Polybuild Technologies International Pty Ltd v P'Auer AG and Anor [2014] VCC 1868

County Court of Victoria|2014-11-28

**1 The first and second plaintiffs seek to recover commission pursuant to an agreement where they allege that they were retained by the defendants to procure the sale of certain assets owned by the first defendant. The sale was successfully achieved. While the defendants did not dispute that the plaintiffs were retained to achieve a sale, they deny that there was any term of an agreement to pay the quantum of the commission claimed. Alternatively, the defendants say that the plaintiffs are precluded from recovering the commission claimed due to a failure to comply with the Estate Agents Act.

2 The plaintiffs allege an agency retainer, wherein the commission was to be any amount above a reserve or minimum price indicated by the defendants. They allege that the agreement was in writing, oral and to be implied. The original agreement in September 2010 involved a possible sale with the net proceeds to the defendants of 4 million CHF with an asking price of 4 million Euro. The commission was to be the difference. This was later amended in February 2011 to a minimum or "rock bottom" price of 1.5 million CHF with an asking price of 2.5 million CHF, and then in April 2011 to 1.8 million CHF with the same sale price of 2.5 million CHF. In July 2011 a sale was achieved at a price of 2.5 million CHF payable in instalments.

a. the first issue regarding the agreement between the parties was have plaintiffs proved a term in the agreement entitling them to the commission sought?

3 The plaintiffs' alleged that a term of the agreement entitling them to recovery was in writing, oral, or to be implied by the conduct of the defendants subsequent to the receipt by them of the EAA. The written element of the contract alleged was a document titled "Exclusive Agency Agreement" (EAA) that was forwarded to the defendants on 27 September 2010 after an earlier discussion over lunch in Zurich. The defendants denied receiving the document. Further, even if the document was received, they denied that the parties had ever reached an agreement to entitle the plaintiffs to a commission amounting to any sum in excess of the minimum amount sought by the defendants to satisfy their banker. The defendants' position was that the parties were like "passing ships in the night" and there was never a concluded term as to the calculation of commission that would entitle the plaintiffs to the entire amount of the sale price above the minimum or reserve set by the defendants.**

b. the second issue was who were the parties to a commission agreement?

**4 The defendants also raised the issue as to whether the first plaintiff was a proper party to any agreement given that discussions were always with its principal Mr Reinke before the alleged agreement was reached. Further, they queried whether the second defendant was a proper party to any retainer agreement.

5 The plaintiffs' position was that at all times they dealt with both the first defendant and its principal, the second defendant. Both were named in the EAA. Further, the second defendant had represented to them that he was "a man of honour". It followed that any agreement was with both the company and Mr Auer personally.

6 In relation to the first plaintiff, the defendants had been advised that Mr Reinke had as a partner Mr Turner in relation to the sale, and after the commission agreement was reached with Mr Turner's corporate vehicle, he had advised Mr Auer of the name of the first plaintiff's corporate vehicle and that had never been disputed.

c. the final issues related to the Estate Agents Act defence were:**

(i) Whether for the purposes of the Act this was a sale of a business or, as alleged by the plaintiffs, a one-off sale of assets not caught; and

(ii) If the transaction was a sale of business for the purpose of the Act, whether the plaintiffs were in business as estate agents and precluded from recovering on the basis that they were not licensed under the Act.

**7 The alternative position of the defendants was that even if there was an agreement in relation to commission, the contract involved the sale of a business and was caught by the Act. Further, the Act required that any commission agreement with an estate agent was to be in writing, and that was not the case here.

8 The plaintiffs maintained that the Act had no application because they were not in in business as estate agents, this was not the sale of a business, and in any event the Act did not apply to one-off transactions.

9 For the following reasons I find for the plaintiffs on all issues.**

**10 Mr Gary Reinke is the principal of the first plaintiff. Its only trade is the one involved in these proceedings. In 2009 and 2010 he was employed as the Business Development and New Product Development Manager of a printing company, Burgess Printing and Packaging Pty Ltd. During 2009 he was looking to develop new product streams including in-mould labelling (IML). After an internet search, the first defendant company emerged.

11 P'Auer AG is a long established family-owned business operating in a town near Zurich, Switzerland. Its principal is Mr Hans Auer, the second defendant, who was born in 1949. P'Auer is a specialised printing business, and in particular at that time had specialist expertise in IML, a technology which was yet to become widespread in the Australian industry.

12 On a trip to Europe during 2009 Mr Reinke attended the factory and discussed with Mr Auer the possibility of P'Auer producing labels in Switzerland for Burgess. This was confirmed in a letter from Burgess to P'Auer on 25 June 2009. That letter was produced at the request of Mr Auer, as he needed it for a discussion with his banker. At that time the company was suffering the effects of the GFC and a high CHF.

13 Subsequently matters moved to a possible proposal to move the printing equipment of P'Auer to Australia. This was confirmed in a request from Mr Auer to Mr Reinke on 17 February 2010. The explanation given in the email was that Mr Auer was getting older, and his son Roland Auer, born in 1973 and the Head of Production, was not willing to take responsibility for the existing business. He requested Mr Reinke to advise whether he was interested in a joint venture. On 9 April Mr Reinke confirmed in a letter to Mr Auer that Burgess continued to investigate the possibility of purchasing his company. In the course of discussions with Mr Auer, Mr Reinke had been advised that Mr Auer was looking to obtain 4m CHF for the business.

14 Subsequently, Mr Reinke entered into discussions with the second plaintiff. Mr Andrew Turner is a partner in Cooper and Turner Pty Ltd, a printing and converting machinery business. He describes himself as a sales representative for overseas manufacturers and suppliers, and has experience in business solutions and the importing of machinery and transfers of IP. In an email dated 6 May 2010 Mr Reinke advised Mr Auer that he was working with Cooper and Turner towards a proposal to put to VIP Packaging, a labelling business, that involved purchasing labels, and eventually moving to Australia the IML manufacturing assets of P'Auer. At that point the proposal was to establish some form of joint venture.

15 By May 2010 Mr Reinke was progressing the idea of purchasing the business by way of establishing a venture and there had been discussions with financiers. He confirmed this in a letter to Mr Auer on 12 May 2010. He received a reply from Mr Auer on 14 May 2010 which indicated that Mr Auer was under pressure from his banker and he was also concerned for arrangements in relation to his son, and indicated that Mr Roland Auer and his wife were willing to relocate to Australia.

