CATCHWORDS Contract - Entitiement of real estate agent to commission - Commission payable on agent obtaining a person 'ready willing and able to purchase" - Purchaser's offer subject to finance and to formal contract - Weaning of "ready willing and able to purchase". Court of Petty Sessions Ordinance 1930 (A.C.T.} - ss. 208(1)(bh), 215. Federal Court of Australia Act 1976 - ss. 24(1), 27. WAYNE ROBERT WATTERS and ROBYN ELLEN WATTERS v. JOHN CRISP PTY. LIMITED No. A.C.T. G66 of 1982 Fox, McGregor and Gallop JJ. 28 July 1983. Canberra. iN THE FEDERAL COURT UF AUSTRALTA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISTON No. A.C.T. Go6 of 1982 ON APPEAL, FROM 'CHE SUPREME COURT OF 'THE AUSTRALLAN CAPSTAL TERRITORY BETWEEN: WAYNE; ROBERT WATTERS and ROBYN ELLEN WATTERS Appellants AND: JOHN CRISP PTY. LIMITED Respondent ORDER JUDGES : Fox, McGregor and Gallop JJ. DATE OF ORDER: 28 July 1983. WHERE MADE: Canberra. l. The appeal be allowed. iS) The order ot the Supreme Court of tne Australian vLanpital Territory and the judgment of the Court of Petty Sessions awarding the respondent the sum or si.710.00 be set aside. The respondent's complaint in the Court of Petty Sessions be dismissed. The respondent pay the appellants' costs of this appeal, and in the courts below, except that the appellants pay the costs reserved by the Chief Justice of the Supreme Court of the Australian Capital Territory on 22 July 1982. IN THE FEDERAL CUUR' AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ON APPRAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN : WAYNE ROBERT WATTERS and ROBYN ELLEN WATTERS Appellants AND: JOHN CRISP PTY. LIMITED Respondent CORAM: FOX, McGREGOR and- GALLOP JJ. REASONS FOR JUDGMENT FOX J. This appeal from the Supreme Court of the Australian Capital Territory, constituted by Kelly J., concerns the entitlement to commission of a real estate agent. The matter came first before the Court of Petty Sessions, where the learned Magistrate found for the agent. On appeal, tne issues hada fit) mn ofii) 1D4 pa i) J a cs) . Slichtly different focus, but Keliy J.., an th also found for the agent. The appellants, Mr. and Mrs. Watters, owned a house property in Canberra. Believing that Mr. Watters was qoing to be promoted to a position in Sydney, they put their house in the hands of the respondent for sale. There was a printed commission aqreement dated 24 January 1980 which Mr. and Mrs. Watters signed, anda Mr. Richardson, an employee of the aqent, also signed 1t. Purchasers for the property, Squadron Leader 'and Mrs. McArdle, were found almost immediately. Within about a week to ten days it was apparent to the prospective vendors that Mr. Watters' promotion was unlikely to take place, and they did not continue with the sale. The learned Magistrate said he was satisfied that the sale "was recognised on all sides as being definitely off by mid-February 1980". It is not in question that the commission became payable when the agent "obtains a person ready willing and able to purchase the property". Strangely, this was not expressed as the event upon which commission became payable, but is undoubtedly the proper inference from what is stated. The words cited have of course to be read in the context of the whole agreement, and there are other clauses, to which I will refer, which are relevant. tab The McArdles were preparsa to cay the orice s37,u0 0) sought by the intending vendors, but were dependent toa larde extent on finance from outside sources tec aq sa. Mr. Richardson s evidence. accepted ov the learned Magistrate, as toa his ensuing conversation with Mr. Watters was as follows: - "IT phoned him and told him that I had a buyer for the property. I rang through who the bloke was anda little bit about him that I managed to elicit from the purchaser. I explained to Mr Watters that I would draft a set of sales instructions and send them to his solicitor so he could draw up a contract and I ran through the financial - - - What did you say about it?---I told him that the chap was a squadron leader in the airforce; that he would be getting a first mortgage from Defence Service Homes corporation and a second mortgage from Civic Co-operative Building Society and that the normal run of events the finance should be through and everything by the time that Mr Watters had anticipated his departure to go to his job in Sydney. What did Mr Watters say to that?---He was quite pleased about it at that stage. There was nothing more said. What did you do?---I went ahead and instructed the solicitor to draw up a contract for sale and..." It can be inferred from the transcript that a Mr. Batterham was Mr. Watters' solicitor. Mr. Richardson''s evidence proceeds: "As a result of instructions from Mr Watters, did you send the instruction to Mr Batterham?---I sent the instructions. In fact, I handed him the instructions. Is that a copy of the instructions?--~Yes. You said you aave one of those ro Mr Batterham, and one =o Mr - - -?---Mr Vandenberg received another copy. On behalf of the purchaser?--~--That 1s ridqht." The Sales Report is in evidence. It contains particulars of the intended parties to the contract for sale, particulars of the property, of the amount to be paid by way of deposit, reference to the fact that there was to be vacant possession, particulars of the finance necessary to be obtained by the purchasers, and the date of expected approval of loan applications (24 February 1980), a date for completion expressed to be "as soon as is practicable", the location of the keys to the premises, and particulars of the solicitors for the parties. Mr. Watters was asked about seeing this document: "And subsequent to that did you receive through - or did you see in Mr Batterham's office a copy of a sales report?