Prestige Residential Marketing Pty Limited v Depune Pty Limited

CATCHWORDS: PRINCIPAL AND AGENT - action for recovery of commission by agent - sale of property - whether agent was effective cause of sale - EVIDENCE - whether judge relied on inadmissible material - whether finding of fact based on assessment of witnesses' credibility should be set aside.

LEGISLATION CITED: Property, Stock and Business Agent's Act 2002 (NSW)

Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 CASES CITED: Fox v Percy [2003] HCA 22; 214 CLR 118 LJ Hooker Ltd v WJ Adams Estate Pty Ltd [1977] HCA 13; 138 CLR 52 Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2; 202 CLR 351

PARTIES: Prestige Residential Marketing Pty Limited (ACN 085 594 663) (Claimant) Depune Pty Limited (ACN 003 377 115) (Opponent)

COUNSEL: Mr M Aldridge SC / Mr J Johnson (Claimant) Mr M J Cohen (Opponent)

SOLICITORS: Macedone Christie Willis, Solicitors (Claimant) Simpson Freed Lawyers (Opponent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40413/07 DC 1371/05

BEAZLEY JA BELL JA MATHEWS AJA

Thursday 14 August 2008 Prestige Residential Marketing Pty Limited v Depune Pty Limited Judgment

BELL JA : Introduction 2 Prestige Residential Marketing Pty Ltd (Prestige) brought proceedings in the District Court under s 36 of the Property, Stock and Business Agent's Act 2002 (NSW) claiming $85,800 in commission, payable under an agency agreement with Depune Pty Ltd (Depune), arising out of the sale of Depune's property at 11 Captain Cook Drive, Caringbah (the property). At the date of the contract of sale, Gunning Commercial Property (Gunning) was acting for Depune as its agent under an exclusive agency agreement. Prestige claimed that the work done during the currency of its agency agreement was an effective cause of the sale. The primary judge gave judgment for Depune. Prestige seeks leave to appeal against the judgment.

Time for filing the summons 3 By amended ordinary summons filed on 26 November 2007 Prestige claimed orders extending the time for filing the summons, to the extent that such an order was necessary, and granting leave to appeal. 4 The proceedings were heard in the District Court between 27 and 29 November 2006. On 31 January 2007 the primary judge published her reasons, which included that "there is a verdict for the defendant" (at [62]). She gave leave to apply for the making of orders. 5 On 1 June 2007, her Honour delivered a judgment dealing with the costs of the proceedings. On this occasion she made orders, including: "1. The Court confirms its verdict and judgment for the defendant, Depune Proprietary Limited, against the plaintiff, Prestige Residential Marketing Proprietary Limited, on the plaintiff's Statement of Liquidated Claim, filed by the Court on 15 April 2005. 2. The Statement of Liquidated Claim is dismissed." 6 In the written submissions filed on Depune's behalf it was contended that the "material date" under the Rules was 31 January 2007, and leave to extend time was opposed. 7 The proceedings were stood over for the making of formal orders and in these circumstances it would seem that the material date is 1 June 2007. It is not necessary to give the matter further consideration, since Mr Cohen, who appeared for Depune, did not press the submission that the material date was that on which the reasons were published (T'cpt 30.28). I approach the matter upon the basis that the material date was 1 June 2007 and that the holding summons for leave to appeal was filed 29 June 2007. The ordinary summons for leave to appeal was filed within three months of the date of the holding summons and, accordingly, an extension of time is not required. I would, however, grant an extension of time if that is necessary. Leave to appeal

8 Argument on the appeal was heard concurrently with the leave application. The claim involves a sum, which with interest, is close to the threshold for an appeal as of right. For the reasons to which I will come, the application raises a challenge to the judgment that is of substance. Leave should be granted.

9 The draft notice of appeal that was filed with the white folder contained three grounds of appeal. These did not include any challenge to the primary judge's findings of fact. On the hearing of the application Prestige sought to rely on an amended draft notice of appeal containing seven grounds. Grounds 1, 3 and 4 were the same as the grounds in the earlier draft. These grounds and ground 2 each raise the same contention, which is that the primary judge erred in holding that Prestige was not an effective cause of the sale. The amended notice in grounds 1 and 2 challenges the finding that Prestige was not the effective cause of the sale (emphasis added). The earlier draft notice challenged the finding that the appellant was not an effective cause of the sale (emphasis added). Mr Aldridge SC, who appeared with Mr Johnson on Prestige's behalf, employed the indefinite pronoun in stating the test. No point was taken concerning the difference between the wording of the two draft notices. In light of the authorities to which I will return, nothing may be thought to turn on whether the definite or indefinite pronoun is used in this context. 10 The additional grounds in the amended notice challenge the primary judge's factual findings and the adequacy of her reasons. No prejudice was occasioned to Depune by the reliance on these grounds since they raise contentions which had been addressed in Prestige's written submissions to which Depune had responded. 11 On the hearing of the appeal, Mr Cohen made reference to an alternative basis upon which its case had been put at trial, which was that Prestige was precluded from claiming commission under the agency agreement because of the operation of s 55 of the Property, Stock and Business Agents Act 2002. An application for leave to file a notice of contention to rely on this ground was withdrawn. It is not necessary to refer further to the contention.

