Shamrock Finance Canberra Pty Ltd v ACT Wealth Services Pty Ltd
[2018] ACAT 50
•2 May 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
SHAMROCK FINANCE CANBERRA PTY LTD & ANOR v ACT WEALTH SERVICES PTY LTD & ORS (Civil Dispute) [2018] ACAT 50
XD 734/2017
Catchwords: CIVIL DISPUTE – construction of contracts – parol evidence rule – liability of office holders of a company for breach of contract – promissory estoppel
Cases cited:Appleby v Pursell [1973] 2 NSWLR 879
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Commonwealth v Verwayen (1990) 170 CLR 394
Reardon Smith Line v Hansen-Tangen [1976] 3 All ER 570
Shamrock Finance Canberra Pty Ltd & Anor v ACT Wealth Services Pty Ltd & Ors [2018] ACAT 11Sidhu v Van Dyke [2014] HCA 19
Waltons Stores (Interstate) Pty v Maher [1988] HCA 7
Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 26
List of
Texts/Papers cited: Paterson J, Robertson A and Duke A, Principles of Contract Law (Lawbook Co., 4th ed, 2012)
The Honourable Justice P L G Brereton RFD, Equitable Estoppel in Australia: The Court of Conscience in the Antipodes; Speech to the Australian Law Journal Conference: Celebrating 80 Years, 16 March 2007
Tribunal: Senior Member E Ferguson
Date of Orders: 2 May 2018
Date of Reasons for Decision: 2 May 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 734/2017
BETWEEN: SHAMROCK FINANCE CANBERRA PTY LTD
First ApplicantKAREN MARGARET MURPHY
Second Applicant
AND:
ACT WEALTH SERVICES PTY LTD
First RespondentMICHAEL BYSOUTH
Second RespondentJACQUELINE BYSOUTH
Third Respondent
TRIBUNAL: Senior Member E Ferguson
DATE:2 May 2018
ORDER
The Tribunal orders that:
1.The first respondent shall pay the first applicant the sum of $5246.69, within 28 days comprised of:
(a)$4,949.77 being the outstanding balance under the deed; and
(b)$296.92 interest in accordance with Schedule 2 Court Procedures Rules 2006 as follows:
(i) On $5855.01 from 1 April to 6 April 2017; and
(ii) On $4949.77 from 7 April 2017 to the date of judgment.
………………………………..
Senior Member E Ferguson
REASONS FOR DECISION
1.At all relevant times the first applicant, Shamrock Finance Canberra Pty Ltd (Shamrock), and the first respondent, ACT Wealth Services Pty Ltd (Wealth Services), operated franchises under license from a national company Yellow Brick Road (YBR) and traded under the YBR brand in different parts of Canberra. Both are registered proprietary companies limited by shares.
2.The YBR business model provides financial services, including home loan brokerage, to consumers. Franchisees derive income from their loan portfolio by way of commissions paid to them by the lenders
3.The second applicant, Karen Murphy, is the sole director of Shamrock; the first and second respondents are office holders of Wealth Services.
4.After agreeing on a mechanism to determine a price based on estimated future trailing commissions, Shamrock transferred its portfolio of loans to Wealth Services with the consent of YBR by a ‘Deed of Sale and Assignment of Trailing Commissions’ (the deed). Ms Murphy guaranteed the performance of Shamrock’s obligations under the deed. The transfer took effect from 1 April 2016.
5.90% of the agreed price of $74,706.70 was to be paid on 1 April 2016 and the balance 12 months later. In April and May 2016 Wealth Services paid Shamrock a total of $67,235.40 being approximately 90% of the agreed price.[1]
[1] $67,236.03 is 90% of the price
6.I will set out the relevant provisions in full later in the decision, but in general the scheme of the deed meant that it was not possible for the parties to ascertain at the date of the agreement the total amount payable by Wealth Services because:
(a)Wealth Services was liable to account to Shamrock for certain commissions it received on the transferred loans after the date of the agreement;
(b)the purchase price could be retrospectively adjusted to take account of information about trailing commissions not available at the date of the agreement; and
(c)any fees charged to Wealth Services by lenders between 1 April 2016 and 1 2017 for loans repaid early (the clawbacks) were deducted from the balance payable on 1 April 2017.
7.Although the parties agreed on the amount to be deducted from the balance of the purchase price for clawbacks they disagreed on the other matters referred to at paragraph 6 and so failed to reach agreement as to the amount Wealth Services was required to pay to discharge its liability under the deed.
8.On 6 April 2017 Wealth Services paid Shamrock $905.24, which it claimed fully discharged its liability under the deed. It sent Shamrock a spreadsheet titled ‘Payout Figure Calculation Sheet Karen Murphy Trail Book’ (the respondents’ payout figure calculations), which sets out its calculation of the amount due under the deed as at 1 April 2017, taking into account monies already paid.
9.On 6 June 2017 Shamrock issued Wealth Services with a tax invoice for an additional $6,375.68. The applicants commenced proceedings on 22 June 2017 to recover a revised amount of $10,441.01 based on their own payout figure calculations, filed with the application (the applicants’ payout figure calculations).[2]
[2] Annexure B to the application filed 22 June 2017
10.On 22 July 2017 the respondents filed a response disputing liability.
11.On 6 October 2017 the respondents filed a counter claim for a refund of $9,017.85 on the grounds that the applicant misrepresented information upon which the purchase price was calculated. At the hearing the respondents did not press their claim for misrepresentation and relied instead on clause 4.4.1 of the deed to claim a retrospective reduction of the purchase price to take into account information not available at the date of the agreement.
12.On 9 October 2017 the applicants responded to the counter claim.
13.I heard the matter on 11 October 2017. At the hearing Ms Murphy represented herself and the first applicant, all the respondents were represented by Mr Vuleta and Mr Smith of Chamberlains Law Firm. After hearing the parties’ submissions and oral evidence I reserved my decision.
14.After reserving my decision I allowed into evidence a document produced by the respondents which the parties agree is the correct deed. It is that document that I will refer to in this decision, rather than an earlier draft of the deed filed by the applicants with the application. I addressed the difference between the two documents in the interlocutory decision of 12 February 2018.[3]
The terminology
[3] Shamrock Finance Canberra Pty Ltd & Anor v ACT Wealth Services Pty Ltd & Ors [2018] ACAT 11
15.At the hearing the parties clarified the following terms relevant to the commercial context of the transaction:
trailing commissions: commissions paid by lenders to the broker (usually through an intermediary – in this case the franchisor, YBR) on a regular basis throughout the life of a loan calculated on the current outstanding balance of the loan.
upfront commissions: commissions paid to the broker (through YBR) by the lender when the loan settles and the borrower receives funds.
clawbacks: fees charged by the lenders to the broker (through YBR) for home loans that are paid or refinanced before the expiry of the term of the loan and within a specified time after settlement, usually between one to three years.
recipient created tax invoice (RCTI): a tax invoice created by YBR as the original recipient of the commissions paid by the lender. YBR issues a RCTI to the broker for its loans when it passed on the commissions on those loans to the broker, after taking its cut.
