Helkeast Pty Ltd v Metro Properties (ACT) Pty Ltd & Ors [2006] ACTSC 12 (3 March 2006)

Last Updated: 6 April 2006

HELKEAST PTY LTD v METRO PROPERTIES (ACT) PTY LTD & ORS

[2006] ACTSC 12 (3 MARCH 2006)

CONVEYANCING - contracts between vendor and marketing agent - exclusive agency agreement - construction of terms of agreement in writing where conflict as to (1) what was said to have been agreed, and (2) when such an agreement was to date from - effect of a unilateral and material alteration to terms of the agreement - application of the rule in Pigot's Case - cross-claim dismissed.

Conveyancing Act 1919 (NSW), s 184

Pigot's Case (1614) 11 Co Rep 26(b)

Davidson v Cooper (1844) 153 ER 142

Armour Coating (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1976) 17 SASR 259

Warburton & Ors v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238

Suffell v Bank of England (1882) 9 QBD 555

No. SC 292 of 2002

Judge: Gray J

Supreme Court of the ACT

Date: 3 March 2006

IN THE SUPREME COURT OF THE )

) No. SC 292 of 2002

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: HELKEAST PTY LTD

(ACN 008 642 993)

Plaintiff

AND: METRO PROPERTIES (ACT) PTY LTD (ACN 095 320 031)

Defendant

AND: METRO PROPERTIES (ACT) PTY LTD

Counter-claimant

AND: HELKEAST PTY LTD

First Defendant to Counter-claim

AND: JOSEPH TOKICH aka JOSIP TOKICH aka JOSO TOKICH

Second Defendant to Counter-claim

ORDER

Judge: Gray J

Date: 3 March 2006

Place: Canberra

THE COURT ORDERS THAT:

1. No order be made in respect of the plaintiff's claim.

2. The defendant's counter-claim be dismissed.

3. The defendant pay the plaintiff's costs of the claim.

4. The defendant pay the costs of the first and second defendants to the counter-claim.

5. I will hear the parties on the question of reserved costs.

1. This matter concerns a claim and a counter-claim in respect of what was said to be an agreement to appoint an agent for the marketing and sale of certain home units and flats at Blocks 13 and 14 Section 43 Turner in the ACT (also referred to as the Moore Street development).

2. Helkeast Pty Ltd (Helkeast), the plaintiff company and first defendant to the counter-claim in this matter, is a company used by Mr Joe Tokich, the second defendant to the counter-claim, to carry on his business as a builder and developer of properties.

3. Metro Properties (ACT) Pty Ltd (Metro) is the defendant company and counter-claimant carrying on business in the ACT in the buying and selling of real estate. Mr Storm Brearley is a real estate agent who had some responsibility for the management of Metro's business but was essentially an employee of the business paid on a commission basis. One of the other employees at the relevant time was Mr Gordon Perry who is also a real estate agent and was also paid on a commission only basis. Each appeared to have authority to bind the defendant company although there was no direct evidence to this effect.

4. The case proceeded on the basis that each of Messrs Tokich, Brearley and Perry acted for and were capable of binding the corporate entities on whose behalf they were acting.

The nature of the proceedings

5. The proceedings in this matter were initially commenced for the purpose of the plaintiff company seeking the removal of a caveat that had been placed on the Moore Street development by the defendant company. The caveat was based upon the terms of an exclusive agency agreement dated 8 June 2001 between the parties for the development. That agreement had been signed on behalf of Helkeast by Mr Tokich and Metro by Mr Perry. In this court, Crispin J, determined that the caveat should be removed: Helkeast Pty Ltd v Metro Properties (ACT) Pty Ltd (unreported) 19 July 2002. Thereafter the proceedings were substantially amended for the plaintiff company to seek a declaration to void any exclusive agency agreement and for the defendant company to counter-claim that there was such an agreement which was either made orally in February 2001 or in writing on 8 June 2001 and to claim breach of agreement, rectification (if necessary) and damages.

6. Accordingly, whilst the plaintiff company, which had initiated the proceedings to remove the caveat was nominally the plaintiff, it was the defendant company suing on the counter-claim which sought to establish the existence and validity of the exclusive agency agreement, its breach and the defendant company's claim to damages consequent upon that breach.

The issues

7. It is not a productive exercise to set out the pleading labyrinth that is represented by the second amended statement of claim, the defence thereto and the further amended notice of counter-claim. The parties agreed to a statement of issues and they set out the relevant matters to be determined:

1. Was a binding oral exclusive agency agreement made between Joseph Tokich on behalf of the plaintiff and Gordon Perry on behalf of the defendant in February 2001?