The evidence 12 The facts forming the basis for Prestige's assertion that it is entitled to judgment are largely uncontroversial. The following is a summary of them taken from the primary judge's findings (to the extent that they are not challenged) and, where indicated, from the affidavit evidence. Unless otherwise stated, the references to dates are to events in 2004. 13 Depune's sole director at all material times was Mr Priddle, who acted on its behalf in connection with the proposed sale of the property. 14 Mr Egan, an employee of Prestige, spoke with Mr Priddle concerning the sale of the property around 20 January. Mr Priddle's account of the conversation is at par 27 of his affidavit. The effect of it is that he conveyed to Mr Egan that he was considering selling the property for $3,950,000 plus GST ($4,345,000 inclusive of GST).

15 In late January, Mr Egan showed Peter Casaceli, a prospective purchaser, through the property. Following this Mr Egan spoke with Mr Priddle and conveyed to him that he had an offer from a prospective purchaser of $3.6 million plus GST. (Paragraphs 9 and 11 of Mr Egan's affidavit and par 29 of Mr Priddle's affidavit). 16 Around 2 February, Mr Egan visited Mr Priddle's office and conveyed to him that the prospective purchaser had increased the offer to $3.75 million plus GST. Mr Priddle said that he would accept $3.95 million plus GST (paragraph 12 of Mr Egan's affidavit and paragraph 30 of Mr Priddle's affidavit). 17 On or about 4 February, Mr Priddle, acting on Depune's behalf, signed an agency agreement with Prestige with respect to selling rights to the premises (the agency agreement). 18 The agency agreement specified the sale price of the property as $3,950,000 plus GST. It provided relevantly as follows: "1. The Principal hereby grants to the Agent selling rights of the property from 1/02/04 until such time as the property is sold or this agreement is terminated by either party giving notice in writing. Agent's Remuneration 2 (i) The Agent shall be entitled to a fee of 2% + 0.2% GST = 2.2% incl GST ( GST inclusive ) if during the Agency Period they effectively introduce a purchaser to the property who subsequently enters into a binding contract. (ii) The Agent's commission is calculated on the GST exclusive selling price. (iii) The Agent's remuneration in the event of a sale at the Agent's estimate of selling price would equate to $86,900.00 (GST inclusive ) THIS FEE HAS BEEN NEGOTIATED BEWTEEN THE PARTIES TO THE AGREEMENT.

19 Around 5 February, Mr Priddle telephoned Mr Egan. During the course of the conversation Mr Egan said that the purchaser had increased his offer to $3,850,000 plus GST, stating that this was his final offer. Mr Priddle told Mr Egan that he had an interested party through Colliers who were prepared to pay $4 million plus GST. Mr Egan said that he would see what he could do. 20 Mr Egan wrote to Mr Priddle on 12 February, as follows: "Further to our recent discussions regarding the latest offer of $3,850,000 plus GST, we have informed the purchaser that there is currently a contract being issued at $4,000,000 to another purchaser. In light of this, the purchaser has formally withdrawn their offer and has asked that we inform you of this. We will continue to show purchasers through the premises and keep you informed of any interest we have." 21 On 17 February, Mr Priddle, on Depune's behalf, entered into an agency agreement for the sale of the property with Gunning Commercial (Gunning).

22 Depune's solicitor, Paul Freed, wrote to Prestige on 17 February, noting that Prestige had listed the property for sale and enclosing a copy of the contract for sale so that Prestige could make it available to any interested purchaser. 23 Peter Rogers, an employee of Prestige, wrote to Mr Casaceli's solicitor, Tanya Palmer, on 18 February, enclosing a copy of the contract for sale for the property. He said this: "Peter advises that he will speak to you regarding the purchaser's details over the next 24 hours. The purchase as negotiated with Peter is as follows: Sale price: $3,950,000 Exchange: Immediate Settlement Mid October 2004 Premises: To be vacated upon settlement Deposit: At this point the Vendor insists on a 10% released. We have explained that this is not acceptable and the Purchaser offers 2.5% release. You will need to speak to Peter regarding this issue. Should you wish to discuss this matter please feel free to contact me on ---------- or at the office." 24 Around 23 February, Mr Egan and Mr Priddle had a conversation. They give differing versions of its terms, but it is common ground that in the course of it Mr Priddle said that he had received advice that the nominated sale price of $3,950,000 was too low and Mr Egan said that it was not. (Paragraph 20 of the Egan affidavit and par 45 of the Priddle affidavit). 25 Around 26 February, there was a further conversation between Mr Egan and Mr Priddle. Again, they give differing versions of the terms of it but, relevantly, it is common ground that Mr Priddle reiterated that the asking price of $3,950,000 plus GST was too cheap and he said that he had been so advised by Gunning (paragraph 21 of the Egan affidavit and paragraph 46 of the Priddle affidavit). 26 In early March, Mr Egan and Mr Priddle had a conversation in which Mr Priddle stated that he intended to award the agency for the sale of the property to Gunning, and Mr Egan said he would write to Mr Priddle to identify the prospective purchasers who had been introduced to the property by Prestige. Mr Priddle says the conversation occurred on 5 March and Mr Egan says that it occurred on 8 March. The difference is not material. (Paragraph 24 of the Egan affidavit and par 49 of the Priddle affidavit). 27 On 5 March, Mr Priddle signed an exclusive agency agreement with Gunning.