Settlement of loan: a loan is settled when the lender releases the funds to the borrower.
The agreement
The deed
16.The relevant provisions of the deed are set out below.
17.Clause 1 defines the following relevant terms for the purposes of the agreement unless the context requires otherwise:
Completion Date means the 1st April 2016.
Loans means the loans described in Schedule 1 being loans in respect of which Shamrock Finance is entitled to the Trailing Commissions under the Franchise Agreement; and the Loans described in Schedule 2 being the loans in respect of which Shamrock Finance is entitled to Upfront Commission upon Settlement, and will generate a Trailing Commission after settlement.
Price means the sum of $74,706.70
Trailing Commissions means all trailing commissions that were due and payable to Shamrock Finance at the date of this agreement.
Upfront Commissions means all upfront commissions that were due and payable to Shamrock Finance at the date of this agreement.
18.The following clauses set out the relevant rights and obligations of the parties:
(a) Clause 2 provides that:
Shamrock Finance hereby sells and assigns to ACT Wealth Services all its present and future beneficial right title and interest in the Trailing Commissions for the Price with effect from the Completion Date.
(b) Clause 3 provides that
Wealth Services must pay 90% of the price on 1 April 2016; and the remaining 10% on 1 April 2017 less any clawbacks incurred during the 12 month period.
(c) Clause 4.2.1 Shamrock Finance warrants that it
has disclosed to ACT Wealth Services all information, which may be relevant to the sale and assignment of Trailing Commissions.
(d) Clause 4.3.1 Wealth Services agrees that:
any upfront commissions payable for the loans described in Schedule 2 will be payable to Shamrock Finance upon production of a tax invoice.
(e) Clause 4.3.2 Wealth Services agrees that it will
purchase any loans settled after 1 April 2016 from Shamrock calculated by reference to the methodology used by Wealth Services is assessing the value of the Trailing Commissions for the purpose of the sale.
(f) Clause 4.4.1 both parties agree that,
in the absence of up to date information about trailing commissions, any adjustments that need to be made to the Price when this information becomes available will be indemnified by the relevant party.
(g) Clause 4.4.2 both parties agree that:
any overdue or payable upfront or trailing commissions for loans described in Schedule 1 that were due to Shamrock up until the date of this agreement (1 April 2016) will be paid by ACT Wealth Services to Shamrock Finance.
19.Schedule 1 lists each loan transferred by Shamrock to Wealth Services with corresponding information including when the loan was settled, the lender, the amount of the loan and outstanding balance, the rate of trailing commissions payable and an estimate of the monthly trailing commissions received by the broker.
20.Schedule 2 lists loans which were due to be settled after the date of the agreement with corresponding information including the expected date of settlement, the amount of upfront commission payable, and a calculation of 1.9 times the trailing commission for the purposes of determining a price for the purposes of clause 4.3.2. The clause requires Wealth Services to purchase from Shamrock any Schedule 2 loans that settle after the date of the agreement.
The price
21.Consistent with clause 1 I will refer to the sum of $74,706.70 in that clause as the ‘price’ for the assignment of Shamrock’s rights under the deed. The price after any retrospective adjustment made pursuant to clause 4.4.1 I will refer to as the ‘adjusted price’.
22.Before signing the deed the parties agreed on a formula to determine the price based on the estimated monthly trailing commissions set out in Schedule 1.
23.The agreed formula was 1.9 × the total estimated monthly trailing commissions for all Schedule 1 loans × 12.
24.Clause 4.4.1 allows the price to be adjusted retrospectively after the date of the agreement when the relevant trailing commissions were received by Wealth Services to take account of any difference between the estimated and the actual amounts received.
25.The parties describe the reference period differently but all calculate the adjusted price by reference to the trailing commissions received for March 2016. Accordingly I accept this as the relevant period for determining both the price (based on the estimated trailing commissions for that period) and the adjusted price (based on the actual trailing commissions received for that period).
The claim
26.Where an issue in dispute relates to individual loans transferred to Wealth Services pursuant to the deed I have identified those loans by initials to protect the identity of the borrower.
27.The applicants claim the respondents owe the following amounts due under the deed:
(a)$984.50 for the purchase of the McC loan under clause 4.3.2;
(b)$672.60 for purchase of the N loan under clause 4.3.2;
(c)$3,235.64 for the trailing commissions received by Wealth Services for the period 1 March to 31 March 2016 under clause 4.4.2; and
(d)$3,708.32 for the upfront commissions received by Wealth Services after the date of the agreement on the McC and N loans under clause 4.3.1 comprising:
(i) $2,276.12 for McC; and
(ii) $1,432.20 for N.
The response
28.In response to the claim the respondents assert:
(a)the second and third respondents are not proper parties to the proceedings.
(b)in relation to the McC and N loans in Schedule 2:
(i) Ms Murphy agreed to accept a “referral fee”, which I will refer to as a spotter’s fee in line with Ms Murphy’s description, in lieu of payment of both:
1.The upfront commissions on the loans under 4.3.1; and
2.The purchase of the loans under 4.3.2.
(ii) On or about 7 April 2016 Ms Murphy represented to Mr Bysouth that work on these two loans was complete when it was not; and he had to undertake further work to finalise the loans.
(c)Wealth Services was not liable for trailing commissions under 4.4.2 because they received no commissions to which the clause applied.
The counter claim
29.The respondents later counter claimed for $9,017.85 on the grounds that the applicants misrepresented information in Schedule 1 upon which the original purchase price was calculated, in particular they claimed:
(a)$6,017.14 because some loans in Schedule 1 had been discharged prior to 1 April 2016 and so the estimated trailing commissions were not received by Wealth Services; and
(b)$3,000.71 because the estimated trailing commission for some loans was overstated in Schedule 1.
30.At the hearing the respondents did not press misrepresentation and instead sought to rely on clause 4.4.1 for a retrospective adjustment of the purchase price in Wealth Services’ favour to take account of the discrepancy between the estimated trailing commissions in Schedule 1 and those actually received by Wealth Services after the date of the agreement.[4]
The common position
[4] Transcript of proceedings 11 October 2017 pages 41-42
31.The parties’ calculations of the balance payable by Wealth Services as at 1 April 2017 are consistent in the following respects:
(a)$5,774.22 for clawbacks is deducted from the balance of the price payable by Wealth Services on 1 April 2017 under clause 3;
(b)$1,048.11 is payable by Wealth Services to purchase the L loan under clause 4.3.2; and
(c)The total amount paid by Wealth Services to Shamrock as at 1 April 2017 was $67,235.40.
