Amaroo Holdings (Australia) Pty Limited v Woodger Corporation Limited [1986] ACTSC 89 (19 September 1986)

SUPREME COURT OF THE ACT

AMAROO HOLDINGS (AUSTRALIA) PTY LIMITED v. WOODGER CORPORATION LIMITED
S.C. No. 1041 of 1985
Principal and Agent

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Morling J.(1)

CATCHWORDS

Principal and Agent - real estate agent - claim for commission - lease of premises - whether lessee introduced by agent - whether agent effective cause of lease - refusal by principal to be bound by agency breach - entry into possession by lessee - action for commission before lease signed

Agents Ordinance 1968 (A.C.T.) s.116

L.J. Hooker Limited v. W.J. Adams Estates Pty. Limited [1977] HCA 13; (1977) 138 CLR 52

Progressive Mailing House Pty. Limited v. Tabali Pty. Limited [1985] HCA 14; (1985) 57 ALR 609

Heyman v. Darwins, Limited (1942) ACs 356

HEARING

SYDNEY
19:9:1986

ORDER

The appeal be dismissed.

The appellant is to pay the respondent's costs.

DECISION

This is an appeal from a decision of the Australian Capital Territory Court of Petty Sessions (Mr J.J. O'Neill, S.M.) that the appellant is liable to pay the respondent $5,200 by way of commission for having introduced to the appellant a tenant for commercial property owned by it.

2. The learned magistrate, who saw and heard the witnesses, accepted the evidence given by the respondent's witnesses in preference to that of Mr William Brinkmeyer, the only witness called by the appellant. Mr Brinkmeyer is a director of the appellant company.

3. The parties did not enter into a written agency agreement. Hence it is necessary to examine the evidence to ascertain the terms of their agreement. The following account of the facts which give rise to the litigation was given by the respondent's witnesses, and must be taken as having been accepted by the learned magistrate.

4. In May 1984 Mr Mark Nash was employed in the commercial sales and leasing section of the respondent. At that time the appellant held the lease of land at Holt, and was planning to erect commercial premises on the land suitable for occupation by a fast food restaurant. According to Nash, Brinkmeyer spoke to him on the telephone "introducing us to the property". Nash was asked: "And did he say that he wanted Woodger Corporation trading as Woodger Real Estate to find a tenant for the property?" to which Nash replied: "If we could find a suitable tenant, yes."

5. As a result of this initial conversation Nash met Brinkmeyer on 16 May at the latter's Fyshwick premises. Brinkmeyer produced plans of a building for the site at Holt and asked what rental might be obtained for the proposed building. There was some discussion about the amount of any fee or commission which might become payable to the respondent. There was no dispute at the trial that if commission was payable at all, the amount of the commission payable by the appellant was $5200.

6. At the abovementioned conversation no mention was made of a company known as Lassonon Pty Limited ("Lassonon"). This company subsequently went into occupation of the premises and took a lease of them. Mr Ross Dorman, another employee of the respondent, was present when Nash discussed the premises with Brinkmeyer. Dorman said that a rental of about $52,000 per annum for the premises was discussed, as was the amount of commission which would be payable to the respondent. Dorman said that Brinkmeyer asked him to attempt to find a tenant.

7. Very shortly after this conversation the respondent placed an advertisement in "The Canberra Times" seeking a tenant for the property. Included in the advertisement was a statement "For further details contact Mark Nash . . . ".

8. The advertisement appeared on 19 May. In response to the advertisement Nash received a number of enquiries, including one from Mr Geoffrey Swann, a director of Lassonon. After an initial telephone conversation with Nash, Swann attended at Nash's office to inspect the plans of the proposed building and Nash arranged a meeting with Brinkmeyer. This meeting took place in late May at Brinkmeyer's office. Dorman was also present at the meeting. At the commencement of the meeting Nash introduced Swann to Brinkmeyer. Brinkmeyer gave no indication that he had previously met Swann. Indeed the two men had not previously met. Swann and Brinkmeyer discussed how the proposed premises might be fitted out so as to be suitable for Lassonon's purposes. There was some discussion about the rental which would be payable, but Nash was unable to recall the detail of it.

9. On 6 June a letter in the following terms was signed by Nash and sent to the appellant:

"re: PROPOSED FAMILY RESTAURANT

BLOCK 1 SECTION 51
HOLT, A.C.T.

We refer to our metting (sic) of Tuesday, May 29,
1984, during which we introduced Mr. G. Swan (sic), of
Lassonon Pty Ltd., (Aussie Chick), to you as a
prospective tenant for the abovementioned building.

We now understand that you have accepted Mr. Swan
(sic) as a tenant and we wish to confirm our telephone
conversation regarding the 'Leasing Fee'.

As you are aware the normal 'Leasing Fee', as per the
Real Estate Institute of A.C.T. Scale, is 10% of the
'average' annual rental, however on this occasion we
agree to accept one months rental ($5200).

We appreciate that it will be some months before the
building is completed and the necessary legal
documents signed, but we ask for your formal
acknowledge (sic) as to the above agreement."

10. Brinkmeyer said that he replied to the above letter on 11 June in the following terms:

"RE: FAMILY RESTAURANT BLOCK 1 SECTION 51 HOLT

We thank you for your letter dated 6 June 1984, but
wish to inform you that we had a prior approach from
Lasonon (sic) Pty Ltd., who own the Aussie Chick
trademark, to lease the above premises.

We also advise you that we have had prior negotiations
with Wendy's Restaurants (Melbourne), Hungry Jack's
(Burger King) Sydney, Chicken King, Woden/Manuka and
Denny's Restaurants of Melbourne.

The only basis we would be able to work with you would
be if you were to introduce a client with whom we had
no prior negotiations. Also we would want to discuss
the actual fee charged before you introduced any
potential lessee to us."

11. There was a dispute at the hearing as to whether this letter was ever sent. The learned magistrate plainly accepted that it was never received by the respondent. A vigorous attack was made on the truthfulness of Brinkmeyer's evidence that he sent the letter and the learned magistrate appears to have had serious doubts as to whether it was ever sent.

12. Brinkmeyer conceded that he did not tell Nash or Dorman that he had made contact with Lassonon prior to being introduced to Swann by Nash. However, in November 1983 Swann became aware by reading a newspaper article that the appellant had purchased the lease of the Holt site and that the site was to be developed as a fast food outlet. He made a telephone call to Brinkmeyer's office, but apparently did not make contact with him at that time. On 24 February 1984 Swann wrote a letter on behalf of Lassonon to the appellant in the following terms:

"We have noted with interest that your company has
purchased land at Holt to be used as a fast food
outlet.
Aussie Chick has just successfully negotiated with a
Mr Dendrinos to establish an outlet on his site at
Weston. We hope to have this site operational before
the end of April.
If you are intending to lease your site at Holt,
Aussie Chick would be interested in discussing terms
and conditions of a lease.
If you are interested in discussing the matter, could
you please arrange a meeting at your earliest
convenience."

13. According to Brinkmeyer, he spoke to Swann on the telephone after receiving the above letter, thanked him for his enquiry and said that he would be in touch with him "once we reach negotiating". Brinkmeyer agreed that he did not thereafter take any step to get in touch with Swann.

14. According to Swann, he did not have any further contact with Brinkmeyer until Nash introduced him to Brinkmeyer at the appellant's Fyshwick office. He said that it appeared to him that the enquiry he had made of the appellant had "come to nothing".

15. Some time after Nash introduced Brinkmeyer to Swann negotiations proceeded as to the form of a lease between the appellant and Lassonon. In November 1984 Brinkmeyer instructed the appellant's solicitors to draw up a lease. Lassonon went into occupation of the premises in December and commenced trading in that month, although a certificate of occupancy was not issued by the Department of the Territories and Local Government until 30 January 1985. Swann said that a rental had been agreed upon at the time his company went into occupation. However he qualified this statement to a limited extent, in that he said in cross examination that he had discussed the rental with Brinkmeyer and that: "We knew exactly - or we knew fairly close to what it was going to be. But I do not think we knew exactly."

16. Mr Keith Cowley, who was the manager of the respondent's commercial property division, had a conversation with Brinkmeyer on 18 December 1984. Brinkmeyer told him, in effect, that the appellant would not acknowledge the respondent's part in the leasing of the premises, because he knew Swann before he was introduced to him by the respondent.

17. Brinkmeyer agreed that he had declined to pay the respondent for its services. He asserted that he had first stated his attitude in his alleged letter of 11 June. Whether or not that letter was ever sent, it is clear that by 18 December 1984 Brinkmeyer had made it clear that the appellant was not going to pay commission to the respondent.

18. It seems to have been common ground at the hearing that Lassonon signed a formal lease of the premises on or about 23 January 1985, the term of the lease being expressed to commence from 1 February 1985.

19. Counsel for the appellant submitted that the learned magistrate made a number of errors of law in arriving at his decision, and that any one of those errors afforded a sufficient basis for allowing the appeal. It was first submitted that, in order to succeed in its claim for commission, it was incumbent upon the respondent to show that it was the effective cause of the lease being granted to Lassonon, and that the evidence did not support a finding that it was, indeed, the effective cause. I agree with the submission that it was obligatory for the respondent to show that it was the effective cause of the lease being granted - see L.J. Hooker Limited v W.J. Adams Estates Pty Limited [1977] HCA 13; (1977) 138 CLR 52, especially at pp.67-68 where Gibbs J points out that it is a question of fact whether the agent was, indeed, the effective cause. However, I am of the opinion that the evidence established that the respondent was the effective cause of the lease being granted.

20. The contact which Swann made with Brinkmeyer prior to May 1984 came to nothing. As at May 1984 the appellant was still looking for a tenant for its premises. At that stage Lassonon Pty Limited had not taken any positive steps to pursue its interest in the premises. It is clear from Swann's evidence that it was the advertisement in "The Canberra Times" which rekindled his interest in the premises and which set in train a course of events which led ultimately to Lassonon leasing the premises. It is not without significance that when Nash introduced Swann to Brinkmeyer, neither Swann nor Brinkmeyer made any reference to their earlier contact. Apparently neither regarded their earlier contact as being of significance. If Brinkmeyer had thought that he had already interested Swann in the premises he surely would have told Nash and Dorman on 16 May of his past contact with Swann.

21. The mere fact that there had been some contact between Swann and Brinkmeyer prior to May is not destructive of the respondent's case that it was the effective cause of Lassonon leasing the premises. For all that appears from the evidence, Lassonon may never have made contact again with the appellant if it had not been for the advertisement placed by the respondent in "The Canberra Times". In my opinion the evidence shows that the respondent was the effective cause of the lease being granted.

22. It was next submitted that it was a term of the agreement made between the appellant and the respondent that commission would only be payable to the respondent if the tenant introduced by it was a person or company of whom the appellant was unaware. The existence of such a term finds no support in the evidence of Messrs Nash, Dorman or Cowley and, indeed, is inconsistent with their evidence. According to Brinkmeyer, he made it clear in his conversations with the respondent's employees that he had been negotiating with operators of fast food businesses and asked them to let him know the names of any persons who might be interested in the premises "so we can let you know whether we have had prior negotiations." I do not find this evidence convincing, more especially because, on his own admission, Brinkmeyer did not indicate on 16 May that he had already been in contact with Swann's company. Even on his own account of what happened, it seems that Brinkmeyer did not regard himself as having had negotiations with Lassonon prior to 16 May. In my opinion this argument also fails.

23. It was further submitted that the respondent's claim for commission should have been dismissed because of the provisions of s.116 of the Agents Ordinance 1968 (A.C.T.). That section provides, in part, as follows:

"116. (1) A person . . . is not entitled to bring an
action to recover any commission, fee, gain or reward
for acting as an agent for a principal . . . unless -
(a) at the time he was engaged to act as an
agent, he was a licensed real estate agent
and he was such an agent at the time of
acting as agent;"

24. It was submitted that it is necessary for an agent who sues to recover commission to allege and prove that he is a licensed real estate agent, and that no such proof was given in the present case. This defence was not raised in the appellant's Notice of Grounds of Defence. It was not raised until after the evidence had concluded. Had such a defence been raised, it may have been incumbent upon the respondent to prove that it held a real estate agent's licence. But in the absence of an appropriate defence, there was no issue on this matter before the Court. In these circumstances I do not think there was any obligation on the respondent to lead evidence that it held a real estate agent's licence. This argument also fails.

25. Finally, it was submitted that the respondent's claim should not have succeeded because the action was commenced on 2 January 1985 and, so it was argued, any cause of action had not accrued before that date. It was submitted that the action should not have been commenced before the lease was actually granted. Counsel for the appellant presented a careful argument on this question and I see the force of it. However, I do not think it is valid. In the first place, I do not think that it was a term of the agreement made between the parties that commission would not become payable until a lease was actually executed. It is to be remembered that as at May 1984 the premises had not been constructed, and it was likely to be some time before a lease would actually be signed. The appellant promised to pay commission to the respondent if it found a tenant for the premises. As at 2 January 1985 the appellant had been introduced by the respondent to Lassonon, the appellant had agreed to accept Lassonon as a tenant, and had let Lassonon into possesion of the premises. It is true that, according to Brinkmeyer there were still some matters to be tidied up concerning the proposed lease, but I think the evidence of what had occurred before 2 January was sufficient to show that, by that date, the respondent had found a tenant of the premises. The fact that a formal lease was not signed until a few weeks later does not militate against such a finding.

26. In the second place, I am of the opinion that the evidence establishes that the appellant indicated prior to 2 January that it did not propose to be bound by its agreement with the respondent. By that date Brinkmeyer had made it clear that he did not propose to acknowledge that he had been introduced to Lassonon by the respondent. In other words, he clearly repudiated the agreement he had made with the respondent. In these circumstances the respondent was entitled to treat Brinkmeyer's action as an anticipatory breach of contract. See Progressive Mailing House Pty Limited v Tabali Pty Limited [1985] HCA 14; (1985) 57 ALR 609 at 619. The issue of the writ was a sufficient indication by the respondent that it accepted the appellant's breach of contract as bringing it to an end. See Heyman v Darwins, Limited (1942) AC 356 at 362.

27. Counsel for the appellant submitted that there was no anticipatory breach of contract because his client had not come under any liability to pay commission to the respondent. But this is not to the point. Brinkmeyer made it plain that his company was not going to honour its obligations, when they arose. That is to say, he gave advance notice of the respondent's refusal to be bound by the agreement and to perform it according to its terms. In these circumstances, the respondent was not obliged to wait before commencing its action until the lease was actually executed. The appellant may have chosen to let Lassonon into possession and to accept rent from it without ever requiring a lease to be executed. But, if that had occurred, the respondent would not have been disentitled to its commission for having found a tenant of the premises. It is true that the Particulars of Claim filed by the respondent did not, in terms, allege an anticipatory breach of contract. However, I think the Particulars sufficiently brought to the appellant's attention the general nature of the claim being made against it, and I do not think it was prejudiced by the informality in the pleading.

28. For these reasons I am of the opinion that the appeal should be dismissed with costs.