28 Mr Egan wrote to Mr Priddle on 8 March, stating: "Further to our conversation today, we wish to nominate the purchasers introduced to your premises by our office during our agency period. The following purchasers were introduced by our office: Peter Casaceli - Natuzi Furniture. As instructed a contract for sale was delivered to his solicitor for these premises. Mr D & Mrs G Treister - Windows on Parade Mr Jason Brownson - Drummond Golf Please supply Gunning Commercial with this list of purchasers." 29 Mr Priddle replied to Prestige by letter dated 2 April in which he stated that the information identifying "interested clients" had been given to Gunning.

30 Michael Abbott, an employee of Gunning, inspected the property with Mr Casaceli in the first week of May. 31 On 31 May, Mr Casaceli signed the contract for the sale of the property for the price of $4,290,000 (inclusive of GST) with a deposit of $214,500. It appears that the draft contract had been submitted to Ms Palmer, Mr Casaceli's solicitor, who varied it by deleting special condition 24, which contained a warranty by the purchaser that he had not been introduced to the property by any real estate agent other than the agent named in the contract (Gunning) and indemnifying the vendor against any claim for commission arising out of a breach of the warranty. The date for completion under the contract was varied from December to March 2005. 32 Mr Egan wrote to Mr Priddle on 4 June, as follows: "We refer to our Agency Agreement dated 1 February, 2004. We further refer to the purchaser introduced to your property, Mr Peter Casaceli of Natuzzi Furniture who was introduced to you and your property in February, 04 and a copy of the contract for sale was delivered to his solicitor on 18 February, 2004 as instructed by you at the agreed price of $3,950,000 with a 5 % deposit. … Mr Casaceli advises that his solicitor made your solicitor aware of his introduction to your property by our office. We now put you on notice that in light of legal advice in this matter, our office intends to make a claim for full commission for the sale of the property at the commission rate of 2.2 % as outlined in our Agency Agreement." 33 Depune's solicitor, Mr Freed, wrote to Prestige on 4 August (exhibit 1) as follows: "We … have been instructed to respond to your letter dated 4 June, 2004 concerning [Prestige's] claim for commission. We understand that some preliminary offer may have been made by Mr Casaceli through [Prestige] but that offer was insufficient and later withdrawn by the prospective purchaser. The contract which was finally negotiated through Gunning Commercials some time later was both at a higher price and upon terms and conditions as to both occupation and completion times that were specially negotiated. In the circumstances we do not consider that [Prestige] was the effective cause of sale and our client does not accept any claim for commission."