---Yes, I think he gave me that. I wonder if the witness might be shown exhibit B. Did you see that document?---In Mr Richardson's office - Mr Batterham's office, sorry, yes." The learned Magistrate concluded as follows: "On a date quite shortly after the Sales Report was received by the defendants' solicitors the male defendant saw that document. He must be taken to be aware of the facts stated therein namely that the Squadron Leader McArdle was proposing to obtain loans from the two lending institutions and that he anticipated approval of these loans by 24 February 1980. There is NO evidence -ner the jefanqsnrs jemyrrend in anv wav ar nhese nrteasalrt at 8 hasrs tor a cantracrt mt sale at than rime ' Tk would, with respecr, seem dounttui wnerher 'seeina" the document should be equated with having read or sridied ur. but I shall accept the Magqistrate's view of the facts in accordance with ordinary conveyancing practice. the interence 15 that it remained tor Mr. and Mrs. Watters ro be advised by their solicitor as to the agreement. Mr Watters was not of course the only vendor, but it 18 possible that he could be regarded as Mrs. Watters' agent at relevant times. There was no evidence on this matter. What precisely would have been provided in the agreement relative to the fact that the purchasers had to obtain finance to complete, is not known. There was no evidence that the McArdles, or e1ther of them, assented to the provisions set out in the Sales Report. It seems obvious that thejr solicitor would look caretuliy at the way in which the date for completion was expressed by the agent. The Sales Report document did not contain any reterence to the bridqing loan necessary before monies were advanced by "Detence Service Homes Loans". Evidence about the need for. and avaitability of, the loan monies was aiven by Mr. McArdle as toLllows: "Were you aft that staqe readv and willing fo purchase that house subiect to of course obtaining that finance?---Ves, [ was. Did you make an application for a loan?---Yes, I did. Did you subsequently learn that the house was withdrawn from the market?---Yes, I did. Did you transfer that application for a loan to another house?---That is right. And was it approved?---It was. And that other house was $1000 more than this house I think?---That is right. At some stage - it is common ground and I think I will lead this, your Worship, without any difficulty. If there is a problem, I withdraw it - the finance you were seeking was from what is commonly called War Service Loan?~---That is right. of $15,000 and Civic Permanent. of $15,000?---Yes. And you were also hoping to get an interim loan to await the War Service Loan?---That is right. , Was that approved or did you not make it or what?---I am sorry? The interim loan, was that approved or did you not need it?---I applied for that through Civic Permanent as well. Did you need that eventually?---Yes, I did. When was your finance approved?---It was not approved for this house, it was approved on a subsequent - about May of the same year. I think that was 27 May?~--Yes. You purchased the other house, did you?---Yes, I did. Yes, I have nothing further, your Worship. Mr McArdle, is this the position, that at the time you first approached Mr Richardson concerning the purchase of Ehe property vou anticipated being abie to obtain finance oy about 24 February?---I did not know exactly when the finance would be approved. I had had interviews with both the war service and Civic Permanent from whom I knew I had to qet the finance and neither of them were prepared to give me any sort of date as to when it was going to be. So at the time you spoke to Mr Richardson you knew that there was a likelihood that you would eventually get finance?---Yes. But you had no idea when that might be?---No, I did not really, no. And indeed between the time you first spoke to Mr Richardson and the time that you were informed that the vendor did not wish to proceed with the matter that position never changed?---That is right. In other words the loans were never approved and you were never told precisely when they might be approved?---Not for this house, no. Eventually a bridging loan was approved in respect of a separate property on I think you said 27 May?---I think that was the date; it was certainly May." The "Terms and Conditions" of the commission agreement, after setting out provisions concerning the obtaining of a person ready willing and able to purchase contains the following: a re TRRESPECTIVE of whether the Vendor and such person have entered into a contract for the sale of the property or whether that contract has been completed, PROVIDED THAT the price is not less than the gross price set out in this Agreement or that the price and terms and conditions of purchase have been confirmed by the Vendor either party orally or in writing. a VENDORS PLEASE NOTE. AS THIS PROPERTY HAS BEZN LISTED JN A SOLE AGENCY S3AST EVEN IF vou OR ANYONE ELSE OBTAINS A PERSON WHO IS READY WILLING AND ABLE TO PURCHASE THE PROPERTY WITHIN THAT PERTOD OF TWO (2) CALENDAR MONTHS, A FULL FEE IS PAYABLE TO THE LISTING AGENT." It was submitted by counsel for the respondent agents that the word "or" where first appearing in the proviso should be read disjunctively, and this may well be so. This, 1t was said indicated that it was only necessary for the agent to obtain someone who has said he will pay the purchase price. It 1s apparent, however, that in order to show that the McArdles were ready willing and able to complete an agreement for the purchase of the property there must be a