2. If so, what were its terms?

3. Was a binding written exclusive agency agreement made on 8 June 2001 between the plaintiff and the defendant?

4. If the answer to 3 is in the affirmative:

(a) what were the terms of the agreement as concluded; and

(b) was the agreement subsequently avoided by material alteration on the part of the defendant?

5. If any binding exclusive agency agreement did subsist did the plaintiff breach that agreement?

6. If so, is the defendant entitled:

(a) to any sum by way of payment; or

(b) to damages from the plaintiff?

The initial arrangement

8. There is some doubt about the circumstances in which Mr Tokich and Mr Perry commenced their business relationship, but it is common ground Mr Perry was the real estate agent acting for the owners of the two blocks in Turner that Mr Tokich wished to purchase for the purpose of developing the site. Mr Tokich attended a meeting on 1 February 2001 where the vendors were present to discuss a purchase of the properties. It is common ground that the owners of these blocks were only prepared to sell them for $500,000.00 each, clear of commission. As a consequence, Mr Perry offered to reduce his commission to $5,000.00 per block if Mr Tokich would pay to the owners their asking price and be responsible for Mr Perry's commission. This proposition was accepted by Mr Tokich.

9. There was discussion about Metro being given sole agency for the marketing of the development which Mr Tokich intended for the properties. Mr Tokich is adamant that he did not commit himself to anything other than being open to receive a proposal to that effect. Mr Perry regarded his offer to reduce his commission conditional upon Mr Tokich agreeing to give the sole agency to sell the units that would be available as a consequence of the development of the site. It was, he maintained, the factor that caused him to enter into the commission arrangement with Mr Tokich.

10. It is not suggested that any more specific terms were expressly agreed at that time and it was not until 22 February 2001 that actual settlement in respect of the properties took place on an exchange of contracts. At that time, Helkeast would have become liable to pay the reduced commission and the consideration for what was said to be the oral agreement arrived at that time would have been given. That was the time that it could be expected that further consideration would be given to the agency to sell, but it was not.

11. The issue, then, is whether what was discussed in the context of Mr Perry reducing his commission amounted to a binding agreement for the exclusive marketing and selling rights to Mr Perry or his employer.

The witnesses

12. There is an absolute conflict between Mr Perry and Mr Tokich's recollection of this matter. Mr Perry was, at the time, on his own admission, a very inexperienced real estate salesman. Mr Tokich is an experienced builder and developer who emigrated to Australia from Croatia in the 1960's. His spoken English is imperfect. He needed the services of an interpreter for the purposes of these proceedings. Nevertheless, he demonstrated a fair understanding of what was said. He had previous experience of a building development which he had undertaken at Condamine Street, Turner. He would have been very aware of the value of a sole agency agreement to a real estate salesman but not be too ready to give such a valuable right away. Mr Perry's inexperience, on the other hand, did not lead him to tie up that right when it was discussed.

13. I consider that both Mr Perry and Mr Tokich were attempting to give their best recollection of what took place between them but their recollections in each case are coloured by the positions that they perceive they would have taken.

14. There was another witness to the negotiations, a Mr Kulkman, an employee of Metro who still works part-time with them. His evidence seems to take a middle course. He overheard a portion of the conversation between Mr Perry and Mr Tokich. His evidence-in-chief was:

And what is that you now recollect was said?---I remember that Gordon said words to the effect that he wouldn't earn any commission and then the other gentleman, who I know is Joe Tokich now, he said he would give the marketing of the property Gordon.

In cross-examination:

What did you hear him say?---I heard him tell Gordon that he would get the marketing on the property.

On what terms?---Didn't specify. He just said: "I will give him marketing," Gordon said he wasn't going to earn any commission. He said: "I will give you the marketing on the property."

And no terms were overheard by you?---No.

It is, of course, not the case that Mr Perry was to not get any commission, nor do I consider that Mr Tokich intended to irrevocably give away the marketing rights without reservation.

15. The tenor of the whole of Mr Kulkman's evidence is that the commission issue was not conditional upon the marketing rights absolutely being given to Mr Perry, but rather that there was a promise in the future that Mr Perry would have the marketing on a basis to be ascertained. I also add the point that there was no reference in Mr Kulkman's evidence to Metro being given those rights or that Mr Perry was securing those rights for Metro.