The primary judge's reasons 34 Mr Egan and Mr Rogers gave evidence on Prestige's behalf. Mr Priddle and Mr Abbott gave evidence on Depune's behalf. Her Honour preferred the evidence of Mr Priddle. Her assessment of the witnesses, which is the subject of grounds 6 and 7, is set out below: [19] Between February 2000 and January 2005, Prestige employed Mr Egan as its real estate agent. Mr Egan was twenty three or twenty four when he commenced working for Prestige. Some four years later, he met Mr Priddle for the first time. With the possible exception of annexure E to Mr Egan's affidavit and of annexures A and F to Mr Priddle's affidavit, there is no contemporaneous record of their telephone conversations and meetings. [20] Mr Egan's impressionistic memory of negotiating with Mr Casaceli and with Mr Priddle is unreliable. Mr Egan misunderstood Mr Priddle's instructions to Prestige. Mr Egan did not know whether Mr Casaceli traded as 'Natuzi Furniture' or as 'Natuzzi Furniture' nor when they inspected the property on Captain Cook Drive in Caringbah with Mrs Casaceli. Mr Egan did not recall when Prestige signed its Selling Agency Agreement with Depune (paragraph 9 and annexures A, E, F and G to Mr Egan's affidavit; annexure H to Mr Priddle's affidavit). The majority of Mr Egan's evidence is conjecture or surmise but he firmly believes that, if Prestige were to succeed in its Liquidated Claim from Depune, 'the right sales agent' would be rewarded. [21] Peter Rogers was an experienced real estate agent when he sold his business and agreed to supervise Prestige's young employees, including Mr Egan. Mr Rogers' assertive delivery and confident demeanour in the witness' box reinforced his evidence that he enjoys working for Prestige. [22] Mr Rogers overstates his association with 'the Priddle family' and his knowledge of 'the Priddles'. In December 2005, Mr Rogers did not know that Depune had owned the property on Captain Cook Drive in Caringbah (paragraphs 4 and 5 of Mr Rogers' affidavit). Mr Rogers exaggerates the nature and length of his slight acquaintance with Mr Priddle. There is no contemporaneous record of their meeting. [23] Between January 2000 and January 2005, Gunning Commercial employed Mr Abbott as its real estate agent. Mr Abbott's recollection of negotiating with Mr Casaceli and with Mr Priddle is sketchy. In the witness' box, Mr Abbott skimmed Gunning Commercial's file of its agreements with Depune and speculated on its content and meaning. [24] Mr Priddle's hearing is defective. He made thoughtful, proper concessions when he understood counsel. Otherwise, they were at cross purposes. [25] None of the witnesses remembers his material conversations verbatim. The evidence does not enable one to date all relevant events. On the other hand, the parties' correspondence, their Selling Agency Agreement and Depune's agreements with Gunning Commercial support Mr Priddle's recollection of the subjects he discussed with Mr Egan and their sequence. [26] With the reservations in this judgment, contemporaneous records are more reliable than the witnesses' uncorroborated recollections of distant events. Attributing appropriate weight to vague, equivocal, contradictory and unchallenged evidence, I find the following facts. 35 Her Honour turned to the evidence and set out the history largely by reference to the correspondence to which I have referred. The reasons for her ultimate finding are contained in pars 55 - 61, which are set out below: "[55] I conclude that Mr Abbott's negotiating with Mr Casaceli and with Mr Priddle, in May 2004, probably was the effective cause, if not the sole cause, of Casaceli Group's signing and exchanging its contract with Depune. None of Mr Rogers, Mr Egan nor Prestige was instrumental in Mr Casaceli's offering, in Mr Priddle's accepting or in Casaceli Group's signing and exchanging its contract with Depune. [56] Between Wednesday, 4 February and Friday, 30 April 2004, none of Mr Casaceli, Mrs Casaceli, Casaceli Group nor its nominee was willing to buy Depune's property on terms and conditions, acceptable to Mr Priddle. Mr Casaceli did not offer to buy the property on terms and conditions, acceptable to Mr Priddle. If I were wrong in those conclusions, the evidence would not persuade me that Prestige conveyed such an offer to Mr Priddle whilst Depune and Prestige were bound by their Selling Agency Agreement. [57] Mr Egan's efforts to persuade Mr Priddle to reduce Depune's price for its property were futile. Mr Egan's baseless allegation to Mr Casaceli that a contract had been 'issued at $4,000,000 to another purchaser' was counter productive. Mr Egan's and Mr Rogers' ensuing attempts to persuade Mr Casaceli to offer $3,950,000.00 plus GST for the property, on terms and conditions acceptable to Mr Priddle, were unsuccessful. [58] Contrary to Mr Egan's allegations in annexures E and G to his affidavit [the letter to Mr Priddle dated 8 March 2004 and the subsequent letter to Mr Priddle dated 4 June 2004 respectively] none of he, Mr Rogers nor Prestige was instructed by Mr Priddle to deliver a 'contract for sale … to [Mr Casaceli's] solicitor … at the agreed price of $3,950,000.00 with a 5 % deposit … .' In fact, on 18 February 2004, Mr Egan, Mr Rogers and Mr Priddle knew that the highest offer Prestige had received for Depune's PROPERTY was $3,850,000.00 plus GST and that the offer had been withdrawn. [59] Mr Egan, Mr Rogers and Prestige knew that Simpson Freed's 'draft document', which Mr Rogers sent to Ms Palmer with Prestige's letter of 18 February 2004, was merely a 'contract for sale (blank draft)'. Mr Egan, Mr Rogers and Prestige knew that Mr Priddle's terms and conditions for the sale of Depune's property were 'not acceptable' to Mr Casaceli. Simpson Freed's 'draft document' informed Ms Palmer that Depune owned the property and had leased commercial premises on the property to Crontec. Prestige's letter of 18 February 2004 informed Ms Palmer that Mr Casaceli was not willing to buy and had not offered to buy the property on terms and conditions, acceptable to Depune, and that Depune's terms and conditions for sale of the property were 'not acceptable' to Mr Casaceli. [60] Prestige's letter of 8 March 2004 named Mr Casaceli to Mr Priddle for the first time. The letter, in the context of the parties' conversations, Selling Agency Agreement and correspondence, acknowledges, explicitly or implicitly, that Depune had signed an Exclusive Selling Agency Agreement with Gunning Commercial. Mr Priddle's letter of 2 April 2004 confirms, explicitly or implicitly, his statement to Mr Egan, three and a half weeks earlier, that Prestige's Selling Agency Agreement with Depune 'is at an end'. I conclude that Australia Post's delivering Mr Priddle's letter of 2 April 2004 to Prestige terminated the parties' Selling Agency Agreement under its clause 1. [61] The amended contract for sale of Depune's property to Casaceli Group, which Mr Abbott negotiated with Mr Casaceli and Mr Priddle, and Ms Palmer negotiated with Mr Freed, was advantageous to the vendor and the purchaser. Casaceli Group obtained an extended settlement date and vacant possession of part of the commercial premises on the property. The contract price was significantly higher than the highest offer of $3,850,000.00 plus GST, which Mr Casaceli had made to Prestige for Depune's property and had withdrawn, weeks earlier. The commission which Depune paid Gunning Commercial under their Exclusive Selling Agency Agreement and under Depune's amended contract with Casaceli Group was significantly lower than the commission in Depune's Selling Agency Agreement with Prestige."

