Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23 Hearing dates: 2 December 2019 Decision date: 21 February 2020 Before: Leeming JA at [1]; Payne JA at [115]; White JA at [116]. Decision: 1. Appeal allowed in part. 2. Set aside orders 1 and 2 made on 26 April 2019, and in lieu thereof, order that the amended statement of claim be dismissed. 3. Set aside the costs orders made on 28 June 2019. 4. Note that there are no orders as to the parties' costs at first instance or on appeal, with the intent that the parties bear their own costs. Catchwords: CONTRACT - real estate agent buyers agreement - entitlement to commission - agreement between property developer and real estate agent - agent to acquire options over seven contiguous parcels of land - options acquired over some of land - options never exercised by developer - agent rendered invoices for commission as options acquired - some invoices paid - whether agent entitled to commission for obtaining options which were never exercised MISLEADING AND DECEPTIVE CONDUCT - agent made demands for commission - whether demands misleading or deceptive contrary to s 18 Australian Consumer Law - whether demands were expressions of opinion of agent's legal entitlement Legislation Cited: Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 236 Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth), s 440D Property, Stock and Business Agents Regulation 2014, schedule 5 Property, Stock and Business Agents Act 2002 (NSW), ss 52, 55, 63, 65 Cases Cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 Al Maha Pty Ltd v Huajun Investments Pty Ltd [2018] NSWCA 245; 365 ALR 86 Bisset v Wilkinson [1927] AC 177 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674; [1910] HCA 20 Horne v James [2015] NSWSC 465 Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; [1999] HCA 51 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311 Ozzy States Pty Ltd (in liq) v Norton Property Group Pty Ltd [2019] NSWCA 244 Ozzy States Pty Ltd v Norton Property Group Pty Ltd [2019] NSWDC 145 Petelin v Deger Investments Pty Ltd (1976) 133 CLR 538 Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339 Smith v Land & House Property Corp (1884) 28 Ch D 7 Tonitto v Bassal (1990) 5 BPR 11,258 Tonitto v Bassal (1992) 28 NSWLR 564 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 XL Insurance Co SE v BNY Trust Company of Australia Ltd [2019] NSWCA 215 Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 Texts Cited: J D Heydon, Heydon on Contract (Thomson Reuters 2019) Category: Principal judgment Parties: Norton Property Group Pty Ltd (First Appellant) Christos Exarhos (Second Appellant) Ozzy States Pty Ltd (in liq) (First Respondent) JRNN Pty Ltd (Second Respondent) Representation: Counsel: N Kidd SC, A Byrne (Appellants) S Goodman SC (Respondents) Solicitors: Levitt Robinson Solicitors (Appellants) Clinch Long Woodbridge (Respondents) File Number(s): 2019/159068 Publication restriction: Nil Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2019] NSWDC 145 Date of Decision: 26 April 2019 Before: Weber SC DCJ File Number(s): 2017/264811 [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.] HEADNOTE [This headnote is not to be read as part of the decision] A property developer entered into a written agency agreement with a real estate agent in April 2016. Under the agreement, the agent was entitled to a buying fee of 2.2% of the purchase price of certain property, if the agent introduced a vendor to the developer and the developer entered into a 'contract for the purchase of the Property'. The agreement defined the relevant property as certain contiguous addresses in Ashfield, New South Wales. From August to December 2016, option agreements were entered into by the owners of some of those properties, and the developer paid option fees to the owners. However, the developer never exercised any of those options. It was necessary for all of the properties to be acquired in order for the development to be viable. The developer also paid $200,000 to the agent, substantially less than the amount invoiced by the agent. After the agreement was terminated, the developer sued to recover the $200,000, less a retainer payable to the agent, claiming the money was paid as a result of the agent's misleading and deceptive conduct. The agent cross-claimed to recover the outstanding amount invoiced. The conduct which the developer claimed constituted misleading and deceptive conduct included oral representations by the agent's representative, email correspondence and the rendering of invoices to the developer. The developer accepted that the buying fee was payable in respect of each property and was not contingent upon options for all of the properties being entered into. The primary judge gave judgment for the developer for the repayment, with interest, of the $200,000 less a retainer fee, on the basis that the agent's demands for fees were representations of fact, rather than of opinion, and dismissed the agent's cross-claim, on the basis that 'contract' meant a contract for the sale of land in the strict sense, not including an option. The agent appealed. The issues in the appeal were: Whether securing options over some of the parcels of land triggered the agent's entitlement to a buying fee under the agreement, properly construed. Whether the agent had engaged in misleading and deceptive conduct in asserting entitlement to the buying fee. The Court held, allowing the appeal in part: As to issue (i), per Leeming JA (Payne JA agreeing): Entry into option agreements for the purchase of land, including by the exchange of executed counterparts, did not, without their being exercised, trigger the agent's entitlement to a buying fee under the agreement: at [77]-[86] (Leeming JA), [115] (Payne JA). As to issue (i), per White JA (dissenting): The options, being conditional contracts of purchase, were contracts for the purchase of the Property which, on exchange of the call option deeds, entitled the agent to the buying fee under the agreement on its better construction: at [137]. As to issue (ii), per curiam: The prohibition of misleading and deceptive conduct in s 18 of the Australian Consumer Law does not turn on the form of the words used, but rather on the nature of the impugned conduct. A statement by a party to a contract of a legal conclusion may frequently be nothing but an expression of opinion: at [89]-[92] (Leeming JA), [115] (Payne JA), [116] (White JA). Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39; Bisset v Wilkinson [1927] AC 177; Smith v Land & House Property Corp (1884) 28 Ch D 7; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82, referred to. In the circumstances, there was no basis for concluding that the Agent's claimed entitlement to fees was anything other than an opinion that the fees were due and payable: at [93]-[98] (Leeming JA), [115] (Payne JA), [116] (White JA). The Agent's conduct was not misleading or deceptive. Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, referred to. Judgment 1. LEEMING JA: This appeal arises from a dispute between a property developer and a real estate agent concerning commission, following an unsuccessful attempt to acquire seven contiguous parcels of residential land in Ashfield in inner western Sydney. 2. Ozzy States Pty Ltd and JRNN Pty Ltd entered into a written agreement with the agent Norton Property Group Pty Ltd, styled a "Statement of Property Details and Buyers Agency Agreement" and dated 7 April 2016. The document was four pages long, handwritten on a standard form drafted by the Real Estate Institute of New South Wales. The left margin of the front page contained the words "STATEMENT OF PROPERTY DETAILS" while the left margins of the remaining pages contained the words "BUYERS AGENCY AGREEMENT". The form permits an agent simultaneously to comply with the obligation in cl 1 of Sch 5 of the Property, Stock and Business Agents Regulation 2014 to provide to the buyer a signed statement of property details, and to avoid the disentitlement effected by s 55 of the Property, Stock and Business Agents Act 2002 (NSW) to any commission or expenses unless the agency agreement is in writing. It is necessary to read the four pages together, but it will be convenient to refer to it as the "Buyers Agency Agreement". 3. The Buyers Agency Agreement described Ozzy States and JRNN as the Principal and Norton Property Group as the Agent, and I shall use those labels in what follows. Speaking generally, the Agent was entitled to a buying fee of 2.2% of the purchase price including GST if it introduced a vendor to the Principal and the Principal "enters into a contract for the purchase of the Property". The main question is whether securing options over some of the parcels of land – which, as it happens, were never exercised – triggered the Agent's entitlement to a fee. 4. The contract defined the "Property" as "Freestanding houses or residential units & townhouses" and gave the location as "114, 118, 120 & 122 Parramatta Rd, 2, 4 & 6 Tideswell St Ashfield NSW". Option agreements were entered into with the co-owners of each of the three Tideswell Street properties, 122 Parramatta Road and the owner of one unit in 118 Parramatta Road between August and December 2016. In each case, the option fee was 1% of the purchase price, JRNN was the grantee, and the option exercise period was 18 months after execution of each agreement. 5. Mr Christos Exarhos signed the Buyers Agency Agreement on behalf of the Agent. Mr Remolo Nigro, who was the sole director and shareholder of Ozzy States, signed it on behalf of the Principal. For most purposes, the presence of JRNN and Mr Exarhos respectively as second plaintiff and second respondent, and second defendant and second appellant, is immaterial, and I shall refer simply to the Principal and the Agent. 6. Between August 2016 and December 2016, the Principal paid option fees of $182,100 to the owners of the properties. The Principal also paid a total of $200,000 to the Agent, but that was considerably less than the $400,620 invoiced by the Agent and to which it claims to be entitled. The uncontroversial history of obtaining options, paying fees, rendering invoices and making partial payments is summarised in the following two tables, which have been taken from the reasons of the primary judge: Table 1: Option Agreements Date of Option Agreement Property Call Option Fee Agreed purchase price on exercise of the Option 22 August 2016 6 Tideswell Street $56,500 $5,650,000 22 August 2016 122 Parramatta Road $58,000 $5,800,000 24 August 2016 4 Tideswell Street $18,100 $1,810,000 23 September 2016 2 Tideswell Street $36,000 $3,600,000 23 December 2016 Unit 4/ 118 Parramatta Road $13,500 $1,350,000 TOTAL $182,100.00 $18,210,000.00 Table 2: Payments and Invoices Date Payment Invoice 23 August 2016 $50,000 26 August 2016 $124,300 (EXARESI 117 – 6 Tideswell Street) 26 August 2016 $127,600 (EXARESI 118 –122 Parramatta Road) 26 August 2016 $39,820 (EXARESI 119 – 4 Tideswell Street) 23 September 2016 $79,200 (EXARESI 120 – 2 Tideswell Street) 11 November 2016 $10,000 15 November 2016 $40,000 22 December 2016 $50,000 9 January 2017 $29,700 (EXARESI 121-118 Parramatta Road) 21 February 2017 $50,000 TOTAL $200,000.00 $400,620.00 1. The Buyers Agency Agreement could be terminated by either party on 7 days' notice, in default of which it ended no later than 7 April 2017, 12 months after it commenced. Through the efforts of the Agent, the Principal had the benefit of option agreements in respect of all three Tideswell Street addresses, one of the Parramatta Road addresses, and one of the apartments in another of the Parramatta Road addresses. The Principal did not exercise any of those options. 