Conclusion on the first issue

16. Even if I accepted totally Mr Perry's evidence, I could not be satisfied that Mr Perry and Mr Tokich had concluded a contract for the marketing at that time. No terms were agreed, particularly as to commission or duration or even the parties to it. The determination of those matters is essential to complete what the parties could be said to have agreed. Matters essential to giving efficacy to what Mr Tokich and Mr Perry discussed were clearly to be determined at a later time. There being no agreement at that time, it follows that there can be no finding as to terms.

Further negotiations

17. There appears to have been some further discussions between Mr Tokich, Mr Perry and Mr Brearley for an arrangement to market the proposed development: on Mr Tokich's part, that he considered that he should receive a "marketing" proposal or at least a proposal; on the part of Mr Perry and Mr Brearley, that there should be an agreement in writing although they say Mr Tokich had given his word that they would have the marketing.

18. A notable aspect seems to me to be the role that Mr Tokich's previous experience of an exclusive agency agreement played in the background to this matter. Mr Brearley was aware of an earlier development at Condamine Street, Turner (the Condamine Street development) in which Mr Tokich had been involved. That was some two years earlier and had been handled by Leader Real Estate (Leader). Although Mr Brearley denies that he was aware of the terms the marketing agreement between Mr Tokich and Leader, I take it that he was aware of Leader's involvement and that Leader was Mr Tokich's preferred marketer because of the earlier arrangement. The arrangement that Leader had with Mr Tokich was in evidence before me. It provided for a sole agency for 180 days from the date of the agreement. Mr Tokich says that he gave Mr Brearley a copy of this agreement during the course of these discussions. Mr Brearley says that he did not and that he only became aware of the terms of the arrangement with Leader after Mr Tokich had been provided with a copy of the agreement the subject of these proceedings. Even if this be so, Mr Brearley could scarcely have not been aware of the possibility of an arrangement in terms similar to that which actually existed between Mr Tokich and Leader. I say this because Mr Brearley did not dispute a conversation that he had with Mr Tokich in which he said that he knew all about the Condamine Street project.

The agreement signed by the parties

19. In any event, on 8 June 2001, Mr Brearley attended at some development units where Mr Tokich was doing maintenance work. He produced a document headed "Exclusive Agency". The document had been prepared by Mr Perry on Mr Brearley's instructions. The document, without any handwriting upon it, was in this form:

ADDRESS: 46 & 44 Moore St	SUBURB: Turner	B/S: 14 & 13 of section 43
EXCLUSIVE AGENCY
Listed by Gordon Solicitor: Tony Cibiras - Minter Ellison Perry Block 13 and 14 section 43 Turner will be amalagated and developed with up to 30 units. These units are the properties of the exclusive agency. Plans may alter along with the asking price although the agency agreement remains as below.

EXCLUSIVE AGENCY

This agreement made between

Helkeast P/L - Joe Tokich of 9 Britton Place, McKellar ACT (the owners) and Metro Properties (A.C.T.) Pty Ltd C/o Ayre Miller, 22 Molonglo Mall, Fyshwich ACT, a company incorporated in the Australian Capital Territory (the Agent). The owners of the above units wish to engage the Agent to sell their house on the following conditions:

1. The Owners appoint the Agent to sell their property exclusive of all others for a period of 1095 days from the date hereof. During the exclusive selling period the Agent has a right to introduce a buyer to the units and to sell the units to the exclusion of any other person. The exclusive selling period shall continue after the 1095 days until the Owners revoke this appointment in writing to the Agent. The Owner agrees not to appoint another agent or sell the units privately during the exclusive selling period.

2. The Owners warrant they have authority to enter into this deed of appointment and if one owner has signed on behalf of any other he has authority so to do.

3. The agent is deemed to have fulfilled its obligation, and is due its commission when

(a) It has introduced a buyer who is ready, willing and able to enter into a binding agreement in the standard form approved by the ACT Law Society to buy the property for a price agreed to, either orally or in writing, by the owner; or

(b) If the Owner breaches this Agreement; or

(c) If the purchaser defaults in his obligation under the contract and the deposit is forfeited to the seller; or

(d) If contracts for the purchase of the property are rescinded or terminated.

4. Notwithstanding that the selling fee is owing immediately the agent has fulfilled its obligation, the time for payment is the earlier of:

(a) the date of completion of the agreement for sale, or

(b) in the case where an agent has fulfilled obligations but the sale does not complete, the date on which it would be reasonable to assume that the sale will not complete.

(c) In the case of 3(b) (c) or (d) above, the date of such breach, default, recision or termination.

5. Should the Agent introduce a buyer to the unit who enters into an agreement to purchase same within twelve (12) months of such introduction, the Agent has by that fact fulfilled his obligation.

