Winning Edge Solutions P/L v Beattie - [2015] SASC 90

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
WINNING EDGE SOLUTIONS P/L v BEATTIE & ANOR
[2015] SASC 90
Judgment of The Honourable Justice Bampton
12 June 2015
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH
From 2009 Winning Edge Solutions Pty Ltd were contracted to act as a sales agent for the Real Estate Institute of Victoria and realestateview.com in numerous states selling online applications to real estate agents – no written services agreement existed until 1 July 2010 – in June 2010 Winning Edge Solutions Pty Ltd entered into an oral retainer agreement with Team BT Pty Ltd to act as its sales agent in South Australia – David Beattie was employed by Team BT to work as the sales agent and did so until Team BT terminated the contract in October 2010 – subsequent to this in December 2010 the REIV/REV gave three months’ notice that they would be terminating the services agreement effective 31 March 2011.
Team BT commenced proceedings in the Magistrates Court seeking payment of one month’s retainer and unpaid commissions – WES counterclaimed alleging breach of contract due to Team BT’s termination and failure to perform obligations under the retainer agreement (Team BT’s claim) – WES commenced District Court proceedings alleging loss of opportunity, lost income and loss of profit as a result of Team BT’s termination and failure to perform (WES’s claim).
Team BT’s claim
1. The retainer agreement properly construed contained an implied term that the parties could terminate the agreement upon giving reasonable notice or payment in lieu of reasonable notice.
2. As no notice given by Team BT, any loss and damage suffered by WES is compensated by WES retaining the amount of the September retainer received from REV and not paid to Team BT.
3. It was intended that the commissions payable to Mr Beattie would be calculated on the same basis they were calculated and paid to WES pursuant to the services agreement.
4. Team BT’s entitlement to commission is therefore $136.06.
5. WES is entitled to damages in the sum of $7,189.94.
WES’s claim
1. WES’s claim is dismissed as it failed to establish the services agreement was terminated solely or in part due to the performance of the retainer agreement by Team BT.

WINNING EDGE SOLUTIONS P/L v BEATTIE & ANOR
[2015] SASC 90
Civil
BAMPTON J.
Background

In 2009, the Real Estate Institute of Victoria (REIV) in a joint venture with Realestateview.com.au Ltd (REV) was selling REV’s online data applications, realestateview.com.au (realestateview.com.au) and Property Data Online (PDOL) (the online products), to real estate agents in Victoria and South Australia. Around this time, Winning Edge Solutions (WES) was marketing its own online applications Ownership Data and Go Prospecting (GOP) to real estate agents in Victoria.
During 2009, the REIV/REV negotiated with WES whereby WES would assume the sales function for the online products in Victoria. It was agreed that WES would provide and manage the sales on behalf of the REIV/REV and a monthly retainer would be paid to WES.
In February 2010, the REIV/REV approached WES to take over the sale of the online products in South Australia. It was agreed that WES would market a package to South Australian real estate agents which included realestateview.com.au, PDOL and WES’s product, GOP (the Foundation Package). As WES’s product, GOP, was specific to the Victorian market, WES developed a GOP product to suit the South Australian market. The South Australian GOP was an electronic telephone directory.
Prior to WES expanding in South Australia, the REIV and REV had 54 South Australian clients who had subscribed to realestateview.com.au and PDOL.
WES commenced marketing to South Australian real estate agents by sending two of its contractors to South Australia on a fortnightly basis during April and May 2010. It was WES’s intention, in addition to selling the Foundation Package to new clients in South Australia, to convert the existing 54 clients to a new contract period on the Foundation Package where “they would pay no more and yet receive GOP free of charge”.[1] For every one of the 54 clients who converted to the Foundation Package, WES would receive $100.
[1] T222.
During 2010, the REIV/REV decided to expand selling the online products in New South Wales and approached WES about acting as its sales agent in New South Wales.
The REIV, REV and WES entered into a written services agreement dated 1 July 2010 (the services agreement). The services agreement provided the terms and conditions under which WES would market, promote, sell and train agents in the use of the online products in South Australia, New South Wales, Victoria and Tasmania. It provided at clause 8.1(a) that REV would arrange for WES at least 14 appointments per week per staff member with REIV members. Clause 8.4 stated that if REV failed to comply with clause 8.1(a), then WES would not be deemed to be in breach of the agreement. The schedule to the services agreement provided that the commencement date of the agreement was 1 July 2010 and relevantly it set out the following in relation to South Australia:
South Australia
·REIV/REV will pay WES a monthly retainer of $8,867 per sales person per month or part there off, for sales staff solely employed to service SA.
·The sales growth targets which appear in the Schedule are as agreed by the parties as at 30 June 2010 and are to be reviewed quarterly commencing on 1 October 2010.
·The parties agree that only one sales person will be appointed for South Australia.
·WES will receive one month’s subscription fee as a commission for all subscribers signed up on a minimum 12 month contract. Such 12 month contract must be fully paid otherwise a pro rata refund will be claimed by REV/REIV.
·Some subscriptions/products sold [may] be bundled and include REIV, REV & WES products, the commission payable to the sales team includes the cost of all WES products sold/invoiced by REIV & REV and WES will not be paid for their portion of the sale which is paid as a commission.
·The retainer will be reviewed annually on the anniversary of the Commencement Date. The retainer will not automatically be adjusted by movement in the wage index.
·The parties agree to the following sales targets for REV, PDOL/MapIT subscribers:
FOR SA ONLY
2010 & 11 Quarterly Sales Growth Targets    Subscriber Numbers
Starting point as at          30/06/2010  50
From 01/07/2010    to     30/09/2010 additional              12
From 01/10/2010    to     31/12/2010 additional              10
From 01/01/2011    to     31/03/2011 additional              12
From 01/04/2011    to     30/06/2011 additional              12
Total Target Number of
Subscribers as at 30/06/2011  96
The services agreement was signed by John Grabyn, a director of the REIV, Enzo Raimondo, CEO and company secretary of the REIV, John Piccolo, director of REV, Petra Sprekos, company secretary of REV, and Mark Shannon as director of WES.
Once WES was required to market the online products in New South Wales pursuant to the services agreement, it became evident to Mr Shannon that WES required a fulltime person to service South Australia. Mr Shannon decided to approach David Beattie whom he had met when they had both worked at Australian Property Monitors.
The café meeting between Mark Shannon and David Beattie
At a casual friendly meeting at a café in Glenelg in April 2010, Mr Beattie met with Mr Shannon to discuss the prospect of promoting the online products to real estate agents in South Australia pursuant to the agreement WES had with REIV and REV.
It was Mr Beattie’s case that in May 2010 his wife’s company, Team BT, agreed to be retained by WES, and it was Team BT that entered into a retainer agreement (“the retainer agreement”) with WES to sell the products. Mr Shannon maintained that WES retained Mr Beattie not Team BT.
Apart from a confidentiality agreement signed by Mr Beattie on 1 June 2010, the retainer agreement was verbal. The retainer commenced 1 June 2010.
Four months after the commencement of the retainer agreement, the relationship had deteriorated to the point where, on 2 October 2010, Mr Beattie forwarded an email to Mr Shannon attaching a letter from Team BT terminating the retainer agreement.
The REIV’s decision to discontinue marketing and supporting PDOL in South Australia
By letter dated 9 November 2010, Mr Raimondo, the CEO of the REIV, wrote to Mr Troughton, the CEO of the Real Estate Institute of South Australia (REISA), regarding the REIV’s decision to discontinue PDOL in South Australia. Mr Raimondo reported that:
The REIV has invested over $750000 to develop and market PDOL in South Australia to date but, unfortunately, we have been unable to gain any significant market share.
…
I know both REISA and REIV have tried over the years to make this work and, unfortunately, it has got to the stage where we can no longer justify the continuing loss.
(Emphasis added)
Mr Raimondo concluded the letter by stating that realestateview.com.au would continue to operate in South Australia.
The termination of the services agreement
In an email dated 27 December 2010,[2] Mr Shannon acknowledged that WES had received, from Mr Raimondo in an email dated 23 December, the notice required under the services agreement to terminate the services agreement. The termination was effective 31 March 2011.
[2] Part of exhibit P9 (Page 99 of the Tender Book).
The proceedings
Team BT commenced proceedings on 24 December 2010 in the Magistrates Court for the sum of $12,020; being the sum of two unpaid invoices it had rendered to WES for one month’s retainer and unpaid commissions. WES denied the claim and counterclaimed against Team BT alleging breach of contract as a result of Mr Beattie’s asserted wrongful termination and failure to perform his obligations under the retainer agreement.
On 30 June 2011, WES commenced proceedings in the District Court against Mr Beattie alleging loss of opportunity, lost income and loss of profit as a result of Mr Beattie’s wrongful termination and failure to perform. On 6 July 2011, consent orders were made by a Master of the District Court transferring the Magistrates Court action commenced by Team BT to the District Court and ordering that it be consolidated with the District Court proceedings commenced by WES. Whilst no order was made that the action commenced by WES be the lead action, the parties conducted the proceedings as if such an order had been made.
Amendment
Pursuant to permission given during the trial, WES filed an amended statement of claim (FDN 27) on 15 May 2014 pleading at para [13] in the alternative to the claim against Mr Beattie that WES maintained the same claim against Team BT.
I shall refer to the action commenced by WES as WES’s claim and the claim commenced by Team BT as Team BT’s claim.
Team BT’s claim
Team BT alleged that, on or about 13 April 2010, WES offered it a position as South Australian contractor on behalf of the REIV. Team BT alleged that on 2 October 2010 it forwarded a letter of termination to WES and on 4 October 2010 WES advised the termination was effective immediately. Team BT alleged that WES remained indebted to it in respect of invoice no 109 and invoice no 119, both dated 1 October 2010. Invoice no 109 totalled $7,326 for the retainer for the month of September 2010 and invoice 119 totalled $4,694 being the amount Team BT alleged it is owed by way of commissions or sign up bonuses.
In its defence, WES asserted that it entered into an agreement with Mr Beattie, not Team BT, for Mr Beattie to act as WES’s sales agent in South Australia. WES alleged that, as Mr Beattie failed to perform his obligations under the retainer agreement properly, it suffered loss and damage.