16 In an email dated 18 May, Mr Reinke indicated to Mr Auer that he had a partner "for the project", Mr Turner, who had introduced the proposed business to VIP. Mr Reinke indicated in that email that VIP may approach Mr Auer about purchasing the business. He indicated at that point that if that were to occur he would be happy:**

"to be the broker for the business here and I must tell you that I have told them the price is in Euro not swiss Frac so be aware of this if they do approach you."

He indicated that he and Mr Turner were working with some other possible prospects.

17 Mr Auer thanked him for that email in a further email dated 18 May 2010, and he indicated in that email details of production that had previously been provided and his further contacts with that business. He also indicated that:

"If they ask us directly about purchasing the business, I will inform you. ... No problem with you as a broker.

He then referred to the declining exchange rate of the Swiss franc.

18 In an email dated 15 July 2010 Mr Auer sought information from Mr Reinke, noting that his business was "low" at the moment. Mr Reinke replied in an email dated 16 July 2010 that indicated that he was about to reveal P'Auer's identity to a possible purchaser, Amcor, noting:

"We are happy to introduce them to you and be the broker of the deal through you if you are OK with this."

He advised Mr Auer not to reveal the price, but to give them an approximate price, and use Euros rather than Swiss francs. This was a reference, according to Mr Reinke, to the plaintiffs obtaining a commission based on the currency difference between the CHF asking price of Mr Auer and what could be obtained for the same amount in Euros.

**19 On 28 July Mr Turner advised Mr Auer that he may be approached by a multinational Multi-Color and that "we are treading very carefully with them to negotiate a partnership. Please advise if you are approached."

20 On 5 August Mr Reinke advised Mr Auer that there had been further interest from Mr Barrett of Multi-Color. He advised that "if he asks about the price it is 4 million euro plus as asking price."

21 Mr Auer responded by suggesting "The machines will be easy to bay [sic] on the market with this 4 Mio EURO."

22 On 12 August 2010 Mr Reinke advised Mr Auer that:**

"There has been further contact with an interested purchaser and this purchaser needs a confidentiality agreement."

He advised in that email that he had given it a price of 4 million Euro, and that Mr Roland Auer would like to work in Australia and needed a sponsor.

23 By an email on 13 August 2010 Mr Auer replied as follows:

"Quit interesting your mail. I under-stud from your point of view ... Brenton [Barrett] is an really smooth operator in the business with dealing. Means we need an good background to deal with them. Therefore you need always the informations about the discussions with him. I don't have any problem with them. Your price with 4 Mio Euro will by OK. Compare to the Swiss Franc is this at the moment 5'400'000.- CHF. This 1.400'000 CHF really that will by enough space for a quit good commission. ... ! But you are right, I need minimal CHF 4'000'000.- . I believe the deal has to by for you and Andrew on the first place. ... Means I go in the back and only you deal with him.

I tell nothing about any price ore any other financial possibility that is only you and Andrew.

24 Mr Auer sought further information from Mr Reinke on 24 August 2010 and was advised that the election had slowed down things. By a reply dated 25 August he indicated that he needed to:

"react end of August to the bank. If I can give them some more hard things ... that will be quit good. Best with official letter had's.

**25 By email dated 30 August 2010 Mr Reinke advised Mr Auer that he had had some further interest in the business and that Mr Auer may get contact from Avery or CCL, and he outlined details of a coming trip to Europe. Mr Auer replied stating that "you are a good salesman!"

26 Mr Reinke gave evidence that the interest of Burgess in the business had waned but that he was undertaking that trip to inspect other machinery for his current employer. The proposal with Mr Turner in relation to the IML assets was in his private capacity. It was consistent with that that in December 2010 Mr Auer sought his personal contact details and Mr Reinke gave him for the first time the name of the first plaintiff.

27 On 1 September 2010 Mr Turner provided to Mr Auer a letter on letterhead. The letter states:

"Gary requested I give you a formal update on our activities to sell your business and most importantly fitting your needs regarding the intellectual property (IP).

I have approached primarily multinational companies that are either Australian based or have a strong presence locally. Moving forward Gary and I believe the IP for IML production is higher than average due the manufacturing process requiring very unique aspects which makes IML a low cost item to produce but with a high finished value."

He then went on to outline the companies to which he had offered the business, and in particular that Multi-Color was a likely contender, and they were about to forward a confidentiality agreement (CA) to commence due diligence. The letter ends:

"Hans, it is at this stage I trust you can understand that I would like some written assurance from you that Gary and I will receive a share of the sale value with our expectation being above your reserve price. We respect your situation and have faith in keeping a strong long term relationship."

A CA relating to Multi-Color was then prepared and forwarded to Mr Auer.

**28 On 25 September 2010 Mr Reinke had a meeting over lunch with Mr Auer at a restaurant near Zurich. There is a dispute as to whether the meeting took place over lunch or dinner. Mr Auer said it was a dinner meeting. Mr Reinke maintained it was over lunch. His trip diary was in evidence and it records it as a lunch meeting. I accept Mr Reinke's account of the meeting as it accords with the prior document and his subsequent note to Mr Turner.

29 I am satisfied that at the meeting Mr Reinke did indicate to Mr Auer how he and Mr Turner were going about the process of seeking to sell the business, including that the price asked was 4m Euro and that Mr Auer was asking for 4m CHF and the difference was their commission. He confirmed in cross-examination that he went through the matters that were set out in his subsequent email set out below following the meeting.

30 Further Mr Reinke was told that Mr Auer's position was getting tougher and that there was a horizon looming and that he needed to be out of the plant. Mr Reinke thought that it was about the middle of 2011. In the discussions, Mr Auer requested an agreement with Mr Reinke for them to continue to work in Australia. There was also discussion that Roland was to be part of the sale of assets and his preference was to work in Australia rather than the opportunities what may have existed in the US.

31 In cross-examination Mr Reinke stated that he had discussed business "lightly" during the lunch. In relation to the terms of his arrangement with Mr Auer he had not discussed it as such, but rather "he didn't disagree with it." He further stated that he went through the proposal that was in the previous emails. He further indicated in re-examination that he knew that Mr Auer had a meeting with his banks and wanted something in writing on letterhead to show that we were working on actively selling his assets in Australia.

32 The account by Mr Reinke was not the subject of detailed challenge by way of puttage. Rather, in final address it was criticised for being in part responsive to leading questions and not going further than the content of the earlier emails.

33 Mr Auer's account of the meeting was scant. He indicated that they discussed the sale of the company to the US and that he had received an offer of US$4M plus interest, which was better than the idea Mr Reinke had.

