Saul v Snowview Pty Ltd t/as LJ Hooker (Cleveland)

[2011] QDC 206

DISTRICT COURT OF QUEENSLAND

CITATION:

Saul v Snowview Pty Ltd t/as LJ Hooker (Cleveland) [2011] QDC 206

PARTIES:

SHARON SAUL
(Plaintiff)

AND

SNOWVIEW PTY LTD t/as LJ HOOKER (CLEVELAND)
(Defendant)

FILE NO/S:

D530/09

DIVISION:

PROCEEDING:

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

15 September 2011

DELIVERED AT:

Brisbane

HEARING DATE:

5, 6 September 2011

JUDGE:

Samios DCJ

ORDER:

The plaintiff’s claim against the defendant is dismissed.

CATCHWORDS:

CONTRACT – Construction and Interpretation – Estoppel

Branir v Owston Nominees (No. 2) Pty Ltd & Anor (2001) 117 FCR 424, 525

Commonwealth v Verwayen (1990) 170 CLR 394, 443

Thompson v Palmer (1933) 49 CLR 507, 547

COUNSEL:

Mrs Masterman for the plaintiff

Mr Ashton for the defendant

SOLICITORS:

Michael O’Brien Lawyers for the plaintiff

Mott & Associates for the defendant

1. The plaintiff, who was a real estate sales person employed by the defendant between 8 January 2001 and 5 April 2006, claims the defendant did not pay the plaintiff all that the plaintiff was entitled to by way of bonus payments for work done by the plaintiff during that period.

1. The plaintiff claims against the defendant damages for breach of contract for the underpayment.  The parties have agreed the quantum of the plaintiff’s claim is $95,000.

1. The plaintiff’s case is that it was agreed between the plaintiff and the defendant that the plaintiff would be paid a salary of $52,000 and a bonus of 50% on commission earned above $42,000.  The plaintiff’s case is that, the defendant made deductions from the gross commission received on the sale of a property before calculating the bonus.

1. The defendant’s case, on the other hand, is that the plaintiff was employed on the Jenman system for remuneration or if not the Jenman system, a system to similar effect.

1. This system was regarding the bonus a system whereby sales people needed to achieve $42,000 in net fees to the office to reach the bonus level.  If they achieved over $42,000 and up to $65,000 they would get a bonus of 50% on their sales and if they achieved over $65,000 they would get 55%.

1. However, the point of departure between the plaintiff and the defendant in this case is that the defendant claims the system provided for deductions to be made from the commission for “PIs (phone ins), market levy, franchise fees, referrals, etc.”

1. When the plaintiff gave evidence she said when she was interviewed for the position she was told she was going to be paid $52,000 in salary and there was a bonus structure as well.  She was not told what this bonus structure was.  She said she found out how the defendant was calculating bonuses from talking to other sales people and there was a whiteboard with the $42,000 target on it.  She said deductions were not noted on this board.  Also, not all sales people were on this board.  She was not given anything about the pay structure of the Jenman system.  She did not take any specific Jenman examinations or training.  She said she did not know what the Jenman system was.  However, she said at the initial interview she was told the defendant was operating under the Jenman system.  That was it.

1. The plaintiff also said although there were records in the office that could show deductions being made to the commission, these records were not readily available to her.

1. The plaintiff also said within 12 months of starting, the $42,000 base figure was increased by the defendant to $45,000 without any prior discussion with the plaintiff.

1. The plaintiff also said she did query the deductions on several occasions and complained about it.  She was told “this is how it’s done here and that’s the marketing pool”.

1. By way of example the plaintiff pointed to a property at 13 Lucy Court, Ormiston, and said for that property, a marketing levy was taken out of the commission.  The property was not advertised and there was no expenditure spent.  The plaintiff said she complained to one of the principals of the defendant business and the response was “well, that’s the way it’s done”.

1. The plaintiff said she made other complaints about deductions being made from the commission.  However, not every transaction had a marketing levy deducted.  Nevertheless, when she complained the response was the same, “it’s the way we do things here, it’s for the marketing pool”.