36 Grounds 5 - 7 overlap and concern the primary judge's fact finding. It is convenient to deal with them before addressing the challenge to the ultimate conclusion, which is the subject of grounds 1 - 4. Ground 5 - Her Honour erred in relying on inadmissible material

37 Her Honour rejected substantial parts of each of the principal affidavits. Ground 5 complains that a number of her Honour's findings drew on material that had been excluded. In written submissions filed by Prestige the parts of the judgment that are the subject of this complaint were set out in a table, which is reproduced below. PARA FINDING ERROR 27 Greenberg met with Priddle and discussed Depune's property in Caringbah Paragraphs rejected (Transcript D2, page 3, line 7) 33 Telephone call from Colliers Paragraphs re Colliers rejected (Transcript D2, page 6, line 58) 34 Words attributed to various parties Includes conversations that were rejected 47 Work done by Gunning Quotes paragraph 9 of Priddle, rejected (Transcript D2, page 4, line 21). Quotes Annexure 1 of Abbott, doesn't exist 49 Sequence of events and statements of who did what Evidence of these events excluded (Transcript D2, page 4, lines 27-28, page 5, lines 6 & 18, page 9, lines 25-35). Only evidence is that Casaceli was shown through property in early May by Abbott and contracts were exchanged on 31 May. 51 Letter from Freed Admitted only as file copy of letter, not on basis that it was ever posted (Transcript D2, page 51, line 56, page 53, line 56). 52 Terms conditions and special conditions negotiated by Abbott with Casaceli and Priddle No evidence of negotiations. Only evidence is as above in 49. No evidence that Depune paid Gunning anything. 55 Conclusion of negotiations between Abbott and Casaceli Evidence of negotiations excluded (Transcript D2, page 4, lines 27-28, page 5, lines 6 & 18, page 9, lines 25-35). 57 Baseless allegation of contract for $4mil Evidence of letter of 12 February which was not contradicted by any contemporaneous record of Depune 58 Egan Rogers and Priddle knew highest offer was $3.85 Finding of dishonesty or breach of duties as an agent without those allegations having been put 61 Exchanged contract advantageous to Priddle Relying on paragraphs struck from Priddle's Affidavit (Transcript D2, page 4, lines 27-28, page 5, lines 6 & 18, page 9, lines 25-35).

38 A number of these complaints are misconceived. They assume that her Honour had recourse to the excluded material and appear to overlook evidence that was properly before the Court, which provided a basis for the impugned finding. I will deal with them in the order in which they are set out in the Table by reference to the paragraph number in the judgment: a) The finding in par 27 does not depend on the material that was excluded from Mr Priddle's affidavit; it is an inference that is open from pars 3 and 46 of Mr Priddle's affidavit. b) The finding in par 33 is open on the basis of par 14 of Mr Egan's affidavit, which Mr Priddle acknowledged to be accurate. c) The complaint concerning par 34 is unparticularised and was not clarified on the hearing. Pars 14 and 16 of Mr Egan's affidavit, taken with his annexure "B", and the cross-examination of Mr Priddle (T'cpt 28/11/06 at 38) would seem to provide the basis for the findings. d) The source of her findings in par 47 is identified in the reasons in parantheses as being, "annexure E to Mr Egan's affidavit; paragraph 9 and annexures D and H to Mr Priddle's affidavit and annexures D and I to Mr Abbott's affidavit". Paragraph 9 of Mr Priddle's affidavit was rejected. There is no annexure I to Mr Abbott's affidavit. It does not appear that anything of moment arises from these inaccuracies, since the finding is supported by annexure D to Mr Priddle's affidavit. e) The complaint concerning the findings in par 49 is unparticularised. Again, it was not clarified at the hearing. Mr Abbott gave evidence that he had met Mr Casaceli in or about early May 2004 and showed him through the property. He said that the exchange of contracts had taken place "after negotiations". The findings that Ms Palmer deleted special condition 24 from the contract, and that Mr Freed agreed to the amendments, are inferences open, having regard to the form of the contract and the correspondence. The latter finding was relied upon by Prestige in support of its challenge to the critical finding that Mr Abbott's negotiations were probably the the effective cause, if not the sole cause, of the Casaceli group exchanging contracts with Depune (Judgment, par 55). f) It is not correct to say that exhibit 1, Mr Freed's letter of 4 August, was admitted as a file copy, which had not been posted. The tender was the subject of objection. (T'cpt 28/11/06 at 51.34-53.14) It was admitted as a business record. (T'cpt 28/11/06 at 53.8-9) Discussion followed thereafter in which her Honour noted that Depune had not discovered the letter. The upshot of the discussion (T'cpt 28/11/06 53-58) is unclear. No limitation was placed on the admission of the exhibit under s 136 of the Evidence Act 1995 (NSW). Mr Cohen, who appeared for Depune at trial, indicated that he was relying on the letter for a limited purpose, which was to clarify the question of whether there had been an answer to Mr Egan's letter of 4 June. It is not apparent that the primary judge relied upon the assertions in the letter as evidence of the facts therein. 39 The complaint concerning the findings in par 52 needs to be assessed in somewhat greater detail. The paragraph reads as follows: "In March 2005, Depune and Casaceli Group settled the property on Captain Cook Drive Caringbah on the terms, conditions and Special Conditions which Mr Abbott had negotiated with Mr Casaceli and Mr Priddle and which Ms Palmer had negotiated with Mr Freed. Depune paid Gunning Commercial's commission of $42,900.00 under their Exclusive Selling Agency Agreement." The complaint is that there was no evidence that Mr Abbott of Gunning negotiated the terms, conditions and special conditions of the contract. Mr Cohen submitted that support for these findings is to be found in pars 24 and 54 of Mr Priddle's affidavit, and in the evidence recorded at T'cpt 29/11/06 19.46-56 and exhibit 1. Mr Priddle states in par 24 that, "[a]fter negotiations finalised the contracts were exchanged on 31 May 2004". He states in par 54, that "[t]he plaintiff did not market, introduce or negotiate the sale of the Caringbah property any further after the termination of the Agency Agreement on 5 March 2004." The passage in the transcript on which Mr Cohen relied contains an exchange between her Honour and Mr Johnson, who appeared for Prestige at trial. Exhibit 1 provides no support for the findings. 40 The only evidence of the negotiations conducted by Mr Abbott with Mr Casaceli and Mr Priddle is that, in or about early May, Mr Abbott met Mr Casaceli, a prospective purchaser, and showed him through the property, and that after negotiations contracts were exchanged on 31 May. There does not appear to have been evidence of the fact of settlement or the payment of commission beyond such inferences as were available from the contract. The date fixed for completion in the contract was 1 March 2005, and by reference to the Gunning agency agreement and the purchase price stated in the contract it is possible to determine that commission payable to Gunning under the contract was $42,900 plus GST. 41 The complaint concerning the finding in par 55 relates to the same issues as are raised by par 52. 42 The complaints concerning the findings in pars 57, 58 and 61 are relevant to ground 6 and do not depend upon demonstrating that the primary judge took into account material that had been rejected. I will deal with them in addressing ground 6. To the extent that her Honour's finding in par 52 is unsupported by the evidence it, too, is better addressed as part of the general complaint in ground 6.