34 He admitted that he had been told that Burgess was not interested in the assets. He denied telling Mr Reinke that he was under pressure from his bankers and that he needed to move his assets out, or that he needed a document to show his bankers. He denied discussing commission but accepted that he was told that Mr Reinke had offered the company for 4m Euro.

35 Immediately following the meeting Mr Reinke sent an email to Mr Turner which read:**

Can you please send a letter on your company letterhead to Hans about our agreement.

Send me a copy of the letter prior to sending to Hans please,

Not in the letter but for us to advise prospects there is real interest from USA and we need to have an agreement in place by end of January 2011.

I have learnt much more and we will talk on my return.

36 By email dated 27 September 2010 Mr Turner sent to Mr Auer an email stating:

"Please find attached our proposed agent agreement. Please revert soonest with comment."

The Company hereby appoints the Agent to be its exclusive Agent for the selling of it's Machinery, Raw Materials, Finished Products and Sales Contracts (hereinafter called "the Business").
The Company hereby appoints the Agent to be its exclusive Agent for the selling of it's Intellectual Property (hereinafter called "the IP").

This Agreement shall commence on September 27, 2010 and operate until September 27, 2011. Thereafter shall be automatically renewed unless either the Company or Agent terminates the Agreement written notice of termination with 90 days notice.

Will promote the sale of the Company's Business.
Will not directly or indirectly indicate that it is acting as part of the Company.
Will keep drawings, specifications and process details furnished to him confidential even after termination of this agreement.
Will not sell or represent any similar products made by another manufacturer other than the Company's.
Will provide monthly activity reports to the Company.

At its own expense supply the Agent with a reasonable amount of technical catalogues and advertising material in English.
Provide training, assistance and technical instruction to the Agent.
Refrain from selling and or giving quotations for the Business or IP other than through the Agent.
Transfer all requests about the Business and / or IP to the Agent to handle.

The Agent will get from the Company as a commission the balance above CHF 4,000,000.00 (Four Million Swiss Franc's) for the sale of the Company's Business.

In special cases there can be a change in the commission, only after a prior mutually written consent by Hans Auer (the Company) and the Agent.

The sale of the Business shall not include exclusive access to the IP unless there is mutually written consent by the Company and the Agent.
The Company and the Agent will agree on the amount of commission due to the Agent in advance of each sale of lP.
In case of termination or expiration of this agreement, the Agent will be paid all outstanding commissions for sales generated up to that date by the Agent.

____________________ ____________________

38 In an email dated 30 September Mr Auer said:

Thank you for the agreement with Multi Color. To the written agreement (contract) about you as agent ..

There is a small issue, I'm well to read such things in German, but to do this in English i need more time. One possibility is the translating over computer with this I can do it easy.

...On thing is to correct. It is not possible to give you the sales/possibility worldwide

You know there are a discussion with USA and sins few days also with INDIA

We need to restrict this to your contact's in Australia."

**39 A central plank of the plaintiffs' case was that although the defendants did not return a signed copy of the EAA, it was received by Mr Auer, and both parties proceeded to act as though it was governing their relationships thereafter in relation to commission. The legal principle that the plaintiffs sought to rely on was that the unreturned contract should be seen to have been accepted by a failure to dispute the contract, as set out in the following decision: Empirnall Holdings v Machon Paull Partners Pty Ltd (1998) 14 NSWLR 523 at 535:

"However, the question is one of fact. A more accurate statement is that where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms....The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted."

40 The defendants on the other hand relied on the following principles in Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 at [39]:**

"Despite the lack of any direct written evidence of an agreement between Adnunat and ITW, Adnunat contends that one must be inferred from their conduct. A contract may in certain circumstances be inferred from conduct, even where no offer and acceptance can be identified: ... However the existence or otherwise of an enforceable agreement depends ultimately on the manifest intention of the parties, objectively ascertained: ... Where mutual promises are sought to be inferred, the conduct relied upon must, on an objective assessment, evince a tacit agreement with sufficiently clear terms**. It is not enough that the conduct is consistent with what are alleged to be the terms of a binding agreement. The evidence must positively indicate that both parties considered themselves bound by that agreement**." (emphasis added, citations omitted)

41 Before explaining how I have reached a conclusion in favour of the plaintiffs on the terms of a concluded agreement it is necessary to review the main events after September 2010 which led ultimately to the plaintiffs achieving a successful sale of the business assets for 2.5m CHF payable by instalments.

**42 As alluded to by Mr Reinke in his reporting email to Mr Turner on 25 September, it was not disputed that there had been other interest in the assets of the first defendant while they were dealing with the plaintiffs. Mr Auer had been in communication with at least two US companies, Nypro and Sealaska. Nypro had advised Mr Auer on 13 September 2010 that it was interested but would be in a better position during 2011 to move forward. In a later email of 9 December that date had slipped back to Q2 of 2011. In a letter to Sealaska on 26 January 2011 Mr Auer sought an update as soon as possible. On 14 February Mr Auer was advised that the project could not be pursued at this time.

43 Meanwhile in Australia in the period between October and February on a few occasions Mr Auer enquired of Mr Reinke as to progress. On 8 October Mr Auer queried information that Multi-Color was seeking. Mr Reinke replied, and on 13 October Mr Auer provided the balance sheets for 2008 and 2009. Mr Turner replied that he had provided details of the proposed sale to a company Sealedair. He went on: "Again I must express my concern about limiting our opportunities to Australia and New Zealand when all companies we are approaching are mulitnationals." No response from Mr Auer is in evidence. The email can be read as a response to the 30 September reply by Mr Auer when he sought to limit the EAA to Australia.

44 On 25 October Mr Auer sought news and Mr Turner advised Mr Auer that he was seeking to translate into English the balance sheets that had been provided. On 20 and 22 November Mr Auer sought news and was advised that Mr Reinke and Mr Turner would be doing a presentation the following week.

45 On 5 December Mr Reinke, in reply to a request a couple of days earlier provided his personal contact details including the name of the first plaintiff to Mr Auer.

46 On 17 January 2011 Mr Auer asked Mr Reinke as to more possibilities and stated that: " From my site I stay a little under time pressure. In the following time (next 6 month's) I need to move my machineries. If possible let us talk about start with label production her and then moving to produce them in Australia."

47 Mr Reinke replied that he was about to leave Burgess. He confirmed that he was seeking some label orders through Burgess, but that he was working with Mr Turner on the sale of business.

48 On 15 February 2011 Mr Auer emailed Mr Reinke stating that he had a meeting with his banker on 17 February and sought an official letter as to any good news. He repeated the request in a further email dated 17 February.

