SUPREME COURT OF NORFOLK ISLAND Huckstep v Charisse Clarke T/A Island Realty [2000] NFSC 3 AGENCY – commission agreement – sale of land – contract does not fall within provisions of Conveyancing Ordinance 1913 – commission recoverable as agent's actions were 'effective cause' of sale. Conveyancing Ordinance 1913 L J Hooker Ltd v W J Adams Estates Pty Ltd (1977) 138 CLR 52 Salamon Nominees Pty Ltd v Moneywood Pty Ltd (1999) ANZ Conv R 580 JOHN HILTON HUCKSTEP V CHARISSE CLARKE T/A ISLAND REALTY SC 2 of 2000 CORAM: BEAUMONT CJ DATE: 21 JUNE 2000 IN THE SUPREME COURT ) ) SC 2 of 2000 NORFOLK ISLAND ) BETWEEN: JOHN HILTON HUCKSTEP Appellant AND CHARISSE CLARKE TRADING AS ISLAND REALTY Respondent ORDERS CORAM: BEAUMONT CJ DATE: 21 JUNE 2000 THE COURT ORDERS THAT: 1. The appeal be dismissed, with costs. IN THE SUPREME COURT ) ) SC 2 of 2000 NORFOLK ISLAND ) BETWEEN: JOHN HILTON HUCKSTEP Appellant AND CHARISSE CLARKE TRADING AS ISLAND REALTY Respondent REASONS FOR JUDGMENT CORAM: BEAUMONT CJ DATE: 21 JUNE 2000 1 This is an appeal from a judgment given by the Court of Petty Sessions in civil proceedings. The background to the appeal is as follows. 2 The respondent, Charisse Clarke, sued the appellant, John Hilton Huckstep, in the Court of Petty Sessions for debt, claiming the sum of $1,980 pursuant to an authority to sell and commission agreement entered into between the parties on 23 September 1997. By his grounds of defence, Mr Huckstep defended the action on the following grounds: (1) he denied that he was the sole proprietor of the subject property; (2) he denied that the owners of the property agreed to pay commission; (3) he denied that Ms Clarke sold or was the party responsible for the sale of the property; (4) he said that, in any event, any agreement with Ms Clarke was revoked prior to the sale; and (5) he disputed the amount of the commission claimed. 3 The parties' respective cases were opened and the issues emerging were thereby indicated, before the Court of Petty Sessions, to the following effect. 4 On behalf of Ms Clarke it was said that the evidence would disclose what follows: Mr Huckstep entered into an Agency Agreement with Island Realty (Ms Clarke) for the sale of Portion 156b1, a block of land owned by Mr Huckstep and Megan Anne Beech. In late December 1997, an offer to purchase that land was received by Island Realty from Stuart Robertson and Margarita Sampson for $56,000. On 6 January 1998, that offer was put in writing and a deposit of 10 per cent was paid to Island Realty. Mr Huckstep declined the offer, saying that he no longer had a need to sell the land. On 22 January 1998, Mr Huckstep and Ms Beech sold the land to Janice Nobbs, the mother of Mr Robertson and the mother-in-law of Ms Sampson for a consideration of $56,000, that is, the same amount as they had offered through Island Realty. 5 On behalf of Mr Huckstep it was said that Mr Huckstep put the property in the hands of Island Realty and also Norfolk Island Real Estate for sale. However, the land was owned by two persons (Mr Huckstep and Ms Beech) and the action has been brought upon an agreement signed by only one of them. This could not result in a sale because the law required the concurrence of both parties. (This was a reference to s 4 of the Conveyancing Ordinance 1913, to be mentioned below.) The agreement sued upon authorises a sale for the sum of $68,000 (including agent's commission) or such other sum as the principal may agree to accept. Yet the offer made through Island Realty was for $56,000 including commission (of about $2,000.) Mr Huckstep declined to sell the land at that (net) price of $54,000. In any event, it was not necessary for Mr Huckstep to sell the land at that time, so he withdrew it from sale by notice published in the "Norfolk Islander" newspaper. 6 The Court of Petty Sessions found in favour of Ms Clarke, and ordered Mr Huckstep to pay the amount claimed, namely the debt amount, together with costs and fees, in the total sum of $2,169.10. Mr Huckstep now appeals from this judgment and these orders. In support of his appeal Mr Huckstep relies essentially upon the grounds stated in his grounds of defence. It will be convenient to consider them in the sequence adopted in his written submissions addressed to the Court of Petty Sessions, dated 14 January 2000, which were also relied on for present purposes and elaborated in oral argument in this Court. 