ANZ Properties Pty Ltd v Sayde Developments Pty Ltd

Supreme Court of NSW|2020-06-10

Judgment

HER HONOUR: By amended summons filed 7 May 2020, the plaintiff seeks an order pursuant to s 144 of the Civil Procedure Act 2005 (NSW) that proceedings number 2019/326391 in the District Court of New South Wales at Sydney be transferred to this Court.
In this Court, the plaintiff is ANZ Properties Pty Ltd (ANZ Properties). The first defendant is Sayde Developments Pty Ltd (Sayde Developments). The second defendant is EQ Products Pty Ltd (EQ Products). The third defendant is Sydney WSPG Realty Pty Ltd (Sydney WSPG). ANZ Properties relied upon the affidavit of its solicitor Pierre Saab dated 6 April 2020. Sydney WSPG relied upon the affidavit of its solicitor Jiayao Peng dated 13 May 2020. Sayde Developments and EQ Products are not parties to the proceedings in the District Court and do not oppose this application. Sydney WSPG opposes this application on the basis that there is no connection or relationship between the proposed claim in the Supreme Court and Sydney WSPG's claim in the District Court.
Mr M Southwick of counsel appeared for ANZ Properties. Mr G Campbell of counsel appeared for Sydney WSPG.
On 20 May 2020, by consent, an order was made that the first and second defendants be excused from the contested hearing of this transfer application between ANZ Properties and Sydney WSPG.

The pleading framework

The statement of claim filed on 18 October 2019 in the District Court proceedings is between Sydney WSPG as plaintiff and ANZ Properties as defendant. It pleads:
On about 3 February 2016, Sydney WSPG and ANZ Properties entered into a conjunction agency deed in relation to the sale of off the plan properties in a development being carried on by EQ Projects on land situated at XX Norfolk Street, Liverpool (the deed). The deed was in writing.
Sydney WSPG was the co-joined agent as defined in the deed. ANZ Properties was the listing agent as defined in the deed. EQ Projects was the developer as defined in the deed. Sayde Developments was the vendor as defined in the deed.
The commission payable to Sydney WSPG was payable at 50% on exchange of contracts for properties sold by it and 50% on settlement of properties sold by it. In the period that Sydney WSPG acted as agent on the sale of 70 properties to the terms of the deed.
In about June 2016, Sydney WSPG issued invoices for the first tranche of 50% of the commission for properties sold by it to ANZ Properties. The invoices were sent by Sydney WSPG's account to ANZ Properties.
In the period June 2016, ANZ Properties paid Sydney WSPG $342,365 pursuant to the deed for the first commission payable for properties sold by Sydney WSPG. The moneys were paid into Sydney WSPG's bank accounts.
On 21 May 2019, Sydney WSPG issued invoices for the second tranche of 50% of the commission for properties sold by it to the ANZ Properties. The invoices were sent by email by Mr He, the director of Sydney WSPG, to Mr Hayek the director of ANZ Properties.
By, at the latest, 21 August 2019, the sale of all properties sold by Sydney WSPG in the development had settled. The purchasers' solicitor confirmed settlement of 70 properties with Sydney WSPG. As a consequence of the properties settling, Sydney WSPG became entitled to the payment of the remaining 50% of the commission.
On 22 August 2019, Sydney WSPG demanded that ANZ Properties pay it the sum of $395,557 payable pursuant to the deed.
Sydney WSPG pleads that in breach of the deed, ANZ Properties has failed to pay it the sum of $395,557 or any part thereof, and as a result, it has suffered loss and damage.

The defence in the District Court

On 20 December 2019, ANZ Properties filed a defence. ANZ Properties was directed to file any cross claim in the District Court proceedings by 1 April 2020. It has not done. While ANZ Properties intends to join third parties to the proceedings the claim in the proposed cross claim exceeds the jurisdiction in the District Court. ANZ Properties' claim is a claim for the agents' commissions for the sale of the same properties in the same residential development as that claimed by Sydney WSPG in the District Court proceedings.
The defence at [21] raises an issue as to the entitlement of Sydney WSPG as conjunction agent to commission where commission has not been paid by Sayde Developments as vendor and/or EQ projects as developer.