contract, or, at the least, firm consensus as to all terms. Until this stage is reached it is impossible- to say that a person is ready willing and able to purchase. There is no agreement (or consensus) to which that person can be said to have turned his mind. Fundamentally, there is no substratum upon which to test readiness, willingness or ability to purchase. In this case, it was contemplated from the beginning by all concerned that the only agreement was to be a formal one such as is commonly prepared by solicitors. So far as appears, even the draft of an agreement had not been prepared. The fact that the estate agent had obtained a deqree of assent from Mr. Watters to a document that he had prepared is really not to the point. The claim for commission must fail on this qround. The submissions for the appellants piacea considerable reliance on the inadequacy of proof of the purchasers' anility to pay. What had to be shown was that the McArdles would be able to pay the purchase monies at the time of completion. but there is no way of testing when this would be. The evidence did not disclose when the expected loans would be available, and I do not think it can be assumed that this would have been before an agreed date for completion. It was submitted that the words in the Sales Report "as soon as practicable" was or would be a contractual term concerning completion, and that this would have meant as soon as practicable, having in mind the need to obtain the loan monies. In my view, neither of these propositions is sound. In my opinion the appeal should be allowed. The respondent should pay the costs of the appellant of the appeals to the Supreme Court, and to this Court, except that, in accordance with an uncontested submission made to us, the appellant should pay the costs reserved in the Supreme Court in an application which was made to the Chief Justice of that Court. I certify thet vais an' ts cught (8) precedint yacst eve 20 gowro af t..e } Reason Ter Cads nar aa. te et ee ee i = — lore. Juvece Ox IN TEE FEDERAL COURT OCF AUSTRALIA ALSTRALIAN CHFITAL TERRITCRY DISTRICT REGISTRY GENERAL [TIVISICN ee ee ON APPEAL FRCM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL BETWEEN: WAYNE ROBERT WATTERS and ROBYN ELLEN WATTERS Appellants AND: JOHN CRISP PTY. LTD. Respondent CCRAM: Fox, McGregor, Gallop JJ. DATE: 28 July 1983 REASONS FOR JUDGMENT McGregor J. This is an appeal by WAYNE ROBERT WATTERS and ROBYN ELLEN WATTERS (appellants) against a decision of a judge of the Supreme Court of the Australian Capital Territory delivered on 24 August 1982 wherein he dismissed an appeal by the appellants against the decision of a Magistrate of the Court of Petty Sessicns, Canberra, whereby there had been entered a verdict for the then Plaintiff, a licensed real estate agent, JOHN CRISP PTY. LIMITED (respondent) for $1710.CC. The earned by 1t 1980 entered séle of the Capital Territory. The precise terms of this agreement so far as may as follows - respondent claimed the amcupt of tre jJucerent wés pursuant to a sole agency egreement Gated 24 January inte between the parties in respect cf the proposed appeliants' house at Giralang in the Austrélian "2. In consideration of the foregoing, the Vendor - (a) (b) (c) IF: (i) (ii) grants to the Listing Agent for a period of two (2) calendar months from the date of this Agreement a sole agency to obtain a person who is ready willing and able to purchase the property; authorizes the Listing Agent and by arrangement with him, all other members of the Multiple Listing Bureau to advertise and introduce persons to the property as prospective purchasers; and agrees to pay to the Listing Agent a fee calculated on the scale set out in the margin being the scale fixed by the Real Estate Institute of the Australian Capital Territory. anyone obtains a person ready willing and able to purchase the property within that period of two (2) calendar months; or anyone obtains a person ready willing and able to purchase the property after that period of two (2) calendar months 1f£ such person was introduced to the property within that period. IRRESPECTIVE of whether the Vendor and such person have entered into a contract for the sale of the property or whether that contract has been completed, There 18 no issue as to the amcunt claimed. be relevant are PRCVICED TERT the price is not less tha gress price set cut ir this Aereere:t cr t the price and terms and conditicns cf curch t have been confirmead by the Venacr e¢€2 orally or in writing. VENDORS PLEASE NCTE. AS THIS FRCPERTY HES BEEN LISTECLD ON A SCLE AGENCY BASIS EVEN IF ¥CU CR ANYONE ELSE CBTAINS A PERSON WEC IS REALY WILLING AND ABLE TC PURCHASE THEE PRGPERTY WITHIN THAT PERIOD OF TwWC (2) CALENDAR MONTHS, A FULL FEE IS PAYABLE TO THE LISTING AGENT. eeee 4. The Listing Agent shall instruct or cause to be instructed the Vendor's Solicitor to prepare the Agreement for Sale." The learned judge at first instance found that on 25 January 1980 an officer of the respondent, Mr. Ian Richardson, had obtained intending purchasers, viz., Squadron Leader and Mrs. McArdle, for the price set out in the sole agency agreement. On that date he caused a Sales Report to be sent to appellants' Solicitor. The evidence in the _courts below was to the effect that they were to provide a cash contribution of $7,000.00 and to seek a loan of $15,000.00 secured by first mortgage from Defence Service Homes Loans (Defence Services) and a further loan of $15,000.00 secured by second mortgage from Civic Permanent Building Society (Civic). Appropriate applications for these advances were lodged with the lenders mentioned. The evidence was that the Sales Report was prepared