7 On behalf of Mr Huckstep, reliance is placed, as has been noted, upon the provisions of the Conveyancing Ordinance. By s 3 of the Ordinance it is provided that no land shall be sold, mortgaged or leased (except for a period less than one year), or otherwise dealt with or disposed of except in accordance with the Ordinance. Whilst s 3 uses the language "sold", it appears that the Ordinance is, as its title suggests, directed at conveyancing, i.e. ultimate dealings in land. This is made clear by the other provisions of the Ordinance. By s 4(1) it is provided that whenever it is desired to deal with any land by way of conveyance upon sale, mortgage, lease, or otherwise, or to make any other disposition of land, the parties or intending parties to the transaction, or their duty constituted attorneys, shall attend before the Registrar of Lands at his office; whereupon the Registrar shall fill up, or cause to be filled up, the appropriate form as set out in the Schedule, and such forms shall be executed by all the parties or their duly constituted attorneys, and attested by the Registrar; and no conveyance shall be valid or admitted in evidence unless so prepared, signed and attested. 8 The conveyance in the present case, dated 22 January 1998, whereby Mr Huckstep and Ms Beech conveyed the land to Mrs Nobbs, was prepared in the form, signed and attested as required by s 4. No question thus arises as to the validity of this conveyance. Nor is its validity attacked. The attack rather is concentrated on the agency agreement sued upon. Reference should be to its provisions. 9 The agreement was entitled "Authority to Sell and Commission Agreement". By its terms, Mr Huckstep thereby authorised Island Realty ("the Agent") "to sell the [described] property owned by me ("the Vendor") … for the sum of $68,000 … including the Agent's commission or such other sum as the Principal may agree to accept". 10 It was further provided that the Agent may allow other agents to act in conjunction in order to effect a sale but only one selling fee will be payable. (It is not suggested that there was any conjunction agency here. Nor is it suggested that Island Realty held an exclusive appointment.) 11 It was a further term of the agreement that – "The Agent is granted selling rights and shall be entitled to payment of: Up to $15,000, 5%; on the next $45,000, 3% …. This fee is due and payable by the Vendor on completion of the sale." 12 It was then provided that the agreement shall commence from its date and "shall continue until notified in writing by the Vendor". 13 The agreement was dated 23 September 1997 and signed by Mr Huckstep as vendor and by Ms Clarke for Island Realty. 14 In my opinion, the agreement was not invalidated by any provision of the Conveyancing Ordinance. It was not a conveyance. Rather, it was a contract of agency for a limited purpose, as its title stated, providing for an authority to sell and for commission. It did not purport, within the meaning of s 4(1) of the Ordinance, to deal with or dispose of land. The rights it conferred were personal and contractual and not proprietary. The authority granted by the agreement was to sell. That is, to negotiate a sale on behalf of the vendor. It was not an authority to deal with, dispose of or convey land. As such, the Ordinance in general, and s 4 in particular, are not, in my view, applicable. In my opinion, the Ordinance provided no answer to Ms Clarke's claim. 15 Further, in my view, the fact that only one of the owners entered into the agreement was no answer to Ms Clarke's claim. In any event, there was evidence that Ms Beech knew of the authorisation and commission arrangement with Island Realty, and acquiesced in it. In any event, it was never suggested by Ms Clarke that Ms Beech was also liable for the commission claimed. Nor was there any suggestion that Ms Beech objected to a sale for $56000. On the contrary. Although the contract for sale to Mrs Nobbs, dated 13 January 1998, provided for a purchase price of $56,980 and that a commission of $980 "[w]ill be paid by the Vendors", and although the conveyance to Mrs Nobbs, dated 22 January 1998, acknowledged in its typed format the receipt by Mr Huckstep and Ms Beech of the sum of $56,980, this was amended to read $56,000 and the amendment was initialled by Mr Huckstep and Ms Beech. It follows, in my view, that for present purposes, nothing that is material turns on the circumstance that Mr Huckstep alone entered into the authority to sell and commission agreement with Island Realty. He alone was sued. 16 As has been noted, under the terms of the agreement sued upon, no commission is due and payable until completion of the sale, and the sale relied upon (by Mrs Clarke) to Mrs Nobbs, was in fact completed. But this is not enough for Ms Clarke to succeed: under the general law, in the absence of express provision to the contrary (and there is none here), commission is recoverable only if the agent's actions are the "effective cause" of the sale. 17 The settled cause of authority shows that the concept of "effective cause" is capable of application in complex as well as straightforward factual situations. 