified lot 8 as one where the plaintiff introduced the prospective customer. Mr Sondergeld admitted that this was the case in cross-examination.
Lot 26
[24] Exhibit P38.
The first defendant records in its own documents that a payment is owed for this lot[25] and Mr Sondergeld confirmed during his evidence in chief that the plaintiff introduced the prospective customers to this lot. Further, an email concerning lot 26[26] is generally supportive of Mr Bieg’s evidence.
Lot 69
[25] Exhibits P45 and P47.
[26] Exhibit P19.
Again, Mr Sondergeld confirmed during his evidence in chief that the plaintiff introduced the prospective customer in respect of this lot. There is email correspondence that supports Mr Bieg’s evidence that he introduced this potential customer.[27]
[27] Exhibit P32.
I find that the plaintiff did submit second schedules to the first defendant for each of the lots in respect of which it claims and that the completion of each of these documents was sufficient for the purposes of the first agreement.
Assisting the principal to establish a relationship with the prospective customers

In relation to the requirement that the plaintiff assist the first defendant to establish a relationship with the prospective customer Mr Sondergeld appeared to submit that something more was required of the plaintiff than actually occurred. It was not entirely clear to me what precisely he was suggesting ought to have been done beyond what the plaintiff did. The basis of his submission appeared to be some emails he received from Mr Bieg indicating that he should not personally contact some of the customers referred by the plaintiff.
Mr Bieg agreed that he sent those emails to Mr Sondergeld. Mr Bieg says that this came about during the later stages of the Middlemount project when the investors were becoming unhappy about the delays. Mr Bieg contended that they were receiving conflicting and confusing information from Mr Sondergeld which was making the situation worse and causing people to contact Mr Bieg to see what was happening. Mr Bieg said that he had no problem with Mr Byrne or anyone else contacting the customers on behalf of the first defendant it was just Mr Sondergeld. It is further plain from the correspondence tendered that in the initial stages of the project Mr Bieg was keen to encourage direct communication between the first defendant, including Mr Sondergeld, and the prospective customers. By way of example I refer to an email from Mr Bieg to Mr Byrne and Mr Sondergeld dated 20 July 2011 where he supplies a list of all of the referrals he made on the Middlemount project to that time and invites Mr Sondergeld to send the contracts direct to the customer rather than through him.[28]
[28] Exhibit P6.
Mr Bieg’s evidence is consistent with contemporaneous records and I accept his evidence.
I further accept that the plaintiff assisted the first defendant to establish a relationship with each of the prospective customers identified. This can be seen from the fact that prospective customers actually became customers and purchased the house and land packages.
Amount to be paid
I find that in relation to all of the lots, except lot 48, the payment amount agreed between the plaintiff and the first defendant was $22,000. This is confirmed by the evidence of Mr Bieg and Mr Byrne which I accept and by second schedules signed by Mr Byrne and Mr Sondergeld. In relation to lot 48, however, the second schedule has been amended to provide for two payments of $8,250. The plaintiff contends that the payment should be two payments of $11,000. The defendants do not specifically dispute this, resting their case on more general propositions; however I will deal with this particular lot in view of the discrepancy on the document.
The second schedule was apparently signed by Mr Byrne and Mr Sondergeld on 29 September 2011 the same date as many of the other schedules were signed. No one has given evidence as to why this particular document was amended. The tenor of Mr Byrne’s evidence was that he could not recall why this happened other than that he, Mr Sondergeld and Mr Bieg must have agreed this. Mr Sondergeld did not give any evidence about agreeing this but the schedule that he prepared of all commissions paid on the Middlemount project does not include reference to a payment or claim for $8,250. The standard payment to the plaintiff and the other entities appears in the schedule to be two payments of $11,000.
Mr Bieg gave evidence as follows:
QThen at p.219 of the bundle, is this the second schedule for lot 48.
