Savills (NSW) Pty Ltd v ATF Cth Pty Ltd

[2020] NSWSC 956

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Savills (NSW) Pty Ltd v ATF CTH Pty Ltd [2020] NSWSC 956

Hearing dates:

13, 14, 15 and 16 July 2020

Decision date:

27 July 2020

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   Judgment for the defendant.

(2)   Unless any party applies for a different costs order by written application to my Associate within 7 days, order the plaintiff to pay the defendant’s costs.

Catchwords:

CONTRACTS — Formation — alleged agreement that plaintiff would act as exclusive agent for sale of defendant’s real property — where plaintiff claims commission for sale of property under agreement — whether contract was executed

CONTRACTS — Construction — Where plaintiff’s entitlement to commission dependent on meaning of “Property” under the contract — relevance of surrounding circumstances to resolve ambiguity

CONSUMER LAW — Unconscionable conduct — In connection with goods or services — whether defendant’s conduct unconscionable

DAMAGES — Proof and calculation of damages —responsibility of the Court to make best assessment of damages — lack of evidence — no loss proved by plaintiff

Legislation Cited:

Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 21, 236

Evidence Act 1995 (NSW), ss 48, 142

Property and Stock Agents Act 2002 (NSW), s 55

Uniform Civil Procedure Rules 2005 (NSW), rr 21.2, 42.1

Cases Cited:

British American Tobacco Australia Services Limitedv Cowell (2002) 7 VR 524; [2002] VSCA 197

Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337; [1982] HCA 24

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

McCabe v British American Tobacco Australia Services Limited [2002] VSC 73

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79

Nominal Defendant v Rooskov [2012] NSWCA 43

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 77 ALJR 768

Qantas Airways Limited v Cameron (1996) 66 FCR 246

Watson v Foxman (1995) 49 NSWLR 315

Category:

Principal judgment

Parties:

Savills (NSW) Pty Ltd (ABN 93 002 647 225) (Plaintiff)
ATF CTH Pty Ltd (ABN 52 169 623 741) (Defendant)

Representation:

Counsel:
C Wood SC (Plaintiff)
A Cheshire SC (Defendant)

Solicitors:
BBW Lawyers (Plaintiff)
Eakin McCaffery Cox (Defendant)

File Number(s):

2017/293995

Judgment

Introduction

1. By amended statement of claim filed on 26 March 2018 Savills (NSW) Pty Ltd (the plaintiff) claimed commission pursuant to an alleged agency agreement pursuant to which it was retained by ATF CTH Pty Ltd (the defendant) to sell certain property, as defined in the agreement, located at 9-25 Commonwealth Street, Surry Hills (the site). In the alternative, the plaintiff claims damages for unconscionable conduct on the part of the defendant in encouraging it to do work on the basis of an assumption that it was the defendant’s exclusive agent for the sale of the property.

2. The defendant denied that there was any concluded agreement in writing with the plaintiff. In the alternative it submitted that, if there was a concluded agreement with the plaintiff in the form for which the plaintiff contended, the terms of the agreement did not entitle the plaintiff to any payment. Further, the defendant contended that there was no unconscionability on its part and that, in any event, the evidence adduced by plaintiff was not sufficient to prove any loss arising from the alleged unconscionable conduct.

3. I note that the hearing was conducted in person in my courtroom. The only witness who gave evidence remotely was Peter Keenan, who gave evidence via audio-visual link from Melbourne. He was provided with documents in the course of his cross-examination by a solicitor who was separately retained for that purpose.

The facts

4. Before turning to the legal claims and defences it is necessary to set out in some detail the facts. Except where necessary for the narrative, the issue of credibility will be addressed separately.

The defendant’s business

5. The defendant is a property developer, the principals of which are investors: Jian Shi, Jingfei Wang and Jiachen Xue, each of whom is based in China. In 2014 it purchased the site with a view to developing a single tower which would comprise hotel, retail and residential components. Mr Shi approached Chang Liu, the son of long-standing friends, and recruited him to help establish a company to manage the development on behalf of the defendant. To that end, ATF Development Pty Ltd was incorporated on 19 May 2014. It subsequently changed its name to Andev Pty Ltd (Andev). On 30 June 2014 a development and management deed was executed by the defendant and Andev, which provided that Andev was to arrange for the existing improvements to be demolished and to design and construct the new development on the site which would comprise a single tower with a hotel as well as residential and retail components.

6. At all material times, Mr Shi was the sole director of Andev. Andev occupied an office on level 35, 50 Bridge Street, Sydney. About every 4-6 weeks, Mr Shi would travel to Australia for a period of 3-7 days. During that time he would visit Andev’s office. Mr Shi speaks Mandarin but not English.

7. Mr Liu was employed by Andev. He is a native Mandarin speaker and is also fluent in English. His roles included data entry and preparation of management accounts. Mr Liu also acted as a conduit and translator between Mr Shi and others associated with Andev, the defendant and those who dealt with them. I accept the description of Peter Keenan (referred to below) that Mr Liu was Mr Shi’s “trusted eyes and ears on the ground in … Sydney”.

8. Andev employed Frank Iemma as its development manager for the site. I accept that he was, as Mr Keenan described him, the gatekeeper to Mr Shi although they spoke no common language. Mr Iemma and Mr Liu worked closely. Grace Shao was Andev’s office receptionist. Ms Shao was also bilingual in Mandarin and English and, from time to time, would also provide translation services to Mr Shi. While Mr Iemma gave instructions to Mr Liu, as he was senior to him at Andev, Mr Liu ultimately reported to Mr Shi. Whenever Mr Iemma needed instructions from Mr Shi, he would use Mr Liu as a go-between. Mr Shi would consult with the other two directors of the defendant before communicating the defendant’s position or decision to Mr Liu to be passed on to Mr Iemma. When Mr Shi visited Australia he would meet with Mr Liu and Mr Iemma but rarely attended external meetings and would leave Mr Liu and Mr Iemma to carry out his instructions.

9. The arrangement between the defendant and Andev was that the defendant would decide on the nature of the development at the site, including what portion would be allocated to hotel, residential and retail purposes. Andev would be responsible for managing the implementation of the proposed development, and would meet with external consultants, councils, architects and other professionals.

10. When Andev was required to execute an agreement with a third party, Mr Shi would generally execute it although, on occasions, he authorised Mr Iemma to execute it on behalf of Andev. When the defendant was required to execute an agreement, Mr Liu would liaise with Mr Shi and the other two directors to execute such documents in China. Mr Liu could recall only one document, a Bank of China loan document, which the directors had executed and asked him to hold onto until other documents were ready. I accept Mr Liu’s evidence that there was no other occasion on which Mr Shi had given Mr Iemma any agreement signed by the defendant’s directors on its behalf, authorising him to exchange the document subject to final terms being agreed.

The plaintiff’s business

11. The plaintiff’s business had several divisions. Its hotels division had two arms: advisory and transactions on the one hand and project management on the other. Both Michael Simpson and Peter Keenan worked in the hotels division. Mr Keenan worked for the plaintiff from October 2015 until April 2018. For the first six months he was the associate director of hotels, tourism and leisure in the project management arm of the plaintiff’s business. He was promoted to the position of National Director, head of hotels, tourism and leisure also within that arm. He and Mr Simpson were at the same level: Mr Simpson was head of the advisory and transaction arm of the hotels division and Mr Keenan was head of the project management arm of that division.

12. For the period up to March 2017, when the plaintiff moved its business premises from 50 Bridge Street, Sydney (where Andev’s offices were also located) to Governor Phillip Tower, Mr Simpson and Mr Keenan worked on the same floor, level 6. After the move they were on different floors in the same building.

The proposed development of the site

13. In July 2015, the defendant spoke to Colliers with a view to engaging the firm as its selling agents for the site. At that time, Knight Frank had already been appointed agents for the site.

14. On 2 September 2015, the Land and Environment Court approved a development application for the site, which authorised the demolition of the existing improvements on the site and the erection of a building with retail floor space, hotel rooms and residential apartments.

15. By early January 2016, the defendant and Andev had terminated the agency agreement with Knight Frank, which was, accordingly, no longer authorised to offer the site for sale.

16. On 20 January 2016, Gus Moors of Colliers sent Mr Iemma and Mr Liu a draft agency agreement for the appointment of Colliers as the defendant’s exclusive agents to sell the hotel stratum of the site. The agreement provided that Colliers was to have exclusive selling rights from 20 January 2016 until 11 March 2016. Although there is no complete executed version of this document in evidence, I understood it to be common ground that the defendant had appointed Colliers in early 2016 to be its exclusive agent to sell the hotel stratum of the proposed development on the site. However, the precise terms of the agreement are not revealed by the evidence. Mr Liu recalled that Colliers was engaged “to test the market”.

17. An Information Memorandum was prepared by Colliers which contained, by way of introduction, the following narrative:

“Colliers International has been exclusively appointed to offer for sale the hotel stratum component of the proposed luxury mixed use development, located at 9-25 Commonwealth Street, Sydney.”

The plaintiff’s role with respect to the project management of the site

18. In about March 2016 Andev sought proposals from consultants to do project management work to develop the site. Mr Keenan put in a proposal, which was accepted by Andev and the defendant. Mr Keenan said:

“I’m very risk averse, I had a signed contract before I started one minute of work …”

19. The agreement provided for a lump sum fee for the work, a portion of which would be billed monthly. As a consequence, Mr Iemma and Mr Keenan met weekly. Mr Liu usually attended these meetings so that he could report to Mr Shi. Mr Keenan understood that Mr Liu represented Mr Shi at these meetings, although he had no authority except to communicate with Mr Shi to pass on information or requests and obtain instructions.

The involvement of Michael Simpson

20. Mr Keenan understood that the plaintiff wanted the various arms of its business to share business opportunities within their respective operations. To that end, on 8 March 2016, Mr Keenan emailed Michael Simpson with a view to the transaction and advisory part of the hotels division (for which Mr Simpson was responsible) providing services to Andev and the defendant. Mr Keenan sent further emails to Mr Simpson providing him with more information about the defendant. By email dated 15 March 2016, Mr Keenan wrote to Mr Simpson as follows:

“In relation to the below, we will be submitting our PM [project management] proposal this Friday and thought that I would check to see if you would like me to include a brief summary of your division[’]s services within our proposal to provide them with food for thought? If so, could you please flick something through so that I can include as part of our submission.”

21. At 9.18am on 18 March 2016 Mr Keenan sent his draft submission to Mr Simpson, which included an outline of services which could be provided by “Savills Hotel Agency” and said, in part:

“The expertise within the team is capable of putting forward unique asset realisation strategies and disposition services, as well as specific management and consultancy services.”