18 For instance, in L J Hooker Ltd v W J Adams Estates Pty Ltd (1977) 138 CLR 52, Stephen J said (at 76): "The concept of effective cause has often been called in aid to entitle an agent to commission in cases where, instead of the straightforward case of the introduced party becoming the purchaser, a more complex fact situation has arisen. For example, the sale may be made not simply to the party introduced by the agent but instead to a syndicate or partnership of which he is a member, or to his dummy, or, with his full approval, to his associates who, together with him, are jointly concerned on behalf of a corporate group in which all are interested, or to a company which he forms or in the formation of which he plays a part, or to persons with whom he initially associated himself in his negotiations with the vendor, although he later drops out of the transaction altogether." 19 In Hooker's case, Gibbs J, referring to Burchell v Gowrie and Blockhouse Collieries Ltd [1910] AC 614 said (at 68 – 69): "The case shows that an agent may be instrumental in bringing about a sale notwithstanding that his negotiations have been with one person and that the sale is made to a different person. Asprey J.A. correctly and succinctly stated the position when he said, in Moran v Hull [1967] 1 NSWR 723, at 725, 'if the agent's efforts with A result in a sale to A, B and C, the agent has earned his commission'. It would be equally true to say that if the agent's efforts with A result in a sale to B, the agent has earned his commission. Illustrations of this latter proposition may be found in two Canadian cases, Stratton v Vachon & Wilson (1911) 44 SCR (Can) 395 (where the purchase was made by associates of the person introduced by the agent, although the latter person took no part in the purchase) and McBrayne v Imperial Loan Co (1913) 13 DLR 448 (where the purchase was by a company with which the person introduced by the agent was associated)." 20 These principles were applied by the Queensland Court of Appeal in Salamon Nominees Pty Ltd v Moneywood Pty Ltd (1999) ANZ Conv R 580. Chesterman J said (at 584): "The concept of effective cause was developed to assist agents to recover commission in circumstances where they had located a purchaser who completed the acquisition of property but where there was some alteration in the transaction from that first contemplated when the vendor retained the agent to find a buyer … . The concept should not become a justification for subjecting an agent's conduct to subtle or sophisticated analysis or a philosophical inquiry into the mechanisms of cause. The inquiry is rather a common sense one to answer the question whether the actions of the agent really brought about the relation of buyer and seller." 21 In my opinion, an analysis of the evidence here indicated that each of these observations are pertinent in the present case. 22 The evidence disclosed the following sequence of events: · The property was listed for sale at $68,000 by Island Realty prior to September 1997 on verbal instructions from Mr Huckstep. By letter to Mr Huckstep dated 15 September 1997, Ms Clarke noting that Island Realty had had many inspections of the allotment at $68,000, forwarded the agency agreement for Mr Huckstep's signature and return. · The agency agreement was then formally entered into by the parties and signed, dated 23 September 1997. · On 27 December 1997 Mr Robertson and Ms Sampson discussed the property with Island Realty's saleswoman, Nadia Cuthbertson, informing her that they thought that the land was very good; that they were interested; and that they would think about it, and get back to her soon. · On 28 December 1997, Ms Cuthbertson sought to telephone Mr Huckstep. Since he was at work, Ms Cuthbertson spoke to Ms Beech and explained that Mr Robertson and Ms Sampson were interested in the land. · Later on 28 December 1997, Mr Huckstep telephoned Ms Cuthbertson and in discussing the sale of the property, Mr Huckstep informed Ms Cuthbertson that he would not take anything less than $56,000. (There is a conflict in the evidence as to whether there was then discussion of the question whether commission would be deducted from the amount of $56,000. In the light of the explanation of the concept of "effective cause" in the authorities cited, it is not necessary to resolve this conflict: an agent does not have to establish any exact coincidence in prices. In any event, the amount of Mrs Nobbs' original offer of $56,980 was later amended to $56,000 in her conveyance.) · On 31 December 1997, Mr Robertson and Ms Sampson contacted Ms Cuthbertson and made an offer of $56,000. Ms Cuthbertson informed Mr Huckstep of the offer. He said that he would think about it. · On 2 January 1998 Mr Huckstep informed Ms Clarke that he was withdrawing the land from sale as he did not need to sell