Rodney Meates v K D Pty Ltd t/a Leader Real Estate - [2012] ACTSC 188

RODNEY MEATES v K D PTY LTD t/a LEADER REAL ESTATE
[2012] ACTSC 188 (20 December 2012)

CONTRACT – employer and employee – representations by employer as to altered terms of employment – employee choosing to withdraw resignation and remain in employment in faith of representations – employer held to representations – case decided on its facts – no issue of principle

No. SC 923 of 2006

Judge: Master Harper
Supreme Court of the ACT

Date: 20 December 2012

IN THE SUPREME COURT OF THE     )
  )          No. SC 923 of 2006
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN: RODNEY MEATES
Plaintiff
AND:K D PTY LTD t/a LEADER REAL ESTATE
(ABN 27098148424)

First defendant

AND: DEREK WHITCOMBE

Second defendant

ORDER

Judge:  Master Harper
Date:  20 December 2012
Place:  Canberra

THE COURT ORDERS THAT:

Judgment be entered for the plaintiff against the first defendant in the sum of $76,314.00.

Judgment be entered for the second defendant.

This action arises out of a dispute about money between the plaintiff, a real estate salesman, and the first defendant which conducted the real estate firm where he worked. The second defendant is the managing director and controller of the first defendant. The plaintiff started work at the firm in March 2003 and left in June 2006. He was initially an employee. In August 2005, with the firm’s agreement, he interposed a family trust with a corporate trustee but the litigation has been conducted throughout as though this made no difference to the rights and obligations of the parties and it may be ignored for the purposes of my decision.

The pleadings

The action was commenced in December 2006 against the first defendant only. The second defendant was joined in August 2009, and an amended statement of claim was filed. The first defendant had previously filed a defence and counterclaim, which had been twice amended. The amendment to the statement of claim required the filing of a further amended defence and counterclaim, which occurred in February 2010.

In March 2010 the solicitors for the parties completed and filed a certificate of readiness in which they certified that pleadings had closed, counsel had been briefed for both sides and the action was ready for trial. The certificate also stated that the length of the hearing was estimated, optimistically as it turned out, at two days.

On 14 April 2010 the matter was listed before a Deputy Registrar, who was informed that junior counsel from the Canberra bar would be appearing on both sides. The Deputy Registrar listed the action for hearing before me on 31 August.

On 2 July 2010 the present solicitors for the defendants were instructed to take over the conduct of the matter from the original solicitors, and filed a notice to that effect. They briefed senior and junior counsel from the Sydney bar. Senior counsel from the Sydney bar was briefed at about the same time for the plaintiff.

On 23 August 2010, eight days before the commencement of the hearing, the new solicitors for the defendants filed an application, returnable for 31 August, seeking leave to make further amendments to the defence. The application was argued after the plaintiff’s opening and before oral evidence, on the first morning of the hearing. For reasons which I gave orally, I refused the application to amend with costs.

During the afternoon of the first day, at the conclusion of the plaintiff’s evidence in chief, senior counsel for the defendant renewed the application. This was not a permissible course, the application having been dismissed. It is a better characterisation of what occurred to describe it as a fresh oral application but seeking essentially the same orders. I said that I would determine the renewed application when giving my reasons for judgment, and I shall return to this.

The hearing, as I have said, took a good deal longer than the lawyers for the parties had originally estimated. It occupied the two days initially set aside, 31 August and 1 September 2010, and two further days. Regrettably, due to the pressures of the Court’s business, and no doubt to some extent the availability of counsel, I was unable to resume the hearing until 4 July 2011, when the continued hearing occupied a further two days.

At the end of the hearing, following oral submissions, I gave leave for the parties to supplement these with written submissions, which were lodged on 13 July (plaintiff) and 20 September 2011 (defendants).

Somewhat extraordinarily, as I have become aware only in the course of the preparation of these reasons, on 18 July 2011 the solicitors for the defendants filed a second further amended defence and amended counterclaim as though leave to do so had been granted. It is in somewhat different terms to the document in which respect of which leave was sought on 31 August 2010. It should have been rejected by the registry when lodged for filing. The solicitors for the defendants should not have attempted to file it without leave.

For present purposes I can ignore the original statement of claim, and concentrate on the amended statement of claim of August 2009. I shall summarise rather than set out in full what the plaintiff asserts in that pleading:

· The first defendant engaged the plaintiff as a salesman by contract dated 7 March 2003.

· In December 2004 the defendant gave notice, and accepted a position with Canberra Investment Corporation to commence in January 2005.

· During December 2004 the parties had discussions with a view to the plaintiff remaining in his job with the first defendant.

· The first defendant represented to the plaintiff that if he stayed with the first defendant and did not change jobs, he would be remunerated on more favourable terms than under his 2003 contract, that he would be recognised as second lister in respect of all Waterfront units, and that he would be paid commission at the rate of 45% (after management and listing fees of the commission received by the first defendant on each sale).

· In the faith of these representations, the plaintiff withdrew his notice and stayed with the first defendant.

· The plaintiff and the first defendant entered a contract in December 2004 to engage the plaintiff on new terms and conditions. The contract was partly oral and partly in writing.

· It was a term of the new contract that the plaintiff would be appointed as second lister on the Waterfront project at Kingston, entitling the plaintiff to a fee on sale of each Waterfront unit sold during his employment.

· It was a term of the new contract that the plaintiff would be paid commission on the sale of any Waterfront unit where he had introduced the buyer.

· During the rest of the plaintiff’s employment with the first defendant, he introduced buyers for fourteen units, and there were 108 sales of Waterfront units in all.

· The plaintiff was entitled to commission on his own sales of $39,362.38, plus second lister fees of $187,228.19, a total of $226,590.57 (these figures gave credit for advances of $59,043.57).

A further count was pleaded to the effect that the plaintiff and the first defendant, or in the alternative the plaintiff and the second defendant, would act as joint venturers in respect of the marketing and sale of Waterfront units, and that this gave rise to a fiduciary relationship between them. This count was not pursued on hearing.

An alternative count was pleaded in quantum meruit, that is that the defendants should be taken to have agreed to pay the plaintiff a reasonable amount for the work he undertook in marketing and selling Waterfront units.

The statement of claim also pleaded a cause of action against the second defendant under the Trade Practices Act 1974 (Cth) then in force, and/or the Fair Trading Act 1992 (ACT).

The defence of February 2010 joined issue on the factual assertions, subject to some admissions. The defence asserted that pursuant to the 2003 contract the plaintiff would be entitled to commissions only in respect of sales which settled before the termination of his employment, and that no sales of Waterfront units had settled by the time he left in June 2006. It is common ground that the building of the Waterfront units was not completed until mid-2007, and that no unit sales had been settled before the plaintiff’s departure from the firm.

The defence further asserted that if the 2003 contract between the plaintiff and the first defendant had been amended in 2004 (which was denied), it remained a term of the new contract that the plaintiff would be entitled to commission only in respect of sales completed before his departure.

The first defendant asserted that it had paid $59,043.57 to the plaintiff by way of an advance of commissions, and that it should have credit for that amount against any liability which it might be found to have to the plaintiff. The payment of that amount is common ground.

The defence included a counterclaim. The basis of the counterclaim was that in March 2006 the first defendant had paid the plaintiff $59,043.57 as an advance in anticipation of commissions to become due, in respect of sales settled during his employment. His employment had come to an end in June 2006, by which time no sales of Waterfront units had settled. The plaintiff was therefore not entitled to retain the advance but rather subject to a liability to repay it to the first defendant, with interest.

The amended pleading on which the defendants wish to rely, subject to leave being granted to amend, raises further matters of defence. First, the defendants wish to raise a defence of accord and satisfaction. In this regard, they say that the payment of $59,043.57 made in March 2006 was in full and final settlement of all claims the plaintiff had against the first defendant, and that he accepted the payment on that basis.

In the alternative, the defendants wish to raise a defence of estoppel arising from the plaintiff’s acceptance of the March 2006 payment.

Again in the alternative, the defendants wish to assert that the plaintiff’s acceptance of the payment gave rise to a waiver of any claim or cause of action against the defendants.

The defendants include, in their proposed second further amended defence, a defence to the effect that the plaintiff should be taken to have abandoned any contract that might have come into existence in December 2004. The defendants do not pursue the abandonment defence.

The first defendant further wishes to amend its counterclaim to plead that it was an express term of an agreement with the plaintiff in March 2006 that if his employment was terminated before the settlement of any sales to which the advance commission related, he would repay the amount of the advance commission.

The case for the plaintiff

The plaintiff applied for an advertised position with the first defendant, Leader Real Estate, and was informed at the end of January 2003 that his application had been successful. This was his first venture into real estate, having spent the previous twenty years in the education field, primarily as a co-ordinator and department head.

At the beginning of March 2003 he signed what was described as a service agreement, which set out the basis for calculation of commission on listings and sales of residential real estate. The agreement also set out expectations as to number of listings and sales per month. The plaintiff was to be remunerated by commission only, with commission to be paid following settlement of each sale. The agreement provided for the firm to pay the salesman advances against commission, at the firm’s discretion.

A specific provision was included in the agreement that commission was to be payable only in respect of sales which had settled prior to termination of the salesman’s employment.

The plaintiff initially worked at listing and selling residential real estate, including houses and apartments. During 2004 he became engaged in the sale of new apartments in specific projects, initially “off the plan” and subsequently by the use of a display apartment at the project concerned. Initially he was simply a salesman, but his evidence was that halfway through 2004 he assumed the responsibilities of a second lister for the Gateway, an apartment development at Kingston foreshore. This involved monitoring sales being made by other sales representatives, liaison with the developer and facilitation of settlements when the building was complete. He took this responsibility over from a person who had left the firm.

In October 2004 he asked Mr Whitcombe, the second defendant and managing director of the firm, for an advance against commission. Mr Whitcombe agreed to this provided that the plaintiff undertook seventy-five prospecting calls. This referred to making contact, generally by telephone, with people he had met, with a view to obtaining the listing of properties for sale. The plaintiff regarded this condition as unreasonable.

Shortly after this the plaintiff saw an advertisement for a position with Canberra Investment Corporation Limited as a salesman. CIC was in the business of acquiring, subdividing and selling vacant land for residential development. The plaintiff applied for the position. He was successful. He signed at the end of November 2004 a letter setting out the terms of his new employment. He was to be paid a base salary, with commissions on sales in addition, and this regular remuneration was attractive to him. He arranged to start with CIC in mid-January 2005, and gave written notice to Mr Whitcombe.

On 3 December 2004 the plaintiff had a telephone conversation with Mr Whitcombe. He says that Mr Whitcombe said to him “You can’t go to CIC. I’ve got something in line for you. How about second lister at the Waterfront?” They arranged to meet on the following Monday, 6 December 2004. The plaintiff explained in his evidence that the Waterfront was a new development at Kingston foreshore. The developer was Stockland Development Pty Ltd. Building work had not commenced, but the developer was about to start marketing with a view to making sales off the plan. The site was still vacant land.