(d)Wealth Services subsequently paid Shamrock a further $905.24.
The issues
32.The issues for determination are as follows:
Issue 1: The proper parties:
(a)Could the second and third respondents be liable under the claim, and do they have standing to bring the counterclaim?
(b)Does the second applicant have standing to bring the claim, and on what basis could she be liable under the counterclaim?
Issue 2 Is Wealth Services liable for:
(a)The upfront commissions it received on the N and McC loans, which settled after 1 April 2016 under clause 4.3.1;
(b)the purchase price for the N and McC loans under clause 4.3.2; and
(c)the trailing commissions on Schedule 1 loans overdue or payable to Shamrock up until 1 April 2016 under clause 4.4.2?
Issue 3: What adjustment, if any, should be made to the price under clause 4.4.1, noting that such adjustment may be in favour of either party?
Issue 4: The ultimate issue for the parties is the amount which remains payable under the deed, and by whom it is payable. At the hearing the parties disputed the accuracy of each others’ calculations. At the end of these reasons I will recalculate the balance payable based on:
(a)the information contained in the parties calculations, to the extent it is consistent and relevant; and
(b)my findings on Issues 2 and 3.
Issue 1 the parties
Michael and Jacqueline Bysouth
33.The parties refer to Mr and Ms Bysouth as the directors of Wealth Services. However, the ASIC company search of the 22 June 2017 filed in proceedings identifies Mr Bysouth as the only director and shareholder (of one fully paid share); and Ms Bysouth as the secretary. The parties did not address this anomaly, but, for reasons which will become apparent, nothing turns on it.
34.Ms Murphy told the tribunal:
The second and third respondents are directors and decision makers for the company, ACT Wealth Services Pty Ltd, who is not a party to the deed, and also YBR Ainslie. They’re the responsible office holders for any of those entities, therefore, they both signed the deed and agreed to the terms within it as being those responsible office holders and it was them personally that chose not to adhere to the terms which caused a loss to the applicants and therefore should be joined in the proceedings.[5]
[5] Transcript of proceedings 11 October 2017 page 12, lines 15-20
35.A company is a separate legal entity capable of contracting on its own behalf. As a party it is entitled to the benefits, and is responsible for the obligations, prescribed by the contract. Being a legal construct, a company must make decisions and act through human agents but that does not make those agents, whether directors or not, liable for the companies contractual obligations.
36.There are limited circumstances in which a director will be personally liable in their capacity as director, for example if they incur debts when the company is insolvent or breach their duties as director. The liability of a shareholder in a company limited by shares is limited to the unpaid value of their shares.
37.The applicants have failed to establish any legal basis in this case for the second and third respondents’ personal liability under the deed.
Karen Murphy
38.Ms Murphy’s role in the agreement is that of guarantor. Clause 6 of the deed provides:
The Guarantor hereby guarantees the performance by Shamrock Finance of all its obligations under this deed, and hereby indemnifies ACT Wealth Services against any loss or damage arising out of a breach by Shamrock of any of its obligations under the deed.
39.As guarantor Ms Murphy only has obligations and not entitlements. It is Shamrock that is entitled to the benefit of the contract, and it follows that it alone has standing to commence proceedings to enforce those benefits.
40.Similarly the Bysouths lack standing for the counterclaim. However, they were entitled to respond to the claim against them and I accept that it is procedurally simpler to keep the same parties for both the response and counter claim
41.Regarding the counter claim against Ms Murphy, her personal obligations as guarantor under Clause 6 only arise if Shamrock is found to be in breach of its obligations under the deed.
Conclusion on proper parties
42.I am satisfied that on the basis of the facts asserted by the parties it is only open to me to make orders against:
(a)Wealth Services in favour of Shamrock as parties to the deed;
(b)Shamrock in favour of Wealth Service as a parties to the deed; or
(c)Ms Murphy in favour of Wealth Services in her capacity of guarantor.
Issue 2(a) Upfront Commissions on Schedule 2 Loans
43.Clause 4.3.1 provides that Wealth Services agrees that:
any upfront commissions payable for the loans described in Schedule 2 will be payable to Shamrock Finance upon production of a tax invoice.
44.Clause 1 defines the loans in Schedule 2:
as being the loans in respect of which Shamrock Finance is entitled to an Upfront Commission upon Settlement, and will generate a Trailing Commission after settlement.
and upfront commissions as:
Upfront Commissions means all upfront commissions that were due and payable to Shamrock Finance at the date of the agreement.
45.The definitions in clause 1 are subject to the qualification:
for the purposes of the agreement unless the context requires otherwise.
46.The general definition of ‘upfront commissions’ in clause 1 is limited to those due and payable at the date of the agreement. However clause 4.3.1 specifically applies to upfront commissions on Schedule 2 loans that is, loans which Shamrock brokered before the date of the agreement but which were due to settle, and thereby generate an upfront commission, after the date of the agreement. If the general definition in clause 1 was applied to upfront commissions in 4.3.1 the clause would be rendered meaningless as the loans to which it applied had not settled at the date of the agreement and therefore the upfront commission was not, at that point, due and payable. Accordingly the context of clause 4.3.1 requires that the general definition not apply to it.
47.The applicants claim $3,708.32 under clause 4.3.1 being the upfront commissions received by Wealth Services after the date of the agreement for the N and McC loans.
48.The respondents summarised their position as follows:
Due to work completed by the First Respondent in finalising the loans, and acceptance of a spotter’s fee by the second Applicant, the applicants have already been paid in relation to these loans.[6]
[6] Summary of Dispute
49.The respondents in their response (as amended at the hearing) set out the particulars of their response to this aspect of the applicants’ claim as follows:
The Second Respondent assisted the client in relation to the McC loan by submitting the first home owners grant required to finalise the loan.
The Second Respondent assisted the client in relation to the N loan by finalising approval of the loan …..and assisting the client to sign and submit mortgage contract documentation required for settlement.
The Applicants agreed to be paid a referral fee rather than a commission in relation to the settled schedule 2 loans.
50.The payment made by Wealth Services to Shamrock on 6 April 2017 included sums described as ‘referral fees’ in relation to both loans, the payment of which the respondents assert discharge their liability in relation to these loans.