by Mr. Richardson at the behest of the male appellant and submitted to the appellants' Solicitors "in order that the Solicitor could draw up a contract". The "anticipated approval date" for the loans was shown in this document as 24 February 1980; ana the date for completion of the sale was statec to be as sccnmn as 158 practicable". Further, his Eeneur f[cuna, éna it 18 ret the subject of dispute before us, that the appellants, fcr reasons which are said not now te ke méterial, did not preceed with the sale; and that all parties involved reccgnized that the sale was definitely off by mid-February 1980. I note that this date preceded the anticipated approval date and thus was before any settlement date had been appointed. Evidence of Squadron Leader McArdle which is not objected to, challenged in cross examination or contradicted 1s that he indicated to Mr. Richardson that he would accept and buy the appellants' house at the price of $37,0CO.00, that he went to a Solicitor whose name appears on the Sales Report, that he was at that stage ready and willing to purchase that house subject to obtaining the finance; that he was advised that the house was withdrawn from the market, that the application for finance was transferred to another house, that he applied to Civic for interim loan for this purchase pending actual availability of the loan from Defence Services; that the price of this house was $1,000.00 more than the price of appellants' hcuse; that finance was approved on 27 May 1986. The Grounds of Appeal set out in the amended Notice of Appeal are as follows - "2. That the said judment was wreng in law. 3. That the said judgment was against the evidence and the weight of evidence. 4. That there was no evidence or no sufficient evidence upen which His Honcur cculd find that the prorosed purcrasers were ét any waterial time reeédy, willinc énd arle to purchase the subtect property." The appeal in this matter lies by virtue cf the Feceral Court cf Austraélia Act 1976 s.24. Secticn 27 therecf provides - "In an appeal, the Court shall have regard to the evidence given in the froceeaings out cf which the appeal arose, and has power tc draw inferences of fact and, in its discretion, to receive further evidence, which evidence may be taken on affidavit, by oral examination before the Court or a Judge or otherwise in accordance with section 46." The appellants' counsel conceded before us that the relevant event upon which commission 1s payable was upcon the respondent introducing a person ready willing and able to purchase the property at the time specified; and the issue tendered on its behalf is whether persons admittedly introduced had this character at the relevant time. It was submitted on behalf of the appellants, e.g. that where the event upon which commission is payable is the introduction of a person ready willing and able to purchase, the agent must establish those factors up to the time when an enforceable contract is made or, alternatively, when the vendor withdraws. He cited Dennis Reed Ltd. v. Goody (1950) 2 K.B. 277 at p.283; that applying this principle the agent (respondent) in this case must establish those factors existed from the date of the introduction of the McArdles to the date of withdrawal by the vendors (appellants); the onus was upon the agent (respondent) to establish that the person introduced was of that character at all relevant times. He referred to Martin v. Perry & Daw (1931) 2 K.B. 31C at p.316; d Eili v. DCavidsen (i95¢c) ¢€.S.R. 31 at f£.33. Counsel submitted Géence frem which the ccurt re that there had tc ke sufficient ev could infer the requisite ability, this being & question ct fact; though 1t was not necessary that the purchaser shovlc heéeve the money in hand or that there shoulc be any binding agreement with lending institution obliging that institution to provide the necessary funds; but what had to be found is that the purchaser could have found the necessary funds to complete the purchase. He pointed to the lack of evidence as to Squadron Leader McArdle's income ability to repay or service borrowings, security of employment or employment history or ownership of other property; or of the acceptability of the subject property as security; that it was a fallacy to assume that because funds were available to purchase the second house, funds would have been available to purchase the first house. He submitted that the evidence adduced as to the ultimate granting of the loans by the lending institutions on other security was really inadmissible, but, anyway, irrelevant; that the offer made by the prospective purchasers (McArdles) was not unqualified; yet such an offer was necessary to establish their readiness and willingness. He referred to Christie Gwen & Davies Limited v. Rapacioli1 (1974) 1 Q.B. 781 (Christie Owen) at 789; Graham & Scott (Southgate) Limited v. Oxlade (1950) 2 K.B. 257 at 266. He argued that the offer here was like one made e.g. subject to survey; Murdoch Lownie Ltd. v. Newman (1949) 2 All E.R. 783; Grime v. Bartholomew (1972) 2 N.S.W.L.R. 627. ~I The respondent's ccunsel subpmittec thet é& proposed purcenaser covla be saiGé te ce "villinc" if he mece er cifer "within the terms that the agent has been authorised to invite": see per Cairns L.J., Christie Cwern at £.7&9. Further, he submitted that on the evidence the proposed purchasers were "ready" to sign the contract and at the proper time to complete. He submitted that there was sufficient evidence to draw the inference,' as had the learned judge below, that Squadron Leader and Mrs. McArdle would, but for the appellants' refusal tc go on with the sale, have continued willing to complete the