The plaintiff says that Mr Whitcombe said to him “I can offer you a good deal at the Waterfront with the Stockland development. I can give you a job as second lister and also increase your commission rate to the senior rate of 45%.” The plaintiff asked for an explanation of how this would work out in practice, and Mr Whitcombe gave him a demonstration on paper.

Mr Whitcombe asked him what he had been offered by CIC, and the plaintiff told him. Mr Whitcombe said that he could match that. He added that Stockland were prepared to pay half of the commission on a sale on exchange of contracts, rather than waiting until completion of the building project and settlement. Mr Whitcombe said that he would put a proposal which included a base salary for the plaintiff, senior commission at the 45% rate, and second lister remuneration.

The next day, 7 December 2004, the plaintiff received a memorandum from Mr Whitcombe on Leader letterhead, in the following terms:

In confirmation of our recent discussions I propose the following elements of a new employment agreement with you.

1. For some time now, you have been promoted as the Kingston/Gateway projects specialist. To this end, I have pushed your name as the person St Hilliers, Stockland and CIC should deal with other than myself. You have done well with this and apart from the delay in income, the rewards have been and will be significant.

2. I am happy for you to continue your present role, specialising in project marketing and having less involvement with established listing prospecting. That is not to say that you don’t need to prospect at all, because real estate is not viable without some sort of regular prospecting regardless of the nature of your involvement.

3. Leader Real Estate will pay you a package of $45,000 per annum, payable weekly, to commence next Thursday, December, 16 2004. This amount will be offset against your ledger and commission income. This amount will be net of administrative fees as specified in your employment contract. You will be expected to produce $15,000 personal income including listings and sales, as a minimum per quarter. I note that in your business plan for 2004 you have set $30,000 as your minimum performance benchmark.

4. You will be promoted to the commission percentage rate of 45% inclusive of superannuation based on the current Leader commission scale, example attached. Once again this rate is dependent on your achievement of a minimum of $15,000 personal income per quarter, and you are aware that we are looking at overhauling our entire commission split system. In any event, you will not receive any less than the arrangement herewith proposed, given that the split will better recognise the different functions performed by salespeople.

5. Whereby in any quarter your personal income should drop below this figure, your commission arrangement will revert back to the standard arrangement which currently applies retrospective only to the applicable quarter.

6. You will be provided such listing and management opportunities that arise dependent upon your participation and involvement. You will be paid whatever listing percentage is appropriate according to this participation and as negotiated between the company and you.

7. You will be the listing “manager” for the Waterfront at Kingston foreshore. Your remuneration will be based on the following scale and subject to confirmation of commission rate and payment arrangements as agreed by Stockland:

Example:

Sale price $1,000,000

Gross commission $20,000

20% management to KD P/L $4,000

$16,000

First 10% listing fee to DW $1,600

$14,400

Second 10% listing fee to RM $1,440

Net commission $12,960

45% Incl super RM selling fee $5,832

(at $2.4m your commission would be $17,452.80)

ie. For each sale for an average of $1,000,000 RM receives $7,272 including listing and selling commission. A proposal to have at least 50% of the commission payable on this project paid on exchange of contracts has been verbally approved by the client and approved sales persons will be able to take advantage of this opportunity.

8. In the event of your departure from Leader Real Estate you forfeit your right to commission normally payable for completed sales and listings sold, except in such circumstances as agreed by Leader Real Estate in writing.

9. Leader Real Estate recognises that in negotiating and accepting a position with a client of Leader Real Estate that you have breached several clauses of your employment agreement, including clauses 4(d), 11 and 14. Leader Real Estate reserves the right to pursue you for any special damages that may be incurred as a consequence.

10. This proposal is conditional upon your acceptance and signature in the place provided below.

Mr Meates was asked in his oral evidence whether there was anything in this document inconsistent with the discussion he had had with Mr Whitcombe the day before. He said that the stipulation about forfeiting his right to commission in the event of his departure from Leader Real Estate was inconsistent. Additionally, Mr Whitcombe had not said anything to him during the conversation about breaches of clauses of his existing employment agreement, or the reservation of any right to pursue him for special damages.

The plaintiff said that he got back to Mr Whitcombe and confirmed that he had received the document. He said that he would think about it. He went home and, the next day, wrote a letter in reply. He handed the letter to Mr Whitcombe on the same day. The letter was in the following terms:

In response to your memo dated 7.12.04 and further to our recent discussions.

I appreciated your kind words regarding my handling of the Gateway, Kingston Foreshore. I have enjoyed the challenge of managing the project since February this year and in particular my dealings with Nick Ridgwell from St Hilliers. I will remind you that my role as listing agent came about after the departure of your most senior sales staff, Alex Eimerl and Andrew Ligdopoulos, presented you with little alternative.

I have spent a considerable amount of time and energy managing the 90 plus sales at the Gateway and seeing them through to completion. For approximately 80 of the sales which I have managed I will not receive any form of remuneration, despite my request for consideration of the work done. I have also been very active in encouraging investors to sign up with Property Management. Of course, this time consuming role has taken time away from the core business of listing and selling property.

I have little or any direct dealing with Stockland or CIC regarding developments at Kingston apart from some sales enquires relating to Sky Plaza in Woden.

I was more than a little surprised by your offer of a retainer in the form of an advance against commissions earned. In November I approached you for an advance of $830 to pay rent on my home which you refused. In September I asked for an advance of $2,000. This you would only reluctantly approve on condition of my making 75 prospecting calls over the weekend. Naturally I came away thinking I was dealing with either a company in a financially precarious situation or an unsympathetic employer who did not value a loyal and dedicated employee. Supporting a wife and four children requires a regular and consistent income so therefore I needed to look at alternatives.

I acknowledge the attractive offer you have since made, however, it only comes as a response to a competitor’s offer. The feature of your offer that is most attractive is the promise of the appointment as the second listing agent for Stockland’s Waterfront development, however before agreeing, I would like to know more about the role and see a detailed job description.

Further, you alluded to an imminent change of ownership of Leader in the near future which would clearly alter the climate and conditions of employment at Leader. Your memo does not indicate how or if this situation would impact on my role at Leader.

My biggest concerns, however, relate to the final points in your memo.

With regards to forfeiting my right to commission if I leave Leader I would like to know what are the circumstances which form an exception?

In point 9 you state that I have already breached several clauses in my employment contract with Leader, namely clauses 4(d), 11 and 14. I would like you to be more specific. The client you referred to is a large company with a range of interests. My understanding is that my duties with them would involve areas of activity which do not involve Leader or impact on Leader’s relationship with the company.

At this stage I will not accept or reject your proposed changes to the employment contract until I have given thorough consideration to them and until I have sought legal advice on a range of issues and have had time to assess the impact any of my action will have on our relationship, and yours with your clients.

Finally, your remark today that you will not allow me to work with your client and that if I did it would damage your relationship with them needs further investigation as I do not wish to precipitate such a course of events nor do I see that I should be restrained by such a threat.

My belief has always been that Leader would benefit from my presence in that organisation.

The plaintiff then had a discussion with Mr Whitcombe. His evidence is that he told Mr Whitcombe that he was not happy with some of the paragraphs in his memorandum. He was not prepared to sign a document containing clause 9, which stated that he had breached several clauses of his employment agreement and might be sued for damages as a consequence. He was not attracted to clause 3, which he crossed out on the memorandum. He was also not prepared to accept clause 8, whereby he would forfeit commission if he left Leader. He said that his understanding was that the industry standard was that on leaving a firm’s employment, salesmen would remain entitled to 90% of commissions as sales were completed.

Mr Meates’ evidence was that during this discussion, he said to Mr Whitcombe “The offer of remuneration with the inducement to stay and be paid as a second lister and the increase in the commission is really attractive to me and I am giving it a lot of thought. I am concerned about other clauses, particularly 8 and 9. I would like the figure to be 90% - you retain 10%. And the one about the client, we need to speak with CIC.” Mr Whitcombe’s reply was “That’s fine. That’s progress. I will talk to CIC about that, namely Mr Alexander, CEO of CIC.”

Mr Whitcombe also said “If you stay, the Stockland proposal is on the table.”. He said that the other clauses could be revisited.

On Thursday 9 December 2004 the plaintiff received a telephone call from Mr Alexander. He then told Mr Whitcombe that Mr Alexander had agreed to his withdrawing his acceptance of his position with CIC, and staying with Leader. Mr Whitcombe replied “That’s good. Let’s get on with it.”. He also said “Start taking deposits.”.

Mr Meates then proceeded with marketing of Waterfront units. He contacted prospects, showed them plans, visited the site, and took deposits on a number of units.

On 4 January 2005 Mr Meates wrote to the sales manager at CIC, confirming that he had decided against taking up the position he had been offered. Circumstances had changed for him and he had decided to stay with Leader. He said that it had been a difficult decision, and concluded “I look forward to continuing our current relationship through my work at Leader and perhaps more directly in the future”.

Mr Meates effected fourteen unit sales in which contracts were subsequently exchanged. All of these sales eventually proceeded to settlement, but not until after Mr Meates had left Leader in 2006. His evidence was that he took a $10,000 preliminary deposit from each of the buyers prior to exchange. I infer that they paid the balance of the usual 10% deposit on exchange.

The plaintiff’s evidence was that despite the request in his letter of 8 December 2004 for a detailed job description in relation to the second lister position, he never received one. In a later discussion, Mr Whitcombe told him in a very general way that the second lister duties would be as Mr Whitcombe saw fit. The plaintiff was given no specific duties apart from compiling market research for a weekly report to Stockland.

The plaintiff said that Mr Whitcombe described him as second lister on two occasions at weekly staff meetings at the Kingston office of Leader, in the presence of a number of members of staff from both the Kingston office and the Erindale office.

In the second half of 2005, Stockland offered Leader sales staff what was described as a bonus of $3,000 on exchange of each sale of a two-bedroom apartment at the Waterfront. Leader staff were able to invoice Stockland direct for these payments, and the plaintiff did so on about three occasions. Otherwise he received no payment for his work at the Waterfront during 2005.

In August 2005 the plaintiff formed a discretionary trust and set up a company as trustee, through his solicitors and accountants. He told Mr Whitcombe about this, and received an enthusiastic response. Mr Whitcombe said words to the effect “Well, that changes things. We must get an agreement together some time”. From then on the plaintiff issued commission invoices to Leader in the name of the trust, but no formal agreement was ever entered into.

Towards the end of 2005 the plaintiff made a number of requests of Mr Whitcombe for payment of part commissions on sales. His understanding was that there was an arrangement between Leader and Stockland whereby Leader could invoice Stockland for 50% of commission on exchange, and Stockland would pay this. He was later informed by the sales manager at Leader, Mr Cooper, that his understanding was correct, except that the percentage which Stockland had agreed to pay on exchange was 60%.

