Creative Academy Group Pty Ltd v White Pointer Investments Pty Ltd

87. 162 CLR 221; [1987] HCA 5 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611; [1975] HCA 41 Scott v Commercial Hotel Merbein Pty Limited [1930] VLR 25 Wigan v Edwards (1973) 1 ALR 497 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; [1978] HCA 42 Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 Texts Cited: Australian Capital Territory Legislative Assembly, Parliamentary Debates (Hansard), 13 March 2003 JD Heydon, Heydon on Contract: the General Part (2019, Lawbook Co) JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5th ed, 2007, LexisNexis Butterworths) New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 May 2002 Category: Principal judgment Parties: Creative Academy Group Pty Ltd (First Appellant) Wonderschool (Conder) Pty Ltd (Second Appellant) Wonderschool (Dickson) Pty Ltd (Third Appellant) Wonderschool (Taylor) Pty Ltd (Fourth Appellant) Wonderschool (Throsby) Pty Ltd (Fifth Appellant) Wonderschool (Woden) Pty Ltd (Sixth Appellant) Simon Larcombe (Seventh Appellant) White Pointer Investments Pty Ltd (First Respondent) Hilton Hedley (Second Respondent) Representation: Counsel: B Walker SC / P Reynolds (Appellants) R G McHugh SC / C E Bannan (Respondents)

Solicitors: Shanahan Tudhope Lawyers (Appellants) Keypoint Law (Respondents) File Number(s): 2023/265994 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity - Commercial List Citation: White Pointer Investments Pty Ltd v Creative Academy Group Pty Ltd [2023] NSWSC 817 Date of Decision: 25 July 2023 Before: Rees J File Number(s): 2021/161182

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In or about October 2017, White Pointer Investments Pty Ltd (White Pointer) entered into an oral agreement with Creative Academy Group Pty Ltd (CAG) pursuant to which White Pointer's director, Hilton Hedley, would assist CAG to identify and lease sites to operate childcare centres in NSW and the Australian Capital Territory (ACT) in return for a fee of $2,000 per child's place at each centre plus GST (the Moncur Agreement). Subsequently, on 14 March 2020, CAG proposed a different arrangement under which it would pay less than $2,000 per child's place, provide what it labelled "advance payment" in respect to some sites and be entitled to a refund of amounts it paid to White Pointer for childcare centres that never opened (the Settlement Proposal). Mr Hedley sourced a number of childcare sites for CAG, including in Hurstville, NSW (the Hurstville site) and at various locations in the ACT (the ACT sites). CAG made payment or part-payment in relation to some of the sites sourced but not others. On 4 June 2021, White Pointer commenced proceedings against CAG and its associated companies (the appellants) claiming amounts alleged to be owed to it under the Moncur Agreement. The appellants resisted the claim and, by way of cross-summons, sought restitution of all amounts they had paid to White Pointer under the Moncur Agreement. They argued that White Pointer had breached the Property and Stock Agents Act 2002 (NSW) (the NSW Act) and the Agents Act 2003 (ACT) (the ACT Act) (both of which required providers of real estate agent services to be licensed, which Mr Hedley was not) such that the Moncur Agreement was illegal or unenforceable, or that the amounts were paid under a mistaken belief that White Pointer could enforce claims for their fees against the appellants. Rees J (the primary judge) found in favour of White Pointer and, on 25 July 2023, ordered the appellants to pay White Pointer $747,650 plus interest. The appellants appealed on the basis that: (1) the primary judge erred in finding that the Moncur Agreement was binding and enforceable; (2) the primary judge erred in finding that the Settlement Proposal was not binding because it lacked consideration; (3) the primary judge erred in finding that White Pointer could recover its outstanding fees in respect of the ACT sites as (despite not being a licensed real estate agent) it was not required to be licensed by the ACT Act; and (4) the primary judge erred in finding that CAG was not entitled to restitution of amounts it had paid to White Pointer given the terms of the NSW Act and the ACT Act. The Court held (Adamson JA, White JA agreeing, Meagher JA dissenting on the application of the ACT Act and availability of restitution) allowing the appeal in part: Whether the Moncur Agreement was binding (1) The minor disparity between the particular (that the Moncur Agreement was made as the result of a single conversation) and the primary judge's finding (that agreement about the timing of payments was made after agreement as to the amount) does not give rise to any practical injustice. The Moncur Agreement was binding and enforceable: at [40] (White JA); [87]-[91] (Adamson JA). Whether consideration was provided under the Settlement Proposal (2) The Settlement Proposal was an attempt by the appellants to gain an unfair advantage by threatening to withhold performance under the Moncur Agreement and rebadge their part-performance of an existing payment obligation as a benefit (labelling payment of $47,650 as an "advance" where more than this amount was outstanding in relation to another site at the time). There is no error in the primary judge's finding that the Settlement Proposal lacked consideration: at [128]-[129], [153], [157]-[158] (Adamson JA). Wigan v Edwards (1973) 1 ALR 497, applied. (3) There was no bona fide dispute about the terms or operation of the Moncur Agreement which the settlement proposal purported to resolve. Its terms were clear and any dispute was manufactured by the appellants: at [13]-[14] (Meagher JA); [40] (White JA); [134]-[143], [157] (Adamson JA). Whether White Pointer or Mr Hedley was required to be licensed by the ACT Act (4) Section 8(2)(b) of the ACT Act is concerned with the "outward-facing conduct" of a real estate agent. That is whether White Pointer negotiated with, induced or attempted to induce the owners of the ACT sites or their agents to lease their premises to CAG: at [21]-[22] (Meagher JA); [44] (White JA); [187] (Adamson JA). Guan v Lui [2021] NSWCA 65, applied. Per Adamson JA, White JA agreeing: (5) At the Throsby, Conder and Woden sites, Mr Hedley merely introduced CAG to the owners' agent and, as such, did not carry on business as a real estate agent within the meaning of s 8(1). The primary judge correctly found that White Pointer could recover their outstanding fees for these sites: at [50], [53], [57] (White JA); [196], [207]-[208], [213]-[215], [222]-[226] (Adamson JA). (6) The primary judge erred in finding that Mr Hedley did not carry on business as a real estate agent at the Red Hill, MacGregor, Taylor and Dickson sites. His dealings with the owners' agent at these sites (making offers higher than those he knew were made by competitors, asking the owner's agent to delay going to market to allow CAG to make an offer and drawing a competitor's financial troubles to the owner's attention) constituted negotiation and attempts to induce: at [47], [51]-[52], [56] (White JA); [201]-[206], [210]-[212], [216]-[221] (Adamson JA). (7) As Mr Hedley was not licensed, White Pointer cannot recover their fees for the Red Hill, MacGregor, Taylor and Dickson sites. The judgment sum must be reduced to $567,250 (the amount outstanding referable only to Throsby, Conder and Woden): at [227] (Adamson JA). Per Meagher JA: (8) The primary judge correctly found that there was no conduct by Mr Hedley in relation to any of the ACT sites that constituted carrying on business as a real estate agent within the meaning of s 8(2)(b): at [24]-[25], [27], [30], [32]-[33], [35], [36]-[38] (Meagher JA). Whether restitution was available Per Adamson JA, White JA agreeing: (9) Restitution is not available on the basis that the Moncur Agreement is unenforceable or illegal. It is not incongruent with public policy, having regard to the purpose of the NSW Act and ACT Act, that White Pointer (despite not holding the requisite real estate agent's licence) retain amounts paid by CAG pursuant to the Moncur Agreement: at [233]-[238], [241]-[242], [243]-[244], [246] (Adamson JA). (10) In circumstances where the appellants have not proved that they would not have paid White Pointer if they had known, at the time of payment, that White Pointer or Mr Hedley was required to be licensed, there is no error in the primary judge's finding that restitution was not available for monies paid by CAG under a mistaken belief that White Pointer could enforce their right to recover them: at [250]-[251] (Adamson JA). Per Meagher JA: (11) As White Pointer did not provide a "real estate agent service" within the meaning of the ACT Act, the appellants' claims to restitution in respect of the ACT sites is not made out. Nor, for the reasons given by Adamson JA, could those claims have been made out if White Pointer was required to be licensed in the ACT: at [3]-[5], [7]-[9] (Meagher JA).

JUDGMENT

1. MEAGHER JA: I have had the benefit of reading Adamson JA's reasons for judgment. What follows assumes a familiarity with those reasons. I agree with her Honour's conclusions with respect to all issues except those relating to whether any of the services provided by White Pointer in relation to the ACT sites constituted a "real estate agent service" within s 8(2)(b) of the ACT Act. It is not controversial that fees with respect to such services could not be recovered by the bringing of proceedings because of the operation of s 23 of that Act. In my view, none of the services provided in relation to those sites answered that description.
2. In addition to explaining my reasoning for this conclusion, in what follows I first summarise the consequences for the restitutionary claims of that conclusion. I then make some further observations for my agreement that ground 1 (whether the Settlement Proposal was unenforceable for want of valuable consideration) should be dismissed.

The restitutionary claims

1. A consequence of my conclusion that White Pointer did not provide any "real estate agent service" in the ACT is that s 23 of the ACT Act did not apply. It follows that the two bases on which the appellants contended they were entitled to restitution of payments already made in respect of those sites could not be made out. Those claims as made were to recover payments for which there had been a total failure of consideration, or as made under a mistake of fact or law.
2. Each of these bases of claim proceeded on the assumption that White Pointer was required to be licensed because it was supplying services which were within s 8(2)(b) of the ACT Act. The total failure of consideration was said to follow because the Moncur Agreement was unenforceable and void for illegality. The relevant mistaken belief was that White Pointer was licensed as required, and that the agreement between it and CAG was legal and enforceable.
3. In relation to the ACT sites and payments sought to be recovered, the underlying assumption that ss 8(2)(b) and 23 were engaged was not made out before the primary judge, and in my view is not made out in the appeal.
4. In relation to the Hurstville site in New South Wales, the primary judge concluded that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the provisions of the NSW Act. I agree, for the reasons given by Adamson JA at [229]-[238] below, that the appeal from that aspect of the primary judgment should be dismissed.
5. The primary judge also concluded that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the relevant provisions of the ACT Act, but did so for the reason that White Pointer was not required to be licensed. Applying similar reasoning to that applied with respect to the provisions of the NSW Act, Adamson JA (at [239]-[244] below) concludes that the Moncur Agreement was not rendered unenforceable or void for illegality by reason of the provisions of the ACT Act, notwithstanding that White Pointer was required to be licensed.
6. It follows from Adamson JA's reasoning that neither of the ways of putting the restitutionary claim in respect of the ACT sites is made out (and irrespective of whether White Pointer was required to be licensed). Although I have reached the same conclusion on the basis that s 8(2)(b) was not engaged, I nevertheless agree with her Honour's reasoning that, if it was engaged, the Moncur Agreement was not thereby rendered unenforceable or void for illegality.

