Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall

Court of Appeal (NSW)|2020-07-27|Before: Leeming JA, Beech-Jones J

Background

None of the parties sought to challenge the primary findings of fact in the judgment appealed from. Unless stated otherwise, the following is taken from those findings.
At all relevant times, Mr and Mrs Outerbridge were in partnership in a real estate agency known as "Century 21 Plateau Lifestyle Real Estate" at Alstonville in New South Wales. Mr Outerbridge was a licensed real estate agent. Mr Outerbridge had a particular expertise in the sale of macadamia farms. According to the primary judge, Mr Outerbridge had "personally sold hundreds of macadamia farms during his time as a real estate agent".
On 30 January 2008, the respondents completed the purchase of the Property for $4.18 million. The primary judge described the Property as "valuable … having panoramic views of Lennox Head and the Byron Bay hinterland, consist[ing] of 55 acres, [with] a prestige house". The Property also included "a working macadamia plantation with a number of thousands of mature trees".
In November 2012, the first respondent, Mr Hall, approached Unique Estates Australia Pty Ltd ("Unique") to act as agents on the sale of the Property. He spoke with the principal of Unique, Ms Nicolette Van Wijngaarden. On 6 November 2012, the respondents signed a sales inspection report and exclusive agency agreement appointing Ms Van Wijngaarden as the agent to sell the Property. This agreement provided for an exclusive agency period from 6 November 2012 to 6 May 2013 and for a non-exclusive period thereafter. The price at which the Property was to be offered for sale under this agreement was $5.5 million. Given the size of the Property, the various documents referred to in s 66R(2) of the Conveyancing Act 1919, including a contract for sale, did not have to be made available for inspection during the period it was offered for sale (Conveyancing Act, s 66Q(2)(b)).

The Agency Agreement

The Agency Agreement appointed the appellants as non-exclusive agents for a period commencing on 10 August 2015 and terminating upon the sale of the Property or seven days after the provision of notice by the respondents, without specifying whether it was the earlier or later of those two events. The Agent's estimate of the Selling Price was specified as $5,000,00.00. Clause 2.1 authorised the "Licensee" to sell the Property at that price "or such other price the Principal approves".
The Agency Agreement provided for the Agent's commission to "2.2% of the Final Sale Price". As for when any commission might be earned, clauses 1.2, 3.1 and 5.3 provided: "1.0 DEFINITIONS … 1.2 "Introduced" - A person shall be deemed to have been "introduced" to the Principal or the Property by the Licensee if the fact that the Property is available for sale is made known to that person by or through the Licensee and, without limiting the generality of this paragraph, a person shall be deemed to have been introduced to the Property by the Licensee if that person becomes aware that the Property is available for sale as a result of reading any advertisement, notice or placard referring to the availability of the Property for sale, published or erected by or in the name of the Licensee. … 1.4 The word "Licensee" and the word "Agent" where appearing mean the same and may be used interchangeably in this Agreement. … 3.0 REMUNERATION, EXPENSES AND CHARGES 3.1 Remuneration - The Licensee shall be entitled to the remuneration set out in Item C of the Particulars ("the Remuneration") in the following circumstances (where the Licensee is the effective cause of the sale): (a) If a person has been effectively introduced to the Principal or the Property by the Licensee during the Agency Period, (including another person who is introduced to the Principal or the Property by such person), and that person, either during the Agency Period or thereafter, enters into a contract to purchase the property or an interest in the property (which Includes by way of exercise of an option; and includes whether it be alone or jointly with another or others), or (b) If the Principal is a corporation then in addition, if a person has been effectively introduced to the Principal or the Property by such person, either by way of exercise of an option) to acquire by allotment, or to purchase (either alone or jointly with another or others) one or more shares, or an interest in one or more shares, in the capital of the Principal. … 5.3 Conjunction Agents - The Licensee may allow other licensed real estate agents to sell the Property in conjunction with the Licensee provided only one amount of Remuneration is payable by the Principal." (emphasis added)