2. Later in 2017, the Principal sued to recover the $200,000 it had paid, less a retainer of $22,000, while the Agent cross-claimed to recover the outstanding $200,620. The Agent's claim was based in contract. The Principal denied that the Agent had any entitlement of fees (save for the $22,000 retainer) and sought recovery of the amounts it had paid alleging they had been caused by the Agent's misleading and deceptive conduct and unconscionable conduct, and that it was entitled to restitution. The parties' cases at trial 1. A trial was conducted in the District Court of New South Wales over two days in March 2019, with judgment delivered on 26 April 2019: Ozzy States Pty Ltd v Norton Property Group Pty Ltd [2019] NSWDC 145. The primary judge gave judgment for the plaintiffs against both defendants for the repayment of $178,000 plus interest, and dismissed the Agent's cross-claim. 2. Shortly before judgment was delivered, voluntary administrators were appointed to the Principal, and shortly after the present appeal was filed, a liquidator was appointed. Leave nunc pro tunc was granted to proceed against the company in liquidation on 30 September 2019, at the same time that a stay of execution, on terms, was ordered: Ozzy States Pty Ltd (in liq) v Norton Property Group Pty Ltd [2019] NSWCA 244. Ground 10 turned on the effect of s 440D of the Corporations Act 2001 (Cth) but it was not pressed. 3. The following aspects of the pleadings are material. 1. It was and is common ground that the contract was wholly written. 2. The Principal accepted that the buying fee of 2.2% was payable in respect of each property, and was not contingent upon options for all of the properties being entered into. 3. The "Representation" on which the Principal relied was expressed to be made during "the period from about October 2016 until April 2017", notwithstanding which it was alleged that on or about 23 August 2016 "by reason of the Representation and the Demands", the Principal paid $50,000 to the Agent. 4. The pleaded Representation was said to have been made orally by Mr Exarhos, in email messages from him to Mr Nigro and by the rendering of invoices. The Representation was that "the plaintiffs were liable to pay fees to the [agent] pursuant to the agency agreement upon the entry of any of the owners of the properties into an option agreement". 5. A claim for moneys had and received was advanced on the basis that the $200,000 was obtained "using improper pressure and in circumstances where the [agent] had no legal entitlement to payment" and where the Principal paid "under the mistake that it was liable to pay such an amount to the [agent]". 6. The Agent said that if the Representation was made, it was a statement of opinion or a statement as to future matters for which there were reasonable grounds. The reasons of the primary judge 1. The primary judge stated what was also common ground when the appeal was heard, namely, that it was necessary for all of the properties to be acquired in order for the proposed development to be viable: at [5]. His Honour first addressed the contractual claim, before turning to the Principal's claims under statute and for restitution. The Agent's contractual claim 1. After setting out the terms of the contract in the option agreements and the exchanges between the parties concerning unpaid commission, his Honour summarised principles of construction of written commercial agreements none of which was challenged on appeal. His reasoning construing the Buyers Agency Agreement, and in particular when the Agent was entitled to commission, was at [37]-[54]. 2. The primary judge commenced with the distinction outlined in Horne v James [2015] NSWSC 465 at [15] to the effect that there was a presumption that there will be no binding contract for sale and purchase of land until exchange, in reliance on which he concluded that the "exchange" referred in the Buyers Agency Agreement was the exchange of signed contracts for the sale or purchase of land. 3. The primary judge then observed that the hypothetical reasonable business person would assume that the word "contract" meant a contract for the sale of land in the strict sense, and thus would not include an option. That reasoning was dispositive of the Agent's cross-claim, and is found at [41]-[42]: "The same hypothetical reasonable business person would, in all probability, be unaware of the controversy surrounding the juristic nature of an option, to which I shall later briefly refer. As I have indicated, in my view, he or she would assume that the word 'contract' meant a contract for the sale of land, in the strict sense. That hypothetical business person would not consider that the meaning of 'contract' extended to include a document such as an option. That hypothetical person would conclude that an option, if it is exercised, is a step along the way to a binding contract, but is not a contract for the sale of land, in and of itself. A contract for the purchase of land in this context, is a well-known concept, providing certainty as to the circumstances in which the Buyers' Fees are payable. In contrast, an option, capable as it is, of taking on many forms, does not provide such certainty, and is a form of agreement which provides for rights which may never be exercised. Put another way, a contract contemplated by an option may be stillborn, whereas an exchanged contract for the sale of land is definitionally not. When the Buyers Agency Agreement is read as a whole, as it must be, it becomes clearer that the noun 'contract' where it relevantly appears, is a reference to a contract for the sale of land in the strict sense. On page 1 of the Buyers Agency Agreement, the property is regularly referred to as "Property to be purchased". Options do not necessarily lead to purchase." 