49 Mr Reinke did not in fact provide a letter similar to the one that had been provided earlier on 1 September by Mr Turner. He did recall a phone call regarding a need for documentation for his bankers.

50 On 18 February 2011 Mr Auer sent the following email headed "Idea" to Mr Reinke:**

needs a working place for my son, he is willing to go to Australia

[A list of equipment and original prices were set out]

IML, Order from SA over approx CHF 750,000 (one print order for 1 year)

IML, Order from Sri Lanka over approx. CHF 500'000 (4-5 orders per year)

IML, Order from Kenya over approx CHF 250'000.- (1-2 orders per year)

51 Mr Turner replied in an email to Mr Auer on 23 February 2011 at 11.05am:

I have great faith in you being honourable as you do in us. The concern I have in offering your business to potential buyers is that most of the companies locally that can afford to buy it and are possibly interested are also Multi-national companies. I would appreciate your personal assurance that should you be approached by any of the companies we refer that you will advise them initially to deal through us. We are excited by the revised conditions of sale as the viability looks far more attractive now to any potential customer however we could both be financially penalised if we do not show unity. Also with the change in sale value and inclusions the agency agreement we established now needs to be changed.

I confirm now that Geoff Martin - CEO of CCL is aware of the business being for sale and he or his colleagues may make contact direct with you.

52 Mr Reinke sent a further email on 23 February at 7.02pm as follows:

Andrew is doing most of the work on this for us at the moment and we have discussed how and who we should approach.

As you can see from the contacts from Andrew there is some very good interest.

Labelmakers want the IP and your son but we told them they go together if this is OK with you, as they would then under-pay for the company.

CCL are looking at it and a private buyer will be back to us next week as he is overseas this week,

Andrew has also offered it to Burgess with no reply as yet.

We discussed the price and decided on 2.5 million CHF as a good start point as we are sure there will be negotiating.

Also does your son have any ideas of what he wants for a salary what vicinity (sic) of annual salary does he earn over there as this may be a good start plus how much to move?

We will keep you in touch with all of the current activity we have generated.

I assured Andrew you are a man of honour and will work with us on our contacts.

Thank you for the information. The price of 2.5 mio is good discussion ground. Now you know you have a good dealing back-ground.

Salari of my son ... in Switzerland annual round about CHF 110'000.- net brutto will that be 145'000.- 5 week Holiday ...

... thank you to tell Andrew that I'm a man of honour ..

I will work with you on your contacts. One problem will by the short time.

**54 When questioned about this email Mr Auer said he wanted to give Mr Reinke, not Mr Turner a commission of 2 to 3%.

55 Mr Reinke gave unchallenged evidence that he had discussed with Mr Auer the agency agreement, because Mr Turner was "really looking for that agreement." Mr Auer acknowledged the comment "but not an answer in the affirmative or in the negative ... it was an understanding of what I'd said." His best recollection of what was said was "Yes, I understand Andrew wants a formal document." The reference in Mr Reinke's email to "man of honour" is a circumstantial fact supporting that there was a discussion on the issue of a written agency agreement. In his evidence Mr Auer agreed that at no stage did he intend to sign anything in writing, which I find could almost be an acceptance of the evidence of Mr Reinke as to their February conversation.

56 Mr Auer denied any discussion with Mr Reinke as to commission. He claimed however that Mr Reinke had asked him "very intensely" about a minimum price. This was not put to Mr Reinke.

57 The plaintiffs' case was that the September agreement had been varied such that while the critical amounts were all now in CHF, the basic commission and arrangement struck earlier remained.

58 Thereafter, Mr Turner and Mr Reinke commenced to prepare an Information Memorandum titled "Pauer AG An opportunity to purchase an Injection Mould Labelling Business". A draft of the IM was sent to Mr Auer for his comment before it was settled. The first page of the draft IM included the following:**

"P'auer AG is (P'auer Company") is a company owned and operated by Mr Hans P'auer and his son XX P'auer. As the major shareholder Mr Hans P'auer (P'auer Senior) has decided to sell this business and has through a deed of appointment, appointed Cooper and Turner Pty Ltd and its representative Mr Andrew Turner ("The Agent") as their exclusive agent in this process.

This Confidential Information Memorandum ("Memorandum") has been prepared for selected parties with a basic understanding of the business of P'Auer Company and to assist the recipients of the Memorandum (Recipients") in making their own independent appraisal of the P'auer Company before making a non binding offer. The memorandum does not purport to be complete or to contain all of the information which a prospective purchaser may require. No representations or warranty is made (or will be made in any sale agreement) as the accuracy, reliability or completeness of any of the information contained in this Memorandum.

The Recipient named at the bottom of this page agrees by receiving this Memorandum that it shall not copy, reproduce or distribute to others this memorandum whether in whole or in part, without the prior written consent of the Agent. Further the recipient will maintain confidential all information contained herein and not already in the public domain. All information obtained in this process will be returned promptly to the agent on request without retaining copies.

Projections by their nature are uncertain and therefore no reliance can be placed on the information contained in any projections included in this document. All amounts are expressed in AUD unless otherwise stated.

Enquiries in respect of this business must be addressed to the Agent in the first place and no direct contact is permitted with the vendor without the prior written consent of the Agent."

**59 The IM went on to detail the history of the business, the IP and assets. There are other parts that purported to set out the revenues of the business, and Mr Auer responded with comments indicating the difficulties that the business had had in 2009. He further set out that it would be ideal for the customer to take the assets to Australia, and that Roland would require a contract to come to Australia.

60 Ultimately the IM was settled. Mr Auer conceded he would have read the version that was sent to Multi-Color. It addressed a number of issues left incomplete in the draft including the full name of Roland and was now titled "An opportunity to purchase an Injection Mould and Cut Stack Label Manufacturing Business." The final page reads in part:**

The opportunity to employ on a contract Hans son who will move to Australia when sponsored to manage the plant and continually supply the IP and training needed to run the plant efficiently adds the cream to the opportunity.

With the rise in value of the Swiss Franc, Hans has seen his margins dwindle. Hans is also of retirement age and wishes to see the business carry on but realises this cannot be cost effective based in Switzerland. Hans also wishes to help his son carry on however Roland does not have the resources to buy out Hans and move the factory to a more cost effective location.

This document was prepared to give a brief insight into Pauer and the current situation. It is understood by the recipient of this document that Hans Auer has engaged Cooper and Turner Pty Limited and its colleagues as his agent and that all negotiations for selling the business are in full co-operation of the agent. Once signed, a non-disclosure agreement between the potential buyer and Hans will be signed and due diligence will be deemed to have commenced.