Ground 6 - the fact finding by her Honour miscarried Ground 7 - Her Honour failed to give adequate reasons, generally, and in particular in relation to findings upon credibility 43 Part of the challenge to her Honour's fact finding was the contention that the reasons given for the adverse assessment of the reliability of the evidence of Mr Egan and Mr Rogers were insufficient to justify the conclusion.

44 Mr Aldridge SC submitted that it was unduly harsh to reject Mr Egan for reasons as inconsequential as the misspelling of "Natuzi Furniture" (which appears to derive from the letter of 8 March) or his inability to recall the date on which Prestige signed the Agency Agreement, which was not material to the claim. Mr Aldridge referred to the cross-examination of Mr Egan on this topic, which was as follows: "The effect of your evidence in paragraph 15 is that you received the agency agreement on 5 February 2004?

A. I don't believe so, but it was - it was around that time.

A. Could have been either side of it, that's when I.

Q. Very well, so it could have been as early as 4 February perhaps as late as 8 February, could it?

A. That's the date it was made, so it would have been after that date.

A. It was on or around the 5th." (T'cpt 27/11/06 48.42-43.8)

45 Mr Aldridge pointed to the finding that, "Mr Egan misunderstood Mr Priddle's instructions to Prestige" (Judgment, paragraph 20), for which he submitted there was no foundation. It is unclear to what this finding refers. Mr Cohen did not identify a basis for it. There is substance to the criticism of the sufficiency of the reasons to explain the adverse assessment of Mr Egan's reliability.

46 Mr Rogers said in his affidavit: "2. I am a real estate agent.

3. I have over 25 years experience in Commercial property sales and leasing.

4. I have known the Priddle family for over 20 years." In cross-examination Mr Rogers said that he had first sold property to Mr Priddle about 20 years earlier and that he had met Mr Priddle and his son on several occasions, "not every year but on several years" (T'cpt 27/11/06 79.12-13).

47 It was submitted that Mr Rogers' evidence that he had known the Priddle family for over 20 years was unchallenged. This submission did not come to grips with the thrust of her Honour's criticism, which was that, in her estimate, Mr Rogers had exaggerated the nature and length of his slight acquaintance with Mr Priddle. He had been directly challenged along these lines in cross-examination (T'cpt 27/11/06, 79.15-17). One inference that was open from Mr Rogers' decision to include par 4 in his affidavit, in the context of this litigation, was that he had intended to convey a more extensive relationship with Mr Priddle than that which existed.

48 The significance of her Honour's assessment of the witnesses related to the resolution of an issue as to whether Mr Egan and Mr Rogers conveyed to Mr Priddle an offer from Mr Casaceli to purchase the property for $3,950,000 plus GST. Mr Egan and Mr Rogers said that an offer in this amount had been conveyed to Mr Priddle. He denied that this was the case. Her Honour accepted Mr Priddle and found that the highest offer that Mr Casaceli had made to Prestige was the offer of $3,850,000 plus GST (Judgment, paragraph 61). Prestige challenged this finding.

49 The principles on which this Court will intervene and set aside a finding of fact based upon the credibility of witnesses are well known and need not be re-stated: Fox v Percy [2003] HCA 22; 214 CLR 118. The primary judge approached the matter upon the basis that the contemporaneous documents supported Mr Priddle's recollection of the subjects that he had discussed with Mr Egan and their sequence. One significant document was Mr Rogers' letter to Ms Palmer of 18 February. Her Honour set out the terms of it in reciting the history of the correspondence passing between the parties. She did not return to the letter in her analysis of the evidence. Contrary to the conclusion at par 25 of the judgment, the letter was a contemporaneous document which provided support for the version given by Mr Egan and Mr Rogers and tended to undermine the accuracy of Mr Priddle's recollection. The letter is compelling evidence that, as at 18 February 2004, Prestige had obtained an offer from Mr Casaceli to purchase the property for $3,950,000, subject to the payment of a reduced deposit. In the ordinary course, it might be expected that an agent who secures an offer to purchase property for the nominated sale price would convey the offer to his principal. Mr Egan said that he had informed Mr Priddle of the offer in more than one conversation and that it had been discussed at a meeting in early March. It was common ground that a meeting between Mr Egan, Mr Rogers and Mr Priddle took place sometime after 18 February. It would be surprising if the fact that Mr Casaceli had offered to purchase the property for the nominated sale price had not been referred to in the course of the meeting. 50 It was not suggested that the contents of Mr Rogers' letter of 18 February had been concocted. Mr Cohen's submission was that Mr Priddle had not been cross-examined on the contents of the letter and, accordingly, that no inference that, contrary to his evidence, an offer of $3,950,000 had been conveyed to him, should be drawn by reference to it. The letter was not Mr Priddle's document. Nor was it addressed to him. It is difficult to see how the letter might properly have been put to him. This does not mean that the letter, along with the other contemporaneous documents, was not material that it was open to the primary judge to take into account in assessing the reliability of the disputed oral evidence.

