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High Court of Australia |
L.J. HOOKER LTD. v. W.J. ADAMS ESTATES PTY. LTD. [1977] HCA 13; (1977) 138 CLR 52
Principal and Agent
High Court of Australia
Barwick C.J.(1), Gibbs(2), Stephen(3), Jacobs(4) and Murphy(5) JJ.
CATCHWORDS
Principal and Agent - Estate agent - Commission - Agent appointed to sell property - Company A introduced by agent as prospective purchaser - Negotiation by owner with company B which was not introduced by agent - Both A and B prepared to pay same price - A and B enter joint venture agreement - Sale to company formed by B - Allotment of shares in purchaser to A so that shareholding held equally by A and B - Whether agent entitled to commission - Whether effective cause of sale.
HEARING
Sydney, 1976, April 29-30.DECISION
1977, March 4.(1) that the respondent under a contract of agency
promised to pay commission to the appellant upon its
introduction of a person willing and able to purchase the
respondent's property in Pitt and George Streets in the City
of Sydney ("the property");
(2) that under an implied contract, the respondent
promised to pay one half of the commission otherwise
payable upon a sale of the property to a single purchaser if
the person to whom the appellant introduced the property
became a joint venturer with the person who signed the
contract to purchase the property;
(3) (added by amendment) that the respondent promised
to pay commission at a rate referentially agreed between
them upon the appellant introducing to the respondent a
person who became the purchaser of the property on terms
acceptable to the respondent. (at p55)
2. The learned primary judge found that neither the first nor second count
was made out and rejected each. No cross-appeal has
been lodged against these
findings. The matter thus proceeded before the Court of Appeal Division of the
Supreme Court upon the
third count alone. So it has proceeded, as indeed it
must, before this Court on appeal from the Supreme Court. (at p55)
3. The primary judge found for the appellant on the third count for the full
amount claimed. He did so because he concluded that
the appellant was an
effective cause of the sale of the property in fact made by the respondent. In
this he was substantially influenced
by his view of the case of Burchell v.
Gowrie and Blockhouse Collieries Ltd. (1910) AC 614 . (at p55)
4. The Court of Appeal by majority (Moffitt P. and Mahoney J.A., Hutley J.A.
dissenting) allowed the respondent's appeal, set
aside the judgment for the
appellant and substituted judgment for the respondent. (at p55)
5. The detailed facts evidenced in the case and the terms of the agreement
round which the appellant's submission are built appear
in the reasons for
judgment to be delivered by other Justices. I need only mention the principal
features. (at p55)
6. A contract of agency was made between the respondent and the appellant.
The terms of the agency, though not express, are, I
think, clear enough. They
were that the appellant should be paid commission at the rate currently
charged in the City of Sydney
by real estate agents in comparable transactions
upon the purchase price to be paid to the respondent upon the sale of the
property
under a contract entered into by a purchaser whom the appellant had
introduced to the property or to the respondent as an intending
purchaser. The
third count in terms speaks of introduction of the purchaser to the
respondent. This, though perhaps the usual way
in which a real estate agent
earns his commission, is not the only way he may earn it. In stating the
contract which, in my opinion,
emerges from the evidence, I have expressed the
circumstance in which the agent would earn his commission alternatively as the
introduction of the person to the property of which he becomes the actual
purchaser or to the vendor as a purchaser of that property.
This change from
the actual language of the third count accommodates it to relevant authority
and to the manner in which that count
was sought to be supported. (at p56)
7. It is quite plain from the evidence that the company which signed the
contract to purchase the property and which was accepted
by the respondent as
the purchaser was not introduced to that property or to the respondent by the
appellant. The appellant was
in no sense instrumental in bringing about the
signature of that contract. The appellant's claim, as pleaded in the third
count
and as advanced before this Court, is for payment of an amount of
commission appropriate to the introduction by the appellant of
a purchaser of
the whole of the property. If no more appeared than what I have so far recited
it must be concluded, in my opinion,
that the appellant could not succeed in
that claim. (at p56)
8. However, the appellant submits that it is entitled to commission upon the
sale of the whole of the property because it introduced
the property to a
company on whose behalf the appellant claims the property was purchased
jointly with the company which signed
the contract of sale as purchaser. In
order to deal with this submission, I should set out the essential structure
of the facts
as they appear to me. In doing so, I leave aside details which to
my mind are immaterial to the solution of the appeal. (at p56)
9. The appellant introduced the property to company A (Ann Arbor Investments
Pty. Ltd.). Unbeknown to the appellant, the respondent
was currently
negotiating with company B (Stocks & Realty (Sydney) Pty. Ltd.) for the sale
of the property to that company.
The
appellant some months before the
signature of the contract of sale of the property became aware of the fact
that there were
negotiations
to sell proceeding between the respondent and
some person or company whose identity was not known to the appellant.
But
without
any intimation to or knowledge of the appellant, company A did become
aware of the interest of company B in the purchase
of the
property. Company A
and company B then entered into the agreement in writing bearing date 6th May,
1968. This agreement
is set
out in reasons for judgment of other justices. The
appellant did not bring company B's activity in relation to the purchase
of
the property to the notice or knowledge of company A: the appellant, as I have
said, was unaware of company B's identity. The
appellant
did not participate
in any way in the formation of the agreement between the two companies: it was
unaware of the making
of the
agreement until after the signature of the
contract of sale of the property by the respondent to company B. (at p57)
10. After the agreement of 6th May had been made, each of the companies
separately negotiated with the respondent to purchase
the property. Company B
was successful and entered into a contract of sale. The respondent was unaware
at the time it sold its
land to company B of the existence of the agreement of
6th May or of any interest of company A in the purchase. (at p57)
11. It is in these circumstances that the appellant claims to have been an
effective cause of the sale which in fact took place.
The appellant's counsel
submits that there is an unbroken chain of causation, beginning with its
introduction of the property to
company A and ending in the signature of the
contract of sale by company B and the respondent. It is said that company A's
introduction
to the property - and, for that matter, to the respondent - as a
potential purchaser led to company A, though without any influence
or
knowledge of the appellant, becoming aware of the interest of company B in
purchasing the property and thereafter entering into
the agreement of 6th May
1968, albeit again without the knowledge or intervention of the appellant. It
is submitted that that agreement
made the two companies joint venturers in the
purchase of the property as well as in its subsequent redevelopment.
Therefore, according
to the argument, the property by reason of that agreement
was purchased by company B on behalf of both companies which were to have
equal interests and responsibilities in the purchase. It is conceded that the
respondent was at all relevant times unaware of the
existence or of the terms
of the agreement of 6th May and of any joint venture in the purchase or, for
that matter, in the redevelopment
of the land. It is also conceded, and indeed
contended, that the respondent sold the whole of the property by one sale
which so
far as the respondent was concerned was a sale to company B. (at
p57)
12. I first approach the appellant's claim to commission on this sale upon
the assumed footing that, by reason of the agreement
of 6th May, company B
became the agent of company A to purchase on their joint behalf the whole of
the property and that company
A by reason of that agreement acquired an
equitable interest in the property upon its purchase by company B. (at p57)
13. This is not, in my opinion for reasons I will give, an acceptable
hypothesis. But, for the moment, I will assume it. It is
important to analyse
the situation which on that assumption existed. The respondent did not sell a
moiety of its property: nor
did it sell any interest less than the entire
freehold. Company A derived, upon the purchase and through the agreement of
6th May,
an equitable estate in the property in common with company B. That
interest was in the whole of the property: not in any divided
part of it. It
did not acquire its interest from the respondent but through the agreement of
6th May - a transaction with which
neither the appellant nor the respondent
had any connexion whatever. (at p58)
14. These facts do not, in my opinion, support the conclusion that the
appellant is entitled to commission upon the sale of the
whole of the property
to company B. No effort or activity of the appellant formed any part of the
causation of that sale. It did
not introduce the property to the actual
purchaser: it did not introduce company A to company B: nor was it in any way
instrumental
in or the cause of the formation of the agreement of 6th May. If
that agreement created a joint venture between the two companies
to purchase
as distinct from redevelop the property, the appellant had no part in the
formation or activity of that joint venture.
The most that could be said is
that, if the appellant had not introduced the property to company A, that
company would have no
interest in company B's efforts to acquire the property
or to make the agreement of 6th May. But clearly, in my opinion, even if
the
appellant's introduction of company A to the property could be regarded as
having any effect upon the creation of the joint
venture, that effort could be
no more in law than a causa sine qua non and not a cause even of the formation
of the joint venture,
supposing there to be one, let alone a cause of the sale
of the property to that joint venture, again supposing there was such a
sale.
(at p58)
15. 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. (at p58)
16. 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. (at p59)
17. In the present case, it cannot be said that the person introduced by the
appellant to the property and to the respondent was
accepted by the respondent
as the purchaser of the property: not even as one of joint purchasers of it.
Indeed, the respondent
had chosen not to accept company A as the purchaser,
preferring company B. (at p59)
18. Some well recognized principles of law in relation to claims by real
estate agents have been relied upon by the appellant
in supporting its claim
to commission. First, it is said that the vendor need not be aware of the fact
that the appointed agent
has introduced the property to the person who becomes
its purchaser: second, that an agent employed to find a purchaser of the whole
of a property is entitled to a commission, rateable to the value of the land
sold, if the principal sells a portion of the land
to a purchaser who was
introduced to the land by the agent, though not to the principal. (at p59)
19. But, in my opinion, the two principles to which I have adverted do not
support the conclusion that the appellant is entitled
to commission, quite
apart from the intractable fact that there never was a sale of part of the
property. The interest of company
A was not derived by purchase from the
respondent: or, put another way, the case is not one in which a vendor has
chosen to sell
only a part of the property for which he has commissioned an
agent to find a purchaser. Where a sale is of part of the property
to an
introduced purchaser, it is essential, in my opinion, that the vendor accepts
that person as the purchaser of the moiety.
Indeed, it is the vendor's act in
selling to that person that attracts his liability to the agent for an aliquot
commission. But,
subject to a comment I will make later on an endeavour to
rely on the second count, we are not concerned in this case with the results
of a sale of a moiety of the property: as I have said, there was none. (at
p59)
20. The proper analysis in the present case, in my opinion, is that company
A, without the intervention of the appellant or the
knowledge of the
respondent, agreed with company B to acquire an interest in common with
company B in the whole of the property
upon its purchase by company B. The
situation is not comparable to a sale by a vendor to a purchaser of part of
the property, where
that purchaser was introduced to the property or the
vendor by the agent. Further, it seems to me that in this case the acquisition
by company A of an interest in the property as joint purchaser would not
entitle the appellant to commission simply because the
appellant had
introduced company A to the property and to the respondent. In my opinion, the
acceptance by the respondent of company
A as a purchaser would be
indispensable to the success of the appellant's claim. That, in the
circumstances of this case, involves
the knowledge by the respondent that the
purchase by company B was a purchase on behalf of companies A and B. With that
knowledge
and an appreciation of the possible consequences of such a sale, the
respondent may well have declined to enter into such a sale.
I am unable to
accept the conclusion that, because company A made an agreement with company B
through which it acquired an interst
in the property the subject of sale by
the respondent to company B, the appellant is entitled to any commission upon
that sale.
(at p60)
21. The argument that the appellant was an effective cause of the sale to
company B is to my mind completely unacceptable. (at
p60)
22. There was an effort made during the argument to resurrect the second
count and claim that in respect of the sale of the entirety
of the property
the appellant was entitled to be paid one half of the commission. I have
already indicated that there was no cross-appeal
against the rejection of this
count by the primary judge. Further, the claim is, in my opinion,
insupportable. I can see no basis
in law on which in respect of a single sale
of the entirety of a property, albeit to joint purchasers, an agent is
entitled to
a commission commensurate to the interst taken up in the joint
venture by the person he has introduced to the property. This claim
of the
appellant has neither principle nor authority to support it. In my opinion, it
must be rejected. (at p60)
23. The case of L. J. Hooker Ltd. v. Dominion Factors Pty. Ltd. (1963) 63 SR
(NSW) 146 was much relied upon by counsel for the
appellant. He claimed that
the case decided that it was possible for two agents each to be entitled to
full commission in respect
of a sale of a piece of real estate. The present is
not a case in which more than one agent claims commission. But the appellant
seeks to draw some relevant principle from the case. I would agree that it is
better to speak of the basis of the agent's entitlement
to commission being
that he is an effective cause of the sale. Where the performance of the
agent's obligation is based upon his
introduction of the property to the
purchaser or of the purchaser to the vendor I have some difficulty in
conceiving how two agents
in relation to a sale of the whole of a property to
a single purchaser should at an identical time introduce the property to the
purchaser or the purchaser to the vendor. I would have thought that in the
ordinary course of things, one introduction would have
preceded the other, and
in that case the efforts of the second agent on the scene might well be
thought not to have been causal
of the sale. But, if the case can be made out
that an agent without introducing the property to the purchaser or the
purchaser
to the vendor, none the less causally assists in bringing about the
sale, I suppose it is conceivable that two agents may each establish
his right
to a full commission: one, it may be, through the introduction of the
purchaser to the property or of the purchaser to
the vendor and the other by
actions which are properly held to be an effective cause of the sale. (at
p61)
24. It may be that if each of two agents introduces a person who becomes,
i.e. is accepted by the vendor as, a joint purchaser
with the other person so
introduced, both agents will be entitled to a full commission. If, on the
other hand, the vendor sells
a moiety to each purchaser, each agent will be
entitled to a proportionate amount of the commission payable on a sale of the
whole
of the property. (at p61)
25. L. J. Hooker Ltd. v. Dominion Factors Pty. Ltd. (1963) 63 SR (NSW) 146
was a case as to interpleader. It really decided no
more than that the two
agents were not claiming from the vendor the identical sum of money as itself
a matter in suit. Each was
attempting to obtain payment in respect of a
separate and different contract and in respect of different activities, though
each
claimed the same amount of money. Both on authority and on principle the
interpleader was an inappropriate procedure in such circumstances.
But I
derive no assistance from the case in the resolution of the present case. (at
p61)
26. Neither the decision nor any reasoning of the Privy Council in Burchell
v. Gowrie and Blockhouse Collieries Ltd. (1910) AC
614 provide any support for
the appellant's submission. In the long run, counsel for the appellant did not
oppose that conclusion.
The headnote of the case accurately discloses what the
case decided. The headnote is in the following terms:
"In an action by the appellant to recover an agreedNo more need be said about the case, for, in my opinion, it has no relevance to the case presently in hand, particularly if the facts of the case are properly understood. (at p62)
commission on the proceeds of a sale of mining property by
the respondent company the latter contended that he was not
the efficient cause of the particular sale affected: -
Held, that as the appellant had brought the company into
relation with the actual purchaser he was entitled to recover
although the company had sold behind his back on terms
which he had advised them not to accept."
27. I should now express my own view of the meaning and effect of the
agreement of 6th May. The parties to the agreement were
to negotiate
separately to become the purchaser of the whole of the property of the
respondent. Quite clearly, neither was negotiating
on behalf of both. It is
noticeable that the parties to the agreement were careful not to have agreed
that one would negotiate
on behalf of both. It was agreed that each should
negotiate independently, though each promised that its negotiation would be
conducted
on the footing of agreed terms of purchase. Clause (d), it seems to
me, means precisely what it says: that when one company had
become the
purchaser, it should complete the purchase and thereafter carry out the
redevelopment of the site jointly with the other
company on the basis of
equality. Each was to seek terms of sale upon which both had agreed but which
are not disclosed. However,
I think it can be inferred from the terms of cl.
(d) that the negotiated terms of sale should not call for the payment of more
than $500,000 up to the time that title was to be transferred to the
purchaser. That clause did not mean, in my opinion, that each
party was to
contribute half a million dollars to the purchase price: or, for that matter,
$250,000 to that price. The purpose
of the clause, rather, it seems to me, was
to ensure that not more than half a million dollars would be called for in
cash under
the contract of sale, the balance being found by mortgage or other
source of finance. The "completion of purchase" within the meaning
of that
clause, in my opinion, was the point at which the land was to be transferred
in terms of the contract to the purchaser.
In fact, the contract which was
ultimately entered into did provide that, upon payment of $500,000, the land
should be transferred
to the purchaser, the balance of the price being secured
by mortgage to the vendor in the terms of the contract of sale. The expression
"equity capital" in cl. (d) might in some contexts mean the amount which
shareholders were to contribute to the capital of a company
and it is a
possible view that this is what the words mean in this case. That meaning is
not inconsistent with the clause also
providing that the amount of cash to be
paid under the purchase up to the time of transfer of the property to the
purchaser should
be no more than $500,000. Having regard to the mutual
intention and obligation to redevelop the property jointly, a limitation on
the amount of cash required to acquire the property would be reflected in the
ultimate cost of the redevelopment. No doubt the
cost of the land, though not
acquired jointly, would be included in the total cost of the redevelopment.
(at p63)
28. It is said that the effect of the agreement was to make the actual
purchaser the agent of itself and company A to purchase
the property in their
joint interest. I cannot so interpret what took place in the making of the
agreement. Its terms are to an
extent somewhat ambiguous. They contemplate
that either of the parties to the agreement might become the purchaser and, in
that
event, there was thereafter to be a joint redevelopment upon the land.
Clause (c) of the agreement, in my opinion, means that that
company which
became the purchaser should itself complete the purchase. It does not impose
upon the other company any obligation
at that point to contribute to the
purchase price, though, as I have said, cl. (d) has its influence upon the
amount of the cost
of the redevelopment which the other company (in the result
company A) would in due course be required to share. As appears from
the
facts, the way in which company A contributed to the redevelopment was by
subscription to the capital of the purchasing company.
This indicates that the
carrying out of the agreement did not necessarily involve placing title
legally or equitably in the joint
names of the two companies, nor did it
involve the contribution by company A of any cash to the actual purchase price
as distinct
from the cost of redevelopment. This method of executing the
agreement was, in my opinion, the method which its language contemplated.
But
I reach that conclusion in point of construction quite apart from the
subsequent conduct of the parties. In my opinion, it
is not correct to say
that the property was purchased by the two companies as tenants in common. The
property was purchased by
the one company, subject to a contractual obligation
attaching at the time of purchase to redevelop the land in association with
the other company on a joint basis. The manner in which this was to be
effectuated was not, in truth, fully worked out by the parties
to the
agreement but such indications as there are in the document, in my opinion,
point in the direction that the parties contemplated
that each would have
equal shareholding in a company which would hold the title to the land and
effect the redevelopment. (at p64)
29. Upon my construction of the agreement, no equitable interest in the land
was obtained by company A at the time of the purchase
of the land by company
B. It had rights acquired under the agreement of 6th May to be allowed to
participate upon an equal footing
in the redevelopment of the land. But the
exercise of such right did not, in my opinion, necessarily involve the holding
of any
direct interest in the land. Its right was that the land when acquired
should be redeveloped as a joint enterprise. That right would
entitle company
A, as things turned out, at least to prevent company B from applying the land
to any other use. If, without breach
by company B of the arrangement for the
joint redevelopment, there had in fact been no redevelopment, company A, in my
opinion,
would have had no right in the land or available equitable remedies
against company B in respect of the land. (at p64)
30. In my opinion, even upon the assumed meaning and effect of the agreement
of 6th May, the respondent for the reasons I have
given was not bound to pay
the appellant any commission in respect of the sale to company B. Further,
upon the proper interpretation
of the agreement of 6th May, the same result
should follow. (at p64)
31. In my opinion, the appeal should be dismissed. (at p64)
GIBBS J. The appellant began the present proceedings in the Supreme Court of
New South Wales to recover from the respondent $28,480
as commission on the
sale of land. The respondent was the owner of land in Sydney which was the
site of Adams Hotel. In September
1965 the respondent placed the land in the
hands of the appellant, a company which carries on business as a real estate
agent,
"to locate a satisfactory purchaser at a satisfactory price". The
appellant introduced the property to Mr. Loblay, a real property
developer who
conducted his operations through a number of companies which he and a fellow
director, Mr. Harvey, apparently control.
Mr. Loblay made several unsuccessful
offers to buy the land, but by April 1968 was willing to pay $1.8m., the price
which the respondent
required. However, in the meantime Mr. Hoyle, the
respondent's solicitor, had commenced negotiations with another developer,
Stocks
& Holdings Ltd. ("Stocks & Holdings"). The appellant had played no part
in introducing that company to the respondent. By
May 1968
Stocks & Holdings
was also willing to buy the land for $1.8m. By this time separate negotiations
were being conducted
by Mr. Hoyle,
on behalf of the respondent, directy with
Stocks & Holdings and, through the agency of the appellant, with Mr.
Loblay.
The learned
trial judge found that Mr. Loblay and Stocks & Holdings "were each
willing and able to purchase and viewed
independently each would,
apart from
the intervention of the other, have probably done so". However, before either
set of negotiations
was concluded, each
of the two prospective purchasers
learnt that the other was in the field. On 6th May 1968 there was a meeting
between Mr. Loblay
and Mr. Graf (the managing director of Stocks & Holdings)
and an agreement was made which was reduced to
writing. The agreement
was
expressed to be between Stocks & Realy (Sydney) Pty. Ltd. ("Stocks & Realty")
(which is a subsidiary
of Stocks & Holdings)
and Ann Arbor Investments Pty.
Ltd. ("Ann Arbor") (which is a company controlled by Messrs. Loblay and
Harvey). It was agreed that
each company would seek to purchase the property
and that each would continue to negotiate with the
respondent "on terms and
conditions
mutually agreed and fully disclosed between them". The agreement
contained the following provisions:
"(c) Upon one of the parties becoming purchaser, that partyThere is no suggestion that this agreement was entered into for the purpose of depriving the appellant of commission. It appears that the parties wished to avoid the possibility that if Mr. Loblay and Stocks & Holdings competed for the land the price might be increased. The respondent did not know that the agreement had been made, and continued to negotiate separately with Mr. Loblay and Stocks & Holdings for the sale of the land. However, by about 10th May 1968 the respondent had decided to sell to Stocks & Realty. The appellant apparently learnt of this decision, and on 14th or 15th May 1968 wrote to the respondent a letter in which it was stated that the appellant had reason to believe that "there is some collusion" between Mr. Loblay and Stocks & Holdings and that if this suspicion were correct the appellant would claim commission on the sale. There is no evidence that at that time either the appellant or the respondent was aware of the nature of the agreement made between Ann Arbor and Stocks & Realty, or even that an agreement had been made. A contract for the sale of the land by the respondent to Stocks & Realty for a price of $1.8m. was executed on 4th June 1968. On 14th August 1968, Stocks & Realty made an allotment of shares to another company associated with Stocks & Holdings and to Ann Arbor, so that the two interests had equal shareholdings in Stocks & Realty. The contract of sale of the land was completed in March 1969. (at p66)
agrees to complete the purchase and carry out the
redevelopment of the site jointly on a basis of equality.
(d) The total equity capital which the parties agree will be
required up to the time of completion of purchase shall
be approximately $500,000.00.
(e) In the redevelopment the joint venture will seek to
arrange the transaction on a sale and lease back basis
or management agreement producing like results."
2. The right of an agent to receive commission from his principal rests on
contract express or implied. It was made clear by the
House of Lords in Luxor
(Eastbourne) Ltd. v. Cooper (1941) AC 108 that commission contracts "are
subject to no peculiar rules or
principles of their own" (per Lord Russell of
Killowen (1941) AC, at p 124 ). In some places special rules have been
introduced
by statute but there is no statutory provision in force in New
South Wales relevant to the questions that arise in the present case.
In
inquiring whether an agent is entitled to commission it is first necessary, as
Viscount Simon L.C. said in Luxor (Eastbourne)
Ltd. v. Cooper (1941) AC, at p
119 "to ascertain with precision what are the express terms of the particular
contract under discussion,
and then to consider whether these express terms
necessitate the addition, by implication, of other terms". The initial
question
- what, on the proper construction of the contract, is the event upon
the happening of which the agent acquires a right to commission
- is one which
has led to difficulty and to a diversity of opinions in many cases. But it is
not the crucial question in the present
case. When the question of
construction has been determined a second question may arise. If, upon the
true construction of the
contract, the commission is only payable in the event
that a particular transaction was brought about by the agent, e.g. upon the
completion of a sale effected by his instrumentality, the question may arise
whether the transaction which in fact occurred was
brought about as the result
of his agency. (at p66)
3. When an agent is employed to sell a property, or to find a buyer, he does
not earn his commission simply by finding someone
who is ready, willing and
able to buy, or who offers to buy. Nothwithstanding what was said in an
earlier decision of this Court,
Macnamara v. Martin [1908] HCA 86; (1908) 7 CLR 699 , it has
become clear since Luxor (Eastbourne) Ltd. v. Cooper (1941) AC 108
that in
such
a case it is at least necessary that a binding contract of sale should
have been executed: see Luxor (Eastbourne)
Ltd. v. Cooper
(1941) AC, at pp
126, 129, 154 ; Jones v. Lowe (1945) KB 73 ; Fowler v. Bratt (1950) 2 KB 96 ;
McCallum v. Hicks
(1950) 2 KB 271
. In Victoria and in New Zealand it has been
held that it is enough in such a case that a binding contract has been
entered
into
as a result of the agency, even though the purchaser subsequently proves
unable to complete it: Scott v. Willmore
& Randell (1949)
VLR 113 ; Latter v.
Parsons (1906) 26 NZLR 645 ; Manns v. Bradley (1960) NZLR 586 . In Queensland,
on the
other hand, it has been
held that the agent is not entitled to
commission unless the purchaser who signed the contract was ready,
willing and
able to complete
it: Pettigrew v. Klumpp (1942) St R Qd, 131 ; Hill v.
Davidson (1950) St R Qd 31 . In Anderson v.
Densley [1953] HCA 47; (1953) 90 CLR 460, at
p
467 three members of this Court, speaking obiter, said:
"Where an agent is employed on commission to sell aThe Court of Appeal of New South Wales has since followed and applied that statement: Montano v. Caffrey (1968) 88 WN (Pt 1) (NSW) 240 . As at present advised I see no reason to differ from the view expressed in Anderson v. Densley [1953] HCA 47; (1953) 90 CLR 460 , but it is unnecessary to consider that question more fully because in the present case the contract made was actually completed. (at p67)
property (and non-completion is not due to the default of the
vendor) the commission only becomes payable if the sale is
completed... If the plaintiff was the effective cause of that
sale...he would at common law have earned his
commission."
4. It is therefore clear that the appellant is not entitled to recover
commission under the contract in the present case simply
because it expended
considerable time and energy in the interests of the respondent and found a
person ready, willing and able
to buy and indeed brought that person to the
very brink of a sale. The appellant must show that a sale was actually
effected. Of
course, a sale was made and completed in the present case, but
the appellant must also establish the necessary causal relationship
between
its actions and the sale, or in other words, that the sale was brought about
through its agency. The law on this question
was stated in Burchell v. Gowrie
and Blockhouse Collieries Ltd. (1910) AC 614, at p 624 as follows:
"There was no dispute about the law applicable to the firstLike all questions of causation this is ultimately a question of fact. (at p68)
question. It was admitted that, in the words of Erle C.J. in
Green v. Bartlett (1863) 14 CB (NS) 681, at p.685 (143 ER 613, at p.614.)
, 'if the relation of buyer and seller is
really brought about by the act of the agent, he is entitled to
commission although the actual sale has not been effected by
him.' Or in the words of the later authorities, the plaintiff
must shew that some act of his was the causa causans of the
sale (Tribe v. Taylor (1876) 1 CPD 505, at p.510.),
or was an efficient cause of the sale
(Millar v. Radford (1903) 19 TLR 575 )."
5. In relation to this matter the learned trial judge based his decision on
alternative grounds. First, he said that he regarded
the case as governed by
the reasoning in Burchell v. Gowrie and Blockhouse Collieries Ltd. (1910) AC
614 , which he thought led
to the conclusion that the appellant was an
effective cause of the purchase by Stocks & Realty. Alternatively, he held
that
the
real commercial fact was that Ann Arbor was itself a purchaser and
that its participation in the purchase was effectively caused
by the efforts
of the appellant. (at p68)
6. With all respect, I consider that a finding that the purchase by Stocks &
Realty was brought about by the acts of the appellant
is insupportable. The
appellant did not introduce Stocks & Realty (or Stocks & Holdings) to the
respondent or to the land,
and
played no part in influencing Stocks & Realty
to enter into the agreement of 6th May or into the contract to buy the land.
The
reasoning in Burchell v. Gowrie and Blockhouse Collieries Ltd. does not
lead to any different conclusion. In that case the
sale
was effected to
"agents or co-adventurers" of the person introduced by the agent, acting in
the same interest as the person
originally
introduced (1910) AC, at pp 623,
625 . It was held that the acts of the agent were an effective cause of the
sale which
actually
took place. The case shows that an agent may be
instrumental in bringing about a sale notwithstanding that his negotiations
have
been with one person and that the sale is made to a different person.
Asprey J.A. correctly and succinctly stated the position
when
he said, in
Moran v. Hull (1967) 1 NSWR 723, at p 725 , "if the agent's efforts with A
result in a sale to A, B and C, the
agent
has earned his commission". It would
be equally true to say that if the agent's efforts with A result in a sale to
B, the
agent
has earned his commission. Illustrations of this latter
proposition may be found in two Canadian cases, Stratton v. Vachon
& Wilson
(1911) 44 SCR (Can) 395 (where the purchase was made by associates of the
person introduced by the agent, although
the latter person
took no part in the
purchase) and McBrayne v. Imperial Loan Co. (1913) 13 DLR 448 (where the
purchase was by
a company with which
the person introduced by the agent was
associated). See also Gunn v. Showell's Brewery Co. Ltd. and Crosswell's
Ltd.
(1902) 50
WR 659 where the agent was employed to purchase, and the purchaser
was a new company promoted by the person for
whom the agent was
acting. But
Burchell v. Gowrie and Blockhouse Collieries Ltd. (1910) AC 614 does not
establish that if an agent
introduces A as
a possible buyer, and a sale is
later made to B, who happens to be a co-adventurer of A, but whose association
with A did not cause
him to make the purchase, the sale must necessarily be
held to have resulted from the agent's efforts. If as
a result of the interest
which the appellant had excited in Mr. Loblay that gentleman had himself
interested Stocks & Realty
in the land, with the result
that that company
bought the property, the appellant might well have been an effective cause of
the
sale. But that was not the
case; Stocks & Holdings was willing to buy the
land before Messrs. Loblay and Graf had their discussion,
and after 6th May
continued
to negotiate with the respondent in the same way as it had been
doing before. The endeavours made by
the appellant to sell to Mr.
Loblay did
not result in the sale to Stocks & Realty. (at p69)
7. The alternative ground upon which the learned trial judge relied was that
Ann Arbor was, as a matter of commercial reality,
a purchaser of a
half-interest in the property. I am prepared to assume, without deciding, that
under the agreement of 6th May
1968, Ann Arbor acquired an equitable interest
in the land immediately it was purchased by Stocks & Realty. However, it did
not
acquire that interest from the respondent. The purchase of the land was
not made by Stocks & Realty as agent for Ann Arbor.
The
parties to the
agreement of 6th May 1968 did not intend that the purchase should be made by
one of them on behalf of both.
They
intended that both should endeavour to
purchase, and (on the assumption already made as to the effect of the
agreement) that
when
the property was bought it should be held by the
purchaser in trust for both parties equally. The document of 6th May 1968
did
not disguise the commercial reality. The reality was that Ann Arbor did not
purchase an interest in the land from the respondent.
In fact, when the
contract was completed, no interest was conveyed from the respondent to Ann
Arbor. So far as the respondent was
concerned, the sale and the conveyance
were to Stocks & Realty alone; the respondent knew nothing about the
acquisition of
an equitable
interest by Ann Arbor. It is contrary to the facts
of the case to say that the appellant was instrumental in bringing
about a
sale
of an interest in the property by the respondent to Ann Arbor, and
thereby earned its commission. (at p70)
8. I do not intend to cast any doubt on the proposition that where an agent
is appointed to find a purchaser for land, it will,
in many cases (depending
of course upon the express terms of the contract), be necessary to imply a
term that if the vendor disposes
of part only of the land or of any interest
therein, as a result of the introduction effected by the agent, the latter
will receive
commission on the sale so made: cf. A. Norton Pty. Ltd. v. Fowler
(1966) 67 SR (NSW) 251, at pp 260-261 . I cannot however accept
that it would
be necessary to imply a term that if the vendor disposes of the whole of the
land, otherwise than through the agency
of the agent, commission will be
payable if in reality an interest is acquired by a person introduced by the
agent, although the
vendor has no knowledge that any such interest is being
acquired and believes that the sale is of the entire interest in the land.
No
doubt, when an agent who is engaged to sell is in fact instrumental in
bringing about a sale, it is immaterial to his right
to commission that the
owner is unaware that the sale was brought about through his agency. In such a
case the event has occurred
upon which the agent becomes entitled to his
remuneration under the contract, and it does not matter that the owner is
unaware
that this has occurred. It does not, however, follow that it is
possible to imply a term that an agent is entitled to remuneration
if he is
instrumental in causing some other person to acquire an interest in the land,
when the owner sells nothing to that person
and is unaware that he has
acquired the interest. (at p70)
9. The position in the present case may be re-stated shortly as follows: The
appellant was engaged by the respondent to find a
buyer. The appellant
introduced A, who was ready and willing to buy. In fact the land was bought by
B, with whom the appellant
had had nothing to do. It may be assumed that B
bought as trustee for A and B, but the respondent was unaware of that fact,
and
the purchase by B did not result from the appellant's efforts to sell to
A. In these circumstances the sale that occurred - that
to B - was not brought
about by the act of the appellant. Commission is not payable under the
contract. (at p70)
10. For these reasons I agree with the conclusion reached by the majority of
the Court of Appeal that judgment should have been
entered in favour of the
respondent. I would dismiss the appeal. (at p70)
STEPHEN J. This appeal is concerned with the curious outcome of protracted
negotiations for the sale of a Sydney hotel property;
curious because two
potential purchasers, discovering themselves to be rivals, agreed to make
common cause: the property would
be bought in the name of only one of them,
but they would in fact share equally as joint venturers in its redevelopment.
(at p71)
2. The sale took place and the vendor was initially unaware of the agreement,
as was its estate agent. The agent had been responsible
for the introduction
of one only of the two potential purchasers, not the one in whose name the
property was bought. The estate
agent, when it did learn of the agreement,
claimed commission on the sale but this claim the vendor rejected. The vendor,
having
found for itself the purchaser in whose name the property was in fact
purchased, saw no reason to reward the estate agent. (at p71)
3. The estate agent sued successfully for its commission before Samuels J. in
the New South Wales Supreme Court. An appeal by
the vendor succeeded before
the Court of Appeal, Hutley J.A. dissenting. It is from the majority decision
of the Court of Appeal,
reversing Samuels J., that the present appeal is now
brought to this Court. (at p71)
4. My brother Jacobs has described, in his reasons for judgment, the general
circumstances with which this appeal is concerned.
To succeed the appellant
must establish that what it did or procured answers the description of what it
was for which the respondent
agreed to reward it by payment of commission.
Because of the very meagre nature of the express terms of the contract between
the
parties, the contract calls for some implication of terms. It follows that
to determine this appeal three distinct steps are involved;
the relevant acts
on the part of the appellant must be identified, the express terms of the
contract described and those additional
terms which the law will imply
ascertained. This done, a comparison of the appellant's acts with the
contractual description of
what was required of the appellant if it were to
earn the promised reward should provide the outcome of the appeal. (at p71)
5. The relevant conduct of the appellant, that is, what it did or procured in
seeking to earn commission, may, when reduced to
its essentials, be stated
quite shortly. It is described in all its necessary detail in the judgment of
Samuels J. and those of
the members of the Court of Appeal. The appellant
first of all introduced to the respondent two prospective joint purchasers,
whose
interests subsequently came to be represented by a company incorporated
for that purpose, Ann Arbor Investments Pty. Ltd. ("Ann
Arbor"). It thereafter
played a part in the lengthy negotiations which ensued. While those
negotiations were proceeding separate
negotiations began between the
respondent and another prospective purchaser concerning whom the appellant
knew nothing; this prospective
purchaser subsequently caused a company Stocks
& Realty (Sydney) Pty. Ltd. ("Stocks") to be incorporated to represent its
interests.
Thereafter for some time the respondent continued its separate
negotiations with each prospective purchaser. The latter each became
aware of
the other's existence and identity and on meeting together they decided to
make the joint venture agreement to which I
have already referred. The learned
trial judge describes the position of the parties immediately before that time
as one in which
the two prospective purchasers were "each willing and able to
purchase and viewed independently each would, apart from the intervention
of
the other, have probably done so. Between themselves, they were, although they
had negotiated separately, ad idem upon the terms
to which they were then
prepared to agree. And I am satisfied that the defendant would have closed
with either of them." By entering
into this joint venture agreement they
avoided the risk that they might, by bidding against one another, force up the
price at
which the property was ultimately bought. (at p72)
6. Neither appellant nor respondent knew of the joint venture agreement. They
continued negotiations with Ann Arbor and the respondent
at the same time
continued negotiations with Stocks. Then, when finality in both instances
seemed close at hand, the respondent
terminated negotiations with Ann Arbor
and entered into a contract of sale with Stocks. (at p72)
7. But for the effect of the joint venture agreement there could be no
question of the appellant having, in these circumstances,
earned commission on
the sale to Stocks, which it did not introduce to the respondent and in whose
negotiations with the respondent
it played no part. (at p72)
8. The effect of the joint venture agreement has been considered in some
detail in the reasons for judgment of Jacobs J. and with
his conclusion I am
in agreement. I share his Honour's view that, for the reasons he states, its
effect was that Ann Arbor became
entitled not merely to share equally in the
development of the property but became entitled in equity to a one-half
interest in
the property itself when purchased by Stocks from the respondent.
However whether or not this consequence of the joint venture agreement
results
in the appellant having earned its commission will depend upon the precise
terms of its agency contract with the respondent.
To these I now turn. (at
p72)
9. The agency contract, in so far as express, was exiguous in the extreme,
clearly calling for the implication of additional terms.
It was oral, made in
the course of one or more conversations between representatives of appellant
and respondent in September 1965.
Those conversations were sworn to by only
one witness, whose imperfect recollection supplies their gist, although little
more than
that; this was that the appellant would, on the respondent's behalf,
seek to find a buyer of the respondent's hotel property at
a price acceptable
to the respondent, being at that time something over three quarters of a
million dollars. (at p73)
10. These then were the express terms to which Viscount Simon referred when,
in Luxor (Eastbourne) Ltd. v. Cooper (1941) AC 108,
at p 119 , speaking of the
implication of terms in commission agents' contracts, he said that the first
task was "to ascertain
with precision what are the express terms of the
particular contract under discussion"; only then might one turn to consider
whether
those express terms necessitated the addition, by implication, of
other terms. (at p73)
11. The express terms in this case amount to no more than a meagre statement
of that which the appellant is to do in the future.
In my view agency
contracts such as this are unilateral contracts in which the agent qualifies
for a reward by procuring for the
intending vendor the sale of his property.
They may possess peculiar features of their own, as suggested by J.R. Murdoch
in "The
Nature of Estate Agency", Law Quarterly Review, vol. 91 (1975), p.
357, but with these we are not here concerned. They do however
clearly involve
the promise of a reward. Where, as here, the parties have confined their
express agreement to a description, itself
inadequate, of what the promisee,
the agent, is to do if he is to gain that reward from the promisor, the
intending vendor, the
law will, by recourse to an implied term, supply the
missing promise by the promisor to pay commission, calculated at a reasonable
rate, upon the sale of the property. It may also by like means supplement the
statement of what it is that the promisee must do
to become entitled to that
reward, but only in a case where, and to the extent to which, the law permits
of the making of such
a supplementary implication. (at p73)
12. That the appellant's reward should consist of remuneration by way of a
reasonable rate of commission, payable upon completion
of the sale, may
readily enough be implied. The implication of such a term flows readily enough
"as a matter of probability" from
all the circumstances (Midgley Estates Ltd.
v. Hand, per Jenkins L.J. (1952) 2 QB 432, at p 435 ) having regard to the
relationship
between the parties and to the matter in hand. The absence of any
reference to a reward requires that "obviously some term must
be implied if
the intention of the parties is not to be defeated" (Luxor (Eastbourne) Ltd.
v. Cooper, per Lord Wright (1941) AC,
at p 137 ) and of the foregoing term it
can be predicated that "it goes without saying". This is very much such a case
as Lord
Somervell referred to in Lister v. Romford Ice & Cold Storage Co. Ltd.
[1956] UKHL 6; (1957) AC 555, at p 597 when he spoke
of instances in which
"the contract,
written or oral, is silent as to matters which have to be settled one way or
the other if
the contract is to be
effective". To imply such a term does no
more than give effect to what may be inferred to have been the manifest
intention of the
parties. Without such a term the contract would lack all
"business efficacy" (The Moorcock (1889) 14 PD 64, at
p 68 ); to imply
it is
to supply the answer which, at the time of contract, the parties would have
given to the question of an
"officious bystander"
(Shirlaw v. Southern
Foundries (1926) Ltd. (1939) 2 KB 206, at p 227 ). (at p74)
13. An alternative basis for the implication of such a term involves no
inquiry as to intention of the parties but rather the
implication of what
Treitel, Law of Contract, 4th ed. (1975), pp. 128-132 describes as a term
implied in law as distinct from one
implied in fact, what H.K. Lucke, in his
"Ad Hoc Implications in Written Contracts" Adelaide Law Review, vol. 5 (1973),
p. 32,
calls "settled", as distinct from "ad hoc", implication. As Lord Reid
observed in Sterling Engineering Co. Ltd. v. Patchett (1955)
AC 534, at p 547
, "the phrase 'implied term' can be used to denote a term inherent in the
nature of the contract which the law
will imply in every case unless the
parties agree to vary or exclude it". Of such implied terms, not dependent
upon the parties'
intention, the implied conditions and warranties on the sale
of goods provide examples. Before they became a part of the statute
law the
courts readily implied them, as in Jones v. Just (1868) LR 3 QB 197 . In
Miller v. Beal (1879) 27 WR 403, at p 404 , Jessel
M.R. observed, of an
auctioneer selling goods without any prior specific agreement as to
commission, that "the main object generally
which auctioneers had in view when
they entered into transactions of such a kind was to earn their commission,
and it would be
doing an injustice not to allow it them", and cases such as
British Bank for Foreign Trade Ltd. v. Novinex Ltd. (1949) 1 KB 623
and Renner
v. Fraser (1911) 31 NZLR 205 provide a basis for allowing commission on the
sale price calculated at a reasonable rate
ascertained in accordance with the
custom of the trade. No doubt commission would also be recoverable on a
quantum meruit claim
(cf. Jacques v. Lloyd D. George & Partners Ltd., per
Cairns J. (1968) 1 WLR 625, at p 634; (1968) 2 All ER 187, at p 194 , at
least
if the case were to be regarded as one in which, although the agent's services
were contractual, there was no agreement as
to the
agent's reward): Way v.
Latilla, per Lord Atkin (1937) 3 All ER 759, at pp 763-765 . (at p75)
14. One way or another there is, then, no difficulty in the present case of
implying such a term. It is when one comes to consider
the other half of the
bargain, the description of what it was which the appellant had to do in order
to earn his reward, that the
position as to the implication of terms is more
obscure. As was said by Samuels J., the facts are scarcely in dispute; what
was
said between the representatives of the parties when the contract was made
was that the appellant was to "locate a satisfactory
purchaser at a
satisfactory price" for the Adams Hotel property, the respondent's then notion
of a satisfactory price being discussed
and the appellant agreeing to "proceed
to see what we can do". (at p75)
15. The task is, no doubt, to determine whether this term of the contract,
understood in the light of permissible processes of
construction and assisted,
if needs be, by permissible implication of terms, can be regarded as satisfied
by the actual conduct
of the appellant. There is, I think, no doubt that the
term requires that there must be an actual sale to an introduced purchaser;
such a meaning will both reflect what is the prima facie likely intention of
parties to all such contracts (Midgley Estates Ltd.
v. Hand, per Jenkins L.J.
(1952) 2 QB, at p 435 ) and will give proper effect to the meaning of
"purchaser". It is accordingly
unnecessary to examine the great volume of
recent cases in the English courts on this particular aspect of estate agents'
commission
contracts, most of which are reviewed by Cairns L.J. in Christie
Owen & Davies Ltd. v. Rapacioli (1974) 1 QB 781 . From them
may,
however,
usefully be extracted the oft repeated injunction against treating such
contracts as involving special rules of construction.
As Upjohn L.J. said in
Ackroyd & Sons v. Hasan (1960) 2 QB 144, at p 154 "there are no special
principles of construction applicable
to commission contracts with estate
agents"; such contracts must, as Ormerod L.J. observed, "be interpreted
according to the ordinary
rules of construction" (1960) 2 QB, at p 162 . (at
p75)
16. Unaided by recourse to processes of construction or implication I am
unable to regard the appellant as having performed the
service described by
this term of the contract. The purchaser to be located was to be a purchaser
of the hotel property and the
only party naturally answering that description
was Stocks; but the appellant neither introduced Stocks to the respondent or
to
the property nor did it play any other relevant part in Stocks' purchase.
As Samuels J. observes in the passage from his judgment
which I have already
quoted, Stocks was, quite independently of Ann Arbor, always willing and able
to purchase and was likely to
have done so even if Ann Arbor had never
ventured upon the scene. If Ann Arbor played no appreciable part in inducing
Stocks to
buy, certainly the appellant played none whatever. The appellant
cannot therefore treat Stocks as the purchaser whose purchase entitled
it to
commission under its contract with the respondent. (at p76)
17. The concept of effective cause has often been called in aid to entitle an
agent to commission in cases where, instead of the
straightforward case of the
introduced party becoming the purchaser, a more complex fact situation has
arisen. For example, the
sale may be made not simply to the party introduced
by the agent but instead to a syndicate or partnership of which he is a member
(see cases annotated in 164 A.L.R. 949), or to his dummy (see cases annotated
in 7 A.L.R. 87), or, with his full approval, to his
associates who, together
with him, are jointly concerned on behalf of a corporate group in which all
are interested (Burchell v.
Gowrie and Blockhouse Collieries Ltd. (1910) AC
614 ), or to a company which he forms or in the formation of which he plays a
part
(McBrayne v. Imperial Loan Co. (1913) 13 DLR 448 ), or to persons with
whom he initially associated himself in his negotiations
with the vendor,
although he later drops out of the transaction altogether (Stratton v. Vachon
& Wilson (1911) 44 SCR (Can)
395
). In each of these instances courts have, in
appropriate circumstances, construed the contract as entitling the agent to
commission
because the agent was an effective cause of the sale, his initial
introduction of the prospective buyer having led quite directly
to the sale.
(at p76)
18. Can the appellant gain any assistance from these decisions? At first
blush there appears to be some analogy between this case
and those cited
above: the appellant's introduction of Ann Arbor to the respondent is
undoubted, and Ann Arbor did acquire an interest
in the property the subject
of the sale. However Ann Arbor cannot be regarded as a "purchaser" of the
property either in the usual
sense of that word or for the purposes of the
commission agreement. Any view of Ann Arbor, rather than Stocks, as the real
purchaser
of the property is untenable; at best Ann Arbor could only be
treated either as buyer of one half of the property or as a party
on whose
behalf Stocks acquired and held one half of such beneficial interest in the
property as accrued to Stocks as purchaser.
(at p77)
19. The first of these possibilities is untenable since there was no sale of
half the property to anyone, let alone to Ann Arbor.
The second fares no
better; whatever interest Ann Arbor acquired it got through Stocks and under
the joint venture agreement and
not at all from the respondent. (at p77)
20. To extend the meaning of the words "locate a purchaser", whether by
liberal construction or by some process of implication,
so as to include that
situation where an agent in effect "procured the sale" or was an (or the)
"effective cause" of the sale does
not avail the present appellant. Stocks was
no "dummy" for or successor to Ann Arbor in the sense that the introduction of
the
latter could be said to have been a cause, effective or otherwise, of the
purchase by Stocks. The joint venture agreement was not
relevantly related to,
nor did it arise out of, the introduction of Ann Arbor by the agent; nor, as
the learned trial judge has
found, was the joint venture agreement an event
without which Stocks would not have become the purchaser. There is no room, in
the present case, for the operation of any term based on the idea of
"effective cause". (at p77)
21. No appeal to commercial realities seems to me to assist the appellant.
The reality, both factual and commercial, was that
the vendor sold to a buyer
which it found for itself and who purchased without the intervention or
encouragement of any agent,
one indeed which would probably have bought, as
the learned trial judge found, whether or not the other prospective buyer had
ever
communicated at all with it. The joint venture agreement contemplates not
a joint purchase from the respondent but a purchase by
one or other of the
joint venturers, the other of them thereupon acquiring from the buyer rights
in the subject matter of the purchase.
Those rights would be derived not from
the vendor but from the other joint venturer, pursuant to the terms of the
joint venture
agreement. (at p77)
22. No process of construction of the contract occurs to me which will, in
these circumstances, in any way assist the appellant.
It is important to
recall what I have earlier referred to, that contracts of this kind are
subject to no special rules and are
to be construed according to ordinary
principles applicable to contracts generally. 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. As
Lord Russell of Killowen said in Luxor (Eastbourne) Ltd. v. Cooper, "The agent
takes the risk in the hope of a substantial
remuneration for comparatively
small exertion" (1941) AC, at p 125 . 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. (at p78)
23. Has, then, a recourse to implication more to offer the appellant? I think
not. No implied term sought to be based upon the
intention of the parties can
be relied upon; one can be confident that at the time of contract nothing was
further from the mind
of either party than that someone introduced by the
agent, while not itself buying the property, might indirectly, by means of a
joint venture agreement with another, acquire an interest in the property.
There is no question here of any answer evoked by an
officious bystander's
question revealing a previously unarticulated intention. (at p78)
24. The uncertainty surrounding the nature of any term as to commission upon
which the parties might have agreed, had they been
able to agree upon any,
demonstrates the inappropriateness of making any implication; would commission
be calculated upon the actual
sale price or only upon the like proportion of
it as Ann Arbor's proportionate interest in the property? Should the rate of
commission
be that applicable to the actual sale price or only to that
proportion of it? Should the obligation to pay it persist whether or
not the
vendor also became liable to pay full commission to another agent who might
introduce the actual buyer? No one answer to
each of these questions can be
predicated as that which the parties, as reasonable men, would necessarily
have joined in giving.
(at p79)
25. In any event the contract is not on its face one which, in respect of the
service to be undertaken by the agent, is wanting
in efficacy; in this respect
the contract as it stands is, in the words of Owen J. in Campbell v. Manly
Municipal Council (1949)
17 LGR 213, at p 217 . "a workable and effective
agreement, and while it might perhaps be reasonable to imply such a term, it
certainly
is not necessary to do so". No clear necessity exists for the
imputation of a term, such as Jordan C.J. regarded in Heimann v. The
Commonwealth (1938) 38 SR (NSW) 691, at p 695 as essential before any
implication might be made. This is not a case in which any
inference that the
parties intended the implication of a term as to the reward-earning conduct is
of such cogency "that another
intention could hardly be supposed": Gullett v.
Gardner, per Dixon J. (1948) 22 ALJ 151, at p 155 , and see Peters American
Delicacy
Co. Ltd. v. Champion [1928] HCA 27; (1928) 41 CLR 316 . (at p79)
26. The only alternative basis upon which a term might be implied would be by
the operation of custom or by the existence of some
settled rule of law
calling for such an implication in the case of contracts of this particular
nature. No question of custom arises
and there is no settled rule applicable
to the relationship of vendor and estate agent which would support the
implication of a
term such as the appellant requires - Luxor (Eastbourne) Ltd.
v. Cooper, per Viscount Simon (1941) AC, at p 120 , Lord Russell of
Killowen
(1941) AC, at p 125 and Lord Wright (1941) AC, at p 137 . (at p79)
27. It follows that in my view the appellant, being unable to rely upon any
implied term or principle of construction as to the
reward-earning service,
and not having in fact performed the service called for by the express term of
the contract, has not shown
its entitlement to any commission. (at p79)
28. I would dismiss this appeal. (at p79)
JACOBS J. This is an appeal from a decision of the New South Wales Court of
Appeal (Moffitt P. and Mahoney J.A., Hutley J.A. dissenting)
reversing a
decision of Samuels J. who had held that the respondent W.J. Adams Estates
Pty. Ltd. was liable to pay $28,480 by way
of commission to the appellant L.J.
Hooker Ltd., a large real estate agency company. (at p79)
2. In September 1965 there was a conversation between Tosh a director of the
appellant, and Adams, who, it was admitted, had authority
to act for the
respondent in this regard. The conversation related to a block of land owned
by the respondent in the City of Sydney.
The respondent carried on an hotel
business on one part of the land and let out other parts of the land. It seems
that the respondent
company was effectively controlled by executors of a
deceased estate. Tosh asked Adams whether he would consider selling the
property.
There was discussion on how much the property was worth. Finally
Adams said that the estate would consider selling, providing they
achieved a
satisfactory price. The satisfactory price was mentioned as being "something
over $3/4 million". Tosh in his evidence
stated: "He (Adams) said we could
endeavour to locate a satisfactory purchaser at a satisfactory price... I said
"Thank you, we
will proceed to see what we can do'". (at p80)
3. In March 1966 Tucker, another director of the appellant, took over the
conduct of the matter. He urged Adams to auction the
property. Adams refused
because he feared staff disruption at the hotel. Adams told Tucker to try to
get a new price of $1.75m.
for the property. Tucker at that time was engaged
in negotiations with a man called Loblay for the purchase of an adjoining site
and brought to Loblay's attention the availability of the Adams' property.
Tucker then commenced a long period of acting as intermediary
between Adams on
the one hand and, at times, an associate of Adams' called Flynn and
beneficiaries of the estate, and on the other
hand Loblay and an associate of
his called Harvey. These negotiations continued throughout 1966 and again in
1967. Part of this
time was used in seeking to obtain vacant possession, an
activity in which Tucker was involved. (at p80)
4. In 1968 matters accelerated. In January the respondent's solicitor
approached the solicitor of Stocks & Holdings Ltd.,
another
property
developer, to try to interest it in the property. Thereafter negotiations
continued in parallel. On the one hand,
the
respondent was negotiating through
the appellant with Loblay and Harvey, and on the other hand the respondent was
negotiating
directly
with Graf the director of Stocks & Holdings Ltd. From at
least early in April onwards, Tucker had been told and believed
there was
another possible purchaser. By mid-April the Loblay group had decided to
purchase through its company Ann Arbor Investments
Pty.
Ltd. and negotiations
proceeded on this basis. The shareholdings in Ann Arbor Investments Pty. Ltd.
went through a series
of rearrangements
but at all relevant times remained
either in the hands of Loblay and Harvey or their nominees or other companies
they controlled.
(at p80)
5. At the end of April, Stocks & Holdings Ltd. incorporated Stocks & Realty
(Sydney) Pty. Ltd., the company to which the
property
was eventually sold.
Also at the end of April, Tucker told Loblay that there was a competing
purchaser, and that he suspected,
though the respondent had not told him, that
this competitor was Stocks & Holdings Ltd. Loblay approached Graf and the
following
agreement was made on 6th May without the knowledge of the appellant
or the respondent.
"This is to confirm that the Agreement between Stocks &
Realty (Sydney) Pty. Limited and Ann Arbor Investments
Pty. Limited, as reached in discussion between Mr. E. Graf
and Mr. L. Loblay this day, is as follows:
(a) Each company will seek to purchase the property being
the whole of the land in Certificate of Title Volume
7846 Folio 119. Pitt to George Streets, Sydney.
(b) Each company will continue to negotiate with the
Vendor on terms and conditions mutually agreed and
fully disclosed between them.
(c) Upon one of the parties becoming purchaser, that party
agrees to complete the purchase and carry out the
redevelopment of the site jointly on a basis of equality.
(d) The total equity capital which the parties agree will be
required up to the time of completion of purchase shall
be approximately $500,000.00.
(e) In the redevelopment the joint venture will seek to
arrange the transaction on a sale and lease back basis
or management agreement producing like results.
(f) In any redevelopment Stocks & Holdings Group of
Companies may through its appropriate subsidiary be
entitled to carry out the building works on terms not
less favourable than the best outside tenderer.
(g) All questions in the joint venture will require
unanimous approval.
(h) If personal guarantees have to be given by the parties
then each party will give the same and give cross
indemnities.
(i) Stocks & Realty (Sydney) Pty. Limited acknowledges
that Landray Industries Limited, or an associated
company of Landray, may be joined in as a partner of
the share of Ann Arbor Pty. Limited. However the
joint party for all purposes hereunder will be Ann
Arbor Pty. Limited.
(j) As far as practicable the legal work will be shared
equally by arrangement between the Solicitors and all
costs shared equally between them." (at p81)
6. By this stage in early May the appellant had brought the respondent and
Loblay and Harvey close to agreement at a price of
$1.8m. On 10th May the
respondent withdrew the matter from the appellant and told the appellant that
it was selling to the other
purchaser. On 14th May the appellant by letter
told the respondent that it suspected collusion between Ann Arbor Investments
Pty.
Ltd. and Stocks & Holdings Ltd. and that if this were the case it would
claim commission. (at p82)
7. Thereafter contracts dated 4th June 1968 were exchanged between the
respondent and Stocks & Realty (Sydney) Pty. Ltd. with
the same sale price of
$1.8m. At the time of exchange of contracts only two shares in that company,
two "B" class shares, had been
issued - one to Graf and the other to his
nominee. On 30th August 1968 Tucker again wrote to the respondent saying that
Loblay
had informed him of the existence of the agreement between the
prospective purchasers but not its exact contents and that the respondent
claimed its commission. On 16th September further shares in Stocks & Realty
(Sydney) Pty. Ltd. were alloted - ten "A" class
shares
and two "B" class
shares to Ann Arbor Investments Pty. Ltd. and ten "A" class shares to another
subsidiary of Stocks &
Holdings
Ltd. By letter of 24th September the
respondent again denied knowledge of the collusion between Loblay and Stocks &
Holdings Ltd.
and in March of the next year the sale to Stocks & Realty
(Sydney) Pty. Ltd. was completed. (at p82)
8. On these facts there was no express contract between the appellant and the respondent. However, the conversation between Tosh and Adams resulted in an implied contract, the appellant being a real estate agent and the context being a business one. It is necessary to determine the content of the implied contract in the light of the language used in the conversation which I have set out and in the light of all the circumstances of the case. Certainly the respondent was to receive a commission on the execution of the consideration on its part. The central issues in the case are - (1) what were the terms of the implied contract and (2) did the events which happened result in the execution by the appellant of a consideration upon which an implied promise to pay commission depended, (3) the amount of the commission. The appellant in its declaration sought to spell out in alternative ways the implied contract upon which it sued but it was unnecessary for it to do so. It was entitled to sue on a common money count. (at p82)
(1) What were the terms of the implied contract?
9. Certainly the respondent agreed to pay a commission to the appellant in
the event that the agent introduced a person who became
a purchaser of the
whole estate and interest of the respondent in the property. The consideration
being a commission, it would
in accordance with common usage be calculated as
a percentage of the price agreed to be paid to the respondent by such a
purchaser.
I do not think that a usage of real estate agents in New South
Wales to claim commission based on the scale fixed by the Real Estate
Institute of New South Wales (whatever it may be from time to time) was
established to be both notorious and reasonable and thereby
to have become an
implied term of the contract. I think that the commission impliedly agreed to
be paid was a reasonable commission
and that the Real Estate Institute scale
was evidence, no doubt strong evidence, of what was in the circumstances
reasonable. (at
p83)
10. What then if a purchaser did not purchase the whole estate and interest
of the respondent in the subject lands? What if the
appellant located a
purchaser who purchased a part of the lands? Or a purchaser who purchased a
part interest in the whole of the
lands? Again, what if the appellant located
a person or company which did not itself purchase but through whose
instrumentality
a third party purchased? These are questions central to the
present case. The answer depends upon the agreement presumed or implied
from
the commissioning of the respondent to locate a purchaser for the property. In
my opinion in a case such as the present, a
quite ordinary case of the putting
of a property in the hands of a real estate agent "for sale" (as it is
commonly but inaccurately
expressed) the implied contract intended by the
parties is that the agent is entitled to commission on that which the
purchaser
located by him purchases, a commission calculated on the price of
that which the purchaser purchases. The agent must of course show
the
necessary causal relationship between the steps taken by him and the
subsequent purchase by the purchaser. I shall return to
this aspect later.
Further, the purchaser must in fact purchase and there is no obligation on the
vendor to accept the person who
is located by the agent and thus to facilitate
the earning by the agent of a commission. It used commonly to be thought
otherwise
but the contrary view was definitively displaced by Luxor
(Eastbourne) Ltd. v. Cooper (1941) AC 108 . But no question on this aspect
arises in the present case. (at p83)
11. Next, the implied contract contained no condition that commission would
only be payable in respect of a purchase by a person
known by the respondent
to have been introduced by the appellant. There is no common understanding in
our community, nor was there
any evidence of a particular usage, which would
import such a requirement. If a proposing vendor commissions an agent to sell
his
property he takes the risk that the person who is in fact located by the
agent may not disclose to him the fact that he has so been
located. If he
wishes to guard against that risk, he may do so by a term in the contract
commissioning the agent or by a warranty
from the purchaser in the contract of
sale. (at p84)
12. Lastly, the implied contract contained no condition that the property, or the interest therein, in respect of the sale of which the appellant claimed commission, should be purchased in the name of a purchaser personally located by the appellant. It would be sufficient that the named purchaser be one nominated by the person located or one who becomes the purchaser through the instrumentality of the person located by the appellant. We must seek in this connexion to give a content to the implied contract between the appellant and respondent which accords with business sense. Substance, not legal form, in such a context must be sought in order to determine that content. For example in Gunn v. Showell's Brewery Co. Ltd. and Crosswell's Ltd. (1902) 18 TLR 659 a brewery company agreed with an agent that "in every case when we purchase properties, houses, or businesses introduced by you we agree to pay you 5 per cent on the amount of the purchase ..." When the agent introduced a suitable business the company set up a subsidiary company which became the actual purchaser. It was held that the parent company was liable to pay commission. In Allen v. Anderson (1969) NZLR 951 an agent was instructed by the two owners of all the shares in a company to sell the property owned by the company. It was held that the agent could recover the commission from the shareholders in the company when they sold their shares to the prospective purchaser of the property introduced by the agent. However, in this connexion also, there must be established the necessary causal relationship between the location of the purchaser and the subsequent purchase and again I reserve consideration of this aspect. (at p84)
(2) Did the events which happened result in the execution by the appellant
of a consideration upon which an implied promise to
pay commission depended?
13. On its face the sale which took place was from the respondent to Stocks &
Realty (Sydney) Pty. Ltd. Loblay and Harvey's
company,
Ann Arbor Investments
Pty. Ltd., on the exchange of contracts became, in my opinion, entitled to a
one-half equitable
interest
in the property as a result of the collusive
agreement of 6th May 1968. I read cl. (c) of that agreement as providing that
whichever
of the two parties thereto should sign the contract of sale it would
both complete the purchase and carry out the redevelopment
of the site
"jointly on a basis of equality". Both the purchase of the site and the
re-development were to be part of a joint venture.
Before completion of the
purchase each party was required to provide in cash approximately $500,000.
The use of the words in cl.
(d) "equity capital" shows that the parties
intended that this would be in return for the issue of shares in the purchaser
company.
An equal shareholding on each side was intended. The clear inference
is that the consequent $1,000,000 would go in payment of part
of the purchase
price of the property. It may also be inferred that the balance of the
purchase price and the costs of redevelopment,
subject to the obtaining of
funds by sale and lease back under cl. (e), would be borrowed on security
because there is a promise
in cl. (h) to give personal guarantees if
necessary. Now if before redevelopment the joint venture had terminated for
any reason,
it is quite clear that the party who happened to have been the
purchaser could not have claimed beneficial ownership of the whole
property.
Equity would have required that the property be held in trust for both parties
jointly, subject to any necessary winding
up of the joint venture in
accordance with the principles governing such a venture. It is not to the
point that the agreement of
6th May was not as a whole specifically
enforceable. Once the property was purchased equity would fasten on to the
property the
rights in respect of the property intended by the parties. (at
p85)
14. Thus Ann Arbor Investments Pty. Ltd. became entitled to a one-half
interest in the whole of the property. No question arises
in this case of a
contract going off after exchange. The purchase was completed through the
medium of the company Stocks &
Realty
(Sydney) Pty. Ltd. in which by the time
of completion Ann Arbor Investments Pty. Ltd. held fifty per cent of the
shares.
Under
the implied contract which existed between the appellant and the
respondent and which I have enunciated under (1) above,
the consideration
upon which the implied promise to pay commission depended became executed,
provided that there was the requisite
causal relation
between the purchase and
the actions of the appellant. The facts that the interest of Ann Arbor
Investments Pty.
Ltd. was a one-half
interest, that it was an equitable
interest and that the transaction of sale and purchase was in the name of
a
nominated company
do not take the events which happened outside the terms of
the implied contract; nor does the fact that the
Loblay interest was
not known
to the respondent, unless for that reason or any other reason in addition or
alternative thereto
there is not the necessary
causal relationship between the
location by the appellant of Loblay and Ann Arbor Investments Pty. Ltd.
and
the subsequent purchase
of the one-half interest. To this I now turn. The
phrase that is time honoured in this context is "effective
cause" or
"efficient
cause", that the agent was an effective cause or the effective
cause. See Anderson v. Densley [1953] HCA 47;
(1953) 90 CLR 460, at p 467 . The
inquiry is a
factual one and it probably does not matter in the long run whether the
definite
or indefinite pronoun is used before
the words "effective cause".
Thus in Burchell v. Gowrie and Blockhouse Collieries Ltd. (1910)
AC 614, at p
625 Lord Atkinson used
the phrases "the effective cause" and "an effective
cause" without distinction between them.
In almost any factual situation a
result will have more than one cause and if there could only be one effective
cause in relation
to a sale within the meaning of
the implication, then there
are plenty of events in this case which would have strong claims for
the title
in competition with
the appellant's actions. "Effective cause" means more than
simply "cause". The inquiry is whether
the actions of the agent really
brought
about the relation of buyer and seller and it is seldom conclusive that there
were other
events which could each be described
as a cause of the ensuing
sale. The factual inquiry is whether a sale is really brought about
by the act
of the agent: Green v.
Bartlett (1863) 14 CB (NS) 681, at p 685 (143 ER 613,
at p 614) quoted in Burchell's Case (1910)
AC, at p 624 . (at p86)
15. On the implied contract in the present case there is only one aspect
which makes one pause in determining that the appellant
was the effective
cause of the purchase by Loblay's nominee company Ann Arbor Investments Pty.
Ltd. of its one-half equitable interest
in the property, namely, that the
respondent did not know of that interest. If it had known, there could never
have been in common
sense any question but that a commission was payable to
the appellant. (at p86)
16. But if it be accepted that the respondent had no knowledge of the
collusion between the proposing purchasers before the exchange
of contracts
despite the appellant's letter of 14th May 1968, then it may be said that from
the respondent's point of view the
purchaser was Stocks & Holdings Pty. Ltd.
and the price of $1.8 million was not to have any commission taken out of it.
In
that
sense the respondent's ignorance caused the sale. (at p86)
17. The fact that a vendor agrees to sell at a certain price to a certain
person under the belief that on such a sale no commission
will be payable to
an agent does not prevent the agent being an effective cause of the sale. This
is so even though the vendor
satisfies the court that he would not have sold
to that purchaser at this price if he had known that the agent had introduced
that
purchaser. It was no part of the contract between the agent and the
vendor that the vendor should know of the agency when he did
that act which
ultimately brought a sale into existence, that which in any sense was a cause
of the sale, namely, the entry into
the contract of sale. On the contract
which arose in the circumstances of this case knowledge of the identity of the
purchaser
of the one-half interest, being no part of any condition of the
contract, did not relevantly affect the fact that the appellant's
act really
brought Loblay and his company into the negotiations which led to a sale in
which that company had a half interest.
(at p87)
18. This conclusion does not depend upon any generalization that two agents
who separately introduce the same purchaser may both
be effective causes of a
sale. That rare case, if it exists at all, can be left until it arises. If and
when it does, I do not
think that it will be simply solved by seeking to
distinguish between an effective cause and the effective cause of a sale. I do
not find it necessary to determine whether certain dicta in L. J. Hooker Ltd.
v. Dominion Factors Pty. Ltd. (1963) 63 SR (NSW)
146 are correct. (at p87)
19. It may also be mentioned that it is of no significance that the
respondent withdrew its instructions to the appellant on 14th
May 1968 almost
a month before exchange of contracts and therefore well before the event on
which commission was to become payable.
It is well established that this does
not defeat the appellant.
"If he was generally employed to sell, and thereafter gaveOn the giving of general instructions the respondent clearly in the circumstances of this case undertook to pay commission to the appellant in respect of any action of the appellant which had the necessary causal link with the later purchase. (at p87)
an introduction which resulted in a sale, he must be held to
have earned his commission, although he did not make the
contract of sale or adjust its terms; because, in that case, he
had implemented his contract by giving the introduction, and
his employer could not defeat his right to commission by
determining his employment before the sale was effected."
(Toulmin v. Millar, per Lord Watson (1887) 58 LT 96, at pp 96-97 ).
20. The revocation of the agent's retainer did not affect the right to this
commission although it may be noted that sometimes
in these circumstances the
amount of commission has been described as damages, Burchell's Case (1910) AC
614 , a description which
was based on a view of the relationship between a
vendor and a real estate agent which has hardly survived Luxor (Eastbourne)
Ltd.
v. Cooper (1941) AC 108 (at p88)
(3) The amount of commission.
21. The appellant was entitled to commission on that sale of which it was the
effective cause within the terms of the implied
contract between the parties.
That was a sale of a one-half interest in the property. The commission agreed
to be paid was that
which was reasonable and, as I have said, a good guide to
what is reasonable is that prescribed by the Real Estate Institute of
New
South Wales for its members. A sum of $28,480 is the commission by this scale
on a price of $1,800,000. There is no evidence
of the exact amount under that
scale on a price of $900,000 but in the absence of any other evidence it
should be determined that
a commission of $14,240, being half that payable on
a sale for twice the amount, is a reasonable sum. (at p88)
22. The appellant claimed primarily that it was entitled to commission on the
whole price. This claim depended upon the submission
that it was in a relevant
sense an effective cause of the sale of the whole property. Upon the facts it
is sufficient to say that
it was not. (at p88)
23. Though the appellant was clearly suing on an implied contract and could
have sued on a common money count the pleader sought
in alternative ways in
the declaration to spell out the terms of such an implied contract. The first
two counts alleged:
1. an agreement between the parties whereby the respondentand in the alternative,
engaged the appellant as agent for the sale of the
property with a term that the respondent would pay to the
appellant commission at a rate prescribed by the Real Estate
Institute of New South Wales ($28,480) upon the appellant
introducing to the respondent a purchaser willing and able to
purchase;
2. a similar agreement with a further term that in the
event of such purchaser entering into a joint venture
arrangement with another prospective purchaser with whom
the respondent was negotiating independently and in the
event of the respondent selling to the other prospective
purchaser upon terms agreed upon by the parties to the joint
venture then the respondent would pay the appellant half the
commission prescribed. (at p88)
24. At first instance the trial judge held that neither contracts alleged in
these first two counts was established. There was
no cross-appeal by the
present appellant. (at p89)
25. The trial judge held that the contract alleged in the third count had
been established, had been performed and that the respondent
was therefore
liable to pay the full commission. On appeal the New South Wales Court of
Appeal held by majority that the contract
alleged in the third count had not
been performed. (at p89)
26. The condition alleged in the third count was that the respondent would
pay to the appellant commission at the rate prescribed
by the Real Estate
Institute of New South Wales upon the appellant introducing to the respondent
a person who became the purchaser
of the property at the price and on the
conditions acceptable to the respondent. I have concluded that what the
appellant did was
to introduce a person who became a purchaser of a half
interest in the property. Does that mean that the appellant fails on the
pleadings? I do not think so. First, in circumstances such as the present
where the agreement to pay depends on no written agreement
or any agreement to
be determined from contested parol evidence but on an implied agreement in the
manner which I have earlier
discussed no purpose is served by such a rigid
application of the rules as to pleading. If necessary an amendment could be
made
to ensure that the pleading conforms with the conditions implied in the
contract. But, secondly, there is no language in the count
which expressly
states that the condition to be performed by the agent can only be performed
in respect of the whole property and
the reference to "property" in the count
is in my opinion sufficient in the circumstances to comprehend a part of the
property
or an interest in the property. The appellant was therefore entitled
to judgment on the third count. The fact that a sum of $28,480
was claimed and
that liability was denied by the plea does not make the issue one of that sum
or nothing. The issue in this respect
is the amount of the debt which is
proved, an amount which, as I have said, should on the evidence be determined
to be $14,240.
(at p89)
27. I would therefore allow the appeal, set aside the judgment of the New
South Wales Court of Appeal and enter verdict and judgment
for the appellant
in that sum. (at p89)
MURPHY J. As commercial transactions become more complicated, it is
increasingly necessary to adapt the rules governing them.
Professor Roebuck
points out that "It has never seemed worthy of comment that we do not expect
the general principles of the law
of contract to cope with the special
problems of many of the most important contracts...we should be happy with our
anomalies and
exceptions, and look for more ways of creating new principles to
deal with problems of limited scope" ("The Crisis of Contract",
Tasmanian Law
Review, vol. 3 (1970), pp. 192-193). (See also Gilmore, The Death of Contract,
(1974). (at p90)
2. The law relating to real estate remuneration is not governed simply by the
general law of contract, the artificialities of
which are often ill-suited to
the area. Commercial realities have often been recognized. The corporate veil,
for example, has been
torn away, with a result indefensible in strict contract
but conforming with quasi-contractual notions of fairness and justice.
(at
p90)
3. It would be unfortunate for the profession of real estate agents (and for
the public dealing with them) if special contracts
must be used to cover
unexpected circumstances. Rather, the general law of contract should be
modified to cope with the special
problems of real estate agents'
remuneration. (at p90)
4. I agree with the analysis of the transactions by Jacobs J. The agent was
the effective cause of a purchase by Ann Arbor Investments
Pty. Ltd. of a half
interest in the property, although there was no separate sale of a half
interest in the property. From the
vendor's point of view, there was a sale of
the entire property. From the agent's point of view, there was a sale (which
it could
claim to have effectively caused) of an interest in half the property
which was, from a commercial point of view, inextricably bound
up with the
vendor's sale. (at p90)
5. The solution in this circumstance is not found in a liability in the
vendor either for the commission on the sale of the whole,
as the agent was
not the effective cause of its sale, or for commission on sale of a half
interest (which on the usual professional
charges, would be more than half the
commission on the sale of the whole), as there was no separate sale of the
half-interest.
If the terminology of contract is to be used, I would imply the
term in the original vendor-agent agreement that, in the events
that have
happened, the vendor would be liable for half the usual commission on the sale
of the whole property, that is, $14,240.
This would be a reasonable commercial
expectation. (at p90)
6. The appeal should be allowed, the judgment of the Court of Appeal set
aside and a verdict and judgment for the appellant entered
in that sum. (at
p90)
ORDER
Appeal dismissed with costs.
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