22. A follow-up email was sent by Mr Keenan at 9.39am. The evidence does not reveal any response by Mr Simpson at this stage.

23. On 30 March 2016 Mr Keenan met with Mr Iemma and proposed an introduction to Mr Simpson the following day. At that point, Mr Iemma was interested in obtaining advice regarding the design of the hotel development from the advisory arm of the plaintiff’s hotel division. On 5 April 2016, Mr Simpson emailed his proposal to Mr Iemma. His covering email included the following:

“Without trying to sound overly arrogant, I believe we offer market leading advice in this space, and would be pleased to provide you with client references confirming this should you require.”

24. In substance, the proposal set out the ways in which the plaintiff’s hotels arm could improve the planning and design of the hotel proposed for the site. The scope of work outlined in the proposal limited the services to be provided at that stage to the following:

“Advise on the optimal hotel product, recognizing that the Client has an existing DA and architectural plans:

•   Recommended scale and quality of hotel which will determine commensurate star rating

•   Number, size and configuration of hotel rooms

•   Number and size of other facilities (including F&B facilities, fitness and recreational facilities) as required

•   Adequate back of house facilities.”

25. Since the proposal was that fees would be charged on an hourly basis, it also included the charge-out rates of the two persons involved, Mr Simpson and Vasso Zographou, each of whose services were to be charged out at $550 per hour, exclusive of GST. The proposal included Mr Simpson’s profile which said, in part:

“Michael has spent more than 10 years as a lawyer responsible for advising on, structuring, negotiating and executing asset level and entity level single asset and portfolio hotel and resort sales, corporate M&A real estate transactions, bilateral, syndicated and private placement financing, and capital market bond issuance.”

26. By that time, Mr Simpson was already hoping to be appointed agent for the sale of the hotel component of the development. On about 6 April 2016, he had a conversation from Hong Kong, where he happened to be, with Mr Iemma to the following effect:

Mr Simpson:    “Frank, helping you out with design review/advisory work is great and we are keen to be involved with it, and I don’t want to sound rude, but the real prize for Savills is selling the property for you.”

Mr Iemma:   “I know and I understand. We’ve already had a proposal from Gus [Moors] from Colliers on that.”

27. Mr Iemma passed on Mr Simpson’s proposal for the design work to Mr Liu, who consulted Mr Shi. Mr Shi instructed Mr Liu to inform Mr Iemma to go ahead and retain Mr Simpson’s team on the hourly rate charges set out in the proposal. Mr Iemma communicated Andev’s acceptance of the proposal by email on 6 April 2016.

28. On 13 April 2016, Mr Simpson’s team provided Andev with a draft design review report which addressed matters such as how many lifts should be included in the proposed hotel and how much back-office space would be required for hotel staff. This was discussed with designers, architects and other professionals who had been retained to advise Andev on the hotel. Practical considerations such as the size of rooms and the location of lifts were addressed in these meetings.

29. Although Mr Liu was privy to the report, he did not translate it for Mr Shi because his understanding was that Mr Shi and his fellow directors of the defendant were not interested in detail which would not impact in any significant way on the final costs and potential profit of the development. At that time Mr Liu did not yet know that Mr Simpson’s team also wanted to sell the hotel which was to be developed on the site. He regarded Mr Simpson’s arm of the hotel division as advisory rather than relating to sales.

The opportunity offered to Mr Simpson by Richard Doyle

30. In about April 2016, Richard Doyle, group general counsel for Staywell Holdings Pty Ltd, contacted Mr Simpson and asked him to act on behalf of two entities to sell the Park Regis Sydney Hotel located at 27 Park Street, Sydney. Mr Simpson did not accept the retainer.

31. Subsequently, the vendor, for whom Mr Doyle acted, sold the hotel on about 28 August 2016 to a Chinese consortium for $46 million. The press article in evidence said that Colliers handled the sale which included a 15-year long management agreement. The terms of the agreement are not in evidence. Nor is there evidence which establishes what Colliers was paid.

32. At 6.42pm on 28 August 2016, Mr Doyle emailed Mr Simpson as follows:

“Thank you for suggesting we speak with Gus [Moors from Colliers] – was a smart recommendation which I will remember.

You can let your Japanese clients know they should have come on board – they would have made good money.

I will be back in the office Monday and would like to touch base with you to see if you can find an asset for us to buy. Wil [sic] explain what I am looking for on Monday when I am back.”

33. Mr Simpson responded:

“Thanks for the note – congratulations on the sale. It is a good result. At the same time we had our discussion I had just listed 9-25 Commonwealth Street Sydney so I took on that assignment (on a sole exclusive basis) and thought that my time was best served looking after the client’s Interests – which is why I didn’t try to find a buyer for yours – only so many hours in the day, as you well know.”

34. I do not accept that the reason Mr Simpson refused Mr Doyle’s offer for the agency was that he was retained by the defendant. Mr Simpson did not submit a proposal to the defendant for the agency until 31 May 2016, which was significantly after he had been contacted by Mr Doyle. I consider Mr Simpson’s response in August 2016 was self-serving and designed to provide corroboration for his claim that there was a signed agency agreement between the plaintiff and the defendant when he knew that not to be the case.

The proposed appointment of the plaintiff as agent for the sale of the hotel

The plaintiff’s proposal

35. As referred to above, although Mr Simpson’s arm of the plaintiff’s business was prepared to provide design services at an hourly rate, Mr Simpson was keen for the plaintiff to be appointed as the agent for sale of the hotel, for which the potential reward was much greater. On 30 May 2016 he sent an email to Mr Iemma which attached a document entitled, “Disposition Proposal and Strategy – Boutique Hotel”. The covering email said as follows:

“Please see attached our short form proposal in relation to the disposition of the hotel.

I note the following:

•    As instructed and in view of the time, it is very much a short form summary without the publishing and livery that we would normally adopt for such an important transaction and client. Given our relationship with you and our recent discussions, I hope this does not prejudice us.

•    The attached document deals with the proposed sale only, and does not cover one of the key points we discussed on our call on Friday, namely the continuation of the design work. This is deliberate so that the attached document was properly ‘quarantined’ from the rest of what is going on so you can evaluate the decision to offer it to the market separately. However, as discussed, we strongly recommend that you continue to run the three ‘separate’ streams in parallel - namely the design with WB, the preparation of the PPRI Project Brief which the PM team are progressing, and the marketing and sales materials.

•    Should the successful investor have a particular adverse perception of the interior design, they can pay for the cost to change it to their preferred scheme.

I look forward to discussing this with you further tomorrow.”

36. I accept Mr Simpson’s admission in cross-examination that the sale of the residential stratum of the development would not be within his department, unless, potentially, one buyer wanted to buy the residential component as well as the hotel component. He also accepted that he would not deal with the retail component of the development since that would be within another of the plaintiff’s departments. His proposal was solely concerned with the sale of the hotel.

37. The executive summary proposed an agency fee “for a sole exclusive mandate, 1.25% of gross realisation, plus 5% of any amount over $68.2m (fees quoted are exclusive of GST).” The document included a “campaign timetable” which proposed an effective appointment by 6 June 2016 and a one week international road show in the EOI [expressions of interest] phase commencing on 20 June 2016 and a date for exchange of a “binding sale contract” on 16 September 2016.

The meeting on 31 May 2016 and its aftermath

38. On 31 May 2016 there was a meeting in the boardroom at Andev’s offices which commenced at about 9.30am. Mr Iemma and Mr Simpson met to discuss the proposed appointment of the plaintiff as agent for the sale of the hotel component off-the-plan. Mr Simpson made a contemporaneous note of the meeting which was exhibited to his affidavit. Mr Liu also attended the meeting and became aware for the first time that Mr Simpson wanted the agency for the sale of the hotel. Mr Liu understood that any such agreement had to be between the agent and the defendant because it was the defendant, and not Andev, which owned the site.

39. During the course of the meeting, Mr Iemma mentioned that Colliers had charged 1% commission, which was less than the plaintiff’s proposal. He told Mr Simpson that he would prefer that the base commission remained at 1% commission but was agreeable to an incentive fee. It was mentioned that Mr Iemma was dealing with a potential buyer in China. Mr Iemma also disclosed that the defendant, and not Andev, was the owner and that it had three directors. Mr Iemma invited Mr Simpson to send a draft agency agreement.

40. Mr Simpson admitted that he understood that work done by an agent in advance of a binding agency agreement was done at the agent’s risk.

41. At 12.11pm on 31 May 2016, Mr Simpson emailed Mr Keenan and Ms Chu, who also worked in the project management team with Mr Keenan, to ask for details of the title of the site and client details so that he could insert them into a draft agency agreement. At 3.31pm, Mr Keenan sent an email to Mr Simpson attaching his “final proposal” and terms and conditions which contained the details which Mr Simpson needed to insert into the draft agency agreement.

42. This led to the preparation of the first of the versions of the agency agreement which passed between Mr Simpson and Mr Iemma. These versions were also sent, or given, to Mr Liu so that he could report to Mr Shi.

43. At some point during this period, Mr Liu spoke to Mr Shi and told him that the plaintiff was asking for a “sole exclusive mandate” with a 1.25% gross realisation and 5% incentive fee. Mr Shi responded:

“Go back to Frank and negotiate the terms. I don’t like exclusivity. I have spoken to some agents with a background in dealing with Asian clients and I want the ability to sell the hotel or the land by myself or through other directors.”

44. On the same or another occasion in this period, Mr Shi also said to Mr Liu:

“There cannot be an exclusive agency because I want other means to sell the hotel. It can be an open agency agreement but not exclusive. We need to carve out my potential buyers.”

45. The matter was discussed between Mr Iemma and Mr Liu as follows:

Mr Iemma:   “Michael [Simpson] thinks it will be hard to carve out other parties.”

Mr Liu:      “Mr Shi wants to continue to negotiate.”

46. Mr Liu did not recall any further discussion about this issue.

47. On Wednesday 1 June 2016 Mr Simpson emailed Mr Iemma to thank him for the meeting of the previous day. He attached a proposed agency agreement. In that draft Andev was incorrectly named as the principal as Mr Simpson had not passed onto the plaintiff’s legal department that the defendant owned the land and was, accordingly, the principal. The base commission had been reduced to 1%. The “Property” was said in the Sales Inspection Report to be “The Hotel to be delivered by the Principal at [the site].”

48. The attached terms and conditions relevantly provided:

“1.   Definitions

…

(d)   Introduced Party means:

(i)   during the Term, any party; and

(ii)   after the Term, a party introduced to the Principal or the Property during the Term (including any related body corporate or associated entity of that party)

…

(g)   Property means the property (or any part thereof) so described in the Sales Inspection Report and includes, but is not limited to, any proposed development to be undertaken on that property

(h)   Sales Inspection Report means the section of this agreement headed “Sales Inspection Report”

…

2.   Appointment

The Principal grants Savills exclusive selling rights of the Property from the Start Date until:

(a)   the Property is sold; or

(b)   either party terminates this agreement by providing 30 days written notice to the other, with such notice not to be given within 180 days of the Start Date.