6. The Owners acknowledge that they charge the units with payment to the Agent of any money owing to it and acknowledge the right to the Agent to caveat the property to protect this charge.

7. The Agent may allow any other agent to act in conjunction with it but only one selling fee will be payable and that is payable to the agent.

8. The agent is bound to observe the rules of conduct for agents as set out in the Agents Act 1968. If the Owners believe there has been any breach they will notify the Agent forthwith and allow it a reasonable time to remedy the matter before they take any other action. The Owners acknowledge that their breach of this clause will cause the agent special damage.

9. All deposits are to be held in the selling agents Trust Account prior to settlement/completion.

10. The Owners acknowledge by their execution hereof that the above particulars in relation to the improvements erected on the land including (but not restricted to) the size, dimensions and condition of same are correct and that all the improvements on the property comply with the Building Ordinance except for those listed as unapproved structures in the above particulars.

11. The selling fee to be paid by the Owner will be calculated as a percentage of the sale price in accordance with the table shown below.

12. After receiving a holding deposit, the agent is authorised to hold the property off the market, pending exchange of contracts. If this is not effected within 14 days the agent may re list the property for sale.

Commission on exchange 4.5% for first $100,000

4.0% for next $50,000

3.0% for the remainder

PLUS GST

Dated at Dickson the eighth day of June 2001.

Signed by the OWNERS

..................................................................

..................................................................

in the presence of ............................................

This agent hereby accepts this appointment. Metropolis Real Estate Pty Ltd per Gordon Perry:

..................................................................

(my highlighting)

20. The document refers to the agent as Metro Properties (ACT) Pty Ltd in the text but as Metropolis Real Estate Pty Ltd in the acceptance. The inconsistency reflects a restructure of the business at about that time and no point is taken about the inconsistency, it being accepted for all relevant purposes that Metro is the proper party to whatever agreement there was with Helkeast.

21. The selling period of 1095 days set out in the printed document (and which I have highlighted) was, on Mr Brearley's evidence, put there by Mr Perry; on Mr Perry's evidence the period was suggested by Mr Brearley. In any event, Mr Brearley says that he recognised it as unrealistic and says that it was the subject of considerable discussion with Mr Tokich on 8 June 2001.

22. At the time that Mr Brearley discussed the document with Mr Tokich, Mr Perry's signature appeared on the line for the agent's acceptance of the appointment.

23. The actual terms of the discussion that took place on 8 June 2001 are in dispute but part of the effect is not. What is not in dispute is that in Mr Tokich's presence, Mr Brearley crossed out the figure 1095 first appearing and initialled the crossing out in the body of the document. In the left margin he wrote the words "180 days". He also placed his initials next to the writing. What is then in dispute is that he wrote the words "from approval of plans" immediately following the words "180 days" that he had written in. Mr Tokich now claims that a combination of his diabetic condition, comprehension of written English and eyesight difficulties meant that he did not fully appreciate what he was signing. Mr Tokich signed the document in the "signed by the OWNERS" space and Mr Brearley witnessed his signature.

24. On one view, Mr Brearley's function was only to witness the document, but I consider that he should be regarded as Metro's agent with authority to negotiate on its behalf and to bind the company. It follows that I do not accept the submission made on the plaintiff's behalf that further written confirmation was required from Metro or its ostensible agent, Mr Perry, to necessarily conclude a binding contract. I consider that Mr Brearley could have done so, although what he did do was to purport to act only as a witness. Nor do I consider that what Mr Brearley said were his amendments, create such a disconformity to prevent the ascertainment of the intention of the parties to what was said to be the effect of the amendment. Although the words, "from the date hereof" appearing after the figure "1095" which was struck out, those words were not struck out, and no change was made to the later reference in the text that, "The exclusive selling period shall continue after the 1095 days ....", those matters do not make the agreement so uncertain as to not be binding, at least as to an exclusive selling period of 180 days.

The date of operation of the agreement

25. Mr Tokich is adamant that he only agreed to 180 days to operate from the date of the agreement. Mr Brearley is equally adamant that the discussions produced Mr Tokich's assent to the agreed period operating from the date the plans were approved.

