Quach v ATM Residential Pty Ltd

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY COURT OF APPEAL

Case Title: Quach v ATM Residential Pty Ltd (No 2) Citation: [2024] ACTCA 38 Hearing Date: 23 August 2023 Decision Date: 23 December 2024 Before: McWilliam and Taylor JJ, Refshauge AJ Decision: (1) The appeal is dismissed. (2) The orders of the Supreme Court of 19 August 2022 are confirmed. (3) The appellant is to pay the respondent’s costs. Catchwords: CIVIL LAW – PRACTICE AND PROCEDURE – Appeal – removal of parties – whether defendant had been inappropriately or unnecessarily joined – appeal against order of primary judge removing a party – whether error by primary judge – whether there were any facts or basis in law for the action against the defendant/respondent – no such facts or law – appeal dismissed Legislation Cited: Agents Act 2003 (ACT), ss 24, 25, 69, 70, 71, 173 Civil Law (Property) Act 2006 (ACT), s 205 Civil Law (Sale of Residential Property) Regulation 2004 (ACT), Schedule 1 Competition and Consumer Act 2010 (Cth) Court Procedures Rules 2006 (ACT) Cases Cited: Allesch v Maunz [2000] HCA 40; 203 CLR 172 Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] NSWLR 309 Hodgson v Amcor Ltd; Amcor Ltd v Barnes [2011] VSC 63; 32 VR 495 Lyons v Labathis, Sports Centres Australia Pty Ltd t/as Canberra International Sports and Aquatic Centre and the Club Group Limited [2010] ACTSC 93; 244 FLR 37 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 Quach v ATM Residential Pty Ltd [2022] ACTSC 210 Quach v ATM Residential Pty Ltd [2023] ACTCA 9 Salomon v Salomon & Co Ltd [1897] AC 22 Scruples Importers Pty Ltd v Crabtree & Evelyn Pty Ltd (1983) 1 IPR 315 The Manchester, Sheffield, Lincolnshire Railing Co v Brown (1883) 8 AC 703 Tolhurst v Associated Portland Cement Manufacturers Ltd [1902] 2 KB 660 Parties: Dr Michael Quach (Appellant) ATM Residential Pty Ltd (Respondent) Representation: Counsel Self-represented (Appellant) J Moffett (Respondent) Solicitors Self-represented (Appellant) Thomson Geer Lawyers (Respondent) File Number: ACTCA 42 of 2022 Decision Under Appeal: Court/Tribunal: ACT Supreme Court Before: McCallum CJ Date of Decision: 9 August 2022 Case Title: Quach v ATM Residential Pty Ltd Citation: [2022] ACTSC 210 Court File Number(s): SC 40 of 2022 McWILLIAM AND TAYLOR JJ:

1. We have had the benefit of reading the reasons of Refshauge J in draft form. We agree with his Honour’s reasons and with the orders proposed. REFSHAUGE AJ: Introduction

2. Doctor Michael Quach, the appellant, made an offer to purchase a property at 17 Toorale Terrace, Lawson, ACT (the Lawson property) to the real estate agent acting for the owner, the seller, but it was ultimately sold to another purchaser for a price less than that offered by Dr Quach.

3. Dr Quach commenced these proceedings, claiming that ATM Residential Pty Ltd (ATM), the respondent, had engaged in misleading and deceptive conduct. ATM applied to be struck out as a defendant. On 19 August 2022, the Court did so: see Quach v ATM Residential Pty Ltd [2022] ACTSC 210 (primary judgment). The following orders were made: (1) Pursuant to r 230 of the Court Procedures Rules, remove ATM Residential Pty Ltd as the defendant in the proceedings; (2) Order that the plaintiff pay the defendant’s costs; (3) Dismiss the proceedings.

4. Dr Quach has appealed from all those orders. As the appeal is by way of rehearing, before this Court on appeal may intervene, error at first instance must be established, including where further evidence is admitted on appeal: Allesch v Maunz [2000] HCA 40; 203 CLR 172 at [22]-[23]. For reasons that follow, there is no discernible error in the orders made by the primary judge.

Background

5. The facts involved in these proceedings and the evidence for them, such as it is, are complicated and it is helpful to set them out in some detail before addressing the issues on the appeal.