Mr Outerbridge's Dealings with Ms Weis

After the Agency Agreement was signed, the appellants marketed the Property, including via various websites and television. In the latter part of 2015, Mr Hall engaged a company associated with Mr Outerbridge to manage the macadamia farm on the Property. In December 2015, Mr Hall commissioned his own website to market the Property. It advertised the sale price as $5.5 million.
On 4 December 2017, the eventual purchaser, Ms Julie Weis, contacted Mr Outerbridge. She stated that she was looking for a "property to buy, perhaps something that is income producing". Mr Outerbridge informed her of the Property's location and that it included a macadamia farm. Over the following eight days, he spoke with Ms Weis and her partner about the Property several times. Mr Outerbridge provided Ms Weis with soil test results, a list of equipment included in the sale, a rate notice, a map of the Property, grower summary reports, details of the irrigation licence, particulars of the extensions made to the Property and the relevant farm management agreement.
On 20 December 2017, Mr Outerbridge met Ms Weis at the Property and introduced her to Mr Hall. Mr Outerbridge, Ms Weis and her partner inspected the Property over a number of hours. After Ms Weis left the Property, Mr Hall sent a text message to Mr Outerbridge stating, inter alia, "[s]eriously, if there is no 5 in the offer, including crop at $125K and ALL machinery, it won't fly".
The primary judge found that on 21 December 2017 Ms Weis made an offer to Mr Outerbridge of $4.5 million to purchase the Property. Mr Outerbridge informed Ms Weis that he would be leaving on holidays from 27 December 2017 but that while he was away, he could communicate by email. Mr Outerbridge conveyed the offer to Mr Hall who told him, "I am not interested, and I am not interested in making a counter offer". Mr Outerbridge urged him to make a counter offer and Mr Hall replied that "we will think about it". Later that day, Mr Hall emailed Mr Outerbridge a counter offer of $4.8 million excluding certain machinery and the right to receive a payment referable to the macadamia crop.
On 22 December 2017, Mr Outerbridge telephoned Ms Weis to advise her to increase her offer. Ms Weis said that she would increase her offer to $4.7 million inclusive of additional equipment and the macadamia crop. She informed Mr Outerbridge that the offer was open for acceptance until "5pm on Friday", presumably being Friday 22 December 2017.
Mr Outerbridge communicated Ms Weis' revised offer to Mr Hall. Before the primary judge, it appears to have been common ground that this offer was accepted by the respondents but not binding in the absence of a written agreement. The primary judge found that the offer was accepted by the respondents on 22 December 2017 "at approximately 4.55pm". This appears to be a reference to a conversation deposed to by Mr Outerbridge with Mr Hall at that time in which Mr Hall said, inter alia, "[w]e will accept the 4.7 with the additional equipment and 2018 crop". In his affidavit, Mr Hall said that the acceptance came about by Mr Outerbridge advising him that Ms Weis' offer had been withdrawn (because it had expired), Mr Hall exclaiming that she was not "a serious buyer", Mr Outerbridge assuring him she was and Mr Hall telling Mr Outerbridge "[w]hy don't you go back and say we accept and see whether she will re‑consider". Neither Mr Outerbridge nor Mr Hall were cross‑examined on this conversation. Nevertheless, given that the primary judge appeared to expressly accept Mr Outerbridge's evidence of Mr Hall's acceptance, I will proceed on the basis that his Honour did not accept Mr Hall's evidence about that conversation.
It is not clear how Mr Hall's acceptance was communicated to Ms Weis. In her affidavit, Ms Weis said that at around 4.30pm on "Friday 23 December 2017" Mr Outerbridge telephoned her and said that the vendors could not decide whether to accept her offer and so she advised Mr Outerbridge that the "deal is off". She said that he rang a few minutes later to advise her that the offer had been accepted. One aspect of this was clearly mistaken as 23 December 2017 was a Saturday. In his affidavit, Mr Outerbridge simply asserted it was accepted and that he forwarded a sales advice on the evening of 22 December 2017. The primary judge did not make any finding on this issue and such a finding is not necessary to resolve the appeal.
On 23 December 2017, there was an exchange of emails concerning the terms of the sale. However, on the evening of 25 December 2017 Mr Hall sent Mr Outerbridge an email which he intended to be forwarded to Ms Weis, stating as follows: "Hope your Christmas Day has been wonderful. Please pass the following message along to your purchasers without alteration. Look forward to chatting with you when you get back from your vacation trip. Rod & Julie [Weis ], many thanks for your interest in our property and for your purchase offers. On reflection, we find we cannot accept your latest offer of $4.7m including all machinery and 2018 macadamia crop. Unfortunately, the offered price does not come anywhere near the investment we have in the property, or the replacement cost, and unfortunately "comparable" sales in this area take no account of the uniqueness of our property. We are quite prepared to negotiate a price somewhat lower than our benchmarks, but we are under no pressure and very happy to continue enjoying [the Property] until we find the buyer who shares our appreciation of its worth. We wish you all the best for the holiday season and very good luck in your ongoing property search."
On 27 December 2017, Mr Outerbridge sent the portion of this email that commences "Rod & Julie" to Ms Weis at around midday on 27 December 2017. Each of Mr Outerbridge and Ms Weis gave evidence of a conversation they had on that day. According to Mr Outerbridge he telephoned Ms Weis prior to sending the email to inform her that the respondents had withdrawn their acceptance and she stated that she was a "little shocked". According to Ms Weis, Mr Outerbridge advised that he could not make contact with the respondents and she, Ms Weis, stated "I can't do business this way, I am out. I don't have a good feeling about the property after these events". The primary judge noted that in cross‑examination Mr Outerbridge agreed that Ms Weis made both statements.
The primary judge found that, sometime on 27 December 2017, Mr Outerbridge told Ms Weis that he was leaving for his holidays that afternoon, that he was available via email and he was leaving his mobile phone with one of his staff "so we are contactable 24 hours". His Honour also accepted Ms Weis' affidavit evidence about her contact with Mr Outerbridge's secretary later that day. Ms Weis said that she telephoned Mr Outerbridge's mobile phone number and the call was placed through to his secretary. Ms Weis stated that she wanted a meeting with the respondents and a representative of the appellants "to try and understand if there is a way forward here". Ms Weis was offered an appointment with Mr Outerbridge when he returned in a "few weeks". Ms Weis stated that was "too long" as the respondents were due to travel overseas and inquired whether there was someone else who could attend the meeting. The secretary advised that there was no one else. Ms Weis concluded the call stating, "Ok, well forget about it, it's not going to happen".
The primary judge accepted the following passage from Ms Weis' evidence as accurately describing her state of mind in relation to the transaction following this telephone call: "I was of the view after the 27th December 2017, there was nothing I could do to re-engage negotiating with the owners through [Mr Outerbridge], as he was in New Zealand, and I believed the owners were also going overseas. I believed on that date that there was nothing further to do with the [Property]". (emphasis added)
To similar effect, in her oral evidence Ms Weis stated that after she spoke to Mr Outerbridge's secretary "I shut down on the whole opportunity" and formed the belief that the "opportunity had passed".