The Settlement Proposal

1. There was no contest before the primary judge that the offer constituted by the making of the proposal in Mr Larcombe's email of 14 March 2020 was accepted and that, objectively, the parties intended to be bound in the terms of that offer (J [234]). The only issue was as to whether their agreement was supported by consideration. The primary judge held that the agreement, which was to replace the existing agreement with one imposing different and far less favourable payment and other terms (including in respect of childcare sites already sourced), was not binding for want of consideration (J [238]-[248]).
2. In Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 456-457; [1954] HCA 20, the High Court accepted the bargain theory of consideration (see Beaton v McDivitt (1987) 13 NSWLR 162 at 168-169 (Kirby P) and 181-182 (McHugh JA); and generally JD Heydon, Heydon on Contract: the General Part (2019, Lawbook Co) at [5.80], [5.90]; JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5th ed, 2007, LexisNexis Butterworths) at [6-09]-[6-11]). That theory treats a contract as a bargain struck between the parties by an exchange and requires that "consideration must be satisfied in the form of a price in return for the promisor's promise or a quid pro quo. The price can be in the form of an act, forbearance or promise" (Beaton v McDivitt at 168 (Kirby P)).
3. The contract said to arise from the Settlement Proposal is a bilateral one. From the appellants' perspective, it may be expressed in terms of promises exchanged between CAG and its associated SPV companies, on the one hand, and White Pointer and Mr Hedley, on the other, as follows: In consideration of you [White Pointer] agreeing to be bound by these new terms relating to our existing and future dealings, and giving up your rights under our original agreement in respect of those existing dealings, we [CAG and SPVs] agree to be bound by these new terms in respect of our existing and future dealings, which are to apply in place of the terms of our original agreement.
4. One of the arguments made by CAG was that the Settlement Proposal resolved a bona fide disputed claim or claims arising out of differences as to the proper construction and application of the Moncur Agreement.
5. As Adamson JA observes at [140]-[141] below, the terms of the Moncur Agreement, though limited, were clear. I agree with her Honour that there was "no room for the implication of terms requiring a refund or limiting the time within which a childcare centre had to open". To the extent that there were questions as to whether the amount of the second tranche should be adjusted if the number of places in the childcare centre as opened were different from those stipulated in the original DA, they were discussed and addressed in the course of the parties' dealings. That was the case in February 2020, when Mr Hedley accepted that "if things changed after the Lease Signing and DA approval", the fee would be altered in the second tranche.

Whether White Pointer was prohibited from bringing proceedings to recover monies alleged to be due in relation to childcare centres in the ACT

1. Section 8(2) of the ACT Act is set out in Adamson JA's reasons at [165] below.
2. The primary judge held that s 8(2)(b) was directed towards the conduct of an agent with respect of the vendor/lessor of a site, which was described in submissions as "outward-facing conduct". I agree with that construction of s 8(2)(b) for the reasons given by the primary judge at J [285]-[286], and add the following observation.
3. Section 8(2)(a) describes transactional activities relating to the acquisition or disposal of an interest in land in relation to which a real estate agent may provide a service for a principal. That principal will be on one side or other of the relevant transaction and accordingly either acquiring or disposing of the relevant interest in land. Section 8(2)(b) describes conduct of the agent directed to achieving the outcome sought by the principal in such a transaction. Where the principal is acquiring, that conduct is directed to the person who is disposing of the interest sought to be acquired. Where the principal is disposing of the interest in land, that conduct is directed to the person acquiring that interest. That is to say, whereas par (a) describes the transactional activity from the perspective of the principal as moving party, par (b) describes conduct of the agent interacting with or directed to the proposed counterparty in the transaction with the principal. Thus, the "person" in s 8(2)(b) is the, or a, counterparty of the principal.
4. There were seven childcare centre sites in the ACT. The primary judge found that, in his dealings with Mr Randell and his principals, Mr Hedley (acting as White Pointer) did not engage in any of the activities described in s 8(2)(b) of the ACT Act. The primary judge made findings as to the underlying facts with respect to those dealings, and they are not challenged on appeal. Those sites include Red Hill, MacGregor, Taylor, Conder and Dickson. Adamson JA has concluded that White Pointer was required to be licensed in the ACT in respect of the services provided for the Red Hill, MacGregor, Taylor and Dickson sites, and that the primary judge erred in holding otherwise. For the reasons below, I consider that the primary judge did not err in holding that White Pointer did not as agent for CAG engage in conduct which fell within s 8(2)(b) of the ACT Act with respect to those four sites.

Conclusion

1. In the result, I would increase the judgment at first instance from $747,650 to $868,650, as the childcare centre at the Taylor site has now opened. More generally, it would follow that the appeal should be dismissed, and that there should be judgment in that amount, together with interest, against the first defendant.
2. WHITE JA: The issues on this appeal are explained by Adamson JA at [67]-[73] in her Honour's reasons for judgment. I agree with Adamson JA that, for the reasons her Honour gives, the Moncur Agreement was binding and enforceable and neither ground 10 nor ground 11 has been established. I also agree with Adamson JA's conclusion that the Settlement Proposal did not involve the resolution of a bona fide dispute and was not binding for lack of consideration and with her reasons for that conclusion. I also agree with the additional reasons of Meagher JA for that conclusion.
3. I also agree with the reasons of Adamson JA and Meagher JA that, irrespective of whether White Pointer was required to be licensed under the Agents Act 2003 (ACT) ("the ACT Act"), Creative Academy Group Pty Ltd ("CAG") is not entitled to restitution for the moneys paid to White Pointer for its services in relation to sites in the Australian Capital Territory. I also agree, for the reasons given by Adamson JA, that CAG is not entitled to restitution for the moneys paid to White Pointer in respect of the Hurstville site.
4. Meagher JA and Adamson JA take different views on whether White Pointer was required to be licensed under the ACT Act in respect of the services it provided in connection with CAG's purchase or leasing of sites in the ACT.
5. This turns on the construction of s 8 of the ACT Act that is quoted in the reasons for judgment of Adamson JA at [165].
6. Meagher JA and Adamson JA are agreed that the "person" referred to in s 8(2)(b) is the, or a, proposed counterparty in the transaction with the principal (at [22], [182]). I agree, for the reasons their Honours give. The question then is whether, on the basis of the primary judge's uncontested findings of fact as to Mr Hedley's dealings with Mr Randell on behalf of the owners of the sites, Mr Hedley was negotiating with the counterparty or was attempting to induce the counterparty to sell or lease, or to make an offer to do so, or to accept an offer from any of the appellants to buy or lease the relevant land.

Red Hill

1. In respect of the Red Hill site, the primary judge found (J [292]) that Mr Hedley forwarded the appellants' initial offer to Mr Randell. After Mr Randell provided feedback on the offer and Mr Hedley had made suggestions to CAG as to how a revised offer should be presented, Mr Hedley then provided the revised offer to Mr Randell. He arranged a meeting with his clients in Canberra with Mr Randell and liaised between Mr Randell and the appellants for further offers for the site. He inspected the site with Mr Randell and the appellants. I agree with Adamson JA that Mr Hedley was thereby attempting to induce the owners (through his dealings with Mr Randell) to make an offer to sell or lease the Red Hill site to the appellants within the meaning of s 8(2)(b) of the ACT Act. He was not merely delivering an offer. Rather by his dealings with Mr Randell and his attendance at the meeting between his client and Mr Randell he was using his personal connection with Mr Randell, which amounted to an attempt to induce the owners to sell or lease the site to the appellants or to make a counter offer.

MacGregor

1. The primary judge found (J [293]) that in respect of the MacGregor site, Mr Hedley's dealings with Mr Randell were limited to enquiring whether, if the appellants built a smaller centre with 90 places rather than the 150 places for which the site was advertised for sale, a new development application would need to be lodged. He arranged a meeting between Mr Randell and the appellants. He forwarded the appellants' offer for the site to Mr Randell. He received the ACT developers' response to the offer and passed on an amended offer. He attended a site inspection with Mr Randell and the appellants.
2. In relation to this site, I agree with Meagher JA that the mere forwarding of the appellants' offer to Mr Randell did not of itself involve any negotiation with Mr Randell or his principals. Nonetheless, I would characterise Mr Hedley's dealings with Mr Randell as an attempt by Mr Hedley to induce Mr Randell's principals to sell the site to CAG.

Throsby

1. I agree with Adamson JA's reasons in respect of the Throsby site.

Taylor

1. The primary judge found (J [295]) that having obtained information from Mr Randell in relation to what was an appropriate market rate per child in the area and having obtained updated plans for the site from Mr Randell, Mr Hedley asked Mr Randell not to go to market as he was sure that his clients would take the site. Mr Hedley inspected the site with Mr Randell and the appellants. He forwarded the appellants' offer to Mr Randell. Having passed on Mr Randell's advice that the offer was insufficient, he forwarded an amended offer. He arranged for the owners' designer to start talking with the appellants' architect. He forwarded a revised offer for the site.
2. In my view, these actions constituted an attempt by Mr Hedley to induce the owners to lease the land to the appellants.

Conder

1. I agree with Adamson JA and Meagher JA that the evidence did not establish that there was any contravention of s 8(2)(b) of the ACT Act in respect of this site.

Dickson

1. As Adamson JA explains, the primary judge found that Mr Hedley provided both Mr Larcombe and Mr Randell with an article in the Australian Financial Review which indicated that the proposed lessee of the Dickson site was in financial trouble. Mr Larcombe advised Mr Hedley that he was obviously keen to get the site. There was already an existing agreement in place with the proposed lessee. Mr Hedley asked Mr Randell whether it was "worth putting an offer under the owner's nose as an alternative given all the bad press" about the then current proposed lessee. Adamson JA has set out the terms of that email (at [217]). The primary judge found (J [297]) that Mr Hedley explored the possibility of leasing the site with Mr Randell as Mr Larcombe was keen to pursue the opportunity.
2. The primary judge found (J [310]) that all Mr Hedley sought to do was to persuade the owner to entertain an offer from the respondents to lease the site where the owner may have already agreed to lease the site to another party. Her Honour characterised this as no more than an introduction of the defendants to the owner for the owner's consideration.
3. I agree with Adamson JA that Mr Hedley's conduct went beyond the mere introduction of his client to the owner for its consideration. In the knowledge of his client's intention to make an offer for the lease of the site, Mr Hedley's disparagement of the then proposed lessee is properly characterised as an attempt by Mr Hedley to induce the owners (through Mr Randell) to accept an offer to lease the Dickson site to the appellants.