The Original Purchase

6. On 1 May 2019, the owner of the Lawson property, Mr Eric Chen, engaged Canberra City Holdings Pty Ltd (CCH), a real estate agency, trading as McGrath Dickson, to sell that property. One of CCH’s agents was Mr Michael Fay. He was named in the Agency Agreement provided by CCH to establish and regulate the agency relationship and signed by Mr Chen. He acted as the selling agent for Mr Chen on the sale of the property.

7. The evidence was not entirely clear whether Mr Fay was an employee of, or contracted to, CCH for the provision of real estate services, including the sale of the Lawson property for Mr Chen. The evidence suggests that Mr Fay’s services were provided under a contract between CCH and Mr Fay’s company, Capitol Life Pty Ltd. He was, however, the selling agent of CCH for the Lawson property.

8. Dr Quach then met Mr Fay on 1 November 2019 and they inspected the Lawson property. On 9 November 2019, Dr Quach made an offer to purchase the Lawson property for $1,505,000. Dr Quach alleged in his Statement of Claim that he did so because Mr Fay had told him “that there was already an offer of $1,500,000 on the property”. This, he pleaded, caused him to make the higher offer. The evidence does not show what happened to that offer. For example, it is not clear whether it was reported to Mr Chen, though it seems likely that it was, and not clear whether Mr Chen rejected it or not, as he was entitled to do.

9. It appears, though the evidence is not clear, that there were Court proceedings concerning the Lawson property, described in the Statement of Claim as “foreclosure court proceedings”. They appear to have delayed the acceptance of any offer for purchase of the Lawson property. No further details were available on the evidence.

10. Of course, the offer made by Dr Quach did not result in a binding contract until it was accepted by the seller, Mr Chen. Unless otherwise constrained, Mr Chen was able to reject or accept any offer for any reason, indeed, for no reason at all. See, for example, Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] NSWLR 309 at 326.

11. Dr Quach, in his Statement of Claim, alleged that the real estate agent acting for the seller of the property had “a statutory duty to accept the highest offer”. Dr Quach did not refer to any statutory provisions to that effect, however, and Mr J Moffett, counsel for ATM, denied that there were any such provisions that applied in this case.

12. The Agency Agreement, into which Mr Chen had entered with CCH, did not give either Mr Fay or CCH the power to accept any offer, much less the highest offer, made for the purchase of the property or give any undertakings or commitments about acceptance of any such offer. That was a power that only Mr Chen, and he alone, could exercise. This was not, for example, a sale by auction where the seller must sell to the highest bidder above the reserve price. See Item 10, Schedule 1, Civil Law (Sale of Residential Property) Regulation 2004 (ACT).

The Relevant Companies and their Businesses

16. Dr Quach did not commence his proceedings against Mr Fay, the only person with whom, on the evidence, Dr Quach had any dealings in connection with his proposed purchase of the Lawson property. Nor did he sue CCH, Mr Fay’s employer, either directly or through a contract with Mr Fay’s company, Capitol Life Pty Ltd. CCH was contractually the exclusive agent for the seller of the Lawson property.

17. It is appropriate, then, to clarify the various corporate entities that were involved in the relevant activities or referred to during the proceedings.

18. In the evidence, there were, helpfully, extracts from the records of the Australian Securities and Investment Commission (ASIC) which provided most of the facts necessary to resolve this appeal.

19. CCH conducted a real estate business in Canberra under a franchise from McGrath Australasia Pty Ltd, the franchisor. The Franchise Agreement was in evidence. It described the “Business Development Area” in which CCH could operate under the franchise, and which was known as “Dickson”. It was constituted by 31 identified areas, generally suburbs, but from Bungendore and Kowen Forest to Griffith, Red Hill and Narrabundah, to Deakin and Yarralumla, to Watson, North Lyneham and Gundaroo to Bywong, Wamboin and Majura.

20. CCH was registered on 16 April 2011 and remained in existence and, indeed, even in operation, with at the very least a rental business and, it would appear, a sales business, as a company at all relevant times. The directors were, at all relevant times, Christoper Dixon and Maree van Arkel. Its principal place of business was at Unit 4, 3 Cape Street, Dickson, ACT.