purchase and ready and able to do so at the time contemplated by the parties, i.e. such time as was reasonably necessary in all the circumstances for approvals to be given and finance, including bridging finance, to be available. I have not referred to all evidence or counsels' arguments. I do not accept that the evidence as to the McArdles' subsequent purchase was inadmissible; once admitted, anyway, 1t may be used by the court, cf. Walker v. Walker (1937) 57 C.L.R. 630 e.g. at p. 634 per Latham C.J., at p.636 per Dixon J. (as he then was) and at p.638 per Evatt J. and, as that case, shows, even though the McArdle evidence could be described (contrary to my opinion) as hearsay evidence. It 1s not, I consider, irrelevant material, as it relates to the McArdle resources at a time sufficiently proximate to allow inference to be drawn - cf. wo sw! Pickup v. Thames Insurence Co. (1&67&€) 3 C.E.L. 594 et £.5 per ns by fy Ceckeurn C.c In my opinicn, that the éppiicetion fEcr lo the purchasers was subsequently granted by the same lenaing bodies for another hceuse, 1s evidence of the McAardle resources and cf their capacity to repay may be inferred. Like many purchasers of houses, their capacity in that regard is to be inferred from their income level and, for example, the size of the instalments. Lending bodies are experienced in and commonly Make judgments or assessments in this regard and the assessment made here by 27 May 198C, in my opinion, supports that the McArdles would have been able to repay the similar loan sought in regard to the (lower priced) appellants' house. As a matter of common experience, and having regard to the level of remuneration of a Squadron Leader in the Royal Australian Air Force, a not anconsiderable rank in that service, one would expect that the purchase of a heme of $37,000.0C would not have been an unreasonable commatment. And it is common knowledge that the repayments to the lending bodies referred to are usually on relatively favourable terms and over an extended period. The drawing of any inference as to the McArdle resources and capacity to repay as did the learned judge was not beyond his Honour merely because of the lack of description of these two houses in the surburbs of Canberra. That the evidence as to the second house was admitted without qualification is a concession of its relevance and, therefore, that there was some reasonable comparison between their values. The judge below was, I consider, entitled to regard the houses as sc similar in price that the ability tc puy the seccnd more expensive hcuse worle @ssist hir to infer the tcArdles were éble tc buy the house cf the appellants a little time earlier. In Commission Agency by Joske at p.49 it was said - "Rlthough the test pays regard to the purchéeser's financial position at the tame of the contract, 1t would seem that the court may hear evidence as to his finances and other relevant circumstances subsequent to that date...." In James v. Smith (1931) 2 K.B. 317n at _p.322n, Atkin L.J. (as he then was) said - "I think that "ability" does not depend upon whether the purchaser has the money in hand at the time; to my mind it is a question of fact. I do not think it depends upon whether he has a binding agreement by which some third person is obliged to provide him with resources to carry out the contract. I think it is sufficient if it is proved by the agent or by the purchaser that the circumstances are such that if the vendor had been ready and willing to carry out his contract, he on his part at the proper time could have found the necessary money to perform his obligation." See also per Hodson J. in Dennis Reed Ltd. v. Goody (supra) at p.292. I do not accept that the offer to purchase made here was, by reference to the oral evidence given by Squadron Leader McArdie and the obtaining of finance, to be regarded as qualified. The reference was to the method of payment; the indication of his acceptance was conveyed to Mr. Richardscn, indicating both readiness and willingness; and this was never withdrawn. The Sales Report - completed with the assistance of 10. the eppellant - containead "Details for the preparation by the Seller's Sclaciter cf én agreement for sale"; the spece fer "Special conditions" was left plank. The épproval aate for the leéns was anticipated; and settlement was tc be ""aés scon as practicable". In my cplnion, to borrow the phrase quoted in Christie Cwen at p.7&6 in the judgment of Cairns L.J., quoting Denning L.J., as he then was, in McCallum v. Hicks (1950) 2 K.B. 271 at pp.285-289. The McArdles remained "irrevocably willing" up to the time when the appellants withdrew. And, as appears in the excerpt from McCallum v. Hicks per Bucknill L.J. at p.282, cited ibid even in circumstances which fall short of the execution of an enforceable contract. The evidence here supports that the appellants were satisfied with the terms of the Sales Report which supplied the details to be used to settle the agreement. The offer was one "within the terms that the agent has been authorised to invite"; see Christie Owen at p.789. In my opinion there was evidence supporting the approach by the judge below that the McArdles fulfilled the description of persons "ready willing and able". He was entitled to regard this Material as fulfilling any onus which respondent bore. I consider he reached a decision which was open to him and which, with respect, was the correct one. The order I would propose is that the appeal 26 dismissed with costs. 