1. The plaintiff said the defendant did not explain to her how the bonus was to be calculated.

1. Exhibited in an agreed bundle of documents are Jenman system documents providing for the paying of bonus and for deduction of the items “PIs, marketing levy, franchise fees, referrals, etc”.

1. As to these documents the plaintiff said she did not see these documents during her employment with the defendant and had not seen this information in any other form.

1. There is no dispute the plaintiff entered into a written contract with the defendant dated 19 June 2001 which was renewed each year thereafter for five years.  As to the first renewal on 24 May 2002, she said at the time of that renewal she was aware the defendant was taking deductions from her commission.  She renewed her contract because she wanted to keep her job.

1. The defendant has two principals, David Patterson and Jan Goetze.

1. When Mr Patterson gave evidence he explained the Jenman system.  He said the Jenman system was a way of putting real estate into perspective whereby it was a way of selling property different to the normal real estate agencies.  The Jenman system tried to entice trust with people.  Jenman did not believe in doing auctions, although the defendant sometimes did.  It also showed the sales people how to list a property.  Jenman did not believe in advertising.  He believed in a marketing levy that was fair to all.  There were principles there for sales people to follow.  When they listed a property, how it was listed, how it was sold, how to achieve the best price.  It was a very complete package of real estate.  He said remuneration was a part of the system.  He confirmed the documents in the agreed bundle of documents showed the bonus structure and included the phrase for deductions “Less PIs, marketing levy, franchise fees, referrals, etc”.  He did not remember any complaints made to him by the plaintiff about deductions.

1. Later in his evidence he said the marketing levy was the Jenman idea of not costing vendors thousands of dollars for advertising because vendors [sic] ultimately did not buy the first property they saw or came off the advertising for.  The franchise fee is used also for covering LJ Hooker’s marketing contribution as well.  These levies and fees were calculated at 10%.

1. Although Mr Patterson said he gave the plaintiff a handwritten pay structure, he did not explain in his evidence what was on that document.

1. When cross-examined Mr Patterson agreed the defendant did not follow the Jenman system to the letter.  For example, the base for calculating the bonus was in the Jenman system $42,000, whereas the defendant used a figure of $45,000.  Further, the Jenman system provided for superannuation to be paid on top of the employee’s bonus, whereas the defendant had crossed out the payment of superannuation.  It was the defendant’s position that the superannuation was to come out of the bonus and not be on top of the bonus.  In any event the defendant did not pay the plaintiff her superannuation, inclusive or exclusive of the bonus. The defendant has since paid the plaintiff her superannuation.

1. When Ms Goetze gave evidence she said when she interviewed the plaintiff for the job she told her it was a Jenman pay structure, that there was a fortnightly payment plus bonus levels, bonus payments.  She did not go through how the bonus worked.  She said during the plaintiff’s employment she did not discuss the bonus or commission with the plaintiff.  She did not have any complaints from the plaintiff about bonus or how they were calculated.  Later in evidence she said she did not recall the plaintiff complaining about deductions that were being made from her commission.  She said the plaintiff was “totally aware of how we did things”.  She said everybody in the office was “totally aware of it”.

1. There are some conflicts in the evidence between the plaintiff and the defendant’s principals. The most significant conflict is whether the plaintiff complained about the defendant making deductions from her commission before paying her bonus. 

1. I accept the plaintiff’s evidence that she was not told what the Jenman system was in terms of how the bonus was calculated. I also accept the plaintiff’s evidence that she complained to Ms Goetze about deductions being made to the commission and that she responded to the effect that is how the defendant does it.

1. However, the fact remains the plaintiff was told the defendant operated under the Jenman system before she started work for the defendant. Further, the plaintiff was aware before she signed the agreement in writing on 19 June 2001 and on each occasion she renewed the contract every year during the five years thereafter, that deductions were being made from her commission before her bonus was being calculated and paid to her.

1. The written agreement between the plaintiff and the defendant dated 19 June 2001 by Clause 7.1 provides:

“7.        Remuneration

7.1(i)        Salary Plus Bonus

The Employer will pay the Salesperson a base salary of $1,852.00 per fortnight paid fortnightly.  In addition to the salary, the Employer will pay the Salesperson a bonus in accordance with the net fees received by the Company as a consequence of the Employee’s work.  Net fees received by the Company in respect of a sale is the Commission received by the Company in respect of each sale.