Ms Weis' Dealings with Ms Van Wijngaarden

From this point, the sale of the Property was effected with the assistance of Ms Van Wijngaarden. Ms Van Wijngaarden had continued to market the Property and arranged for 12 potential purchasers to inspect the Property between November 2012 and December 2017. However, on 2 December 2017 Unique's licence to act as a real estate agent ceased, although none of the parties were aware of that. The primary judge found that the affidavits of Ms Weis and Mr Hall accurately set out their dealings with Ms Van Wijngaarden and each other in this period. The following is taken from those affidavits.
Consistent with the above, Ms Weis states that after her conversation with Mr Outerbridge's secretary she "decided to look around". She looked at two other properties. Ms Weis "phoned [Ms Van Wijngaarden] to enquire of properties on the market". Ms Van Wijngaarden asked if there were any properties she had already seen that she liked and Ms Weis referred to the Property. Ms Van Wijngaarden advised her that she knew the respondents and would call them.
Mr Hall received a call from Ms Van Wijngaarden on 28 December 2017. In evidence that was only admitted to record the fact that it was stated and not its truth, Mr Hall said that Ms Van Wijngaarden told him that she had received a call from Ms Weis who had told her that "she does not want to deal with [Mr Outerbridge] anymore" and that Ms Weis "told me that you want more than $5 million". Mr Hall replied that "we have not changed our position, we will not accept less than $5 million".
Around this time, Ms Weis received a call from Ms Van Wijngaarden who advised her that the respondents were willing to negotiate. She also told Ms Weis that "[t]hey have never told [Mr Outerbridge] it was listed at $5 million dollars".
Late in the evening of 28 December 2017, Mr Hall emailed Ms Van Wijngaarden. He advised her that the respondents were "indeed willing sellers" but that until he received her call, they "had resolved to take [the Property] off the market". He stated that they were willing to accept a price of $5 million with a further $125,000 for certain machinery and they were "not interested in any counter-offer". The balance of the email referred to some difficulties with a pond and the potential for assigning the agreements for the management of the macadamia crop. Mr Hall informed her that the respondents had deferred their overseas travel.
On 29 December 2017, Mr Hall sent Ms Van Wijngaarden an email listing the equipment that was included in the "basic price" of $5 million and the equipment that would be purchased separately for $125,000. Just before 4.00pm on 29 December 2017, Ms Van Wijngaarden emailed Ms Weis seeking confirmation that she was prepared to pay $5 million for the Property and the equipment identified by Mr Hall as part of the "basic price" less $12,000 for the cost of repairs to a pond, the assignment of the management contracts for the macadamia farm and the sale of other machinery for $125,000. Ms Weis replied confirming the offer, seeking assurance that if the respondents accepted there was no "likelihood of a repeat of their withdrawal" and thanking Ms Van Wijngaarden for her assistance.
Ms Van Wijngaarden forwarded Ms Weis' email to Mr Hall on 30 December 2017. On the afternoon of 30 December 2017, Mr Hall replied accepting the offer, save for the exclusion of a specific household item. He confirmed that there would be no withdrawal. This was apparently acceptable. On 2 January 2018, the respondents' solicitor received a sales advice from Ms Van Wijngaarden.
On 11 January 2018, the parties exchanged a contract for the sale of the Property for $4,913,000. The parties also entered into an agreement for the sale of plant and equipment for $200,000.00. The combined purchase price was $5,113,000 which represents the overall price nominated by Mr Hall in his email of 28 December 2017 ($5,125,000) less $12,000 for the cost of repairs to the pond. Ms Weis paid a deposit of $491,300 to Unique. This sale price was $413,000 more than the sale price under the in-principle transaction that was affected between the respondents and Ms Weis on 22 December 2017.
On 13 February 2018, liquidators were appointed to Unique. Soon after, Mr Hall became aware that its doors had closed. The sale of the Property was completed on 15 March 2018 without the respondents receiving the deposit. Thereafter the respondents pursued a claim to recover the deposit from the "Compensation Fund" established by Part 10 of the Property Stock and Agents Act 2002 (the "PSA"). Ultimately their claim to recover the deposit and interest less the agent's commission was approved. The primary judge found that it was paid.
On 6 March 2018, the appellants served a notice under s 36 of the PSA on the respondents. Section 36(1) precludes the commencement of proceedings by, inter alia, a licensed real estate agent to recover their remuneration until 28 days has expired from the service of such a notice.