2 cercify that this and the nine preceding pages «re @ trtec copy of the Reasons for Judgnent herein of Fis Yonour Mr. Jvstica MeGrecaor oe tut associate d Datec 28 Julv 1982 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G.66 of 1982 DISTRICT REGISTRY GENERAL DIVISTON ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: WAYNE ROBERT WATTERS and ROBYN ELLEN WATTERS Appellants AND: JOHN CRISP PTY LIMITED Respondent CORAM: FOX, McGREGOR and GALLOP JJ. REASONS FOR JUDGMENT GALLOP J. This is an appeal by Wayne Robert Watters and Robyn Ellen Watters (the appellants) against a decision of the Supreme Court of the Australian Capital Territory delivered on 24 August 1982 dismissing an appeal by the appellants against the decision of the Court of Petty Sessions, Canberra, delivered on 20 May 1982. In the Court of Petty Sessions John Crisp Pty Limited (the respondent in this appeal) had sued the appellants for commission pursuant to an agreement between the appellants and the respondent dated 24 June 1980 and judgment was entered for the respondent in the Court of Petty Sessions in the sum of $1,710 with costs. From that decision, the appellants appealed to the Supreme Court of the Australian Capital Territory pursuant to section 208(1)(h) of the Court of Petty Sessions Ordinance 1930. Their appeal was dismissed with costs. Pursuant to section 215 of the Court of Petty Sessions Ordinance 1930 an appeal from the Court of Petty Sessions under section 208(1)(h) 1s to be determined by the Supreme Court in accordance with the law as in force on the date on which the hearing of the appeal 1s concluded, on the evidence before the Court of Petty Sessions and on any further evidence in respect of which laave is granted. The appeal to the Supreme Court was in fact heard on the evidence before the Court of Petty Sessions. The appeal to this Court is brought pursuant to section 24(1) of the Federal Court of Australia Act 1976. Section 27 of that Act reads: "27. In an appeal, the Court shall have regard to the evidence given in the proceedings out of which the appeal arose, and has power to draw inferences of fact and, in its discretion, to receive further evidence, which evidence may be taken on affidavit, by oral examination before the Court or a Judge or otherwise in accordance with section 46." It was common ground before the Supreme Court and on the hearing af the appeal to this Court that upon a proper construction of the commission agreement between the parties the relevant event upon which commission was payable was the introduction by the respondent of a person ready, willing and able to purchase the appellants' property. The 1ssue litigated on the appeal to the Supreme Court and on the appeal to this Court was whether the evidence established that the persons admittedly introduced were in fact ready, willing and able to purchase the appellants' property for the price svecified. J There was really no disoute between the parties ! either on the appeal to the Supreme Court or on the apoeal to this Court that the evidence givan in tne Court of Fetty Sessions estadlisned tne following facts: ' (1) (2) (3) On 24 January 1980 the appellants and Mr Tan Richardson, on behalf of the respondent, signed a Sole Agency Agreement in respect of the vendors' house at Giralang. On the same day the parties signed a document headed "Multiple Listing Bureau Sole Agency Agreement". Under clause 1 of the Agreement the respondent was to list the property with the Multiple Listing Bureau for sale at the price of $37,000 and endeavour to obtain a person ready, willing and able to purchase the property. Clause 2 of the Agreement was in the following terms: "2. In consideration of the foregoing, the Vendor:- (a) grants to the Listing Agent for a period of two (2) calendar months from the date of this Agreement a sole agency to obtain a person who is ready willing and able to purchase the property; (b) authorizes the Listing Agent and by arrangement with him, all other members of the Multiple Listing Bureau to advertise and introduce persons to the property as prospective purchasers; and (c) agrees to pay to the Listing Agent a fee calculated on the scale set out in the margin being the scale fixed by the Real Estate Institute of the Australian Capital Territory. IF: (i) anyone obtains a person ready willing and able to purchase the property within that period of two (2) calendar months, or (4) (5) ({1i) anvone obtains a person ready willing and able to purchase the property after that mper1iod of two (2) calendar nonths, 1f such person was introduced to tne prooerty within chat period. IRRESPECTIVE of wnether the Vendor and such person have entered into a contract for the sale of the property or whether that contract has been completed, PROVIDED THAT the price is not less than the gross orice set out in this Agreement or that the price and terms and conditions of purchase have been confirmed by the Vendor either orally or in writing. VENDORS PLEASE NOTE. AS THIS PROPERTY HAS BEEN LISTED ON A SOLE AGENCY BASIS EVEN IF YOU OR ANYONE ELSE OBTAINS A PERSON WHO IS READY WILLING AND ABLE TO PURCHASE THE PROPERTY WITHIN THAT PERIOD OF TWO (2) CALENDAR MONTHS, A FULL FEE IS PAYABLE TO THE LISTING AGENT." By 25 January 1980 the respondent, through Mr Richardson, had obtained interested purchasers, namely Squadron Leader McArdle and his wife. On the afternoon of the same day Mr Richardson informed the male appellant that he had a buyer for the property, that the buyer would be financing the purchase partly by means of a first mortgage from War Service Homes and a second mortgage from Civic Permanent Building Society, and that he would prepare sales instructions and send them to the appellants' solicitor so that a formal contract could be drawn up. The male appellant instructed Mr Richardson to forward the relevant information to his solicitor so that a contract could be drawn up. Mr Richardson did so on the same day. The sales report contained explicit information identifying the vroperty, the names of the vendors and prospective purchasers, the agreed purchase price (6) (7) (8) of $37,000 and the sources of finance which the purchasers proposed to employ, which were, as amplified by the evidence of Squadron Leader McArdle (a) a War Service Loan for $15,000; (b) a loan from Civic Permanent Co-Operative Building Society of $15,000; and (c) a cash contribution by the purchasers of $7,000. The purchasers also proposed to obtain a bridging loan from Civic Permanent Co-operative Building Society until the War Service loan became available. The purchasers did in fact make application for finance 1n accordance with the terms of the sales report, but before their application could be dealt with by the lending institutions, the appellants withdrew from the sale. At the time when Squadron Leader McArdle first approached Mr Richardson he realised that he would need finance and had had discussions with the lending institutions referred to. Despite the discussions, he did not know when the finance might become available. When the appellants withdrew from the sale the purchasers' applications for loans had not been approved and they had not been told when they might be approved. After the appellants withdrew from the sale the proposed purchasers transferred their application for loan to another house at a price of $1,000 more than the appellants' house and a bridging loan in respect of that proposed purchase was approved on 27 May 1980. (9) No contract of sale between the eppellants end the 'SS oO Drosvectlvs purchasers yes ever drewn up. yy ea fects the Suvreme Court concluded thet ct D Oo Le?) rom the event upon which the vayment of commission was payable had heppened and eccordingly dismissed t ay oO'g peal with costs. it reeched thet conclusion by construing clause 2 of the commission agreement to mean that the aopellants committed themselves to pay commission to the respondent should the respondent, or for that matter anyone, obtain an intending purchaser who — (a) was ready willing and able to purchase the property within a period of 2 calendar months, or (b) having been introduced to the property within that period was ready, willing and able to purchase it after that period of 2 months had expired. The court said that it did not matter that the appellants or such intending purchaser did not enter into a contract for the sale of the property or that a contract for sale entered into was not completed. The commission was to be payable if the intending purchasers introduced by the respondent, or anyone, were ready, willing and able to purchase the property by 24 March 1980 or, if introduced to the property before that date, thereafter at the asking price on terms otherwise acceptable to the appellants. Adopting this construction the court concluded that the proposed purchasers would have been in a position eventually to complete the transaction proposed and would heve continued willing to complete the purchase et the time reasonably contemplated by the parties 1.e. such time as was reasonably necessary in all the circumstances for approvals to be given and finance, including bridging finance, to be arranged. The first task in commission agents' contracts 1s "to ascertain with precision what are the express terms of the particular contract under discussion" (Hooker v. Adams Estates (1976-1977) 13 A.L.R. 161 per Stephen J.at 177 , citing Viscount Simon in Luxor (Eastbourne) Ltd v. Cooper (1914) A.C. 108,. There are no special principles of construction and such contracts must be interpreted according to the ordinary rules of construction (Ackroyd & Sons v. Hasan (1960) 2 Q.B. 144 per Upjohn L.J. at 154, and Omerod L.J. at 162). In Hooker v. Adams Estates, supra, (at p.181) Stephen J. said: "One must guard against any tendency to strain the proper limits of construction, and, for that matter, of implication, due to a feeling of the apparent injustice involved where an estate agent goes unrewarded despite its protracted efforts on a vendor's behalf, a feeling no doubt heightened when the vendor has in fact achieved a sale and the agent has not been altogether unconnected with its occurrence. Rightly or wrongly the law, as it has evolved, has made the earning of an agreed commission an all or nothing affair, on the one hand denying to agents any reward despite substantial labour on their part and on the other handsomely rewarding agents who with little effort manage to effect a sale. ... The law has seized upon their success or failure in bringing about a sale as the sole criterion of reward and rates of commission have no doubt come to reflect this state of affairs. To adopt unduly extended concepts of effective cause in an individual endeavour to do what may appear to be justice in a particular case not only disregards the settled approach of the law in this field but may, by its effect as a precedent, disrupt the existing pattern of acceptable scales of reward for services rendered by estate agents." As already indicated it was common ground on the hearing of the appeal to this Court that on its proper construction the commission agreement provided that the relevant event upon which commission was payable was the introduction by the respondent of a person ready, willing and able to purchase the appellants' property. The period of 2 months referred to in the agreement was intended to relate to the time of introduction rather than to the completion of the purchase. Further, 1t was not disputed upon the hearing of the appeal to