WES’s claim
WES pleaded that, on or about 1 June 2010, it entered into the retainer agreement with Mr Beattie for Mr Beattie to act as its sales representative in South Australia selling software packages developed by it to real estate agents in South Australia and providing technical support to purchasers of the software packages. It is alleged that the retainer agreement was partly oral and partly in writing and partly to be implied. To the extent that it was oral, it is alleged that it consisted of a series of conversations between Mr Shannon and Mr Beattie in or around April 2010 to the effect that:
·Mr Beattie would act as a sales representative in South Australia with responsibility for selling software packages developed by WES to real estate agents in South Australia;
·Mr Beattie would receive payments of $85,000 per annum payable monthly for the life of the retainer agreement;
·Mr Beattie would provide ongoing support to the customer in relation to the use of the software package;
·Mr Beattie would receive payments by way of commission on each successful sale provided that:
-       the customer paid the first monthly instalment for the use of the software package,
-       the customer continued to subscribe to and use the software package for a minimum of 12 months,
-       the customer continued to receive support from Mr Beattie throughout the said period,
such commissions would be reduced on a pro rata basis in the event that the customer did not continue to use the software package for a period of at least 12 months or in the event that Mr Beattie ceased to provide support to the customer in the said period; and
·Mr Beattie would give at least one month’s notice in the event that he intended to terminate the retainer agreement.
To the extent that the retainer agreement was evidenced in writing, WES referred to the confidentiality agreement signed by Mr Beattie on 1 June 2010.
It is alleged that Mr Beattie failed to perform his obligations properly pursuant to the retainer agreement in that:
·he failed to arrange a sufficient number of meetings with potential customers;
·he failed to communicate adequately with customers and potential customers;
·he failed to provide adequate support or training to customers who purchased the plaintiff’s products;
·he failed to communicate adequately with WES or to respond to requests for information;
·he failed to follow directions given by WES in relation to the performance of his obligations under the retainer agreement; and
·he regularly allowed potential customers free use of the plaintiff’s products but gained no benefit for the plaintiff by doing so.
WES alleged that Mr Beattie wrongfully terminated the retainer agreement and by reason of such wrongful termination it suffered loss and damage.
WES pleaded that the retainer agreement between it and Mr Beattie was entered into for the purpose of fulfilling WES’s obligation pursuant to the services agreement.
It is alleged that in or about November 2010 solely as a result of Mr Beattie’s breaches of the retainer agreement and his wrongful termination, the REIV terminated the services agreement. WES alleged that it suffered further loss and damage, being loss of profit, loss of income, and loss of subscriptions as a result of the termination of the services agreement.
In his defence, Mr Beattie said that WES entered into a contract with his employer, Team BT Pty Ltd. He said that the terms of the retainer agreement between WES and Team BT were discussed between him and WES. He alleged that those discussions included the fact that he would provide services by Team BT. Mr Beattie denied that it was agreed that he would receive payments of $85,000 per annum payable monthly for the life of the retainer agreement and said that invoices were submitted by Team BT to WES and WES paid the invoices submitted by Team BT based on $79,920 per annum to Team BT. Mr Beattie alleged that the services provided to WES were provided by Team BT, of which he was an employee.
Mr Beattie alleged that there was no discussion that commissions would be paid on each successful sale provided that the first monthly instalment to use the software was paid by the customer, that the customer continued to subscribe to and use the package for a minimum of 12 months, and that the customer continued to receive support from him throughout the period. Mr Beattie further alleged that there was no agreement or discussion to the effect that commissions would be refunded to WES on a pro rata basis in the event that the customer did not continue to use the software package for the period of at least 12 months or in the event that he ceased to provide support to the customer in that period.
He also alleged that there was no agreement and/or discussion regarding notice of intention to terminate the retainer agreement.
Mr Beattie denied that he failed to perform his obligations pursuant to the retainer agreement properly and said that during the four months to 2 October 2010 in which services were provided on behalf of Team BT, he conducted 229 appointments and 16 training sessions which exceeded WES’s requirements of 12 to 14 meetings per week.
He asserted that he did not receive any written or verbal complaints about lack of client communication or training from any clients or potential clients, or from WES, the REIV, the REISA, REV or PDOL.
Mr Beattie alleged he sent over 107 emails to WES, plus over 51 emails to Petra Sprekos, and sent over 220 emails to Teresa Sperti at REV in Melbourne. He also provided WES with a progress report of all appointments and sales.
Mr Beattie asserted that WES continually and unilaterally tried to change the terms of the retainer agreement between Team BT and WES. These changes included increasing the number of appointments and increasing the contact hours requiring him to be available 24 hours per day.
Mr Beattie asserted that the only clients permitted to have free access to the products were those who signed up for a 24 month Foundation Package.
Mr Beattie denied that WES suffered the loss and damage as alleged.
The protracted proceedings
This matter was not reached when first listed for trial in the District Court in March 2013. The second trial date in May 2013 was vacated on the application of WES as a witness was not available.
The trial was then listed before me on 21 August 2013. The first day and a half was spent in mediation. As the matter did not resolve, the trial commenced on 22 August 2013. As Mr Shannon was due to go overseas, the matter was adjourned part-heard after two days of evidence and listed to resume in October 2013. The Court had to vacate that date and re-listed the matter for three days on 5 May 2014, being the only date suitable to all parties. As the evidence had not finished on 7 May 2014, the trial was adjourned and resumed on 23 and 24 July 2014. Final submissions were made on 11 August 2014.
The witnesses
WES called evidence from Petra Sprekos, Mark Shannon, Annelie Bailey and Joseph Mercuri.
The witnesses for Team BT were David Beattie and Greg Troughton.
Petra Sprekos
Ms Sprekos is the General Manager of REV. Her role is to manage the operations of realestateview.com.au, an advertising real estate portal and the REIV’s data portal, PDOL. Ms Sprekos explained that the REIV is a controlling shareholder of realestateview.com.au and the 100 per cent owner of PDOL. PDOL is a reseller of Department of Lands settled sales data. In other words, the REIV buys a licence to resell government data. Ms Sprekos said the REIV and REV are “very intertwined”:[3]
My CEO whose the managing director of realestateview limited is actually the CEO of the REIV.
[3] T14.

Ms Sprekos’ job involves the sales and marketing of realestateview.com.au. The REV online products compete with realestate.com.au, a Murdoch owned business, and domain.com.au, a Fairfax owned business.
Ms Sprekos said that a services agreement dated 1 July 2010 was entered into between the REIV, REV and WES. The CEO of the REIV, Mr Raimondo, signed on behalf of the REIV. Ms Sprekos signed it as a company secretary for REV.
Ms Sprekos clarified that when REIV/REV first started working with WES in 2009 a written contract had not been signed and it took a lengthy time to negotiate the terms. She agreed that there was an ongoing relationship between the REIV/REV and WES prior to the execution of the written contract on 1 July 2010 and that was why Mr Beattie was working with WES prior to that contract being signed.[4]
[4] T47.
She said that WES was the sales team representing the REIV/REV business and products. She explained that, at that time, the REIV and REV were selling products primarily in Victoria and Tasmania and they were looking at expanding into South Australia and New South Wales. As the website was national, the REIV/REV considered that they needed to have a national presence. Ms Sprekos had been selling the products in South Australia for about 12 months in 2009. She flew to Adelaide every week on a Monday, visited agents, conducted training sessions and left on a Tuesday. Ms Sprekos maintained that in 2009 she saw at least 14 agents per visit she made to Adelaide.
She had dealings with Mr Beattie for the four months he was engaged by WES. She was involved in two training sessions that Mr Beattie attended. She said that it was important for Mr Beattie to be armed with the appropriate tools because the products he was required to promote competed against some big players in the market.
She said that she was copied in on a lot of emails between Mr Beattie and WES and she attempted to contact him on a regular basis. She said the main reason she was copied in on communications between Mr Beattie and WES was because of the lack of performance in South Australia. She said she “had a lot of pressure on her at the time to make sure that South Australia worked”; that is, that they got a lot of agents on board. She said she had the REIV CEO in her ear constantly asking how sales were going, “what’s going on, why aren’t we visiting as many people in South Australia when we could be” (emphasis added). She said that as she had a lot of pressure on her it was important that she was privy to every single piece of information so that she was armed with the right information when her Board and CEO asked her questions.[5]
[5] T28.
Ms Sprekos maintained that Mr Beattie did not perform and, when asked to explain what she meant, she said that she would call him, she could not recall how many times she called him, but she would not get a return call. She said it was her expectation as the General Manager that if she called a staff member, that she would get a call back the same day or even a text message. She said the same applied to his lack of response to email communications.
She was asked whether she had any direct dealings with South Australian real estate agents regarding complaints by them about Mr Beattie. Her response was that she had but when she was asked if she recalled the details of which agents and when particular complaints were made, she said she recalled “vaguely”[6] one company, she was pretty sure it was Elders, that complained about a data feed. She said that she was pretty sure there were dealings around the fact that Mr Beattie had promised that the feed was established. She could not recall whether she had conversations with Mr Beattie about real estate agents’ complaints.
[6] T33.
In cross-examination, Ms Sprekos said she did not receive any complaints or did not receive complaints from customers about Mr Beattie’s performance. There were complaints from REV to Mr Beattie about lack of appointments and fulfilling his obligations.
Ms Sprekos said that Mr Beattie’s performance in arranging face to face meetings was poor. She said the sales numbers did not match up to the expectations and the key performance indicators set in the services agreement. She received the sales reports prepared by Mr Beattie via WES and from those she made her assessment that his performance was poor and was not up to expectations.
Her assessment was based on the number of agents that Mr Beattie reported that he had seen and the number of sales that he had made. Ms Sprekos was taken to exhibit P3, an email exchange between her and Mr Beattie on 12 July 2010 at 8.29am, wherein she said “but please advise what we are doing for your 14 appointments this week”. Ms Sprekos said she did not have access to his diary but Donna Nehme, an employee of REV who received a copy of the email, was employed to make the appointments for Mr Beattie and she had copies of his appointments that Ms Sprekos had access to.
Ms Sprekos said it was the responsibility of Mr Beattie and Donna to communicate on a regular basis to make sure that his diary was up to date with the number of appointments and that is where she, Ms Sprekos, would ascertain whether he was doing 12 to 14 appointments per week. She said that it was up to Mr Beattie to advise where he would like REV to make the appointments. She said she recalled that Donna would have asked Mr Beattie for this information and that is where she, Sprekos, would have stepped in and asked him to provide the detail of the areas he wanted them to focus on. She said Mr Beattie’s advice about where the appointments should be was not up to her standard. She explained her standard was as set out in the services agreement.
She was referred to the email of 12 July 2010 at 1.34pm where she said, “Donna will also be making sure you have at least 14 one hour appointments per week”.[7] She said Mr Beattie did not achieve this.
[7] Part of exhibit P3 (Page 36 of the Tender Book).