3.   Entitlement to Commission

The Commission is due and payable to Savills by the Principal if at any time during or after the Term:

(a)   the Principal enters into a binding contract for the sale of the Property with an Introduced Party;

(b)   the Principal enters into a put and call option with an Introduced Party pursuant to which an Introduced Party may call for the Property or have the Property put to it; or

(c)   by any other means than those described above, an Introduced Party:

(i)   becomes the legal and/or beneficial owner of the Property; and/or

(ii)   obtains a controlling interest in the Principal and/or the Property.”

49. The document was the standard pre-sale agreement prepared by the plaintiff’s legal department. The only changes made were to cl 3, which provided for the agent’s entitlement to commission. Mr Simpson explained that the change was made to ensure that commission for this matter would be paid on exchange of contracts rather than settlement of the contract, which was expected to take in the order of three years.

50. The execution page of the draft provided on 1 June 2016 made provision for one “authorised signatory” to sign on behalf of the plaintiff and for that signature to be witnessed. The lower half of the execution page was entitled: “Principal in accordance with section 127 of the Corporations Act 2001” [emphasis in original] and provided for two signatures, that of a director and also a signature of a director/secretary.

51. Mr Iemma responded to this email at 10.34am on 2 June 2016, relevantly as follows:

“Thank you for sending through the agency agreement, it is most appreciated.

I have looked through the agreement this morning and in the main it appears fine. In relation to specific items, I have made the following changes to the attached word document;

1.    Principal. ATF CTH is the owner of the property where as Andev are the Development Managers.

2.    The property address is Sydney and not Surry Hills.

3.    I have inserted our Solicitors details as requested.

4.    In relation to the Exclusive Period, I have changed the period from 180 days to 120 days at Item 2.b. Based on our current discussions and progress, I believe a sale should be effected within this period.

Michael, the only other item than those listed above that I believe that we need to document, is the situation where Andev or ATF CTH brings another party to the sales process. As I have mentioned previously, I have several longstanding contacts who I have worked with before that have brought overseas parties to the table. In relation to the Hotel, I have currently the same situation. Your advice on this item would be appreciated.

I look forward to your feedback.”

52. The further draft attached to that email had incorporated the corrections identified by Mr Iemma in the email. The changes were, in the main, to the Sales Inspection Report document. The only change to the terms and conditions was to change the period in cl 2(b) from 180 days to 120 days. The execution page remained in the same form.

53. It appears from the terms of Mr Simpson’s email to Mr Iemma sent at 11.05am that the two attempted to speak on the phone but missed each other. At 11.06am, Mr Iemma invited Mr Simpson to come to his office. However, Mr Simpson appears to have had second thoughts, since he followed this up with an email sent at 11.10am, saying “…I thought it would be better to give you some initial thoughts (below) before we have a discussion”. Mr Simpson then responded by inserting his comments against the points Mr Iemma had raised in the email of 10.34am. Points 1-4 were either noted or agreed. In response to Mr Iemma’s last point, Mr Simpson wrote:

“…-can we discuss. It is hard to carve out any people including those we don’t know about as this doesn’t align our interests – we would be ‘working against’ those people we don’t know which isn’t in your interests. Anyway, let’s discuss when I come up now.”

54. Between the time of this email (11.10am) and the time of a subsequent email (11.52am), Mr Simpson went to Mr Iemma’s office to discuss the matter further. Mr Simpson took his notebook to the meeting. It appears that his notebook also contained a note of the response he had given Mr Iemma at 11.10am. In respect of the last matter, he noted, consistently with what was in his email:

“we can’t proceed w/o [without] full excl [exclusivity] as people will approach Mr Shi direct.”

55. Under this note, Mr Simpson wrote:

“He [Mr Iemma] said OK.”

56. I do not consider this record to indicate that Mr Iemma agreed to there being no carve out at the meeting. Rather, I consider that Mr Simpson was merely recording that he had made the statement to Mr Iemma. It would be inconsistent with the objective facts and circumstances for Mr Iemma, who did not have authority to agree to changes without consulting Mr Shi, to agree to such an amendment. Further, Mr Iemma had no capacity to obtain those instructions due to the language barrier and would have had to consult Mr Liu to obtain such instructions from Mr Shi. Mr Simpson was well aware of the limits on Mr Iemma’s authority and that Mr Shi’s signature was required on the document. He confirmed in cross-examination that he appreciated that the draft agency agreement would not be binding unless and until Mr Shi signed it on behalf of the defendant and that, whatever Mr Iemma told him on 2 June 2016 would not make the agreement binding. Mr Simpson accepted that Mr Iemma did not tell him on 2 June 2016 that he had spoken with Mr Shi that morning.

57. Mr Keenan’s understanding was also that Mr Shi would have to sign the agency agreement. He said:

“…[I]t wasn’t Frank [Iemma] signing it; it was Mr Shi. So Frank could provide his opinion and feedback, but ultimately, for something as large a number as the fee associated with this, it was always my understanding Mr Shi always had to sign it off. That was my - and that was the feedback that I got. It wasn’t Frank’s decision to not want to sign an exclusive. It was my understanding it was Mr Shi’s desire not to sign an exclusive agency agreement.”

58. Mr Keenan also said:

“…Frank may have an opinion and may have had discussions with Michael, but what Frank was saying to me was that Mr Shi was the one, in fact, who wasn’t sitting in on any of these meetings, who have final say on what was signed and what wasn’t signed and had total authority on what was signed and what wasn’t signed.”

59. After this meeting, Mr Simpson returned to his office and instructed Steven McMahon from the plaintiff’s legal team to insert the agreed changes (being points 1-4 in Mr Iemma’s email).

60. At 11.52am, Mr Simpson emailed Mr Iemma and said:

“Thank you for catching up just now.

Please see attached the final version with our comments.

Could you please let me know when it has been signed. As you know we are continuing to work before it is signed.”

61. The signature page of the document which was apparently attached to that email was different from the one which had been provided on 3 June 2016 in that, although, as before the signature space for the plaintiff provided for a witness and one signature of an “authorised signatory”, the signature space for the defendant, while purporting to be “in accordance with section 127 of the Corporations Act 2001”, provided for the signature of an “authorised director” and a signature of a witness. Mr Simpson was unable to explain why there was a difference in the signature pages of the respective versions.

62. Mr Liu has never seen an executed agency agreement between the plaintiff and the defendant. Had Mr Shi signed such an agreement, it is probable that Mr Liu would have been involved in obtaining his signature and receiving the document and passing it on to Mr Iemma.

The events from 3 June 2016 until the international roadshow

The morning of 3 June 2016

63. Mr Simpson’s evidence was that on the morning of 3 June 2016, a Friday, he was in his office and printed out the final version of the agency agreement which had been produced the previous day, signed it, but inexplicably did not have it witnessed, and took it to Mr Iemma’s office and asked the receptionist to give it to Mr Iemma. He neither copied nor scanned the executed version. He said that he delivered it to Mr Iemma himself because it was “a little bit ceremonial”, notwithstanding that Mr Iemma was not there to receive it. For the reasons given below I do not accept that he ever executed the agreement or delivered the signed document to the defendant’s offices.

The lunch on 3 June 2016 at Ucello

64. At some time prior to 2 June 2016, Mr Keenan had arranged to host a lunch at a restaurant in the Ivy complex in George Street called Ucello. Catherine Hyland and Kylie Chu from his project management team were invited to attend as were Mr Iemma and Mr Liu (from the defendant, as clients). Milton Lloyd from Mijollo Architects and Jacqui Senior from Woods Bagot, interior designers, came too as they were working with Mr Keenan’s team to provide project management services.

65. When Mr Keenan invited Mr Liu, who was referred to by his Anglicised name, Leo, to the lunch he said words to the following effect:

“Leo, I want to invite Andev to lunch because you had been working with me and others to try to obtain the construction certificate for the Site. Ordinarily the CC [construction certificate] process would often take a lot longer than had occurred in our case as we had finished 80% of the work to obtain a construction certificate within six months.”

66. When Mr Simpson heard about the lunch, he asked Mr Keenan if he could attend as he was trying to develop his relationship with Mr Iemma with a view to being appointed exclusive agent for the sale of the hotel on the site. Mr Keenan agreed to Mr Simpson coming to the lunch.

67. I do not accept Mr Simpson’s evidence in [38] of his affidavit sworn 1 February 2019 about the justification for the lunch as follows:

“Mr Keenan and I had previously said to Mr Iemma that we should go to Ucello restaurant to celebrate Savills’ appointment to sell the Commonwealth St Property via my group and also Savills’ appointment, via another Savills’ group (Hotel Project Management) headed by Mr Keenan, to provide project management services to ATF for the development of the Commonwealth Street Property.”

68. Nor do I accept Mr Simpson’s evidence that “[t]here were lots of handshakes at the lunch” in so far as he intended to imply that the lunch was celebratory or congratulatory. There was no cause for celebration since Mr Simpson knew that there would be no binding agreement without Mr Shi’s signature.

69. In his second affidavit sworn on 21 October 2019, Mr Simpson deposed, in answer to Mr Liu’s affidavit referred to above:

“The lunch was to celebrate the two appointments which Savills accepted from ATF and Andev, namely the appointment to sell the Property via my group, and the appointment to project manage the development of the Property by Savills Project Management division, of which Mr Peter Keenan was a director. The Hotels division and the Project Management Division, each of which are operated under a separate profit and loss statement, shared 50% each of the cost of that lunch, as is customary when two divisions each have an appointment in respect of their own discrete services.”

70. I consider Mr Simpson’s evidence on the topic of the lunch (apart from his attendance, its occurrence and its cost) to be a fabrication, whether conscious or otherwise, designed to bolster his version that agreement had been reached on the terms of the plaintiff’s appointment as agent and that he had a reasonable expectation that Mr Shi would sign it, notwithstanding Mr Shi’s previous insistence on a carve-out for purchasers whom he had introduced himself. It is plain from the chronology set out above that Mr Keenan’s team had been retained by Andev in about March 2016, some three months before the lunch. The wording of Mr Keenan’s invitation to Mr Liu indicates that the relevant milestone was the work towards the construction certificate, not the retainer.