21. Mr Fay remained working for CCH until 11 August 2021, when he terminated that arrangement.

22. ATM, the respondent to this appeal, was also a real estate agency conducting business in Canberra. It also held a franchise from McGrath Australasia for the Business Development Area of “Belconnen and Gungahlin”, which was roughly to the north and west of the Business Development Area that the relevant Franchise Agreement had granted to CCH.

23. ATM was registered on 6 August 2003 and remained in existence as a company at all relevant times. There is no direct evidence, but it appears that it continued its business during its existence. The directors were Justin Taylor, Craig Chapman and Suzanne Wells at all relevant times. From 2015 to 4 March 2021, its registered office was in Unit 1L, 46 Hibberson Street, Gungahlin, ACT, that is from where it had been conducting its real estate business. It was only from 5 March 2021 that its Registered Office was transferred to Unit 4, 3 Cape Street, Dickson, ACT.

24. ATMCCH Operations Pty Ltd (ATMCCH), was registered on 21 February 2020 and remained in existence as a company at all relevant times. Its business was entirely unclear on the evidence, some of which was contested. There was no evidence to suggest that it conducted a real estate agency under a franchise agreement with McGrath Australasia at any time.

The Real Estate Business and the Franchise

26. The Franchise Agreement in evidence was between CCH and McGrath Australasia. It was suggested, and not contested, that it was the standard Franchise Agreement for companies which wished to conduct a real estate business under a franchise from McGrath Australasia. It contained a provision that was relevant to these proceedings, namely clause 2, which provided as follows: 2.2 Business Development Area (1) Subject to the Franchise Owner [CCH] complying at all times with its obligations under this Agreement, McGrath must not during the Term itself establish, or grant a third party the right to establish a McGrath Office to be operated from premises located within the Business Development Area. (2) The Franchise Owner acknowledges and agrees that there is no exclusivity to clients or to properties in the Business Development Area and that other McGrath Offices may from time to time provide Real Estate services to clients who have properties situated within the Business Development Area.

27. Each real estate business in the ACT must be conducted by a person holding a licence under the Agents Act 2003 (ACT). There are two classes of licence, a class 1 licence and a class 2 licence. The qualifications and experience required for a licence are not set out in the Agents Act, but determined by the Commissioner of Fair Trading: ss 24, 25.

28. What is clear is that each office of a real estate agency must have a class 1 licensee responsible for the day-to-day management of the business. Such a licensee cannot be responsible for more than one licenced property agent’s place of business: s 70 of the Agents Act. The holder of a class 2 license, however, may be responsible for more than one place of business, but must have a class 1 licensee responsible for the day-to-day management of each place of business: s 69(2) of the Agents Act.

29. On the evidence, Mr Dixon carried on the business of CCH as McGrath Dickson, as noted in the Agency Agreement with Mr Chen.

The “Merger”

30. A merger of the businesses of CCH and ATM was in contemplation, evidence of which was contained in the affidavit of Mr Chapman made on 19 July 2022. Dr Quach sought to challenge the evidence in the affidavit, suggesting that Mr Chapman had lied in it. He did, however, rely on or repeat many of the facts deposed to in the affidavit, including the following matters.

31. Mr Chapman deposed that, in about February 2020, the directors of CCH and ATM discussed a merger between the two businesses conducted by those two companies, in part because the lease by ATM of its premises in Gungahlin was going “to expire soon”. The approach by Mr Chapman to Mr Dixon and Ms van Arkel was received positively and steps were later taken towards achieving a merger.

32. In particular, a vehicle for the merger, ATMCCH, was registered on 21 February 2020 and, as noted above, it included the directors of both the proposed merging companies (plus Ms Talbot who is not shown in the ASIC records as a director of any of the other companies) as directors of it. While Mr Chapman said that the merger would commence shortly after that, it “was delayed by the impacts of the COVID epidemic”. This clearly implies that the merger did not happen on 21 February 2020 when ATMCCH was registered, though Dr Quach asserts to the contrary, as will be dealt with below.

33. Further, on 30 April 2021, Mr Dixon and Ms van Arkel met Mr Chapman and told him that they had decided not to merge but to sell their business instead. Indeed, on 2 August 2021, Mr Chapman again met with Mr Dixon and Ms van Arkel, who told him that they had “decided to sell the business to Ray White”. Ray White is another franchisor of real estate businesses. It seems on the evidence that the sale was to that franchisor or a franchisee carrying on business under the name of Ray White Belconnen.