26. This aspect of when the agreement is to operate from is far from clear. Mr Brearley says that was agreed and the words indicating that were written on the agreement. There is some room for the observation that there is a distinct gap between the figure and words "180 days" and the words "from approval of plans" that were written on the document. On Mr Tokich's account, the discussion of the subject of the days the agreement was to operate resulted in the agreement being changed from 1095 to 180 days. He says he saw only 180 days written on the contract. It was not until he received the pseudo agreement that he "learned that words written in the margin were "270 days from approval of plans" and not "180 days from the date of the agreement...". His affidavit goes on to say:

On 8 June 2001 all I had agreed to on that day was to vary the agreement Mr Brearley had proposed in the following terms. I authorised Mr Brearley to change the agreement by varying 1095 days from date of agreement to 180 days from the date of agreement, which I assumed he had done when I observed him writing on the document when he was with me that day in the unit at Condamine Street, Turner.

27. Mr Brearley's account of this event is set out in paragraph 12 of his affidavit:

In relation to paragraph 28 of Joe Tokich's Affidavit, I say that I did attend the units at Condamine Street on or about 8 June 2001. At that time, I handed the Agreement which Gordon Perry had drafted, to Joe Tokich and I recall that he placed a small pair of silver glasses on the end of his nose, and he appeared to read the Agreement. After about 4 or 5 minutes, I had the following discussion with Joe Tokich:

Me: `Is there anything that you don't understand?'

Joe Tokich: `No, but 1,095 days is too long.'

Me: `I agree. It's about 3 years and that's a long time for an agreement, I have never had an agreement this long before, but it's a different situation, it's a bit excessive but it took four or more years to get your last approval in Turner. I know it will not take that long this time but it is impossible to know how long it will take. I would like to think that we would not need to worry about a time frame but we would have the marketing until they are sold.'

Joe Tokich: `What happens if you don't get them sold?'

Me: `Joe, they will almost be selling themselves as long as you don't over price them and stick close to the valuation or a little above. The problem is to establish a fair marketing period. As you know we just don't know how long it will take to get approval.'

Joe Tokich: `I agree. You should not market them until the plans are approved.'

Me: `I think it's legal suicide, even illegal to sell before they are approved. It causes too much trouble with all the changes, how do you know what you're selling? People don't know what they are buying, they can pull out if the changes are too big. Joe, do you have a better way than 1,095 days, then tell me?'

Joe Tokich: `I don't know.'

Me: `Well we both need some protection. Us from not having the opportunity to have a fair chance of selling the units, and you need protection from us not selling them in the right time frame. 1,095 days leaves you in a difficult position and any other ways leave us with nothing. Okay, then let us put down the time from approval of plans. This puts us under pressure to sell quickly and if we are hopeless you can sack us, and it only costs you time of a couple of months. How long will it take to construct?'

Joe Tokich: `About 12 months.'

Me: `Why don't you give us 12 months. No, that won't work either, it's no good for you. How about 90 days after issue of the final certificate?'

Joe Tokich: `No, I can't do that. The banks won't allow construction until approximately 50 per cent of the development is sold. What if you don't sell them?'

Me: `I know we can easily sell them. If it was 100 units I wouldn't feel good about that. We would not be the right agents. But don't forget that we have 2 offices, Elders and Metropolis. We have about 13 sales people plus we will offer sales to the other 6 Elders offices all over Canberra. We could give the units to Elders as a conjunction that is covered in our agreement. If you had a development of 100 or more units you could only give them to Independent Group but with only 30 units, it's a piece of cake.'

Joe Tokich: `Okay then. Let's make the period from approval of plans. How about 90 days?'

Me: `Okay. No, we need at least 6 months, that's only 180 days.'

Joe Tokich: `Okay.'

Paragraph 13 of Mr Brearley's affidavit continued:

I then amended the Agreement by crossing out the figure of 1,095 and I wrote `180 days from approval of the plans' in the left hand border of the document. Both Joe Tokich and myself signed the document.

Both agree that it was Mr Tokich who raised the point that 1095 days was too long. Although Mr Brearley had said that when Mr Perry gave the agreement to him he thought the period excessive, on the account that he gives in his affidavit he sought to justify the length of the period to Mr Tokich.

28. What I find somewhat improbable about Mr Brearley's account is that it was said to be Mr Tokich's suggestion that the marketing period be measured from the date of approval of the plans when the clear proposal that the written agreement put forward by Mr Brearley was to take effect from the date of the agreement. Mr Tokich's previous experience with the Condamine Street property was a marketing period that was expressed to operate from the date of the agreement. I consider it most unlikely that Mr Tokich would have raised on his own initiative the implications of a term dating from the approval of plans and I do not consider that he would have said, as Mr Brearley alleged he said, "Let's make the period from approval of plans". At all times Mr Tokich has maintained that any period that he agreed to operated from the date of the agreement. I am not prepared to find that Mr Brearley later inserted the words "from approval of plans" on the printed agreement but am satisfied that, if at the time he was discussing the agreement with Mr Tokich, he did not draw those words to Mr Tokich's attention. I am also satisfied that Mr Tokich did not appreciate that he was signing a document which was to operate other than from the date upon which it was signed.