On 25 November 2005 Mr Whitcombe sent an email to Mr Cooper, with copies to the plaintiff and other sales staff, which read as follows:

Waterfront advance commission

As discussed, I am prepared to provide an advance in commission of the sales made in the project, however we must insist that the normal minimum real estate effort is being exerted. It will take four weeks to get any advance through so I will only pay them if EACH of you has three new ESTABLISHED houses listed between today and receipt of the advance from my client. I am certain that you can each achieve this and then enjoy Christmas a lot more!!! No alibis . . . start prospecting.

The plaintiff said that he was shocked by the imposition of this condition on receiving payment of a proportion of the commissions. He complained to the sales manager, saying that it was not fair. The sales manager replied that it had nothing to do with Stockland, and said that he would take it up with Mr Whitcombe.

During December 2005 the plaintiff from time to time continued to ask Mr Whitcombe and Mr Cooper when payment of commissions might be available. He was told that he would be informed when Stockland had been invoiced. He did not receive any payment for these Waterfront sales (he was receiving payment of commission for earlier project and other sales as they settled). He heard nothing about the Stockland commissions during January, and in mid-February he decided to invoice Leader for 60% of his commissions on the exchanged Waterfront sales. He submitted the invoice by email, with a spreadsheet which set out what he said was the agreed commission structure for him.

Mr Whitcombe replied by email on the same day, 15 February 2006, as follows:

Rod,

There is clearly a serious misunderstanding here! Enormous changes have occurred since you and I discussed your role some time ago and I was shocked that you submitted a claim based on something that didn’t occur as I have assumed you were pretty up to date with everything. I was certain that Terry was talking to you as things developed. You have certainly not managed the listing to this point and you cannot possibly claim that you have. I can see however that we should have had more formal discussions about what was happening. Unfortunately, the biggest problem has been the lack of real estate activity in the office and my unswerving commitment to ensure our financial survival via this project at least. Your potential income is if anything even greater than we discussed, but we have to rectify the lack of established activity. In that sense, we are in the same boat.

After much discussion last year, I approved a commission split with Terry and in line with our new general approach to commission it is nothing like the old system. It reflects the actual way the project has been managed. I have discussed some of the many changes in the way it ended up being managed with you and have not yet required you to act as listing agent in any way.

On many occasions I said to you “At some point you will have to get involved with the listing and help me” but this has not yet eventuated for various reasons.

Alternatively, I put you in the position of having the greatest sales opportunities in the project (particularly in the early “better” selling period) and you have clearly taken advantage of that, doing far better than you and I had earlier anticipated. As a consequence, you have done extremely well out of it and will continue to do so.

I have already withdrawn from the mainstream sales side of the project as you know and can now involve you more in the management of the listing. You are aware of how much of my time has gone into managing the listing to date and for you to receive a proportion of the listing on the second half of the project, you will have to put in the work too.

It is time we sat down and discussed this and a number of issues. There are several imminent developments that will need your focus soon and I am concerned that we are under-resourced as it is. I propose we have some lunch in Kingston tomorrow and plan our “go forward” strategy as well as establish your role in the second half of Waterfront and other projects on the horizon.

The plaintiff’s evidence was that he was at that time unaware of any “enormous changes”. Nothing of that nature had been communicated to him. He had not been informed of any change in the “commission split” system. His evidence was that he had no recollection that Mr Whitcombe had ever said anything about having to get involved in listing or helping him.

On the same day, the plaintiff and Mr Whitcombe had a face-to-face discussion. It appears from the plaintiff’s diary that this was at 12.30 pm, which would be after his email but before the response from Mr Whitcombe. This may not be correct as Mr Whitcombe does not mention any such meeting in his email. In any event, the plaintiff’s recollection was that during the meeting, Mr Whitcombe said to him “Things have changed. I am not going to pay you that.” The plaintiff said “That’s news to me. I was working with the belief that we had an agreement that you would pay me the second lister payment and also commission as noted in our original agreement.” Mr Whitcombe replied “Well, I’m not paying you for that second lister role.”.

The plaintiff recalled then having a meeting with Mr Cooper, the sales manager, who explained the new commission split arrangement, which had the effect that the salesman making a sale would receive a much lesser proportion of the entire commission, about 23.5%.

The plaintiff said that he had been under the misapprehension that the commission Leader was entitled to charge Stockland on each sale was 2% of the sale price, whereas it was in fact 2.2%. He had also believed that Stockland had agreed to advance 50% of the commission on exchange of contracts, and later found out that the arrangement was in fact an advance of 60%.

On Friday 17 February 2006 the plaintiff sent Mr Whitcombe another email:

I did intend to see you today, however, I had a series of appointments.

My position regarding the Waterfront is still the same. I stayed at Leader because of your offer as second lister and I expect that agreement to be honoured. As for the commission rates, I based my calculations on the example you showed me in your memo 7 December 04.

Regarding your other comments – I did not exceed my or your expectations in the early selling period. I had worked hard compiling a client list for at least 18 months and produced those early sales off my own bat and produced what I was expected to.

Mr Whitcombe replied on the same day:

Okay Rod,

Let’s not get too involved with semantics or what our goals were in 2004. There have been many big changes. Massive financial variances and my responsibilities in seeing the company survive require me to make hard decisions. You have been witness. You know why I alone carried the Waterfront listing to this point and anything you say isn’t going to change what actually has transpired to date. I have had to carry the project to ensure its and our survival. I could also say to you and others “You said you were going to get five sales and five listings per month etc etc but you didn’t”. I am the bottom line here and when you and the sales people let the company down (which has been the case for most of the last year), I still have to find the way to pay our bills. I borrow money against my home when salespeople fail to produce. That’s reality.

You haven’t been the second lister (so far) in the Waterfront and that is a fact.

I’m sorry, but you will not be paid for something you haven’t done. As for the future, and as I’ve said to you on many previous occasions, we need to establish a way that you can participate and contribute to the management of the Stockland listing. There are a number of fruitful ways that I think you could and there is more than 50% of the project left to sell. You should focus on the positive here. For example, I see there is potential for the project to be represented properly to the National Art Gallery and several diplomatic and high level government entities. To this time, however, I have not heard you suggest how you can contribute one thing to it and if you still have designs on listing management commission, then you should tell me what you see as your contribution. As a good salesperson on the project, I am happy to have you continue to take advantage of this great product and continue to use it to further your and our interests in other projects. The State Circle project is all your own listing work and that augurs well; you deserve the full listing commission as far as I can see. The Acton is a huge project that is still on the table and you have an opportunity there as well. There are 300 sales at stake. To date I am alone in my pursuit of that one though. I am currently working on Woden East, Kingston Tench St, Doma at Barton and B. Bay, section 55 Belconnen and at least one other Stockland project.

I am happy to discuss all of this with you Rod in a positive and team orientated fashion and I consider you an important element of the company. My focus is now firmly on getting back some established market share so that we don’t have to rely on a high percentage of project commissions being retained to ensure our survival. As you can see, Gabby is a big part of our future plans and with people like her in the company, we have a very good future. Let’s work together to build the “agency” side of the business so you too can participate in its future growth and success. When I have received the amended claim for advanced commission and we have the AWA agents’ agreement in place, we can have Carol pay you your entitlement ASAP.

The next day, Saturday 18 February 2006, the plaintiff prepared an amended claim for commission based on the firm’s commission being 2.2% of the sale price rather than 2% and the advances being 60% rather than 50% of the full commission, and on an agreed commission rate of 45%. He calculated the commission due to him, being 60% of full commission on exchanged sales, at $53,675.98, and the second listing fee on all exchanged Waterfront sales at $53,113.10. He forwarded his amended claim for commission by email to Mr Whitcombe, informing him that he had instructed a solicitor, and that he would advise Stockland that he was not available to man the Waterfront display unit until he had received payment.

On the following Wednesday, 22 February 2006, the plaintiff had a meeting with Mr Whitcombe. Also in attendance was Ms Gabriele Hume. Ms Hume had been with Leader since April 2005, and was appointed general manager of Leader with effect from 1 March 2006.

The plaintiff’s evidence was that at this meeting, he said that he had submitted the revised claim for commission based on what he said was the original agreement. Mr Whitcombe said “No way, I am not paying you that. You haven’t done the work and things have changed.”. Mr Whitcombe refused to pay the plaintiff as second lister, but suggested the possibility of paying a consultancy fee of $1,000 per sale. The plaintiff said that this was far short of the original arrangement, and the discussions moved to a possible figure of $1,500 per sale. The plaintiff was at that time in the process of buying a house, and was relying on a payment from Leader for the stamp duty. Mr Whitcombe suggested lending him $50,000, and also made a suggestion of giving the plaintiff a stake in the company. The plaintiff’s evidence was that he did not accept any offers at that meeting. That evening he sent Mr Whitcombe an email as follows:

Further to our discussions this morning in the presence of Gabby Hume, you offered me the following:

1. A consultancy fee of $1,500 on each of the remaining sales (60) at the Waterfront for management

2. Sales commissions on all sales of 23.5%

3. $50,000 loan from Leader

4. An unspecified stake/share in Leader Real Estate

5. Involvement in future projects

We came to no agreement on the listing and sales commissions owed to me as per our original agreement of 7 December 2004.

I will say that on reflection a loan of $50,000 in lieu of claimed commission is not acceptable.

As for the other matters I will respond in due course. Your offer of $1,500 management consultancy fee on remaining sales at Waterfront is a matter I would be willing to include in any future discussions we may have.

A copy of this has been forwarded to my solicitor for his records.

The plaintiff and Mr Whitcombe had another meeting on the morning of Friday 24 February 2006, which the plaintiff recalled as heated. There was a further meeting the same day at 3 pm at the Waterfront, where the plaintiff said that he was given an ultimatum to bring a resolution by 4.30 pm failing which he would be suspended from duty and not permitted access to the Leader office.

The plaintiff said that he thought long and hard. He was in a situation where he had to resolve the matter. As he saw it, his options were either to walk away and not get paid anything, and to find other employment, or to try to achieve a resolution with Mr Whitcombe. He put a further proposal in writing as follows:

Derek, in the interests of resolving this dispute and to avoid potentially damaging legal action, I put forward the following resolution.

1. I retract my claim of the 10% second listing fee for the first 48 sales at the Waterfront or any subsequent sales (a claim in total of $88,521.84).

2. I want full payment (100%) on my 14 exchanged sales at the Waterfront at the original agreed rate. That amount is $89,459.96. Refer spreadsheet. A cheque for this amount to be made out to Elrom Pty Ltd and given to me on Monday 27 February 2006.

3. I will not claim this rate for any subsequent sales and will accept the new rate offered by you on those remaining sales I make.

4. I accept the offer of a $1,500 consultancy fee for the remaining sales pending clear guidelines on the expected tasks.