71. I accept Mr Keenan’s description of the lunch and the splitting of the bill between himself and Mr Simpson as follows:

“My, my recollection with that was that it was a reasonably hefty bill and for a number of reasons, we felt that it would be best that we split the bill. Once again, my recollection that I was bringing Michael to a, a team lunch that I’d organised, once again on the - with my intention to helping him out, getting him closer to the client, developing a rapport, and you know, in all honesty, just getting - hopefully getting him the, the role to sell the hotel. So, I think, Michael, based on what I was trying to do for Michael, I think we just mutually agreed that we’d split the bill, correct.”

72. The bill for the lunch was $2,475. There were eight guests in total. The lunch began at 12.42pm. The time of its conclusion does not appear from the evidence although I accept that it was lengthy and that Mr Simpson’s recollection of “7-8 hours” may be accurate.

73. I accept Mr Keenan’s recollection that he was not aware of any mention being made at that lunch of the terms of the agency agreement having been agreed or of Mr Simpson having delivered a signed copy of the agreement to Mr Iemma earlier that day. I also accept Mr Liu’s evidence that there was no discussion at the lunch about whether Mr Simpson’s team would be appointed to sell the hotel. Had there been any such discussion, I am satisfied that one or other of Mr Liu or Mr Keenan would have been aware of it and recalled it.

What occurred between 3 June 2016 and 24 June 2016

74. In his affidavit of 1 February 2019, Mr Simpson deposed that he had met with Mr Iemma on 7 June 2016 to discuss the items that they needed to start the sale campaign for the site. He deposed in the same affidavit that, on an unspecified date, he had a telephone conversation with Mr Iemma to the following effect:

Mr Simpson:   “I am not getting on a plane until I get a copy of our signed agency agreement.”

Mr Iemma:   “Don’t worry, I’ll make it happen.”

75. I do not accept this evidence. In cross-examination, Mr Simpson was asked whether he asked Mr Iemma when the signed agreement (which Mr Simpson said that he had signed and delivered to reception on 3 June 2016 before the lunch) would be returned and Mr Simpson volunteered, for the first time, that he had asked for it on 7 June 2016 (the Tuesday following the lunch on the previous Friday) and also on 20 June 2016 when he had forwarded other documents.

75. When it was put to Mr Simpson in cross-examination that 7 June 2016 was too early for an ultimatum (given that he did not get on a plane until 3 July and did not book the ticket until a couple of days before), he maintained that he had done it in a “colloquial manner” and had prefaced the ultimatum with the word “mate”. I do not accept this evidence.

76. On 8 June 2016, at 1.40pm Mr Iemma sent Mr Simpson an email attaching a report from Woods Bagot which he asked him to review. At 3pm that day, Mr Simpson sent an email to Mr Keenan and Ms Chu, which was copied to Mr Iemma asking for a plan of the ground floor with a view to making sure that a luggage storage area could be on the ground floor so as not to raise investor concern or “guest dissatisfaction”. There was no mention in the email about the agreement which Mr Simpson said that he had signed and given to Andev’s receptionist.

77. On 10 June 2016, there was an exchange of emails between Mr Simpson and others about “hotel visuals”. Mr Simpson said, by email: “the sooner we get the renders [for digital images] going the better as we cannot go to market without them”. Later that day, Ms Senior informed Mr Simpson and Mr Iemma that the “renders and full hotel pack will be issued on the 27^th of June”.

78. As referred to above, Mr Simpson maintained in cross-examination on 13 July 2020 that he had a distinct recollection of asking Mr Iemma for the signed agreement on 20 June 2016, although he had not previously referred to it in any of his affidavits. He said that he had asked for it because he “also sent him some documents around that time”. This was presumably a reference to an email Mr Simpson sent to Mr Iemma at 2.17pm on 20 June 2016 which attached a “CA” (confidentiality agreement) for investors to sign and a term sheet, to be reviewed by Andev’s lawyers. He also sent an executive summary and said that the draft Information Memorandum would follow. The following exchange in cross-examination is significant:

“Q.   If you were sufficiently concerned on 20 June to raise it with Mr Iemma, why then didn’t you raise it in this email?

A.   I couldn’t answer that.”

80. The volunteering of 20 June 2016 as being a date on which he asked Mr Iemma for the signed agreement is an example of what I consider Mr Simpson did generally of retrofitting his evidence to the documents which he knew were in existence and known events (such as the lunch) to a version of the facts which he considered to be in his interests. However, the absence of any reference in his written communications with Mr Iemma to his impatience at not receiving the signed agreement is telling and indicates, in my view, that Mr Simpson had no confidence in ever receiving a signed agreement other than one which had the carve-out which Mr Shi wanted.

81. This is consistent with Mr Keenan’s evidence, which I accept, that shortly before Mr Simpson got on the plane to Singapore on 3 July 2016 for the international roadshow, he had a discussion with Mr Keenan, which is referred to below.

The alleged receipt of the signed counterpart agreement on 24 June 2016

82. As referred to above, in his affidavit sworn 1 February 2019, Mr Simpson made no reference to having followed up Mr Iemma about the agreement at any specified time between the morning of 3 June 2016 and 24 June 2016. However, in his evidence he nominated 7 June and 20 June 2016 as occasions when he had asked for the agreement, although there was no reference in the numerous emails which passed between the two of any such request having been made.

83. In his affidavit sworn 1 February 2019, Mr Simpson said the following occurred (in [40]):

“A copy of the Agreement was provided to me by Mr Iemma at a meeting on 24 June 2016. I noted that the Agreement had been signed by Mr Shi on behalf of ATF. The signature was both in English and what I understand to be Chinese. The English words said ‘Jian Shi’ and were written in a style that seemed to me to be of a non-native English speaking person. Whilst the Agreement had commenced on 3 June 2016, I understand that there was some delay in me receiving the counter signed copy from ATF, as the Agreement had to be executed by Mr Shi who resided in China, after it was sent to him there and then the original returned to Australia.”

84. He expanded on the meeting at [43e] of his affidavit and said:

“On 24 June 2016 at 10am I met with Mr Iemma to review the draft Information Memorandum I had submitted to Mr Iemma and to finalise any amendments to it. At some point in that meeting, Mr Iemma handed to me the signature page of the Agreement (as discussed previously in paragraph 36 of this affidavit). Mr Shi’s signature on the Agreement was in the same style and to the best of my lay eye, the same signature as appears on the confidentiality agreements signed by Mr Shi, to which I refer more fully below.”

85. In cross-examination, Mr Simpson confirmed that the document he received from Mr Iemma was a copy and did not have ink on it. When he was cross-examined about the inconsistency between the version he had given in [40] of his affidavit that the agreement had been handed over and what he had said in [43e] of his affidavit that only the signature page had been handed over, Mr Simpson was unable to explain it. Mr Simpson gave evidence that Mr Shi’s signature was not witnessed. He could not explain why he did not ask Mr Iemma to go back to Mr Shi to get the signature witnessed.

86. I accept Mr Liu’s evidence that Mr Shi did not send only the signature page of agreements to him to be passed on to Mr Iemma. It was Mr Shi’s practice to send the entire agreement with the execution page. The only exception was for the Bank of China document where Mr Liu was asked to hold the signature page until other documents were ready.

87. Mr Simpson gave evidence under cross-examination, which I reject, about what he said happened to the document which Mr Iemma had given to him:

“Q.   So why didn’t you just sign the one he gave to you?

A.    Because I just grabbed it and put it in with a whole bunch of documents that he gave me while we were sitting there and put it in a plastic folder and brought it back with the other bundle of documents that I had on the file.

Q.    But you understood that the key document to your relationship then between you and ATF was that contract, correct?

A.    It was a key document.

Q.    So, do you say that you just put it in a plastic sleeve with all the other documents and just left it in a pile of documents somewhere?

A.    That's exactly right.”

88. It was envisaged that Mr Keenan would attend the meeting at 10am on 24 June 2016. However, at the last minute, Mr Keenan emailed Mr Iemma to tell him that he was in a meeting which would go longer than expected and he would not be able to come.

89. At 11.43am on Friday, 24 June 2016 (shortly after the counterpart signed by Mr Shi was said to have been handed over by Mr Iemma to Mr Simpson), Mr Iemma sent Mr Simpson an email referring to their meeting that morning in which he referred to the term sheet which they had discussed at the meeting, which the defendant’s solicitor, Lands Legal, had issued.

90. In an email in response sent that evening at 11.08pm, Mr Simpson wrote to Mr Iemma as follows:

“Thanks very much Frank, and for your instructions in our meeting this morning.

I’ll send you the updated documents Monday and we can then integrate the renders to finalise the IM.”

91. In my view, it beggars belief that, if Mr Iemma had actually given Mr Simpson the long-awaited agreement or signature page, no mention of it would have been made in either of these two emails which were sent on the same day between the only two people who were present at the meeting when it was said to have occurred. It is also highly significant that Mr Simpson never wrote to Mr Iemma and asked for the signed agreement up until that date or thereafter. Had Mr Shi actually signed the agreement, he would have sent it to Mr Liu, who would have provided the entire document to Mr Iemma for provision to Mr Simpson.

92. The emails between Mr Iemma and Mr Simpson continued the following week about details relating to the Information Memorandum to promote the sale of the hotel component and the parties whom Mr Iemma intended to include in the “first round approach”. I note that, in documents prepared at around this period for distribution at the roadshow, including the Information Memorandum, the plaintiff was described as the defendant’s “exclusive agent” for the sale of the hotel. I regard these references as neutral since they are insufficient to address the remaining issue between Mr Simpson and Mr Shi: namely, whether there would be a carve-out for any purchaser introduced by Mr Shi. As there was no question of another agent being appointed to sell the hotel, the plaintiff was, relevantly, an exclusive agent.

93. Mr Liu recalled that he saw the Information Memorandum printed in hard copy. It is not clear from his evidence whether he saw it in draft form or only after it had been printed professionally. He translated what he considered to be the “key parts” of the Information Memorandum to Mr Shi. He said to Mr Shi:

“This is a basic project information presented to future hotel buyers. A marketing material. This includes Antai’s [a company associated with the defendant] experience in property development, hotel concept, the projected hotel operations. Savills prepared the document and is presented to be our hotel agent.”

94. Mr Liu did not translate the document in its entirety for Mr Shi and, in particular, did not translate that the plaintiff was described as the defendant’s “exclusive agent”. Mr Liu considered the document to be a marketing document, rather than a legal one.

95. An invoice for Mr Simpson’s flights from Sydney to Singapore and from Singapore to Hong Kong was issued on 30 June 2016. This is consistent with Mr Simpson’s recollection that the tickets were booked a couple of days before his departure. A significant amount of work had been done on the Information Memorandum at this time. The booking is also consistent with Mr Simpson being satisfied that it would be ready for his departure. Mr Simpson confirmed that the draft Information Memorandum had gone for printing by 3.04pm on 30 June 2016.