Woden

1. I agree with Adamson JA's reasons in respect of the Woden site.

Conclusion

1. For these reasons I agree with Adamson JA's proposed orders 1 and 2. I also agree with her Honour's proposed orders in relation to the costs of the proceedings below and of the appeal.
2. ADAMSON JA: The first appellant, Creative Academy Group Pty Ltd (CAG), the second to sixth appellants, CAG's associated companies, which operated as special purpose vehicles (SPVs), and the seventh appellant, Simon Larcombe, a director of CAG (together, the appellants) appeal against a judgment ordered by Rees J (the primary judge) on 25 July 2023 in favour of the first respondent, White Pointer Investments Pty Ltd (White Pointer), in the sum of $747,650 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW).
3. In the Court below, White Pointer claimed monies alleged to be owed to it by the appellants pursuant to an oral contract it made with CAG in or about October 2017 for services provided by White Pointer's sole director and secretary, Hilton Hedley, the second respondent. It was common ground that, by about September 2017, CAG wanted to lease and develop a site at Hurstville for a childcare centre (the Hurstville site) as well as to lease sites for childcare centres in the Australian Capital Territory (the ACT sites). CAG acknowledged that it lacked connections to obtain sites for that purpose. Mr Hedley, who was familiar with the market for childcare centres, offered to identify sites for CAG and assist it to lease them in return for a fee.
4. White Pointer alleged, and the primary judge found, that there were discussions in around late September 2017 regarding the proposed arrangement between Mr Hedley, Mr Larcombe and Glenn Dumbrell, a business associate of Mr Larcombe who had worked with Mr Hedley in the past. These discussions took place at the Woollahra Hotel. On 20 September 2017, following the first of these discussions, CAG (then under a different name) was incorporated and Mr Larcombe and Jim Mascitelli, who was the Managing Partner of Mazars, an accounting firm, were appointed as its directors. Mr Mascitelli acted as CAG's accountant. Mr Dumbrell was appointed CAG's executive general manager.
5. The shareholders of CAG are, so far as is revealed by the evidence, as follows: Name of shareholder % shareholding Ultimate holder Role of ultimate holder in CAG Zamat Pty Ltd 55% Simon Larcombe Worked in business AWBrooks Pty Ltd 15% Anthony Brooks None revealed Jim Mascitelli 15% Jim Mascitelli Provided accounting services to CAG and its SPVs B Larcombe Pty Ltd 15% Sean Larcombe Simon Larcombe's brother

1. In about September 2017, Mr Hedley started to do some work for CAG with a view to obtaining the Hurstville site for it, although no agreement as to his remuneration had yet been concluded.
2. The primary judge found that in or about October 2017, either in the course of a lunch at Bistro Moncur (located in the Woollahra Hotel) or shortly thereafter, an oral contract was entered into between White Pointer and CAG (the Moncur Agreement) on the following terms: 1. Mr Hedley would source sites suitable for childcare centres for CAG; 2. in return for Mr Hedley's services, CAG would pay White Pointer a total of $2,000 plus GST for each child place at each childcare centre of which: 1. 50% would be paid upon the execution of an agreement for lease (AFL) of the relevant site and the grant of a Development Approval (DA) for the development of the site as a childcare centre; and 2. 50% would be paid upon the opening of the childcare centre.
3. Subsequently (as set out in more detail below), on 14 March 2020, after Mr Hedley had introduced a number of such sites, CAG, by email from Mr Larcombe to Mr Hedley, proposed a different arrangement (the Settlement Proposal) which, if accepted, would result in a substantial diminution of White Pointer's remuneration. Under the Settlement Proposal, CAG proposed that it pay less than $2,000 per child's place at various centres and that it provide "advance payments" of these lesser amounts, which White Pointer would be obliged to repay if the relevant centre did not actually open. CAG alleged, and the primary judge accepted, that White Pointer had agreed to the Settlement Proposal. However, the primary judge found that the Settlement Proposal was not binding as it was not supported by consideration.
4. On 4 June 2021, White Pointer commenced proceedings against the appellants in the Commercial List of the Equity Division of the Supreme Court, claiming amounts alleged to be outstanding under the Moncur Agreement.
5. The appellants resisted the claim on the following four bases: 1. White Pointer had not proved the Moncur Agreement as alleged; 2. Because White Pointer had breached the Property and Stock Agents Act 2002 (NSW) (the NSW Act), the appellants were not liable to White Pointer in respect of any of the childcare centres in NSW; 3. White Pointer was prohibited from bringing proceedings to recover the amounts outstanding in respect of the ACT sites by reason of s 23 of the Agents Act 2003 (ACT) (the ACT Act) as the services which White Pointer had provided through Mr Hedley were "real estate services" within the meaning of s 8(2) of the ACT Act, for which he was required to be, and was not, licensed; and 4. the Settlement Proposal was binding and, accordingly, CAG was liable only for a much lesser amount, which took into account a refund of $79,200 (including GST) which it had paid White Pointer in respect of the Hurstville site (which the Settlement Proposal provided White Pointer had to repay if no childcare centre opened at that site).

The grounds of appeal

1. The appellants appeal on a total of 11 grounds, which can conveniently be grouped as follows: 1. the primary judge erred in finding that the Moncur Agreement had been concluded and was binding, given the disparity between the particulars of the pleaded case and the primary judge's finding (grounds 10-11); 2. the primary judge erred in finding that the Settlement Proposal was not binding because it lacked consideration (ground 1); 3. the primary judge erred in finding that White Pointer was not precluded from recovering its fees in respect of the ACT sites because it did not have a real estate licence under the ACT Act (grounds 2-5); and 4. the primary judge erred in finding that White Pointer was not obliged to repay monies which it had been paid (grounds 6-9), either: 1. because restitution was available given the terms of the NSW Act and ACT Act and given that there was a total failure of consideration in respect of the Moncur Agreement; or 2. on the basis that CAG and associated companies made those payments as a result of a mistaken belief (that White Pointer was not in breach of the NSW Act or the ACT Act).
2. I propose to address grounds 10, 11 and 1 first, which relate to the pleading of the Moncur Agreement and the Settlement Proposal, before turning to the effect of the NSW Act and the ACT Act.

Grounds 10-11: whether the Moncur Agreement was binding and enforceable

The pleading of the Moncur Agreement

1. In its amended Commercial List Statement filed on 10 April 2022, White Pointer alleged: "10 In or around October 2017, Creative Academy entered into an agreement with White Pointer whereby, in return for White Pointer sourcing sites for child-care centres on behalf of Creative Academy or subsidiaries to be incorporated by Creative Academy (Future SPVs), Creative Academy or the Future SPVs (when incorporated) would pay White Pointer a fee (the Agreement). Particulars (a) The Agreement was partly express and oral and partly to be implied from the circumstances in which it was entered into. (b) The Agreement consisted of a conversation between Mr Hedley on behalf of White Pointer and Mr Larcombe on behalf of Creative Academy." (Emphasis in italics added.)
2. White Pointer made an alternative allegation in similar terms in paragraph 10A of its amended Commercial List Statement that Mr Larcombe had entered into an agreement on behalf of or for the benefit of a company or companies to be registered (which was designed to cover the SPVs).
3. White Pointer alleged in paragraph 11 of its amended Commercial List Statement that the terms of the Moncur Agreement included the following: "(a) White Pointer would source sites for child-care centres (Centre(s)) for Creative Academy and/or the Future SPVs (Service); (b) in return for the Service, White Pointer would be paid a fee by Creative Academy and/or the Future SPVs (Total Fee); (c) the Total Fee was $2,000 (plus GST) per placement, per Centre as at the date of the opening of such Centre; (d) 50% of the Total Fee was payable when the lease for a Centre was signed and development consent for the Centre had been obtained (if development consent had not already been given) (Initial Fee); (e) the remaining 50% of the Total Fee was payable when the Centre opened (Final Fee); and (f) in the event the number of placements changed between the time of the signing of the lease for a Centre and the opening of that Centre, then an adjustment was to be made in relation to the Final Fee to accord with paragraph 11(c) above."

The evidence in support of the Moncur Agreement

1. Mr Hedley was the only witness to give evidence in the Court below. His evidence was to the effect that an agreement was reached at or around the time of a lunch at Bistro Moncur in Woollahra in October 2017 and that subsequent correspondence (which included invoices and payments of invoices) confirmed the existence of the agreement. When he was cross-examined by CAG's trial counsel on whether he considered that there was a binding agreement following that lunch, Mr Hedley responded by saying that there was no doubt in his mind that there was such an agreement in the terms alleged (as set out in the pleading). Although an affidavit of Mr Larcombe, who was present at the lunch, had been served, it was not read and he was not called as a witness. The respondents had served an affidavit of Mr Dumbrell. That affidavit was not read and he was not called to give evidence.

Submissions made in the Court below about the Moncur Agreement

1. CAG's trial counsel submitted that the agreement which was reached at the Bistro Moncur lunch was that Mr Hedley would source sites for childcare centres for CAG and could claim a fee, which CAG would pay if it considered it to be reasonable, and, if there had to be negotiations about the amount, such negotiations would take place as part of the arrangement between long-standing associates. Thus, the gist of the defence was that, whether or not fees and tranches had been discussed, there was no intention to create legal relations as the discussions gave rise to no more than a loose arrangement.
2. CAG's trial counsel did not suggest in cross-examination to Mr Hedley that there had been no agreement at the Bistro Moncur lunch about the amounts being paid in two tranches.
3. In the Court below no submission was made to the effect that White Pointer ought be held to its particulars that the agreement was made as a consequence of a single conversation as distinct from more than one conversation. Had such a submission been made, it can be expected that White Pointer would have applied to amend the particulars to its amended Commercial List Statement and that the amendment would have been granted unless the appellants could establish irremediable prejudice.

The primary judge's findings about the Moncur Agreement

1. The primary judge accepted that Mr Hedley told Mr Dumbrell (at the Woollahra Hotel but before the lunch at Bistro Moncur) that he was already sourcing sites for childcare centres on behalf of another business, Kids Club Childcare, for a fee of $2,000 per child's place plus GST and would be happy to do the same for CAG (J [209]. Her Honour found that Mr Hedley's actual recall of the conversation was "slight" (J [210]).
2. The primary judge found, in accordance with Mr Hedley's evidence, that at the Bistro Moncur lunch he, Mr Larcombe and Mr Dumbrell had discussed the sourcing of childcare centres. Her Honour also had regard to what she described as "contemporaneous documents" and, in particular the following exchange of text messages between Mr Larcombe to Mr Dumbrell of 14 June 2018, which read as follows: "Mr Larcombe: Hilton has agreed mate Mr Dumbrell: Great work so fee for the 5%? How much cash? Mr Larcombe: Mate It was always $2000 per kid. So around $184k Half at execution and DA Other half once open" (Emphasis added.)
3. The primary judge also found, contrary to Mr Hedley's evidence but on the basis of Mr Larcombe's text message of 14 June 2018, that the agreement that the fee would be paid in two tranches and not as a single payment was made after the Bistro Moncur lunch. It is plain from her Honour's reasons that her Honour construed the reference to $2,000 per child as something which had been agreed before the agreement about the money being paid in two tranches (which appears to have been a concession by Mr Hedley and not something which he offered to Kids Club).
4. The primary judge concluded at J [214]: "I am satisfied, however, that the plaintiff offered to 'source' childcare sites for the defendants for a fee. Mr Hedley proposed a fee of 5% (of what is not known) but the parties agreed on 'a straight fee' of $2,000 a place. Whether this happened at or after the lunch is unknown and immaterial. The defendants accepted this offer. The parties later agreed that the fee would be paid in two tranches."

The alleged denial of procedural fairness

1. Mr Walker submitted that the primary judge's finding that the figure of $2,000 had been agreed before there was any agreement about when it would be paid amounted to a denial of procedural fairness because the finding went beyond the case as pleaded and particularised. Mr Walker placed particular emphasis on the circumstance that the particulars, as they appeared in the Commercial List Statement as originally filed, relied on "conversations" but that the amended Commercial List Statement deleted the "s" to rely only on a single conversation which is said to have occurred "in or around October 2017" and not, for example, in June 2018 when Mr Larcombe sent his text to Mr Dumbrell. Mr Walker submitted, on this basis, that in so far as it alleged breach of the Moncur Agreement, White Pointer's claim ought to have been dismissed.