It is to be understood by all potential buyers that entering due diligence does not give the buyer rights to exclusion of other potential buyers, exclusion of the agent or an unlimited time frame for consideration. The agent and / or Hans will advise as quickly as possible all that have entered due diligence when a binding agreement of sale has been reached by any potential buyer.

The agent and its colleagues shall be compensated by Hans from the sale of the business and / or intellectual property."

**61 From March Mr Turner proceeded to forward an individually addressed IM on a confidential basis to a number of prospects. An interested prospect was required to enter a confidentially agreement with the first defendant. Mr Auer sought information as to progress and noted in an email dated 28 March that time was running and that at the end of May "all employees are leaving the company." He also noted in an email of 31 March that "the business [of the sale] is cooking".

62 The prospects appeared interested, and arrangements were then made for Mr Auer and his son to travel to Australia in April in order to further progress the sale of the business including meeting with a number of prospects that had been solicited.**

**63 The plaintiffs' case as pleaded at this point is that the parties had agreed in September 2010 to the agency arrangement with the commission on a successful sale to be the amount achieved above 4m CHF. In February the minimum or "rock bottom" price was reduced by Mr Auer to 1.5m CHF, with the commission arrangement unchanged. The asking price was at that point 2.5m CHF. The plaintiff alleged that the minimum price was increased to 1.8m CHF in April 2011 when Mr Auer and Roland arrived in Australia to meet prospective purchasers.

64 On Mr Reinke's evidence the first prospect visited was a company in Clifton Hill, NCI. At the meeting the prospective purchaser stated that he would not be able to get his board to approve more than 2m CHF. The meeting ended amicably and Mr Auer and Roland were to consider the proposal.

65 Outside, there was a brief discussion and Mr Reinke stated that this was a good starting point where he had someone prepared to offer 2m CHF for the business, and that given that the base price was 1.5 m the gap and the commission was good. At this point Mr Auer stated that the base price was 1.8m CHF. Mr Reinke then referred to the 18 February email that referred to 1.5m CHF. The Auers then had a discussion in German, and then reiterated that the base price was 1.8m CHF. Mr Reinke indicated that he would produce the email, and the matter was left there. He denied that Mr Auer had mentioned an issue with the roof of the factory. He then spoke to Mr Turner by phone and later forwarded the 18 February email to him. He was not involved in later meetings.

66 There was disputed evidence from Mr Auer as to events associated with the increase in the base price from 1.5m to 1.8m CHF. His evidence, which was not expressly put to Messrs Reinke and Turner was that in a conversation in a café when they had been at Burgess he had told them that the minimum price was now 1.8m CHF because the roof required repair at a cost of 300,000. There was then a discussion that Mr Reinke was hoping for a payment of 120,000 in an unspecified currency which could be shared with Mr Turner. Mr Auer refused this because the agreement had not been concluded and the company had not been sold yet, and it was too expensive for him.

67 I do not accept that evidence. I prefer the account of Mr Reinke as to what occurred after the NCI meeting. I accept that the meeting at Burgess took place some days later because the original scheduled meeting could not proceed. What is common ground on the competing accounts is the increase in the base price from 1.5m to 1.8m CHF. It was common ground that thereafter the plaintiffs proceeded on that basis.**

**68 After a series of meetings in Melbourne, in April at a final meeting the company Pact Group Pty Ltd agreed to purchase for 2.5m CHF the IML assets and to engage Roland as an employee, as well as Mr Auer as a consultant. The mechanics to get to final completion included a Memorandum of Understanding which was finally signed in late May. On 25 May Messrs Turner and Reinke and the solicitor engaged, Mr Burns, were invited to a future celebratory dinner. There followed due diligence and then an Asset Sale Agreement which was signed on 15 July 2011, with payments made in four instalments. Messrs Turner and Reinke were involved in liaising with the lawyers in settling the terms of the MOU, and the ASA, and an event occurring during the decommissioning of the machinery. The terms of payment were broadly that the purchaser would pay .5m CHF upon signing and shipment, 1m CHF in December 2011 on the recommissioning of the plant, and then two payments of .5m CHF on the anniversary of the recommissioning.

69 On signing of the ASA on 15 July 2011, Mr Auer sent a "thank you" email to Mr Reinke. On 18 July Mr Auer sent congratulatory email to Mr Turner.**

September 2011 commission discussion in Switzerland

**70 In September 2011 Mr Reinke visited Mr Auer in Zurich. At dinner Mr Auer told him in words to the effect that he can't pay "your commission straight away because we have to pay the bank". Mr Reinke responded that he and Mr Turner understood that their commissions would be paid from the final two payments on the anniversaries. Mr Auer replied "Yes." He was not challenged on that account.

71 On 27 September 2011 Mr Reinke sent an email to Mr Auer thanking him for his hospitality and stating:**

"I have informed Andrew our payments will be after the first year as loans need to be settled first, and also a more final set of costs will be available. I have also told him you will send us a note to this effect when you return from holiday."

72 Mr Auer agreed that he received the email, but was unable to recall if he put it through his Google translator. He did not reply. Nor did he respond to later emails from Mr Reinke, including on 15 February 2013 when he was sent invoices from the plaintiffs for their half share each of the 700,000 CHF commission. On 6 February 2013, and confirmed on 2 May 2013, Mr Reinke sent an email seeking payment of the commission stating:

"As we discussed when I visited, we were aware that you were not able to pay us anything until the 3rd payment, but now that it has been paid we would like to start the process."

**73 Mr Turner said that after sending the invoice he had left a voicemail message for Mr Auer but had not been contacted.

74 Mr Auer gave evidence in cross-examination, not put to Mr Turner, that Roland had contacted Mr Turner and told him that Mr Auer had thrown the invoices out.**

**75 The oral evidence here was supplemented by numerous contemporaneous documents that were uncontested and these supported the evidence of Messrs Reinke and Turner. Mr Auer gave his evidence through a German interpreter. At all times in their personal dealings with Mr Auer, Messrs Reinke and Turner spoke in English. Mr Reinke described his English as very good and fluent, but not native. He has spoken to Europeans who spoke better English. He accepted that there were some strange expressions, and denied generally having to ask Mr Auer to repeat himself. He accepted that Roland spoke better English. Mr Turner's evidence was to similar effect. In relation to his spoken English, I accept the evidence of Messrs Reinke and Turner as to his fluency. Mr Reinke has had a number of meetings with Mr Auer, as has Mr Turner, and both are in a position to make an assessment.

76 Mr Auer gave evidence that he would have a split screen on his computer and would put emails he received through a Google translator so that he could read them in German. A perusal of the documents generated by Mr Auer (some of which have been reproduced verbatim above) in evidence indicates that his written English is not perfect, but is pretty good. In relation to some of the written emails he also obtained assistance from Roland.

77 Another evidentiary matter to note is whether the various emails were received. Without delving into the learned article submitted by Mr Wirth, I do not accept that there should be any presumption of unreliability of this mode of communication. Rather, I am satisfied that the emails relied on by the parties were, as they purport on their face to show, sent and received as claimed. In relation to a crucial email, that dated 27 September 2010 attaching the EAA, Mr Auer did not put to Mr Turner that it was returned. There was no evidence that email communications between the parties were the subject of unexplained failures during the relevant period. I draw an inference that the disputed email was, like all the others, received by the sender. This conclusion is supported by the reply email of 30 September.

78 In final address, Mr Moon made a bold submission that I should not accept the evidence of Mr Auer on contested matters unless it is supported by other evidence. The submission combined a number of bases.

79 I accept the submission that Mr Auer was reluctant to make concessions when confronted by documentary evidence to the contrary. Perhaps the best examples were his insistent denial that all employees were to leave the factory at the end of May 2011. His final position was that he remained an employee, yet it is clear that he had communicated to the plaintiffs and others that employees were ceasing then. Giving due consideration to any difficulties with translation in the sting of the questioning, I found his responses unsatisfactory.

80 Similarly, his reluctance to frankly concede that the company was under financial pressure from its bankers was unconvincing given the financial records showing falling sales, the fact that employees were to cease in May 2011, his own requests for material from the plaintiffs to provide to the bankers, the advice in the email of 17 January 2011 as to time pressure, the "rock bottom price" communicated in February 2011, and references to his need to address his bankers when the payment instalments under the ASA were being negotiated.

81 These denials that he was under financial pressure were was also in the face of the unchallenged evidence of Mr Reinke that in his 25 September 2010 discussions with Mr Auer he ascertained that there was a time horizon as the assets had to be moved out of the factory.

82 Mr Auer would not accept that he had provided documents that had been provided by Mr Turner at his request to his bankers. If that was the case he failed to explain why he had requested the documents in the first place.

83 Another matter upon which his responses were unsatisfactory was the state of negotiations in the US when he was having his 25 September 2010 discussion with Mr Reinke. From the documents from Nypro it is clear that from mid September they were hardly active, yet Mr Auer was reluctant to concede this, but maintained he had received a better offer in the US. He said that there was a letter of intent, yet the only relevant document in evidence were Nypro minutes of a meeting dated April 2010 that refers to a potential merger and that the cost of the Pauer equipment would be US$4M. It seems that this had been superseded by the time of the September meeting.

84 Next, the rule in Browne v Dunn was infringed on occasions in relation to the meeting after the NCI meeting in April, and generally in relation to any discussions as to commission. The evidence of Mr Auer was not opened extensively, and on a number of issues he gave evidence that had not been opened, and not put to Messrs Reinke and Turner. One example which stands out is his evidence that he just did not receive the EAA, as distinct from not responding to it. Similarly his evidence as to a discussion as to commission with Mr Reinke at a meeting at a café during the April visit to Burgess had not been opened in any detail, and the timing of the discussion was contradicted by other evidence.

85 This leads to the further submission that I uphold that the failure to call Mr Roland Auer was unexplained. He is said to have been present at the discussions at NCI and any café meeting and would have been in a position to support his father.

86 Further, at no time has Mr Auer explained why, given that he had had numerous previous friendly exchanges with both Messrs Reinke and Turner in the period up to September 2011, including promising them a dinner, that thereafter there was "radio silence." This cries out for explanation, and only Mr Auer can provide it. In his evidence, he did say that Roland had confronted Mr Turner in Melbourne with the invoices. This did not appear to be put directly to Mr Turner, and was not opened.

87 The inference available due to the failure of Mr Auer to put any explanation for his failure to respond to the commission claim applies particularly where at no time, except in these proceedings, has he proffered any alternative basis for the calculation of commission for the transaction that he does not dispute that the plaintiffs successfully brokered. This, like the radio silence, is a circumstantial fact that supports the plaintiffs' case that an agreement was reached in September 2010.

88 Finally, I have had the opportunity to consider the evidence of Messrs Reinke and Turner. Both are experienced businessmen and gave their evidence in a straightforward manner and made concessions when pressed. Further, their evidence was consistent with the contemporaneous documents, and indeed much of their case is based upon those documents. Given the consistency between their evidence and the documents, and accepting the criticisms of Mr Auer made by Counsel, I prefer their evidence on all matters where there is any inconsistency between their account and that of Mr Auer.**

a. first issue: have the plaintiffs proved an entitlement to the commission quantum claimed?

**89 In closing address Mr Wirth did not seek to resile for the concessions made by Mr Auer in his evidence that he had retained both Mr Reinke and Mr Turner to sell his business. Rather, his submissions focussed on putting the plaintiffs to proof that the pleaded agreement as to the calculation of the commission quantum was actually made. In particular he submitted that much of the conduct relied on by the plaintiffs was merely post contractual and thus did not assist in identifying whether an earlier agreement as to the commission calculation had been reached in September 2010.

90 In support of this overarching submission Counsel submitted that a number of matters that might be described as part of the factual matrix were irrelevant. These were that Mr Auer was desperate to sell and whether he was happy or unhappy about the US prospects. Other matters seen as irrelevant to the pleaded case, were whether the activities of Messrs Reinke and Turner were instrumental in closing the deal, and how extensive or valuable their work was. He noted that no quantum meruit claim was made.

91 The first basis for the challenge to the asserted agreement made by Mr Wirth was that it was an improvident and improbable bargain and unfair to Mr Auer. It was put that it was unlikely that Mr Auer, an experienced man of business, would offer to sell his family business and life's work on a basis that there would be a substantial commission claimed being the total amount above his "minimal" 4m CHF. This applied even more so when the base price was reduced to 1.8m CHF and the plaintiffs were to receive everything above that figure, and only the bank was to be paid.

92 He put it that on the contract terms alleged all the risk was with Mr Auer who would receive nothing unless a sale was achieved, and it would be in the interests of the agents to downplay the amount received. This contrasted with the usual agency arrangement based on a percentage achieved where the commission would rise with the price achieved.