Primary Judge's Reasons

As noted, the appellants sued to recover the commission said to be owing to them under clause 3.1 of the Agency Agreement. In their defence, the respondents denied that any entitlement to the commission had arisen and further contended that, even if it had, that it was qualified by the terms of a conjunction agreement between the various agents, that the respondents were estopped from denying that was so and that the commission was otherwise irrecoverable by reason of s 32 of the PSA. The primary judge rejected all of these further contentions. They are not the subject of a Notice of Contention and need not be considered further.
In relation to the claim for recovery of a contractual entitlement to a commission, the primary judge made the following further findings, none of which were challenged.
First, the primary judge found that Mr Outerbridge introduced Ms Weis to the Property, had substantial telephone and email contact with Ms Weis in relation to the Property, accompanied Ms Weis on an inspection of the Property and provided her with substantial information in relation to the Property including in relation to the macadamia farm.
Second, the primary judge found that Ms Weis made offers to buy the Property through Mr Outerbridge, one of which was accepted but the acceptance was withdrawn.
Third, the primary judge found that Ms Van Wijngaarden was able to secure a higher price for the respondents for the Property from Ms Weis.
Fourth, the primary judge found that as at the time of that withdrawal, "unless there was to be more than a modest increase in the offering price, that the defendants were content to stay in the Property and not sell".
Fifth, in relation to Ms Weis' attitude to the sale, the primary judge found that, while she "remained very interested and motivated to buy the Property", she inspected two other properties in the period between 27 and 29 December 2017 and: "(d) ……she wanted a meeting with the defendants to understand whether she could trust them, what they were seeking to achieve, what their objectives were and whether they were still interested in selling; (e) It was through the involvement of Ms Van Wijngaarden …. that Ms Weis found [out] that the defendants had been apparently seeking $5.5 million for the Property which provided clarity to her in relation to their desires concerning an offer on the Property; (f) Her previous belief that the price being sought by the defendants was $5 million led her to make offers under that figure; (g) Therefore, until Ms Weis understood that the defendants could be trusted, what the defendants wanted for the Property and altered her approach accordingly, if she still wished to purchase the Property, it was unlikely that a sale would occur."
These findings need to be considered with his Honour's acceptance of Ms Weis' evidence to the effect that "after 27 December 2017", and before she spoke with Ms Van Wijngaarden, she believed that there was no possibility of her purchasing the Property (see [37] to [38]).
The primary judge then analysed the case law on the meaning of effective cause, a topic I will return to. His Honour then rejected the appellant's claim, reasoning as follows: "130 In my view, Mr Outerbridge played a very significant causal role in relation to Ms Weis purchasing the Property. He introduced her to it, provided substantial information to her in relation to it and took her on an inspection of the Property. He was the vehicle by which offers and counter offers were initially conveyed to and from the vendors. He also obtained an offer from Ms Weis for the Property which the defendants accepted and then rejected. 131 However, in my view Mr Outerbridge on the whole of the evidence was not the effective cause of the sale. On 27 December 2017 when Mr Outerbridge went on his annual vacation, the position was as follows. The defendants had withdrawn their acceptance of the offer and were apparently going overseas. While they mentioned the possibility by inference of accepting a higher price, they had wished Ms Weis "very good luck in [her] ongoing property search". At that time, Ms Weis did not know whether the defendants were serious vendors and could be trusted and what they really wanted. She did not know what the "benchmarks" were of the defendants as referred to in the email she had received on 27 December 2017. In substance, she did not know at that time what the defendants wanted. 132 It is true that it was only two days later that Ms Weis confirmed an offer to buy in relation to the Property. However, in that period there had been the intervention of Ms Van Wijngaarden. Ms Weis had also looked at two other properties which showed that she was not wedded to the idea of purchasing the Property. It was only when Ms Van Wijngaarden clarified to Ms Weis what the defendants apparently really wanted and that they were serious sellers that she was able to alter the offer to more fairly accommodate their targeted sale price. The intervention of Ms Van Wijngaarden was, on the evidence, crucial. Until she provided the clarification of the defendants' position, the sale apparently could not have occurred. In my view, whilst the conduct of Mr Outerbridge was very significant, he did not bring about a state of affairs giving rise to the contractual right to the commission. It was the conduct of Ms Van Wijngaarden which clarified to Ms Weis the position of the defendants. She also clarified to the defendants that Ms Weis was a genuine buyer. This allowed Ms Weis to consider and make a higher offer which took into account the defendants' desired sale price. Ms Van Wijngaarden also brought about a higher sales price for the benefit of the defendants. 133 For all these reasons I find that Mr Outerbridge was not the effective cause of the sale of the Property within Clause 3.1 of the Agreement……" (emphasis added)
In this Court, Mr Rayment contended that the reference in [132] of this extract to Ms Van Wijngaarden "clarifying to the [respondents] that Ms Weis was a genuine buyer" was meant to be a reference to Ms Van Wijngaarden clarifying to Ms Weis that the respondents were genuine sellers. It was submitted that this is evident from the following sentence which refers to Mr Weis considering and making a higher offer. Mr Alexis SC resisted that submission. He contended that, when Mr Outerbridge departed on his holidays, not only did Ms Weis doubt the bona fides of the respondents because they had withdrawn their acceptance of the offer, but the respondents doubted the bona fides of Ms Weis. I do not accept that submission. The only evidentiary basis for it is the statement Mr Hall said he made to Mr Outerbridge on 22 December 2018 which was not the subject of a finding by the primary judge (see [32]). Otherwise, there is nothing in either Mr Hall's evidence or the judgment appealed from to suggest that he doubted that Ms Weis was genuinely interested in purchasing the Property, although following his withdrawal of his acceptance he may have believed that their difference in perspectives on the value of the Property meant that there was no prospect on them agreeing on a sale price.