Ms Sprekos confirmed that she was referring to Mr Beattie’s laziness in the email dated 17 September 2010 to Mr Shannon where she said:[8]
Hey Mark,
Whats going on with apt’s for next week
IN particular David B has nothing- I think 2
Please handle. He must have 14 otherwise we are not paying for laziness anymore.
Thanks Petra
She denied that he had sent 51 emails to her.
[8] Exhibit P6 (Page 76 of the Tender Book).
She was asked whether the decision to stop operations in South Australia was made by the REIV before 30 September 2010 and her response was that it was made in December 2010. She said she participated in the decision to stop operations in South Australia. She said it was because of the damage that was caused in the preceding months “as a result of our reputation and not being able to get that penetration in the marketplace that we needed”. When asked who was responsible for that she replied, “WES”.[9]
[9] T59-60.
She said that the REIV/REV planned to get considerable market share by real estate agents subscribing to their products and services. Having worked in South Australia for 12 months, she said there was nothing that indicated to her that the products would not be just as successful as they had been in Victoria. She maintained it was the lack of performance in South Australia from 1 June to December 2010 that caused the change. She said that, as a result of the activities in South Australia, they had to make a decision and they ceased the services of WES shortly after that:[10]
Q… My interest in this question is; what effect did the decision to close down the South Australian business have on Winning Edge.
AOkay. So as a result of the activities of South Australia, we had to make a decision on what we did with our sales team at realestateview, and we actually ceased services of Winning Edge Solutions shortly after that. I think it was a few months after that event.
Ms Sprekos agreed that the services agreement ended in South Australia at the same time it ended in Victoria, Tasmania and New South Wales.
[10] T61-62.
It was put to Ms Sprekos in cross-examination that the reason the services agreement ended with WES was because the REIV was losing too much money. She said the main reason they cancelled the services agreement with WES was the fact that she was exiting the business to have her first baby and REV wanted to employ its own sales team.[11] She explained that the business was also undergoing capital raising and they had received advice that they should engage their own team.[12]
[11] T75.
[12] T75.
It was put to Ms Sprekos that the REIV was questioning the viability of the business as early as July 2010 and she was taken to an email written on 6 July 2010 to Greg Troughton.[13] She said they always questioned the viability of the business. She agreed that in November 2010 there were 60 clients in South Australia and they were making approximately $80,000. She said that the Property Data side of the business was losing a lot of money. She denied that that was the reason why the services agreement ended with WES.
[13] Exhibit D3.
She agreed in cross-examination that realestate.com.au had a much larger share of the market in South Australia than realestateview.com.au. She agreed that in July 2010 realestate.com.au had about 62 per cent of the market and realestateview.com.au had seven per cent. She agreed that PDOL’s competitor was RP Data and it had a substantial market share in all states except Victoria. She agreed that was the case in 2010.
She agreed that Annelie Bailey, Jerry Van Driels and Derek Downes did the job that Mr Beattie did in South Australia for a period of time of around three months.
She agreed that her complaint about Mr Beattie’s response to emails and calls was how long it took for him to return her calls and emails. She agreed that “he responded to most of them in a very, very lengthy time. He did not respond to all of them though.”
She agreed it was the responsibility of the REIV to arrange 14 appointments pursuant to the services agreement. She maintained that it was the lack of feedback from Mr Beattie that meant the appointments were not arranged. She agreed that the target for South Australia, pursuant to the services agreement, for July 2010 to 30 September 2010 was an additional 12 new subscribers. She said that Mr Beattie achieved roughly 18 to 20 new subscribers.
Ms Sprekos said that WES invoiced REV for the commission when an agent signed up and WES invoiced REV for Team BT’s retainer. She said that if an agent did not honour their contract, REV would ask for the commission back. She said it was only in South Australia that the agents would not honour their contracts.
I asked Ms Sprekos whether any thought was given to putting REV’s own people in Adelaide to effect sales following the termination of the services agreement with WES. She said they thought about it but, because of the companies REV was up against in terms of competition, their focus was on the eastern seaboard and strengthening their position. She said that the real estate market in 2009/2010 was a tough period and it was a tough sale at the end of the day.[14]
[14] T79.
Ms Sprekos certified a calculation prepared by the REIV regarding WES’s and Mr Beatties’s commission entitlements from the sales in South Australia.[15] Mr Beatties’s commission entitlement for the period of the retainer from June to September 2010, according to that document, is $136.06
[15] Exhibit P7.
Ms Sprekos said the potential market in Tasmania was just fewer than 200 real estate agents. She said Victoria had over 2,000 clients and that New South Wales was slightly bigger. She was not able to say how big the South Australian market was in 2010.[16]
Assessment of Ms Sprekos’ evidence
[16] T310-311.
It was submitted by WES’s counsel that Ms Sprekos was an impartial witness who had no interest in WES’s claim and that her evidence was that the reason for the failure of the contractual arrangements with WES was the incompetence and failures of Mr Beattie. I disagree. Ms Sprekos was the General Manager of REV, a party to the services agreement.
I infer from her evidence Ms Sprekos was answerable to Mr Raimondo the CEO of the REIV and the REV. My assessment of her evidence is that she was under a lot of pressure from Mr Raimondo to produce sales of the products in South Australia and she attempted to distance herself from the lack of performance in South Australia.
The services agreement imposed an obligation on REV to make 14 appointments for the South Australian contractor. As she said, Donna Nehme was employed to make appointments for Mr Beattie.
It appears that staff were spread thin when the move was made to penetrate the New South Wales market and, as a consequence, the requisite appointments were not made. Ms Sprekos said she participated in the decision made in December 2010 to stop operations in South Australia because of the damage that was caused in the preceding months as a result of WES not being able to penetrate the marketplace. She said as a result of the activities in South Australia, they had to make a decision and they ceased the services of WES. However, in cross-examination, she said the main reason the services agreement with WES was terminated was because she was leaving to have her first baby and a decision had been made for REV to have an in-house sales team. This, coupled with the evidence about PDOL losing money in South Australia (see paragraph [13]), and the REIV’s decision to terminate its association with WES in not just South Australia, but also New South Wales, Victoria and Tasmania, does not support a conclusion that Mr Beatties’s or Team BT’s performance or the termination was the reason the services agreement was terminated.
Ms Sprekos said that at the time the decision was made to terminate the services agreement with WES, South Australia was the only state affected in terms of sales. It does not make sense that that the services agreement would be terminated with respect to New South Wales and Victoria due only to poor performance in South Australia.
It is clear, by reference to the email Ms Sprekos wrote to Mr Shannon on 21 July 2010,[17] that sales were down and there were cancellations in Victoria and New South Wales, not just South Australia. Ms Sprekos said in the email that she was quite stressed at the numbers, the likes of which she had not seen for a very long time. This prompted Mr Shannon to email the WES employees and contractors on 21 July 2010 saying, “Sales are very much down and cancellations up. I need 150% effort from everyone to try to improve these numbers before the end of the month please”.
[17] Exhibit P4.
Ms Sprekos’ evidence about Mr Beattie’s performance was vague and not of assistance. It is clear by reference to the services agreement that the 14 appointments were to be made by REV. I accept that it was expected that Mr Beattie would collaborate with REV to identify agents or areas to target.
I accept Ms Sprekos’ evidence apart from the inference from her evidence that the services agreement was terminated because of Mr Beattie’s performance. Her clear evidence in cross-examination was that it was terminated mainly because she was leaving to have a baby and a decision had been made to have an in-house sales team and it was not viable to continue the services agreement.
Mark Shannon
Mark Shannon is the sole director of WES. Mr Shannon’s partner Annelie Bailey works for WES as General Manager of marketing and sales.
Mr Shannon said that in April 2009 WES was asked to take over the sales component of the REIV in relation to the marketing, training and distribution of realestateview.com.au and PDOL. He said that in March 2010 WES was asked to assist the REIV in sales in South Australia and Tasmania.
In April 2010, when WES contractors started going to South Australia and servicing clients, there were approximately 54 existing clients subscribed to realestateview.com.au and PDOL. Mr Shannon said the 54 clients had been signed up by Petra Sprekos without assistance from WES. He later said his contractors Derek Downes and Jerry Van Driels signed up 10 to 12 of the 54. Mr Van Driels and Mr Downes worked as WES agents in New South Wales and Victoria and worked in South Australia after Petra Sprekos for two to three months in early 2010.
In April 2010, GOP was being used in South Australia by only one agent.
Mr Shannon said that his first meeting with Mr Beattie was around April 2010 at a café.
On 1 June 2010, WES signed a confidentiality agreement with Mr Beattie.[18] Mr Shannon said that apart from the confidentiality agreement, the retainer involving WES and Mr Beattie was verbal.[19] He said that the terms offered to Mr Beattie were the same as those offered to Mr Van Driels and Mr Downes.
The café meeting
[18] Exhibit P8.
[19] T89.
Mr Shannon said that it was totally transparent that Mr Beattie’s terms and conditions would be no different to anybody else’s. The only discussion regarding Team BT was that WES’s other contractors preferred to be in contract, but to do that, Mr Beattie would be required to give an ABN. He said Mr Beattie told him that he and his wife had a company called Team BT that ran a small body corporate and took up only an hour of his time a week.
Mr Shannon said that he told Mr Beattie that WES was not employing Team BT or his wife or anybody else but “how you wish to bill us at the end of the day is entirely up to you”.[20] He said the first communication he had with Mr Beattie’s wife was the email he received on 2 October 2010 terminating the retainer agreement.
[20] T96.
Mr Shannon said that the café meeting was to explain to Mr Beattie what WES was doing in South Australia and that there may be a role for him as a consultant in South Australia.
Mr Shannon said he told Mr Beattie the following at the meeting:
·that WES’s position with the REIV was to provide services, sales, marketing and online services;
·the REIV were considering engaging someone full time in SA;[21]
[21] T89.
·this was previously done by Ms Sprekos;
·that Jerry and Derek worked for WES on a contract basis and that Annelie Bailey was an employee;
·that he would offer the same contract to him as Jerry and Derek with the terms of the retainer being a monthly wage equivalent to $80,000 per annum that would be paid in arrears;
·that Mr Beattie would be paid a commission on new sales and that it was absolutely paramount to service a client;
·that bonuses were contingent on continuing to service clients;
·that he had to give one month’s notice if he did not like the job;
·that he had to provide his own car, phone and communicate with Mr Shannon on a regular basis daily;
·that he was to undertake training with Annelie, Jerry and Derek;
·that there were currently 54 subscribers to realestateview.com.au and PDOL and that they had packaged those products with GOP successfully in Victoria;
·that they had encouraged 150 subscribers in Victoria to take up the bundle in the previous 12 months;
·that he was required to set up a minimum of 12 proper meetings a week, not call-ins or drop-ins and he was to prepare for those meetings;
·that a training session was also a meeting;
·that the REIV would assist in booking meetings but, ultimately, the obligation was up to him;
·that he was to report and reply to emails and phone calls. His job was to create new clients, service existing clients and sell the three products;
·that he was to supply his own tools such as laptop, phone and printer, car, fuel and data projector;
·that the REIV would supply him with business cards;
·that WES was employing him – no-one else. Who he invoiced WES from was up to him.

Mr Shannon described Mr Beattie’s sales performance as ‘terrible’, his responsiveness to phone calls as ‘pathetic’, and his performance in making appointments as ‘hopeless’. He said that sometimes he would get no reply at all to an email. He said that Mr Beattie’s reports after meetings contained nothing whereas other contractors would record four or five lines about what they did, what they saw and what their result was.
Mr Shannon said that if one of the existing 54 customers in South Australia signed up to GOP, the REIV would pay WES $100 a month. The existing 54 customers would receive GOP for free so Mr Shannon expected at least 50 per cent to take up the package by September 2010 which equated to $2,700 income to WES a month. Mr Shannon expected the subscribers would take up the opportunity to have GOP added their package for no additional price because, in his words, “why wouldn’t you?”.[22] He also expected six to eight new sign ups on a Foundation Package a month.[23]
[22] T111.
[23] T111-112.
Mr Shannon said that Mr Beattie would earn the equivalent of one month’s subscription as commission on a GOP sale. The difference between the retainer paid by REIV/REV to WES and the retainer paid by WES to Mr Beattie and the monthly income from GOP were WES’s two sources of income. When the South Australian component of the services agreement was withdrawn upon termination of the retainer agreement on 2 October 2010, Mr Shannon said WES lost the retainer gap straight away.
Mr Shannon said that he travelled to Adelaide on Wednesday 29 September 2010 and spent two days with Mr Beattie going to meetings with real estate agents. He said that due to the lack of preparation by Mr Beattie for meetings, he wrote Mr Beattie a handwritten note outlining all the practices he was to use in his job.[24] Mr Shannon said that the note did not contain anything that was not described to Mr Beattie at the café meeting.
New South Wales
[24] Exhibit P10.
Mr Shannon said that when the services agreement was terminated in March 2011 there were 90 GOP subscribers in NSW, earning WES $9,000 a month. This dropped to around $5,000 a month after one year because WES was no longer there to service them. Mr Shannon said that WES still received around $2,500 a month from GOP customers in New South Wales as at 31 March 2013.[25]
[25] T115.
Mr Shannon said that WES received about $135,000 from New South Wales but only about $1,500 from South Australia. WES no longer has a relationship with the REIV, but fees are still paid from the REIV to WES on a monthly basis.
The requirement that REV arrange appointments
Mr Shannon said that the clause in the services agreement that REV arrange the 12-14 appointments per week was never complied with so he told WES staff they needed to arrange their own 12-14 meetings a week. He said that REV were not able to do the arranging.
Mr Shannon said that the Foundation Package that Mr Beattie was supposed to sell would cost a subscriber a total of $398 a month. The REIV received this payment monthly. However, Mr Shannon said some agents only paid for a short period of months.
The following exhibits are reports prepared by, the witness Jo Mercuri after the commencement of proceedings in 2011 when he was the CFO of REIV:
·Exhibit P18 is a report showing the commission claimed by Mr Beattie;
·Exhibit P19 is a report showing billed South Australian subscribers and the commission payable by REV;
·Exhibit P20 is a South Australian financial report;
·Exhibit P21 is a summary of payments for the GOP share to WES of money received by the REIV in March 2011 from South Australian clients;
·Exhibit P22 contains a bundle of invoices that WES rendered to the REIV. These were invoices for the retainers for Victoria and South Australia, set up fees for South Australia, monthly GOP fees for South Australia and for forthcoming auction data.
Exhibit P23 are the progress reports submitted by Mr Beattie and stored by Mr Shannon on his computer. Mr Shannon said that he sometimes saved the newly submitted report over a previous report and he implied that there were fabricated appointments added at a later date:[26]
I later on found there was a lot of inconsistency here because there were appointments that all of a sudden started to appear, whereas in the earlier spreadsheets I had come through there weren’t appointments there and later on, looking back at it, there were appointments that had been put in the system and the only way that this could have happened was – what I should have done was I should have saved a separate file as ‘David Beattie’ and I did in a few instances but I wasn’t religious enough to do it all the time. I should have ‘David Beattie 11 June’, ‘18 June’, ‘25 June’ as opposed to overriding the actual file, which happened in a number of instances.
[26] T160-161.
Mr Shannon said that he told Mr Beattie that his progress reports were very poor and needed to be more elaborate in regard to who he saw and what he demonstrated.[27] He said that he raised this issue numerous times with Mr Beattie including during the first few weeks of the retainer agreement.
[27] T163.
Mr Shannon said that WES was marketing the same product in New South Wales and that, if anything, New South Wales was a tougher market because South Australia already had 54 subscribers to the products. He compared the success of New South Wales with the apparent failure to make sales in the South Australian market and said that, if done correctly, the South Australian market should have mirrored the New South Wales market.
Discounts and commissions
Mr Shannon said that Mr Beattie was authorised to give a client the first three months for free if they signed up on a Foundation Package for 24 months for $399. He said there were only three Foundation Package subscribers in South Australia that continued to subscribe for any lengthy period of time.[28]
[28] T175.
He said that if Mr Beattie signed up a new client to a Foundation Package, WES would pay him the first month’s income of $399 as a commission. He said this was subject to that client continuing the contract and to Mr Beattie servicing the client during the contract period. If the client did not proceed with the contract then the commission would be adjusted pro rata.[29]
[29] T208.
Mr Shannon asserted that Mr Beattie would give clients a three month free trial without authorisation and that he was never authorised to give discounts other than on a 24 month Foundation Package.
Mr Shannon said that in 2009 Petra Sprekos would provide non-billable or free periods when selling a package of realestateview.com.au and PDOL as she was the General Manager of REV and was authorised to do so.[30] He said any non-billable period on a Foundation Package was subject to his approval. He said that there may have been free trials in existence at the time Mr Beattie was engaged:[31]
QI suggest that at that time free trials were already in existence.
ANot in regards to this. There was a separate agreement. This relates actually - dating back, this is 15 June, so when the REIV came to set up new clients in South Australia, which was almost 12 months prior, we go back in time to 2009, some date in 2009, the REIV at that stage was employing a girl Julie Rutherford – actually Petra Sprekos came across to South Australia to actually meet the agents and to start signing up new clients and in those days it was only a package of realestateview and PDOL. Petra was out to encourage the thing start in South Australia, she probably used to do - she did things like a non-billable, free period of time, she was the general manager of realestateview and PDOL. She would have authorisation in relation to that. After David Beattie started or once we were involved, we were selling, we were in a totally different ball game. We were selling Foundation Packages and the only time that there was a non-billable or a free period was when a 24-month new Foundation contract was to be signed up that there was, subject to my approval, allow the three months free billing period.
QYou can see the email on p.6, can I suggest this: that at the time Mr Beattie was engaged, there were free trials in existence.
AThere may have been, not of a Foundation Package but there may have been free trials of PDOL or realestateview.
[30] T204-205.
[31] T204-205.
In an email sent on 26 September 2010 at 6.37pm,[32] Mr Shannon said to Mr Beattie, “You are NOT authorised to offer or give free periods”.[33] In a response later that night, Mr Beattie said in an email (which appears to be a merger of Mr Beattie’s response and Mr Shannon’s commentary on the response):[34]
Today is the first time since I started on 31 May that anyone has said no free periods.
It was suggested to Mr Shannon that the email sent on 26 September 2010 was the first time Mr Beattie was told that there were to be no free periods. Mr Shannon’s response was “Well I suggest … that Beattie’s got selective amnesia” and he referred to the emails dated 27 September from Donna Nehme and Petra Sprekos asking why Mr Beattie was giving away free periods.
[32] Part of exhibit P9 (Page 82 of the Tender Book).
[33] Emphasis in original.
[34] T84.
It was put to him that he said at the café meeting that Mr Beattie would receive the first month’s subscription fee as a commission for each sign up. Mr Shannon said there were conditions applied to that; it was on the proviso that it was actually a new subscription, a 24 month Foundation Package, and it was conditional upon him servicing the client and the client paying. If the client did not proceed, it would be adjusted pro rata. He denied that Mr Beattie would receive a commission if he signed a client up for something less than the Foundation Package, for example, realestateview.com.au alone. He maintained that was never discussed. He said that at that point in time Mr Beattie’s role was to convert the existing 54 subscribers to the three products on the Foundation Package.
Mr Shannon said that after some consideration WES allowed Mr Beattie to sign up clients on individual products even though the services agreement with the REIV was to market the three products.
Mr Shannon said that he was not entitled to any commission on single product packages. He said that Mr Beattie was required to service the clients during the contract period and to teach them how to use the products. He said the fact that Mr Beattie was not around to do this means he was not entitled to commission.[35]
[35] T180.
Mr Shannon asserted that a number of clients cancelled their contract either before or after Mr Beattie had terminated the retainer agreement with WES. Mr Shannon said that the REIV would let the contract lapse as it was very hard to enforce the contracts once Mr Beattie was not there to service the clients.[36]
[36] T183.
Mr Shannon said that if a client did not go ahead with the contract, the REIV would adjust the commission payable to WES on a pro rata basis. He said that if a client cancelled after three months, WES had to repay the commission to the REIV and that in turn meant that the sales person had to reimburse WES. According to Mr Shannon, only three clients proceeded with Foundation Packages in the time that Mr Beattie was working.
Arranging appointments
Mr Shannon said that Mr Beattie was expected to have 12 to 14 appointments per week with potential clients. These included training sessions. Mr Shannon asserted in cross-examination that he inserted the clause in the services agreement about REV arranging the appointments so that the REIV could not pursue him if Mr Beattie did not arrange the meetings.[37] He said that the retainer agreement between WES and Mr Beattie was that Mr Beattie was to arrange the appointments.
He maintained the services agreement was signed by the parties in mid September and backdated to 1 July 2010. He said that the café meeting was held before the services agreement was signed and that the clause was added because Mr Beattie was not providing the appointments he was contracted to do. He said he:
… ensured because of safeguards for my company Winning Edge that I wanted that noted in the contract that there was an obligation from the REIV because, in all honesty your Honour, I actually felt that there would have been serious repercussions from the Real Estate Institute of Victoria against Winning Edge Solutions after what happened in South Australia and that’s what happened.
It was put to him in cross-examination that it was part of the services agreement that REV would arrange the appointments. His response was:
I’ve already explained to you yesterday why that was actually inserted in there. That was only in fact actually put into the contract in mid September 2010 backdated and dated the 1^st of June. That was to protect myself and the integrity of my company just in case there had been a backlash on us because David Beattie was not performing what he was contracted and requested to do.
Mr Shannon was asked whether he took up with the REIV/REV that they had varied the terms. His response was:
They said they can’t – they would assist to turn around and do 14 appointments, to try and arrange 14 appointments for each of my contractors, they said they didn’t have enough time and it would be the responsibility of the contractors to do so themselves.
[37] T194.
Mr Shannon was referred to an email between Ms Sprekos and Mr Beattie dated 12 July 2010,[38] where Ms Sprekos said “Donna will also be making sure that you have 14 one hour appointments per week”. Mr Beattie replied and said “I look forward to the set appointments”. Mr Shannon said in regard to this email chain that Donna was not meant to organise the meetings for Mr Beattie, the primary responsibility was Mr Beattie’s.
[38] Exhibit P3.
He went on to say that the REIV would assist where possible to make appointments and where their staffing levels permitted, but they were moving into a stage where they were releasing products in New South Wales and he knew that resources in the REIV were going to be extremely strung out and overworked for that period of time. He contended it was Mr Beattie’s sole responsibility to ensure those meetings were made.[39]
[39] T212.
In an email sent to Mr Beattie on 5 June 2010,[40] Mr Shannon said to Mr Beattie, “You will have to start making your own calls and appointments at this time until we have got more support from REIV”.
[40] Exhibit D9.
He was taken in cross-examination to an email that said “Donna will also be making sure that you have at least 14 one hour appointments per week”.[41] It was suggested to him that is how things were supposed to work and his response was “No, I suggest to you that’s not the case”.
[41] Part of exhibit P3 (Page 36 of the Tender Book).
Mr Shannon was asked about an email he wrote to Mr Beattie on 25 August 2010 asking, “How are meetings going, are you getting enough and is Donna providing you enough”.[42] It was suggested to him that that was the way it was supposed to work and his response was:
I am suggesting to you from the outset that the primary responsibility of 12 to 14 face to face meetings per week was David Beattie’s responsibility. I did offer and suggest at all times that I have not denied that the REIV would assist where possible to help him get these meetings.
[42] Part of exhibit P9 (Page 64 of the Tender Book).
He was taken to an email sent on 30 September 2010 where he said to Ms Sprekos “Yes, agree, but part of this problem is dooms is not making enough meetings”.[43] Mr Shannon confirmed that “dooms” should read ‘Donna”.
[43] Part of exhibit P9 (Page 90 of the Tender Book).
Mr Shannon agreed he also wrote in the email 30 September that Mr Beattie’s “knowledge of product presentation is good and will be better since our time together”. This email was written two days before Team BT sent the termination letter on 2 October 2010.
Mr Shannon was asked whether he received any complaints from clients about Mr Beattie and his response was, “Well I would not have received them directly any complaints would have come through either Petra Sprekos or Donna Nehme or perhaps through Annelie Bailey”. He said he had a few phone calls with Mr Beattie in regards to his communication level with him. He agreed he did not receive any complaint.[44]
Progress reports
[44] T218.
Mr Shannon said that Mr Beattie’s weekly progress reports were meant to be sent to him each Monday morning and that in most cases this was not done.[45]
[45] T219.
In cross-examination, Mr Shannon was questioned about entries in the progress reports.[46] When asked, for example, whether he agreed Mr Beattie had 13 appointments during the week of 20 September 2010, he again asserted many of the diary entries were fabrications:[47]
QYou agree that week beginning 20 September ended on 16 Friday, 24 September.
AI agree with that.
QIf you go down you can see the last entry on 24 September 2010 is Professionals Home World.
AYes.
QYou agree if you count down there are 13 appointments that week beginning with Elders Strathalbyn.
AAccording to the publication but can I tell you his diary did not reflect that. The back end of the system did not reflect he did a face to face meeting. He did not access GOP or PDOL during that period of time. If he is supposed to have done these meetings and the pre-meetings, in the back end you see when someone goes in with their particular username and password. He could have put 40 names in there. I am suggesting, from the outset, many of these entries here, which I hope we will prove by the end of the case, are fabrications or they are just mere call ins or a phone call. It’s indicative of, for instance, Fenwick Partners, the fact that there is a lack of information dramatically – says ‘Still on hold. Home address supplied. Still interested. Left info. Drop-in. Only one partner. Reset appointment for 5 October. Peter still trialling. Decision in early October. Good appointment. Will follow up. Extended trial’. That does not indicate and our back end shows he did not actually demonstrate the product in that period of time. He could have put 50 entries in there for all that matters. Add a few more in – because they were not in his diary, they weren’t evidenced in his diary and they weren’t evidenced on the contractual basis that David Beattie was to do a pre-listed trial, face to face, for the three products. He didn’t open them. Didn’t show the products. Didn’t get access.
[46] Exhibit P23 (Pages 130-156 of the Tender Book).
[47] T226-227.
Mr Shannon said that in every State there were competitors to the products they were trying to sell. RP Data was the main competitor to PDOL and RP Data is now almost non-existent in Victoria. He said that at the time of launch the competitors were dominant.[48]
Assessment of Mr Shannon’s evidence
[48] T258-259.
Mr Shannon’s evidence was given in a confident, determined manner. He formed a view about Mr Beattie being pathetic and hopeless, and, as he said, he hoped to prove by the end of the case that his entries in the progress reports were fabrications.
I do not accept the conclusions that Mr Shannon draws and the assumptions he makes about Mr Beattie being responsible for the termination of the services agreement, the inferences he draws about Mr Beattie fabricating entries in the progress reports, and how easy he said it would be to sell the online products in South Australia. I find his evidence was an attempt to distance WES from responsibility for the services agreement being terminated.
There is no evidence to support the assertion that the progress reports contained fabrications. The spreadsheets containing the reports were sent to Mr Shannon every week. It was only during the course of the trial that the allegation of fabrication was made. It was not pleaded.

Mr Shannon asserted that the services agreement was terminated because of Mr Beattie:
ANot South Australia, no. The South Australian part of the contract was basically cancelled immediately once David Beattie resigned, the cancellation of the contract. So basically once David Beattie resigned and the correspondence that flowed as a result of that the REIV said ‘That’s it, you are not doing South Australia any more. You are done’. I have no doubt this was also the pre-lapses, they didn’t want me to put anybody else on in South Australia. ‘You had a go at it, screwed it up. You have chosen the wrong person. It has been a disaster. It has caused damage. We have to look at the whole viability and profitability of South Australia now. We don’t want you to do anything in South Australia now’.
HER HONOUR
QWas that actually said to you or are you assuming that.
AThis was said to me by Petra Sprekos. They later cancelled our contract, finito, in I think a number of months later and there was a three months period of time for cancellation which I think finally concluded in March of 2011, must be.
However, this does not accord with the evidence of Ms Sprekos given in cross‑examination or the documentary evidence about the REIV’s assessment of the viability of PDOL in South Australia.
Significantly, none of the correspondence Mr Shannon said “flowed” as a result of termination of the retainer agreement was produced. In fact, the only emails produced after 2 October were to the effect that the termination by Team BT saved Mr Shannon the “job of sacking” Mr Beattie and that Mr Beattie was to be cut off from accessing systems.[49] Mr Shannon asserted that the services agreement included reference to the REIV making 14 appointments consequent upon an amendment to the services agreement he insisted be inserted in mid‑September 2010 because he did not want to be responsible for the failure of Mr Beattie. No other witness gave evidence about this. Mr Mercuri gave evidence that two or three months after he started work at the REIV in April/May 2010, he was asked to put the services agreement with WES in place and “Enzo requested me to, you know, put something together that covered the arrangement that they had in place with Winning Edge Solutions”. Mr Mercuri was not asked whether clause 8 was added at Mr Shannon’s insistence.
[49] Part of exhibit P9 (Page 96 of the Tender Book).
Having regard to the following, I find it improbable that the clause imposing the obligation on REV to make its appointments was added in mid‑September 2010:
·The fact that the services agreement is dated 1 July 2010 and Ms Sprekos said it “was actually signed on 1 July 2010”;[50]
·Ms Sprekos’ evidence that Donna Nehme was employed to make appointments for Mr Beattie;
·Email correspondence prior to 1 July referring to REV making the appointments;
·The email dated 5 June 2010 which suggests the making of appointments was an issue from the start of the retainer agreement; and
·There is no pleading to this effect and it was first referred to during Mr Shannon’s cross-examination.
[50] T47.
Further, I query whether Mr Shannon was in a position to insist on the addition in circumstances where, on his evidence, South Australia was looking very ugly at the time[51] and where sales were down and cancellations were up.[52] I query whether Mr Shannon was in a position to insist on the addition having regard to the emails about lack of appointments, for example, Ms Sprekos’ email of 17 September asking about Mr Beattie’s lack of appointments and assertion that they are not paying for laziness any more.
[51] T194.
[52] Exhibit P4.
The inference I draw from Mr Shannon’s evidence is that the REIV and Ms Sprekos in particular were putting pressure on WES and Mr Shannon, in turn, put pressure on Mr Beattie.
Mr Shannon also gave evidence by reference to the book entitled South Australia Progress Reports.[53] There was an attempt to adduce evidence of the New South Wales experience as a model for what should have occurred in South Australia. Counsel for WES said instead of me having to guess about the repeat business experience in South Australia, WES could point to the actual experience in New South Wales. The formulation and collation of the documents was done by Mr Shannon. Counsel said it was a description of what happened in New South Wales and he wanted to persuade me that the use of the model was a reliable basis to calculate actual loss in South Australia having regard to the drop‑off rate in another State. It was submitted that a drop-off rate in South Australia would have been the same at about the same time. This was not an independent forensic accounting opinion.
[53] Exhibit P23.
Because of the improbability of Mr Shannon’s evidence about the services agreement not being signed until mid-September 2010 following the insertion of clause 8 at his insistence and his stated intention to show that Mr Beattie fabricated the entries in the progress reports, I prefer Mr Beattie’s evidence where it differs from Mr Shannon’s. I do not accept his evidence that it was Mr Beattie’s performance and the termination of the retainer agreement that brought about the termination of the services agreement. Ms Sprekos’ evidence in cross-examination was not to this effect. The email dated 23 December 2010 from Mr Raimondo giving notice of termination of the services agreement, referred to by Mr Shannon in his responding email dated 27 December 2010,[54] was not produced. Further, no witness from the REIV other than Ms Sprekos was called to give evidence or document tendered regarding why the services agreement was terminated.