I know you are eager to resolve this matter urgently so I would expect a response from you immediately. This is my final offer.

A number of emails went backwards and forwards on Monday 27 February 2006. Mr Whitcombe asked the plaintiff for a copy of his employment agreement before responding to his proposal. Mr Meates responded that his offer expired at close of business on that day and that Mr Whitcombe would have to rely on his own documentation. Mr Whitcombe replied:

Rod, we have copies of the documentation and so does our solicitor. I want to ensure we are talking about the same documents. You seem to be avoiding some correspondence in our discussions. You are in breach of your employment agreement so I wouldn’t go threatening me with deadlines. I will respond to your “proposal” after I have met with our solicitor once again. I am very busy as you would know.

A little later, Mr Whitcombe emailed again:

Rod,

Our solicitor has read your employment agreement and the memo of December 04. It has been my hope to resolve the issue without having to take strong steps. I will get back to you as soon as I can and that won’t be today. As I am still your employer I suggest you do some proper work in the meantime as your results have been less than great over the last few months and this issue has caused enough trouble.

A further meeting took place between the plaintiff and Mr Whitcombe on Tuesday 28 February 2006. The plaintiff’s evidence was that Mr Whitcombe offered 50% of the amount he had claimed. The plaintiff rejected the offer. On Wednesday 1 March 2006 the plaintiff confirmed the rejection by email and resubmitted his previous invoice. On Thursday 2 March Mr Whitcombe responded:

I’m sorry Rod; we cannot pay you that amount. In the interests of all those positives we discussed yesterday, I offered you half of your amended claim now and half on settlement. That won’t change. What happens next is up to you.

The next meeting was Monday 6 March. Ms Hume was again present. Mr Whitcombe increased the offer to immediate payment of 60% of the amount claimed, with 40% to follow on settlement. The plaintiff pressed his claim for the second lister fee, but Mr Whitcombe refused to consider this any further. Mr Meates asked that the offer of 60% immediately with 40% to follow be put in writing. He said that he would like to discuss how the $1,500 consultancy fee would work but that this was something which could be worked on later, and Mr Whitcombe agreed with that. The plaintiff said that he would invoice Leader for 60% of his commission claim.

On the following Monday, 13 March 2006, Mr Whitcombe sent the plaintiff an email saying:

Rod,

I am just waiting for Meyer Vandenberg to prepare your employment agreement with the details of our recent agreement included. They are preparing all of them at the same time. We also need your “listing consultancy pro . . . ” to review and add to the agreement; how’s it going? Once we’ve got the agreement all squared away we can make the advance payment to you.

The plaintiff replied:

Derek,

It was not my understanding that the advance was tied to signing a new agreement. I am expecting the agreed payment immediately.

. . . pay me and I will be back at work at the Waterfront.

Mr Whitcombe immediately responded:

Rod, the agreement to pay you the money was for very obvious reasons tied to you signing a new agreement which also includes your new “consultancy” activities. That was very clear and I have asked Gabbie if she had any doubt about . . . had not. When the new employment agreement is in place, as I said before, we will pay you the advance. In the meantime, if I were you, I would be wanting to be at the display as the enquiry is fantastic at present . . . however; we can cover it and I am inducting Gabbie as well. Get the list to me ASAP so we aren’t waiting on it, okay?

The plaintiff recalled that Mr Whitcombe had raised the question of a new Australian Workplace Agreement at a staff meeting at about that time, but he said that Mr Whitcombe had not discussed this with him specifically and certainly had not made it a condition of the payment of the commission to him.

After 13 March, the plaintiff said that he had a number of conversations with Mr Whitcombe about the payment. At one point Mr Whitcombe told him that he would have a deed of release prepared. In the event the plaintiff was never given or asked to sign a deed of release. On 30 March 2006 the plaintiff was presented with a letter, which he was asked to sign, in the following terms:

This is to acknowledge receipt of the sum of $59,043.57 inclusive of GST being an advance on commissions in respect of sales at the Waterfront, Kingston ACT.

This is to further acknowledge that the above sum is an advance on commissions that Elrom Pty Ltd will only be entitled to in the event that it is still contracted to K D Pty Ltd at the time of settlement of all sales in the Waterfront project. This is to confirm that in the event of Rod Meates of Elrom Pty Ltd leaving the employ of Leader Real Estate that the sum of $59,043.57 together with any other advances or loans, is payable within 7 days.

The plaintiff said that he had come in on 30 March by arrangement to collect the cheque. He had not previously seen the letter he was asked to sign. He spoke to Ms Hume about it. He told her that the letter did not accurately represent what had been agreed and that he would not sign it. She said that she would have to talk to Mr Whitcombe, and did not hand the cheque to the plaintiff.

On the following day, 31 March 2006, the plaintiff was provided with a further letter on Leader letterhead, which he was prepared to sign. The letter simply read:

Enclosed is a cheque for $59,043.57 which is a commission advance of sales initiated at the Waterfront due to Rod Meates who has instructed Leader Real Estate to make payment to him in the name of Elrom Pty Ltd.

On signature of this letter, the plaintiff was handed the cheque.

Thereafter, the plaintiff continued with his work at Leader, listing and selling real estate and working on projects including the Waterfront. There was no further discussion between him and Mr Whitcombe, or anyone else from Leader, as to the status of second lister or any second lister payment. Nor was there any conversation about consultancy payments.

On 5 June 2006 the plaintiff decided to resign to take up a position with Peter Blackshaw Real Estate. By the time of the hearing, he was employed by CIC as a project sales manager.

Mr Alexander gave evidence that after he had offered the plaintiff a job at the end of 2004 and the plaintiff had accepted it, he received a telephone call from Mr Whitcombe, with whom he had had a good business relationship for many years. Mr Whitcombe asked whether he would be prepared to release the plaintiff from the arrangement so that he could remain with Leader. He told Mr Alexander that the plaintiff was a valuable employee whose services he wished to retain, and that Mr Alexander would be doing him an enormous favour by releasing him. Mr Alexander agreed, subject to confirming the arrangement with Mr Meates which he did shortly afterwards by telephone.

Brief evidence was also given by Gregory Smith, development manager with Stockland. He had been in that position in relation to the Waterfront project from 2004. He dealt primarily with Mr Whitcombe at Leader Real Estate as selling agents for the units. Sales off the plan commenced in December 2004, with holding deposits of $10,000 being paid. Exchange of contracts commenced in June 2005. Part of the arrangement with Leader, formalised in a written agreement, was that on unconditional exchange of contracts in respect of a unit, Stockland would pay Leader an amount equal to 60% of its commission within 28 days of exchange and on receipt of a tax invoice. The balance of 40% would be payable following completion. For each sale, Leader would be entitled to a commission equal to 2.2% of the sale price. The agreement provided that on receipt of payment of an instalment of commission by Stockland, Leader must, as soon as practicable, distribute any commission payable to its employees or contractors in respect of the sale of the relevant unit.

Mr Smith confirmed that as sales of units proceeded, Leader invoiced Stockland for the 60% advance payments of commission from time to time.

Mr Smith met the plaintiff during 2003 or 2004, as a salesman with Leader. He became aware at some point that Mr Meates had been leaving to work with another employer, but had subsequently elected to stay with Leader.

He said that Leader did not send invoices for the 60% advance commission as contracts were exchanged in respect of each individual unit, but rather “bundled” the sales and sent an invoice relating to a number of properties at a time. His recollection was that the total paid to Leader by way of commission and bonuses in respect of the Waterfront project was of the order of $3 m. All units were ultimately sold and all sales proceeded to settlement. There had originally been 108 units in the development but some were combined at the request of purchasers and 104 units were sold. Of these, there were four where original purchasers could not complete, which were placed back on the market and sold to other buyers.

The case for the defendants

Mr Whitcombe gave oral evidence. He has been a licensed real estate agent in Canberra for more than thirty years.

He confirmed that he had been managing director of Leader Real Estate when the plaintiff commenced employment there early in 2003. Leader was exclusively involved in the selling of residential property, both established houses and units and new building projects. In relation to the latter, Leader used the expression “first lister”. Mr Whitcombe’s evidence was that the expression “generally related to the person that gained the business, put the business generally together, and performed a number of important functions on behalf of the client”. He added that “it related to the function of that person in terms of assisting the client once the business had been achieved, which is generally done by the first lister.”. The expression “second lister” was also used. Both terms applied only to project development and marketing, not to the listing and sale of established properties. Mr Whitcombe’s evidence was that he created the term “second lister”, and had never heard it used outside Leader Real Estate.

Mr Whitcombe was asked in chief what were the duties and responsibilities of a second lister. His answer was lengthy, and rather than attempt to summarise it I shall set it out:

Well there was no set number of duties that a second lister would have to perform but it would be a number of duties from the overall list of duties performed by listers in general whether they’d be first or second and they could include involvement with a client in a selection of a site to be developed.
That could include being involved with architects who are employed by the client, it could involve demographic research, work with focus groups to find out what sort of people would be interested in purchasing property and the development, it could involve work with interior designers, it could involve work with engineers in relation to heating and so forth, it could involve work such as advice on appropriate inclusions.
It could involve work in creating selection sheets for a client, it could involve work which would see the second lister educating the rest of the sales team in what was incorporated in the project, it could involve different types of communication with the sales team in relation to the legal aspects of selling that particular project which could include the period of time in which contracts needed to be exchanged, the various components of the contracts, the period of time in which people had to pay deposits , the size of deposits, whether or not they could be put in co-options in the purchase of property, the number of properties that could be purchased by a purchaser so as to not put the client at risk in the instance of a purchase for multiple properties not being able to proceed.
It could include communication with the vendor or the clients and the client’s consultants and representatives on a whole range of things and I could continue a lot about that but might just cut to some others. It could include assisting the sales people in achieving timely exchanges of contracts in the sales of property.
It would definitely include updated information to be provided to the sales people in relation to properties that were sold, properties that were exchanged, properties that had finance approval, the number of properties for sale, the pricing of properties that were unsold, any information relating to changes that were to occur with those unsold properties, expected completion dates, inclusions list, selection opportunities which can change from time to time, it could include assisting the sales people in sorting out problems with their purchases and helping them bring those problems to a resolution. It could include providing information in reports to the first lister and generally did.
It could include creating reports or parts of reports that were to be provided to the client. It could include attending exhibitions and generally attending exhibitions at the busiest times so as to give them an opportunity to make sales. It could include them working with purchasers that had purchased from other sales people.
It could include organising access on to the building site with respect to occupational health and safety and insurance issues. It could include attending inspections with various purchasers after receiving industry qualifications. It could include assisting with the marketing of the development. It could include working with marketing companies and advertising companies. It could include general updates to the client as regards to the success of the development.
It could include the identification of prospective purchasers in the community. It could include recommendations of yet unutilised opportunities to market. It could include setting up functions for presentations for various parts of the community and so on and I could continue

I asked Mr Whitcombe how the duties of a second lister differed from those of a first lister. His answer was that the first lister would perform some of those duties himself, and would apportion the balance to the second lister. There was no specific practice as to allocation of duties between first and second lister. Appointment of the first and second lister was a matter entirely for Mr Whitcombe as managing director.