The Contractual Term and Effective Cause

The contractual provision governing the appellants' right to a commission is set out above. Both before this Court and the primary judge, the parties devoted little attention to its terms. Instead, they treated the operation of the clause as synonymous with the discussion of "effective cause" in the case law dealing with agent's recovery of commission under an implied term (see L J Hooker Ltd v W J Adams Estates Pty Ltd (1976-1977) 138 CLR 52 at 54 to 55 and 61 per Barwick CJ; [1977] HCA 13; "L J Hooker"). I will do likewise with the consequence that the following discussion does not address any particular issue of construction that may arise in relation to clause 3.1 in the future (which is probable given that clause 3.1 is part of a standard form agency agreement). In particular, I note that neither before the primary judge nor in this Court was it contended that the words in brackets in the opening part of clause 3.1 (ie, "where the Licensee is the effective cause of the sale") impose some requirement that is separate from and additional to the necessity for an "effective introduction" by the Licensee. Instead, subject to one matter, it was common ground between the parties before the primary judge and in this Court that the concept of "effective cause of the sale" informed the concept of "effective introduction"; that is, unless an "introduction" was the, or an, "effective cause of the sale" then it was not an "effective introduction".
The one matter of exception concerned the debate alluded to earlier about whether it was necessary for the appellants to demonstrate that their actions were "an effective cause" of the sale or "the effective cause" of the sale and whether there was any difference between the two. A test requiring proof of "effective cause" is different from and more stringent than the test of proximate cause which is often applicable to insurance contracts which in turn is more stringent than the 'but for' test of causation (Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351; [2001] HCA 2 at [83] per Gummow J; "Moneywood"). However, it does not mean the sole cause in the sense that it is possible that two agents acting independently of each other can both be an effective cause of a sale (L J Hooker at 61 per Barwick CJ, and at 86 per Jacobs J; Berben & Anor v Hedditch & Anor (1982) NSW ConvR 55-081 -56,482 per Hutley JA; "Berben"). In L J Hooker (at 86), Jacobs J observed in relation to an implied term for the payment of agent's commission that "it probably does not matter in the long run whether the definite or indefinite pronoun is used before the words 'effective cause'" and that it is not necessary that either be the "one effective cause" or sole cause (see also Moneywood at [182] per Callinan J). Those observations are applicable to the opening words of clause 3.1 of the Agency Agreement.
In L J Hooker, Jacobs J described the relevant "inquiry [to determine effective cause as] whether the actions of the agent really brought about the relation of buyer and seller"; that is, "whether a sale is really brought about by the act of the agent" (at 86). Although his Honour was in dissent in the result in L J Hooker, this statement accords with the approach of the rest of the Court (at 58 to 59 per Barwick CJ, at 67 to 68 per Gibbs J and at 76 per Stephen J and at 90 per Murphy J) and has been followed since (Moneywood at [27] per McHugh J and at [85] per Gummow J).
A determination of whether the agent's conduct was the effective cause of the sale requires a consideration of matters of substance and not form (Moneywood at [30] per McHugh J) and, is of course, a question of fact (Berben at 56,480 per Moffit P). Where the substance of the conduct relied on by the agent is their introduction of someone who later becomes the purchaser, then a determination of whether they were an effective cause "requires a consideration and evaluation of all circumstances which may have had some causal relationship to the sale" (Berben at 56,480 per Moffitt P). One matter in favour of the introduction being "a critical factor in some cases" is the relative uniqueness of the property (id).
In Berben, Hutley JA reasoned that, as there could be two effective claims for commission, a claim for commission "cannot be disposed of … simply by comparing the amount of work which each agent may have done towards bringing about the ultimate sale" (at 56,842). Implicit in that statement is that there must at least be a consideration of the work done by a subsequent agent. This is made explicit by Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 ("Emmons") the facts of which are broadly analogous to this case. In Emmons, between June and August 1996, the first agent introduced a potential buyer for a hotel, provided trading figures and information concerning occupancy rates and secured an offer to purchase the hotel for $25 million (at [12] to [20]). However, the vendors sought a price of $30 million and after attempting to bridge the gap the agent ceased his efforts to bring about a sale (at [27]). Between 2 September 1996 and 3 October 1996, a second agent brokered a purchase by the potential buyer for $29.7 million (at [28] to [31]). Stein JA, with whom Giles and Hodgson JJA agreed, held that the first agent had not proven that his efforts were an effective cause of the sale (at [48]) reasoning as follows: "44 By the end of August 1996 it is obvious that [the agent] had given up his efforts. His efforts were spent. The impediment was price. He understood that [the CEO of the purchaser] was stuck on $25 million and the vendor on $30 million. There was, in effect, no room for him to move. But it was Mr Reed whose efforts closed this gap to a final agreed price of $29.7 million, giving a net figure of $29.4 million to the appellant. 45 It is simply insufficient to rely on the introduction alone and the verbal offer of $25 million. Given the impediment of price it was [the second agent] and not [the first agent] who bridged the gap. To my mind, it cannot be inferred from the evidence that Mr Wheeler's efforts flowed through to [the purchaser], when he made the ultimate offer of $29.7 million which was accepted by the vendor. It cannot be inferred that [the first agent's] efforts continued to influence Mr Wan to buy the property. To use the words of Brereton J in Baker v Leonard Oades Pty Ltd [1964-5] NSWR 1745, the yeast of [the first agent] was no longer working. 46 As to [the second agent's] participation, it seems to me that it cannot be inferred from the evidence that his introduction to the property and the purchaser was not an independent one or that he simply built on [the first agent's] earlier efforts. I say this particularly because [the first agent] gave up on the issue of price. It was [the second agent] who worked successfully to bridge this gap. The suggestion that [the second agent] was merely building on the back of [the purchaser's] original offer of $25 million should be rejected. 47 As to what [the CEO of the purchaser] would have told Mr Reed of his prior knowledge of the hotel, it is difficult to speculate. He may well have told him that he was aware of the hotel and that he had made an offer of $25 million. But this does not lead to an inference that this flowed into his ultimate decision to purchase the property for $29.7 million. That, it appears to me, was the independent work of [the second agent], [the first agent] having given up on the obstacle of price."
As the determination of effective cause is ultimately a question of fact, it follows that the enunciation of specific rules as to when such cause may or may not have been established should be avoided. Thus this passage from Emmons should not be treated as establishing any general principle but instead it stands as an example of a case in which a "consideration and evaluation of all circumstances which may have had some causal relationship to the sale" (Berben at 56,480 per Moffitt P), including the role played by a second agent, led to the conclusion that effective cause has not be shown.
However, Emmons is also a useful albeit rough analogy to this case especially in considering the primary judge's reasoning. The background to the extract from the primary judgment set out above are the primary judge's findings accepting Ms Weis' evidence that her attempts to contact Mr Outerbridge after he travelled overseas came to nothing, that she believed "there was nothing further to do with the [Property]" and that she contacted Ms Van Wijngaarden because she had "decided to look around". Thus in [131] of the judgment appealed from the primary judge explained how both Ms Weis and the respondents believed the proposed sale was over. The latter were travelling overseas and were resigned to Ms Weis looking elsewhere. Ms Weis doubted the respondents genuinely wanted to sell or could be trusted and did not know what price they truly wanted. In [132], the primary judge explains how Ms Van Wijngaarden's "crucial" intervention was able to resuscitate the transaction, namely by clarifying the respondent's position and that they were genuine sellers.
These circumstances are reasonably similar to those in Emmons. In this case, the first agent introduced a potential purchaser but the prospect of a sale disappeared. In Emmons there was an apparently unbridgeable gap in price. In this case there was a difference in price expectations and significant doubt on the part of the buyer that the respondents were genuine sellers. In Emmons the agent ceased his efforts to sell the property. In this case the agent rendered himself unable to sell the property by departing overseas and becoming effectively uncontactable. The seller began to look elsewhere. In both Emmons and this case, the second agent was able to effect the sale whereas the first agent was not.
Thus, the passages from the primary judge's reasons set out above do not involve his Honour treating Ms Van Wijngaarden's actions as some form of intervening act breaking the chain of causation between Mr Outerbridge's introduction and the eventual sale. Instead, his Honour's findings reveal that the prospect of a sale was extinguished after Ms Weis was rebuffed by Mr Outerbridge's secretary but was resuscitated through the actions of Ms Van Wijngaarden. On this approach the introduction by Mr Outerbridge was effectively exhausted or, to use the phrase stated by Brereton J in Baker v Leonard Oades Pty Ltd [1964-65] NSWR 1745 and cited in Emmons at [45], the "yeast [of the introduction] ... was no longer working" (at 1748).
In a passage from Emmons relied on by the appellants, Hodgson JA stated that to prove an entitlement to commission it was necessary for the first agent to prove, inter alia, that "the impediment of the gap between the offer it obtained of $25 million and the final agreed price of $29.7 million, was one which it could and would have overcome if not deprived of the opportunity of doing so" (at [3]). His Honour treated the "apparent disinclination" of the proposed purchaser to deal further with the first agent as a reason why an inference to that effect would not be drawn (Emmons at [6]). The same position appears to apply to Ms Weis after her attempts to contact Mr Outerbridge when he was overseas were rebuffed. However, irrespective of Ms Weis' attitude to Mr Outerbridge, this Court can be confident that Mr Outerbridge could not have taken the steps that Ms Van Wijngaarden did in late December 2017 to secure a sale because he was in another country and was effectively uncontactable.

Grounds of Appeal

The grounds of appeal as identified in the appellants' written submission were slightly different from those stated in their Notice of Appeal. As the respondent's written submissions and the oral argument engaged with the former, I will do likewise.

Ground 1: Application of Incorrect test

Ground 1 of the appeal contended that the primary judge applied the incorrect test to determine whether a right to a commission arose in favour of the appellants. Four related contentions were made under this ground. First it was contended that the primary judge wrongly considered that the appellants' contention that they were an effective cause of the sale was necessarily inconsistent with Ms Van Wijngaarden being an effective cause of the sale. Second, it was contended that the primary judge's findings warranted the conclusion the appellants were an effective cause of the sale. As this contention overlaps with ground 2 of the appeal, it is addressed below (and rejected). Third, by reference to the judgment of McHugh J in Moneywood, it was contended that the primary judge erred in supposedly equating the "importance of procuring finance with the task of providing the 'clarification' desired by Ms Weis". Fourth, it was contended that the primary judge erred in failing to give consideration to whether the "task" (of negotiating a sale) could have been undertaken by Mr Outerbridge if given the opportunity.
I do not accept that any of the first, second and fourth of these contentions fairly describes the primary judge's reasoning. In relation to the first contention, the appellants contended that the primary judge erred in proceeding on the basis that whether or not Ms Van Wijngaarden was the (or "an") effective cause of the sale was determinative of whether Mr Outerbridge was such a cause. The submissions referred to Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179 ("Prestige") in which Bell JA (at [61]) found that the primary judge in that case has failed to address the significance of the appellant's introduction of the purchaser and subsequent negotiations carried out by the appellant, but instead had addressed whether the actions of another agent was an effective cause of the sale. Her Honour concluded that "[i]n the circumstances, it was necessary to appreciate that in rare instances two agents may independently be an effective cause of sale" (citing, inter alia, LJ Hooker at 61 per Barwick CJ).
As noted, the authorities, including the passage from the judgment of Jacobs J in L J Hooker, recognise the possibility that the actions of more than one agent can answer the description of "effective cause", although such a circumstance can be expected to relatively rare (L J Hooker at 61 per Barwick CJ; Emmons at [48] per Stein JA). However, I do not accept that the primary judge proceeded on the basis that, if Ms Van Wijngaarden was an effective cause of the sale, then Mr Outerbridge was not. His Honour did not make any express finding that Ms Van Wijngaarden was the effective cause of the sale. At its highest his Honour found that Ms Van Wijngaarden's "intervention" was "crucial" and she "brought about the sale". On any view of the authorities, an assessment of whether Mr Outerbridge's conduct was the effective cause of the sale required a consideration of factors external to him that brought about the sale, including Ms Van Wijngaarden's conduct (see [63]). In this case, as already explained, the effect of his Honour's findings was that, after Ms Weis contacted Mr Outerbridge's secretary, his introduction was exhausted at least so far as consummating a sale was concerned. In referring to the actions of Ms Van Wijngaarden after she was contacted by Ms Weis on 28 December 2017, his Honour was explaining how a transaction that was effectively over after Ms Weis was rebuffed by Mr Outerbridge's secretary, was resuscitated.
In relation to the third contention, in Moneywood (at [30]), McHugh J gave, as an example of where a consideration of the substance of the matter led to the conclusion that the agents' conduct was not an effective cause, the circumstance that "[i]f the sale could not have occurred until the vendor or another agent arranged finance on terms, not otherwise available to the purchaser and not contemplated at the time of the introduction" ([id] citing Moran v Hull [1967] 1 NSWR 723; Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571 and Bradley v Adams [1989] Qd R 256). Counsel for the appellants, pointed to a statement by the primary judge that his Honour apparently discerned from Moneywood, namely that "[i]If the sale could not have occurred until the vendor or another agent undertook tasks not otherwise available to the purchaser and not contemplated at the time of the introduction, the proper conclusion will ordinarily be that the introducing agent was not the effective cause of the sale". Counsel contended that the primary judge incorrectly widened the proposition stated by McHugh J in Moneywood so that it referred to any form of "task" undertaken by a subsequent agent rather than just arranging finance. It was submitted that the primary judge then applied this incorrectly stated principle to the actions of Ms Van Wijngaarden in clarifying the respondents' "position" in relation to the price they were willing to accept, a step the appellants contended was not "especially difficult".
It is unnecessary to determine whether the proposition stated by the primary judge was correct, although it may ultimately depend on the nature of the relevant "task". This is so because I do not accept that the primary judge analysed the conduct of Ms Van Wijngaarden in securing the sale as akin to the task of arranging finance as referred to in Moneywood. In the extract from the primary judgment set out above, his Honour did not address whether or not Ms Van Wijngaarden's actions in correcting Ms Weis' understanding of what the respondents was seeking was a task "not contemplated at the time of introduction" by Mr Outerbridge. Instead, as stated, his Honour simply referred to that as a part of the explanation for how a transaction that was effectively over after Mr Outerbridge departed on a holiday was revived.
This conclusion obviates the necessity to address a debate that arose at the appeal as to whether or not Mr Outerbridge was responsible for any misapprehension on the part of Ms Weis as to the respondents' price expectations. The primary judge's findings do not allow and do not require that debate to be resolved. This is so because his Honour's findings establish that the respondents had repeatedly stated that they would not accept less than $5 million for the Property and that, until after 27 December 2017, Ms Weis was not aware of their true bottom line. Hence, whatever the cause of the miscommunication in the vendors' expectations, it was the actions of Ms Van Wijngaarden that resolved it and Mr Outerbridge could not have done so as he was overseas and effectively uncontactable.
This reasoning also addresses the fourth contention noted above, namely that that the primary judge erred in failing to give consideration to whether the "task" (of negotiating a sale) could have been undertaken by Mr Outerbridge if given the opportunity. The short answer to that contention was that, after 27 December 2017, Mr Outerbridge was not capable of rectifying Ms Weis' misunderstanding about the respondents' position because he was uncontactable.
I would reject ground 1 of the appeal.

Ground 2: Finding against the weight of the evidence

Ground 2 of the appeal contends that the primary judge's finding that the appellants were not the effective cause of the sale of the Property was contrary to the weight of the evidence. As noted, it can be addressed together with the contention that the primary judge's findings warranted the conclusion that the appellants were an effective cause of the sale. In substance, the appellant contended that, an application of the correct test to the primary judge's findings and certain inferences that should be drawn from those facts, warrants a reversal of the primary judge's findings. As such, it assumes that, given the findings of primary fact, this Court is in a good as position as the primary judge to reach a conclusion on whether effective cause was shown. I agree with that assumption.
By reference to Emmons, the appellants' submissions contended that the correct test was "whether Mr Outerbridge's work in introducing Ms Weis to the [P]roperty continued to influence her in her decision to buy the [P]roperty". The submissions referred to the findings and undisputed evidence concerning the introduction of Ms Weis to the Property by Mr Outerbridge, the work he undertook to further her interest in the Property (see [28] to [29]), his securing of offers from her and his informing Ms Weis that he was contactable by email while on holidays. The submissions also contrasted the work he undertook with what was contended to be the relatively small contribution of Ms Van Wijngaarden to the securing of the sale. It was submitted that it was Mr Outerbridge "who introduced the buyer, who influenced the buyer to attempt to buy the [P]roperty, whose earlier efforts continued to influence the buyer when they negotiated and finalised the sale, and whose efforts flowed through to that sale". In oral submissions, counsel referred to the relative uniqueness of the Property (see [20]) as a factor supporting great weight being attached to the importance of the introduction of Ms Weis by Mr Outerbridge (Berben at 56,480 per Moffitt P).
It is correct that, in Emmons, Stein JA characterised the test for recovery of commission of as whether the agent's efforts "continued to influence" the potential purchaser to buy (at [39]). However, that statement is not, and was not intended to be, a substitute for the test of effective cause or to limit the inquiry spoken of by Moffitt P in Berben. As the facts of Emmons indicate, the mere introduction of a purchaser that creates their interest is usually or at least sometimes insufficient. Ultimately, the issue is not so much whether the purchaser has been influenced but the extent of the influence on the sale that in fact eventuated including its price.
Insofar as the appellants relied on the facts found by the primary judge, their submissions omit any reference to his Honour's acceptance of Ms Weis' evidence of her attempts to contact Mr Outerbridge via his secretary and the conclusion she drew after she was rebuffed, namely that that the sale was over such that she decided to contact another agent to look for other properties. His Honour's conclusion that Mr Outerbridge "played a very significant causal role in relation to Ms Weis purchasing the Property" and her evidence accepting that it was Mr Outerbridge's efforts that generated her interest in the Property have to be considered in light of the findings concerning the events of 27 and 28 December 2017. This case was not simply a scenario where one agent introduced a potential buyer to a relatively unique property, generated their interest in the property, secured an offer and another agent then completed the negotiations to the point of sale. Instead, it was a case where, before the intervention of the second agent, the first agent left the country and could not be contacted leaving the potential purchaser doubting the seller's bona fides and concluding the transaction was over. The second agent did not just continue the negotiation; they resurrected the transaction, restored trust between the parties and bridged a significant price gap. In these circumstances, and notwithstanding that the actions of Mr Outerbridge generated the purchaser's interest in a relatively unique property, I agree with the primary judge's conclusion on effective cause.
The appellants' submissions in relation to this ground also contended that the primary judge considered or assumed that Ms Van Wijngaarden "overcame some hurdle or difficulty which Mr Outerbridge could not have overcome himself". They contended that there was "nothing to suggest that Mr Outerbridge could not have negotiated the price of the property while he was away". This is a repetition of a submission that has already been addressed. The primary judge did not make that assumption. Further, there is a very good reason to conclude that Mr Outerbridge could not have negotiated the sale of the property on the terms that were ultimately agreed upon, namely that he was effectively uncontactable. On the primary judge's findings, Ms Weis did not want to deal with Mr Outerbridge by email.
I would reject ground 2 of the appeal.

Orders

I propose the following orders: (1) Pursuant to rule 51.9(1)(b) of the Uniform Civil Procedure Rules extend the time for the filing of a Notice of Appeal up to and including 30 March 2020; (2) The appeal be dismissed; (3) The appellants pay the respondents' costs of the appeal.

Amendments 16 September 2020 - Paragraph 75 - date corrected to read: 27 December 2017. 03 February 2021 - [7] - "the respondent's submission" changed to "the respondents' submission". 24 March 2021 - [7] - "he was not the effective cause" changed to "he was the effective cause". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 March 2021

Property Stock and Agents Act 2002(NSW)

Solicitors: Jemmeson & Fisher (Appellants) Heydons Lawyers (Respondents) File Number(s): 2019/408771 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Citation: Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall [2019] NSWDC 724 Date of Decision: 03 December 2019 Before: Dicker SC DCJ File Number(s): 2018/154851