34. Dr Quach submitted, generally consistent with this evidence, that Ms Wells had told him that the “rental roll” of CCH had been sold to Ray White and he relied on this evidence.

35. An email from Mr Dixon and Ms van Arkel to Mr Chapman, terminating the discussions towards a merger was annexed to an affidavit made by Dr Quach. In that email, Mr Dixon and Ms van Arkel described that they had “sold our business to Ray White Belconnen”. They noted that “some of the services of Canberra City Holdings Pty Ltd were managed by ATM”. The email continued, “[t]hat Services agreement has been terminated and we have taken back the management of the rent roll and sales with the assistance of Ray White’s administration team”.

Grounds of the Appeal

36. There were three grounds of appeal as follows: 1. The interlocutory application was filed late, after 13 July 2022 subject to the Orders of the Court 27 June 2022 [sic]. The defendant was not granted leave for an extension of time. 2. Suzi Wells, Director of ATM Residential Pty Ltd trading as McGrath North Canberra, said that Chris Dixon had sold its Property management rental roll to Ray White Belconnen. Canberra City Holdings Pty Ltd was not sold to Ray White Belconnen. 3. Mr Michael Fay, in answer to a subpoena, admitted to working “under the CCH/ATM banner”.

37. These grounds do not directly address all the issues that Dr Quach raised in his submissions. The first ground is relatively clear; the other two grounds not so clear, but were expanded upon and explained in argument. The first ground can be dealt with separately and the second and third grounds dealt with together.

The reasons of the primary judge

38. Relevant to the grounds of the appeal and the arguments made by Dr Quach during the hearing, the primary judge explained the basis for ATM’s application to be removed as a party as follows at [1]-[2]: 1. By originating process filed on 10 March 2022, Michael Quach seeks various remedies against ATM Residential Pty Ltd trading as McGrath North Canberra. In broad terms, Dr Quach's complaint is that a property for sale which he inspected in November 2019 and for which he claims to have made the highest offer was later sold to another person at a lower price. The relief sought includes annulment of the contract of sale of the property, an order that the contract of sale be awarded to Dr Quach, compensatory damages, interest and costs. 2. Dr Quach also seeks an injunction preventing the future sale of the property pending the determination of these proceedings. Although the named defendant is ATM Residential Pty Ltd (to which I will refer to as “ATM”), the complaints specified in the pleading are directed exclusively to an individual, Mr Michael Fay. The pleading does not assert or seek to explain any connection between Mr Fay and ATM. ATM says there is none and that Dr Quach has sued the wrong defendant.

39. The critical finding for the resolution of ATM’s application was set out at [5] of the primary judgment: 5. … I am satisfied that Dr Quach has, indeed, sued the wrong entity and that ATM should be removed as a party to the proceedings. In circumstances where Dr Quach has steadfastly refused to accept that fact in the face of overwhelming evidence, I do not think there is any utility in permitting the proceedings to remain on foot. I am satisfied that the proceedings should be dismissed. My reasons for reaching those conclusions are as follows.

40. The primary judge’s conclusion is at [17] of the primary judgment: 17. For those reasons, it is appropriate, pursuant to r 230 of the Court Procedures Rules, to remove ATM as a defendant to the proceedings. That rule provides that the Court may order that a person be removed as a party to a proceeding if the person has been inappropriately or unnecessarily included as a party. The rule permits the Court to make an order at any stage of the proceedings on the application of the party or of its own motion. The evidence plainly establishes that ATM has been inappropriately and unnecessarily included as the only defendant to the proceedings and accordingly, I propose to make that order.

41. The evidence that the primary judge considered to be “overwhelming” was discussed at [8]-[16] of the primary judgment. It included a copy of the agency agreement in respect of the property Dr Quach was negotiating to purchase, which named CCH as the exclusive agent for the sale of the property, and Mr Fay as the individual agent. The primary judge stated at [10]: …The copy of the agency agreement naming Canberra City Holdings as the exclusive agent for the sale of the property and Michael Fay as the individual agent ought to have been enough to satisfy him of the need to remove ATM from the proceedings. Instead, he issued a notice to produce and a notice to admit facts to ATM as well as multiple subpoenas directed to numerous strangers to the litigation. He defended ATM's application vigorously, making an elaborate argument as to why, notwithstanding the plain terms of the agency agreement, ATM should remain a defendant to the proceedings.