1. His Honour's conclusion was reinforced by two considerations based on cl 3(iv). The first was that the clause was premised upon the transfer of a legal or beneficial interest in the Property, which would not occur on the grant of an option. The second was the use of the word "exchange", which described an ordinary contract for sale, but not an option ("Options are said to be 'granted' rather than 'exchanged'"). Finally, on this issue, his Honour addressed the nature of the option agreement, at [44]-[54], concluding that they did not create a form of conditional contract such as to trigger the obligation to pay buyers fees, but added that even if he were wrong about this, he did not consider that the contract would come within the Buyers Agency Agreement's definition of "contract". 2. Ground 1 of the appeal challenges the construction reached by the primary judge. The Principal's statutory and restitutionary claims 1. The remainder of the judgment addressed the claims to recover amounts paid by the Principal. His Honour observed at the outset that cross-examination had been limited, on the basis that neither side would take Browne v Dunn points against the other, which led to his Honour not being prepared to determine contested factual issues that were not the subject of cross-examination. 2. At [56], the primary judge stated that the Agent's demands for fees were representations of fact, rather than representations of opinion, and as such they were misleading or deceptive because the entitlement under the Buyers Agency Agreement had not arisen. The entirety of this reasoning is at [56] as follows: "It is clear that Mr Exarhos has, on a number of occasions, represented to the Principals that the Buyers' Fees were payable upon execution of the relevant option. On the construction of the Buyers Agency Agreement and the Option Agreements to which I have come, that was not correct. These representations were not made as expressions of opinion, but as representations of fact. As such, they were misleading or deceptive. Mr Byrne for the Agents, did seek to characterise Mr Exarhos' statements as statements of opinion, which opinions were genuinely held by him. I do not accept this characterisation. The demands for payment did not carry with them any suggestion that the payments were sought as a consequence of the formation of an opinion by Mr Exarhos, rather they were statements as to the fact that the monies were owed." Ground 2 of the appeal challenges that characterisation. 1. The primary judge then addressed causation, at [57]-[65], and impliedly rejected the submission based on the pleadings that the first payment, made on 23 August 2016, could not causally be linked to the pleaded representation (which was only made in October). The primary judge rejected a submission that the payments were made "in good faith" in order to maintain the commercial relationship, on the basis that Mr Nigro's evidence was uncontradicted and that it was sufficient for the representations to have been a material cause of the loss. This was the subject of grounds 3 and 4. Ground 3 contends that Mr Nigro's evidence was contradicted and he was confronted with this, and ground 4 challenges the finding of causation. 2. The details of grounds 5, 6 and 7 may be passed over. They challenged the orders made by the primary judge insofar as they proceed on the basis that JRNN suffered loss from making payments or that Mr Exarhos was liable as a payee. The Principal candidly accepted all of these errors in its written submissions. The appeal must at least in that respect be allowed. That is not without commercial significance, given the winding up of Ozzy States. 3. Finally, his Honour addressed restitution, concisely because it was non-dispositive, at [67]-[69], concluding that the payments were made by the Principal on the basis of a mistake of fact and that it was against conscience for them to be retained by the Agent. His Honour briefly rejected a defence of "counter-restitution" based on the proposition that the Agent had provided some benefit in the form of the option agreements. Grounds 8 and 9 challenge this aspect of his Honour's reasoning. 4. On appeal, no differently from at trial, the claims under the Australian Consumer Law and for money had and received are premised upon acceptance of the Principal's construction of the Buyers Agency Agreement. If the Agent is entitled to the fees, there was no misleading or deceptive conduct and no basis for restitution. The starting point is contract. The terms of the Buyers Agency Agreement 1. The Buyers Agency Agreement is handwritten upon a form dated January 2009 drafted by the Real Estate Institute of New South Wales. It identifies as the parties Ozzy States and JRNN as the Principal, and Norton Property Group as the Agent. Under the heading "Property" there is the following: 1. The provisions of most significance are contained on the second page of the document, which is reproduced as annexure "A", and is described verbally below. 2. The agency period was 12 months commencing 7 April 2016, but subject to a power to terminate by either party giving 7 days' notice in writing (a termination fee of $22,000 was payable if the Principal, as opposed to the Agent, terminated the agreement). 3. Clause 2 was accompanied by three boxes to be marked "Yes" or "No", to indicate three respects in which authority was conferred on the Agent. All three boxes were crossed "Yes" in hand. The first was "to identify and recommend potential properties to the Principal" while the third was bidding at auction for the Property. The second was: "The Agent is authorised to negotiate on behalf of the Principal for the purchase of the Property pursuant to the terms and conditions set out in the statement of property details above (or as amended)." 