He was asked how the duties of a second lister compared with those of an ordinary member of the sales team. He replied that the second lister would be significantly more involved with the project, and would perform many of the tasks he outlined in his earlier answer.

Mr Whitcombe denied putting to the plaintiff any ultimatum that the dispute had to be resolved by 4.30 pm on 24 February 2006 and that he would be suspended if it were not. He could not recall whether he spoke to Mr Meates after the meeting on 22 February 2006 and receiving the letter from the plaintiff on 24 February. He did not suggest that he specifically took this up with the plaintiff at their next meeting, which he accepted was probably on 27 February 2006. His recollection was that at the meeting on that date he initially thanked the plaintiff for his proposal but said that he would not be in a position to pay him 100% of the commission on his exchanged sales, as Leader had received only 60% of the commission. However, he was happy to talk to the plaintiff about paying him his share of the 60%. His recollection was that the plaintiff said that he would think about this. He recalled the plaintiff saying that he was under financial pressure and keen to resolve the matter and receive some money. He mentioned that he was buying a house.

Mr Whitcombe said that he reiterated that the plaintiff had not done any work as a second lister and was not entitled to be paid for it. He said that the plaintiff conceded that he understood this, and that the offer was limited to 60% of his commissions on exchanged sales.

Mr Whitcombe said that the plaintiff used the words “I understand that I didn’t perform the work of a second lister technically and therefore I am not due to be paid for it.”

Mr Whitcombe’s evidence was that the next discussion about the dispute after the meeting on 27 February was on 29 March 2006. He then sought to amend his earlier evidence, saying that it was at the meeting on 29 March that the plaintiff had said “I accept that I didn’t perform the work of a second lister and therefore don’t expect to be paid for it.” Mr Whitcombe recalled that there had been a number of discussions between the meeting on 27 February and the meeting on 29 March, in the presence of Ms Hume. Mr Whitcombe said that he had said to the plaintiff many times that as he had not done the work of a second lister in any way, shape or form he would certainly not be paid for it.

At the meeting on 29 March, Mr Whitcombe’s recollection was that the plaintiff said “I will accept the 60% commission. I will accept the commission as full and final payment in the dispute.” Mr Whitcombe then said that Leader would be happy to pay the plaintiff the remaining 40% of commission on settlement “assuming you are still with the company”. He asked the plaintiff whether he accepted that this was in full and final settlement of the matter, and the plaintiff acknowledged that he accepted this. He said “I guess I have no choice. When can I have the money?” Ms Hume then said that she would organise the money forthwith.

It was put to Mr Whitcombe in cross-examination that on 9 December 2004, in the course of a meeting with the plaintiff to discuss the memorandum of 7 December 2004, agreement had been reached that if the plaintiff were to leave Leader with sales where contracts had been exchanged but settlement had not yet been reached, after settlement he would be paid 90% of the commission otherwise payable. Mr Whitcombe denied this.

He agreed that at the end of 2004 he was concerned to keep the plaintiff with the company and to keep him happy. He was also keen to ensure that Leader’s relationship with CIC remained healthy, and a continuing source of business.

As to clause 9 of the memorandum, in which Mr Whitcombe had asserted that the plaintiff had breached his employment agreement, and reserved Leader’s right to pursue him for any special damages, Mr Whitcombe’s evidence was that if the plaintiff had left and Leader had lost CIC’s business, he believed that he would have pursued the plaintiff about this. He was asked whether he had raised it with Mr Alexander in his conversation with him. His response was that it was not something that he had wanted to go into detail about, but he certainly did mention the matter to Mr Alexander. Mr Whitcombe said that he had past experience where sales people had left Leader and taken major clients with them, and he was concerned that this might happen again with the plaintiff.

As to the concluding sentence of clause 7 of the memorandum, in which Mr Whitcombe had said that a proposal to have at least 50% of the commission payable on exchange had been verbally approved by Stockland, and that approved sales persons would be able to take advantage of this opportunity, Mr Whitcombe’s evidence was that he had mentioned this to sales staff in general as something which he was trying to negotiate, and which he thought would be attractive to them.

Senior counsel for the plaintiff put to Mr Whitcombe in cross-examination that following the meeting on 9 December he had reached agreement with the plaintiff about the various issues raised, and the plaintiff had decided to withdraw his notice and stay with Leader. His answer was that there were still a number of things the plaintiff was concerned about, which he wanted to discuss further. It was put to him that there were no further discussions with the plaintiff after 9 December about these issues. His response was:

I believe that Mr Meates had changed his mind about going to CIC because he could see that he would have far more opportunity with the company, particularly with the various aspects that we were discussing in terms of getting 50% commission payments and other projects that we discussed.

He did not accept that the basis upon which the plaintiff was to stay with Leader had been effectively settled by the end of that meeting, saying “it never really settled. It never ended. The discussions continued.” He denied that the plaintiff ever accepted the offer of 45% of commission for his own sales.

Mr Whitcombe was cross-examined about the earlier projects his firm had been involved with, Sky Plaza at Woden (a CIC project) and Gateway at Kingston, a joint venture between St Hilliers and the ACT Government. It was put to him that if he had been unable to deal with an inquiry about a unit in one of those projects he would pass the enquiry on to the plaintiff. He denied this, and said that there were a number of sales staff who dealt with such enquires. It was put to him again that he was pushing the plaintiff as the person with whom Hillers and CIC should deal in relation to those projects. His answer was that he was trying to promote the plaintiff and trying to give him exposure to the projects. He was asked whether he agreed that he had pushed the plaintiff as the person the companies should deal with, other than himself. His answer was “on occasion, yes”. He then agreed that it was his plan to get the plaintiff known as the Gateway project specialist within the Leader office.

He denied that he had suggested the plaintiff as the person Stockland should deal with in relation to the Waterfront project. He then agreed that this might have been so, at times when he was unavailable, although he always handled meetings personally.

Mr Whitcombe was reluctant to make any concession that the plaintiff had been in any special position as a salesman in relation to the Waterfront. Asked whether the plaintiff had taken a number of deposits on Waterfront units after 10 December 2004, he answered “along with other sales people, yes.”

He was also reluctant to concede that the plaintiff had been responsible for the fourteen sales in respect of which he claimed commission. He was asked about the names of some of those buyers. He said that he could not recall where they came from originally. He recognised a number of them because he still dealt with them. A number of them were people who attended the display unit and met the plaintiff there.

He said that the plaintiff had not always complied with his requests for action. As an example, he said that he had asked the plaintiff to see whether he could get access to a National Gallery database, because he thought that there would be members of the Gallery who might be potential buyers. He did not agree that he had been completely satisfied with the plaintiff in the latter part of 2004, or during 2005. He appeared to me at some pains to play down the plaintiff’s contribution to sales efforts of the Waterfront project during late 2004 and early 2005.

His evidence was that Leader had to achieve a number of sales resulting in exchanged contracts before being invited by Stockland to send an invoice for an advance payment in relation to commission. He said that he believed that fifty sales was “the magic number” entitling Leader to advance commission. This is inconsistent with the agency agreement between Stockland and Leader, which does not specify any minimum number of sales to be achieved before the agent can invoice for 60% of commission. It is apparent that the written agreement was that Leader could invoice following each exchanged sale if it chose to do so. There is no obvious reason why Leader would not have invoiced Stockland for advance payments of commission as soon as the entitlement arose.

The “magic number” requirement was not put to Mr Smith in cross-examination (paragraphs 78 to 81 above).

Mr Whitcombe was asked in cross-examination whether it was correct that, on being asked for a small advance by the plaintiff late in 2005, he imposed a condition of making seventy-five prospecting calls over the following weekend. His reply was that sales people frequently asked for advances, and he probably did impose that condition, which was the sort of thing he usually said to sales staff asking for advance payments. He said that cash flow was usually a problem. He blamed this on sales staff not listing enough properties for sale, in turn related to inadequate effort in making prospecting calls.

Asked about his email to sales staff at the end of 2005, set out in paragraph 48 above, his evidence was that he could not recall whether Leader had yet invoiced Stockland for commission advances by the time he sent the email. He described the condition he imposed on sales staff of listing three established houses for sale as an incentive, and added that “it was a condition upon each one of them getting three established listings which, of course, they didn’t”. It is difficult to escape the conclusion that Mr Whitcombe was aware that the condition he was imposing would be difficult if not impossible to meet, minimising any likelihood that Leader would be obliged to pay any of the advance commission money to its sales staff.

It was put to Mr Whitcombe that he had not kept the plaintiff informed about receipt by Leader of commission advances from Stockland. His reply was that he was not “necessarily in the habit of discussing the financial arrangements of the company.” It seems an unavoidable inference that the plaintiff and other sales staff were unaware of Leader’s contractual obligation to Stockland to distribute commission payments as soon as practicable following receipt to staff who had effected the sale which had generated the payment. The plaintiff said in his letter to Mr Whitcombe of 8 December 2004 (set out at paragraph 35 above) that he had concluded that Leader was either a company in a financially precarious situation or an unsympathetic employer. The evidence does not enable me to make any finding about Leader’s financial situation during 2004 and 2005, but I am satisfied that Leader must have received advance payments of commission from Stockland during that period, from which it did not immediately pass on the proportion due to its sales staff. It is clear that Mr Whitcombe, rather than make those payments, took the opportunity to impose further conditions on staff, for example as to numbers of established properties to be listed for sale, which were in no way related to Stockland or the Waterfront project.

Mr Whitcombe was cross-examined about the role of second lister on the Waterfront project. It was put to him that he never supplied the plaintiff with a list of expected duties. His reply was that the plaintiff was familiar with the duties. Pressed, he said that he was sure he had done so orally. Asked when this occurred, he replied “in numerous meetings, sales meetings, the sales people all were exposed to the activities that were involved, so I can’t say I specifically went through the list, but he certainly was exposed to it”. He also said that he had spoken “one on one” to the plaintiff about the necessary duties, on a regular basis. An example was an occasion just before a meeting with a client when he asked the plaintiff “how he was going with his thoughts on the listing activities”. He said that he asked this question because he had noticed that the plaintiff “had not been doing anything”.

Mr Whitcombe denied that the offer of payment as a second lister had involved no expectation of additional duties but had merely been a financial inducement for the plaintiff to stay with Leader. It was put to him that throughout 2005 he put nothing in writing about any dissatisfaction he had with the plaintiff in relation to any failure to act as second lister. His reply was that he was waiting for the plaintiff to come back and confirm that he was accepting his offer. He said that he would not pay anybody the amount of money involved in the second lister arrangement for doing nothing. He conceded that a previous employee had sued Leader for payments as a second lister. In relation to this, he said “he made an ambit claim that we ended up negotiating out”.