The proposed cross claim

The proposed cross claim is wrongly identified as "Statement of Claim" (Aff, Saab 6/4/2020 p 23).
In the proceedings currently in the District Court, ANZ Properties' proposes to cross claim against Sayde Developments as first cross defendant and EQ Projects as second cross defendant for the unpaid commissions owed to it. ANZ Properties entered into agreements with each of the proposed cross defendants in relation to commission. Sayde Developments is the vendor and EQ Projects is the developer of the property.

The relevant legislation

Section 22 of the Civil Procedure Act reads: "22 Defendant's right to cross-claim (1) Subject to subsection (2), the court may grant to the defendant in any proceedings (the first proceedings) such relief against any person (whether or not a plaintiff in the proceedings) as the court might grant against that person in separate proceedings commenced by the defendant for that purpose. (2) Relief may not be granted under this section against a person who is not a plaintiff in the first proceedings unless the relief relates to, or is connected with, the subject of the first proceedings. …"
Section 56 of the Civil Procedure Act reads: "56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. …"
Section 140(1) of the Civil Procedure Act relevantly reads: "The Supreme Court may, of its own motion or on application by a party to proceedings before the District Court or the Local Court, order that the proceedings, including any cross-claim in the proceedings, be transferred to the Supreme Court."
The parties referred to BOC v MDL [2019] NSWSC 278 ("BOC") and Hau Shan v Fairfield City Council [2020] NSWSC 681("Hau Shan").
In BOC, Hoeben CJ at CL summarised the relevant legal principles that apply to an application pursuant to s 140 of the Civil Procedure Act. His Honour at [17]-[19] stated: "Legal principles 17 In exercising the discretion conferred by s 140 of the Civil Procedure Act, it is necessary for the Court to consider all relevant facts and circumstances (Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 924 at [4], Bryson J; Harbourside Catering Pty Ltd v TMG Developments Pty Ltd [2006] NSWSC 631, Campbell J). 18 The applicant for transfer bears the onus of satisfying the Court that there is "sufficient cause", "sound ground" or "good reason" to transfer the proceedings so that justice is best served between the parties: Sanderson Motors at [3]-[4]; Parry v WGE Engineering Pty Ltd [2003] NSWSC 337 at [3]. 19 In Rinbac Pty Ltd v The Owners - Strata Plan No 64972 [2010] NSWSC 656; 77 NSWLR 601 Brereton J (as he then was) said at [11]: "11 The purpose of the Civil Procedure Act, s 140, is to permit the removal from a lower court to a higher court of proceedings where there is good reason to do so. Typically, that has been where there has been a risk that a jurisdictional limit affecting the lower court would be exceeded, where there are complex and important issues, and where the proceedings involve allegations of significant notoriety or public importance."
In Hau Shan, Button J at [14] said: "14 I think that the issue here is an assessment on my part in a broad sense of the likelihood of this claim succeeding in going beyond the District Court's jurisdiction. Patently, one would reject out of hand, as a matter of theory and practice, the idea that the work of the Supreme Court would be clogged up by matters that, for some reason or other, are sought to be either commenced here or transferred here when it is perfectly clear that a lower Court is ready, willing and able to deal with the matter, and to do justice in the matter."

The three agreements

Counsel for ANZ Properties referred to three agreements. I shall briefly refer to them.
ANZ Properties asserts that neither Sayde Developments nor EQ Projects have paid the commissions that ANZ Properties claims are payable.

Agreement 1

On 25 October 2012, Sayde Developments entered into a sales inspection report and exclusive agency agreement with ANZ Properties. Clauses 3(i) and 3(vi) state: "Agent's Remuneration 3. i. The Exclusive Agent shall be entitled to a fee of 4.4% (GST incl.) … vi. The fee to which the Agent is entitled shall be due and payable on completion of the sale or upon demand if the sale is not completed owing to default of the Principal after the parties have entered into a binding contract or if after the making of the contract the Principal and the purchaser mutually agree not to proceed with the contract."