96. Later on 30 June 2016, Mr Simpson sent an email to Andev, in which he identified several prospective purchasers, including Glenn Boultwood, the Chief Executive Officer of Aligned FM Pty Ltd (Aligned). Mr Simpson had known Mr Boultwood for more than ten years and knew him to be a director of a fund, Glenmarie Capital Pty Ltd (Glenmarie), which specialised in purchasing hotels. To each of these emails, Mr Simpson attached the Information Memorandum (which by that time had been finalised) and the confidentiality agreement which needed to be signed in order to obtain access to the data room and a copy of the plans. Each email began:

“We have been appointed as exclusive agent to the Vendor for the sale of the hotel at [the site].”

97. In response to these emails, Mr Simpson received signed confidentiality agreements which he forwarded to Mr Iemma for execution by Mr Shi on behalf of the defendant. Mr Liu arranged for these documents to be sent to Mr Shi’s email address so that he could sign and return it to the prospective purchaser. I accept Mr Liu’s evidence that Mr Shi returned the complete signed documents to Mr Liu, who would then pass them on to Mr Iemma. The plaintiff kept records, in respect of each prospective purchaser approached, as to whether a confidentiality agreement had been signed.

98. Although Mr Simpson did not have an enforceable agreement, he knew that he had been authorised by the defendant to act as its exclusive agent to sell the hotel. The only remaining issue was its entitlement to commission in the event that Mr Shi introduced the purchaser.

99. It would appear from the e-ticket receipt that on 1 July 2016, Mr Simpson’s ticket from Hong Kong to Sydney for a flight leaving on the evening of 7 July 2016 was booked and paid for.

100. I accept Mr Keenan’s evidence that shortly before Mr Simpson left for the roadshow in Asia on 3 July 2016, he admitted to Mr Keenan that he was frustrated because he did not have a signed agreement and appreciated that he was going out on a limb by going overseas without one. Mr Keenan was aware of the timing because his project management team had been consulted on the form and detail of the Information Memorandum up until the time it went to print on 30 June 2016.

The promotion of the hotel component by the plaintiff

101. On 3 July 2016, Mr Simpson left for the roadshow. He went to Singapore and Hong Kong to promote the proposed hotel on the site. In much of the documentation, the plaintiff was identified as the defendant’s exclusive agent for the sale. While he was away and on his return, he reported by email to Mr Iemma as to the responses received from prospective purchasers. While Mr Simpson was away, Mr Iemma told Mr Liu, who told Mr Shi, that Mr Simpson had met with a couple of prospective purchasers in Asia.

102. At around this time, after Mr Simpson had already left for Asia, Mr Keenan spoke with Mr Iemma, who told him that Mr Shi was not interested in signing an exclusive agency agreement in the event that he brought his own buyer to the table. Mr Iemma told Mr Keenan that, in those circumstances, Mr Shi did not see why he should be paying a commission to another party which may not have had any involvement in the sale. After this conversation, when Mr Simpson had returned from the roadshow, Mr Keenan asked him how he expected to get the agreement signed, given Mr Shi’s attitude. Mr Keenan recalled that Mr Simpson responded, on this or another occasion, in a similar way as he had before he had left: “they better f—ing well sign this thing because I’ll be, I’ll be, you know, majorly pissed off if they don’t.” I do not accept Mr Simpson’s denial of the admission he made to Mr Keenan that, shortly before he got on the aircraft for the roadshow, he did not have a signed agency agreement. For the reasons given below, I prefer Mr Keenan’s evidence to that of Mr Simpson and accept Mr Keenan’s evidence.

103. Mr Wood SC, who appeared on behalf of the plaintiff, put to Mr Keenan in cross-examination (presumably on instructions) that Mr Simpson had told him that he was not getting on the plane until he had received a signed agreement. Mr Keenan did not recall that he ever said that.

104. Mr Iemma told Mr Liu about an offer which was made by a company called Mulpha to buy the hotel for an amount of $63,240,000. Mr Liu passed on the key terms of the offer, including price and settlement date, to Mr Shi.

105. Throughout July and August 2016, Mr Simpson and his team continued to work promoting the proposed hotel through an expression of interest process. Mr Simpson introduced Mr Boultwood to Andev. For some period, it looked as if Aligned would purchase the proposed hotel from the defendant. Aligned was interested not only in the hotel stratum but also in the retail stratum on the site. There was an unregistered plan or strata subdivision which set out the various lot numbers for these different components on the site. Aligned/Glenmarie offered to purchase the hotel and retail components for $70,600,000.

106. When Mr Liu was told about an offer from Aligned, he told Mr Shi who informed him that he and the other directors were happy with the amount offered. Mr Iemma asked Mr Liu to obtain instructions from Mr Shi to permit Andev to engage Lands Legal to act on the defendant’s behalf on the sale.

107. At the end of every financial year and calendar year, each department of the plaintiff’s business was asked to prepare a summary of its achievements which was to be included in a presentation to the plaintiff’s staff. At the presentation on 27 July 2016 and 8 December 2016, Mr Simpson represented to the plaintiff in in-house presentations and literature that his team had been appointed to sell the hotel component of the site.

108. On 23 August 2016 Mr Simpson wrote to Mr Keenan to ask for information about the potential suppliers of the “top 10 main items of plant and equipment” to be provided to the “final party with which we expect to go exclusive in the next 24 hours”. Mr Keenan’s team provided this information to Mr Simpson.

109. Heads of agreement were signed by Aligned/Glenmarie on 29 August 2016. Prior to the execution of this document by the defendant, Mr Liu translated the key terms of the agreement for Mr Shi. As a consequence, Mr Shi signed the agreement on behalf of the defendant. On 30 August 2016 Mr Boultwood emailed Mr Simpson to ask whether the defendant had signed the counterpart. Mr Simpson forwarded the email to Mr Iemma who responded:

“Mr Shi has the document and I am just waiting for him to return it today.”

110. Later that day, a counterpart of the heads of agreement was signed by Mr Shi on behalf of the defendant and provided by Mr Iemma to Mr Simpson and Mr Boultwood. After its receipt, Mr Simpson emailed his response at 30 August 2016:

“Thanks gentlemen and congratulations on this first step in a long and mutually prosperous relationship. I look forward to working with you both to finalise the contract.

I have spoken with Peter Keenan and he and I are meeting Thursday when we’re both back in the office to assist you Glen with your earlier email regarding approvals/DD materials. We’ll come back to you after that meeting.

In the meantime, please let me know if there is anything I can do to assist either of you.”

111. After the execution of the heads of agreement, Mr Shi told Mr Liu of his concern about controlling the cost which the defendant would incur in developing the site and constructing the hotel. Mr Shi told Mr Liu:

“You and Frank need to control the costs we’ll incur if we go ahead with this agreement.”

112. Throughout September 2016, there were various meetings between the plaintiff, the defendant and Aligned/Glenmarie about the terms of the contract for the sale of the hotel and retail strata of the site. Mr Keenan’s work occasionally “dove-tailed” with Mr Simpson’s. For example, on 19 September 2016, Mr Simpson asked Mr Keenan for an updated list of major plant and equipment. Throughout September and early October the due diligence process continued and the contract for sale was drafted and its terms negotiated.

113. On 9 October 2016, Mr Keenan raised with Mr Iemma that both potential purchasers wanted to use particular “OS&E” (operating supplies and equipment) which were more expensive than had been budgeted for. Mr Iemma’s almost immediate email response was:

“From all discussions and meetings I have had lately, I knew this was their expectation. It’s very simple, if Glen thinks I am going to take a $2M hit, then we don’t have a deal.

Michael [Simpson] has had a nice holiday, so this is where he earns his comm [commission].”

114. Mr Keenan responded that he agreed and said in an email:

“We [the plaintiff’s project management team] did factor and clearly articulate what we thought was a fair and reasonable OS&E list for you to fund from the outset, which is now vastly different.”

115. On 12 October 2016 Mr Simpson sent an email to Mr Boultwood which was copied to Mr Keenan and Mr Iemma about outstanding issues under the proposed contract of sale. Negotiations about the terms of sale continued between Andev and Aligned throughout October and into November. There was also negotiation of a put and call option deed, which, as Mr Simpson explained, was designed to defer the purchaser’s obligation to pay stamp duty. The terms of this document were agreed by 29 November 2016 although there were still outstanding contractual issues in December 2016. Nonetheless, it appears that the mutual understanding of Mr Simpson and Mr Boultwood was that the transaction would proceed. On 7 December 2016, Mr Simpson emailed Mr Boultwood and said:

“Mr Shi has flown out here to sign the contract (he arrives later today) so everything is moving in the right direction and is full steam ahead.”

The defendant's change of plans

116. At around this time, the tender process which had been conducted by Mr Keenan’s project management team resulted in construction costs that were, as Mr Keenan described them, “high enough to make the owners question whether the development was viable or not.” Mr Keenan’s view was that the defendant had already incurred substantial costs in obtaining approval of the development application from the Land and Environment Court, which also made the development non-viable. Mr Liu came to the conclusion that the feasibility for the development of the site no longer met the defendant’s expectations in terms of time and cost returns. When Mr Liu provided Mr Shi with the numbers both in writing and verbally, Mr Shi said:

“I will take that information to the directors and we’ll have to discuss whether to proceed to develop the site or sell the site undeveloped. Please hold off the sale of the hotel.”

117. Mr Liu passed on Mr Shi’s response to Mr Iemma. On 19 December 2016, there was a meeting between Mr Iemma and Mr Simpson for which Mr Simpson made and retained a file note. Mr Iemma informed him that the defendant had been approached to sell the undeveloped site and that the offer would be acted on that week. Mr Iemma told Mr Simpson that the offer was not based on the Development Application but was an offer for the undeveloped site itself. He said that two of the three of the defendant’s partners wanted to “move on”, although Mr Shi did not. Mr Iemma also informed Mr Simpson that Aligned’s deal “has holes”. As a result of this conversation, Mr Simpson appreciated that there was at least a possibility that the defendant would sell the whole undeveloped site to a third party rather than sell the hotel and retail components to Aligned.

118. Nonetheless, on 22 December 2016, Mr Iemma emailed Mr Boultwood to confirm that Andev was agreeable to continuing the exclusivity period in accordance with the heads of agreement. This period was extended by consent to the end of January 2017.

119. The plaintiff’s change in position, which arose from doubts about the viability of the transaction, led to a marked change in the regularity with which Mr Simpson and Mr Iemma communicated with each other. They had communicated regularly earlier in 2016. However, by late 2016 and early 2017, there was little communication between them.

120. Mr Keenan knew that the plaintiff and Mr Iemma were negotiating the sale of the hotel with Mr Boultwood and observed that Mr Simpson became frustrated when it became apparent that this transaction would not go ahead because the defendant no longer considered the development to be viable.