51.The legal grounds for the response on this issue are not clear. Do the respondents deny liability on the basis that the contract was varied by agreement or do they assert that Shamrock is estopped from enforcing its contractual rights, and if so on what basis? The summary and particulars of the response suggest that the respondents rely upon variation of the contract but at the hearing Mr Stipe submitted without elaboration that in the circumstances Shamrock was estopped from enforcing its entitlements under 4.3.1. For the sake of completeness I will consider both grounds.
Variation of contract
52.It is a fundamental principle of contract law that consideration for a promise is essential to the formation of a contractual relationship. It is also uncontroversial that the requisite consideration cannot be something done by the promissee before the promise is made. The respondents assert that Ms Murphy promised to reduce the amount payable in relation to the two loans in recognition of work already done by Mr Bysouth. Accordingly, the facts asserted by the respondents could not have resulted in a change to Wealth Services contractual obligations under clause 4.3.1 because the alleged consideration occurred before Ms Murphy made the promise.
Estoppel
53.There are many types of estoppel and the distinction between them is often subtle.
54.Given the respondents emphasis on Ms Murphy’s alleged representation that she would not enforce Shamrock’s rights under 4.3.1, and the respondents alleged reliance upon that representation, I assume the respondents intend to rely on the equitable doctrine of promissory estoppel.
Promissory estoppel
55.Because promissory estoppel is founded in equity and not contract absence of consideration is irrelevant.
56.His Honour, Mr Justice Brennan observed (comments in brackets added):
Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant (or the plaintiff where estoppel is raised as a defence): it operates when the defendant has induced or acquiesced in the adoption by the plaintiff (or defendant) of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscientious insistence by the defendant on them.[7]
[7] The Honourable Justice P L G Brereton RFD, Equitable Estoppel in Australia: The Court of Conscience in the Antipodes; Speech to the Australian Law Journal Conference: Celebrating 80 Years, 16 March 2007, page7
57.Promissory estoppel can be raised both as cause of action or a defence. In either case the party asserting an estoppel must establish[8]:
[8] Waltons Stores (Interstate) Pty v Maher [1988] HCA 7, Brennan J at 428-429
(a)some form of legal relationship either exists or is anticipated between the parties;
(b)a representation or promise by one party;
(c)reliance by the other party on the promise or representation;
(d)the party relying on the promise must suffer detriment as a result of relying on the promise; and
(e)unconscionability, that is that in the circumstances it would be unfair to allow the party to renege on its promise.
The facts
58.I am satisfied of the following facts, which were either uncontroversial or established on the balance of evidence.
59.YBR records show Ms Murphy as the broker responsible for arranging or ‘writing’ the loans for McC and N.
60.Ms Murphy finally handed the remaining files, including the N and C loans, over to Wealth Services on 29 April 2016 at which time the N loan was conditionally approved. Mr Bysouth obtained a rental statement to meet the lender’s requirements and it was unconditionally approved in May 2016.
61.The McC loan was already unconditionally approved when handed over. An application for a First Home Owners Grant (FHOG) had yet to be submitted to ACT Revenue and a settlement date scheduled.
62.The parties disagreed on the extent of the work done by Mr Bysouth on both files. Ms Murphy told the tribunal that applying for a FHOG was an optional service additional to the brokerage service, nevertheless it was a service she always provided for her clients.[9]
[9] Transcript of proceedings 11 October 2017 page 83
63.I am satisfied that in the case of the N loan, the work performed by Mr Bysouth was necessary to obtain final approval from the lender; for McC whilst the loan was already finally approved, Mr Bysouth provided an additional service to the client which was usual and incidental to the brokerage service.
64.The following email exchange took place between Ms Murphy and Ms Bysouth on 7 June 2016:
Ms Bysouth emailed Ms Murphy at 12.46:
Hi Karen,
RCTI attached for April 2016. Sorry I didn’t do this sooner, but I realise this was yours. I’ll do transfer now, should be in your account tomorrow.
Cheers,
Jackie
To which Ms Murphy responded at 12.55pm:
Brilliant. Thanks so much Jackie J That’s probably the last one that’s all mine. There are some more still to settle but with the amount of work Michael’s had to do on them I’ll be grateful for a spotter’s fee! ;)
65.The parties agreed both loans settled in June 2016 and the upfront commission was probably paid sometime in July 2016.
66.Wealth Services did not dispute that it received $2,276.12 for McC and $1,432.20 for N from YBR for upfront commissions.
67.Mr Bysouth asserted that after the email exchange between Ms Murphy and Ms Bysouth of 7 June 2016 the parties engaged in further discussion by email and or text regarding payment of the spotter’s fee.
68.Ms Murphy says as her offer of 7 June 2016 did not specify an amount for the spotter’s fee she waited for the Bysouths to get back to her with a figure, which they failed to do. Having received no further response from the Bysouths Ms Murphy says she proceeded to seek recovery of the full upfront commissions. According to applicants’ timeline:
On or around 22 July 2016- Karen Murphy sent a text message to Michael Bysouth enquiring about the upfront commission payments for McC and N and the purchase of the trail commission for L, Mc and N, and also reminded him of the overdue trailing commissions for March. Michael sent a dismissive reply stating that his children were sick and he would get Jacqueline Bysouth to look into it when she was back in the office. The Bysouths did not respond regarding these outstanding amounts and Karen Murphy made a decision to wait until the final a10% payment was due on 1 April 2017 and invoice ACT Wealth services for all amounts due.
69.Neither party produced texts or emails to support their conflicting accounts of communications following the email exchange of 7 June 2016. I therefore cannot be satisfied on the evidence that any communication regarding the upfront commissions occurred during this time.
70.Wealth Services did not transfer the upfront commission they received for the two loans to Shamrock.
71.It is not disputed that Shamrock did not issue a tax invoice pursuant to clause 4.3.1 when Wealth Services received the upfront commissions, and I am not satisfied on the evidence that it otherwise sought to recover the sums at that time.
72.As the 1 April 2017 deadline for payment of the balance of the price approached, Ms Murphy wrote to Mr and Ms Bysouth asking for relevant information about commissions Wealth Services had received so she could prepare an invoice. That email sent on the 15 March 2017 read in part:
I wanted to check with you about the final payment for the trail book which is due on 1 April.
I can send an invoice for that. I am also owed some upfront commission and there’s a couple of loans that you haven’t paid 1.9 times for.
From memory, upfront is for McC and the loans that need to be purchased are McC and L.
Can you please let me know so I can prepare a Tax Invoice?
73.To which Ms Bysouth replied on 18 March 2017:
I have drafted a preliminary final figure for you, including the purchase price of the two client loans mentioned, however we can’t finalise the payment until we receive the RCTI that covers payments and clawbacks that apply to the loan book that cover to 1 April. As soon as we get that RCTI, I will know the correct figure and will let you know the amount to invoice for.