[54] Part of exhibit P9 (Page 99 of the Tender Book).
Annelie Bailey
Annelie Bailey is the General Manager of WES. She started working for WES in 2008, training in software programs and also sales and account managing. She is the life partner of Mark Shannon. Her current position involves looking after the administrative side of the office and making sure WES has staff to support its clients. She also looks after IT and provides a sales consultant role.
In June 2010, Ms Bailey was working as accounts manager and a sales representative mainly in Victoria but between other States as well. She said she spent time in South Australia, Tasmania and Queensland. She was involved in selling mainly REIV products as well as GOP and Ownership Data, both WES products.
Ms Bailey said that she first came to South Australia in February or March 2010 to see what the market was like. She concluded that the South Australian market had good potential for WES to develop and launch the Foundation Package.
Ms Bailey was present at the café meeting. She said she explained the Foundation Package to Mr Beattie and what WES had done with the discounted packages in Victoria. She said she described the market to Mr Beattie as she saw it. She said that Mr Beattie was told at the meeting:
·The Foundation Package was the only product WES were selling in South Australia and that it was for two years;
·The three products worked hand in hand together;
·That there were 54 existing contracts in South Australia;
·That the job was selling and account handling and support on technical issues;
·How imperative it was to train clients;
·That he had to do a minimum of 12-15 meetings per week;
·That before meetings he needed to prepare by spending about 20 minutes using the client’s website, PDOL and REV to prepare for that client; and
·That he needed an ABN and that he was being contracted, not employed.
Ms Bailey said that she did not discuss termination notice periods or commissions at the meeting. She also said that at the time of the café meeting, commissions were not paid. They were something that was being discussed.
After the café meeting, Ms Bailey met with Mr Beattie in May at his home to train him in the Foundation Package. She said that this is when she went into much more detail, explained how each of the products worked and showed Mr Beattie the work that needed to be done to prepare for a client meeting.[55]
[55] T283.
Ms Bailey said that while the Foundation Package was for 24 months, new clients could sign up for 12 months because it was hard to say to a new subscriber that they have to sign for 24 months.[56]
The online calendar
[56] T293-294.
I have referred above to Mr Shannon’s evidence to the effect Mr Beattie fabricated entries to his progress reports. There was an attempt by WES to prove this by way of late discovery of the Microsoft Outlook calendar Mr Beattie used at the time of the retainer agreement. During her evidence, Ms Bailey attempted to demonstrate by taking the Court to the electronic version of the program. For unexplained reasons, dates and times appear to be, to use Ms Bailey’s terms, “skewed”. Given this, it was clear the integrity of the online calendar has not been preserved since Mr Beattie’s access rights were denied to him in October 2010.
For whatever reason this occurred, no weight can be placed on it.
Assessment of Ms Bailey’s evidence
Ms Bailey unsuccessfully attempted to demonstrate that Mr Beattie had fabricated the online calendar. Apart from her evidence about the calendar and any inference that Mr Beattie’s performance brought about the termination of the services agreement I accept Ms Bailey’s evidence.
Joseph Mercuri
Joseph Mercuri is a qualified accountant who had worked for WES for about a year at the time he gave evidence. He does bookkeeping, handles accounts payable, receivables and answers client queries. He was previously the financial controller for the REIV. It was Mr Mercuri who put together the services agreement.[57]
[57] T313.
Mr Mercuri said that WES was already engaged with the REIV/REV when he started at the REIV in April/May 2010 and he was advised a few months later that there was no formal contract with WES.
Mr Mercuri said that the commission on sales due to WES was one month’s subscription fee and this fee was dependent on the package the client signed up to. He said that as soon as the client was billed for the first month the amount was remitted to WES. The REIV did not wait for the client to pay the first bill. He said that if there was an issue with non-payment then the REIV would have clawed the money back at a later date. This was done by making a negative adjustment on the next payment to WES. If a client stopped paying, the REIV would pay the commission on a pro rata basis and only remit what was received. He said that if someone did not pay their subscription they would refer the matter to the debt collectors.
Mr Mercuri said that the sales targets in the services agreement were set by Mr Raimondo, Ms Sprekos, WES and himself. He said the initial targets were reasonable and set in order that any competent person would reach them adequately.
Mr Mercuri was taken to exhibit P18 entitled “David Beattie Commission claim” which he had prepared. It is clear from Mr Mercuri’s evidence that all the agencies listed in exhibit P18 signed up. However, some did not continue their contracts or did not pay as required to under their contracts. According to exhibit P18, which bears the date 5 May 2011, four agencies had amounts of “$0 payable” as commission because they did not honour their agreements. The rest of the commissions listed as claimed were payable in total or on a pro rata basis. Four claimed commissions had a pro rata reduction. According to exhibit P18, $2,088.47 was payable. $1,088.19 had been paid by REV to WES. $1,575.51 remained outstanding to WES. Mr Mercuri said WES would have invoiced REV for the outstanding amount.
Mr Mercuri confirmed that he is the business manager referred to in exhibit D3, the email dated 6 July 2010 from Petra Sprekos to Greg Troughton. Ms Sprekos asked Mr Troughton in the email when the licence agreement is due for renewal and advised that the business manager was looking at the viability for the business overall. Mr Mercuri said the quarterly instalment referred to in the email would relate to the South Australian licence fee.
Assessment of Mr Mercuri’s evidence
I accept Mr Mercuri’s evidence with the exception of his opinion regarding the reaching of targets. Mr Mercuri is an accountant not a real estate agent.
The effect of Mr Mercuri’s evidence, by reference to exhibit P18, is that, as at 5 May 2011, during the retainer Mr Beattie signed 18 agencies. Exhibit P18 records that one agency “never paid an account at legal”. Six of the 18 agencies were initially signed up to the Foundation Package, one never became a subscriber, one cancelled in December 2010 and one changed the package and was billed in February 2011. The effect of the changing or cancelling of an agency’s package was that either the commission was changed because the package was changed or it was reduced on a pro rata basis. According to exhibit P18, Mr Beattie, as at 1 October 2010, had signed up 15 ongoing subscribers during the period from 1 June to 1 October 2010. However, exhibit P18 is superseded by exhibit P7 prepared and signed by Ms Sprekos on 3 August 2012. Exhibit P7 recorded that very few agents signed by Mr Beattie have continued their subscriptions into 2011 resulting in pro rata commission payable to Mr Beattie of $136.06.
David Beattie
David Beattie has been a real estate agent for about 19 years and he manages Team BT, a strata management company and registered real estate agent in South Australia. He is a member of the REISA and is on the REISA Board. Before working for WES, Mr Beattie worked as a real estate agent in South Australia for Ray White Commercial.
He said he first met Mr Shannon in 2003 and met up with him again at a café in Glenelg in April 2010.
The café meeting
The meeting lasted about one and a half hours. Mr Beattie said that he was told or discussed the following at the meeting:
·the business was going well and they were hoping to expand into South Australia and nationally;
·the products that were being sold in South Australia through Jerry and Derek;
·he was to do 15 appointments a week that would be arranged by REIV and that his job would be to attend and sell the three online products;
·that he was to arrange follow-up meetings for training purposes and these meetings would each count toward the 15 meetings per week;
·for each meeting he arranged, the REIV could arrange one less for that week;
·the retainer was to be $80,000;
·there was no discussion as to the length of the meetings, just to be prepared for them;[58]
·his bonus would be the equivalent of one month’s subscription payment for each client he signed up;
·Mr Shannon did not have employees in South Australia and that he had to have an ABN;
·Mr Shannon was fine with him using Team BT;[59]
·it was to be a Monday to Friday job;
·that he needed to supply his own car, laptop, data projector and phone at his own expense;
·there was no discussion about giving notice to terminate the retainer agreement;
·Ms Bailey gave him the gist of the three products. He said that GOP was the only product with which he was not already familiar.
[58] T350.
[59] T351.
Mr Beattie said he was not told that his commission was subject to a client completing the terms of the contract or paying the contract amount. He said he was not told that his commission was subject to him servicing the client during the period of the contract.[60] He said there was no discussion at all about the consequence of an agent terminating an agreement. He said he was not told that if there was an existing contract with an agent he would not earn a commission on that client entering into a new contract. There was no mention of the circumstance when a bonus would not be paid. There was no mention of a difference in commission between 12 month or two year contracts or that commission was not paid on the sale of single products.
[60] T403.
Mr Beattie said in cross-examination that when he was State manager for Australian Property Monitors his staff were paid their commission the month after they sold and drawbacks did not occur if a contract was terminated. He said the same applied when he was with property.com.au, where commission rebates or drawbacks were not sought when a contract was terminated.
Mr Beattie said that he was not told at the café meeting that call‑ins or drop‑ins did not count as meetings.
He said realestateview.com.au competed with domain.com and realestate.com.au as well as other smaller sites. He said that PDOL’s main competitor was RP Data. The data on PDOL was very up to date as it came from the Valuer-General on a weekly basis.[61]
[61] T346-347
He said that GOP was a reverse telephone directory and that you could add one or two comments to a particular phone number. The difference between this product and its competitors was that you could actually edit what was in the database.
Mr Beattie said that, on 12 May 2010, Ms Bailey came to his home and Team BT agreed to work for WES. The start date was to be 1 June 2010. He said that in May he began to attend appointments with Jerry Van Driels and Derek Downes while they were demonstrating the products in South Australia.
Mr Beattie said that a week after he started he was informed that he would have to make his own appointments and he ended up making 70 to 80 per cent of the appointments himself. He said that if the REIV made an appointment for him they would put it in his Outlook calendar for him to accept.
An email from Mr Shannon to Mr Beattie dated 25 August 2010 asked “How are the meetings going are you getting enough and is Donna providing you with enough ??”. The reply from Mr Beattie said, “Still need more new potential clients each week. Donna is away tomorrow and in meetings on Friday morning. I will get on the phone and make more”.[62]
[62] Part of exhibit P9 (Page 64 of the Tender Book).
Mr Beattie said that less than 50 per cent of the phone calls he made to real estate agents turned into appointments. He said his appointments would last for about an hour and he used a PowerPoint presentation that looked like it was live online. He explained the reason he did this was so he did not have to worry about slow internet speeds that might put the agents off buying the product.