121. On 17 January 2017, Mr Iemma sent an email to Mr Simpson which was copied to Mr Liu, informing him that he had been asked by the directors to undertake a review of the project’s feasibility for the directors who would be in Sydney for Chinese New Year. He also said:

“Michael, I have not been asked to withdraw from the negotiations with Aligned however, until the directors can assess the project[’]s current position, I will not be in a position to finalise this matter at the moment.”

122. There were further communications between Mr Iemma and Mr Simpson about how Aligned would be dealt with and what Mr Boultwood should be told. In an email sent at 1.10pm on 17 January 2017, Mr Simpson wrote to Mr Iemma:

“My view is that we should tell him the truth – that the build cost came in significantly higher than anticipated and the principals are coming out for CNY [Chinese New Year] to review and proceed – so nothing can be finalised until then.”

123. Mr Iemma responded soon afterward and said in part:

“I agree, unfortunately, that is the truth and the review process and final decision can only be made once the directors are fully informed.”

124. I do not infer from Mr Simpson’s preparedness to tell the truth to Mr Boultwood on this occasion that his evidence as to matters affecting the plaintiff’s entitlement to commission was truthful. I formed the impression from Mr Simpson’s evidence that truth, to him, was a relative concept, to be fashioned by reference to his perception of his own interests at the time. It was in Mr Simpson’s interests that Mr Boultwood be told the truth about why the defendants’ directors were having second thoughts, since it absolved Mr Simpson of responsibility for the stalling of the sale to Aligned, which was why he was in favour of Mr Boultwood being told the truth.

The sale of the site through different agents

125. On 3 February 2017, Mr Simpson wrote to Mr Iemma to tell him that he had heard from a “few people” that they had been offered the site that week. He asked whether the site was on the market and where that left the plaintiff if it was. Mr Iemma responded by email that day:

“I have been advised that the site is not formally on the market. There may have been some talk from the 2 overseas based directors that I am not aware of to others.

Can you advise on who is calling and from where?”

126. In February 2017, the Development Application for the site was modified by Sydney City Council on the defendant’s application.

127. Knight Frank and Massari Corporation Pty Ltd (Massari) were retained by the defendant to sell the site. The evidence does not include a full, executed copy of the agency agreement. The period defined as the “Exclusive Agency Period” was 9 February 2017 to 9 May 2017 although this clause was struck through and a reference was made to “Annexure C”. This annexure was not tendered. The agreement was signed by one of the plaintiff’s directors on 16 February 2017.

128. On 15 February 2017, Mr Simpson sent an email to Mr Iemma proposing a meeting on Friday 17 February 2017 at Bertoni, a café in the city, to discuss “the status of where things are at” with the site. Mr Iemma agreed to meet at 10am on 17 February 2017.

129. At 6.30pm on 16 February 2017, Seil Kim of Millinium Inmark sent an email to Mr Simpson which attached an Information Memorandum which was similar, but not identical, to the one which Mr Simpson had not only used in his marketing campaign for the hotel but also had already sent to Mr Kim as part of the plaintiff’s sales campaign. Millinium Inmark was an investment manager which Mr Simpson understood might be interested in purchasing the site. The Information Memorandum attached to Mr Kim’s email omitted from the executive summary on page 4 the entries for car parks, deal structure, sales process and agent’s details. Mr Kim said in the covering email:

“Can you please check the facts on the attached.”

130. Mr Simpson responded at 6.36pm to Mr Seil’s email in the following terms:

“That’s my f[…]ing IM that someone has ripped off and taken my details off. Was it Walter Chu that sent it to you.”

131. Mr Simpson had been told by Mr Kim that Mr Chu had sent him the second version of the Information Memorandum.

132. On 17 February 2017 at 1.08pm, Mr Simpson said in an email to Mr Iemma, following a meeting between them that morning:

“Good to catch up today.

As discussed, attached are the documents that have been circulated by Walton Chu to some parties.

We have a number of investors who are looking for ‘shovel-ready’ projects - if ATF has decided to exit the site, we would very much like the opportunity to present it to these people on a strictly confidential basis. Could you please let me know if that is possible?”

133. The documents attached to the email included the version of the Information Memorandum that Mr Simpson had obtained from Mr Kim. Mr Simpson accepted in cross-examination that he was hoping to obtain instructions from the plaintiff to market and sell the undeveloped site including to the people whom Mr Chu had approached. Mr Simpson said, in cross-examination:

“As an agent, we can only act on instructions, so yes. I was looking for those instructions.”

134. On 21 February 2017 at 6.32pm, Mr Simpson sent a text message to Mr Iemma asking, “Could you please let me know if I can approach anyone on [the site]?” Mr Iemma responded by text message at 9.01am on 22 February 2017:

“I spoke with Leo [Mr Liu] and the price they are after is circ $70m plus. I am not sure if this is realistic but that’s their figure.”

135. Mr Simpson responded, also by text message:

“Hi Frank, not sure if it’s worth exploring at that number. It just doesn’t work even if they are funding with cash and revenue on resi is $22,000/metre. I’ll call you in a bit if that’s ok.”

136. On 22 February 2017, Mr Simpson asked Mr Iemma by text:

“was the party you were dealing with at the end of last year on a site sale CCCC? If not I’d like to ask them as they are pursuing us for opportunities and this would seem to fit.”

137. On 23 February 2017, Mr Iemma responded to Mr Simpson by text:

“Apologies for not getting back to you yet as I have been waiting for Mr Shi to provide Leo an update on where everything sits with [the site]. Leo said the boss is traveling at the moment and is proving hard to catch.”

138. On 23 February 2017 at 10.45am Mr Iemma sent an email to Kevin Gu of Bank of China, the defendant’s bankers as follows:

“I have spoken with Savills regarding the updated valuation and they have indicated that this should be fine. However as Savills Hotels are acting on our behalf regarding the hotel sale, they have requested that I confirm with the Bank that this is not an issue in updating the valuation.”

139. Mr Gu responded at 11.34am that day that there was no issue with the plaintiff marketing the hotel. He said that the valuation was required for an internal annual review to extend the loan for one more year and that, as long as the valuation was over the previous year’s valuation of $40m, it would be “fine”.

140. On 23 February 2017 at 1.22pm Mr Simpson emailed Mr Iemma as follows:

“Has another agent been appointed? We are getting calls and emails from people saying what is going on and Glen [Boultwood] is not happy at all. Can we get a debrief on what is happening?”

141. On 23 February 2017 at 1.25pm, Mr Iemma responded to Mr Simpson and said:

“I have no idea what is happening. Sorry.”

142. On 23 February 2017 at 3.13pm, Mr Simpson emailed Mr Iemma and said:

“Who does [have an idea] that we can speak with? This is extremely embarrassing for us and damages our relationships and reputation in the market, not to mention the fact that we’ve spent a year working on this, have negotiated a great deal and have not been paid a cent.”

143. On 23 February 2017 at 8.23pm, Mr Simpson said in an email to Mr Liu:

“We are really concerned Leo about what is going on with the Commonwealth Street deal. As you probably know, we were appointed as exclusive agents by ATF CTH Pty Ltd (ATF) and have negotiated a deal with Aligned FM for the sale of the hotel and the retail. Aligned is ready, willing and able to sign that negotiated deal and proceed with the acquisition, as they have been since December. Andev has advised us and Aligned that they are not yet prepared to sign the deal but have not fully explained to us why.

Recently we have become aware that an intermediary Walton Chu has been marketing the site using our marketing materials (and advising some of our clients that he has been authorised by ATF to do so), and now Knight Frank has sent a database mail out to a large number of people (including Aligned) saying they are appointed to sell the site with an EOI closing on 16 March 2017.

Our exclusive agency agreement is still valid and binding. We have received no information about what the status is of Savills’ agreement with ATF nor the negotiated deal between ATF and aligned.

Aligned have acted in good faith and spent hundreds of thousands of dollars to negotiate a hotel and retail transaction with ATF. They are understandably dismayed and frustrated that they have spent the time, money, effort and opportunity cost on a deal which is now being shopped around the market without reference to either the exclusive agent Savills or the exclusive buyer Aligned.

Could we please urgently have a meeting with you tomorrow, Friday 24th February so we can understand where things are at and resolve how to proceed.”

[Emphasis added.]

144. Mr Simpson accepted in cross-examination that, notwithstanding he had asserted that the “exclusive agency agreement was valid and binding”, he did not actually go and look for it. Although he rejected the proposition that he did not look for it because he knew that it had not been signed, his answer is nonetheless incriminating. Because Mr Simpson appreciated that there was an issue about whether the plaintiff would be entitled to commission at all, the existence of the agreement was vital to support his assertion that there was a valid and binding agreement. However, had he looked for it before the move from Bridge Street to Governor Phillip Tower, he could not use the move as a reason why he could not find the document. Although I accept that he did not look for it, I am satisfied that the reason he did not look for it was that no document had ever been signed, either by him or by Mr Shi.

145. Mr Liu and Mr Simpson spoke on 24 February 2017. In the course of the discussion, Mr Liu said:

“Mr Shi acknowledges the work Savills has done to date, and he will pay Savills costs when the property is sold.”

146. I accept Mr Liu’s denial that he had suggested to Mr Simpson that Savills would be paid its commission if the sale of the land was effected by Knight Frank. I accept Mr Liu’s evidence that he told Mr Simpson that the plaintiff’s expenses would be paid by the defendant. I note that this is what occurred when the plaintiff submitted an invoice to the defendant (referred to below).

147. At about this time, Mr Simpson and Mr Boultwood discussed the fact that Knight Frank was marketing the site. On 28 February 2017 Mr Iemma sent an email to Mr Boultwood confirming that the sale of the hotel and retail to Aligned would not proceed.

148. In February and March 2017, Knight Frank proceeded to promote the sale of the site. Knight Frank prepared its own Information Memorandum. The executive summary indicated that it was the “100% freehold interest” in the three titles which comprised the site that was to be sold (not the strata titles as had been proposed when the plaintiff was selling the hotel areas). The marketing material identified Knight Frank as the vendor’s “exclusive agents”. Knight Frank informed potential purchasers that the sale was to be by expressions of interest which would close on Thursday 16 March 2017 at 4pm.

149. At about this time, Mr Liu learned from Mr Iemma (who had been told by Mr Simpson) that the defendant had engaged other agents to sell the site. Mr Liu called Mr Shi and asked why he had not been told that other agents had been contacted by the defendant. Mr Shi responded:

“The other two directors decided not to develop the land, they wanted to sell it undeveloped as the numbers did not look good.”