it any more. · On 6 January 1998, Mr Robertson and Ms Sampson signed a written offer to buy the land for $56,000, lodging with Island Realty a cheque for 10 per cent deposit of $5,600. The cheque was drawn on the account of "Whataway Designs", a business owned and controlled by Mrs Nobbs. As will be seen, the cheque was later returned in the light of subsequent events, but that is not material for present purposes. The significance of the cheque is the identity of its drawer, effectively Mrs Nobbs. It shows her close connection with the dealings between her son and daughter-in-law and Island Realty. If it were needed, the cheque for the deposit also corroborates the evidence given by Mrs Nobbs that she heard about the land being for sale "through the children", and that she bought the property because "the children … just loved it"; and that she "just wanted to help the kids to get the land". · Shortly afterwards, Mr Huckstep informed Ms Cuthbertson that he would not accept the offer. Accordingly, Island Realty returned the cheque for the deposit. · The business records of Norfolk Island Real Estate, another real estate agency owned and controlled by Agnes Rosina Hain, were tendered in evidence. The relevant entries in the records, in the period 8 – 13 January 1998, were part of a diary kept by a member of the staff, Tracey Martin. (The property had been listed with this agency since 1996.) The entries in the diary indicate that on 8 January 1998, Mr Huckstep informed Ms Martin that he was withdrawing the property from the market; that on 12 January 1998, Mrs Nobbs telephoned her and offered $56,980 for the land; that on 12 January 1998 Mrs Martin informed Mr Huckstep of this and he said that he would discuss it with Megan (Ms Beech); and that on 13 January 1998, Mr Huckstep instructed Mrs Martin to proceed to draw up a contract at the price of $56,980. · As has been noted, the contract for sale between Mr Huckstep and Ms Beech as vendors and Mrs Nobbs as purchaser was drawn up and executed, dated 13 January 1998, and completed, subject to the reduction of the purchase price, by the conveyance dated 22 January 1998. 23 In my opinion, this description of the material events indicates that, within the meaning of the concept as explained by the settled course of authority, Island Realty was the "effective cause" of the completed sale to Mrs Nobbs. It is true that the ultimate steps in the transaction were undertaken by Norfolk Island Real Estate. But, in my view, the previous actions of Island Realty were, in reality, the effective cause in bringing the vendors and the purchaser to a deal. The close family relationship between Mr Robertson, Ms Sampson and Mrs Nobbs, and the significance of the drawing of the cheque for the deposit on 6 January 1998 have already been emphasised. Significantly it was about this time that Mr Huckstep decided to withdraw the property from sale. The slight increase (and later apparent reduction) in the price offered by Mrs Nobbs cannot, in my opinion, detract from the appropriate characterisation of the role of Island Realty as the effective cause of the sale. 24 Nor, in my view, did Mr Huckstep's decision in early January 1998 to withdraw the property from sale provide an answer to the claim for commission. It was by then too late: Island Realty had already introduced a willing purchaser at the right price. It is true that the agency agreement provided for revocation of its authority. But by 6 January 1998 Island Realty had already achieved the introduction of purchasers closely related to Mrs Nobbs willing to buy at $56,000. It does not follow from the facts that because this relative very soon thereafter offered a slightly higher price, and then completed at the same price, Island Realty was not the effective cause of the sale to Mrs Nobbs. In my opinion, it was so, notwithstanding Mr Huckstep's subsequent attempt to undo what had already occurred. I accept, as was held in Taylor v Silver Giant Mines Ltd (1954) 3 DLR 225, that if there is a sufficient break in the relevant continuity, the agent may lose an entitlement to commission. But questions of degree are involved here. In the present case, there was no such break, given the close proximity of the parties and the timing in the events which happened. 25 Finally, for completeness, it may be noted that there was no real challenge to the amount of the commission. ORDERS 26 It must follow that the appeal should be dismissed. There is no reason why costs should not follow the event. 27 The appeal is dismissed, with costs. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Beaumont. Associate: Dated: 21 June 2000 Counsel for the Appellant: A Cook QC Solicitor for the Respondent: D Wright, Yandell Wright Stell Date of hearing: 20 June 2000 Date of Judgment: 21 June 2000