1. In that clause and elsewhere in the contract, the word "property" is sometimes capitalised and sometimes uncapitalised. The words "statement of property details" are invariably uncapitalised. However, the uncapitalised "property" referring to land which the Agent might assist the Principal in acquiring appears only in (i), while both (ii) and (iii) refer to capitalised "Property". I return to this below. 2. Clause 3 is central to this appeal. It is headed "Agent's Remuneration" and provides as follows: "3. i A non-refundable retainer fee of $22,000 (GST incl.) applies. If the agent receives a payment under Clause 3 ii, then the non-refundable retainer fee shall be deducted from the calculation of the buying fee as stated in 3 ii. ii The Principal acknowledges that the Agent shall be entitled to a buying fee: calculated as a percentage of the total purchase price including GST, if any of [There followed three boxes, identifying a percentage of the purchase price, a flat fee, or an amount identified on a schedule. Only the first box was marked. Written in that box was "2.2%"] … and the Principal hereby agrees to pay the fee in accordance with this agreement in the event that the Agent introduces to the Principal a vendor of a property or the Property and the Principal: a enters into a contract for the purchase of the Property; b procures another person or entity to enter into a contract for the purchase of the Property (whether by novation or otherwise); c where the Property is owned by a company; enters into a contract for the purchase of any shares of that company; d where the Property is owned by a company, procures a further person to enter into a contract for the purchase of any of the shares of that company (whether by novation or otherwise); e by any other means whatsoever becomes the legal and beneficial owner or both of the Property; or f where the Property is owned by a company, by any means whatsoever becomes the legal and beneficial owner or both of any of the shares of that company. iii A termination fee of $22,000 (GST incl.) is due and payable by the Principal if the Principal terminates the agreement. iv. The Agreed Fee in 3 ii is due and payable by the Principal on exchange of any of the contracts referred to in (a) to (f) above or on completion of the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above or upon demand if any of the contracts referred to in (a) to (d) above or the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above are not completed owing to the default of the Principal. v. The parties also expressly agree that the Agent shall also be entitled to payment of the agreed buyers fee in 3 ii if the vendor of a Property or a Property [sic] is introduced to the Principal by the Agent at any time prior to the termination of this Agreement, and the Principal satisfies any of the requirements set out in 3 ii (a) to (f) within [handwritten 12] month(s) after such termination." 1. Only the amounts $22,000 as the retainer fee, the percentage 2.2%, the estimate of the fee of $22,000 to $110,000, the termination fee and the 12 month period in cl 3(v) were written in hand. The balance of the clause was printed and unaltered from the standard form. 2. It will be seen that the clause referred to three fees: the non-refundable retainer fee, the buyer's fee and a termination fee. Only the buyer's fee gave rise to any issue. The entitlement to the buyer's fee was governed by cl 3(ii) read with cl 3(v), while the time at which the buyer's fee was payable was governed by cl 3(iv). 3. Clause 4 on the form made provision for reimbursement for expenses, but this clause was struck through. The remaining clauses are of limited importance and need not be summarised, save in two respects. Clause 7 was as follows: "Contract For Sale 7. The Agent is not authorised to enter into or sign a contract for sale on behalf of the Principal." 1. Clause 13 contained a warranty that the Principal had disclosed all material facts, and stated that "material facts" in that clause bore the same meaning as it has in s 52 of the Property, Stock and Business Agents Act. Reference to the same legislation is found in small typeface at the top of each page of the agreement; it may readily be inferred that the document was drafted with an eye to assisting agents satisfying their requirements under that Act and the regulations made pursuant to it. The parties' submissions on construction 1. Mr Kidd SC, who appeared in this Court but not at first instance for the Agent, made four main submissions on construction. First, he submitted that the primary judge's construction was inconsistent with the reference in cl 7 to a "contract for sale" of the property, on the basis that the latter term was a reference to a contract for sale in the strict sense, leaving the words in cl 3(ii)(a) "a contract for the purchase of the Property" apt to extend to an option. He also relied upon references in the Property, Stock and Business Agents Act to the term "contract for sale" and the provisions in ss 63 and 65 which extended the operation of that Act to cases of options. 2. Secondly, he submitted that the primary judge's construction of "contract" was inconsistent with the commercial purpose of the contract, in that it was plain that the purpose was to be effected by an option, but on the primary judge's construction, a buyer's fee only became payable if an unconditional contract for sale was entered into, being something less favourable to the developer. 