AYes it is, your Honour you will notice that they have changed the commission amounts, this was one of the first properties that were sold under the $15,000 plus GST amount.
QWhen you say ‘they’ who do you mean.
AMr Sondergeld and Mr Byrne, so because this was referred under that first agreement, when I sent them this second schedule they changed the amount to $8,250 and they both signed it and sent it back to me and I accepted that.
QMy copy isn’t terribly clear, but is the alteration changing it from $11,000 to $8,250 in each case.
AYes it is.
QMr Bieg did you accept that offer of $8,250.
AI did actually, but then I believe verbally they just said ‘We’ll pay you the full amount anyway because there was only one’.
QWhen you say ‘they’ –
ASorry, Mr Sondergeld and Mr Byrne verbally, because of the amount of lots that were transacted they just said – Mr Sondergeld and Mr Byrne said they would just pay the full $11,000 per claim.
QWhen Mr Sondergeld and Mr Byrne said that were all three of you involved in the one conversation can you recall.
AI would assume that the conversation was a verbal conversation between me and Mr Byrne, and Mr Byrne would have consulted with Mr Sondergeld about it. But I can’t confirm that or deny whether they had a conversation about it.
QSo your conversation was with Mr Byrne and not with Mr Sondergeld.
AThat’s correct.
QCan you recall about when that conversation was.
AIt would have been in the initial referral process when there was a number of referrals that gave gone through. So based on that, late 2011. [29]
[29] Transcript 95-6.
The two invoices presented by the plaintiff to the first defendant for this lot claimed the sum of $11,000; one on ‘enclosed’ and the other on ‘completion’. Mr Bieg said that those invoices would have been prepared after his conversation with Mr Byrne about the increase and that was why he charged $11,000. He gave evidence about receiving payment for the first invoice by way of a cheque for $11,000 which he banked on 25 January 2013.[30]
[30] Exhibit P26.
In the light of the contemporaneous documents and the fact the first defendant paid an initial payment of $11,000 for lot 48 I accept Mr Bieg’s evidence that the parties agreed that the plaintiff would be paid $22,000 for lot 48 in common with the other lots. In those circumstances I find that the amount outstanding on lot 48 is $11,000 rather than $8,250.
Were valid invoices provided
The plaintiff has provided copies of all relevant invoices. The defendants contested that these were valid tax invoices. The basis of this appears to be the fact that the date on the tendered documents is incorrect. I accept Mr Bieg’s evidence in chief that he lost many of his records when he left his former workplace. He therefore only had an electronic version of the invoices upon which the document date is automatically updated each time the document is opened. Accordingly, all of the invoices tendered are dated 9 October 2015, the date upon which Mr Bieg opened and printed these documents. Clearly, however, the documents did not bear this date originally. I say this because:
I accept Mr Bieg’s evidence that he provided the invoices during the project and prior to payments being made or where payments were not made by the first defendant, at the appropriate stage.
Mr Byrne, who was responsible for making the payments on behalf of the first defendant, gave evidence that invoices were provided during the project and that he would not make any payments without having a valid tax invoice.
Mr Sondergeld admitted during cross-examination that he did not have access to Mr Byrne’s email account and so could not deny that Mr Byrne had received the invoices; and
Email correspondence tendered in evidence shows that the first defendant was provided with and had the invoices during the course of the project. Mr Sondergeld admitted during cross-examination that the invoices disclosed by the first defendant as part of its discovery were invoices provided to him by Mr Byrne during 2013.[31]
[31] Exhibits P8 and P40.
In addition, Mr Bieg gave evidence about the many steps that he took to follow up on non-payment of his invoices including telephoning and sending emails on a regular basis. A number of these emails have been tendered in evidence.[32]
[32] Exhibits P33, P34, P42, P43, P44 and P48.
I accept the plaintiff’s submission that the outstanding invoices all comply with the requirements in s 29.70 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) and are valid tax invoices as required by clauses 3.3, 12.1 and 12.2 of the first agreement.