The alterations to the agreement signed by the parties

29. Mr Brearley then says that a further discussion took place after Mr Tokich had signed the document. In his affidavit he says that the following took place:

I was nervous and excited as this was one of the biggest commissions I had signed up. I wanted it to be right. I then began reviewing the Agreement to make sure that it was all right, and I thought that 180 days from the approval of the plans was not going to be long enough. I felt more confident now that Joe and I had talked for a while, and I said to Joe Tokich `Hey Joe, how about nine months? It's a pretty good compromise and a long way from three years.' Joe said to me `Okay.'.

30. Mr Tokich emphatically denied this later discussion and the circumstances in which it was said to have taken place. His evidence was that upon signing the document, Mr Brearley left the premises. In cross-examination, he was asked about the circumstances of the amendment to the document and he responded:

Yes, we had a big argument, [Storm] and myself. He was asking for 1095 days and I told him, "You should be stupid to" - "no one could sign that". If I signed that I'd be stupid". I told him that, "I'll sign to you for 90 days" and he was holding me for about an hour and a half to two hours. My sugar went right down, I couldn't hold any longer, I was shaking all over. Then I told him, "I'll agree for the Leader's type of agreement of 180 days" and at the end we have agreed and I realise that it's not affecting my business and I signed it. [Storm] when I signed the letter, [Storm] - left me as happy as if he has won a lottery prize.

31. It is not material to the result if I make an adverse finding against Mr Brearley in respect of his subsequent alteration to the document, but I indicate that, particularly having regard to Mr Tokich's response referring to "the Leader type of agreement", I am not persuaded that he did in fact agree to any suggestion by Mr Brearley that the agreement be extended from 180 days to nine months.

32. Nevertheless, for the moment I will assume in Mr Brearley's favour that it was his genuine belief that he had some form of assent to a period of nine months. He made no attempt to effectuate that understanding by seeking to again alter the agreement whilst he was with Mr Tokich. What he did was to take the agreement back to his offices where he says he photocopied the document and gave a photocopy to Mr Perry "to file".

The alteration to the marketing period

33. Neither Mr Brearley or Mr Perry accepted that they were responsible for the original proposal of a marketing period of three years. However, the period was apparently discussed between them before the document was put to Mr Tokich. Mr Brearley gave evidence that he took the view that it was an unrealistic period. Mr Perry's evidence was that he told Mr Brearley that it was ridiculous to put that time in the document as it was unnecessary to specify a period as "Joe told me we could have it until it was sold". Notwithstanding who it was that had the idea of a three year exclusive period, Mr Brearley did not subsequently raise with Mr Perry the significant restriction on the selling period that Mr Tokich had insisted upon. More particularly, I would have expected there to have been discussion between the two of them as to the extension of the limited selling period had that event in fact taken place.

34. Mr Brearley said in his affidavit that "at some time later", after photocopying the document, he realised that he had not changed the figure in the written document to reflect the agreement of nine months. That "some time later", to which his affidavit refers, was not at about the same day but, as his cross-examination shows, was at a time up to and perhaps over a week later. At that time he changed the figure `180' in the left hand border to read `280' by changing the `1' to a `2'. He then says he inserted the figure of `280' into the body of paragraph one of the agreement just above where he had crossed out the figure of 1095 days. The change was made on the original document, not the photocopy given to Mr Perry. At the time he made the alterations, he did not draw Mr Perry's attention to what he had done.

35. This is quite extraordinary. There was, on Mr Brearley's account, no alteration made at the time when Mr Tokich was present and could have assented to it. He gave no indication when he gave the photocopy document to Mr Perry to file that the photocopy document he was presenting represented anything different from the document Mr Perry had prepared. He had made a later unilateral alteration to the original document without reference to either of the persons who had executed it.

36. There was a further singular circumstance. Mr Tokich was not provided with a copy of the document he had signed until he requested it some months later. Although Mr Tokich said he repeatedly requested the document, Mr Brearley only responded to communication of Mr Tokich's request that he received from Mr Perry in late 2001.

37. What Mr Brearley then did was to take the copy of the document that he had given Mr Perry and on that document, he altered it by whiting out his initials and the figures and words that he had written on the side of the document. He replaced that writing with his initials and the figures and words "270 days from approval of plans". He did so because he says that the figures 270 more accurately reflected the nine months that he said had been agreed. He then photocopied the document and threw the altered document into the rubbish bin. This is confirmed by Mr Perry who deposed to it taking place when he was present.

38. The document so produced is quite misleading. The original had already been altered to change the 180 days to 280 days by changing the 1 to a 2. To the discerning viewer of the original, that alteration had been made after Mr Tokich had signed the document as it was in a different ink. At the least there was the appearance of some discrepancy in the photocopy. By whiting out and replacing the figures and words entirely on the document given to Mr Tokich, there was no ostensible reason to question that the document provided to Mr Tokich reflected what the parties had agreed and that was the state of the document that Mr Tokich signed. That circumstance would lead to the conclusion that whatever belief was held by Mr Tokich about an agreement as to 180 days, the actual writing on the agreement reflected that 270 days had been agreed. I therefore do not regard the later references which Mr Tokich makes to 270 days as supporting a conclusion that it was in fact the period discussed.

References by Mr Tokich to a period of nine months

39. As support for his submission that Mr Tokich had in fact agreed to the exclusive selling period being 270 days, Mr Pappas, who appeared as counsel for the defendant, pointed to an affidavit sworn by Mr Tokich on 8 July 2002. In that affidavit, referring to the notation made by Mr Brearley, para 3 says:

The amendment was made in the following circumstances. I would not agree to 1095 days and instead insisted on 90 days. The defendant through its agent Mr Storm Brearley whose signature appears as the second signature on the Agreement said words to the effect that the defendant would not accept 90 days but would accept 270 days. I was not happy with 270 days, but I did not object when I observed Mr Brearley writing the figure 270 days in the margin of the Agreement.

40. I am not inclined to place any weight at all upon this in light of the misleading document given to Mr Tokich. It only shows how misled Mr Tokich was by the document that he received when it was finally given to him in late 2001. I also accept that notwithstanding having just received a document which referred to the 270 days, Mr Tokich was adamant in a conversation that he had with his son, Anthony Tokich, that he had only agreed to 180 days and that he had initially wanted 90 days. The extent of Mr Tokich's confusion and the fact that, having regard to the pseudo copy agreement that he had been given, he could be justified in doubting what was the true situation is evident from this question and answer. Mr Pappas sought to argue that the paragraph in Mr Tokich's affidavit constituted an admission. I do not regard Mr Tokich's statement in the affidavit as an admission that any period of nine months was discussed either as such a period, or in terms of a period of 280 or 270 days.

41. The same comment can be made concerning the answers 8 and 9 to the interrogatories dated 20 November 2003 which are further confused by the fact that the original document, of which Mr Tokich was by then aware, purported to be for 280 days because the original figure of 180 had been altered by Mr Brearley. I do not know when Mr Tokich became aware of the alteration made by Mr Brearley to the 180 figure and Mr Tokich was not cross-examined as to the answer to the interrogatories upon which Mr Pappas seeks to rely. I do not consider that either the affidavit or the answer to the interrogatory either constitutes an admission or lends any support to the proposition that a term of 270 days (or nine months) was agreed to in the conversation between Mr Tokich and Mr Brearley on 8 June 2001.

42. Accordingly, although I have before me Mr Brearley's assertion that there was such an agreement after it had been agreed that the term should be 180 days, I do not consider that I can safely act upon it. Even if there was a discussion after Mr Tokich signed the agreement relating to a nine month period, I am not satisfied that it could have amounted to an agreement to alter the agreement or that the discussion was such that it could be said that Mr Brearley was authorised to make the alteration that he did.

The rule in Pigot's Case

43. What is then said on the part of the defendant is that the alteration made by Mr Brearley was made without Mr Tokich's knowledge or consent and this has the consequence of making the agreement void. On the findings that I have made, this appears to be an inescapable conclusion.

44. The defendant invokes what is referred to as the rule in Pigot's Case (1614) 11 Co Rep 26(b) at p27(a). The rule is expressed:

When any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it by interlineation, addition, razing or by drawing of a pen through a line, or through the midst of any material word, that the deed thereby becomes void...

The rule applies to all written instruments (Davidson v Cooper (1844) 153 ER 142).

45. The rule has been much criticised and has the capacity to cause harsh and unjustified results if applied without qualification. Its application has been recognised by the Full Court of South Australia in Armour Coating (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1976) 17 SASR 259 and the Court of Appeal of New South Wales in Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238. It may be noted that the New South Wales Law Reform Commission, Report 97, January 2001 recommended the abolition of the rule and, as a consequence, s 184 of the Conveyancing Act 1919 (NSW) has abolished the rule in that State. It remains, however, as part of the law of the Australian Capital Territory and is the law that I must apply.