Mr Beattie said that Team BT bought a computer and data projector to conduct the presentations.
Mr Beattie said that he kept appointments in the online calendar and in his manual diary as well as his weekly timesheet. He said he used his hard copy diary more than the online calendar as there had to be an internet connection to use the online calendar. He said his access to his electronic diary ceased when the retainer agreement was terminated.
Weekly/progress reports
Mr Beattie said he submitted an Excel spreadsheet at the end of every week. He sometimes sent them through to Mr Shannon on Saturday, Sunday or the Monday morning of the next week.[63] He said that he did not record drop-ins as meetings and would write ‘drop-in’ or ‘cold call’ if recording them in his progress report. Later, in cross-examination, he said that “If I met them and spent time with them and talked to them about the product I counted it as a meeting”.[64] He said that entries not recorded in his diary were often made on Monday morning and that a lot of drop-ins converted to appointments.
[63] T357.
[64] T472.
Mr Beattie said he did not ever receive complaints about not supporting agents or about his performance or his communication with agents, from an agent or otherwise. He said he received a number of complaints about the fact more than one comment could not be recorded on a GOP file. He said he sent about 10 emails to Mr Shannon about this and it was resolved.

Mr Beattie said that if he was out on the road he did not respond straightaway to phone calls from Mr Shannon. He said that if he got a phone call after 5:30pm he would leave it until the next day and if it was after 5:30pm on a Friday night he would sometimes leave it until Monday morning.
He said that he responded to emails during the day if he was online otherwise he would wait until the end of the day.
There were numerous emails throughout Mr Beattie’s time with WES that he agreed constituted complaints by Mr Shannon that he did not have enough meetings, did not reply to emails and did not reply to phone calls.[65] Exhibit P2 is one example where three emails were sent by Ms Sprekos over an eight day period before Mr Beattie finally replied saying he “will have full response by morning”.
[65] T453-462.
Exhibit P5 contains an email from Ms Sprekos that Mr Beattie had not replied to after four days.[66] Ms Sprekos sent a follow up email and Mr Beattie replied on the fifth day.
[66] Part of exhibit P5 (Page 67 of the Tender Book).
An email from Mr Shannon to Mr Beattie expressed concern at the lack of meetings and about a meeting with Greg Troughton.[67] That email was sent at 10:26pm on Friday 17 September and was replied to by Mr Beattie on Sunday 19 September at 7:13pm.
[67] Part of exhibit P9 (Page 78 of the Tender Book).
There was also an email from Mr Shannon to Ms Sprekos on 30 September 2010 saying that part of the problem was Donna was not making enough meetings also and this needed to change.[68]
[68] Part of exhibit P9 (Page 90 of the Tender Book).
It appears that some of the meetings Mr Beattie had in his progress reports do not match up with the days that he was in Adelaide. On 24 June 2010, the progress report records Mr Beattie as having met with two agents. His handwritten diary indicates that he was in Melbourne that day, having flown over early in the morning and arriving back in Adelaide that night. Mr Beattie explained that he must have had the meetings the day before on 23 June.[69] He said he may have recorded the wrong date on a couple of occasions.
Signing up a client
[69] T464-466.
Mr Beattie said that signing up a client was a matter of preparing some paperwork and having the client sign. He said he offered free subscriptions because he was told he could do three months free or six months at half price, if clients signed up for at least a year. This way they were not paying for two subscriptions if they had to give one to two months’ notice to their other provider.
Mr Beattie agreed that he received an email from Mr Shannon in late September 2010 saying free subscriptions were not to be given and said that he gave no more after that date.[70] He said 26 September 2010 was the first time he was told not to do it.[71] He was told by Jerry, Derek or Annelie that they gave discounts so he took it that he could give discounts. He said nobody took issue with this for three months.
[70] T363.
[71] T474.
Mr Beattie said that from June to October 2010 he had 231 appointments including drop-ins. He said that without including drop-ins he averaged about 12 appointments per week.[72]
[72] T364.
Mr Beattie claimed that he signed up 32 clients, some of whom signed for multiple products. He said that four of those were existing clients who he signed up for two year periods, making a net total of 28 new clients.[73]
The resignation
[73] T364, Exhibit D1.
Mr Beattie sent an email to Mr Shannon and Ms Sprekos on 2 October 2010 attaching a letter from his wife notifying them of the termination of the retainer agreement. The email reads:[74]
[74] Part of exhibit P9 (Page 93 of the Tender Book).
Mark
Having never been micro managed in my life, I am NOT ready to start now.
Please find a letter from Cassandra attached, terminating our working relationship.
Regards
David Beattie.
The attached letter reads:
Dear Mark,
When David starting orientation with Winning Edge on the 31^st May 2010 with the promise of 15 appointments a week being made by the REIV and input in the creation of a viable second force in the online market real estate, He was most excited in how the industry could take control of its destiny.
The changes of having to generate fifty to sixty percent plus of SA appointments, the new level of micromanagement from yourself being imposed and having no authority to negotiate short term deals to get quick responses while still being expected to suggest ideas to improve subscriptions has resulted in David losing his enthusiasm for working in this environment and consequently we are unable to provide staff that meet your requirements.
We will arrange for all stock to be delivered to REISA for your collection.
Yours sincerely
Cassandra Beattie
Director
Team BT Pty Ltd
CC: Petra Sprekos, Realestateview.com.au
Mr Beattie said he resigned because Mr Shannon had put “a whole heap of stipulations” that he wanted on a daily basis. He said he had been working for four months and was not getting the support he was promised. He said that just prior to the retainer agreement ending, Mr Shannon came to Adelaide and they spent two days together going out and visiting agents. Mr Shannon handed him a list of demands as he was going to the airport. The list of demands dated 30 September 2010 read as follows:[75]
[75] Exhibit P10.
(End of Day)
Daily Emails all days activities
-     Who you meet – names
-     Who you rang – names
-     Who you called in to see – names
-     How many hrs worked
Weekly (Wednesday)
-     How many meetings for next week
-     How many meetings you arranged + how many you did make versus how many Donna made for you.
Weekly Report by Sunday night to be emailed to me.
Ideas to improve subscriptions not just price reductions.
Mr Beattie said that most of the demands were new to him.
Mr Beattie discussed the situation with his wife, who owned Team BT, and they decided they did not want to continue. He said that if Mr Shannon said they had to work the four weeks, they would have done so. He said it was his understanding that both parties could terminate instantly.[76]
[76] T478.
He said that in any week he would spend about an hour at each appointment and the rest of his time was travelling time to and from appointments, doing reports, calling agents and preparing for meetings.[77] The reason he gave for not having enough meetings in his progress report was because he had to make all the appointments himself and the appointments involved a lot of running around. He said it could take up to five phone contacts to make an appointment.[78]
[77] T433.
[78] T435.
There appears to have been constant communication from Ms Sprekos concerning Mr Beattie’s diary entries. Mr Beattie said he knew that Ms Sprekos required him to keep his calendar up to date. He said that sometimes he would record the entries at the beginning of the day and sometimes at the end of the day. He also said that some appointments were not organised until 11:00am on the day of the appointment.[79]
[79] T446.
Mr Beattie said that he had signed up each of the agents that were identified in the progress reports. At the time he entered the details into each report and forwarded them to Mr Shannon, he said it was never suggested that they were wrong.
Assessment of Mr Beattie’s evidence
Mr Beattie gave his evidence in a straightforward manner. Despite the aspersions cast upon his professional competence by Mr Shannon, he did not resort to negative commentary about Mr Shannon. He conceded that he may have recorded some dates he saw agents incorrectly and that he was slow to respond to emails and phone calls on occasions.
I accept Mr Beattie’s evidence apart from his evidence to the effect that he understood the retainer agreement could be terminated without notice. I cannot draw any inference from his evidence that there was a concluded agreement about the calculation and payment of commissions.
Greg Troughton
Greg Troughton had been the CEO of REISA for approximately seven years at the time of giving evidence.
Mr Troughton said he was familiar with the product PDOL and said its main competitor was RP Data. His predecessor signed an agreement with the REIV whereby REISA would be in the marketplace trying to sell PDOL. The agreement was effectively a joint venture where each Institute would cover half of the expenses and reap half of the rewards.[80]
[80] T489.
At the time when Mr Troughton began as CEO of REISA they had a staff member employed to try to sell PDOL to member agents. He said it was a constant struggle to sell PDOL and he had conversations with his Victorian counterpart where he said, “look, the product just isn’t working”.[81] He said that, in the early days, REISA were just selling PDOL on its own until they were able to get out of a sponsorship arrangement with realestate.com.au. After the arrangement with realestate.com.au ceased, REISA then partnered PDOL with realestateview.com.au, the listing portal.
[81] T490.
He said he met Mr Beattie when Mr Beattie was appointed to work for WES. Mr Beattie now sits on the board and the financial committee at the REISA. He said Mr Beattie was the fifth person trying to sell the products in South Australia. Mr Troughton and Mr Beattie would meet regularly to discuss how they could make the sales work. He said Mr Beattie’s presentation of the online products was one of the best he had seen.
He said that the REISA ceased involvement with PDOL in November 2010 after the Victorian joint‑venture side said they would no longer be paying for the Valuer-General’s data, a cost of $150,000 per year.[82]
[82] T491.
Mr Troughton’s counterpart at the REIV at the time was Mr Raimondo. He said that they had a conversation resulting in Mr Raimondo writing to him indicating that it was costing him $150,000 a year and he had had enough. From that day, Mr Troughton believed that PDOL was not going to be successful in South Australia.[83] He said he had several discussions prior to that about the inadequacies of the product and it never seemed to improve despite undertakings that it would.
[83] T494.
Mr Troughton said that, when he arrived, his board were under the impression that the REIV would keep spending money and that there was no obligation for the REISA to pay. Legal advice he sought at the time confirmed his interpretation was likely to be correct in that REISA would end up owing significant amounts of money to the REIV if he did not find an exit deal.[84] REISA did not end up making any contribution to any expenses.
[84] T495.
Mr Troughton said that the real estate market in 2010 was okay. He said that since the contract with the REIV ceased no online products have come in to the market. If someone was looking for a house to buy they would still go to realestate.com and the great majority of real estate agents and mortgage brokers would be using RP Data.
Mr Troughton said that South Australia is about eight per cent of the total national marketplace and New South Wales is 34 per cent. He guessed that Victoria would be between 24 to 28 per cent. This put South Australia at, roughly, one third of the size of Victoria.[85]
Assessment of Mr Troughton’s evidence
[85] T497.
I accept Mr Troughton’s evidence.