74.Significantly Ms Bysouth’s email did not address Ms Murphy’s question about the upfront commissions. Further correspondence between them ensued which also contained no mention of the upfront commissions.
75.On 6 April 2017 Wealth Services, without waiting for an invoice, sent Shamrock its final payout calculations, which included a ‘referral fee’ of 20% rather than an upfront commission for both the N and McC loans. Wealth Services attributed $741.46 of their final payout figure of $905.24 to the referral fees. It transferred $905.24 to Shamrock’s account on the same day.
76.On 6 June 2017 Ms Murphy sent Wealth Services a letter demanding payment of a further sum of $6,375.68 which read in part:
I refer to our agreement effective 01/04/2016 wherein you agreed to pay all trail commissions owing and accrued to Shamrock Finance Canberra Pty Ltd as at 01/04/2016, and also agreed to pay the upfront commissions and 1.9 times the trailing commissions for the loans described in Schedule 2.
77.The tax invoice attached to the letter of demand described the item charged for as simply ‘Final payment for loan book’.
78.After obtaining legal advice Ms Murphy changed her mind about how much Wealth Services owed and filed an application claiming $10,441.01 based on her calculations.
79.The applicants first particularised their claim for upfront commissions for N and McC in their ‘Payout Figure Calculations’ filed with the application to the Tribunal on 22 June 2017.
80.Whilst Ms Murphy did not dispute the email correspondence of 7 June 2016 with Ms Bysouth she submitted:
(a)the loans referred to in the email were not identified, but she offered no alternative explanation as to which loans the email referred to.
(b)the respondent provided no evidence that they had ever taken her up on her offer; or if it did what amount, if any, was agreed to be paid by Wealth Services by way of spotter’s fees.
(c)she did not accept the spotter’s fees paid by Wealth Services in April 2017 (which the respondents call referral fees) in satisfaction of its liability under clause 4.3.1.
81.I am satisfied on the basis of logical appeal that:
(a)the email correspondence of 7 June 2016 refers to the N and McC loans because they are the only two loans for which the upfront commission is claimed by Shamrock; and
(b)Ms Murphy did offer to accept a spotter’s fee on N and McC in lieu of upfront commission in recognition of the work performed by Mr Bysouth on these files.
The representation
82.I am satisfied that Ms Murphy’s representation took place in the context of the legal relationship between the parties created by the deed and so satisfies the first criteria for promissory estoppel.
83.In her email of 7 June 2016 Ms Murphy clearly and unambiguously represented that Shamrock would accept what she described as a ‘spotter’s fee’ in lieu of an upfront commission under clause 4.3.1 for both loans. There is no reliable evidence to support Ms Murphy’s assertion that she changed her position and sought payment of the trailing commissions in July 2016.
84.A spotter’s fee is normally a relatively small fee for introducing a client to a business. However, it is not disputed that Shamrock did more on the files than just introduce the clients to Wealth Services. It is likely that the parties understood Ms Murphy to mean that she would accept an amount equivalent to a spotter’s fee, in lieu of an upfront commission, in recognition of Mr Bysouth’s contribution to the files.
85.There is no evidence of an agreed amount or time for payment of the spotter’s fee. However, to establish estoppel the terms of the representation need only be sufficiently certain to know that Shamrock has departed from it. In this case it was clear that Ms Murphy represented that Shamrock would not enforce its right to the upfront commissions if Wealth Services paid the equivalent of a spotter’s fee. I am satisfied that it is clear that Shamrock departed from that representation when it first indicated it would rely on clause 4.3.1 in Ms Murphy’s email of 15 March 2017.
Reliance
86.Reliance is an essential element of equitable estoppel.[10]
[10] See Sidhu v Van Dyke [2014] HCA 19; Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; Commonwealth v Verwayen (1990) 170 CLR 394
87.Reliance on the representation must be reasonable[11] and the promissee must suffer detriment if the promise is not fulfilled.
[11] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7
88.Brennan J in Commonwealth v Verwayen at 429 described the relevant detriment as follows:
The relevant detriment in a case of equitable estoppel is detriment occasioned by reliance on a promise, that is, detriment occasioned by acting or abstaining from acting on the faith of a promise that is not fulfilled. The relevant detriment does not consist in a loss attributable merely to non-fulfilment of the promise.
89.Waltons Stores (Interstate) Ltd v Maher provides an example of detrimental reliance in the context of a cause of action based on estoppel. Waltons negotiated to lease some land from Mr Maher. Waltons wanted Mr Maher to demolish the existing buildings and replace it with another more suited to its purpose. In reliance upon representations made by Waltons Mr Maher demolished the existing building and started building a new one. Waltons were aware of the action being taken by Mr Maher in expectation of the lease but nevertheless did not go on to sign it. The High Court found that it would be inequitable to allow Waltons to deny the contract and thereby allow Mr Maher to suffer detriment.
90.The High Court in Sidhu v Van Dyke in the context of proprietary estoppel considered the importance of reliance and the onus of proving it:
In point of principle, to speak of deploying a presumption of reliance in the context of equitable estoppel is to fail to recognise that it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention. Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jorden v Money by dispensing with the need for consideration if a promise is to be enforceable as a contract’
There was no shifting of the burden of proof as regards reliance; the onus remained on V
91.On the balance of evidence I am not satisfied that Wealth Services altered its position to its detriment in reasonable reliance on Ms Murphy’s representation for the reasons set out below.
92.Wealth Services could have paid the spotter’s fee as soon as they received the upfront commissions in July 2016 rather than waiting until making its final payment in April 2017.
93.Shamrock reasonably expected Wealth Services to accept a spotter’s fee in lieu of upfront commission up to the moment Ms Murphy clearly indicated that Shamrock intended to assert its rights under 4.3.1.
94.That moment came on 15 March 2016 when Ms Murphy emailed Ms Bysouth and said, “I am owed some upfront commissions” “from memory on McC”. Nothing turns on her being unable to remember N at that point because the respondents do not dispute that they received upfront commission on both loans and that they owed Shamrock something in relation to those commissions.
95.In light of that email Wealth Services could not reasonably continue to expect Shamrock to stick by the representation made by Ms Murphy in June 2016, certainly not without further negotiation.
96.Until that Ms Murphy’s email of 15 March 2017 Wealth Services had not altered its position in reliance upon her representation. In fact Wealth Services’ conduct was entirely consistent with compliance with 4.3.1 which did not require it to take any action in the absence of an invoice from Shamrock.