51 To the extent that her Honour's assessment of the witnesses depended upon her view that the parties' correspondence supported Mr Priddle's evidence (judgment, par 25), her failure to take into account the contents of the letter of 18 February was a material omission. As I have noted, it tended to support the evidence of Mr Egan and Mr Rogers. If Mr Priddle's version was nonetheless preferred to the evidence of Mr Egan and Mr Rogers, the letter remained as evidence that Prestige had secured an offer from Mr Casaceli for the nominated sale price subject to special provision for the payment of the deposit. The finding at par 61 of the judgment, that the highest offer that Mr Casaceli made to Prestige was $3,850,000, was contrary to the compelling inference to be drawn from the contemporaneous document. 52 There was no evidence to support the finding in par 52 of the judgment to which I have referred, and the finding in par 61 was contrary to the evidence. Ground 6 succeeds. Ground 1 - Her Honour erred in finding that the appellant was not the effective cause of the sale of the property at 11-15 Captain Cook Drive, Caringbah Ground 2 - Her Honour ought to have found that the appellant was the effective cause of the sale of the property at 11-15 Captain Cook Drive Caringbah Ground 3 - Her Honour erred in failing to find that the appellant was entitled to its sales commission on the sale of the said property Ground 4 - Her Honour erred in failing to find a verdict for the appellant for its sales commission and interest thereon

53 Since Prestige has established that the primary judge's factual findings were materially flawed it is not necessary to deal at length with grounds 1 to 4, which, in different words, each challenge her ultimate conclusion. 54 Prestige's claim was for the payment of the commission on the sale of the property that it asserted was due to it under the Agency Agreement. Clause 2 of the agreement provided that Prestige's remuneration was to take the form of a fee of 2% plus .02% GST, "if during the Agency Period they effectively introduce a purchaser to the property who subsequently enters into a binding contract".

55 While Mr Egan's evidence was the subject of challenge, it does not appear to have been in issue that he introduced Mr Casaceli to the property. The assertion in his letter of 4 June (par [32] above) that, "Mr Casaceli advises that his solicitor made your solicitor aware of his introduction to your property by our office" was not contradicted. 56 Mr Casaceli entered a binding contract for the purchase of the property on 31 May. 57 Mr Aldridge did not submit that the effective introduction of a purchaser to the property within the meaning of clause 2 of the agency agreement required no more than proof of the fact of introduction of the purchaser and of the subsequent contract. Prestige was required to prove that it was an effective cause of the sale: LJ Hooker Ltd v WJ Adams Estate Pty Ltd [1977] HCA 13; 138 CLR 52; Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2; (2001) 202 CLR 351. Each of the parties called in aid the judgment of Jacobs J in LJ Hooker v Adams at 86. His Honour was in dissent in the result, but this does not detract from his statement of the principles: "The phrase that is time honoured in this context is 'effective cause' or 'efficient cause', that the agent was an effective cause or the effective cause. See Anderson v Densley [(1953) 90 CLR 460 at 467]. The inquiry is a factual one and it probably does not matter in the long run whether the definite or indefinite pronoun is used before the words 'effective cause'. Thus in Burchell v Gowrie and Blockhouse Collieries Ltd [[1910] AC 614 at 625], Lord Atkinson used the phrases 'the effective cause' and 'an effective cause' without distinction between them. In almost any factual situation a result will have more than one cause and if there could only be one effective cause in relation to a sale within the meaning of the implication, then there are plenty of events in this case which would have strong claims for the title in competition with the appellant's actions. 'Effective cause' means more than simply 'cause'. The inquiry is whether the actions of the agent really brought about the relation of buyer and seller and it is seldom conclusive that there were other events which could each be described as a cause of the ensuing sale. The factual inquiry is whether a sale is really brought about by the act of the agent: Green v Bartlett [(1863) 14 CB (NS) 681 at 685] quoted in Burchell's Case [supra, at 624]."

58 In the same case Barwick CJ said at 58: "It is true that an agent to procure a purchaser of property in stated terms may earn the commission payable to him in various ways. But the commission is not fully earned unless there is a sale which has resulted wholly or partially from the efforts of the agent. The most common way of performing the agent's task is to introduce to the principal a person who becomes the purchaser under a binding contract of sale. In terms of causation, the agent has thus been an effective cause of the sale. It is nothing to the point in such a case that that person would have become the purchaser without the intervention of the agent: or that the principal's own efforts were also an effective cause of the sale."