Is the plaintiff precluded from claiming payment by virtue of the Property Agents & Motor Dealers Act 2000 (Qld)?
The defendants say that if the plaintiff is otherwise entitled to payment under the terms of the first agreement it is precluded from recovering the amount claimed by reason of the Property Agents and Motor Dealers Act (Qld) 2000 (the Act).
The defendants rely upon sections 128 and 133 of the Act. These provide that a real estate agent must not act as a real estate agent for a person unless they have first been appointed in writing or there is a previous appointment. It is uncontroversial that at the relevant time neither the plaintiff nor Mr Bieg held a real estate agent licence in Queensland, nor did they have an appointment as contemplated in section 133 of the Act. The defendants say that in those circumstances the plaintiff is precluded from recovering in this action because of the provisions of section 140(1) of the Act which provides as follows:
A person is not entitled to sue for, or recover or retain, a reward or expense for the performance of an activity as a real estate agent unless, at the time the activity was performed, the person:
(a)    Held a real estate agents licence; and
(b)    Was authorised under the person’s licence to perform the activity; and
(c)    Had been properly appointed under division 2 by the person to be charged with the reward or expense.
There are a number of difficulties with this submission, not the least of which being the fact that the Act was repealed by section 237 of the Property Occupations Act 2014 (Qld) which commenced on 1 December 2014 and the transitional provisions in that Act do not appear to assist the defendants. Leaving that issue to one side I do not think it can be said that the plaintiff is suing to recover a reward or expense for the performance of an activity as a real estate agent. Rather it is my view that the plaintiff is seeking to recover debts owed to it by the first defendant under the first agreement and against the third defendant under the supplementary agreement.
Paragraph 9.3 of the third defence sets out particulars as to the manner in which the defendants say that the plaintiff acted as a real estate agent for the purposes of the Act. These are as follows:
(a)    Paul Bieg, on behalf of the plaintiff, acted as an agent in respect of each relevant Middlemount property by introducing, communicating with, acting as a go between with and negotiating with potential buyers for reward or in expectation of a fee, gain or reward;
(b)    Paul Bieg, on behalf of the plaintiff, procured the execution of the contract of sale by the buyer and returned the documents to the first defendant or the buyers solicitor;
(c)    Paul Bieg, on behalf of the plaintiff, advertised and/or marketed the Middlemount properties for sale, including via on-line marketing;
(d)    Paul Bieg, on behalf of the plaintiff, was the first point of contact for buyers or potential buyers in respect of Middlemount properties; and
(e)    Paul Bieg, on behalf of the plaintiff, engaged in contract negotiations on behalf of the seller of each relevant Middlemount property including negotiation as to price, inclusions and rebates.
These particulars are ambiguous as to the person for whom the plaintiff is said to have been the agent. On one view it could be for the vendors, on another view for the prospective customers.
Mr Bieg gave evidence that he did not know and did not communicate with the vendor; indeed he said that he did not know who the vendor was until after these proceedings commenced. His dealings were with the first defendant who was not as far as he knew, the vendor. He was aware that the vendor had appointed its own real estate agent for the sale of land; Justin Dee of Platinum 7.[33] Mr Bieg gave evidence that he had limited involvement with Mr Dee and Platinum 7 and generally speaking any contact he had related to properties in which he was acting as the mortgage broker rather than in relation to his dealings with the defendants.
[33] Transcript 37.
It is uncontroversial that the plaintiff was not paid by the vendor or the prospective customers. Rather it was paid by the first defendant. The evidence shows that the plaintiff was paid, and is claiming commissions, that only relate to the build aspects of the project rather than any dealings in land. The first agreement makes it plain that the plaintiff was to be paid upon certain stages of the build being reached. The evidence demonstrates that many of the lots settled in mid to late-2011 but that the plaintiff was not paid until 2013 when buildings reached the relevant stages. Had the buildings not progressed to those stages the plaintiff had no entitlement to commission regardless of the fact the sale of land had taken place.