97.As the necessary element of reliance is not established Shamrock is not estopped from enforcing its rights to the upfront commission under clause 4.3.1.
98.I am satisfied that the invoice sent by Ms Murphy to Wealth Services on 6 June 2017, whilst lacking in important detail including the amount attributable to the upfront commissions, when read together with the covering letter was sufficient for the purposes of clause 4.3.1. My finding is further supported by the fact that Wealth Services already knew the amount of upfront commissions they had received from YBR for the types of loans referred to in the clause.
99.I find the first respondent liable to pay the first applicant $3,708.32 under 4.3.1 being the upfront commissions it received for the McC and N loans. However to avoid double recovery, the amount payable under that clause should take into account the $741.46 referral fees already paid by Wealth Services.
Issue 2(b) Purchase of loans under clause 4.3.2
100.Clause 4.3.2 provides that Wealth Services agrees that it will purchase any loans settled after 1 April 2016 from Shamrock calculated by reference to the methodology used by Wealth Services is assessing the value of the trailing commissions for the purpose of the sale.
101.Although the clause does not specify the loans it applies to, the parties positions are premised on these being the loans described in Schedule 2, which I accept is the logical construction. The loans in dispute were again McC and N. Unlike 4.3.1 clause, 4.3.2 does not stipulate a timeframe or trigger for Wealth Services to perform its obligation.
102.The applicants claim $1,657.10 under this clause comprised of:
(a)The price for purchasing the McC trail (loan) [($43.18 × 12) × 1.9] = $984.50; and
(b)The price for purchasing the N trail (loan) [($29.50 × 12) × 1.9] = $672.60
103.The respondents dispute that Wealth Services is liable for the cost of purchasing these two loans for the same reason given in relation to clause 4.3.1, that is:
Due to work completed by the First Respondent in finalising the loans, and acceptance of a spotter’s fee by the second Applicant, the applicants have already been paid in relation to these loans.[12]
[12] Summary of Dispute
104.I find it likely that Ms Bysouth’s email of 7 June 2016, and Ms Murphy’s brief and spontaneous response nine minutes later, relates only to the immediate issue raised by Ms Bysouth about the transfer of the upfront commissions Wealth Services were expecting to receive for McC and N.
105.It is not significant that Shamrock waited until the balance of the purchase price was due in April 2017 to assert its rights under 4.3.2 as no time for performance by Wealth Services was stipulated in that clause.
106.The respondents also denied liability for the purchase price of N and McC on the grounds that on or about 7 April 2016 Ms Murphy misrepresented to Mr Bysouth that work on the loans was finalised and did not require further work; and that the “Respondents signed the Deed on condition of and relying upon the representations made by Ms Murphy.”[13]
[13] Response filed on 21 July 2017
107.I do not accept this argument because Mr and Ms Bysouth both gave evidence that they signed the deed on behalf of Wealth Services on 1 April 2016, that is six days before the alleged misrepresentation. Accordingly the respondents could not have entered the contract in reliance upon the alleged misrepresentation.
108.For the reasons set out above I am satisfied that the first respondent is liable to pay the first applicant $1,657.10 for the purchase of the N and McC loans under clause 4.3.2.
Trailing commissions
109.Trailing commissions received by Wealth Services on Schedule 1 loans after 1 April 2016 are relevant to the following issues:
(a)Wealth Services’ obligation under clause 4.4.2 to pass on certain trailing commissions it received after the date of the agreement to Shamrock (Issue 2(c)); and
(b)Adjustment of the price under clause 4.4.1 (Issue 3).
How trailing commissions are paid
110.YBR’s arrangements for receiving, processing and distributing trailing commissions are set out below. It is not clear whether these arrangements were established by contract or convention, but they are accepted by the parties.
111.Lenders pay trailing commissions to YBR. After taking its cut YBR pays the rest to its franchised brokers such as Wealth Services and Shamrock and sends them a corresponding RCTI. The RCTIs outlines the fees, the amount withheld by YBR and the balance payable to the broker with and without GST.
112.The payments are made regularly in relation to trailing commissions accrued in the previous month. The time of month payment is made depends on the lender.
113.YBR does two payment runs to its brokers each month. The corresponding RCTIs are titled ‘month period 1’, and ‘month period 2’. The reference month being the month in which the commissions accrued.
114.I am satisfied on the balance of evidence, logic and Mr Malizis evidence of usual industry practice that period 1 corresponds to a date range of 21st of the named month to the 5th of the next month and period two corresponds to the date range 6th of the next month to 20th of the next month.[14]
[14] See Jacqueline Bysouth at transcript of proceedings 11 October 2017 page 108 and paragraph 5 of her witness statement
115.Therefore YBR could be expected to send the payments and corresponding RCTIs for trailing commissions accrued in March 2016 to Wealth Services rather than Shamrock because by the time YBR processed the payments from the lenders Wealth Services were the new owners of the loans.
Issue 2 (c) Clause 4.4.2 upfront and trailing commissions due to Shamrock at date of agreement
116.Clause 4.4.2 provides that both parties agree that:
any overdue or payable upfront or trailing commissions for loans described in Schedule 1 that were due to Shamrock up until the date of this agreement (1 April 2016) will be paid by ACT Wealth Services to Shamrock Finance.
117.The applicants claim an amount of $3,235.64 for trailing commissions payable to Shamrock for the period 1 March 2016 to 31 March 2016 on Schedule 1 loans.
118.At the hearing, Ms Murphy told the tribunal that the correct amount was $3,293.32 in light of new information filed in the proceedings by the respondents on 6 October 2017. She also asserted she was entitled to GST on the trailing commissions.
119.However, as Ms Murphy did not seek to amend the application I will treat the claim for trailing commissions as capped at $3,235.64 and not permit the claim to be amended to include GST.
120.As Wealth Services did not receive any trailing commissions from YBR for those loans described in Schedule 1 as ‘Post AISA YBR’ loans, the amount it received for trailing commissions on Schedule 1 loans accrued before 1 April 2016 was $3,177.68.
121.The parties’ dispute turns on the construction of clause 4.4.2.
Construction of 4.4.2
122.The applicants argue 4.4.2 applies to trailing commissions that accrued or were earned by Shamrock before the date of the agreement even though these would be paid to Wealth Services by YBR after that date.
123.The applicants relied on the expert evidence of Angelo Malizis who gave evidence at the hearing and was cross-examined.
124.I accept that Mr Malisiz is suitably qualified by his professional qualifications and experience to give evidence as to the usual commercial practices in the mortgage brokerage industry.