59 In Moneywood McHugh J said at 361, [30]: "In determining whether the agent's conduct was an effective cause, the law looks at the substance of the matter [ L J Hooker v Adams at 84]. If 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, the proper conclusion will ordinarily be that the introducing agent was not the effective cause of the sale [ Moran v Hull [1967] 1 NSWR 723; Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571; Bradley v Adams [1989] 1 Qd R 256]."

60 His Honour continued at 377, [86]: "Questions respecting the sufficiency of a causal connection usually will arise, as was the case in L J Hooker , where the question is whether the agent introduced to the principal the party who eventually purchased the land; or where the question is whether the intention of the purchaser to purchase the land was brought about by the actions of the agent; or in the situation considered hypothetically by Jacobs J in L J Hooker where two agents separately introduce the same purchaser. In all of these cases the essential issue is whether the agent brought about a state of affairs giving rise to the contractual right to the commission." 61 Her Honour's finding that in the period between February and April Mr Casaceli (and those associated with him) were not willing to buy the property on terms that were acceptable to Mr Priddle (judgment, par 56) was not determinative of the question of whether Prestige's efforts were in a real sense the cause of the sale. The finding that Mr Abbott's negotiations were "probably the effective cause, if not the sole cause" of the sale (judgment, par 55) is confusing. Generally, the reasoning at pars 56-59 supports Mr Aldridge's submission that her Honour failed to address the significance of the introduction of Mr Casaceli to the property and the subsequent negotiations carried out by Prestige: the question was not whether Gunning had received or was entitled to receive commission on the sale, but whether Prestige had established that it was an effective cause of the sale. In the circumstances, it was necessary to appreciate that in rare instances two agents may independently be an effective cause of sale: LJ Hooker v Adams per Barwick CJ at 61; Jacobs J at 86; and Emmons Mount Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117 per Stein JA (with whose judgment Giles JA agreed) at [48]. 62 Mr Aldridge submitted that the finding that Mr Egan's efforts to persuade Mr Priddle to reduce Depune's price for its property had been futile (judgment, par 57) and that he had made a counter-productive, baseless, representation to Mr Casaceli, was against the evidence. It was common ground that Mr Priddle had told Mr Egan that he had an interested party through Colliers, who was prepared to pay $4,000,000 plus GST. The representation to which her Honour referred (Mr Egan's letter of 12 February) was that a contract had been issued for this amount. This appears to have been a gloss added by Mr Egan. The conclusion that the representation was counter-productive must fall away if it is accepted that Prestige subsequently succeeded in obtaining an increased offer from Mr Casaceli. 63 The orders claimed in the draft notice of appeal include that this Court substitute a verdict and judgment for Prestige. 64 In Mr Aldridge's submission, Prestige made good its claim on the strength of the evidence that is not in issue. The fact that Mr Casaceli was introduced to the property by Prestige and that Prestige succeeded in negotiating with him up to an offer of $3,850,000 plus GST were submitted to be a sufficient basis in the circumstances of this case for the conclusion that its efforts were an effective cause of the sale. All the more so if the inference is drawn that Prestige obtained the offer of $3,950,000 plus GST. 65 This is a case in which the judgment cannot stand since the primary judge's finding in a material respect is contrary to the evidence. This Court is in a position to draw inferences from the evidence which is not in issue. In these circumstances it is appropriate for this Court, in the discharge of its duty of deciding the appeal by way of rehearing, to determine the matter for itself. 66 I have concluded that Prestige established that it was in a real sense the cause of the sale. It introduced Mr Casaceli to the property and by 18 February it had worked him into a position in which he made an offer to purchase it for the nominated sale price. His offer was made on the basis of the payment of a reduced deposit, which was not then acceptable to Depune. Subsequently he and Depune compromised their differences as to the provision of the deposit. It is to be observed that around the time, or shortly after, Mr Casaceli made his final offer through Prestige, Mr Priddle had come to the view that the nominated sale price was too low. The evidence does not establish the content of any negotiations conducted by Gunning with Mr Casaceli. It is clear that by 31 May Mr Priddle no longer considered that $3,950,000 plus GST was too cheap a price at which to sell the property. By that date he was willing to sell the property for $50,000 less than the offer that Mr Casaceli had earlier made. On these facts, I am satisfied that the inference to be drawn is that the work done by Prestige during the currency of the agency agreement was an effective cause of the sale. It follows that Prestige has established its entitlement to commission on the sale under clause 2. The sum claimed in the Statement of Liquidated Claim is $85,800. The accuracy of this figure was not in issue. 67 For these reasons, I propose the following orders:

1. Grant leave to appeal. 2. Notice of appeal to be filed within seven days of today's date;

3. Allow the appeal and set aside the verdict and judgment in the Court below;

4. Substitute verdict and judgment in favour of the appellant in the sum of $85,800; 5. Award interest on the judgment sum from 23 June 2004 to 15 August 2008; 6. The respondent is to pay the appellant's costs of the appeal and of the trial; 7. Liberty to the parties to file consent orders to give effect to order 5. 8. Liberty to apply to Bell JA within 14 days of the date of these orders in the event of any dispute as to the quantum of interest to be paid in accordance with order 5. 68 MATHEWS AJA: I agree with Bell JA.

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