[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
JUDGMENT
THE COURT: On 6 December 2023, the Court made the following orders (see The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq) [2023] NSWCA 291):
1. The appeal be allowed in part.
2. Set aside the order dated 12 August 2022.
3. Subject to order (4), remit the proceedings to the primary judge for the purpose of considering making orders for judicial sale.
4. Within 14 days hereof, the parties are to seek to agree the form of a declaratory order which gives effect to these reasons, as well as seek to agree costs of the proceeding both below and on appeal. If they are unable to reach agreement, each should within that time provide a brief written outline of submissions, not exceeding four pages in length, in support of their respective positions. The remaining issues will then be finalised on the papers and without a further oral hearing.
On 20 December 2023, each party provided written submissions on final orders. On the matter of costs, the parties agreed that there be no order as to costs in relation to the costs to date in proceedings in the Court below, and there should be no order as to costs in this Court.
The parties were unable to agree on the form of declaratory relief. The appellant sought the following declaration:
"(4) The form of declaration which PIA seeks be made is:
'Declare that the Commission in the amount of $641,894.20, plus interest at 10% per annum accrued thereon from 01/10/2019 to and including 06/12/2023 is owing to the Appellant by the Respondent pursuant to the Sole Agency Agreement dated 20 April 2019, as supplemented by the Fourth Supplementary Agency Agreement dated 12 August 2019, is secured by an equitable charge over the following properties -
(1) 89/SP90549 189/10 Thallon Street, Carlingford NSW 2118
(2) 96/SP90549 196/10 Thallon Street, Carlingford NSW 2118
(3) 107/SP90549 207/10 Thallon Street, Carlingford NSW 2118
(4) 109/SP90549 209/10 Thallon Street, Carlingford NSW 2118
(5) 138/SP90549 238/10 Thallon Street, Carlingford NSW 2118
(6) 219/SP90944 367/2 Thallon Street, Carlingford NSW 2118
(7) 261/SP90944 409/2 Thallon Street, Carlingford NSW 2118
(8) 268/SP90944 416/2 Thallon Street, Carlingford NSW 2118
(9) 275/SP90944 432/2 Thallon Street, Carlingford NSW 2118
(10) 279/SP90944 427/2 Thallon Street, Carlingford NSW 2118
(11) 280/SP90944 428/2 Thallon Street, Carlingford NSW 2118'."
This proposed declaration has the following relevant features. First, it quantifies the debt owing to the appellant and secured by the implied equitable charge which the Court found, in the amount of $641,894.20 plus interest at 10% for the specified period. Secondly, it identified 11 properties as security for the equitable charge. Those are the 11 properties that were the subject of the Fourth Supplementary Agency Agreement dated 12 August 2019.
In contrast, the respondent proposes two alternative declarations. The first purports to give effect to the reasons of Griffiths AJA at [155], while the other purports to give effect to the reasons of White JA.
The respondent submitted that there is some ambiguity in the reasons for judgment of both White JA and Griffiths AJA, particularly at [123] and [155] respectively.
White JA at [123] proposed a declaration that "the appellant has an equitable charge over the lots in the Development contained within the Schedule of Lots which is Annexure A to the Notice of Appeal to secure all moneys owing to it pursuant to the Sole Agency Agreement as supplemented by the Fourth Supplementary Agency Agreement dated August 2019".
As the respondent correctly submitted, the form of declaration proposed by White JA was too wide in that there might be moneys payable to the appellant under the Sole Agency Agreement which were not "commission entitlement or compensation or damages".
The definition of "Commission" and "commission entitlement" in the Sole Agency Agreement expressly includes interest for late payment. It does not include other moneys which might become payable such as a share of rental income for a unit (cl 15.4).
Griffiths AJA said (at [155]):
"[155] This means that I would grant a declaration in narrower terms to that proposed by White JA relating to the scope of the equitable charge. Rather than extending to the schedule of lots which is Annexure "A" to the amended notice of appeal, I consider that the charge should be limited to the debt relating to outstanding commission concerning the lots as listed in the Agency Lot Schedule which is an annexure to the Supplementary Agency Agreement dated 12 August 2019."
The second sentence of this paragraph was a slip. There was no issue that if cll 12.9-12.11 of the Sole Agency Agreement created by implication an equitable charge, and if the rectification claim failed, the charge secured the payment of commission owing on the sale of the Agency Lots listed in the Sole Agency Agreement. It was not disputed that the charge would secure commission owing in respect of the sale of Agency Lots listed in any of the Supplementary Agency Agreements. Nor was it submitted that the Fourth Supplementary Agency Agreement superseded the Sole Agency Agreement.
The respondent submitted that the matter should be remitted to the primary judge to determine what debt was secured by the equitable charge arising from cll 12.9-12.11. However, because Kirk JA agreed with the orders proposed by Griffiths AJA, which were that "…the parties seek to agree the form of a declaratory order which gives effect to these reasons", the primary judge would be bound to construe and apply [155] quoted above, which would not reflect the intentions of any member of the Court.