HEADNOTE [This headnote is not to be read as part of the judgment] The appellants are partners in a real estate agency. One of the appellants is a licensed real estate agent (the "first agent"). Between 2012 and 2015 the respondents engaged various real estate agents to sell their property in the hinterland of Byron Bay. In 2015 they entered into a written agreement with the appellants engaging them as agents on a non-exclusive basis. The agreement conferred a right to be paid commission where, inter alia, the appellants were "the effective cause of the sale" and if a purchaser "has been effectively introduced" by them. In December 2017, the eventual purchaser contacted the first agent who showed her the property. The purchaser made an initial offer on the property which was rejected. The purchaser then increased the offer and it was accepted in principle by the respondents. However, on 25 December 2017 the respondents withdrew their acceptance as the price was too low. On 27 December 2017 the purchaser attempted to contact the first agent to arrange a meeting with the respondents but was informed by his staff that he was overseas, would return in a few weeks and that there was no one else who could attend a meeting. The purchaser concluded that "there was nothing further to do with the" property. The purchaser then contacted a second agent to look at other properties. This second agent had also entered into a non-exclusive agency agreement for the sale of the property with the respondents. The second agent contacted the respondents and secured an agreement for the sale of the property and equipment for a price that was just over $400,000 more than the in-principle agreement they had previously reached. The parties later discovered that the second agent had ceased to be registered as a real estate agent at the time of the sale. The second agent went into liquidation before the sale was completed. The respondents received compensation for the lost deposit but not for any amount representing agent's commission. The appellants sought recovery of the commission contending that they were the, or an, effective cause of the sale. The primary judge dismissed the claim. The appellants appealed. The issues on appeal were: (i) Whether the primary judge wrongly considered that the appellants' contention that they were an effective cause of the sale was necessarily inconsistent with the second agent being an effective cause of the sale. (ii) Whether the primary judge erred in supposedly equating the importance of procuring finance with the task of providing the clarification on price desired by the purchaser. (iii) Whether the primary judge erred in failing to give consideration to whether the task of negotiating a sale could have been undertaken by the first agent. (iv) Whether the primary judge's finding that the appellants were not the effective cause of the sale of the property was contrary to the weight of the evidence. The Court held, dismissing the appeal: As to issue (i), per Beech-Jones J (Leeming JA and Emmett AJA agreeing): While the actions of more than one agent can answer the description of an "effective cause" of the sale of a property, a consideration of whether the first agent's conduct was the effective cause of the sale nevertheless required a consideration of factors external to him that brought about the sale, including the conduct of the second agent. Berben & Anor v Hedditch & Anor (1982) NSW ConvR 55-081; Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179; L J Hooker Ltd v W J Adams Estates Pty Ltd (1977) 138 CLR 52; [1977] HCA 13, referred to. As to issue (ii), per Beech-Jones J (Leeming JA and Emmett AJA agreeing): The primary judge did not treat the conduct of the second agent in securing the sale of the property as akin to the task of arranging finance. The task of providing clarification to the purchaser was referred to as part of the explanation of how a transaction that was effectively over after the first agent departed on holiday was later revived. Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351; [2001] HCA 2, referred to. As to issue (iii), per Beech-Jones J (Leeming JA and Emmett AJA agreeing): The primary judge did not fail to give consideration to whether the task of negotiating the sale could have been undertaken by the first agent in circumstances where he was not capable of providing the purchaser with any clarification of the respondents' price expectations because he was overseas and effectively uncontactable. As to issue (iv), per Beech-Jones J (Leeming JA and Emmett AJA agreeing): A determination of effective cause requires a consideration and evaluation of all the circumstances surrounding a sale. The mere introduction of a purchaser that creates their interest in a property is usually, or at least sometimes, insufficient to be an effective cause. In this case the potential for a sale was effectively extinguished when the first agent departed overseas and became uncontactable. It was the second agent who revived and completed the sale. Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117, referred to. Observations by Leeming JA and Emmett AJA on the necessity to construe the written agreement first before resorting to case law dealing with implied terms.

Judgment

LEEMING JA: I agree with the reasons of Beech-Jones J and the orders he proposes. I add the following by way of emphasis.
Principal and agent can agree to a right of commission by written contract. If so, then the entitlement to commission will normally involve first a question of construction of the agreed term, followed by a factual question whether what the agent did falls within its meaning. The process of construction may sometimes involve the implication of terms, including as a matter of business efficacy, or in accordance with custom, as mentioned by Gummow J in Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351; [2001] HCA 2 at [80]‑[81]. But the starting point is the parties' express promise. One does not leap to decisions which determined an entitlement to commission in cases where the parties' agreement was silent. The position is as stated by Lord Russell in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 124, in a passage reproduced with approval by Lord Kitchin JSC in Devani v Wells [2020] AC 129; [2019] UKSC 4 at [25]: "(1) Commission contracts are subject to no peculiar rules or principles of their own; the law which governs them is the law which governs all contracts and all questions of agency. (2) No general rule can be laid down by which the rights of the agent or the liability of the principal under commission contracts are to be determined. In each case these must depend upon the exact terms of the contract in question, and upon the true construction of those terms."
Thus some of the decisions prominent in the submissions in this appeal were of at best indirect relevance. In Anderson v Densley (1953) 90 CLR 460 at 464; [1953] HCA 47, the jury charged with finding the facts in the Supreme Court of Queensland was asked to find whether the agent was "the effective cause of the sale", because the contract was oral and silent as to the requisite causal connection. In L J Hooker Ltd v W J Adams Estates Pty Ltd (1977) 138 CLR 52; [1977] HCA 13, a pre-judicature case commenced in 1969 in the Supreme Court of New South Wales, the agent succeeded on its third count based on an implied contract that "the respondent promised to pay commission at a rate referentially agreed between them upon the appellant introducing to the respondent a person who became the purchaser of the property on terms acceptable to the respondent": see at 55. In Moneywood itself, the inquiry concerning effective cause arose because "[t]he parties made no express provision as to the eventuality that an introduced purchaser might acquire part but not all of the land": at [80].
In contrast, the appellants' rights to commission are based on cl 3.1 of the Agency Agreement. It is true that that clause is less clearly drafted than might be desirable in a standard form contract. It is also true that its language may be informed, as a matter of construction, by the term implied at common law that an agent must have been the effective cause of the sale. But the starting point for analysis is the construction of 3.1, as opposed to decisions on agents' entitlement to commission in cases where no express provision had been made.

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