125.In his witness statement Mr Malizis said:
4. It is absolute market convention and indeed consistent with established generally accepted accounting principles that trailing commissions and upfront commissions up until the day of sale (in this case 1 April 2016) are for the entitlement of the vendor. This convention is unchallenged and has never been in dispute across the industry.
5. In the mortgage industry, commissions which have accrued are typically payable two to three weeks after the last day of the month.
6. Therefore if the sale of the Applicants trail book took place as at an effective date of April 2016, any trail commissions that has accrued up until and including 31 March 2016 is due and payable to the vendor in this case the Applicant) even though theses trail commissions may not be physically paid by the lender until some weeks after the end of the month.
126.The respondents argue that 4.4.2 only applies to trailing commissions due to be transferred by YBR to Shamrock, in accordance with the usual arrangements, up to 1 April 2016. These would not include trailing commissions accrued in March 2016 which would not be normally paid until after 1 April 2016.
127.They submit that their interpretation is supported by Clause 2:
Shamrock Finance hereby sells and assigns to ACT Wealth Services all its present and future beneficial right title and interest in the Trailing Commissions for the Price with effect from the Completion Date.
128.As Ms Bysouth says:
To me the operation of clause 2 meant that from the completion date, which was 1 April, that ACT Wealth Services owned the loan book and all of its trail commissions.
129.The respondents argue that Wealth Services is not liable under 4.4.2 because none of the trailing commissions it received for Schedule 1 loans were overdue, payable or due to Shamrock at the date of the agreement, regardless of when they accrued.
The law
130.Where a contract is in writing the parol evidence rule limits extrinsic evidence that may be brought to assist the interpretation of the terms of the written contract.
131.The relevance of evidence of commercial context was considered by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW.[15] Mason J cited with approval Lord Wilberforce in Reardon Smith Line v Hansen-Tangen[16]:
In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which parties are operating.
[15] (1982) 149 CLR 337
[16] [1976] 3 All ER 570
132.However his Honour went on to observe:
the true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning.[17]
[17] (1982) 149 CLR 337, 352
133.The High Court in Western Export Services Inc v Jireh International Pty Ltd[18] following Codelfa, stressed that it was essential to identify ambiguity in language before the Court could have recourse to extrinsic circumstances.
[18] [2011] HCA 26
134.The parol evidence rule may be relaxed if words have a particular meaning in the industry in which the parties operate. Paterson, J et al in Principles of Contract Law[19] at [13.40] summed up the exception as follows:
Where parties have used language in their written record of a contract that has a special meaning in the parties’ particular trade or industry, extrinsic evidence of that meaning may be admitted.[20] However to be admitted as evidence, the trade meaning must be “well-known, uniform and certain.”
[19] Paterson J, Robertson A and Duke A, Principles of Contract Law (Lawbook Co., 4th ed, 2012)
[20] eg. Appleby v Pursell [1073] 2 NSWLR 879, 889
Analysis
135.The contentious terms relating to commissions in clause 4.4.2 are:
overdue or payable…………….. were due to Shamrock up until the date of this agreement (1 April 2016)
136.The effect of the words ‘present…rights’ in the context of Clause 2 generally entitles Wealth Services to all Shamrock’s existing rights in relation to the Schedule 1 loans at the date of the agreement. This is clearly inconsistent with the specific provisions of clause 4.4.2 which requires Wealth Service to account to Shamrock for payments it receives which were “overdue and payable to Shamrock at the date of the agreement.” It is a fundamental principle of construction that a specific provision prevails over an inconsistent general provision to the extent of the inconsistency. Clause 2 therefore cannot be used to limit the operation of clause 4.4.2.
137.Mr Malizis does not assert that the contentious words have special meaning in the parties’ industry.
138.Mr Malizis says that the trailing commissions accrued before the date of agreement are ‘due and payable’ by the purchaser to the vendor. Although Mr Malizis’ use of the language of clause 4.4.2 is confusing, I am satisfied in the wider context of his evidence he simply means that in his opinion, based on industry convention, the purchaser is liable to pay the vendor any trailing commissions it receives on the purchased loans, accrued up to the date of purchase. It should be noted that determination of liability is a matter for the tribunal.
139.In this case it is not necessary to have recourse to extrinsic evidence of the parties’ intended meaning as the words of the clause are unambiguous. Accordingly, it is not relevant whether the clause is consistent with market convention or usual accounting practices.
140.I am satisfied that under the accepted arrangements between YBR and its brokers, trailing commissions were not ‘payable’ to Wealth Services until after they had been processed by YBR and that they became ‘payable’ after the end of the month in which they accrued.
141.‘Due’ means due to be paid and means the same as ‘payable’ in this context. The natural meaning of the word ‘overdue’ in relation to a payment is one which, having become payable, remains unpaid.
142.It was open to the parties to use the terms ‘earned or accrued’ if they intended the construction argued by the applicants but they did not. It was Ms Murphy’s responsibility to ensure that the deed she adapted from a template had the effect she intended.
143.Therefore Shamrock is not entitled to trailing commissions received by Wealth Service for Schedule 1 loans because although they were accrued in March 2016 they were not overdue, payable or due to Shamrock before 1 April 2016.
144.I find the first respondent is not liable to pay the first applicant for the commissions claimed in these proceedings pursuant to clause 4.4.2.
The counter claim
Issue 3: 4.4.1 The adjusted purchase price
145.Clause 4.4.1 provides that both parties agree that:
in the absence of up to date information about trailing commissions, any adjustments that need to be made to the Price when this information becomes available will be indemnified by the relevant party.
146.The parties all understood clause 4.4.1 to allow the original price based on the estimated trailing commissions for March 2016 to be retrospectively adjusted when the actual trailing commissions accrued in that month became known after the date of the agreement. Both parties calculated an adjusted purchase price based on the RCTIs described as March 2016 attached to Ms Bysouth’s witness statement filed with the counter claim.
147.YBR sent the March RCTIs to Wealth Services as the new owner of the loan book and that information remained in their exclusive possession until it was filed with the counter claim on 6 October 2017, four days before the hearing.
148.According to Ms Bysouth:
From my review it is evident that YBR Head Office added the Loan Book to the RCTI in 2 parts being:
(a) The first on 4 April 2016 which is RCTI March 2016 Period 1, which was paid on 15 April 2016 (to Wealth Services); and
(b) The second on 20 April 2016 which is RCTI March 2016 Period 2, which was paid on 2 May 2016.[21]
[21] Jacqueline Bysouth witness statement paragraph 5
149.Ms Bysouth at paragraph 9 of her witness statement inserted a table of Schedule 1 loans for which she said the trailing commission for March were lower than that estimated by Shamrock for the purposes of calculating the price.