150. Mr Liu told Mr Iemma of the conversation he had had with Mr Shi. Mr Iemma said:

“Well, I’m not happy about that. It makes us look stupid.”

151. On 9 March 2017, Mr Simpson invited Mr Liu to lunch. Before the lunch, Mr Liu phoned Mr Shi and had a conversation to the following effect:

Mr Liu:    “What should I say to our current agent? He has invited me to lunch.”

Mr Shi:   “I’m happy to pay a certain amount to maintain the relationship and keep everyone happy.”

Mr Liu:   “How much would you pay?”

Mr Shi:   “Probably 30 or 50 thousand dollars.”

152. Mr Simpson and his colleague, Iris Liu and Mr Liu had lunch together. They had a conversation to the following effect.

Mr Simpson:   “What has happened here? Why did you do this?”

Mr Liu:   “I personally feel sorry about how Savills were treated. Mr Shi is a relationship person. He doesn’t burn bridges.”

Mr Simpson:    “I’m not very happy.”

153. During the lunch, Mr Simpson did not say anything about there being an exclusive agency between the plaintiff and the defendant. However, he did ask Mr Liu whether the plaintiff could have an agency to sell the land. Mr Liu did not tell Mr Simpson what Mr Shi had said about being willing to pay a certain amount to the plaintiff because Mr Liu had not yet been instructed to do so. Nor did Mr Liu tell Mr Simpson that the defendant had sought legal advice about the agreement, although it was the case that the defendant had sought legal advice at about this time from Mills Oakley, a law firm.

154. When Mr Liu returned to Andev’s office after lunch, Mr Iemma told him that he should not have gone by himself and that he should not have any further communications with Mr Simpson on his own.

155. On 16 March 2017 at 11.23am, Mr Simpson wrote to Mr Iemma and Mr Liu as follows:

“I refer to:

1.    The exclusive agency agreement between Savills (NSW) Pty Ltd (Savills) and ATF CTH Pty Ltd (ATF) (Agency Agreement).

2.    My call with Leo on 24 February 2017 at 11:40am (Call with Leo).

3.    My meeting with Leo and Iris Liu on 9 March 2017 (Meeting with Leo).

This email does not relate to Savills Project Management’s engagement or services.

Agency Agreement

I note that the exclusive Agency Agreement remains valid and binding.

History

While I will not go into extensive detail on the history of the Savills Hotels team’s involvement with the project at 9-25 Commonwealth Street Sydney (Property), I note that Savills was initially engaged to provide some development advisory advice. To date, Savills has not invoiced ATF for the development advisory services. The engagement from ATF was subsequently expanded into an exclusive agency appointment with respect to the Property.

Savills has performed all of its obligations under the Agency Agreement. Savills has delivered a buyer for the Hotel and Retail component of the project, and that deal has been negotiated. The buyer, Aligned Funds Management, has been ready, willing and able to exchange and pay the deposit for the acquisition of the Hotel and Retail since December 2016. The sale and purchase agreement was deliberately not finalised by ATF, and the Property was subsequently offered for sale through Knight Frank.

Call with Leo

On the call with Leo, Leo and I discussed Savills’ position with respect to ATF relating to the Agency Agreement and the status of the Property. Leo said (among other things) that Mr Shi, a Director of ATF, acknowledged the work that Savills has done to date. Leo said Mr Shi advised he would ‘pay Savills costs when the Property is sold’. I asked what that means - does that refer to the ‘expenses Savills has incurred as well as our professional fees/commission.’ Leo said ‘yes, it does’. I said ‘all of it?’ Leo said ‘yes, all of it’. Leo said that this does not include any payment from ATF for Aligned’s costs and expenses. I said it is up to Aligned to make that claim from ATF and that I would not make it on their behalf.

Meeting with Leo

At the Meeting with Leo, Leo said ATF had taken legal advice and did not believe it was obliged to pay our fee. I said this was contrary to our advice. Regardless, we both said that we both wanted to avoid this going down a legal path and would prefer to settle amicable arrangements between us.

Leo and Iris discussed that a possible solution was that once the expressions of interest (EOI) came in from Knight Frank tomorrow, ATF would provide us with the most favourable EOl from Knight Frank, and if Savills could achieve an EOl that was equal to or better than the most favourable Knight Frank EOl, ATF would transact with Savills' buyer.

Leo also said that if a Knight Frank buyer is successful, ATF will introduce Savills to the buyer on a no-obligation basis to see if that buyer wishes to transact on the hotel as per the current arrangement.

Moving Forward

To date we have enjoyed a very good relationship with ATF and Andev. We secured an outstanding result for the Hotel and Retail which was well above valuation support.

Separately, we have a very strong, qualified buyer who wishes to buy the site from ATF and is waiting for the outcome of the Knight Frank campaign.

We would like to hear your views on the best way to resolve the position between ATF and Savills, and in particular your confirmation that our buyer for the site will be afforded an opportunity to acquire the site following the close of the expressions of interest today.”

“… [S]ome directors take on more risks than others and, you know, like a, like a large part of what Michael was doing, in my personal opinion, was that he was, he was taking on a hell of a lot of risk when certain mechanisms should’ve been in place, but I’d, I don’t – anyway …”

192. Mr Simpson’s evidence was not only inconsistent with the narrative set out above, but it was also inconsistent, in material respects, with the evidence of Mr Liu and Mr Keenan, which, for the reasons given below, I accept. I do not accept Mr Simpson’s evidence except where it was uncontroverted, materially corroborated or against interest. I regard him as a dishonest witness.

Mr Keenan

193. As Mr Keenan was, as of April 2018, no longer an employee of the plaintiff, he did not have access to any of the file notes he made at the time. Nonetheless, his recollection of dates and events was relatively good. He was subpoenaed by the defendant to give evidence although he had worked for the plaintiff. It was put to him in cross-examination that he had ultimately been made redundant, which he accepted. I accept his denial of the allegation of misconduct put to him. I do not accept that he had any animus towards either Mr Simpson or the plaintiff. He was relevantly disinterested and had no motive to help the defendant or harm the plaintiff. He impressed me as someone who was trying to tell the truth as he recalled it.

194. He gave his evidence in a straightforward way and appeared to be trying to give his genuine recollection of what occurred. He was hesitant about incriminating or criticising Mr Simpson but did so when necessary to answer the questions asked of him truthfully. On several occasions he was pressed in cross-examination about his concern about Mr Simpson’s preparedness to do the roadshow without a signed agency agreement. Mr Keenan maintained his view that it was Mr Simpson’s responsibility to “extract” a signed agreement and that Mr Keenan would have been overstepping his own responsibilities by telling Mr Simpson “how to run his business unit”. Further, Mr Keenan frankly accepted that he would not necessarily have known when or whether the agency agreement was actually signed.

195. To a significant extent, Mr Keenan’s recollection was corroborated by contemporaneous documents and by Mr Liu’s evidence.

196. Although he did not have access to contemporaneous documents, he was able to put a date or a period on events by reference to when he started with the plaintiff (late 2015) and when he was promoted to the position of National Director (about six months later). Thus, he was able to recall that he had spoken with Mr Simpson before he had gone overseas in June or July 2016. The most significant parts of his evidence related to the lunch on 3 June 2016, including its purpose, and the admission made to him by Mr Simpson on about 1 July 2016 that he still did not have a signed agency agreement and the subsequent admission on Mr Simpson’s return. I accept Mr Keenan’s evidence.

Mr Liu

197. The continuing financial and personal relationship between Mr Liu and Mr Shi means that Mr Liu cannot be regarded as a disinterested witness. Nonetheless, he gave his evidence in a careful, unguarded way and made appropriate concessions. I accept that he was not asked to obtain Mr Shi’s signature for the agreement and that he would have been asked to obtain it if there had been final agreement on its terms. I also accept his evidence about the lunch on 3 June 2016 and the last contact he had with Mr Simpson set out above.

The relationship between the parties

198. In substance, the issues in the case relating to whether there was a signed agreement come down to two hypotheses. The plaintiff’s case is that there was a signed agreement; that Mr Simpson would never have gone on a roadshow without one; and that, but for there being a signed agreement, the defendant would never have allowed the plaintiff to deal with prospective purchasers on its behalf. An alternative hypothesis is that both Mr Simpson and the defendant knew that no agency agreement had been signed but the defendant was content to clothe the plaintiff with authority to promote and market the hotel component of the site and would, had the hotel component been sold other than as a consequence of an introduction by Mr Shi to one of his friends or associates, have been content to pay commission to the plaintiff notwithstanding the lack of signed agreement. The plaintiff has failed to discharge the onus of establishing the first hypothesis on the balance of probabilities. Indeed, the defendant has persuaded me of the alternative hypothesis: namely, that both parties knew that there was no signed agreement and were prepared to proceed regardless.

199. The alternative hypothesis is consistent with Mr Simpson’s relatively greater appetite for risk than Mr Keenan. It is not inconsistent with the defendant’s understanding that Mr Simpson was going on a roadshow as the defendant’s agent to sell the hotel part of the site. The alternative hypothesis is also consistent with Mr Liu’s understanding that, notwithstanding that no agency agreement had been signed, had the sale of the hotel component to Aligned gone through, the defendant would have paid the plaintiff a commission calculated in accordance with the formula that had been agreed between Mr Simpson and Mr Iemma. This hypothesis is also consistent with Mr Iemma’s comment in the email of 9 October 2016 to the effect Mr Simpson will have to work to earn his commission.

Claim for damages for breach of agency agreement

200. It was common ground that, at the relevant time, s 55 of the Property and Stock Agents Act 2002 (NSW) relevantly provided:

“55   No entitlement to commission or expenses without agency agreement

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

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

(i)     the person, and

(ii)     the licensee, and

…

...”

201. It is not a bar to a claim for commission under an agency agreement that the written version has been lost, misplaced or destroyed since its existence may be proved by secondary means: s 48 of the Evidence Act 1995 (NSW). The contents of the document must be proved on the balance of probabilities: s 142 of the Evidence Act.

202. For the reasons given above, the plaintiff has not established that there was a written agency agreement. Accordingly, the plaintiff’s claim based on the alleged agency agreement fails.

Whether the plaintiff would have been entitled to commission had the agency agreement been signed in the form of the final draft

203. My obligation as a trial judge requires me to make all necessary findings of fact. Therefore, even though I have rejected the plaintiff’s claim for commission it is necessary to address whether, in any event, the plaintiff would have been entitled to commission resulting from the sale to WR Sydney in 2017, had the agency agreement been signed in the form of the final draft.