3. Thirdly, it was contended that the Agent's construction was consistent with authority concerning the nature of option agreements, notably Gibbs J's judgment in Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57, holding that an option creates property rights in the property, sufficient to support the lodging of a caveat. 4. Fourthly, it was submitted that the trial judge's construction led to absurdity and would defeat the contract's commercial purpose, insofar as the contract was to be in force only for 12 months while the option agreements would last longer, and might be triggered after the expiry of the contract. 5. Mr Goodman SC, who appeared for the Principal in this Court and at trial, defended the conclusions reached by the primary judge. He also submitted that there was no difference between "contract for sale" and "contract for purchase", and that the references when seen from the perspective of the potential purchaser was unsurprising, given that the contract was a buyers agency agreement. He submitted that reliance upon the Property, Stock and Business Agents Act was misplaced, because the references were ambiguous, the legislation using both terms. He also invoked consistency with commercial purpose, insofar as the development was only viable if all seven properties could be secured, with the result that there was nothing uncommercial if fees were not payable in the event that the development did not proceed. He advanced a submission based on the reasoning of first instance decisions, notably Tonitto v Basal (1990) 5 BPR 11,258, a decision of Bryson J, overturned on appeal on a different basis, that an option agreement was regarded as an offer coupled with a promise not to revoke it. 6. The appeal was heard on 2 December 2019. On 18 December 2019, the Court invited further submissions from the parties as to whether, and if so, how, cl 3(iv) of the Buyer's Agency Agreement affected the construction of clause cl 3(ii) "and in particular, whether cl 3(iv) indicates that cl 3(ii)(a) does or does not apply to a call option that may be characterised as a conditional contract of purchase", noting that whether cl 3(iv) contemplated that the fee might be due and payable on more than one occasion might be relevant to that question. 7. Both sides took up that invitation and provided supplementary submissions within the time specified. Both sides submitted that cl 3(iv) identified three points of time at which the buyer's fee became due and payable: 1. on exchange of any of the contracts referred to in (a)-(f) above; 2. on completion of the transfer or the legal or beneficial ownership or both referred to in (e) and (f) above; and 3. upon demand if the contracts in (a)-(d) above or the transfers in (e)-(f) above were not completed due to the Principal's default. 1. The Principal submitted that the language of "exchange", "completion" and "transfer of ownership" were terms which were "more apt in the context of a contract for sale and purchase in the strict sense, than in the context of a conditional contract of purchase/call option". The submission noted that options are usually granted, rather than being the product of an exchange, that an option might never be completed, and that there might never be an opportunity to complete, because the option might never be exercised. 2. The Agent submitted that the bringing into existence and exchange of formal contracts upon the exercise of a call option did not involve the Principal entering into a contract for purchase of the Property. The exercise of the option was said merely to involve "the execution of a document to record in a formal fashion the agreement which resulted from the exercised option and does not involve the formation of a new and different contract". The Agent also submitted that the first limb of cl 3(iv) supported the conclusion that cl 3(ii)(a) applied to a call option. Otherwise, if the Agent introduced a vendor and obtained a call option with an option period running beyond the expiry date of the Agency Agreement, the Principal could avoid paying the fee, which was an unbusinesslike and uncommercial result to be avoided. 3. In relation to the third limb, the Agent submitted that a decision by the Principal not to exercise a call option could not be described as "default of the Principal", and so the potential for the fee to become payable for a second time was neutral on the question whether cl 3(ii)(a) applied to an option. Textual problems with the Buyers Agency Agreement 1. The Court's task of determining the legal meaning of a written contract involves weighing up the different considerations based on text, context and purpose: "checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences": see Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 at [12]. The need to assess the potentially available legal meanings against text, context and purpose was reiterated in Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 at [86]-[87], Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311 at [41]-[42] and XL Insurance Co SE v BNY Trust Company of Australia Ltd [2019] NSWCA 215 at [54]. 2. That task is made difficult in the present case by three quite distinct considerations. The first is that the parties have used an inapt standard form. The second is that the form has itself been drafted with less than scrupulous care. The third is the Principal's forensic decision not to rely on a construction which made the fee payable only if options were obtained over all the parcels of land comprising the "Property". It is useful to summarise the difficulties at the outset. 