The Late Filing of the Application by ATM

43. The application to which the first ground applies was the application by ATM which sought the dismissal of ATM from the proceedings. It also sought, if that ground was not successful, that the proceedings be dismissed and, in the event that that further ground was not successful, that Dr Quach be directed to provide security for costs. If none of those grounds were made out, it sought that the pleadings be struck out.

44. As is clear from the orders made by the Court, the first ground of the application by ATM was made out. It is to this order that the first ground of appeal is directed.

45. The argument that the application was incompetent because it was out of time was not a matter that appears to have been raised before the primary judge. However, the respondent did not object to this Court dealing with the argument on appeal.

46. The history of the application is briefly as follows. After filing his Originating Claim and Statement of Claim, Dr Quach issued some subpoenas. The return of the subpoenas came before the Registrar on 27 June 2022.

47. On that day, however, the solicitors for ATM foreshadowed that the application for removal of ATM as a party and the other orders was to be filed and a date was sought for the hearing of the application.

48. It was not possible for that date to be given at that directions hearing, but the Registrar did give a direction that the application be filed by 13 July 2022. The Registrar did suggest that, depending on the state of the lists, the application may be able to be heard on 22 July 2022. The matter was to be returned for further directions on 25 July 2022.

49. In the event, the application was filed on 19 July 2022, six days late. The application was made returnable on 8 August 2022.

50. Dr Quach submitted that the failure of ATM to file the application by 13 July 2022 rendered it a nullity and, as such, the appeal must be upheld and the orders of the Court on 19 August 2022 must be set aside.

51. It is relevant to note that the proceedings were listed on 1 August 2020 before the judge who was to hear the application on 8 August 2022. At that directions hearing, Dr Quach did not raise the question of the lateness of delivery of the application. Allowance must be given to his position as a litigant in person, though he has previously been involved in a significant number of court actions as the evidence showed.

52. Dr Quach’s submission that the late delivery of the application rendered it a nullity is not the law. It is clear that the order by the Registrar was a direction under Rule 1401 of the Court Procedures Rules 2006 (ACT). The rule commences as follows: (1) The court may, at any stage of a proceeding, give any direction about the conduct of the proceeding it considers appropriate, even though the direction may be inconsistent with another provision of these rules. (2) The court may give a direction about the conduct of the proceeding on application by a party or on its own initiative.

Transfer of Liability

69. Dr Quach, however, submitted that the merger of the two businesses of CCH and ATM effected such a transfer. The evidence is all one way that there was a proposed merger, but it never happened. Curiously, Dr Quach seems to accept this, for he acknowledged and, indeed, to some extent, relied on, the fact that CCH had sold its rental roll to Ray White Belconnen. If there had been a merger, then the rental roll was no longer the business of CCH to sell and it would have had to be a sale by the merged entity, that is ATMCCH, if proven to be that entity.

70. There was a dispute about whether CCH had sold its whole business or only the rental roll, but that does not need to be resolved at this time. The fact is that, if there had been a merger, then CCH would no longer have had the ownership of the rental roll business or any other business and could not sell it. This is a very strong support for the proposition that there was no merger. Only the merged entity could sell any of the businesses that had become the property of it by absorption of the pre-merged entities or, more likely, businesses, into the merged entity.

71. Dr Quach submitted, however, that the registration of ATMCCH was the merger. The error in this reasoning, however, was that Dr Quach seemed to be submitting that, because the directors of the two companies proposing to be merged had become directors of the new company that was to be used to effect the merger, it had happened. That, of course, is not the law. In the first place, the business of a company is not necessarily the actual company. That is to say, a company may conduct a business, such as a real estate agency, and then sell that business but not have sold the company which may continue and, for example, undertake another business.

72. Similarly, neither the directors nor the shareholders of a company are identical with the company. As was pointed out as long ago as 1897 in Salomon v Salomon & Co Ltd [1897] AC 22, the company and its owners and directors are different persons protected by what is sometimes called the “corporate veil” to separate them from each other.