Agreement 2

On 18 September 2015, EQ Projects entered into an Agency Agreement with ANZ Properties.
In simplified form that agreement provided: 1. For the rescission and re-exchange of the contracts 2. It provided by Clause 10 for EQ Projects (as developer) to pay commissions and fees... in accordance with the Schedule to the document.
Schedule 1(1) of the agency agreement states: (1) The agent is entitled to be paid commission as follows: At Exchange At Settlement Existing exchanges as at 14/9/2015 2.2% 2.2% Rescission & Re-Exchange 2.2% 2.2%

Original Exchange price N/A 3.3%
Uplifted Amount at Re-Exchange New Sales 1.65% 1.65%

Agreement 3 - the conjunction agreement

On 3 February 2016, ANZ Properties entered into a conjunction agreement with Sydney WSPG.
Clauses 3, 4.2 and 5 state: "3. Nature of Conjunction Agreement The Co-Joined Agent agrees and acknowledges: (a) it may only act as conjunction agent for the Property (according to the terms of this deed) in relation to the Conjunction Lots; (b) the Vendor is under no obligation to accept any offer presented by the Co-Joined Agent or Listing Agent; (c) the Co-Joined Agent must not offer to sell any part of the Property other than the Conjunction Lots to the same Previous Purchaser for the same respective lot on terms as may be required by the Vendor and Developer from time-to-time. … 4.2 Commissions (a) The Co-Joined Agent is only entitled to be paid commission from the li sting Agent where a Previous Purchaser of a Conjunction Lot enters into simultaneous rescission of the respective Prior Contract and enters into a new contract for sale of land for the same lot of the Property subject to terms acceptable to the Vendor and Developer, and the new contract is completed. (b) In the event the Vendor rescinds a Prior Contract (either by agreement with the Prior Purchaser or otherwise) then no commission will be payable to the Co-Joined Agent other than the amount already paid to the Co-Joined Agent in respect of the respective lot as set out in the Schedule. (c) Subject to clause 4.2(a) and (b), the amount of commission payable to the Co-Joined Agent is as set out in the Total Commission column of the Schedule, being payable in the following manner: (i) 50% on exchange of a new contract for sale of land; and (ii) 50% on completion of a new contract for sale of land. … 5. Benefit of Developer and Vendor The Parties acknowledges and agree that: (a) the provision• of this deed also operate to the benefit of the Vendor and Developer; and (b) the Vendor and Developer are not parties to this deed."

ANZ Properties submissions

The quantum of the ANZ Properties" proposed cross claim is for the amount $3,474,149, which exceeds the jurisdiction of the District Court: see Hewins v Formica Plastics Pty Ltd [1968] 3 NSWR 793. In accordance with s 22 of the Civil Procedure Act, the statement of claim against Sayde Developments and EQ Projects is related to and connected with the claim, which is the subject of the District Court proceedings.
ANZ Properties submitted that Sydney WSPG's claim in the District Court recites the role of Sayde Developments as the owner, and EQ Projects as the developer. The nature of the case is a construction issue as to how the three agreements overlap and whether they should be construed together. In the conjunction agreement there is an acknowledgement that the agreement acts to benefit of the vendor and the developer even though they are not parties to the agreement. These three agreements need to be construed together. (T 8).
There is express provision in all of the agency agreements, and relevantly in the Sydney WSPG and ANZ Properties' agreement at clause 9, for the provision of a conjunction agent. It expressly says that there can, with approval of the developer and other agents, be a conjunction agent. Plainly, there is more involved in this conjunction agreement than simply an agreement between ANZ Properties and Sydney WSPG in the District Court. (T 14).
There has been no substantive delay in bringing this application. The District Court proceedings have not proceeded past the filing of the defence and it was indicated additional parties were to be joined by cross claim.
There is no evidence of any prejudice or other reason to refuse the transfer (Aff, Peng 13/5/2020). This is not a "pay and be paid" arrangement (referred to below) because there are agents who are both ultimately deriving payment from the vendor of the property.