Mr Whitcombe was cross-examined about his email of 15 February 2006, set out in paragraph 51 above, sent after he received an invoice from the plaintiff. He was asked about the “enormous changes” he had referred to in the first line. He said that the expression had “applied to a lot of things that were happening”. He was “referring to a number of things that had occurred over a period of time, nothing in particular”.

As to the new “commission split” arrangement, he said that changes had been made to the division of commission with sales staff. The sales manager “had updated everybody as time had gone by”. Mr Whitcombe said that he had not been personally involved because he was too busy doing the Waterfront work. The sales manager had introduced the new commission scale, and had reported to Mr Whitcombe that he had explained the new system to sales staff. He assumed, based on a conversation with the sales manager, that the latter had told the plaintiff that the percentage commission payable to salesman on a sale would be 23.5% rather than 45% of the total commission, and that the plaintiff had accepted this. He conceded that he had never had any discussion with the plaintiff personally about it. He would not necessarily have expected the sales manager to have notified staff of this change in writing. He said that “sometimes those sorts of things are discussed in meetings. In that particular instance, Terry spoke to each of the sales people individually and discussed it with them”. Mr Cooper was not called. There was no explanation for his absence.

As to the second lister issue, Mr Whitcombe said “. . . it became very clear to me that Rod was unable to deliver any of the activities that I needed. So I just let it go, basically. He didn’t do anything in terms of the second listing role. So it just died a death, so to speak.”

He conceded that he had not put anything to the plaintiff in writing about letting the second lister role go. He said he had not needed to. As to the second lister issue generally, Mr Whitcombe’s evidence was that he had never reached an agreement with the plaintiff. The plaintiff had never accepted the offer put to him, and never did anything consistent with having accepted it. The plaintiff had simply not responded to the offer and the offer had gone away.

Senior counsel for the plaintiff put to Mr Whitcombe that, in response to the offer, the plaintiff had withdrawn his notice and come back to work for Leader. Mr Whitcombe acknowledged this, saying “. . . he was clearly keen because we had a very exciting project and getting advance commission to a sales person in his financial situation was obviously attractive”.

Mr Whitcombe was cross-examined about whether the percentage advance on commission was to be 60% or 50%. He said “The arrangement that I had with Stockland was that they would pay Leader Real Estate 60%, but that didn’t necessarily mean that we were going to pay the sales people at the rate of 60%. They’re two separate matters.” This is plainly inconsistent with Leader’s contractual obligation to Stockland under clause 13 of the agency agreement, to distribute any commission payable to its employees or contractors as soon as practicable after receipt of an instalment of commission from Stockland.

Of course the sales staff of Leader were not parties to the sales agreement with Stockland, but their effectiveness at selling Waterfront units was of high importance to the project from Stockland’s perspective, which was clearly the reason Stockland had inserted the final paragraph in clause 13.

Senior counsel for the plaintiff put to Mr Whitcombe that following his rejection on 27 February 2006 of the plaintiff’s offer set out in his written communication of 24 February, he had a further meeting with the plaintiff on 6 March. Mr Whitcombe said that he did not recall any meeting on that date. Shown a copy of an email from the plaintiff sent on 13 March 2006 which referred to a meeting the previous Monday, 6 March, Mr Whitcombe accepted that a meeting must have taken place on that date.

Mr Whitcombe said that he had had another meeting with the plaintiff, he thought on 29 March 2006. He said that he was a little hazy with the dates by the time he gave his evidence. He was however sure that he had held a meeting at about that date with the plaintiff, in Ms Hume’s presence, and that this was the last meeting where they discussed resolution of the dispute. He thought that it had been in his office. He did not remember at what time of day, or whether it was morning or afternoon. He thought that the meeting lasted about fifteen or twenty minutes. He recalled that during the meeting the plaintiff said that he accepted $60,000 in full and final payment, or words to that effect. Mr Whitcombe said that agreement was reached at the meeting for Leader to pay the plaintiff $60,000 in full satisfaction of his claim.

It was put to him that he had agreed some weeks earlier to pay the plaintiff in effect his full claim in respect of commission, being 60% of what would be his full commission on each of the sales. Mr Whitcombe agreed with this, but added “There was still a sense that he wasn’t completely happy with that, and I wanted to make sure that there was no misunderstanding that this was in full satisfaction of the matter.”

It was put to Mr Whitcombe that during his evidence in chief, after correcting an earlier mistake, he had seemed certain that the meeting had taken place on 29 March. His response was that all he could now say was that it was on or around that date. He agreed that he had no written notes of the meeting, and no diary entry to confirm it. He conceded that the plaintiff’s diary for 29 March made no reference to any such meeting. He agreed that there was no email in either direction confirming such a meeting or any agreement reached at it. He said that immediately following the meeting he instructed Ms Hume to have a cheque for the agreed amount prepared. Mr Whitcombe said that he dictated a letter to the financial controller of Leader, Ms Hays “but for some reason the letter that I dictated to the financial controller which was to be given to Mr Meates with his cheque wasn’t the one that was actually ultimately delivered”. He identified the letter of 30 March 2006 as the one he had dictated. He conceded that the letter did not include the expression “full and final payment” or “in full satisfaction”.

His attention was drawn to the last sentence of the letter, in which Mr Meates was asked to confirm that if he left Leader’s employ he would repay the amount of the cheque. It was put to him that he had not said in chief that this was any part of the agreement reached at the meeting on 29 March. He responded “Well, this letter wasn’t actually attached to the cheque.” He said that he had not needed to mention this during the discussions on 29 March because it was already part of the plaintiff’s employment agreement. His intention in adding the sentence to the letter was to make the point that he was paying the advance on condition that the plaintiff remained with the company until the Waterfront project was completed and settled.

It was put to Mr Whitcombe that during the course of the action a number of defences and amended defences had been filed, the first in 2007. He said that he had not necessarily had a lot to do with those documents which had been prepared by his solicitors.

Mr Whitcombe was shown the letter signed by the plaintiff on 31 March, when the cheque was handed over. His evidence was that he had not been involved in the preparation of that letter but had instructed Ms Hume to organise it. He was not told that the plaintiff had refused to sign the letter of 30 March. He agreed that there was no mention in the letter of 31 March of full and final settlement or anything similar.

Mr Whitcombe agreed that he did not get the plaintiff to sign a deed of release at any time. He said that he had instructed his then solicitors to prepare a deed of release. There was a delay because the solicitor looking after the matter went on holiday. He said that he did have a draft deed of release drawn up but it was incomplete and he did not use it. Time then got away, and he thought that the matter had been completely resolved.

Ms Hume was called to give evidence. She has been employed in real estate in Canberra for some twenty years. She joined Leader in April 2005, and remained in its employ, or that of related estate agencies, until January 2011. By the time she gave her evidence she had started her own property management agency.

She was initially engaged as a senior property manager with Leader but was promoted to general manager from 1 March 2006. In that role she was responsible for Leader’s various departments: sales, marketing, property management and administration.

The plaintiff was working at Leader when she joined. He was a senior sales consultant.

Her evidence was that in February 2006 Mr Whitcombe asked her to attend a meeting he was having with the plaintiff in his office, so that she could witness what took place. She said that she took notes during the meeting. She understood that the meeting had been called because of an email sent by the plaintiff to Mr Whitcombe requesting payment of commission. She took the notes in a notepad. She thought she had kept it with her personal records at home. She had not previously been asked about this notebook. It became clear that the solicitors and counsel for the defendants were unaware of its existence until she mentioned it in the witness box.

Ms Hume’s evidence was that she kept it with her records at Leader’s office until she left Leader at the beginning of 2011 when she took all of her records home. She had looked at the notes in the course of preparing an affidavit which she swore for the purposes of the proceedings in August 2010. At the end of the day’s hearing, Ms Hume went home and carried out a search for the notebook but was unable to find it.

Ms Hume’s evidence was that she attended two meetings with Mr Whitcombe and the plaintiff during February 2006, and took notes at each of them. She recalled only one further such meeting, on 29 March 2006, although there were other informal discussions during that month. She did not take notes during the meeting on 29 March. Her recollection was that a proposal had been tabled. Amendments were made to that document during the meeting and these, in her view, formed the notes of the meeting. She did not take notes of any informal meetings during March 2006.

She said that during 2010 she was asked to prepare an affidavit for the proceedings. For that purpose she reviewed all of the documentation available to her. These included her notes of the two meetings, which she looked at at the time but had not seen since. She thought it possible that she had left them at the last office she worked as part of Mr Whitcombe’s group, PRD Nationwide, but they have never been brought to the attention of the court and I must take it that they have never been found.

Ms Hume also said that her affidavit had been prepared from notes she had made which formed the basis of a draft of the affidavit, but this also has not been produced and, I take it, has not been found.

She was asked what had happened at the first of the meetings in February 2006. Her answer was that the first point was that Mr Whitcombe had been shocked to have received a request from the plaintiff for payment of commission. Following objection, she was asked to recount what had been said. She said that Mr Whitcombe had said “Rod, you have made this claim as a second lister. Can you please tell me what you have done in that role?” Mr Whitcombe then asked whether the plaintiff had been in contact with various embassies to promote the development, whether he had assisted the sales team in the project, whether he had been involved in any of the reporting. The plaintiff responded “You know I haven’t, you know that you have done that.” The plaintiff then conceded that he had not acted in the role of second lister. He said that this did not matter, and that he still had an entitlement to payment. The plaintiff went on to say that he needed the money because he was buying a house, Mr Whitcombe said “Let’s see what we can do to assist in this regard.” He suggested a consultancy fee of $1,500 per property on each of the sixty units remaining to be sold, a loan of $50,000, a future potential shareholding, involvement in future projects and a 60% advance on commissions. The plaintiff said that he would consider all of this and let Mr Whitcombe know.

Ms Hume said that the next meeting was five days later. Again she attended at Mr Whitcombe’s invitation. She took a pen and notebook. She saw during the meeting the plaintiff’s memorandum of 24 February 2006. The plaintiff said that he wanted his full commission on his fourteen exchanged sales. Mr Whitcombe said that the developer, Stockland, had paid only 60%. The plaintiff said that he needed the 100% amount and that it was imperative that he have it. Mr Whitcombe said that this was not possible. No agreement was reached.

After that meeting a number of informal discussions took place during February 2006. The plaintiff’s office adjoined hers, and he would raise the matter with her frequently as they passed.

The next formal meeting Ms Hume could recall was one that took place on 29 March 2006. Again she was invited to the meeting by Mr Whitcombe. She took her pen and notebook. She said that during the meeting, the plaintiff stated that he realised that he had not performed the role of second lister on the Waterfront project and would not press that claim. He wanted payment of the commissions on his exchanged sales. He was under financial pressure because he had committed himself to buy a house. Mr Whitcombe said that he could pay a 60% advance but no more. The plaintiff asked whether Mr Whitcombe might pay 100% of the commission if he withdrew the claim for a $1,500 consultancy fee on remaining sales. The plaintiff put a line through the paragraph numbered four of his memorandum of 24 February as he put this proposal. Mr Whitcombe repeated that he could not go any higher than 60% of the commission claim. The plaintiff then agreed to this. He said that he was disappointed but he needed the money to buy the house. He then crossed out the figures 100% and substituted 60%. He put a line through the claimed amount in the memorandum ($89,549.96) and substituted the figure $60,000.

Ms Hume’s evidence was that Mr Whitcombe then said “That’s good. We’ll organise a payment for you. Let’s get on with it.”

Ms Hume said that she had a meeting with the plaintiff in her office on the following day, Thursday 30 March 2006. She said that she commenced by saying words to the effect that she still did not understand why the plaintiff had made a claim for payment as a second lister. He responded that he knew that he had not performed that role but said that did not matter, it was what he had expected.

Ms Hume told him that she was preparing a payment for him, but that she had also reviewed his employment agreement. She asked him to acknowledge that he understood that in the event that he left Leader’s employment the advance payment would have to be repaid. Her evidence was that the plaintiff said that he understood this.

She said that she also used words to the effect “This is full and final payment on the disputed claim.” She asked whether he understood this, and he responded “I understand”. He asked how soon the payment could be made. She said that she was working with the finance manager on getting the payment to him as quickly as she could. It did not become available until 3 April, when she gave him the cheque with a letter, which she signed first and he then signed. Her signature was dated 3.4.06 in her handwriting.

Ms Hume was asked in cross-examination whether she recalled a meeting on Monday 6 March 2006. She said that she did not recall the meeting. When she was reviewing documents to prepare her affidavit, she saw an email which mentioned that date but she did not recall the meeting. She remembered a number of informal discussions leading up to the meeting of 29 March.

By agreement, senior counsel for the defendants tendered five paragraphs (of twenty in all) of Ms Hume’s affidavit sworn on 20 August 2010. Two of these paragraphs were introductory and consistent with her oral evidence. In the three substantial paragraphs, Ms Hume set out conversations during February and March 2006 which I should reproduce:

6. A few minutes after this discussion, on 22 February 2006, I attended a meeting in Mr Whitcombe’s office with Mr Whitcombe and Mr Meates. A discussion at the meeting occurred to the following effect:

Whitcombe: Rod, I don’t understand. As I said to you on the phone, you have not done any of the work that a “second lister” is expected to do. I was shocked to receive your claim for the listing fees. Tell me, what have you been doing in performing the role of a “second lister”?

Meates: Well, that’s not the point. I have expected it.

Whitcombe: When I offered you a role as second lister I asked you to do a number of things and you haven’t done any of them or anything that a second lister is supposed to do, such as go to the Art Gallery and using your connections set up functions there to promote the development. You need to be liaising with embassies and other things that we have discussed in the past. Have you done any of these things to justify your claim?

Meates: No, I haven’t. But as I said it is not the point.

Whitcombe: To perform the role of a “second lister” you would also need to be liaising with the sales team and provide project updates and so forth. Have you done this?

Meates: No, I haven’t. I didn’t do it as you have always done it. I couldn’t see anything else that I should do.

Whitcombe: What interactions have you had with the sales team other than just being a sales person?

Meates: None. We haven’t had a meeting because I was aware you were doing all that.

Whitcombe: Then you haven’t been performing any of the tasks required of a “second lister”. You haven’t performed the role of a “second lister”, so why claim for it?

Meates: It doesn’t matter that I haven’t performed the role. It matters that you promised me that I would be in this role and I need to be paid accordingly in that role.

Whitcombe: Why would I pay you if you are not actually performing in the role?

Meates: Well I only stayed with the company because this is what was promised to me and I want the payment. I need the payment. I need to purchase a house and without the money for the commissions I will not be able to pay for the deposit on the house and I will lose it.

Whitcombe: Then I make the following offer on the condition of performing the role of “second lister” along with increased opportunities on continuing sales in the future:

-     A consultancy fee of $1,500 on each of the remaining sales (sixty) at the Waterfront for management;
-     Sales commissions on all sales of 23.5%;
-     $50,000 loan from Leader;
-     Potential participation in a shareholding in Leader Real Estate to show a move forward position in this and other projects; and
-     Involvement in future projects.

Meates: I won’t accept that at this stage. I will consider it and get back to you.

11. On Wednesday, 29 March 2006 the final meeting took place with Whitcombe and Meates. I was in attendance, Mr Meates said words to the effect that:

Meates: Considering that I did not do the role, I can see that I am not entitled to the extra payment and that I will accept the commission due to me on my direct sales.

Whitcombe: We will only be able to pay you 60% of your sales commissions in advance.

Meates: Well, how about I remove my claim for the consultancy fees from this? Will you then pay me the 100%?

(at this point Mr Meates crossed out point four of the letter which related to the consultancy fees on remaining sales)

Whitcombe: Sorry Rod, I’m not prepared to offer you more than 60%. The company just doesn’t have that much.

Meates: Okay, well if the company doesn’t have 100% I will take the 60% but I am not really happy.

(at this point I saw Meates cross out “100%” on the letter and he wrote “60%”)

Meates: Well that roughly equates to $60,000.

(at this point I saw Meates cross out the amount of “$89,459.96” on the letter and write in its place “$60,000”).

Whitcombe: Okay, that’s good, that’s great. Let’s get your money and move on from here.

12. On or about 30 March 2006 I had a meeting with Mr Meates. During that meeting I had a discussion with Mr Meates to the following effect:

Me: Rod, why did you claim that you were entitled to listing fees when you did not do the work?

Meates: I know I didn’t do it but it’s what I was originally promised. I could not deal with people like Theo Koroneos and I didn’t know how to deal with people like that.

Me: Okay, so we need to finalise this, Rod. You do understand that if I give you the cheque it is a full and final payment?

Meates: I understand, so let’s just go ahead with it.

Me: You need to also understand that this is an advance and in accordance with your employment agreement if you leave the company before the development settles, you will have to pay the money back?

Meates: I understand.

Gaye Spooner was also called in the defendant’s case. She is a licensed real estate agent. She started work with Leader in November 2004 and was still working with the same firm, though under its new name, when she gave evidence. She sold Waterfront apartments from early 2005 until the completion of the project. She estimated that this project took up about half of her time. She attended sales staff meetings each week, convened by Mr Whitcombe and attended by Mr Meates with other staff. Her evidence was that she never heard the expression “second lister” used by Mr Whitcombe in connection with Mr Meates, and indeed never heard the expression used during the course of her employment at Leader. In her understanding and from her observation, Mr Meates was a sales representative like herself, and not in any other category.

She conceded in cross-examination that she might not have attended every sales meeting, and may have missed the occasional one. There were generally nine or ten people present.

She also said that in relation to Waterfront sales, she received a 60% advance of commission on exchange of contracts. She received the balance of 40% on settlement.

Evaluation of the evidence and factual findings

The evidence in the plaintiff’s case, and Mr Whitcombe’s evidence in chief, were given in August-September 2010, approaching five years after the events of late 2005 and early 2006. Mr Whitcombe’s cross-examination and the balance of the defendant’s case were heard in July 2011, almost a year later. I recognise that the memories of all witnesses will be less reliable so long after the event, particularly as to the words used in conversations. For that reason I place greater reliance on contemporaneous written records, including emails and diary entries.

I am particularly sceptical of what purport to be verbatim accounts of conversations, committed to writing years after the event, of the kind recorded in paragraph 142 above.

With that general introduction as to my approach to the evidence, I should say that I generally accepted the plaintiff as a truthful witness doing his best to remember the conversations and other events in which he had been involved. Generally his evidence was consistent with contemporaneous records such as emails and diary notes. Whilst I approach his evidence with the scepticism appropriate to that of a person with an interest in the outcome of the proceedings, and a considerable amount to gain (or lose) depending on the outcome, generally I am disposed to accept his evidence as truthful and broadly accurate.

I was less impressed with Mr Whitcombe as a witness. His approach in the witness box was argumentative and long-winded. He tended not to limit himself to answering questions as asked, but to volunteer additional material which might have been helpful to his case or damaging, as he saw it, to the plaintiff’s case. I generally accept that he saw himself, and continues to see himself, as the driving force behind Leader and as carrying the operation personally, sometimes without much help from his staff.

I formed the view, however, that Mr Whitcombe was generally inclined not to adhere to arrangements made earlier, to avoid paying money to staff to a greater extent than seemed unavoidable, and not to share information with staff where this might work to his financial disadvantage. I am satisfied, for example, that he deliberately refrained from informing staff that he had committed Leader contractually to distributing commission received from Stockland to staff in the proportions to which they were entitled and which he had agreed with Stockland to distribute to them. I find that he deliberately permitted staff to believe that Stockland was paying 50% of final commission on exchange when it was actually paying 60%.

The evidence does not permit me to make any finding as to Leader’s financial position during the periods under consideration. It may be that Leader was subject to considerable restraint and that Mr Whitcombe believed that the company might be at risk of failure if he were to pay all he was obliged to pay to his staff. Whatever the position in that regard, he made it clear in his evidence that he regarded Leader’s financial arrangements as none of the business of the staff. I am satisfied that he kept this information to himself, and used it to the detriment of the staff and to the advantage of the company and perhaps also himself.

I also found Mr Whitcombe a poor communicator as to matters of detail. His description of the duties and responsibilities of a second lister, set out in paragraph 84 above, provides a good example. I found it difficult to understand from his answer precisely what he expected of a second lister. I had the impression at the end of his answer that he did not himself have a particularly clear idea of his expectations in that regard.

As to the supporting witnesses, I generally accepted the evidence of Mr Moore. I accept that he was present at at least one meeting of Leader’s sales staff when Mr Whitcombe announced that the plaintiff was to be second lister on the Waterfront project.

The evidence of Mr Smith of Stockland and of Mr Alexander of CIC was uncontentious and I accept it.

Supporting evidence in the defendant’s case was given by Ms Spooner, who was by then still a sales representative with Leader. Her evidence was that she generally attended weekly sales meetings but never heard Mr Whitcombe announce that the plaintiff had been appointed as a second lister. I am satisfied that she was honestly doing her best to remember what had been said (or rather not said) at those meetings more than six years earlier. She conceded that she may not have been at every meeting and I accept that she has no recollection of any such announcement. This is not inconsistent with my accepting Mr Moore’s evidence that such an announcement was made by Mr Whitcombe at least on one occasion.