3. First, it seems plain on the face of the form that the document was not intended to cover the cases where (a) the agent was appointed to negotiate in relation to a number of properties, and (b) the agent's task was to obtain option agreements, as opposed to agreements for the sale of land. But while the fact that these parties have chosen an inapt form to record their bargain increases the scope for disputation, it does not relieve the Court from the task of construction. 4. A separate source of difficulty arises from certain problematic aspects of the drafting of the form. Plainly enough, cll 3(ii) and 3(iv) are to be read together, the latter expressly referring to the former. Subclause (ii) identifies the quantum of the fee and the circumstances when it is payable. Subclause (iv) identifies the time when the fee becomes due and payable. 5. However, each of those two subclauses is problematic. 1. The amount of the agreed buying fee stated (in handwriting) in the contract was between $22,000 and $110,000. That is a small fraction of the amount claimed by the Agent of $400,620 (and a smaller fraction of the amount which would have been payable had all parcels of land comprising the Property been acquired). 2. The standard form distinguishes between "property" and "Property" in a number of places, but particularly in the introductory words to cl 3(ii). There can be no accident when that clause refers to "the event that the Agent introduces to the Principal a vendor of a property or the Property and the Principal …" (emphasis added). 3. There is force in the submission made by Mr Kidd that references to "property" and "properties" are references to introductions effected pursuant to the authority in cl 2(i), while references to the "Property" are references to what is defined in the box on the front page of the contract. Clause 2 seemingly respects the difference between the identified "Property" defined on the front page of the contract, and the unidentified "property" which the Agent might be retained to identify and recommend to the Principal. But how and when the Agent obtains a commission in the latter case is unclear. 4. It is clear that the entitlement to the fee turns not merely on the Agent effecting an introduction, but also upon one of paragraphs (a) – (f) being satisfied. However, each of those six paragraphs (a) – (f) refers exclusively to a transaction involving a (capitalised) "Property". Thus if the introduction is to a (lower-case) "property", rather than to a purchaser of the "Property", it is difficult to see how the second component of the provision would be satisfied unless some implication is made doing violence to the capitalisation of the references to "Property". 5. Clause 3(ii)(e) and (f) both refer to "legal and beneficial owner or both" of the Property. This surely is an error in the printed form. Those words are to be contrasted with "legal or beneficial owner or both" in cl 3(iv). 1. The critical question for present purposes is how does the Buyers Agency Agreement, and in particular cll 3(ii) and (iv), apply when the Agent succeeds in securing an option. However, the textual difficulties mentioned above, while they do not directly arise in this appeal, are not without significance. The casual and imprecise way in which the form has been drafted tends to diminish the weight to be given to submissions which would have greater force if the drafting had been more careful. As was said in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [98], "Legal meaning should not turn on arguments based on semantic exactitude where it is plain that the parties have recorded their bargain in loose, ungrammatical language." 2. The third source of difficulty is that the Principal accepted at trial and in this Court that the buying fee was payable even if options were not acquired for all of the parcels of land comprising the Property. Accordingly, no submissions were made in support of such a construction. In particular, the Agent was not heard against such a construction. But such a construction is far from implausible. It is a natural way to read the term "Property" which is defined as seven street addresses. Reading it that way makes commercial sense, for the Principal could not lodge a development application let alone develop the site without the support of all of the property owners. True it is that the Agent might go to some effort only to be met by an implacable refusal to sell by one of the owners of lots comprising the Property, but even then the Agent was at least entitled to a retainer of $22,000. 3. As will be seen below, the arguments for and against the competing constructions are quite finely balanced. It is not surprising that it is difficult to resolve the submissions for and against the constructions favoured by the parties when they fall short of including all of the available constructions. Commercial purpose and surrounding circumstances 1. The parties were content to have the contractual dispute determined largely on the basis of the terms of the contract. It seems to have been uncontroversial that Messrs Nigro and Exarhos first met, by chance, a few weeks before the agreement was signed. Mr Exarhos gave evidence that they met on 8 March at Mr Nigro's office, and in relation to a proposed development in Ashfield, there was the following conversation: "Exarhos: 'We can provide two services. We can conduct the acquisitions through Norton Property Group, Costa's buyer's agency, and then amalgamate the site for you. We can then later sell developments sites for you through EXA Property Group, my sale's agency.' Nigro: 'I have already purchased 124 and 126 Parramatta Road, on a delayed settlement, as well as one of the properties behind Tideswell Street. But to be clear, I am looking to develop the area. I cannot afford to acquire all the properties, and then be in a situation where the development does not proceed. It needs to be under option as if I don't get approvals, I will walk away from it.'" 1. Mr Exarhos also said that Mr Nigro said, by reference to an aerial photograph which was in evidence: "Look at this map of a site at Ashfield. I want to engage you to amalgamate this site for me. The area which I will shade in green I already have under option, so don't worry about approaching those owners. The area I will shade in pink I currently own, and the area that I will shade in orange is the part I need you to option for me." 1. The area shaded orange corresponds to the "Property" defined in the Buyers Agency Agreement. Aside from some contested evidence as to whether Mr Nigro was given a carbon copy of the agreement when it was executed, that was essentially the totality of the evidence of the matrix of facts in which the contract was executed. 