We have held that cll 12.9-12.11 of the Sole Agency Agreement impliedly created an equitable charge over all of the units in Somerset development, which had not been transferred to purchasers (at [79]-[82], [111]-[112], [128], [153]). Accordingly it should be declared that all of the units listed in the annexure to the notice of appeal are charged to secure the debt owed for commission and interest, save for the one lot which has been sold.
The secured debt is not restricted to commission on sales of Agency Lots listed in the Fourth Supplementary Agency Agreement. But, as explained below, it does not extend to all of the sums claimed by the appellant in its Amended Commercial List Statement.
Clause 12.10 of the Sole Agency Agreement provided that the "caveat provision" gave the Agent (the appellant) the right to protect its interests to "commission entitlement or compensation or damages as the case may be".
The "commission entitlement" was defined to mean:
"…commission plus interest for any late payment of the commissions in accordance with this Agreement, which the owner has agreed to pay to the Agent for the sale of each Agency Lot".
"Agency Lots" was defined to mean the residential units listed in the Agency Lot Schedule which was a schedule to the Sole Agency Agreement (at [6]-[8]).
The appellant's contention that the implied equitable charge secures a debt for commission of $641,894 arises from the sale of units in the development that were "Agency Lots" either as listed in the Agency Lot Schedule to the Sole Agency Agreement, or in Agency Lot Schedules attached to four supplementary agreements.
In its Amended Commercial List Statement, the appellant claimed commission in respect of three sales made after 28 April 2018 and up to 24 May 2018 that were subject to the Sole Agency Agreement. The commission claimed in respect of these sales was $131,615. There can be no issue about this claim.
The First Supplementary Agency Agreement is dated 2 February 2018 but that must be an error, because it amends the Sole Agency Agreement made on or about 20 April 2018. The respondent's Commercial List Response did not respond to that allegation. The appellant alleged that it was "agreed and finalised on 27 June 2018". It applied to promotions that were subject to contracts exchanged before and on 31 July 2018. The appellant is referred to as "the Agent". The agreement recited that the parties wished to amend the Sole Sales Agency. Clause 2 provided that the amendments had effect from "the date of this Supplementary Agreement" (until seven days after written termination notice was given). The respondent agreed to pay $5,000 plus GST "bonus incentive to sales agent" to be paid upon the exchange of contracts; a 5% deposit upon contract exchange and another 5% to be paid on settlement (which refer clearly enough to terms to be offered to purchasers), together with a $10,000 cash rebate to a purchaser at settlement and "$10,000 referrer fees" payable to an existing purchaser of Somerset who refers another purchaser.
The Second Supplementary Agency Agreement is dated 29 October 2018. The respondent agreed to implement a promotion of the Agency Lots listed in the Agency Lot Schedule specified. This included a discount to the sales price, a stamp duty rebate, and a "Sales Incentive" described as follows: "2.2% (inclusive of GST) of contract price a sales incentive will be rewarded to the Sales Consultant and to be payable upon contract exchange".
Commission payable to the Agent (the appellant) was adjusted to 4.4% (inclusive of GST) and was to be paid on settlement.
A Third Supplementary Agency Agreement is dated 6 February 2019 and has the same recitals. Its effect is to add six additional lots to which the Second Supplementary Agreement applies.
The Fourth Supplementary Agreement was made on or about 12 August 2019. It provided for the inclusion of additional Agency Lots for the Agent to market and promote, revision of the Minimum Selling Price of the Agency Lots, and the implementation of a promotion. The terms of the promotion included a rebate to purchasers and an incentive to "Sales Agent" of $10,000 exclusive of GST. This was to be rewarded to the "Sales Consultant" and was to be due and payable on completion of the contracts.
Each of the Supplementary Agency Agreements lists lots under a heading "Agency Lot Schedule". Each agreement is headed "SUPPLEMENTARY AGENCY AGREEMENT In respect of the Agency Lots in the Development at 7-13 Jenkins Road and 2-14 Thallon Street, Carlingford NSW 2118". Each agreement provided that it amended the Sole Agency Agreement. Clause 1 of each agreement provided that expressions defined in the Sole Agency Agreement had the same meaning and effect when used in the Supplementary Agreement.
If the First, Second and Third Supplementary Agency Agreements were only intended to provide incentives for the promotion of sale of lots specified in the Agency Lot Schedule for each agreement, it would have been unnecessary to have amended the definition of Agency Lots in the Sole Agency Agreement to include additional Agency Lots. Each agreement recites that it does amend the Sole Agency Agreement.
The effect of these provisions is to treat the Agency Lots in the Schedule to each Supplementary Agency Agreement as if they were included in the Agency Lot Schedule attached to the Sole Agency Agreement.