Sydney WSPG's submissions

Counsel for Sydney WSPG described ANZ Properties' case as a concept known as "pay when paid" in the construction industry that has received negative treatment in the Building and Construction Industry Security of Payment Act 1999 (NSW). "Pay when paid" is where a building contractor would say "I don't have to pay my subcontractors until the principal pays me". (T 10).
The clauses of the conjunction agreement require ANZ Properties to pay Sydney WSPG in two tranches, the first on exchange, and the second on completion. There is no requirement for ANZ Properties to be paid by Sayde Developments and EQ Projects, as third parties, first. Sayde Developments and EQ Projects, while being mentioned in the conjunction agreement, are not parties to it.
It is common ground that ANZ Properties has paid the first tranche to Sydney WSPG, which is in compliance with clause 4.2(c)(i) of the conjunction agreement. The only issue is whether or not there has been completion such that the second payment is triggered under clause 4.2(c)(ii). The evidence in these proceedings will show that completion has occurred, that there has been no intervening factor. The claimed amount is due and owing, however, those are matters for the District Court.
Further, the proposed cross claim by ANZ Properties in the Supreme Court details issues involving two agency agreements between ANZ Properties and Sayde Developments, EQ Projects. Sydney WSPG is not party to those agreements. There is no pleading in the proposed Supreme Court proceedings involving the conjunction agreement. There is no allegation made against Sydney WSPG in the Supreme Court proceedings. Counsel for Sydney WSPG submitted that ANZ Properties claims an indemnity from Sayde Developments and EQ Projects in respect of amounts owing to Sydney WSPG and there is no basis identified for the indemnity. Sydney WSPG is not named as a party in the proposed Supreme Court cross claim. There is no connection between the cross claim and the District Court proceedings. (T 10). There is simply no reason for Sydney WSPG to appear in the proposed Supreme Court proceedings.
There is no reason to keep Sydney WSPG out of its funds claimed in the District Court, which are relatively modest compared to the amounts claimed in the proposed Supreme Court proceedings, and to force it to take part in Supreme Court proceedings in which it is not even named would require it to suffer additional costs, which would be contrary to the provisions of the Civil Procedure Act, including s 56.
Therefore, application must fail because ANZ Properties has not discharged its onus of satisfying the Court that there is "sufficient cause", "sound ground" or "good reason" to transfer the proceedings so that justice is best served between the parties, and accordingly, the interests of justice dictate that the District Court proceedings run in that jurisdiction: see Hau Shan at [18].
Patently, one would reject out of hand, as a matter of theory and practice, the idea that the work of the Supreme Court would be clogged up by matters that, for some reason or other, are sought to be either commenced here or transferred here when it is perfectly clear that a lower Court is ready, willing and able to deal with the matter, and to do justice in the matter: see Hau Shan at [14].

Conclusion

While I accept that there are three separate written contracts involving ANZ Properties referred in the proposed cross claim, the overriding purpose is the resolution of the real issues in dispute. Sydney WSPG submitted that there was no connection between the District Court proceedings and the proposed cross claim. However, Sydney WSPG and ANZ Properties, who are parties to the conjunction agreement, both derive payment of their commission from the vendor of the property, Sayde Developments. ANZ Properties will argue that there is more involved in the conjunction agreement than simply an agreement between ANZ Properties and Sydney WSPG.
ANZ Properties has discharged its onus. I am satisfied that there will be a construction issue as to how the three contracts overlap and how they should be construed together. If the District Court proceedings were transferred to this Court all of the issues can be resolved in one hearing as opposed to three separate hearings in two different courts. If the cross claim is filed in the District the judgment amount is likely to exceed the jurisdiction of that Court. It is my view that these are good reasons to transfer the proceedings in the District Court to this Court and grant leave to ANZ Properties to file and serve a cross claim.
Costs are reserved.

The Court orders that: (1) Pursuant to s 144 of the Civil Procedure Act 2005 (NSW) proceedings number 2019/326391 in the District Court of New South Wales, Sydney are transferred to this Court. (2) ANZ Properties Pty Ltd are to file and serve a cross claim in this Court within 14 days. (3) Costs are reserved. (4) The matter is listed for a directions hearing before the registrar at 9.30 am on 16 July 2020.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2020

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