46. There can be no doubt that the alteration that was made in this case was a material alteration unless the defendant can establish that there was a common contractual intention that it be made. The defendant has failed to do so. In Suffell v Bank of England (1882) 9 QBD 555 at 568, Brett LJ observed:

Any alteration of any instrument seems to me to be material which would alter the business effect of the instrument if used for any ordinary business purpose for which such an instrument or any part of it is used.

Mr Pappas, on behalf of the defendant, conceded that unless I found an underlying agreement between Mr Tokich and Mr Brearley as to an exclusive selling period of 270 days, then to change 180 to 280 or 270 would be a material alteration.

47. Further, I cannot regard the situation that I have found as one akin to a party having implied authority to complete the document such as Hope JA considered in Warburton v National Westminster Finance Australia Ltd (supra). I appreciate that in Armour Coating (Marketing Pty Ltd (supra), Bray CJ was prepared to find an implied authority to supplement the agreement, but to find such an authority in this case, I would have to find that the parties agreed to a period of nine months. As I have earlier said, I am not satisfied that Mr Tokich agreed to such a term.

The completion of the executed agreement

48. There appears to me to be a further difficulty in the defendant making out its case even if there had been some discussion about a nine month term after Mr Tokich signed the document. Any proposition that the terms of the exclusive agency be extended I would only characterise as a counter offer to the signed acceptance given by Mr Tokich for an exclusive agency for six months which Metro had proffered for his acceptance. That is so because the representation that was made on the document was that Mr Perry was Metro's representative for the signing of the document. Mr Brearley presented himself as the witness to Mr Tokich's signature to the agreement. Although Mr Brearley clearly considered himself having the power to further negotiate with Mr Tokich, he completed that negotiation and he did not do anything other than make and initial the alteration as the witness to it. He did not purport to re-execute the agreement on the defendant's behalf. Once Mr Tokich had signed the agreement as altered by Mr Brearley, that act completed it. Any further negotiations that could be said to have taken place can be properly characterised as negotiations to vary that executed agreement. That is a circumstance that I consider would require Metro to assent to it and could not be the subject of a unilateral alteration to the document.

Breach of contract

49. The defendant's submissions that the plaintiff was in breach of contract depend upon the existence of a binding exclusive agency agreement. By reason of my acceptance of the applicability of the rule in Pigot's Case, the alteration made by Mr Brearley to the written document made it void. It is therefore unnecessary to consider the submissions made by Mr Pappas as to the circumstances in which it might be said that the plaintiff was in breach depending upon the date from which the exclusive selling period ran and its continuance until revocation.

Conclusion

50. Had the proceedings been a claim for breach of contract, the claim would be dismissed because the actions of Mr Brearley had made the contract void. The plaintiff's second amended statement of claim seeks declarations that:

(a) A declaration that the Agency Agreement in writing dated 8 June 2001 between the plaintiff and the defendant was voidable by the plaintiff.

(b) A declaration that the plaintiff has validly avoided the said Agency Agreement and that the parties are discharged from further performance under the said agency agreement.

My conclusion is that the effect of the role in Pigot's Case on the Agency Agreement dated 8 June 2001 is to make it void. The declarations sought by the plaintiff do not accurately reflect that conclusion.

51. In the event, I propose to dismiss the defendant's counter-claim which is based upon breach of contract. I would also refuse the counter-claim insofar as it seeks rectification and a consequential declaration or the alternative of breach of warranty of authority. My dismissal of the counter-claim is on the basis that the agreement between the parties is void and of no effect. I therefore do not see any efficacy in making the declarations sought by the plaintiff in its second amended statement of claim or making a general declaration as to the agreement being void. However, as the plaintiff has wholly succeeded, it must have its costs of the claim and counter-claim. I will make no order on the plaintiff's claim and dismiss the counter-claim.

52. I understand that there is a question of reserved costs and I will hear the parties on that aspect.

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 3 March 2006

Counsel for the plaintiff and defendants

to the counter-claim: Mr J M Ireland QC with Mrs L Donohoe

Solicitor for the plaintiff and defendants

to the counter-claim: Ken Cush & Associates

Counsel for the defendant and

counter claimant: Mr J Pappas

Solicitor for the defendant and

counter claimant: Meyer Vandenberg

Date of hearing: 10-13 October 2005

Date of judgment: 3 March 2006