Team BT’s claim
There was no dispute that the September 2010 retainer has not been paid. WES alleged there is no entitlement to it because Mr Beattie was not performing his obligations under the retainer agreement and notice of termination was not given.
The terms of the retainer agreement were never put in writing. A number of issues were discussed at the café meeting. Mr Beattie’s evidence was that the issue of termination was not discussed. Mr Shannon said that he told Mr Beattie one month’s notice was required to terminate.
I am not satisfied that the topic of a notice period was discussed. In the circumstances, I find that the retainer agreement, properly construed, contains an implied term that the parties could terminate the retainer agreement upon giving reasonable notice. Having regard to the whole of the evidence, reasonable notice was one month.
Turning to the topic of commission, whilst I am satisfied the topic of commissions was discussed at the café meeting, it is not clear on the evidence whether in fact there was a concluded agreement regarding the way commissions would be paid. It was not until 12 May 2010 that the offer of the retainer was accepted. Ms Bailey’s evidence was that, at the time of the café meeting, commissions were not being paid and were still being discussed. In the circumstances, it is appropriate to look at the services agreement which provides that:
WES will receive one month’s subscription as a commission for all subscribers signed up on a minimum 12 month contract. Such 12 month contract must be fully paid otherwise a pro rata refund will be claimed by REV/REIV.
Mr Shannon was adamant that he told Mr Beattie that commissions would be calculated on the same basis as they were calculated and paid to WES by the REIV/REV. Mr Beattie said the only discussion about commissions was to the effect that he would receive the equivalent of one month’s subscription as a bonus. I do not accept that Mr Shannon discussed the issue in the detail he asserted for the reasons discussed above at [117]-[126]. In the absence of evidence confirming an agreement regarding the calculation and payment of commissions between WES and Team BT, I infer that it was intended that the commissions payable to Mr Beattie would be calculated on the same basis they were calculated and paid to WES as prescribed by the services agreement. The commission payable to Mr Beattie is therefore the sum calculated in exhibit P7, that is, $136.06.
The counterclaim by WES
Having regard to the whole of the evidence, I am of the view that WES retained Team BT. Mr Beattie supplied his own car. A laptop, phone, printer, and data projector were bought by Team BT to carry out the presentations.
WES was invoiced on a Team BT invoice with an ABN as requested by Mr Shannon. WES paid the monthly retainer to Team BT in arrears.
In an email dated 12 May 2010,[86] Mr Beattie, on behalf of Team BT, accepted the offer made by WES and wrote “Our company Team BT Pty Ltd would be contracted to provide the services in SA and I will be employed by it and Team BT would invoice Winning Edge?? Monthly.”
[86] Exhibit D5.
In an email dated 4 July 2010 Mr Shannon asked for a tax invoice from “Your company”.[87]
[87] Exhibit D6.
Performance of the retainer
There was no evidence of any complaint about Mr Beattie’s performance, communication or training from any client. Mr Shannon and Ms Sprekos conceded that they had received none (other than the data feed complaint). The allegations of poor performance were made by Mr Shannon and Ms Sprekos.
Those allegations included a failure to respond to emails and telephone messages. Certain emails from Mr Shannon ask things such as “are you alive?”.
It was submitted by Team BT that the emails and messages were often sent late at night and often on a Friday and that with some exceptions, most emails were answered within a reasonable time.
In an email dated 30 September 2010, two days before Team BT terminated the arrangement, Mr Shannon described Mr Beattie as “knowledgeable” and said his presentation was good. Mr Shannon also wrote that “part of this problem is dooms (Donna) is not making enough meetings also and this needs to change”. This was inconsistent with Mr Shannon’s evidence that his performance during the four month retainer was pathetic and hopeless. It was also an acknowledgement that REV was not making enough appointments.
WES alleged that Mr Beattie was giving free subscriptions. This was raised in an email to Mr Beattie on 26 September 2010. He responded explaining that the email from Mr Shannon is the first time since he started that anyone had said no free periods. Thereafter, he stopped giving free periods. Mr Beattie was asked in cross-examination and could not remember any specific conversation in which Ms Sprekos said that free subscriptions could be offered. However, having regard to the email from Donna Nehme to Mr Beattie dated 15 June 2010 in response to Mr Beattie’s request for details of existing REV relationships including “how much they are paying – eg Free, on special deal etc”, it would appear that free trials existed in June 2010. I find that there had been free periods offered at the time the retainer agreement commenced.
WES’s records demonstrated that Mr Beattie did arrange appointments and conduct meetings. Mr Beattie’s evidence was that he organised most of the appointments himself despite what was initially promised. The requisite number per week was not met. He did, however, achieve sales.
Mr Mercuri’s evidence established that Mr Beattie attained the sales target of 12 subscribers for the period 1 July to 30 September 2010 set out in the services agreement. However, by reference to exhibit P7, not many subscribers continued into 2011.
WES’s counsel submitted that Mr Van Driels and Mr Downes signed up 54 clients in the three months they were working in South Australia. That was not the evidence. Mr Shannon’s evidence was that the 54 existing subscribing agencies were signed up by Ms Sprekos without assistance from WES.[88] He was later asked whether “some of the pre-existing 54 clients were signed up by Derek and Jerry” and his answer was, “Yes approximately 10. 10 to 12”.[89]
[88] T108.
[89] T222.
In summary, I am not satisfied that, despite any tardiness in responding to emails and phone messages by Mr Beattie or the lack of required appointments, WES has established Team BT’s or Mr Beattie’s performance brought about the termination of the retainer agreement. Mr Beattie’s performance may not have been up to the exacting standards of Mr Shannon in terms of prompt return of emails, phone calls and appointment numbers and sales, but it did not solely or in part bring about the end of the services agreement. There were many other factors at play including the fact that WES was competing against competitors holding the lion’s share of the market and that REIV/REV support was spread thin due to the expansion into New South Wales.
Cancellation of the REIV contract
WES’s counsel submitted that REIV made the decision to cancel South Australia because of the poor sales by Mr Beattie, not because the business was not viable. It was contended the evidence of Ms Sprekos was irrefutably to this effect. I disagree. As discussed above, Ms Sprekos gave inconsistent evidence on this topic and I accept her evidence in cross-examination that the main reason the services agreement was terminated was because she was having a baby and the REIV/REV had decided to have an in-house sales team. It is clear that the viability of the whole of the business, or at the very least with respect to PDOL, was being looked at in July 2010 and the decision to discontinue PDOL in South Australia was made in November 2010. Mr Raimondo wrote to Mr Troughton on 9 November 2010 saying the REISA and REIV had tried over the years to make PDOL work and it had got to the stage where continuing losses could no longer be justified. There is no mention of Mr Beattie or Team BT in Mr Raimondo’s letter.
I find the evidence clearly points to concerns about the financial viability of PDOL in South Australia.
In an email dated 27 December 2010, Mr Shannon acknowledged Mr Raimondo’s email of 23 December giving notice of termination of the services agreement. The email from Mr Raimondo was not tendered. There is no mention of Mr Beattie or Team BT in Mr Shannon’s email.
WES has not discharged its onus of proof with respect to the allegations made in paragraph 10 of WES’s statement of claim. WES has failed to prove that the services agreement was terminated solely or in part due to any breach of the retainer agreement by Mr Beattie or Team BT.
Conclusion
In summary, my findings are:
·The oral retainer agreement was between WES and Team BT;
·The retainer agreement commenced on 1 June 2010;
·It was agreed that Team BT would market, sell and support the online products in South Australia;
·The retainer was $80,000 per annum paid monthly;
·WES would pay the monthly retainer in arrears upon receipt of an invoice bearing Team BT’s ABN;
·Team BT would conduct 14 appointments with real estate agents per week arranged by REV;
·Commission equivalent to one month’s subscription would be paid for each client signed up by Team BT.
Apart from these matters, I cannot be satisfied that the parties agreed the issues in dispute, in particular, the requirement to give notice of termination and the calculation and payment of commissions.
Team BT’s claim
·Taking into account the totality of the evidence about the retainer agreement, the fact that invoices were rendered monthly and paid by WES monthly in arrears, the retainer agreement properly construed contained an implied term that the parties could terminate the retainer agreement upon giving reasonable notice. Having regard to the whole of the evidence, reasonable notice was one month.
·Consequent upon this finding, Team BT was obliged to give WES one month’s notice of its intention to terminate the retainer agreement.
·As Team BT did not give one month’s notice, the question is: what is WES’s damage? Arguably, it suffered disruption, cost and inconvenience as a result of the termination without notice. Its damage may also include sales it might have made in a month. In my view, taking a broad brush approach, WES is adequately compensated by retaining the amount of the September retainer it has received from REV and not paid to Team BT.
·Whilst I am satisfied that the issue of the payment of commissions was discussed, the evidence is such that I cannot be satisfied that it was discussed sufficiently clearly for there to be a concluded agreement about it. In these circumstances, I infer that it was intended that the commissions payable to Mr Beattie would be calculated on the same basis they were calculated and paid to WES pursuant to the services agreement. Team BT’s entitlement to commission is therefore $136.06.
·It follows that Team BT’s claim for commission is reduced to $136.06.
·Accordingly, WES is entitled to judgment in its favour on the Team BT claim for damages based on the amount of the monthly retainer in the sum of $7,326 less the amount of $136.06 on account of the commission payable.
WES’s claim
·WES has not established that Team BT or Mr Beattie was a cause, let alone the sole cause, for the REIV/REV terminating the services agreement as alleged in paragraph 10 of the amended statement of claim.
·Ms Sprekos said the main reason the services agreement was terminated was because she was having a baby and a decision had been made to have an in-house sales team.
·Mr Troughton said the REIV informed him it stopped financing PDOL in South Australia because it was not financially viable for it to continue.
·There was no evidence called or tendered by WES which leads to the inference that the services agreement was terminated solely or in part due to anything done or not done by Mr Beattie or Team BT.
·There was no evidence given other than from Ms Sprekos or document tendered evidencing the REIV/REV reason for terminating the services agreement.
·WES’s claim is dismissed.

Finally, I was asked to assess WES’s claim for damages by reference to the New South Wales experience. This was not underpinned by independent forensic accounting opinion or qualified by the factors that distinguish the New South Wales real estate market from the South Australian market. Leaving aside the fact the services agreement was terminated at the same time in South Australia, New South Wales, Victoria and Tasmania and the issue of mitigation, had WES established Team BT was liable for the termination of the services agreement in South Australia, any loss is attributable only to the failure to give reasonable notice. This loss is adequately compensated for by the award I have made in the Team BT claim.
I will hear the parties as to orders and costs.