Consideration

1. One of the purposes of a statement of claim (or in this case a Commercial List Statement) is to put a defendant and the court on notice of the way in which a plaintiff puts its claim and the material facts relied on in support of the causes of action pleaded. It must be sufficiently clear to permit the defendant to file a defence and, thereby, to indicate what matters are in issue. The pleadings define the issues and determine admissibility on the grounds of relevance: see generally, Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70; Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (Mason CJ and Gaudron J); [1990] HCA 11. Pleadings and particulars are an important aspect of procedural fairness in the context of adversarial litigation.
2. In the present case, the principal issue between the parties regarding the Moncur Agreement was whether there was a binding agreement between CAG and White Pointer as to the amount and timing of payment (as White Pointer contended) or whether there was a loose arrangement between them, the details of which would be worked out from time to time (as the appellants contended). Although Mr Hedley's evidence was that both the amount and timing of the payments had been agreed at the Bistro Moncur lunch, the primary judge was entitled to prefer the inference to be drawn from Mr Larcombe's text of 14 June 2018 (that the timing of payments was agreed after the agreement as to amount) over Mr Hedley's recollection.
3. That the text was sent on 14 June 2018 did not mean that the agreement as to timing of payments was not concluded until June 2018; the text was consistent with there being an agreement as to the timing of payments after the lunch but still "in or around October 2017".
4. Further, the timing of the payment or payments was a necessary integer in the concluding of an agreement. The Moncur Agreement, as pleaded, was only concluded when there was agreement as to that matter. In these circumstances, it is difficult to see how any denial of procedural fairness occurred as a result of the particularisation of a single conversation rather than two conversations. Although Mr Walker intimated that the decision not to call Mr Larcombe was the consequence of the reference to a single conversation in the particulars of the Moncur Agreement, the submission appeared to be no more than conjectural and may have been no more than a narration of the sequence of events. I do not accept that the minor disparity between the particular and the primary judge's finding gave rise to any "practical injustice": Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [38] (Gleeson CJ).

Ground 1: whether the Settlement Proposal was binding

1. The primary judge made detailed findings of fact in relation to the dealings between the parties following the making of the Moncur Agreement, none of which was in serious contest on appeal. The facts germane to ground 1 are summarised below.

Mr Hedley's understanding of his role

1. Mr Hedley deposed in his affidavit sworn 25 March 2022: "I considered that White Pointer's main value to companies operating under the Wonderschool brand was that, because of the relationships I had and could establish due to my 27 years of experience as an agent and consultant, I was able to introduce and recommend them as tenants to landlords and/or their agents so that they could lease sites on which to operate child-care centres and establish the Wonderschool brand. In my view and based on my experience in the commercial property industry, without these relationships and the work done by White Pointer, through me, the Defendants, particularly in 2018 and 2019, had little chance of securing sites to operate child-care centres. This was particularly so for the sites that White Pointer, through me, sourced for the Defendants in the Australian Capital Territory."
2. Mr Hedley accepted that he was not merely "sourcing" sites for CAG and its SPVs, but that he was also helping them to secure these sites by recommending them as tenants to the landlords/owners. He said: "I put the tenant [CAG] forward to the [owner's] agent in their most positive light. It was the agent on behalf of the landlord that decided whether or not to proceed with them."

The Hurstville site

1. The first invoice issued by White Pointer was to "Wonderschool (Hurstville)" for the Hurstville site. "Wonderschool" is a business name owned by CAG. The invoice was issued on 9 November 2018 (J [61]), after the AFL had been entered into and the DA had been granted for 72 places in the childcare centre. The invoice claimed $79,200 (72 places x $2,000 x 50% plus GST) and was paid in full on 6 December 2018 (J [69]). Subsequently, in July 2020, CAG terminated the lease for the Hurstville site, with the result that the second tranche did not become payable as the proposed childcare centre did not open.

The ACT sites

1. Mr Hedley had a professional relationship with Guy Randell, a commercial real estate agent at Burgess Rawson in Canberra (J [15]). Mr Randell's clients were owner/developers, some of whom were obtaining development consent and constructing or leasing sites, including for childcare centres. From 2018, Mr Randell contacted Mr Hedley, with a view to identifying potential tenancies for the childcare centres which Mr Randell's clients were developing (J [15]). As time went on, the appellants had greater direct contact with Mr Randell and, accordingly, the benefit to them of Mr Hedley's connections diminished.
2. In early March 2019, Mr Dumbrell suggested to Mr Larcombe that CAG's shareholders' agreement be changed to provide that if he found a site, the fee that CAG would otherwise pay Mr Hedley ought be added to Mr Dumbrell's own equity (J [104]-[105]). The primary judge found at [106]: "Mr Larcombe did not embrace Mr Dumbrell's suggestion, replying on 3 March 2019: (emphasis added) Put [Mr Hedley] to the side he is getting paid a fee of $2k per pax on all these deals we are doing and has no interest in the business think that's he asked original for 5% with no fee so that what he thought was fair and now gone to straight fee which is simpler for all of us."
3. On 20 March 2019, White Pointer issued invoices in respect of sites at MacGregor and Red Hill in the ACT, as an AFL had been exchanged and a DA granted in respect of each (J [110]-[111]). The invoice for MacGregor claimed $165,000 (150 places x $2,000 x 50% plus GST) and the invoice for Red Hill claimed $132,000 (120 places x $2,000 x 50% plus GST).
4. In respect of each of the MacGregor and Red Hill invoices, CAG asked White Pointer to issue revised invoices for half of the amount of the first tranche, with an invoice for the remaining half of the first tranche to be rendered six weeks later. White Pointer was prepared to grant these indulgences. On 28 March 2019, Mr Hedley sent through invoices in Microsoft Word format for Mr Larcombe to amend. The revised invoice for MacGregor was for $82,500 and for Red Hill for $66,000 (being half of the first tranche). These changes were confirmed by email on 28 March 2019. Both revised invoices were paid on 29 March 2019. On 14 June 2019, CAG issued further invoices in respect of MacGregor for $75,000 and Red Hill for $60,000, both of which incorporated a 10% discount for prompt payment and which were paid on 18 June 2019 (J [146]).

Mr Hedley's urgent requests for payment of outstanding sums

1. On 5 February 2020, Mr Larcombe sent Mr Hedley a text message in which he informed him that funds would only be released to him when a bank loan to CAG had been approved (J [169]). On 6 February 2020, Mr Hedley responded to Mr Larcombe by text, saying that it was "not really the text [he] was expecting.". Mr Hedley explained in his text that he really needed a statement from CAG as to what was owing and that he "was prepared to accept just $20k today on the basis that the rest came by the end of Feb." Mr Hedley sent a further text saying: "$20k is peanuts in the scheme of things but would keep me going and keep the wolves at bay for a few weeks as long as everything was sorted at the end of Feb or sooner when CbA [CAG's bank loan] lands."
2. In a subsequent text sent on the same day, Mr Hedley said in part: "I just need that email with the fees and timeline please asap and if u can spare 20k until late feb then that would be great. I have been waiting since December and it[']s now February. Cheers"
3. On 7 February 2020 (the following day), Mr Larcombe sent Mr Hedley an email in which he said: "As discussed $50k of your fees due will be paid in March Apologies for the delay as always thankyou"
4. The following text messages were subsequently exchanged between the two men: Mr Hedley: "Mate your email is ridiculous. You know it is Why are u doing this when you know the fees are about 6 x that" Mr Larcombe: "Gee mate it was just an email saying you would get paid part in March what's wrong with that? How about you write the email and I'll send it back to you." Mr Hedley: "Ok I[']ll send it now"
5. At 11.08am on 7 February 2020, Mr Hedley sent an email to Mr Larcombe in accordance with his request, in which he drafted an email for Mr Larcombe to send back to him, as follows: "Hi Hilton As per our most recent discussion I thought [I'd] send an email outlining what has been paid to date and what Is owing to you for deals completed and impending deals relating to Wonderschool. These fees are based on paying the agreed rate of $2k per licensed place. $1k upon lease signed, DA Approval and becoming unconditional, the remaining $1k to go towards equity in the business. Please note that the shareholders agreement outlining equity splits are being drafted and will be sent short[l]y. What has been paid to date is: Dickson: $90k paid (nothing further owed other than equity) Hurstville: $72k (nothing further owned other than equity) Red Hill: $60k (a further $60k is owing once unconditional) + equity M[ac]gregor: $75k (a further $75k is owing once unconditional) + equity Throsby: $55k (a further $55k is owing once the additional places are approved) Conder: $109k owing now + equity We are awaiting further finance from the Commonwealth Bank which we are anticipating will be paid towards the end of February. All outstanding amounts will be paid upon our finance being paid. We also expect Red Hill and McGregor to be unconditional within weeks. Regards Simon."