This is even clearer in the Fourth Supplementary Agreement. Recital D to that agreement provides that the parties wished to amend the Sole Agency Agreement to provide for the inclusion of additional Agency Lots.
Accordingly, commission payable in respect of all of the lots the subject of the Supplementary Agency Agreements were subject to the equitable charge provided for by cll 12.9-12.11 of the Sole Agency Agreement.
No contrary submission was raised either on the hearing of the appeal or in the respondent's written submissions.
The recitals to the Fourth Supplementary Agency Agreement provided that it superseded all previous supplementary agreements and was deemed to supplement the Sole Agency Agreement, but this did not affect sales made before the parties entered into the Fourth Supplementary Agency Agreement.
In its Amended Commercial List Statement, the appellant claimed sales commission under the Sole Agency Agreement and each of the Supplementary Agency Agreements. It also claimed "incentive bonuses" and a "Referral Fee" payable under the First Supplementary Agency Agreement. The "Referral fee" payable under the First Supplementary Agency Agreement was not payable to the Agent but to an existing purchaser in the development who referred another purchaser. None of the incentive bonuses claimed was payable to "the Agent" as defined (ie the appellant) but to a "sales agent" or a "sales consultant", being a reference to the individual who procured the sale of a unit.
Paragraph 57 of the Amended Commercial List Statement alleged that the respondent had "failed to pay to the plaintiff commissions due and payable upon the settlement in the sale of the 25 Agency Lots after 20 April 2018 are $131,615 plus $118,725 plus $304,379.20, plus $87,175 = $641,894.20".
This sum of $641,894.20 was part of the total claim of $18,132,076.20 for which Hammerschlag J gave judgment in favour of the appellant on 13 September 2021 (The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175 at [7]).
The respondent's Commercial List Response pleaded at para 5 that the respondent did not plead to, amongst other paragraphs, paras 51, 52, 53, 54 and 57 of the Amended Commercial List Statement because "…the plaintiff's causes of action pleaded in those paragraphs have merged in the Monetary Judgment pursuant to the doctrine of merger in judgment…".
The appellant submitted that by not pleading to those paragraphs, the respondent is taken to have admitted them. This would be correct if the Commercial List Statement and the Commercial List Response were to be treated as pleadings (Uniform Civil Procedure Rules, r 14.26; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 at [62]-[63]). It is unnecessary to express an opinion on that question.
Even if failure to respond to an allegation in a Commercial List Statement (as required by Practice Note SC Eq 3 cl 11(b)) has the same consequence as failing to traverse an allegation in a pleading, we do not accept that the respondent is taken to have admitted that what is described in para 57 of the Amended Commercial List Statement as a failure to pay "commissions" is a failure to pay "Commission" referred to in cl 12.9 of the Sole Agency Agreement or "commission entitlement or compensation or damages as the case may be" referred to in cl 12.10. The respondent would also be taken to have admitted paras 52, 53 and 54 of the Amended Commercial List Response which make it clear that the sums claimed included not only "PIA Sales Commission" but also "Incentive bonus" or "Referral Fee".
Neither the incentive bonuses nor the referral fee constitute "compensation or damages" to which the appellant is entitled within the meaning of cl 12.10.
The respondent did not contend that the merger of the appellant's cause of action for commission and interest in the judgment means that there is no debt for Commission or commission entitlement that is the subject of the implied equitable charge. Nor do we think that any such argument would have been tenable had it been raised.
When the amounts of incentive bonuses and referral fees are excluded, the amount of commission secured by the charge is $527,958. Interest at 10% from the time each payment of commission became payable would also be secured by the charge. The appellant only seeks interest from 1 October 2019. It seeks interest up to 6 December 2023 (being the date of publication of our reasons), but is entitled to 10% interest until 13 September 2021 (when Hammerschlag J gave judgment) and thereafter at the rates prescribed for the purpose of s 101 of the Civil Procedure Act 2005 (NSW).
Costs in respect of the submissions as to the orders to be made are costs in the appeal.
For these reasons we make the following additional orders:
1. Declare that commission in the amount of $527,958 plus interest at 10% per annum accrued thereon from 1 October 2019 to and including 13 September 2021, and thereafter at the rates prescribed for the purpose s 101 of the Civil Procedure Act 2005 (NSW), is owing to the appellant by the respondent pursuant to the Sole Agency Agreement as supplemented by the First, Second, Third and Fourth Supplementary Agency Agreements pleaded in paragraphs 14, 22, 25, 27 and 29 of the Amended Commercial List Statement, and is secured by an equitable charge over the properties listed at Annexure A to the Notice of Appeal, save for property 264/SP90944.
2. Remit the proceeding to the primary judge for the purpose of considering making orders for judicial sale.
3. Order that there be no order as to costs to date in respect of the proceedings below, or of the appeal, with the intent that the parties bear their own costs of the proceedings below to date and of the appeal.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 March 2024