The other supporting witness in the defendant’s case was Ms Hume. By the time she gave her evidence she had left Leader, a few months earlier, but she had been with Leader when she prepared an affidavit which she swore during August 2010, a week or two before the start of the hearing. I have no doubt that at the time she prepared the affidavit she was disposed to assist Mr Whitcombe’s case. Notwithstanding the solemnity which should surround the making of an affidavit, it is by no means unusual for deponents not to appreciate the seriousness of what they are doing at the time. The detail in which Ms Hume set out the conversations to which she was attesting in her affidavit, set out at paragraph 142 above, more than four years after the event and without detailed shorthand notes of the conversations, is frankly unbelievable. Ms Hume’s evidence was that she had had her own handwritten notes of the conversations when she prepared her affidavit, but that these could no longer be found when she was giving her evidence. She did not, however, suggest that she had written down every word of each conversation, and I am left in no doubt that there was very considerable reconstruction involved in that portion of her affidavit evidence.

I was left with the impression that she saw her function as to assist Mr Whitcombe, and to oppose the claim being brought by the plaintiff. Where her evidence conflicts with that of the plaintiff, I prefer his version of events.

There are two periods during the employment relationship where the evidence on behalf of the plaintiff and the defendants is at variance. The first was the period in November and December 2004 when the plaintiff gave notice of his resignation to work with CIC. The second was in February and March 2006, when the plaintiff pressed, eventually with some success, for a substantial payment.

As to the events of November-December 2004, I am satisfied that at that time Mr Whitcombe saw the plaintiff as a valuable employee, and one he was prepared to go to some lengths to keep. On 7 December 2004 Mr Whitcombe sent the plaintiff the memorandum set out at paragraph 33 above. This contained some elements the plaintiff was happy with, and others he was not. On the following day he wrote a detailed reply, set out at paragraph 35. They then had a meeting and a discussion, probably on 7 or 8 December 2004. The plaintiff’s evidence as to what was said during that discussion is set out in paragraphs 36 to 38. Mr Whitcombe did not specifically take issue with the evidence contained in those paragraphs and I accept it. On 9 December 2004 the plaintiff told Mr Whitcombe that he had spoken to Mr Alexander at CIC and withdrawn his acceptance of the offer of a position with that company, and that he would be staying with Leader.

I am satisfied that the plaintiff made his decision to stay with Leader at that time in the faith of representations made to him on behalf of the first defendant by Mr Whitcombe, to which the first defendant should be held. I am satisfied that, notwithstanding some degree of vagueness about the precise terms, the effect was to make some changes to the contractual arrangements between the plaintiff and the first defendant.

Relevantly to the present dispute, it was agreed that the plaintiff would be paid a commission percentage rate of 45% of the commission earned by Leader on sales effected by the plaintiff.

I am further satisfied that it was agreed that the plaintiff was to be remunerated for such sales according to the formula exemplified in paragraph 7 of Mr Whitcombe’s memorandum of 7 December 2004. The example was that on a commission of $20,000, 20% would first be deducted as a management fee to the first defendant. 10% of the balance would then be deducted as a first listing fee to Mr Whitcombe. The plaintiff would then be entitled to 10% of the remaining balance ($1,440) as a second listing fee, and 45% of the commission remaining after that deduction ($5,832), a total of $7,272.

There was no example given by Mr Whitcombe as to how much, if anything, the plaintiff was to receive out of a sale made by another Leader sales representative. I find that the two memos and the subsequent discussion did not clarify this to the extent that I can be satisfied that there was any representation that the plaintiff was to earn a second listing fee on such sales. This is something that the plaintiff could have clarified at the time, but he did not do so.

I am therefore satisfied that the plaintiff, after the representations, had an entitlement to commission on sales which he effected, calculated in accordance with the example, but not to any commission on sales effected by other sales staff. I am fortified in coming to this view by the fact that payment of a second listing fee to the plaintiff on such sales would have had the effect of reducing significantly the commission payable to those sales staff, something there is no suggestion that any of them had agreed to.

Mr Whitcombe sought to impose, in paragraph 8 of his memorandum, a condition that the plaintiff would forfeit any commission if he left Leader prior to settlement of any sale. I am satisfied that the plaintiff objected to this but proposed that in such an event his entitlement would be reduced by 10%. I am satisfied that Mr Whitcombe agreed with this proposal, and that that became the arrangement.

As to the events of early 2006, I accept the plaintiff’s evidence that no meeting took place between the plaintiff and Mr Whitcombe on 29 March 2006. I reject the evidence of Mr Whitcombe and Ms Hume that a meeting took place on that date. There is nothing in writing to support it. The only contemporaneous written record, the plaintiff’s diary, contains no mention of it. It follows that I reject the evidence of Mr Whitcombe and Ms Hume that the plaintiff agreed that the payment was being made according to some formula such as full satisfaction or full and final payment.

It would seem extraordinary if the plaintiff had agreed to such a proposition. The payment was after all simply an advance against commissions following exchange of contracts, with the balance to be payable following settlement. There was no sense in which the payment could have been seen in any way as being in settlement of any dispute or in full and final payment of anything. The payment was made after pressure by the plaintiff, in circumstances where he needed money to complete the purchase of a house. He knew by then that he was entitled to 60% of the commission, at least in the sense that Stockland had paid 60% of the full commission to Leader in the expectation that 60% of the individual salesman’s share of the commission would be paid out to the salesman.

There is some confusion in the evidence as to the letter which the plaintiff was initially asked to sign before the cheque was handed over to him, set out in paragraph 71. I accept that Mr Whitcombe dictated this letter, seeking to reimpose the condition he had earlier agreed to withdraw, about entitlement of a salesman to commission if no longer in Leader’s employment at the time of settlement, and seeking to impose an obligation to repay the advance in such an event. Hardly surprisingly, the plaintiff refused to sign such a letter. It is significant that Leader withdrew the letter and prepared another one without any such condition (see paragraph 73) which the plaintiff was willing to sign. Mr Whitcombe’s evidence was that he was unaware of this change in the letter to be signed by the plaintiff. I accept that he may have forgotten about it by the time he gave his evidence but have no doubt that he must have been aware of it at the time the cheque was handed over. It seems to me to be an acknowledgement on his part that the first letter represented an unwarranted attempt to reimpose a condition which was no longer part of the contractual arrangement between the plaintiff and the first defendant.

It follows from these reasons that the plaintiff is entitled to recover from the first defendant the balance of his commission on the fourteen sales he effected at the Waterfront, less 10% because his employment ceased before settlement, and that he is under no obligation to refund any amount to the first defendant.

As to the claims against Mr Whitcombe personally under the Trade Practices Act and the Fair Trading Act, I am not satisfied that, when he made his representations to the plaintiff in December 2004, he did not intend to comply with them if they were accepted. I am not satisfied that his conduct at the time was misleading or deceptive. The fact that the company did not meet its obligations to the plaintiff when the sales were settled does not of itself give rise to an inference that at the time the representations were made there was no intention to do what was promised. Accordingly the plaintiff’s claim against Mr Whitcombe personally fails.

The calculation as to commission payable is set out tab 7 in exhibit A, and can be briefly summarised in the following table:

Unit Number Buyer Second Lister Payment Sales Representative Commission

1 Thorburn $744.48 $3,015.11

4 Butler $1,457.28 $5,901.98

5 Welbourn $1,219.68 $4,939.70

10 Stenhouse $1,663.20 $6,735.96

12 Evans $1,211.76 $4,907.63

22 Hearn $1,853.28 $7,505.78

26 Rose $3,326.40 $13,471.92

28 Ford $1,211.76 $4,907.63

29 Brissenden $1,346.40 $5,452.92

31 Kelly $1,520.64 $6,158.59

32 Grimson $1,298.88 $5,260.46

36 North $1,552.32 $6,286.90

47 Moore $1,465.20 $5,934.06

58 Norton-Baker $2,217.60 $8,981.28

$22,089.08 $89,459.92

$22,089.08

$111,549.00

Less 10% for termination $11,155.00

$100,394.00

Plus GST at 10% $10,039.00

Total $110,433.00

It is agreed that the plaintiff is to give credit against this amount for the advance payment made in March 2006, $59,043.57, leaving a balance payable of $51,389.43.

That amount will carry interest at the commercial rate set by the Court Procedures Rules 2006, 9% per annum. The settlement dates for the sales are set out in a copy tax invoice from Leader to Stockland which forms part of exhibit C. Most of the sales in question were settled between 21 June and 3 July 2007, with two of them settling a little later. It is reasonable to assume that commission would have been paid to Leader and distributed to individual sales representatives within a month of settlement. Rather than perform a calculation in respect of each sale, I can achieve virtually the same result by calculating interest from a median date for the fourteen sales of 1 August 2007.

Interest on $51,389.43 at 9% calculates at $4,625.05 per annum. Interest has run for five years from 1 August 2007 to 1 August 2012, and a further 142 days since then. Interest will be included in the judgement in an amount of $24,924.57.

Having regard to my factual findings, the foreshadowed defences of accord and satisfaction, estoppel and waiver, and the proposed amendment to the counterclaim for reimbursement of the advance, are doomed to failure. Leave to amend will accordingly be refused as futile.

There will accordingly be judgment for the plaintiff against the first defendant for $76,314.00. There will be judgment for the second defendant. I shall hear the parties as to costs.

I certify that the preceding one hundred and seventy-six (176) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.
Associate:
Date: 20 December 2012

Counsel for the plaintiff:  Ms JA Needham SC
Solicitors for the plaintiff:  Howes Kaye Halpin
Counsel for the defendants:  IM Neil SC & MJ Lewis
Solicitors for the defendants:  Williams Love & Nicol
Date of hearing:  31 August, 1 September 2010, 4, 5 July 2011
Date of judgment:  20 December 2012

Sale price	$1,000,000
Gross commission	$20,000
20% management to KD P/L	$4,000
$16,000
First 10% listing fee to DW	$1,600
$14,400
Second 10% listing fee to RM	$1,440
Net commission	$12,960
45% Incl super RM selling fee	$5,832

Unit Number		Buyer			Second Lister Payment	Sales Representative Commission
1		Thorburn		$744.48	$3,015.11
4		Butler		$1,457.28	$5,901.98
5		Welbourn		$1,219.68	$4,939.70
10		Stenhouse		$1,663.20	$6,735.96
12		Evans		$1,211.76	$4,907.63
22		Hearn		$1,853.28	$7,505.78
26		Rose		$3,326.40	$13,471.92
28		Ford		$1,211.76	$4,907.63
29		Brissenden		$1,346.40	$5,452.92
31		Kelly		$1,520.64	$6,158.59
32		Grimson		$1,298.88	$5,260.46
36		North		$1,552.32	$6,286.90
47		Moore		$1,465.20	$5,934.06
58		Norton-Baker		$2,217.60	$8,981.28
$22,089.08	$89,459.92
$22,089.08
$111,549.00
Less 10% for termination				$11,155.00
$100,394.00
Plus GST at 10%			$10,039.00
Total			$110,433.00