The Settlement Proposal

1. There is no challenge to the primary judge's findings as to the communications which the appellants contended, at trial and on appeal, made the Settlement Proposal a binding agreement which superseded the Moncur Agreement (assuming that agreement to be binding). It is convenient to set out her Honour's factual findings in full: "181 On 14 March 2020, Mr Larcombe sent a lengthy email to Mr Hedley, which began: This is the arrangement between yourself personally and White Pointer Investments and Creative Academy Group (and associated companies being Wonderschool associated companies). Advance payments have been made on below projects and if they don't proceed for any reason funds are to be refunded. 182 This was the first time that it had been suggested that the plaintiff would refund fees. Mr Larcombe set out the current position on each of the childcare sites. In respect of the Hurstville site: Wonderschool Hurstville proposed 72 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021 This has dragged out so $1,500 per place plus GST total fee We paid $79,200 incl GST on the 6/12/18 in advance which shall be refunded if it doesn't proceed Fee to pay 3 months after child care centre is open and trading with 72 pax being $39,600 incl GST 183 In respect of MacGregor: Wonderschool MacGregor proposed 150 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021. This centre is to[o] big for the area and will likely never fill to 150 places so fee will be based on 120 places which is still to[o] big This has dragged out so $1,500 per place total fee plus GST for 120 pax We paid $82,500 incl GST on the 29/3/19 in advance which shall be refunded if it doesn't proceed We paid $75,000 incl GST on the 18/6/19 in advance which shall be refunded if it doesn't proceed Fee to pay 3 months after child care centre is open and trading with min 120 pax being $22,500 incl GST 184 In respect of Red Hill: Wonderschool Red Hill proposed 120 pax centre which has not proceeded to date and is still very conditional on them proceeding and drop dead date for us having an acceptable [agreement for lease] to us and construction started on site is 1st January 2021 This has dragged out so $1,650 per place total fee plus GST for 120 pax We paid $66,000 incl GST on the 29/3/19 in advance which shall be refunded if it doesn't proceed We paid $66,000 incl GST on the 18/6/19 in advance which shall be refunded if it doesn't proceed Fee to pay 3 months after child care centre is open and trading with min 120 pax being $85,800 incl GST 185 In respect of Dickson: Wonderschool Dickson proposed 90 pax centre which looks like its proceeding although service approval will not be easy with CECA not liking level 1 child care centres. We are working our way through these issues likely open November/December 2020 No government guaranteed take out for any kids so fee $1,500 per place total fee plus GST for 90 pax We paid $99,000 incl GST on the 19/8/19 in advance which shall be refunded if it doesn't proceed Fee to pay 3 months after child care centre is open and trading with min 90 pax being $49,500 incl GST 186 In respect of Throsby: Wonderschool Throsby proposed 110 pax centre which is open and have service approval for 80 pax. Been all sorts of building issues with this site which has cost us an extra $250,000 in variations. CECA have said we won't get to 110 pax looks like we will max out at 103 pax Total fee $500 a place plus GST for 103 pax We paid $60,500 incl GST on the 26/9/19 Total fee being $56,650 incl GST so you are credit $3,850 187 In respect of Conder: Wonderschool Conder proposed 107 pax centre which will is about to open on 30th March 2020 and have service approval. Been all sorts of building issues with this site which has cost us an extra $550,000 in variations Total fee $500 a place plus GST for 103 pax Total fee due being $51,500 incl GST 188 In respect of Woden and other sites: Other sites that you will be paid a fee are Wonderschool Mitchell, Woden, London Circuit, Vaucluse These sites fee $600 per pax plus GST total fee $300 per pax plus GST when we have satisfactory AFL executed and landlord commences construction on site $300 per pax plus GST 3 months after opening centre and trading 189 In short, Mr Larcombe proposed that the plaintiff would refund its fees if a site did not proceed, and would receive a reduced fee if it did. Mr Larcombe proposed a reduced fee for each site, ranging from $500 to $1,650 a place. The time for payment of the second 50% of the plaintiff's fee was put back by three months after opening. Mr Larcombe said that each of the sites were 'still very conditional' on various matters; he imposed 'drop dead' dates for acceptable agreements for lease and construction to begin. Mr Larcombe's email concluded: On a without prejudice basis, This is the full and final settlement sheet You are to exclusively assist us where possible with all these transactions and do everything in your power to promote Wonderschool/Creative Academy brand and businesses and not compete against us on, or introduce directly or indirectly any other person to, any of these sites listed on this email or the owners thereof. These arrangements are absolutely confidential Being we should not have technically been paid for Hurstville, MacGregor or Red Hill you are in advance or credit by the large sum of $366,550 which you currently owe us if any of those deals don't proceed to completed child care centres for us to take over From now on if you bring us off market deals that we don't know about and not associated with Guy Randell then we will pay you a total fee of $1,500 per pax plus GST being $750 on [agreement for lease] execution and terms being acceptable to us thus unconditional [agreement for lease]/Lease and $750 per pax being paid 3 months after we commence trading in a centre Please confirm your acceptance of these terms today so we can make a payment for Conder fee of $51,500 today less the $3,850 credit for Throsby thus payment today total being $47,650 We think this is a very generous offer given the amount of credit we have advanced yourself and are very reluctant to pay anything given this is the case We hope to continue to work with you in the future 190 Mr Larcombe's proposal was quite extraordinary given the arrangements observed by the parties until then. Unsurprisingly, Mr Hedley replied 'I can't agree to this and will not be signing it. You have done nothing but contradict our agreement and broken promises made as recently as yesterday.' 191 Mr Hedley replied 52 minutes later, and thus presumably having had sufficient time to consider Mr Larcombe's email, 'Taylor? Bronte?' Twenty minutes later, Mr Larcombe replied, 'Taylor same as Throsby. Bungendore no fee bought the land and not involved.' To this, Mr Hedley replied eight minutes later, 'can u make the payment today please?' 192 It is clear from the text messages exchanged between Mr Hedley and Mr Larcombe at this time that Mr Hedley was under very significant financial pressure. Mr Hedley said, 'By the time this had happened, it was clear to me that unless I agreed to his proposal, I was not going to receive a cent.' In parallel with the emails between Mr Larcombe and Mr Hedley were the following text messages from Mr Hedley, the time of each being illegible: U Must be kidding. If I agree to that will u make the payment today ? 193 Eight minutes later, Mr Larcombe replied to Mr Hedley's initial response to the proposal at [190]: (emphasis added) That's not true we went through each deal and your $350k in advance been paid $500m and still ungrateful Shareholders think this is fair and reasonable deal Conder, Throsby are $15k referrals not $50k or $60k fees which we have agreed to pay That's all I can do mate take it and move forward it's a good deal That is, Mr Larcombe acknowledged that the defendants had previously agreed to pay $50,000 for Conder and $60,000 for Throsby but now considered only $15,000 should be paid for each site. 194 One minute later, Mr Larcombe sent an email to Mr Hedley in response to his email asking whether payment could be made that day (at [191]), 'Sure assume you accept the arrangement?' Mr Hedley immediately replied, 'yes please pay thank you.' Soon after, Mr Larcombe sent a text message of a screenshot authorising payment of $47,650, 'Fee Conder.' Mr Hedley agreed that the invoice for Conder was not otherwise due until the end of March 2020. 195 On 16 March 2020, fellow shareholder, Sean Larcombe congratulated Mr Larcombe on the result. Mr Larcombe replied, 'Yes he has been smashed on fees so it's definitely a win for us.' This was effectively the end of the relationship between the plaintiff and the defendants. 196 Notwithstanding the exchange of emails and text messages on 14 March 2020, Mr Hedley sent Mr Larcombe invoices for Red Hill and Conder sites on 3 April 2020, being $121,000 and $239,800 respectively. The description on the Red Hill invoice stated: Re: Consultancy services for Wonderschool Red Hill based on 110 places x $2,000 per place = $220,000 + GST Remaining 50 percent payment due 197 The invoice for Conder stated: Fee as agreed 109 places @ $2,000 per place = $218,000 Centre open trading Total payable now $218,000 + GST 198 There is no evidence of any reply." (Emphasis added in [194] to indicate the words relied on as constituting Mr Hedley's agreement.)

The primary judge's finding

1. The primary judge found that, as CAG had not established that the Settlement Proposal provided any tangible benefit or advantage to the respondents, it lacked consideration and was therefore not enforceable. This finding is the subject of challenge in ground 1. The only issue is whether the Settlement Proposal was supported by consideration.

Consideration

1. The principles for determining whether an agreement is supported by consideration are well established: see Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 456-457; [1954] HCA 20 (in which the High Court accepted the "modern" or bargain doctrine of consideration) and Beaton v McDivitt (1987) 13 NSWLR 162 at 168-169 (Kirby P) and 181-182 (McHugh JA). As was stated in Beaton v McDivitt the law is not concerned with the equality of a bargain, but in some cases the alleged consideration will be so illusory that a quid pro quo will not be found (168-169). Further, in situations where a promise contains a request by a promisor to do an act, the doing of the act by the promisee will usually constitute consideration (181-182).
2. However in the present case, which concerns whether a new promise in the context of a pre-existing contract amounts to consideration, the applicable principles were articulated in Wigan v Edwards (1973) 1 ALR 497 in which Mason J said at 512: "… The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party's new promise of performance will provide sufficient consideration for that benefit. An important qualification to the general principle is that a promise to do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under that contract. The qualification recognizes that for the Court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit, presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract."

The benefit of resolving a bona fide dispute

1. Mr Walker submitted that a bona fide dispute arose as the Moncur Agreement failed to address crucial matters such as: 1. how the amount for the second tranche would be calculated if there was a reduction in the number of permissible child places after the payment of the first tranche but before the childcare centre opened (when the liability to pay the second tranche was triggered); 2. whether White Pointer would be obliged to refund the first tranche payment if the childcare centre did not open at all (in other words, whether the first tranche payments were advance payments pending opening which had to be refunded if no centre opened on the site, or whether they were unconditional payments); and 3. what time for completion (the opening of the particular childcare centre) would be allowed.
2. Mr Walker submitted that, at the time of the Settlement Proposal, there was a bona fide dispute about each of these matters, and that the Settlement Proposal was a "bona fide compromise" of these disputes in the sense described by Mason J in Wigan v Edwards (see [71] above), therefore amounting to sufficient consideration. He did not press the submission put on behalf of the appellants in the Court below that the question whether the respondents could enforce the Moncur Agreement because of alleged breaches of the NSW Act and the ACT Act, which was, implicitly, resolved by the Settlement Proposal, constituted valuable consideration.
3. Each of the matters in (1)-(3) above may be accepted. However, it does not follow from the absence of express terms in the Moncur Agreement dealing with the matters in (1)-(3) above that there was or could be a dispute between the parties which they were unable to resolve in the course of their dealings. The objective intention of the parties at the time the Moncur Agreement was made was that the value of the first tranche was to be ascertained at the time of the AFL and DA and, thus, the number of child places must be that stipulated in the DA. It followed, as a matter of construction, that the appellants would be entitled to benefit if a greater number of places were approved by the time the childcare centre at a particular site was opened and, conversely, White Pointer's entitlement to the second tranche would not be reduced if the number of childcare places were reduced by the time the centre was opened. Indeed, in the course of their dealings, the parties appear to have agreed subsequently that there would be an adjustment in the amount of the second tranche if the numbers of places in the childcare centre were different from those stipulated in the original DA (the agreement is referred to in Mr Hedley's email of 20 February 2020).

The benefit of a written agreement over an oral agreement

1. Mr Walker submitted that the undoubted benefit of a written agreement is that it tends to be more readily enforced as disagreements about the terms of such an agreement tend to arise less frequently.
2. The question whether the provision of a written agreement constitutes sufficient consideration is related to whether there is a bona fide dispute about the terms of the agreement, since it is generally only where there is such a dispute that the difference between an oral and a written agreement is material. The difficulty with the appellants' submission is that the terms of the Moncur Agreement, though limited, were clear. The difference between the Moncur Agreement and the Settlement Proposal was not due to any attempt to clarify or resolve issues as to the meaning and scope of the Moncur Agreement which were the subject of a bona fide dispute. Rather, that difference was, again adopting the language of the primary judge at J [240], "simply another attempt to re-negotiate the oral contract on more favourable terms" to the appellants.
3. The initial invoices were paid soon after they were rendered, following Mr Mascitelli's query of Mr Larcombe whether they accorded with the agreement as to the commission payable to Mr Hedley. There was, as I have said above, no room for the implication of terms requiring a refund or limiting the time within which a childcare centre had to open. To the extent to which the appellants asserted otherwise, I infer that they were, at least by February 2020, endeavouring to manufacture disputes to excuse their obvious breaches.
4. Further, it may be that the deal which its makers thought attractive in the throes of lunch at Bistro Moncur became less so, particularly to Mr Mascitelli, who had not been present at the lunch but was responsible for releasing funds to make the payments. As time went on, the appellants' capacity to pay appears to have been adversely affected by increases in the development costs and delays in opening the centres in the context of the COVID-19 pandemic. These circumstances, rather than any dispute about what had been agreed, led the appellants to renege on payments due under the Moncur Agreement and to assert "rights" which they must have known they did not have under that agreement.
5. For these reasons, the circumstance that the Settlement Proposal was in writing whereas the Moncur Agreement was oral did not provide any benefit or advantage to White Pointer: the terms of the Moncur Agreement were clear and enforceable and the terms of the Settlement Proposal were manifestly inferior (from White Pointer's perspective) to those in the Moncur Agreement.

The promise concerning off-market deals and the deletion of the requirement for a DA

1. Mr Walker submitted that the promise concerning off-market deals conferred a "kind of exclusivity" on White Pointer and the reference to the possibility of deals in respect of new sites (Woden, Mitchell, London Circuit, Vaucluse, Taylor and Bronte) amounted to a benefit. Further, he submitted that the deletion of the requirement for a DA or service approval for the payment of the first tranche was also a benefit since White Pointer would be entitled to the first tranche upon the AFL being executed.
2. These changes amount to no more than a distinction without a difference since it was not only the execution of the AFL but the requirement that "terms be acceptable to [the appellants]" which triggered the appellants' obligation to pay the first tranche in the Settlement Proposal. It could be expected that the appellants would not execute an AFL unless and until a DA approval had been granted (which stipulated the number of child places), particularly if the former (but not the latter) triggered an obligation to pay White Pointer. I reject the submission that the Settlement Proposal conferred any kind of exclusive arrangement since I do not consider this to be the effect of the words used. The reference to potential new sites was not promissory and therefore did not constitute a benefit.

The additional parties to the Settlement Proposal

1. Mr Walker submitted that it was of benefit to White Pointer that not only CAG but also "associated companies being Wonderschool associated companies" would be parties to the Settlement Proposal and therefore liable to pay White Pointer. Thus, he contended that White Pointer would have the benefit of being able to enforce its entitlement against any or all of the SPVs, as well as their holding company, CAG, itself.
2. Mr McHugh submitted that it was not clear how the reference to the associated companies would produce a different result from that produced by the Moncur Agreement, given that Mr Hedley had been asked to revise his invoices to include the name of the particular SPV for the corresponding site. Further, Mr McHugh relied on the fact that each of the SPVs was a wholly owned subsidiary of CAG and submitted that, accordingly, any benefit to White Pointer would be no more than illusory. Further, he submitted that the reason for the reference to the SPVs in the Settlement Proposal may be for the benefit of the SPVs themselves because the Settlement Proposal made provisions for refunds, which would be referable to particular sites, and therefore to particular SPVs.
3. The wording of the Settlement Proposal as to this matter is somewhat opaque. It is doubtful whether it would be effective to make CAG and each of the SPVs jointly and severally liable for payments incurred with respect to a particular site, such that White Pointer could sue any one or more of them. I am not persuaded that this aspect of the Settlement Proposal would be effective to produce a different legal consequence than would apply under the Moncur Agreement (as varied by the introduction of the various SPVs for each site). Nor did the evidence establish whether any SPV was financially independent of CAG or likely to be able to make payments in circumstances where CAG was not financially able to do so. Accordingly, I am not persuaded that it would confer any benefit on White Pointer over and above that for which the Moncur Agreement provided.

The promise to pay $47,650 on 14 March 2020 for the Conder site

1. It was common ground that, as at 14 March 2020, the Conder site had not been opened and, therefore, White Pointer was not entitled to the second tranche until it did (which was expected to occur at the end of March 2020). Under the Moncur Agreement, the amount of the second tranche was $117,700 including GST, based on DA approval for 107 places.
2. The appellants asserted an entitlement to a credit of $3,850 in respect of the Throsby site to reflect the fact that the number of child places, on the basis of which the first tranche had been paid, had been reduced from 110 to 80 places when the childcare centre at that site opened (J [162]).
3. However, as at 14 March 2020, the Throsby centre had already opened and, therefore, the second tranche in respect of that childcare centre had become due. Having regard to the parties' dealings, it was necessary to adjust the amount of the second tranche to reflect the circumstance that the number of child places had been reduced from 110 (on the basis of which the first tranche had been calculated) to 80 places. The amount owing for Throsby, as at 14 March 2020, was $115,500, calculated as follows: Total amount for Throsby centre = $2,000 x 80 plus GST = $176,000 Less amount paid on 26 September 2019 ($60,500).
4. Mr Walker submitted that the outstanding sum in respect of Throsby was immaterial since, by agreeing to the Settlement Proposal, White Pointer had agreed to the allocation of the amount paid to the Conder site and not to the Throsby site.
5. I do not regard the classification of the payment as being for the Conder site as anything other than a colourable attempt to rebadge a partial performance of an existing obligation (by paying less than the amount owing) as a "benefit". I accept Mr McHugh's submission that the acceleration of the payment for the Conder site was "completely illusory".

The benefit of adjusting a transaction which has become too onerous for one party in order to ensure that the transaction is sustainable for both parties

1. Mr Walker submitted that there were benefits in the parties agreeing to less onerous terms (for one party) to ensure that the agreement remained sustainable. It may be accepted that there was a real prospect that the appellants had misjudged their capacity to make the promised payments when they entered into the Moncur Agreement. Mr Hedley's willingness to accept part-payments and to apply discounts for prompt payment indicated that he was not averse to making allowance for the appellants' asserted cashflow difficulties.
2. For the purposes of assessing whether there is consideration in the present case, it was not to the respondents' benefit that the Settlement Proposal was significantly better for the appellants and therefore more likely to enable the appellants to perform it according to its terms. If it were otherwise, a promise to perform less than the extant obligation would, depending on the commercial circumstances of the promisor, amount to consideration. This possibility was excluded in the passage from Wigan v Edwards extracted above.

Conclusion

1. Mr Walker emphasised the portion from the passage from Wigan v Edwards extracted above to the effect that it is not for the court to "value" consideration since this is a matter for the parties and not for judicial assessment. However, the Court is both entitled and obliged to form a view about whether the Settlement Proposal was a bona fide attempt to resolve a genuine dispute. Although there was no defence propounded that, if the Settlement Proposal was binding, it ought be set aside as unconscionable (as there might have been), the principles of the common law are sufficient to address the question, without resort to the doctrines of equity.
2. I regard the Settlement Proposal as properly to be characterised as an attempt by the appellants "to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract" (Wigan v Edwards, 512). The appellants contended that they were entitled to refunds, in circumstances where they must have known that the Moncur Agreement did not incorporate any such entitlements. Any dispute between the parties as to the terms of the Moncur Agreement had been manufactured by the appellants and was, accordingly, not bona fide. At the time they made the Settlement Proposal, the appellants knew that the respondents were cash-strapped because of Mr Hedley's constant pleas to be paid a relatively paltry sum ($20,000 in February 2020), which was much less than was due to White Pointer, to "keep the wolf from the door". In characterising the payment as a payment for the Conder site rather than the Throsby site, they sought to dress up their part-performance of an existing obligation as a valuable concession. It is difficult not to see Mr Larcombe's boast to his brother ("Yes [Mr Hedley] has been smashed on fees so it's definitely a win for us") as consistent not only with the bad faith which imbued the Settlement Proposal but also with the appellants' Schadenfreude that they had got away with unscrupulous conduct by procuring Mr Hedley's "agreement" to it.
3. I reject Mr Walker's submissions that any of the matters referred to above amounted by itself, or in combination, to consideration. The appellants have not established any error in the primary judge's conclusion, amply explained in her Honour's reasons, that the Settlement Proposal, though accepted, was not binding for lack of consideration.

Grounds 2-5: whether White Pointer or Mr Hedley required a licence to perform the services which they performed under the Moncur Agreement and whether White Pointer was prohibited from bringing proceedings to recover monies alleged to be due with respect to childcare centres in the ACT

The statutory provisions

1. It was common ground that the relevant version of the NSW Act was the historical version for the period from 7 July 2017 to 10 October 2018 and that the relevant version of the ACT Act was republication No 35, effective from 31 August 2017 to 26 February 2021. All references to the legislation will, accordingly, be to these versions.

The NSW Act

1. Section 3 of the NSW Act relevantly defines "real estate agent" as follows: "real estate agent means a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise), carries on business as an auctioneer of land or as an agent: (a) for a real estate transaction, or (b) for inducing or attempting to induce or negotiating with a view to inducing any person to enter into, or to make or accept an offer to enter into, a real estate transaction or a contract for a real estate transaction, or (c) for the introduction, or arranging for the introduction, of a prospective purchaser, lessee or licensee of land to another licensed agent or to the owner, or the agent of the owner, of land, or …"
2. Section 8(1) of the NSW Act prohibits a natural person from acting as or carrying on the business of, relevantly, a real estate agent unless that person is the holder of a real estate agent's licence. Section 9(1) is the corresponding provision with respect to corporations.
3. Section 8(2) relevantly provides that an individual is not entitled to bring any proceeding in any court or tribunal to recover any commission, fee, gain or reward for any service performed by them as a real estate agent unless they hold a real estate licence. Section 9(2) is the equivalent for corporations.
4. The extrinsic material for the NSW Act does not particularly illuminate the purpose of these provisions, save that they are designed to regulate those who provide such services for the protection of the public. Of present relevance, the Second Reading Speech (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 May 2002) for the Property, Stock and Business Agents Bill 2002 said at p 1965: "The bill also recognises the activities of buyers' agents who act exclusively for purchasers in finding suitable properties and negotiating sales on the best possible terms for the purchasers. Buyers' agents will continue to be required to hold a real estate agent's licence."
5. White Pointer accepted that it fell within par (c) of the definition of "real estate agent" in s 3(1) of the NSW Act as it introduced a prospective lessee (CAG) to another licensed agent or to the owner or agent of the owner, of land, being the Hurstville site. The primary judge held that White Pointer was acting as an "agent" for CAG in introducing the appellants as prospective lessees of the Hurstville site (J [271]), and that finding is not challenged on appeal. Thus, White Pointer was required to be licensed in respect of the services it provided for the Hurstville site.

The ACT Act

1. Section 8 of the ACT Act relevantly provides: "8 Carrying on business as real estate agent (1) A person carries on business as a real estate agent if the person provides, or offers to provide, a real estate agent service for a principal for reward. (2) Each of the following is a real estate agent service: (a) buying, selling, exchanging, leasing, assigning or otherwise disposing of land; (b) negotiating with, or inducing or attempting to induce, a person to - (i) buy, sell, exchange, lease, assign or otherwise dispose of land; or (ii) enter into, or make or accept an offer to enter into, a contract to buy, sell, exchange, lease, assign or otherwise dispose of land; … (3) To remove any doubt, a person does not carry on business as a real estate agent only because the person carries on business as a stock and station agent."
2. Section 9 of the ACT Act, which applies to stock and station agents, is in similar terms to s 8, except that it includes, in s 9(2), the following: "(c) introducing a buyer or lessee of rural land to another licensed agent or to the owner, or an agent of the owner, of rural land …"
3. Section 18 provides that it is a strict liability offence for a person to carry on business as a real estate agent unless the person is licensed.
4. Section 23 provides: "23 Unlicensed agents cannot recover fees etc A person is not entitled to bring a proceeding to recover a commission, fee or reward for a service provided by the person as an agent if the person was not licensed to provide the service when the service was provided."
5. Section 23 is to be compared with s 100 of the ACT Act, which applies to services provided in relation to rural land or land not intended to be used only or mainly for commercial, business or industrial purposes (s 99). Section 100 provides that a licensed agent is not entitled to a commission or expenses from a principal for services provided by the agent for the principal unless there is a written agency agreement, which "identifies the rebates, discounts, commissions and expenses that the agent may receive" and estimates their amount.
6. The ACT equivalent of the Second Reading Speech, the Presentation speech (Australian Capital Territory Legislative Assembly, Parliamentary Debates (Hansard), 13 March 2003), serves to emphasise the purpose of public protection, such as in the following passages (pp 995-997): "The Agents Bill represents the first major revision of this legislation since 1968 and, importantly, introduces a level of consumer protection noticeably absent from the old legislation. Not only will consumers of agents' services benefit from the proposed reforms; so, too, will agents and their employees. … Agency agreements between agents and sellers must now be in writing; oral agreements will no longer be acceptable. Sellers of properties will be protected from being disadvantaged by unscrupulous agents. This measure will also afford protection in some cases for agents where instructions might not be entirely clear cut. This measure will enable home owners to better understand their rights and obligations under agency agreements. Licensees must now disclose any relationship with a person to whom the agent refers a client or prospective buyer or benefits that might occur to them through a real estate transaction, aside from commissions, in dealings with their clients. This would include benefits received from a financier, a legal practitioner or another real estate agent. This reform will clean up instances of kickbacks and other benefits obtained by agents without the knowledge of clients. In addition, agents can no longer obtain a beneficial interest in a property that they are selling on behalf of a client without the consent of the Commissioner for Fair Trading."

The primary judge's findings of fact and determinations of the appeal on the basis of these findings

1. The primary judge found that Mr Hedley always dealt with the owners' agent (Mr Randell) rather than the owners directly. Her Honour found that what he was authorised to do was informed by the terms of the Moncur Agreement, which required him to identify (source) sites for the appellants (J [289]-[290]).
2. I do not consider it to be to the point that Mr Hedley communicated with the owners' agents, and in particular, Mr Randell, rather than with the owners directly. Where each party is represented by an agent, courtesy, convention and protocol generally require that the agents communicate with each other rather than directly with the other's principal. Further, agents are bound by their instructions. In this context, it is inapposite to describe an agent as a "mere conduit" since it is the nature of agency that the agent is not permitted to act outside the authority conferred by its principal, whether actual or ostensible. The expression "mere conduit" tends to be used in the context of an allegation of misleading or deceptive conduct where a person who is a "mere conduit" is regarded as not engaging in misleading or deceptive conduct because that person simply passes on information "for what it is worth" without vouching for its accuracy: Yorke v Lucas (1985) 158 CLR 661 at 666; [1985] HCA 65 (Mason ACJ, Wilson, Deane and Dawson JJ). It is not a useful expression in the context of agency.
3. None of her Honour's findings of primary fact regarding what Mr Hedley did for the appellants has been challenged. Accordingly I propose to summarise these findings for each of the sites (in the order in which the primary judge addressed them) regarding Mr Hedley's conduct towards the owners and their agents before expressing my view as to whether the conduct fell within s 8(2)(b) of the ACT Act.

The Red Hill site (J [292])

1. Mr Hedley advised the appellants that offering $4,250 per place in their expression of interest for this site would put them ahead of Kids Club who were competing for the lease. He helped the appellants put together an offer and advised them how they could "put their best foot forward" to the owners. He helped arrange meetings between the appellants, Mr Randell and the owners and, after receiving Mr Randell's response to the offer, helped the appellants with a revised offer which he forwarded to Mr Randell.
2. I consider that in putting an offer on behalf of the appellants to the owners agent in their expression of interest at a higher figure than was put by another contender (Kids Club), Mr Hedley was, at least, attempting to induce the owners to make an offer to sell or lease the Red Hill site to the appellants within the meaning of s 8(2)(b) of the ACT Act. Thus, I consider that her Honour's findings of primary fact lead to the conclusion that the respondents are prohibited from bringing proceedings to recover the amount of commission claimed in respect of the Red Hill site.
3. As no part of the respondents' primary claim included an amount in respect of Red Hill (as the first tranche was accepted as having been paid and the second tranche has not yet become payable), my view has no effect on the judgment sum, although it will preclude the respondents from recovering any amount in respect of the second tranche if a childcare centre at the Red Hill site ever opens.

The MacGregor site (J [293])

1. Mr Hedley obtained information from Mr Randell, which he provided to the appellants, that the site was for sale with 150 places. Mr Hedley told Mr Larcombe that 150 places was too many and that the site should be leased in stages or, if purchased, the number of places ought be reduced. Mr Hedley asked Mr Randell whether, if the appellants built a smaller centre with 90 places, a new DA would be required. CAG prepared an offer, which was provided to Mr Hedley, who then "forwarded" that offer to Mr Randell. At the same time, Mr Hedley suggested to the appellants that they check whether there were other obligations which they would be required to meet in respect of 150 places, notwithstanding that their offer was based on 120 places and passed on the ACT developer's response and the appellant's amended offer.
2. I consider that, in communicating the appellants' offer to Mr Randell, which was based on 120 places, Mr Hedley was "negotiating with" the owners (through their agent, Mr Randell), on behalf of the appellants, to make or accept an offer to enter into a contract to sell land within the meaning of s 8(2)(b) of the ACT Act. Thus, I consider that her Honour's findings of primary fact lead to the conclusion that the respondents are prohibited from bringing proceedings to recover the amount of commission claimed in respect of the MacGregor site.
3. As with Red Hill, no part of the respondents' primary claim included an amount in respect of the MacGregor site (as the first tranche was accepted as having been paid and the second tranche has not yet become payable). Accordingly, my conclusion does not affect the judgment sum, although it will preclude the respondents from recovering any amount in respect of the second tranche if a childcare centre at the MacGregor site ever opens.

The Throsby site (J [132]-[140] and [294])

1. The findings of the primary judge with respect to the Throsby site show that, although Mr Hedley gave advice to the appellants, the communications between the appellants and the lessors (either on their own account or through Mr Randell) or with the developers of the site were conducted by the appellants themselves rather than through Mr Hedley. For example, the primary judge found at [132]: "… On 13 May 2019, Mr Randell advised Mr Hedley and Mr Larcombe that he was instructed to receive offers on both Throsby sites. Mr Hedley provided his initial thoughts [to the appellants] on this opportunity, suggesting that the [appellants] would need to be happy with the design for the childcare centre being built and acquire a first right of refusal for the second site 'That way u have 3 years to fill it.'"
2. The evidence does not establish that any communication was made by Mr Hedley to the owners or their agent (Mr Randell) in respect of the Throsby site. The appellants did not establish that the respondents were acting other than as introducers in respect of the Throsby site.
3. As the appellants have not established that the respondents were providing a "real estate agent service" within the meaning of s 8 of the ACT Act, the respondents are not prohibited by s 23 from bringing proceedings to recover their commission in respect of the Throsby site. As the centre was opened, the respondents are entitled to $115,500 (subject to other defences addressed below), as found by the primary judge. As referred to above, this agreed figure takes account of the reduction in child places from 110 (as specified in the DA) to 80 places, as was the number when the childcare centre opened before 14 March 2020.

The Taylor site (J [295])

1. Apart from communications between Mr Hedley and his principal (the appellants), the primary judge found that Mr Hedley did the following: 1. asked Mr Randell to tell him an appropriate market rate per child in the area and communicated this to the appellants (J [295]); 2. asked Mr Randell not to go to market as he was sure that his clients would take the site (J [90] and [295]); and 3. communicated the appellants' initial offer to Mr Randell and, when informed by Mr Randell that the offer of $3,500 per child was "insufficient" (to stop the appellants from going to the market), conveyed that information to CAG and later received an amended offer from Mr Dumbrell, which Mr Hedley provided to Mr Randell (J [93]).
2. I consider that, in asking Mr Randell not to go to market, Mr Hedley was attempting to induce the owners (for whom Mr Randell acted) to make an offer to sell or lease the land to the appellants within the meaning of s 8(2)(b) of the ACT Act. In communicating the appellants' initial and amended offers to Mr Randell, Mr Hedley was negotiating with the owners to induce them to lease the land to the appellants within the meaning of s 8(2)(b) of the ACT Act. Thus, I consider that her Honour's findings of primary fact lead to the conclusion that the respondents are prohibited from bringing proceedings to recover the amount of commission claimed in respect of the Taylor site (Cf. J [307]).
3. The respondents' primary claim included an amount of $121,000 in respect of the Taylor site (as the first tranche, which was due in March 2021, was not paid). Accordingly, this amount must be deducted from the judgment sum as the respondents were not entitled to bring proceedings to recover it. In so far as the respondents maintain a claim for a further $121,000 based on the circumstance that, since the judgment was ordered, the childcare centre at the Taylor site had opened, they are not entitled to make that claim. In conclusion, the effect of s 23 of the ACT Act is that the respondents are not entitled to bring proceedings for any of their fees in respect of the Taylor site.

The Conder site (J [296])

1. Apart from communications between Mr Hedley and the appellants, the primary judge found that Mr Hedley "explored [with Mr Randell] whether the owner would be open to a differently structured deal" (J [296]). However, the primary facts found by the primary judge do not indicate that there was any particular act or conduct of Mr Hedley with the owner or its agent (Mr Randell) which was designed to have that effect. Indeed, her Honour found, at [134], that Mr Hedley told Mr Larcombe and Mr Dumbrell that he "wished to explore Conder and believed they could get the deal they wanted" but then detailed the communications between Mr Larcombe (on behalf of the appellants) and Mr Randell (on behalf of the owner), which resulted in a lease and DA being granted on 12 March 2020 at the latest.
2. In these circumstances, the appellants have failed to prove that there was any act on the part of the respondents which fell within s 8(2)(b) of the ACT Act such that the respondents are prohibited by s 23 from recovering their commission in respect of the Conder site.
3. As the childcare centre at Conder opened at about the end of March 2020, the respondents are entitled to both tranches (totalling $235,400), from which a deduction of $47,650 is to be made (to take account of the payment attributed to that site), leaving an agreed balance of $187,750.

The Dickson site (J [151], [297])

1. The primary judge found that Mr Hedley saw an article in the Australian Financial Review on 4 July 2019 which indicated that Edhod, the proposed lessee of the Dickson site, was in financial trouble. He drew it to the attention of Mr Larcombe and Mr Randell, asking the latter to send it to the owners of the Dickson site (J [151]). Mr Hedley asked Mr Larcombe to draft an offer to Mr Randell but Mr Larcombe responded by email that he would leave it to Mr Hedley and Mr Randell to discuss.
2. Mr Randell responded by saying that it was a "tight lease" and there was "zero room for negotiation". At 10.15am on 4 July 2019, Mr Hedley replied to Mr Randell: "Ok thanks Guy is it worth putting an offer under the owners nose as an alternative given all the bad press about Edhod...? There is about to be more bad press, including staff not being paid their entitlements and suppliers not being paid, including shopfitters, builders and suppliers of play equiptment [sic]. Im flagging this because im guessing a government of any kind cant be seen be involved in any way in a company that operates in such a bad manner. Imagine dickson opening as an edhod and a couple of samoans rocking up to repossess a see-saw with little johnny falling off and busting his knee in the process Not a good look. Thats just one of the things that will happen if you proceed with Edhod Cheers"
3. After this communication, there is no evidence of Mr Hedley having any further communication about the Dickson site with Mr Randell. Mr Larcombe communicated with Mr Randell on and from 5 July 2019.
4. It can be inferred that Mr Hedley's intention in sending the newspaper article about Edhod's financial difficulties to Mr Randell was to disparage the appellants' competitor for the Dickson site. This intention is made even clearer by the terms of the later email in which Mr Hedley spelled out the possible consequences for the owners of proceeding to contract with Edhod, rather than dealing with the appellants with respect to the Dickson site. As such, Mr Hedley's intention was to discourage Mr Randell's principals from proceeding with a lease to Edhod. That raised the opportunity for the appellants to put "an offer under the owners' nose as an alternative".
5. I consider that Mr Hedley's communications with Mr Randell on 4 July 2019 constitute attempts to induce the owners (through Mr Randell) to make or accept an offer to sell or lease the Dickson site to the appellants within the meaning of s 8(2)(b) of the ACT Act. Accordingly, s 23 precluded White Pointer from recovering its commission in respect of the site.

The Woden site (J [298])

1. The primary judge summarised her findings regarding the Woden site as follows (J [298]): "Finally, in respect of the Woden site, Mr Hedley enquired about this site from Mr Randell. The site was then 'on hold' for Kids Club. Notwithstanding this, Mr Hedley suggested that the defendants make an offer, which they submitted to Mr Randell. Mr Randell was not interested, but when Kids Club withdrew from the site, Mr Hedley suggested that the defendants secure Woden as soon as possible. Mr Randell provided Mr Hedley with the latest plans and offer. Mr Hedley inspected the site with Mr Randell and the defendants. Mr Larcombe provided Mr Randell with an offer for the site. Relations between the parties dissolved before the plaintiff had issued an invoice."
2. The primary judge's more detailed findings about the Woden site include that, when Mr Hedley enquired of Mr Randell on 16 April 2019 about the development of the Woden site, Mr Randell told him that the site was "on hold for Kids Club" (J [125]). However, Mr Randell also told him that "[i]f it gets a hint of going bad [Kids Club] is out" and that any offer would need to be "better than [$]4800 [per child's place]." Mr Hedley passed on this information to the appellants and discussed what they should do. Mr Larcombe instructed Mr Hedley to "[p]ut [his] foot on it", following which Mr Hedley texted Mr Randell that he was sending through an offer. On 23 April 2019, Mr Hedley contacted Mr Randell who told him that there was "nothing for Woden … there is a wait and see on this" (J [129]). On 29 April 2019, it was Mr Larcombe who communicated the appellants' offer for the Woden site.
3. In May 2019, Mr Hedley discussed the Woden site further with Mr Larcombe and Mr Dumbrell (J [134]). In June 2019, Mr Randell told the appellants that Kids Club had withdrawn from the Woden site. Mr Randell provided Mr Hedley with the latest draft plans and offer in respect of the Woden site (J [140]). On 18 June 2019, Mr Larcombe inspected sites, including the Woden site (J [148]). On 15 July 2019, Mr Larcombe provided Mr Randell with an executed offer for the Woden site (J [153]).
4. By February 2021, the AFL for the Woden site was executed and the DA granted. Ultimately, the Woden Centre opened on 17 May 2021 with 120 places (J [199]).
5. The appellants have failed to prove that in respect of the Woden site the respondents provided a real estate agent service within the meaning of s 8(2) of the ACT Act. Although Mr Hedley communicated on occasions with Mr Randell, none of these communications amounted to negotiations or attempts to induce the owners to make an offer to sell or lease the Woden site. The appellants have made no payments in respect of the Woden site. Subject to other defences raised by the appellants (which will be addressed below), the sum of $264,000 remains outstanding, as the primary judge found.

Summary of the consequences of grounds 2-5 having been made out in part

1. For the reasons given above, the judgment sum needs to be reduced to take account of the reductions for the Dickson and Taylor sites. The effect on the judgment of these findings on appeal is as follows: Site Amount awarded under primary judgment ($) Amount of judgment not enforceable (by operation of the ACT Act) ($) Adjusted judgment sum ($) Hurstville 0 N/A 0 Conder 187,750 0 187,750 Dickson 59,400 59,400 0 Taylor 121,000 121,000 0 Throsby 115,500 0 115,500 Woden 264,000 0 264,000 MacGregor 0 N/A 0 Red Hill 0 N/A 0 TOTAL 747,650 (180,400) 567,250

Grounds 6-9: whether the appellants were entitled to restitution from White Pointer of monies paid

1. Ultimately, there were two bases for the appellants' claim for the restitution of monies it had paid to White Pointer in respect of the ACT sites and the Hurstville site: first, as monies paid for which there had been a total failure of consideration (grounds 6 and 9); and second, as monies paid under a mistake (grounds 7 and 8). As to the total failure of consideration, it is said that the Moncur Agreement was illegal, contrary to public policy, unenforceable and inherently ineffectual, resulting in that total failure of consideration (J [313]-[314]). As to mistake, it was said that the appellants believed or assumed that White Pointer held the necessary licences legally to provide its services, was entitled to charge for its services, and that the oral contract was legal.

Ground 6: alleged unenforceability in respect of the Hurstville site (ss 8(2) and 9(2) of the NSW Act)

1. Because of the primary judge's finding that the respondents were not in breach of the ACT Act, it was necessary for her Honour to address only the payment of $79,200 made in respect of the Hurstville site (in respect of which the respondents accepted that they were in breach of the NSW Act because they were not licenced). Her Honour, after addressing the relevant authorities, found that the matter was to be resolved as a question of statutory construction and referred to Mason J's observation in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 429; [1978] HCA 42 as follows: "There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished."
2. The primary judge said: "316 As Gageler J explained more fully in Gnych at [63]-[75], a strong presumption of unenforceability has given way to approaching the matter by proper construction of the statute. 'An agreement which is not denied legal operation by statutory force may still be unenforceable … by operation of the common law by reference to considerations of public policy. The cases in which that might occur, however, must now be closely confined': at [70]. Further, at [73]: It is not the function of the common law to seek to improve on a regulatory scheme by supplementing the statutory sanctions for its breach. If a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice. 317 Considerations of public policy may nonetheless dictate that the contract is unenforceable. Relevant considerations were expounded by Gageler J at [75]: A court examining the application of that consideration of public policy to the enforcement of an agreement made in breach of a statutory prohibition will examine the intention of a person in entering into the agreement and in seeking to enforce the agreement. The court will recognise that, 'whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken'. The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute seeks to advance and the means which the statute has adopted to achieve that end [and whether] the consequence of withholding the remedy [are] proportionate to the seriousness of the illegality and not incongruous with the statutory scheme. The moulding of an equitable remedy, if sought, might involve other considerations and permit of greater flexibility."

Ground 6: alleged unenforceability with respect to the ACT sites (s 23 of the ACT Act)

1. As I have found above, White Pointer was required to be licenced in respect of the services it provided for the Taylor, Dickson, Red Hill and MacGregor sites. The appellants seek restitution of amounts they paid to the respondents referable to these sites on a similar basis to the Hurstville site, as addressed above.
2. Section 23 of the ACT Act makes it clear that an unlicensed agent is not entitled to bring a proceeding to recover commission, fee or reward in respect of work for which the agent was required to be licensed, whatever the cause of action. Thus, an unlicensed agent does not have the option of suing on a claim for quantum meruit since this would be prohibited by s 23 of the ACT Act. However, it is telling that as in the NSW Act, the ACT Act does not provide that monies which have already been paid are recoverable.
3. Therefore, for the reasons given above in relation to the Hurstville site, restitution is not available on the basis that the Moncur Agreement is unenforceable in respect of monies paid for the ACT sites.
4. The appellants have not established any error in the primary judge's analysis. For the reasons above, grounds 6a, b and d have not been made out.

Ground 6: alleged illegality of the Moncur Agreement

1. The appellants allege in ground 6c that the primary judge erred in failing to find that White Pointer had contravened s 9 of the NSW Act and s 18 of the ACT Act by not being licensed. This ground overlaps with grounds 2-5, which have been addressed above, and has been made out in part (in respect of the Taylor, Dickson, Red Hill and MacGregor sites and the Hurstville site), for the reasons given above.
2. I am not persuaded that the contravention of these provisions results in the Moncur Agreement being void for illegality. In these circumstances the appellant has not established that it is entitled to restitution on that basis. For these reasons ground 6c has not been made out.

Ground 9: whether appellants entitled to restitution on the basis that the Moncur Agreement was unenforceable or illegal

1. Ground 9 alleges that the primary judge was in error in failing to find that the appellants were entitled to restitution of the monies they had paid White Pointer on the basis that the Moncur Agreement was unenforceable or illegal. For the reasons given above with respect to ground 6, this ground has not been made out.

Ground 8: whether White Pointer was obliged to repay monies because the appellants had paid them in the mistaken belief that White Pointer could recover them

1. Ground 8 alleges: "The court below erred in failing to find that the Appellants made payments to the First Respondent in respect of the Hurstville and ACT sites pursuant to a mistaken belief that there was an enforceable obligation to pay those amounts (J[324]). This was the only available inference, or the inference that ought to have been drawn, based on the evidence before the Court and its own finding at J[240] that there was no bona fide dispute as to the First Appellant's obligation to pay $2,000 per approved child placement." (Emphasis added.)
2. The primary judge found, at [324], that the appellants, in order to prove that they had made payments under a mistaken belief that White Pointer was entitled to enforce its claim for payment, were required to prove that they were mistaken as to whether White Pointer needed, and had, a real estate agent licence and that such a mistake was causative of payment. Her Honour was not satisfied that the appellants were relevantly mistaken or that any mistake was causative of the payment of the Hurstville fee. The primary judge referred to the absence of any mention of the issue in the contemporaneous documents as well as the circumstance that Mr Larcombe's failure to give evidence led to the inference that his evidence would not have assisted the appellants' case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.
3. The appellants accepted that the primary judge had stated the principle correctly but contended that her Honour had erred in failing to find that the appellants had discharged their onus of proof on this matter. Mr Walker submitted that the "only available inference" was that the appellants had paid in the mistaken belief that White Pointer could have enforced a right to payment. Mr Walker asked rhetorically: why else would the appellants have paid White Pointer except because they believed that they had to?
4. In my view, other explanations arise from the evidence. The appellants had a strong commercial interest in using the respondents' services and obtaining the associated benefit from the connections which the respondents enjoyed in the market for sites for childcare centres. CAG was a new entrant to the childcare industry (J [216]). Without the respondents' connections, the appellants would have been unlikely to secure any of the sites which they ultimately leased and developed. It cannot be inferred that the appellants cared whether the respondents were, or were required to be, licensed since all the appellants either wanted or needed from the respondents was their connections, a circumstance which may explain why there is no evidence that the respondents' licence status was ever mentioned. The appellants, as the evidence in respect of later sites established, were commercially sophisticated and capable of negotiating on their own account and communicating with Mr Randell, without the respondents' having any further involvement beyond introducing them to the owners of the sites.

Ground 7: whether the contract needed to be set aside for mistake or illegality before the appellants could seek restitution on the grounds of mistake

1. This ground need not be addressed as the appellants have, for the reasons given with respect to ground 8, failed to prove that they were actually mistaken. The alleged illegality has been addressed above in the consideration of grounds 6 and 9.

Conclusion

1. For the reasons given above, the appeal ought be allowed in part to reduce the judgment sum to reflect the appellants' partial success regarding amounts which were otherwise owing with respect to the Taylor site ($121,000) and the Dickson site ($59,400) and which were included in the judgment sum ordered by the primary judge. Although the childcare centre at the Taylor site has now opened, White Pointer is not entitled to the second tranche of $121,000 because of its conduct falling within s 8(2)(b) of the ACT Act because it is prohibited by s 23 of the ACT Act from recovering its commission in a proceeding.

Costs

1. The parties have not been heard on costs. There does not appear to be any reason why the reduction in the judgment sum ought affect the costs in the Court below. The appellants have had only modest success in this Court and have failed on most of their grounds. In these circumstances I consider that they ought be ordered to pay 75% of the respondents' costs of the appeal. If any party seeks a different order, an application ought be made pursuant to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW).

Proposed orders

1. For the reasons given above I propose the following orders: 1. Allow the appeal in part. 2. Set aside the judgment in order (1) of the orders made by Rees J on 25 July 2023 and, in lieu thereof order judgment against the first defendant in the amount of $567,250, together with interest under s 100 of the Civil Procedure Act 2005 (NSW). 3. Otherwise dismiss the appeal. 4. Order the appellants to pay 75% of the respondents' costs of the appeal.

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