The plaintiff had no involvement with the owner or developer of the land. On no view can it be said that the plaintiff was acting as an agent for the developer. The plaintiff was not paid by the developer of the land, nor was it paid any commissions in respect of the sale of the land. Justin Dee of Platinum 7 was appointed to sell the land and did so in the majority of cases. He was paid sales commissions. Otherwise for a number of lots Mr Sondergeld gave evidence that his business Lifestyle 8 Pty Ltd acted as real estate agent and received the sales commission. There was no relationship between the plaintiff and Lifestyle 8.
Mr Sondergeld gave evidence that there were separate land and building contracts. The land contracts were prepared by the vendor’s solicitors. The building contracts were prepared by the solicitors acting for the builder. The plaintiff was not involved in the preparation of either type of contract.
Mr Sondergeld gave evidence that the first defendant was set up as a separate specific purpose vehicle precisely to avoid the operation of the Act in order that it could obtain higher commissions than were allowed under the Act. His evidence was that the first defendant was not paid sales commissions but only build commissions. It cannot therefore be the case that the first defendant received only build commissions but then paid sales commissions to the plaintiff.
The plaintiff’s marketing of the project essentially involved emailing an information booklet to prospective customers on its data base that had previously expressed an interest in this type of investment. The information booklet contained information provided to the plaintiff by the first defendant such as the price of the house and land packages. Mr Bieg said that there was no negotiation by the plaintiff with the prospective customers. The plaintiff was given the package by the first defendant and then informed prospective customers of the package. Mr Sondergeld pointed to some occasions where Mr Bieg had in his contention renegotiated a sale price on behalf of a customer. Mr Bieg however gave evidence that this occurred when he was acting as that purchaser’s mortgage broker and the finance valuation had come in at a lower sum than the sales price. His position was that as the person’s mortgage broker he would put to the defendants that the purchaser would be unable to complete the contract unless the price when renegotiated. This, he said, formed no part of the arrangement contemplated by the first agreement.
The plaintiff did not undertake tasks that a real estate agent would traditionally undertake such as handling deposit moneys and engaging in contractual negotiations. Essentially the role of the plaintiff was to introduce the potential customer and leave the rest to the defendant and the other parties involved in the development.
Mr Sondergeld referred to the case of Sultana Investments Pty Ltd v Cellcom Pty Ltd[34] in support of his contention that the plaintiff was acting as a real estate agent. This case concerned a financial planner that had marketed a potential real estate investment to its clients and was found to have acted as a real estate agent under the Act. That case can be distinguished from the present case because the financial planner was engaged and paid by the vendor of the properties. That situation is very different from the present case where the plaintiff was engaged by the first defendant and was not involved in the sale of land and had no involvement, contractual relationship or knowledge of the developer and owner of the land.
[34] (2008) QCA 357
Second, the payments to the financial planner were directly linked to the sale of the property by the vendor. This is different to the plaintiff’s situation where its commissions were not linked to the sale of land but rather to the stages of the building on the land.
Third, the contracts for sale of land were sent to the financial planner and in most instances the court found that the contracts were completed by persons associated with the financial planner, the contracts were executed and returned by the financial planner. In this case both Mr Bieg and Mr Sondergeld gave evidence that the plaintiff provided the names and contact details of prospective customers to the first defendant and that Mr Sondergeld sent this information to the vendors solicitors. The solicitors prepared the land contracts and those land contracts were generally sent direct to the purchasers.
Fourth, the financial planner communicated matters such as the purchasers’ colour scheme choices to the vendor. No similar activity was performed by the plaintiff in this case.
Accordingly, none of the matters relied upon by the Court in Sultana to determine that the financial planner was acting as a real estate agent are applicable in this situation.
I find that the plaintiff was not acting as an agent for others for reward in relation to buying or selling land. Rather I find that the plaintiff is seeking to recover for services provided under its commercial agreement with the first defendant. Accordingly section 140 of the Act does not assist the defendants.
Conclusion
It is my view that the plaintiff supplied services to the first defendant in accordance with the terms of the first agreement, the plaintiff rendered valid invoices to the first defendant and is entitled to be paid for the amounts outstanding.
The first defendant has no defence to the contractual claim. It stopped making payments not because of any underlying concerns with the validity of the first agreement, or the invoices or even because it believed that the plaintiff was acting as an unlicensed real estate agent. Instead it appears that the first defendant stopped making payments because it was not being paid. This much is clear from the evidence of Mr Sondergeld where he said as follows:
QIn this email you agree that funds can be disbursed to Mr Bieg’s company, don’t you.
AAt the time we were having issues with who was receiving money.
QJust answer my question please, Mr Sondergeld.
AYes, we said this money can be transferred.
QWhen you say ‘we’.
AI said its okay subject to Jason confirming he wished to pay for those lots.
QYou didn’t say ‘I don’t think we should pay because we don’t have a binding agreement’.
AI never really referred to that, we just made payments.
QYou didn’t say ‘I don’t think we should pay because we don’t have a valid invoice’.
AThat really wasn’t procedure. We just paid funds out irrespective of whether we did or not have agreements.
QNor did you say ‘Mr Bieg or his company are not licensed real estate agents’.
AOur job was to sell the development and keep everyone happy for the sale to continue, so we transferred funds when requested and able to.
QSo as long as sales were going on, you really didn’t care what happened.
AEssentially, the builder – our job was to ensure he was liquid and the funds went through the builder’s bank account and that everyone was not harassing the builder to stop the construction cycle.
QSo as long as funds flowed you were happy.
AThe builder continued to construct, we were happy, yes. [35]
[35] Transcript 360-61.

Mr Byrne had a different view of matters as expressed in his evidence in court and in his emails at the time. Indeed Mr Sondergeld in 2014 prepared the schedule tendered in evidence[36] which implicitly acknowledges that amounts were owed to the plaintiff.
[36] Exhibit P38.
I accept the plaintiff’s evidence as to the quantum of the amount outstanding as supported by the second schedules, invoices and bank statements together with the oral evidence of the parties. I find that the amount outstanding is the sum of $174,750. In the circumstances therefore I find that the plaintiff is entitled to judgment for that amount.
Indemnity costs
The plaintiff submits that, in the event of success, it is entitled under the terms of the first agreement to recover its costs on an indemnity basis and is not subject to the usual order for party/party costs. The plaintiff has been successful in this matter. I have set out the relevant provision of the first agreement above. In Micarone v Perpetual Trustees Australia Ltd (No2)[37] the Full Supreme Court said:
The general rule is that, in the absence of an agreement to the contrary, a mortgagee is entitled to costs on a party and party basis. The expression of a contrary intention must be “plainly and unambiguously expressed” to use the words of Vaisey, J in Adelphi Hotel Ltd[38] at 961.[39]
[37] [1999] SASC 533
[38] (1953) 1 WLR 955
[39] At paragraph 32.
This issue was considered by Blue, J in Essential Beauty Franchising (WA) Pty Ltd and Others v Pilton Holding Pty Ltd and Others.[40]In that case a submission was made that the principle of construction outlined in Micarone applied to mortgages but did not apply to other types of documents. Justice Blue rejected that contention and stated that the principle applied generally. Accordingly it is appropriate to apply that principle of construction in this matter.
[40] [2014] 120 SASR 433
It is my view that the first clause 10.4 and the definition of claims in clause 14.1 of the first agreement do not plainly and unambiguously express an intention to step outside the usual rules relating to the assessment of legal costs. I therefore reject the plaintiff’s contention as to the effect of the first agreement on the question of costs. Costs in this matter ought to be assessed under the usual principles applicable to litigation in this court.
I will hear the parties as to the question of interest and costs.