150.At the hearing Ms Bysouth amended the table as follows[22]:
(a)Only G (which had a nil estimate) and V were discharged before 1 April 2016;
(b)The respondents no longer disputed W.
[22] Transcript of proceedings 11 October 2017 page 6
151.Ms Murphy asserted that the March RCTIs showed many other Schedule 1 loans, not included in Ms Bysouth’s table, for which the trailing commissions received by Wealth Services were more than that estimated. I accept that her assertion is supported by the RCTIs.
152.Ms Murphy admitted that:
(a)YBR did not transfer to Wealth Services any of the loans described as Post YBR AISA in Schedule 1 comprising:
(i) L,& P
(ii) S
(iii) G - but as this loan has no estimated trail it is not relevant to either clause 4.4.1 or 4.4.2
(iv) D; and
(b)V was discharged prior to 1 April 2016, which Ms Murphy said both parties became aware of in mid April 2016.
153.Ms Murphy says she gave the physical files for the Post YBR AISA loans to the Bysouths in April 2016. She was not aware that Wealth Services had not received commissions on these loans until served with the counter claim and she has since followed up with YBR but received no response.
Analysis
154.The first step in determining what, if any, adjustment is due under 4.4.2 is to calculate the difference between the total amount estimated for trailing commissions due to the broker in Schedule 1 and the total amount received by Wealth Services for March 2016 as evidenced by the RCTIs.
155.Ms Murphy claims that Wealth Services received $3,177.68 in trailing commissions for Schedule 1 loans accrued in March 2016 comprised of:
(a)$403.06 excluding GST for March Period 1; and
(b)$2,774.62 excluding GST for March Period 2.
156.When I examined the RCTI for March Period 1 I found a trailing commission for a second W loan (….78) not included in Schedule 1.
157.I note that the respondents retracted their original assertion that the W loan (….77) in Schedule 1 was discharged before the date of the agreement and did not mention the second W loan. It seems likely that the second loan was associated with ….78 and was transferred along with it to Wealth Services but left out of Schedule 1 by mistake.
158.I accept the following methodology used by Ms Murphy in the response to the counterclaim to determine which trailing commissions in both March RCTIs relate to Schedule 1 loans:
(a)Using the data in the RCTIs Ms Murphy added:
(i) the total brokers share of trailing commissions, excluding GST, for Resi loans ($2,957.77) to those for ‘VOW Aggregator’ loans ($131.32) to reach $3,089.09;
(ii) She then subtracted:
(iii) $229.65 for Resi loans identified as owned by Wealth Services prior to transfer; and
(iv) $84.82 received for the DS loans which Shamrock omitted from Schedule 1 due to their impending transfer.
159.I am therefore satisfied that the adjusted purchase price, based on the information available at the date of the hearing, should be 1.9. x 3177.68 x 12 = $72,451.10.
160.In relation to the counter claim I find the price reduced by $2,255.60 pursuant to clause 4.4.1 of the deed.
161.An adjustment under clause 4.4.1 is not based on breach of contract and therefore Ms Murphy is not personally liable to indemnify Wealth Services under clause 6.
Issue 4: Final payout figure
162.In the table below I have calculated the final payout figure taking into account my findings on further amounts payable under the deed by Wealth Services and the adjusted purchase price.
163.I have also relied on the ‘Payout Figure Calculations’ spreadsheets filed by both parties to determine the payments made by Wealth Services, the rebate for clawbacks, and the amount payable to purchase the L loan all of which are agreed.
164.Although the parties agree on the amounts paid by Wealth Services there are some material differences in the way the payments are described. The applicant describes one of the payments made by Wealth Services in April 2016 as including interest on the outstanding balance, whereas the respondent describes all the payments simply as “funds from Wealth Services”. I prefer the respondents’ terminology as the applicant established no contractual entitlement to interest, and in their calculations both parties applied all payments to reduce the principal debt.
165.On 12 May 2016 Wealth Services paid an amount of $250. The payment is described as “bank fees” by Shamrock but simply “funds received from ACT Wealth” by Wealth Services. I prefer Wealth Services description and applied this amount to the price as it consistent with the undisputed proposition that Wealth Services paid Shamrock 90% of the price shortly after the date of the agreement.
Item
Date
Amount Credited
Amount Debited
Balance
Price
$74,706.70
Initial funds from Wealth Services
7/4/16
$2,720.40
Funds from Wealth Services
11/4/16
$64,265.00
Funds from Wealth Services
12/5/16
$250.00
Purchase of L loan (45.97 x12) x 1.9
4/4/16
$1,048.11
Purchase of McC loan (43.18 x12) x1.9
$984.50
Purchase of N loan (29.50x12) x1.9
$672.60
Clawbacks
Various between 4/4/16 to 20/3/17
$5,774.22
Upfront commissions received for the N and McC
$3,708.32
Adjustment of purchase price
$74,706.70 less $72,451.10
$2,255.60
Funds from Wealth Services
(including $741.46 described as referral fees for N and McC)
6/4/17
$905.24
Balance outstanding
$76,170.46
$81,120.23
-$4949.77
Conclusion
166.The applicants claim interest on the debt from 1 April 2017 to be determined by the tribunal in accordance with Court Procedures Rules 2006 and ACAT procedural directions.
167.I have allowed interest in accordance with Schedule 2 Court Procedures Rules 2006 as follows to take account of the payment made by Wealth Services of $905.24 on 6 April 2017:
(a)On $5,855.01 from 1 April to 6 April 2017; and
(b)On $4,949.77 from 7 April 2017 to the date of judgment.
168.Under section 48 of the ACT Civil and Administrative Act 2008 the Tribunal has discretion to order Wealth Services and Shamrock to pay each other’s filing fees because each of them at least partially succeeded in their claims. I have decided to exercise my discretion to not award either company an amount for the filing fee as the majority of the amount claimed by each of them was disallowed.
169.Although Shamrock’s and Wealth Services’ applications were both partially successful instead of making separate orders for the claim and counter claim I have made one order for the net amount payable by Wealth Services, including interest, as it was simpler and clearer to do so.
170.The first respondent is liable to pay the first applicant the sum of $4,949.77 plus interest.
………………………………..
Senior Member E Ferguson
HEARING DETAILS
FILE NUMBER:
XD 734/2017
PARTIES, APPLICANTS:
Shamrock Finance Canberra Pty Ltd
Karen Margaret Murphy
PARTIES, RESPONDENT:
ACT Wealth Services
Michael Bysouth
Jacqueline Bysouth
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
Chamberlains Law Firm
TRIBUNAL MEMBERS:
Senior Member E Ferguson
DATES OF HEARING:
11 October 2017
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