this Court that the onus was on the respondent to establish that the purchasers were ready, willing and able to purchase up to the time when an enforceable contract for purchase was made or, alternatively, as happened in this case, up to the time when the vendors withdrew (Martin v. Perry and Daw (1931) 2 K.B. 310 at 316; Hill v. Davidson (1950) Q.S.R. 31 at 35; Dennis Reed Ltd v. Goody (1950) 2 K.B. 277 at 283). In Christie Owen & Davies v. Rapacioli (1974) Q.B. 781 the Court of Appeal had to construe very similar words to those used in the commission agreement in this appeal. The Court had to construe an agreement that commission should be payable in the event of the agents effecting an introduction either directly or indirectly of a person ready, able and willing to purchase at the price nominated or for any other price the vendor might agree to accept. After summarising the authorities, Cairns L.J. at 789 propounded the following propositions as being supported by the authorities: "(1) The decision as to whether the commission is payable depends on the terms of the contract and on ordinary rules of construction. (2) When the agreement between principal and agent is for commission to be payable on the introduction of a person ready, able and willing to purchase, the commission is payable if a sale actually results, but may become payable when the transaction becomes abortive. (3) Commission is payable when a person who is able to purchase is introduced and expresses readiness and willingness by an unqualified offer to purchase, though such offer has not been accepted and could be withdrawn." Orr L.J. agreed with Cairns L.J. and stated that the entitlement to commission arose when the person introduced made a firm offer for the purchase of the property in question on terms acceptable to the vendor. It was submitted on behalf of the respondent that although the offer made by the proposed purchasers was qualified to the extent that the purchasers would have to obtain the finance specified, the male appellant, acting on behalf of both appellants, accepted the qualified offer and that commission was therefore payable pursuant to the terms of clause 2(c) and the proviso thereto. It will be noted that the proviso reads: "PROVIDED THAT the price is -not less than the gross price set out in this agreement or that the price and terms and conditions of purchase have been confirmed by the vendor either orally or in writing." In my view the evidence was all one way that the offer was qualified as being subject to finance. The real issue in this apeal is whether the respondent satisfied the onus of proving by direct evidence or inferentially that the appellants accepted that qualified offer so as to amount to confirmation of the terms and conditions of purchase in accordance with the proviso. I have read and reread the evidence in the Court of Petty Sessions to which we were specifically directed by both counsel. It is to be noted that the evidence from Mr Richardson was in answer to leading questions. That course was not objected to but, of course, if counsel chooses to ask questions in that way the facts may not be as starkly established as if it had been elicited otherwise by non-leading questions. I have noted also that there was no eross-examination of Mr Richardson upon that evidence. Looked at critically, I think that the most that the evidence of Mr Richardson establisnes is that, having been informed about the terms of the qualified offer and the details thereof, the male appellant requested Mr Richardson to forward the relevant information by way of a sales report to the appellants' solicitor. Mr Richardson's evidence does not establish, in my view, confirmation by the appellants that they would be prepared to proceed to completion with the proposed purchasers on a contract which was subject to finance. Counsel also referred us to the evidence of the male appellant where he said that he subsequently saw the sales report in his solicitors' office. I note that there was no cross-examination about this matter or indeed any cross-examination tending to establish confirmation by the appellants that they were prepared to accept the qualified offer which the respondent had been able to obtain. On the evidence as it was, it was not to be inferred that, in allowing the sales report to be sent to their solicitor, the appellants had decided to accept the purchasers' qualified offer. In my view there was insufficient evidence from which to conclude that the qualified offer was accepted. In those circumstances the event upon which commission was payable was not established by the respondent. In other words, the proposed purchasers were not ready, willing and able to purchase up to the time when the appellants withdrew from the sale. I only wish to add that I was not impressed by a submission by the appellants' counsel that even 1f there was an acceptance of the qualified offer, it was made by the male appellant only in his telephone conversation with Mr Richardson and, so the submission went, in the absence of evidence of confirmation by the other appellant, the event had not been established. The evidence was sufficient to establish that at all times in the conduct of the transaction by the appellants and the respondent, the male appellant was acting for and on behalf of both appellants and Mr Richardson was acting for and on behalf of the respondent. Accordingly I would allow the appeal. I agree with the order for costs proposed by Fox J. I certify that this and the 1) (Tea) preceding pages are a true copy of the Reasons for Judgment herein of his Honour ir. Justice Yyrlloz? Associate | ; prot | Dated: <8 July /983