93 The weakness in this argument is the evidence of Mr Turner as to the nature of what was being offered. As he noted the assets had a scrap value. However, there was accompanying IP that had been developed by Mr Auer and with the assistance of Roland a valuable IML business could be established by a purchaser. Thus as he said in evidence it was a "unique" proposal. Unless a buyer could be found then the assets would effectively have to be sold as scrap, and Roland would not have a position in circumstances where Mr Auer wished to retire. Mr Turner accepted that the commission arrangement was in effect a "success fee" where the agents would receive nothing unless a sale was achieved. The fact that the commission arrangement was to be that amount above a reserve, base, minimum or "rock bottom" amount explains why there was no reference to the actual amount because a sale first had to be achieved in the market. This explains why Mr Reinke would in his email of 23 February 2011 refer to the price of 2.5m CHF "as a good start point as we are sure there will be negotiating." As events unfolded that figure was achieved, but with extended payment terms.

94 It also explains why there was no advice as to the amount of commission until the invoices were forwarded after the first anniversary of the recommissioning.

95 A further matter to note and relevant to the assertion that this was an improvident arrangement was that Mr Turner gave evidence that the commissions on sale of second hand machinery were in the region of 25 to 40% which is not dissimilar to the final commission here.

96 The next argument put was based on an analysis of the emails exchanged on 12 and 13 August as set out above. This analysis followed the evidence of Mr Reinke that in the Zurich meeting he went through the agreement that had been set out in those emails. It was submitted that on proper analysis the email exchange, with its reference to "enough space for a ...commission" could either mean that should a sale be achieved, 4m CHF would be allocated to P'Auer and the parties would then negotiate a commission. This relied on the evidence of Mr Auer that "space" meant "range". Alternatively, there was no concluded bargain on possible terms for commission.

97 That analysis cannot be accepted in the light of the subsequent receipt without demur of the 1 September letter set out above. Considered objectively, Mr Auer had set out a "minimal" requirement of 4m CHF and for some months Mr Reinke and then his partner Mr Turner had been soliciting interest at 4m Euro. No sale was in sight but there was good interest. It is not surprising that the precise amount of commission was not discussed. Yet the basis on which the plaintiffs were operating was, to an objective bystander, set out in that 13 August email, considered in the light of the earlier events.

98 The matter is further clarified by the terms of the final paragraph of the letter of 1 September. At no time did Mr Auer, who accepted that he received the letter, dispute its contents, which set out the commission "expectation" as the amount above the reserve price. In evidence he described the content of the final paragraph as "logical."**

**99 The defendants' next submission relies on a consideration whether Mr Auer received the EAA.

100 First it was submitted that he did not do so. This was premised on his evidence to that effect and then on an analysis of the 30 September Confidentiality Agreement email. I am satisfied from an analysis of the responding email of 30 September that the earlier one was received. After the first sentence which obviously relates to the signed CA which had been sent by Mr Turner under cover of an email of 29 September (Exhibit 9), it reads as though it refers to the written agreement - "contract". It makes no sense for it to be read as referring solely to the CA which does not refer to coverage. I am unable to accept Mr Auer's evidence that it was such a reply. The CA had already been signed, which itself is evidence of Mr Auer acting consistently with a retainer to Cooper and Turner.

101 When the reply email was written Mr Auer was still hoping that the US proposal would come off. The US interest was conveyed to Mr Reinke and is recorded in his email to Mr Turner after the lunch. That explains the issue of coverage. Further, Mr Auer gave evidence of his Google translator. He had been able to respond to earlier emails without calling for the document to be resent. In any event, even if no Word format document was sent, Mr Auer had responded to numerous other documents. Further, Mr Turner gave evidence that the CA was in Word format, which is a further matter indicating that the email refers to the EAA. If Mr Auer was in fact having difficulty reading the EAA then he did not later seek to clarify any of its contents. In those circumstances, save as to the issue of coverage, the plaintiffs were entitled to proceed on the basis that he accepted its terms. I do not accept the submission that Mr Auer did not understand the document.

102 A circumstantial fact supporting receipt of the EAA is the reference to that Agreement in the opening page of the draft, and ultimately final, IM, as set out above. Mr Auer responded to that document, yet he did not take issue with that opening paragraph. Had such an agreement not been received by him, I find it likely that he would have taken issue.

103 In assessing whether the EAA was received and responded to, the evidence of Mr Reinke must also be considered in the light of the wider factual matrix. At that point there was interest in the business. Mr Auer was also I find under pressure from his bankers. He had not seen Mr Reinke for well over a year and Mr Reinke was progressing the project in his private capacity with Mr Turner because at that stage Burgess had lost interest. A major company, Multi-Color, had shown interest and sought a CA to advance the matter. It is inherently probable that when in Zurich Mr Reinke would seek to confirm the arrangements set out in the emails and the 1 September letter in a face-to-face meeting. I accept his evidence that he did so, and that what he outlined to Mr Auer, without him disagreeing with it, was as set out in his email to Mr Turner of 25 September sent immediately after the lunch.**

The pleaded September 2010 agreement relating to commission proved

**104 The defendants submitted that on a conventional offer and acceptance analysis, the EAA, even if received, could not amount to a concluded agreement that could be relied upon. First it was said that there was no subsequent reference to the document. I have dealt with that above. I further note the reference in Mr Turner's email of 23 February 2011 to "New Agents Agreement", which can only be premised on him having sent the earlier EAA. Again it can be rhetorically asked: Why if Mr Auer had not received that earlier document would he not have queried what was the reference?

105 Next it was submitted that on the basis of the oral evidence the plaintiffs could not succeed as the discussions rose no higher than the August email exchange. I do not accept that because Mr Reinke gave evidence that while he confirmed with Mr Auer what was contained in the emails he also put to him what was contained in his 25 September 2010 email sent after the lunch. If there can be said to be any uncertainty in the August emails, then there can be no uncertainty in what is confirmed in the 25 September lunch, and which itself is confirmed in the EAA.

106 It follows that the plaintiffs can rely on the discussion of 25 September as well as the unreturned EAA as setting out the terms of the agreement as to commission on which they rely.

107 In considering the application of the Adnunat test set out above, namely whether the evidence positively indicates that the parties considered themselves bound by the EAA, I am satisfied that the evidence does reach that level. As submitted by Mr Moon, after the Zurich meeting and the unreturned EAA, all parties conducted themselves as though they were in an agency relationship for the sale of the business with a remuneration basis agreed.