The alleged agency agreement

204. The Sales Inspection Report and the relevant terms of the alleged agreement are set out above. Whether the plaintiff is entitled to commission depends on the meaning of “Property” in the agreement. In substance, the plaintiff contended that the word “Property” included the sale of the land located at the site, that is, the fee simple. Thus, it argued that the sale of the fee simple to WR Sydney triggered its entitlement to commission. The defendant submitted that “Property” included only the hotel component of the proposed development and that as there had been no sale of the hotel component, the plaintiff was not entitled to commission. It was common ground that the plaintiff had not introduced WR Sydney to the site and that WR Sydney had purchased the fee simple.

205. As set out above “Property” is defined to mean the property described in the Sales Inspection Report (that is, the hotel to be delivered by the defendant on the site) “and includes, but is not limited to, any proposed development to be undertaken on that property”. The plaintiff submitted that because the hotel was a proposed development on the site, “Property” included a sale of the fee simple with the DA for the hotel. The defendant submitted that the words “that property” in the definition of “Property” could not include the defined term because that would be circular. It submitted that the words “that property” meant the hotel, because that was the property described in the Sales Inspection Report. Thus, according to the defendant’s argument, the only proposed developments which would be included in the definition of “Property” were developments to the hotel, since this was the only property described in the Sales Inspection Report.

206. Where there is an ambiguity in a contract, evidence of the surrounding circumstances is admissible to establish the factual matrix to ascertain the objective intention of the parties to the contract: Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 352 (Mason J); [1982] HCA 24.

207. The relevant surrounding circumstances are as follows. As set out above, Mr Simpson’s division was the hotels division of the plaintiff. He did not purport to have expertise or offer services in the sale of property other than hotels, whether already developed or to be sold off-the-plan. He eschewed expertise in selling retail or residential developments or real estate in the form of land and accepted that he would have referred prospective vendors of those forms of property to other divisions within the plaintiff’s business. The proposal put forward by the plaintiff reflected its expectation that its expertise in transactions of hotel developments was what was required and sought by the defendant. All the literature which the plaintiff disseminated to potential purchasers represented that what was to be sold was the hotel component of the yet-to-be-constructed development. The proposed development involved the creation of strata titled land, whereby particular units in the strata plan would comprise the hotel component; other units would compose the retail component and there would also be units for the residential component. The common areas would be owned by an Owners Corporation, of which unit holders would be members.

208. The mutual expectation of the plaintiff and the defendant was that the defendant would sell the categories of units (hotel, retail and residential) to three potential purchasers before they were developed and “deliver” the development to the purchasers on completion of the development. In respect of the hotel component, the plaintiff would be the defendant’s agent. The defendant would appoint other agents for the sale of the retail and residential components. Mr Simpson’s proposal did not contemplate that he would sell these components unless, for example, the purchaser of the hotel also wanted to buy the retail component, as was the case with Aligned.

209. The provenance of the agency agreement is a further relevant surrounding circumstance. Mr Simpson’s evidence was that it the standard pre-sale agreement prepared by the plaintiff’s legal department. Thus, it was a precedent which had not been drafted for the purposes of the particular transaction but was designed to cover, with appropriate modifications, all types of property which the plaintiff might be engaged to sell. The only relevant modification to the terms and conditions of the precedent was to cl 3, the entitlement provision.

210. Against this factual matrix, it is plain that the word “Property” does not extend to the sale of the fee simple and includes only the hotel component. For this reason, the plaintiff would have no entitlement to commission even if the agency agreement had been executed, since its entitlement did not arise. WR bought the fee simple and not the hotel.

Claim for damages for unconscionable conduct

211. The sole alternative basis for the plaintiff’s claim is for damages under s 236 of the Australian Consumer Law for statutory unconscionability contrary to s 21 of the Australian Consumer Law. I note that there is no claim for damages for misleading or deceptive conduct and no allegation that the defendant is estopped from refusing to pay commission to which the plaintiff would otherwise be entitled.

Whether the defendant’s conduct was unconscionable

212. The unconscionability claim, as particularised, is, in substance, that the defendant behaved unconscionably by encouraging the plaintiff to spend time and effort on the negotiations with Aligned to sell the hotel and then resolving to sell the land through a different agent, thereby depriving the plaintiff of the commission to which it would otherwise have been entitled and causing the plaintiff to incur expenses for which it would otherwise not be compensated.

213. The authorities establish that, in order to establish statutory unconscionability, the plaintiff must prove some moral fault or moral responsibility or that the defendant’s conduct amounts to serious misconduct which is plainly unfair and unreasonable: Qantas Airways Limited v Cameron (1996) 66 FCR 246 at 262 (Davies J) and 283-284 (Lindgren J, Lehane J agreeing).

214. The principal difficulty with the unconscionability claim as framed is that the evidence established that the reason the defendant decided not to develop the site and sell the components, including the hotel component, was that the estimate of construction costs made the development unviable. The defendant’s decision not to proceed was made towards the end of 2016 on the basis of the construction costs worked out by the plaintiff’s project management team which was led by Mr Keenan. It is always open to an owner who has retained an agent on commission to decide not to proceed with a sale. This is one of the vicissitudes which is built into the agent’s commission and reflects the risk/reward ratio implicit in the fee payable on a successful sale. It was not unconscionable for the defendant to decide not to pursue the development. Mr Simpson became aware of the defendant’s concerns about viability at about the same time as Mr Keenan’s team was providing the figures as to construction cost. No decision was made by the three directors of the defendant until Chinese New Year 2017.

215. Once the decision had been made to sell the land, rather than the hotel component, there was no real question of Mr Simpson’s team being an appropriate agent, since Mr Simpson had no particular expertise in selling land and the plaintiff had only been appointed to sell the hotel component. In these circumstances, there was nothing unconscionable about the defendant choosing to retain Massari and Knight Frank as its joint agents to sell the fee simple. Although it became hypothetical, I am satisfied that the defendant would have paid commission to the plaintiff had the sale to Aligned completed. I note that the defendant also paid the plaintiff’s disbursements, which included printing costs and the cost of flights and accommodation for the road show.

216. I am not satisfied that the defendant’s conduct was unconscionable within the meaning of s 21 of the Australian Consumer Law.

What damages flow from the alleged unconscionability

217. Because I am obliged to make all relevant findings of fact, irrespective of my findings of liability, it is necessary to address the claim for damages for unconscionable conduct. Damages are claimed under the following four heads:

1. damages for the plaintiff’s overheads while performing work for the defendant;

2. damages for the lost opportunity to sell the site or to be appointed the agent to sell other properties;

3. compensation for the management time thrown away in “managing the [defendant’s] repudiatory and unconscionable conduct”; and

4. damages for the damage to the plaintiff’s good name and reputation.

218. Mr Wood accepted that there was no evidence of category (1).

219. As to (2), as I have found above, the defendant was entitled to change its mind and sell the fee simple rather than the strata titles in the developments to be constructed on the site. I do not accept that the plaintiff lost the opportunity to sell the Park Regis by reason of anything the defendant did. There is therefore no basis on which to assess what, if any, opportunities the plaintiff has lost.

220. As to (3), Mr Simpson gave evidence that he had spent 540 hours promoting the sale of the hotel for the defendant and that his charge out rate was $550 per hour. There was no evidence to enable me to work out how much of this time was spent in which period. There is therefore no sensible calculation that could be made. Further, the plaintiff would only be entitled to its cost of Mr Simpson’s time and not its profit from that time. There is no evidence as to how much of the $550 per hour relates to the plaintiff’s overheads and what constitutes profit.

221. As to (4), there is no evidence that the defendant’s conduct damaged the plaintiff’s reputation. Mr Boultwood understood that the sale to Aligned could not proceed because the defendant had changed its mind about developing the site. If anything, it reflected on Mr Shi and not on the plaintiff. Mr Boultwood appreciated that Mr Simpson had been working hard on the transaction and was disappointed by the defendant’s change of mind.

222. Mr Wood contended that, although the evidence of loss was sparse and inexact, I was obliged to do the best I could to calculate the damages, that being the role of the trial judge.

223. As was said in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 (Mason CJ and Dawson J); [1991] HCA 54 (Amann):

“The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can.”

224. In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 77 ALJR 768, Hayne J said at [39], citing Amann, at 80, 83-84 (Mason CJ and Dawson J), 138 (Toohey J), 153 (Gaudron J) and, 161 (McHugh J) that the plaintiff “had to prove these matters on the balance of probabilities and with as much precision as the subject matter reasonably permitted”.

225. It is one thing to engage in a degree of speculation because the defendant’s wrong has made it impossible to assess damages with any degree of specificity. It is quite another to absolve a plaintiff from the obligation of proving its loss on the balance of probabilities when such material can be taken to have been readily available. Cases in the first category include claims for damages for injuries negligently sustained to an infant where the plaintiff’s loss of earnings for a lifetime need to be assessed, notwithstanding the lack of evidence as to what path the plaintiff, had he or she not been injured, would have taken. There are also cases, such as Amann, where it was held that, although a successful tender would not have made a profit on the first three-year term of the government contract for coastal surveillance, it was likely that it would have been renewed for an indeterminate period. In that case, damages were awarded which compensated Amann Aviation for all its expenditure on the tender, including the loss of value of aircraft it had purchased and modified for the contract because of the impossibility of assessing damages by reference to loss of profits in these circumstances. McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 (McRae) is an extreme example of the category of cases where assessment of damages is made particularly difficult by reason of the defendant’s breach. In McRae, the appellants had been retained by the respondent to recover an oil tanker which had sunk to the ocean floor. It turned out that there was no oil tanker in the locality provided for in the contract. The appellants’ damages were assessed to include the expenditure wasted in reliance on the promise that there was an oil tanker at the locality given.

224. The present case does not belong to the first category. No assumption can be made that Mr Simpson’s team lost another opportunity because it promoted the hotel for the defendant. Nor can any assumption be made about when the 540 hours spent by Mr Simpson were spent or how much of his charge-out rate represented the plaintiff’s costs. Nor am I prepared to infer that the plaintiff’s reputation suffered as a consequence of anything the defendant did since the defendant was within its rights to change its mind and any inconvenience caused to, or expenditure wasted by, Aligned could not reasonably be attributed to the plaintiff. Nor was there any evidence of any loss of reputation by the plaintiff.

225. In these circumstances, the plaintiff has failed to prove any loss.

Costs

228. I have not heard the parties on costs. I am not aware of any reason to depart from the general rule that costs follow the event: UCPR, r 42.1. However, I will make provision in the orders for an application for a different order if there are matters which either party wishes to put.

Orders

229. For the reasons given above, I make the following orders:

1. Judgment for the defendant.

2. Unless any party applies for a different costs order by written application to my Associate within 7 days, order the plaintiff to pay the defendant’s costs.

**********

Amendments

03 August 2020 -

heading before [116] - "plaintiff's" replaced by "defendant's"

Decision last updated: 03 August 2020