(ii)The Employee will not be entitled to bonus payments until the Company has received settled sales of $42,000 per quarter as a consequence of the Employees work.  Such bonus when payable to the Employee will be paid to the Employee in addition of the Employee’s Fortnightly Salary in Clause 1 of this schedule.

(iii)Where a sale is effected by 2 or more employees the selling commission shall be divided by the employees in such proportion as they decide.  If no agreement can be reached the Company will act as arbitrator.  If there is still no agreement an employee can request an independent arbitrator to receive the matter.”

1. It is to be noted Clause 7.1 does not provide the percentage to be applied to the commission whether that commission is with or without deductions.  It is the Jenman system or a system to similar effect that provides a percentage of 50% upon commission exceeding $42,000 per quarter or $45,000 per quarter as the base figure became.

1. The clause also uses the expression “net fees” received by the company but goes on to say net fees is the commission received by the company. In one breath this clause may indicate deductions are to be made while in another breath they are not.

1. The question becomes whether the Jenman system or a system to that effect was part of the agreement between the plaintiff and the defendant.  The plaintiff accepts at least the 50% as the percentage for the calculation of the bonus was part of the agreement.  However, the plaintiff does not accept deductions could be made to the commission.

1. Regarding the effect of a party’s conduct upon the making of an agreement, Allsop J in Branir Pty Ltd & Ors v Owston Nominees (No. 2) Pty Ltd & Anor (2001) 117 FCR 424 at 525 said:

“… if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract.  Sometimes this is said to be a process of inference or implication.  For my part, I would see it as the inferring of a real intention expressed through or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: ‘and we hereby agree to be bound’ in this or that respect.  The essential question in such cases is whether the parties’ conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract.”

1. In this matter the plaintiff said she was told the defendant was operating under the Jenman system.  Further, the plaintiff knew deductions were being made from the commission and when she complained she was told “that is how we do things here”. Further, the plaintiff entered into the written agreement with that knowledge and renewed the agreement each year thereafter with that knowledge.

1. It may be the plaintiff was in a position where she had to accept these terms because she wanted employment rather than not have employment.  However, even Clause 7.1 requires some contractual term about the percentage to be applied to the commission to pay the bonus.  The defendant had a system in place when it employed the plaintiff to calculate the bonus.  Initially it was the Jenman system.  The defendant left the Jenman system on the evidence in about 2003.  However, the defendant maintained elements of the Jenman system and increased the base figure from $42,000 to $45,000.

1. In my opinion the plaintiff is to be taken to have accepted the terms of the Jenman system or a system to similar effect.

1. I find it was a term of the agreement between the plaintiff and the defendant that the defendant could make deductions of the kind referred in the Jenman system or a system to similar effect.  Even though the defendant did not follow the Jenman system to the letter, that does not in my opinion mean those parts applied by the defendant do not have the effect upon the contractual relationship between the plaintiff and the defendant.

1. Therefore, I find the defendant was entitled to make the deductions it made to the plaintiff’s commission.  I find there has been no underpayment in the circumstances.

1. However, if I am wrong about that the question remains whether the plaintiff is estopped from claiming from the defendant the sum of $95,000.

1. The object of estoppel by conduct is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other’s detriment (Thompson v Palmer (1933) 49 CLR 507, 547 per Dixon J).

1. Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs (Commonwealth v Verwayen (1990) 170 CLR 394, 443 per Deane J).

1. In my opinion the plaintiff well knew there was no employment with the defendant except on the basis that deductions could be made from the commission before the bonus was paid to the plaintiff.  In my opinion it would now be unjust to allow the plaintiff to recover from the defendant the deductions the defendant considered it was entitled to make.  That is, the plaintiff in my view has allowed the defendant to make an assumption that it was entitled to make these deductions and the defendant has acted to its detriment in making those deductions without retaining the amount of those deductions to be paid to the plaintiff.

1. Therefore, I dismiss the plaintiff’s claim against the defendant.  I will hear the parties on the question of costs.