73. The creation of the company can only be the very first step in a merger process. There is then a need for a transfer of the businesses of the two bodies that merged them into the new entity. This may, for example, require the substitution of new contracts for current contracts, in this case a new agency contract between Mr Chen and the new entity for the old contract between Mr Chen and CCH. Whilst it is possible that this could happen, it seems quite unlikely that a new merged entity would or would want to undertake any liabilities that had accrued under the old contract.

74. It could occur if the new entity had purchased one or both of the companies that wanted to merge not just to merge the businesses, but the evidence, particularly from the ASIC extracts, shows that this did not occur.

The Duty to Accept the Highest Offer

78. The pleading, however, then proceeded to allege that ATM had “the statutory duty” to accept the highest offer on “the property by the Plaintiff”. No statute was mentioned either in the pleading or in submissions. The only reference was to the Competition and Consumer Act and no section of that legislation makes such a requirement.

79. Fundamental to the law of contract is what is referred to as the freedom of contract, described as the free and voluntary entry into a contract by the two parties to it: The Manchester, Sheffield, Lincolnshire Railing Co v Brown (1883) 8 AC 713 at 718-9. That is to say, a vendor may accept any offer for the purchase of a property or reject it and cannot be forced to accept an offer.

80. This is, of course, subject to any statutory provision to the contrary, such as the mandating conditions of an auction referred to above at [12]. To comply with the law of freedom of contract is not and cannot be misleading and deceptive without more.

81. That freedom could be subject to, or overridden by, a statutory provision. None, however, was here mentioned. It could also be subject to some action or representation by one party to the other which is misleading or deceptive. In this case, there was no pleading that any statement, for example that Mr Chen would accept the highest bid, had been made. There was no evidence or even a submission that any such action had been taken or any such representation had ever been made. No document was produced to that effect. The only agreement governing Mr Fay’s conduct was the Agency Agreement (referred to at [11] above) and it contained no such statements.

82. In any event, the other contracting party in this case would not be CCH, ATM or ATMCCH. None of them had the right or power to accept the bid or reject it, except, if there was such an agency relationship, and then only as an agent for Mr Chen. Only he, Mr Chen, as the seller and the other contracting party, could accept (or reject) an offer. He may delegate the actual communication of that acceptance to his agent. That, however, would not make the agent liable, though the agent could make Mr Chen, the principal, liable. Again, if this is the allegation and is made out, then the seller had the obligation to accept the highest offer. The seller was Mr Chen, not Mr Fay, CCH or even ATMCCH, but certainly not ATM. Dr Quach has even then sued the wrong party.

Real Estate Agents Licence

83. In submissions, Dr Quach further argued that Mr Chapman was the licensee of a merged business under ATMCCH, with a class 1 licence, that rendered ATM liable. Dr Quach developed the submission as follows: (a) ATMCCH was carrying on the merged business of CCH and ATM. (b) In order to carry on the merged business, ATMCCH required a licenced agent. (c) That person must have been Mr Chapman and the licence he held must have been a class 1 licence. (d) Because Mr Chapman was the licensee of ATM, the business of ATMCCH was transferred to ATM.

84. That was how, he submitted, ATM became liable to him for his claim.

85. This argument was neither pleaded, nor in the written submissions of Dr Quach, nor argued before the Court originally hearing the application.

86. The complete answer to it is that there was no basis for relying on any licence held by Mr Chapman to find that any liability of Mr Fay, CCH or, even if there had been a merger, of ATMCCH, had been in some way transferred to ATM. There was no evidence that ATMCCH was even carrying on any business.

87. First, as explained above at [69]-[76], there is no evidence that the merger had occurred, or that even if it had occurred it would have meant that ATM was liable for anything that Mr Fay had done which gave rise to any claim by Dr Quach.

88. Second, the licensing arrangements for Mr Dixon contradict the inferences Dr Quach relied upon to make his argument. The only actual evidence of any licence was that Mr Dixon was the licenced agent, presumably holding a class 1 licence, for McGrath at Dickson. There was no evidence to show that Mr Dixon did not continue to have his Class 1 licence for the business of CCH at Dickson. An exhibit to Mr Chapman’s affidavit showed Mr Dixon as later a “Licensed ACT and NSW Agent” for Ray White Canberra. That later licence for Ray White Canberra suggests that Mr Dixon held a class 1 licence. Further, that licence could have, if there had been a merger, extended to ATMCCH, if it constituted a partnership under s 70(2)(b) of the Agents Act. Again though, there was simply no evidence about this.