108 By their conduct in proceeding to explore prospects and prepare the IM, the plaintiffs were seeking to advance the process. In turn Mr Auer was playing his part. He signed the CA with Multi-Color. There is no evidence that he sought to discuss price with any interested party, which was in accordance with an earlier reference in the email of 13 August above. He provided the financial records and other information as to the background of the business. He continually sought news. After the reduction in his price to the "rock bottom" price, he assisted in preparation of the IM and supplied a video of a factory tour. He confirmed in the email of 24 February that he would work with Mr Reinke "on your contacts." He confirmed in an email to NCI on 28 March that the second defendant was handling the sale of his business.

109 When the matter is considered on the basis of the requirement set out in Empirnall Holdings a similar conclusion is reached. The defendants had taken the benefit of the actions of Mr Turner as set out in the 1 September letter. Mr Auer had not disputed the matters set out by Mr Reinke in the Zurich meeting. He had only queried the issue of coverage in his reply to the EAA. At that point a reasonable bystander would conclude that he had accepted the commission terms set out in the EAA.

110 I am unable to accept the argument that the conduct of Mr Auer is entirely consistent with him either not having received the EAA or not having understood it. As far back as 18 May he had accepted that the world functions with brokers. Brokers have to be remunerated. He had set out his minimum price and accept that, at the price then being quoted there was room for a "quit good commission.". He had accepted in that email that he would allow Messrs Turner and Reinke to address the issue of price with potential purchasers. The method of calculation of commission had been set out in the letter of 1 September provided by Mr Turner. It had been confirmed in the 25 September meeting by Mr Reinke, and it was then set out again in express terms in the "Commission" section of the EAA.

111 I have considered the other criticisms of the conduct of the parties referable to the EAA made by Mr Wirth but do not accept them. Mr Turner gave evidence that he crafted the document from an earlier agreement. It contained terms that may have been applicable in other circumstances, such as reporting obligations. It was always open to the parties to waive compliance with those terms. The same applies to the argument that under the EAA any variation had to be in writing. This can be waived by conduct.

The February "rock bottom" variation affirms the agreement

112 The plaintiffs' submission was that the relationship between the parties was fluid, but contrary to the submission of the defendants the plaintiffs did rely on the September terms including the EAA. The conduct of the parties following the Zurich visit by Mr Reinke is, I find, referable to the September agreement. To an objective observer, there is no other way to explain why Mr Auer continues to follow up with Mr Reinke and Mr Turner. His agents in Australia are attempting to move the matter forward, as they have been doing for nearly a year at that stage.

113 After Mr Auer reduced his asking price to the 1.5m CHF "rock bottom price" he again was acting with reference to his earlier "minimal" amount. The role of the plaintiffs was to achieve as much above it as possible. The main task, however, was to actually effect a sale as I am satisfied that Mr Auer was under bank pressure. He had to move out of the factory by June as he set out in his email, and he was looking to obtain a position for Roland. Further, his response to Mr Reinke's 2.5m CHF "good start point" for negotiating in the 23 February email was positive.

114 An objective observer at that point, particularly one who accepts the evidence of Mr Reinke as to the failure to respond to a request for a written agreement, and having regard to the "man of honour" references would I am satisfied, say "of course" when asked whether the parties were operating at that time on a commission basis set out in the EAA. In the context of having earlier received the EAA, and the later request by Mr Reinke to enter a written agreement, then the duty on Mr Auer, if he was not to be bound to the September terms was, under Empirnall to break his silence or be held that he was bound by those earlier terms. I find that Mr Auer and the first defendant are so bound.

April variation also affirms agreement as to commission

115 I have indicated above that I do not accept the account by Mr Auer as to the increase in the base price to 1.8m CHF. It smacks of reconstruction and the timing does not accord with the documents including the emails as to the cancellation of the Burgess meeting and the reproduction of the "rock bottom" email by Mr Reinke to forward to Mr Turner.

116 Mr Moon submitted that in relation to whether there remained a binding agreement as to the calculation of the quantum of commission similar principles applied to this variation. The parties had continued to act in accordance with the September terms, as varied by the "rock bottom" email. The defendants then increased the base or rock bottom price to 1.8m CHF.

117 The conduct of the parties after the April discussion is consistent with what is alleged by the plaintiffs. There was no need to re-negotiate the agreement. Its terms had been acted upon by all up until that time.

118 In final address Mr Moon put that the case was on all fours with Empirnall. The defendants had an obligation to respond or they were to be held to the September agreement as varied by the February variation and the April variation. I accept that submission.

119 The alternative basis upon which the plaintiffs rely is that under the authority of cases such as Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97326 and Vroon BV v Fosters Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32, a contract is to be inferred by the conduct of the parties in all the circumstances. In the former case at 11,117-118 it is said: "nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words... In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed" In Vroon at 67-68 Ormiston J said: "I would accept that in commercial transactions the court should strive to give effect to the expressed arrangements and expectations of those engaged in business, notwithstanding that there are areas of uncertainty and notwithstanding that particular terms have been omitted or not fully worked out. Where one should draw the line is difficult to state and equally difficult to apply. The court's desire to give effect to commercial bargains has in recent years been frequently reiterated but occasionally overstated... It is unreasonable to look to a business transaction and try to see how many difficulties could arise in the working out of the contract where some minor term or other had not been dealt with all those eventualities"

120 I accept the submission that the conduct of the parties can be analysed along the same lines to reach a conclusion that there has been assent to the contractual terms set out in the unsigned EAA.

121 A good example of how the above principles apply here is that they apply to a contract involving the first plaintiff. That can be inferred from the conduct of the parties is that it was only in December 2010, well after the September meeting and the EAA that Mr Reinke advised Mr Auer of the name of his corporate vehicle. Given that Mr Auer did not take any issue with that, then it can be inferred that he was contracting with that company.

122 Similarly, given that I accept that Mr Reinke unsuccessfully sought from Mr Auer a written agreement in a conversation in February 2011, but received only in return a representation that he was a man of honour, this can be the basis, along with all the other conduct, that Mr Auer, and his company are bound by those terms.

123 I do not accept the submission that the fact that Mr Auer, or indeed Messrs Turner and Reinke had not expressly referred to the commission quantum in communications until the invoices were sent is against such a conclusion. Once the agreement to what was a success fee was reached, then until the deal was completed questions of the amount of commission were thus purely hypothetical. Further, as had been made clear in the final page of the IM set out above, it was Mr Auer who was to pay the commission rather than the purchaser direct.

124 For all the above reasons I am satisfied that the plaintiffs have proved a claim for commission in the amounts set out in the invoices.

At a glance

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Judgment (235 paragraphs)

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Legislation Cited (1)

Cases Cited (3)