The Decision at First Instance
55 The primary judge identified the first issue for his decision as whether Concept was entitled to a fee "where its introduction was not a cause of the 2004 deal". His Honour expressly held that "Concept was not the effective cause of the deal in 2004" (Judgment [7]) and it is implicit in the way in which he framed the first issue that he did not regard the introduction as "a cause" of the 2004 acquisition.
56 His Honour referred to a number of authorities concerning the implication in commission agency agreements of a term that the agent will not be entitled to its fee unless it has been the "effective cause" of the transaction. In particular, he referred to the decision in Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351. In that real estate agency case Gummow J referred to the requirement of "effective cause" as "one of the various concepts, understood as terms implied by law, which are found in the body of common law learning applicable to real estate agencies" and noted that terms of this kind, "although treated as implied by law, may be excluded by express provision made by the parties and as a result of the inconsistency with express terms of the contract in question" (at [81]). He went on to say that:
"The notion of 'effective cause' reflects the requirement expressed in a long line of cases that it is not enough that the engagement of the agent to find a purchaser or to introduce a purchaser was a step without the taking of which the sale would not have been effected. Something more immediate is required if the criterion of contractual liability is to be satisfied. This is because, as Macpherson J put it in Doyle v Mount Kidston Mining and Exploration Pty Ltd, it would be 'quite artificial to suppose that the parties intended that the agent should earn his commission simply by finding or locating an individual who, independently of any further action by the agent, later agreed to buy the subject property'" (at [82]).
57 Outside the field of real estate agency cases, the primary judge referred to David Leahy (Aust) Pty Ltd v Macpherson's Ltd [1991] 2 VR 367, Brian Cooper & Co v Fairview Estates (Investments) Ltd (1987) 282 EG 18 and The County Homesearch Co (Thames & Chilterns) Ltd v Cowham [2008] 1 WLR 909 and concluded that whilst the effective cause principle "does extend beyond estate agents", "in reported cases outside the area of vendors' real estate agent[s], the few reported cases indicate that courts are not slow to find inconsistency which will preclude the implication" (Judgment [20 and 24]).
58 He referred to the argument put by Mr Hutley, Senior Counsel for Concept, that in the present case there were two distinct situations in which commission was payable, identified by the two separate numbered paragraphs in the letter agreement, with the reference to causation in paragraph (2) (that is, in the words "which results") indicating "that it is not an element of (1)" (Judgment [17]).
59 His Honour expressed his conclusion on the issue as follows:
"29 Although both constructions are open, in my view, bearing in mind the way courts have construed this sort of agreement in the past, the indications are that Mr Hutley's approach is the correct one. There are two situations in which commission is payable, only one of which involves an element of causation. Even though what occurred in making the deal took place five years after the agreement and between corporations which were governed and constituted quite differently from when the agreement was made, the corporate entities were the same and the plaintiff must abide by its contract" (Judgment [29]).
60 He then considered an argument that the letter agreement of 30 April 1997 had lapsed or had been abandoned.
61 He referred to the statement of Tadgell J at first instance in David Leahy v Macpherson's:
"It might very well be that, if the defendant did not acquire the company or business within a reasonable time of its submission or introduction by the plaintiff, the parties should be assumed to have agreed by implication either to treat the submission or introduction as having lapsed or as being inoperative under the agreement, or that each party might have a right to elect that the agreement should not apply to the submission or introduction" (at 377).
62 His conclusion was that there was insufficient material to show that, the parties intended that "introductions would only be operative for a certain while and then lapse", or, even if they had that intention, "more than a reasonable time had elapsed" (Judgment [33-34]. As to abandonment, he referred to the following statement of Dixon CJ and Fullagar J in Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432: "What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that … 'the matter is off altogether'".
63 He also referred to Chitty on Contracts, 28th ed. (1999) Sweet & Maxwell, where it is said that:
"The party seeking to establish abandonment of a contract must show that the other party so conducted himself as to entitle him to assume, and that he did assume, that the contract was agreed to be abandoned sub silentio " (at [23-027]; in the same terms in the 30 th ed (2008) at [22-027]).
64 The primary judge then considered the issues arising out of the legislation governing business agents.
65 He dealt first with an issue as to whether Concept carried on business in New South Wales. He held that it did and that finding is not contested on appeal.
66 Secondly, he concluded that Concept did not need a licence under the 1941 Act because its act of introduction to Challenger did not amount to "negotiating for the sale, purchase or exchange or any other dealing" (Judgment [60]). This was the only arguably relevant portion of the definition of "business agent". Further, he doubted whether the "merger of two large financial entities by way of scheme of arrangement is within the concept of dealing with or disposing of businesses or professional practices" (Judgment [58]).
67 In any event, he held that the 1941 Act could not be relied upon by Challenger to defeat Concept's claim because it had been repealed by the 2002 Act which he considered did not contain any saving provision which would assist Challenger and because at the time of the repeal Challenger did not have any "accrued right or privilege" to defeat Concept's claim (see Interpretation Act 1987, s 30).
68 Finally, he held that the 2002 Act did not apply because the prohibition relevant to corporations (s 9(2)) refers to the holding of a "corporation licence" and "as it was not possible to hold a licence, the section cannot apply" (Judgment [74]).