89. The third hurdle in the evidence relates to the licensing arrangements for Mr Chapman. If Mr Chapman held a class 1 licence, it could only be for the Gungahlin business, otherwise, with Mr Dixon as licensee for the Dickson premises, he would have committed an offence under s 70 of the Agents Act.

90. Dr Quach asserted, without reference to any actual evidence, that Mr Chapman “must” have also been licenced, though Ms Wells may have been the licensee for ATM, as she seemed to be involved in a significant amount of the detail of the matters before the Court.

91. There was also no evidence to show that either Mr Chapman or Mr Dixon or both had not been exempted from holding a licence under s 71 of the Agents Act.

Franchise Areas

98. The primary judge dealt with this aspect of the appellant’s argument in the primary judgment at [13]-[16]: 13. Dr Quach does not appear to dispute that the proposed merger did not proceed. His argument is more nuanced. Leaving aside the fate of the proposed merger, he rejects ATM's assertion that it has no connection with Canberra City Holdings. He contends that, according to the terms of its McGrath franchise, ATM was permitted only to operate one “business development area”. On the strength of the fact that ATM moved to Dickson and shared offices with Canberra City Holdings, he infers that ATM was instead operating in two areas. He contends that ATM could not do that without breaching its franchise agreement. Dr Quach submitted that ATM is using the newly incorporated company and other corporate entities because they do not have authority to operate in the Dickson area so they are using other entities to operate the franchise agreement for the area as a “silent partner”. 14. In what was perhaps a different iteration of the same point, Dr Quach submitted that, as at November 2019 when he inspected the property he wished to purchase, the two agencies were selling each other's properties. He relied in that context on the fact that Susie Wells, a director of ATM, signed a contract (which appears at page 50 of the exhibit to Mr Chapman's affidavit) for McGrath Dickson under the company name of Canberra City Holdings. Dr Quach submitted, confusingly, that Susie Wells owes him a duty of care because she advertised Mr Fay as the agent for the sale of the property. 15. Finally, Dr Quach submitted that, in light of the dealings between the two companies, he could rely on the “neighbourhood principle”, citing the decision in Donoghue v Stephenson [1932] AC 562. 16. Even assuming that the argument as to the operation of the business by ATM in the Dickson area as a silent partner is correct, it is not Dr Quach's concern. If there has been any breach of the franchise agreement, that would be a matter between franchisor and franchisee. More importantly, it does not follow from that argument, or indeed any of Dr Quach's arguments, that ATM played any role in the sale of the property in question.

99. On appeal, Dr Quach again submitted that it was relevant that the Lawson property was within ATM’s Business Development Area and not that of CCH under their respective Franchise Agreements.

100. However, as the primary judge explained, even if the work on the sale of the Lawson property on behalf of Mr Chen was a breach of the Franchise Agreement, that did not render any liability to Dr Quach by Mr Fay or his employer, CCH, a liability of ATM. That was, at best, an issue for McGrath Australasia.

101. In fact, the terms of the Franchise Agreement expressly permitted an agent to provide real estate services for one of its clients in the Business Development Area of another franchisee. See clause 2(2) of the Agreement as set out at [25] above.

Conclusion

102. None of the arguments made by Dr Quach can justify that any claim he might have from the way in which Mr Fay dealt with him and the failure of Mr Chen to accept his bid was a claim for which ATM was, or could be, liable. None of the claims pleaded in the Statement of Claim were ones for which ATM could be liable.

103. Indeed, the Statement of Claim is deficient in making out any justiciable claim at all.

104. It was therefore clearly correct to dismiss ATM from the proceedings and, given the failure (or the unwillingness) of Dr Quach to consider any other party, or to show how his claim could justifiably be arguably made out, to dismiss the proceedings.

105. Accordingly, the appeal must be dismissed.

106. There is no other basis on which any order other than the usual order for costs is to be made, namely that the appellant pay the costs of and relating to the appeal.

Orders

107. For these reasons, the following orders are proposed and, with the agreement of McWilliam and Taylor JJ, made: (1) The appeal is dismissed. (2) The orders of the Supreme Court of 19 August 2022 are confirmed. (3) The appellant is to pay the respondent’s costs.

I certify that the preceding one hundred and seven [107] numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: Date: