John Crisp Pty Limited v Matic Bros Pty Limited; Ivan Vinco Matic; Slavica Matic and Jure Praljak [1987] ACTSC 4 (16 February 1987)

SUPREME COURT OF THE ACT

JOHN CRISP PTY. LIMITED v. MATIC BROS. PTY. LIMITED; IVAN VINCO MATIC; SLAVICA
MATIC and JURE PRALJAK
S.C. No. 114 of 1984
Agency

COURT

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

CATCHWORDS

Agency - Claim by estate agents for commission - Whether, in one case, agents an effective cause of sale - Whether, in others, it being conceded that purchasers were ready, willing and able to complete at price agent found authorised to offer, there was a firm consensus as to terms of contract - No new question of principle involved.

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

Watters v. John Crisp Pty. Limited, Federal Court of Australia, unreported, 28 July 1983

HEARING

CANBERRA
16:2:1987

ORDER

The appeal be allowed in part.

For the amount of the judgment awarded by the learned Magistrate, $1,237.04, there be substituted the amount of $5,173.04.

DECISION

At all material times John Crisp Pty. Limited (the appellant) was a real estate agent while Matic Bros. Pty. Ltd. (the respondent) was a builder. By its ordinary claim filed in the Court of Petty Sessions the appellant claimed from the respondent a total of $7,935.04. The principal part of the claim, for amounts totalling $6,736, related to claims for commission in respect of work done by the appellant as an estate agent in connection with the sale or attempted sale of three properties. The relevant parts of the claim read:-

"3. By an oral agreement made in about the

month of June 1980 the plaintiff agreed to
act as the defendant's agent in and about the
sale of certain properties and the defendant
agreed that in the event of the plaintiff
introducing in respect of any of the said
properties a person willing and able to
purchase that property, the defendant would
pay to the plaintiff a commission at the rate
provided for by the Real Estate Institute
scale of commission.

4. The plaintiff pursuant to the said
agreement introduced one Raymond Livingstone
to the property described below:
Mountview Estates, Namatjura (sic) Drive,
Weston
but in breach of the said agreement the
defendant has refused and failed to pay the
commission due in respect thereof, $2,700.00

5. By written agreements each dated the 15th
day of June 1982 the plaintiff agreed to act
as the defendant's agent in and about the
sale of certain properties and the defendant
agreed that in the event of the plaintiff
introducing in respect of any of the said
properties a person ready, willing and able
to purchase that property, the defendant
would pay to the plaintiff a commission at
the rate provided for by the Real Estate
Institute scale of commission.

6. Pursuant to the said written agreements
the plaintiff introduced to the following
properties the purchasers listed below:

Commission Payable

(a) Mr Donald Duffin, block 13,
section 435, Richardson $2,018.00

(b) Mrs J.E. Thrupp, block 11,
section 435, Richardson $2,018.00

but in breach of the said agreements the
defendant has refused and failed to pay the
commission due in respect thereof, totalling
$4,036.00."

2. The balance of the claim was for a total of $1,199.04 made up of four separate claims, respectively for $100, $771.04, $208 and $120. For some reason with which I need not concern myself the claim for $771.04 was reduced to $709.04 during the course of the hearing. With that reduction the four claims were conceded. Due to an arithmetical error, judgment in respect of them was entered for $1,237.04 instead of for $1,137.04.

3. I deal first with the claim in respect of the sale to Mr Livingstone. He is and was at the relevant time a solicitor. The learned Magistrate found that in about March 1982 he began to act for the respondent in relation to various properties and projects. It is clear from the evidence that from that time the appellant employed the firm of which Mr Livingstone was a member to do conveyancing work in connection with a number of town houses or units of which Mr Livingstone eventually bought one. The learned Magistrate, in making his findings concerning the claim for commission in respect of the sale to Mr Livingstone, referred to the evidence of Mr Livingstone and that of Ian Cedric Hardy, formerly a principal of the appellant. He pronounced his relevant findings in the following words:-

". . . sometime in about June 1982
Mr Livingstone, having sold his home, was
interested in finding a townhouse to
purchase; . . . Mr Matic, at various times,
mentioned to him that he ought to buy one of
Matic Bros units. . . .

It would be appreciated that there is a
difference to some degree in the
recollections of Mr Livingstone and Mr Hardy
as to what occurred. It is also relevant to
note that somewhere in the period late July,
I think it was, the instructions from (the
respondent) to (the appellant) to act in the
sale of the properties and their various
projects were withdrawn. So one has evidence
from Mr Hardy suggesting that there was a
meeting on the site of the Mountview
properties, one of which Mr Livingstone
subsequently purchased, on or about 15 June,
nothing but just units shown and no
particular decision made about whether or not
one would be purchased or not.

Mr Livingstone's evidence would suggest that
he had conversations with Mr Matic, as I have
indicated before, in which Mr Matic suggested
that he, Mr Livingstone, ought to buy one of
his units and indicates that he said some
time in July of 1982 he became interested in
buying one of Mr Matic's and he apparently
got in touch with Mr Hardy to make sure that
he had seen some of the property at that
time. He does concede that it was in part as
a result of this inspection that he decided
to purchase one of the units.

. . . The actual formal agreement about the
purchase of one of these properties on that
Mountview estate by Mr Livingstone, did not
materialise until well after Mr Hardy's
company's role in the sales had been
withdrawn. In my view there is no basis on
which (the appellant) (is) entitled to a
commission in respect of the ultimate sale to
Mr Livingstone.

They did not introduce a purchaser ready,
willing and able to make the purchase. There
was no introduction because the introduction
had already taken place. Mr Livingstone
already was well acquainted with Mr Matic.
It is true that at the request of
Mr Livingstone he was shown some of the units
on the estate and that that showing did in
part result in him ultimately purchasing one
of the units. But having regard to the fact
that Mr Livingstone was the solicitor for the
vendor at the time, in respect of these
various units, and to the fact that Mr Hardy
was the principal in the firm of real estate
agents that was endeavouring to sell them on
behalf of the vendor company, it does not
seem to me that it can be said that any
circumstance occurred which entitles them to
commission in respect of this transaction."

The learned Magistrate went on to say:-

". . . the only basis on which it could be
argued that they were entitled to commission,
if one does not accept the proposition that
because they had been appointed agents they
were entitled to commission in respect of any
sale, however effectuated, that they were the
effective cause of the sale to
Mr Livingstone. In this situation you have
only got to state that proposition to see
that it does not apply. I cannot see how it
could be successfully argued that they were
the effective cause." (Emphasis added).

4. Mr Hardy gave evidence that Mr Livingstone, having recently been appointed solicitor for the respondent, expressed interest in perhaps buying one of the units of the Mountview Estate at Weston and suggested that even if he did not buy one it would be nice to see the properties which his vendor client had for sale. Mr Hardy said that as a result of that conversation he arranged to meet Mr Livingstone early in June 1982. He gave him directions and at the appointed time met Mr Livingstone who had three other people with him. He showed them an exhibition unit and then took them over the estate where the cheaper units were inspected. Mr Livingstone asked whether he thought the sale price might be reduced by negotiation and Mr Hardy made an appropriate reply. He said that was about the sum total of the conversation and it probably took about half an hour in all for the inspection. Mr Livingstone said he would get back to him but before the matter went any further Mr Hardy's agency was terminated by Mr Matic somewhere between early and mid August.

5. The learned Magistrate did not express a view as to which evidence he preferred but it does not seem to me really to matter for the essence of the appellant's case on this aspect is that Mr Livingstone asked to be shown over the estate and agreed that it was in part because of the inspection which he had carried out in company with Mr Hardy that he decided to purchase one of the units. He was asked in cross-examination about the inspection. The relevant questions and answers were:-

"When you met Mr Hardy there, did he open the
door of some D type units for you to look
at? --- I think he did, yes. I cannot
recall now whether he did or not but I
presume he would have.

And subsequently, in part as a result of your
inspection, you decided to purchase one of
the units? --- Yes, I did."

6. It was not disputed that the appellant was acting as the respondent's agent in attempting to sell the units of which that purchased by Mr Livingstone was one. There was no written agreement concerning the agency in respect of the unit purchased by Mr Livingstone so that the matter falls to be determined on the considerations applicable to such a contract of agency as that between the respondent and the appellant. In L.J. Hooker Ltd. v. W.J. Adams Estates Pty. Ltd. [1977] HCA 13; (1977) 138 CLR 52 Barwick CJ said at pp 58-9:-

"It is true that an agent to procure a
purchaser of property in stated terms may
earn the commission payable to him in various
ways. But the commission is not fully earned
unless there is a sale which has resulted
wholly or partially from the efforts of the
agent. The most common way of performing the
agent's task is to introduce to the principal
a person who becomes the purchaser under a
binding contract of sale. In terms of
causation, the agent has thus been an
effective cause of the sale. It is nothing
to the point in such a case that that person
would have become the purchaser without the
intervention of the agent: or that the
principal's own efforts were also an
effective cause of the sale.

Another not unusual manner in which the
agent may be entitled to his commission is
the introduction to the property of the
person who ultimately becomes the purchaser.
That introduction can be regarded as an
effective cause of the sale, though the
principal may not be aware when selling to
that person that he has been introduced to
the property as a purchaser by the agent.
Again, the circumstance that the principal's
own efforts effectively contributed to the
resulting sale will not preclude the
conclusion that the agent's introduction of
the purchaser to the property was an
effective cause of the sale. But the essence
of the reason for that conclusion is that the
person introduced by the agent to the
property becomes the purchaser, that is to
say, is accepted by the vendor as such,
albeit in ignorance of the agent's relevant
activity. As the law stands, the intending
vendor is not bound to accept as the
purchaser the person whom the agent has
introduced to the property or to that
vendor. Thus it is the acceptance of that
person as the purchaser which creates the
liability of that vendor to the agent."

7. In my respectful opinion, Barwick CJ did not intend to confine the instances where an agent may earn the commission payable to him to the examples given. What the learned Chief Justice said is, I think, authority for the proposition that where a potential purchaser learns from the vendor himself that property is for sale an agent may yet earn commission in respect of the ultimate sale if his efforts are an effective cause of the sale even when the vendor's own efforts are an effective cause of the sale as well.

8. If the efforts of Mr Hardy were an effective cause of the sale as distinct from the effective cause of the sale then the appellant is entitled to commission in respect of that sale. The question is one of fact.

9. Mr Matic, managing director of the appellant, was asked in chief how he and Mr Hardy came to discuss the involvement of the appellant in selling the Mountview project. He replied,

"At the time when the Cook project was in
development, we bought the land in Weston, so
he was involved right through with me, even
when we submit the plan or when we start
putting the plan on the drawing board; so, he
was involved from the start."

Mr Matic said that it was agreed that if he (Mr Hardy) sold any of the units the appellant was to get one hundred percent commission. The appellant was not, however, to have the sole agency.

10. The evidence as to the matters which led Mr Livingstone to purchase his unit is somewhat confused. The learned Magistrate did not make specific findings as to the veracity of any of the witnesses to the transaction. However, there appears to be no reason why he should have disbelieved any of them. Mr Livingstone's evidence is, however, as I have indicated, confused. It appears clear that he did not actually decide to buy his unit until the appellant's services as agent of the respondent had been dispensed with.

11. Relevant parts of Mr Livingstone's evidence was as follows:-

"Do you recall meeting a Mr Ian Hardy from
John Crisp Real Estate at the project on one
occasion? --- I knew Mr Hardy at that stage.
The first occasion I went to the scene, I
believe, that I saw Mr Hardy there in
attendance but I do not believe that I spoke
to him. I did speak to Mr Hardy at the
development on a subsequent occasion and that
was following a conversation with Mr Matic.
I told Mr Matic that I had decided to buy one
of his units.

. . .

Following the conversation with Mr Matic, did
you do something? --- Yes, I telephoned
Mr Hardy. I asked Mr Hardy to provide me
with a key to the premises as I wished to see
them and Mr Hardy said, 'I'll see you there.'

When you said, you wanted a key, the key to
what? --- Again, I cannot remember now.
Presumably it was keys to one of the types of
townhouses that I was interested in, the D
class townhouses.

What was the rest of the conversation you had
with Mr Hardy? --- I do not have a
recollection of actually what was said today
in precise context. I believe that an
arrangement was made with Mr Hardy to meet
him sometime around lunch-time. It was about
12 o'clock and I believe that a Mr Steve
Bentwood, a friend of mine, came with me and
I think also yourself (Mr Tantala) attended.

. . .

Did Mr Hardy say that he was showing you a
unit you were going to purchase? --- It was
definitely understood that I was interested
in purchasing one of the units, yes. I do
not recall exactly what Mr Hardy said.

And following that meeting with Mr Hardy, did
you leave the building site? --- I did.

And did you ever hear from Mr Hardy again in
respect of your proposed purchase of one of
Mr Matic's units? --- No, I did not."

12. That evidence which accords, so far as each deals with the same subject, with that of Mr Hardy seems to me conclusive against the appellant. All that Mr Hardy can be said to have done is to show Mr Livingstone over the units one of which he was already half determined to buy. When Mr Livingstone said in answer to the question put to him in cross-examination that it was in part as a result of his inspection that he decided to purchase one of the units he ought to be taken as saying no more than that having half made up his mind to purchase the unit the inspection was a factor contributing to his final decision. The inspection was obviously and must necessarily have been a factor in any event but the mere fact that Mr Hardy showed him over the unit does not establish that Mr Hardy had anything to do with the eventual sale. He seems to have acted as a guide to the vendor's solicitor rather than as a selling agent introducing a prospective purchaser to a property. Certainly one could not be persuaded on the evidence that on the balance of probabilities he was an effective cause of the sale. The appellant carried the onus and I think the learned Magistrate was perfectly correct in not finding the onus had been discharged.

13. It follows that the appeal so far as it relates to the claim for commission in respect of the sale to Mr Livingstone must fail.

14. It is convenient to deal next with the claim for commission in respect of the projected purchase by Mrs Thrupp of Block 11 Section 435. The evidence is that she was ready, willing and able to purchase the unit at the price of $42,950.00 at all relevant times and it is common ground that she had immediately available, or at least readily available so that she might properly be described as able to complete the purchase, enough money, not from her own resources but hopefully from a lending institution and, without doubt, should it prove necessary, from her father.

15. An issue arose in the case as to whether Mr Matic had signed a sole agency agreement pursuant to which the appellant was to seek to sell each of the two units for the sum of $42,950.00. This issue depended upon the view the learned Magistrate took of the several witnesses. He accepted the witness who gave evidence on behalf of the appellant and no challenge is now made to his finding that $42,950.00 was the sale price of the unit agreed to initially by Mr Matic and acted upon by the agent.

16. The written agreement upon which the appellant seeks commission in respect of the proposed sale to Mrs Thrupp of Block 11 Section 435 is a multiple listing bureau sole agency agreement dated 15 June 1982, the document signed by Mr Matic and referred to above. Amongst its "Terms and Conditions" was the following:-

"2. In consideration of the foregoing, the
Vendor:-

(a) grants to the Listing Agent for a period
of two (2) calendar months from the date
of this Agreement a sole agency to
obtain a person who is ready willing and
able to purchase the property;

(b) . . .

(c) agrees to pay to the Listing Agent a fee
calculated on the scale set out in the
margin being the scale recommended by
the Real Estate Institute of the
Australian Capital Territory.

IF:

(i) anyone obtains a person ready willing
and able to purchase the property within
that period of two (2) calendar months,
or

(ii) anyone obtains a person ready willing
and able to purchase the property after
that period of two (2) calendar months
if such person was introduced to the
property within that period.

IRRESPECTIVE of whether the Vendor and such
person have entered into a contract for the
sale of the property or whether that contract
has been completed,

PROVIDED THAT the price is not less that the
gross price set out in this Agreement or that
the price and terms and conditions of
purchase have been confirmed by the Vendor
either orally or in writing."

The list price shown on the agreement was, as earlier indicated, $42,950. An agreement incorporating those exact terms was considered by the full Court of the Federal Court of Australia in Watters v. John Crisp Pty. Limited, unreported, 28 July 1983. In that case Fox J said:-

"It is not in question that the commission
became payable when the agent 'obtains a
person ready willing and able to purchase the
property'. Strangely, this was not expressed
as the event upon which commission became
payable, but is undoubtedly the proper
inference from what is stated. The words
cited have of course to be read in the
context of the whole agreement, and there are
other clauses, to which I will refer, which
are relevant.

Later His Honour said:-

It was submitted by counsel for the
respondent agents that the word 'or' where
first appearing in the proviso should be read
disjunctively, and this may well be so.
This, it was said, indicated that it was only
necessary for the agent to obtain someone who
has said he will pay the purchase price. It
is apparent, however, that in order to show
that the (proposed purchasers) were ready
willing and able to complete an agreement for
the purchase of the property there must be a
contract, or, at the least, firm consensus as
to all terms. Until this stage is reached it
is impossible to say that a person is ready
willing and able to purchase. There is no
agreement (or consensus) to which that person
can be said to have turned his mind.
Fundamentally, there is no substratum upon
which to test readiness, willingness or
ability to purchase.

In this case, it was contemplated from the
beginning by all concerned that the only
agreement was to be a formal one such as is
commonly prepared by solicitors. So far as
appears, even the draft of an agreement had
not been prepared.

. . . What had to be shown was that the
(proposed purchasers) would be able to pay
the purchase monies at the time of
completion, but there is no way of testing
when this would be."

Gallop J said:-

"It was common ground before the Supreme
Court and on the hearing of the appeal to
this Court that upon a proper construction of
the commission agreement between the parties
the relevant event upon which commission was
payable was the introduction by the
respondent of a person ready, willing and
able to purchase the appellants' property.
The issue litigated on the appeal to the
Supreme Court and on the appeal to this Court
was whether the evidence established that the
persons admittedly introduced were in fact
ready, willing and able to purchase the
appellants' property for the price specified.

17. His Honour set out the approach which ought to be taken to questions such as that raised here:-

"The first task in commission agents'
contracts is 'to ascertain with precision
what are the express terms of the particular
contract under discussion' (Hooker v. Adams
Estates (1976-1977) 13 ALR 161 per Stephen
J. at 177, citing Viscount Simon in Luxor
(Eastbourne) Ltd v. Cooper (1914) AC 108.
There are no special principles of
construction and such contracts must be
interpreted according to the ordinary rules
of construction (Ackroyd & Sons v. Hasan
(1960) 2 QB 144 per Upjohn L.J. at 154, and
Omerod L.J. at 162). In Hooker v. Adams
Estates, supra, (at p 181) Stephen J. said:

'One must guard against any tendency to
strain the proper limits of construction,
and, for that matter, of implication, due to
a feeling of the apparent injustice involved
where an estate agent goes unrewarded despite
its protracted efforts on a vendor's behalf,
a feeling no doubt heightened when the vendor
has in fact achieved a sale and the agent has
not been altogether unconnected with its
occurrence. Rightly or wrongly the law, as
it has evolved, has made the earning of an
agreed commission an all or nothing affair,
on the one hand denying to agents any reward
despite substantial labour on their part and
on the other handsomely rewarding agents who
with little effort manage to effect a
sale. . . The law has seized upon their success
or failure in bringing about a sale as the
sole criterion of reward and rates of
commission have no doubt come to reflect this
state of affairs. To adopt unduly extended
concepts of effective cause in an individual
endeavour to do what may appear to be justice
in a particular case not only disregards the
settled approach of the law in this field but
may, by its effect as a precedent, disrupt
the existing pattern of acceptable scales of
reward for services rendered by estate
agents.'"

18. The judgments of Fox and Gallop JJ establish, in my respectful opinion, that the commission agreed to be paid under the sole agency agreement in question was payable if the appellant or its agent (under the multi-listing system) introduced a purchaser who was ready, willing and able to purchase the property for the price specified and if there was a contract or, at least, a firm consensus as to all terms.

19. As I have indicated, it was established that Mrs Thrupp was ready, willing and able to purchase the property at the price which the learned Magistrate found to have been authorised by the respondent. The evidence of the agent who actually effected the sale, Mr Brain, was not subject to substantial challenge and in the circumstances he is to be taken as the appellant's agent. The resulting position may be equated, therefore, to one where Mrs Thrupp had offered to pay and was able to pay the purchase price asked in cash.

20. The only reason the respondent, by Mr Ivan Matic, gave for rejecting the offer was that it wanted more money for the unit. Mr Matic said:-

"The reason I reject it, because that was not
the asking price for the unit. So we
rejected all three sales."

21. Clearly he meant by "all three sales" those relating to Blocks 11, 12 and 13, Section 435, Richardson.

22. There was, therefore, it seems to me a firm consensus as to all terms except the price which the respondent refused to accept as the purchase price. But that price was a price which the respondent had, on the finding of the learned Magistrate, authorised. It follows, in my opinion, that the two conditions precedent to the payment of commission in respect of the proposed sale to Mrs Thrupp had been met. She was ready, willing and able to pay the required purchase price and, despite the respondent's rejection of the sale price, there was in fact a firm consensus as to all terms of the contract.

23. In these circumstances, it is no answer to the claim for commission in respect of Block 11, Section 435, Richardson that the respondent did not enter into a contract. By refusing the purchase price offered in accordance with what must be taken to have been its instructions it could not deny the appellant the commission it had earned in respect of that particular property. Accordingly, I am satisfied that the appellant is entitled to judgment for the amount of the commission claimed in respect of the proposed sale to Mrs Thrupp, namely, $2,018.00.

24. The position concerning the proposed sale of Block 13, Section 435, Richardson to Mr Duffin is slightly different. It was conceded as it had been in the case of Mrs Thrupp that Mr Duffin was also ready, willing and able to purchase the unit. The concession just referred to was made in each case subject to the fact that no formal contract had ever come into existence in respect of either property and subject to the further fact that Mr Duffin needed finance.

25. In my opinion, the respondent's contention fails. Having regard to the evidence given by Mr Matic quoted above and the concession that Mr Duffin was ready, willing and able to purchase the property, it seems to be undoubtedly the case that there was a firm concensus reached as to the terms upon which the sale was to proceed and that the only thing which prevented the contract with Mr Duffin from being entered into was the refusal by the respondent to accept the price that the appellant or its agent had been authorised to offer.

26. It follows that the appellant is entitled to the commission claimed in respect of Block 13, Section 435, Richardson, $2,018.00.

27. The appeal must therefore be allowed in part and for the amount of the judgment awarded by the learned Magistrate, $1,237.04, there should be substituted the amount of $5,173.04.