2. The most important guide to construction is the text of the document executed by the parties, especially where as here it is in a standard form: see for example Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [38]. However, the Buyers Agency Agreement is also to be construed by reference to the commercial circumstances addressed by the document and the objects it was intended to secure: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [15]. The commercial purpose is, in a sense, clear: place the Principal in a position where it can apply for development approval and, if it sees fit, acquire the land. The details by which that purpose might be achieved are unclear. What were the terms of the option already held in relation to the nearby land shaded green on the photograph? In particular, when did the option expire? Were there development possibilities involving some but not all of the lots comprising the "Property"? 3. There was no suggestion that development approval had somehow already been obtained on the footprint comprising the Property (or indeed on the blue and pink shaded areas as to which the Principal already enjoyed rights). As a matter of law, an application for development consent can only be made with the owner's consent (there is a detailed analysis in Al Maha Pty Ltd v Huajun Investments Pty Ltd [2018] NSWCA 245; 365 ALR 86 at [85]-[101]). Consistently with this, the option agreements made provision for the owners to grant consent if asked. It follows that a development application could only be lodged when and if the Agent had obtained option agreements from all of the landowners (or, perhaps, had obtained consent to the lodging of a development application from any owners which had not executed option agreements, although there is no suggestion in the evidence that this occurred). 4. There was no evidence as to how the option fees were funded, and how the costs of a development application were proposed to be funded. In particular, there was no evidence as to whether the developer intended to secure development consent and then sell to another, or would develop the amalgamated site itself. These matters all bear on an outstandingly important commercial consideration. Few property developers have funds readily available for expenditure. Most property developers fund acquisition and construction costs from debt. Ozzy States evidently contemplated paying some $300,000 - $350,000 in option fees, and $600,000 - $700,000 in agency fees, in addition to acquisition price of some $30 or $35 million plus the costs of planning approval, and demolition and construction costs. Perhaps the $600,000 - $700,000 agency fees was small change, which was regarded as the price of seeking to exploit a development opportunity. But such evidence may have shown that it was known to both parties that the $600,000 - $700,000 was only ever going to be payable at some stage when finance had been obtained for the project. 5. There was also an absence of evidence of commercial considerations from the Agent's perspective. There was no evidence as to the fees which an agent might charge to obtain options so as to "amalgamate" a site for a developer. A report which apparently supported a quantum meruit claim was not read when that claim was abandoned. Some of Mr Exarhos' notes were in evidence, and it may be inferred that they reflect many hours of work, however, they do not on their face suggest an inordinate amount of work bearing in mind the $22,000 retainer. 6. But the parties are free, if they so wish, to litigate in the absence of evidence of commercial purpose and surrounding circumstances, and it may be that evidence of the matters outlined above was not available, or was thought not materially to assist, or was equivocal. Textual considerations 1. I return to the text. The starting point is whether entering into the option agreements satisfied cl 3(ii)(a): "[the Principal] enters into a contract for the purchase of the Property". The Principal said that merely entering into an option agreement, which was never exercised, did not satisfy the clause. 2. Contrary to the Agent's submissions, the references to ss 63 and 65 of the Property, Stock and Business Agents Act are of minimal weight. Section 63(2) prohibits a real estate agent from "offer[ing] residential property for sale unless the required documents are all available for inspection at the real estate agent's registered office by a prospective purchaser or agent for a prospective purchaser at all times at which an offer to purchase the property may be made (or at such other place or at such other times as may be prescribed by the regulations)." The balance of the section prescribes when property is offered for sale, and what the "required documents" are. Subsection (1) states that "In this section – purchaser includes a grantee of an option." 1. Section 65 deals with the procedure after rescission to be followed by agents in relation to deposits. It too contains an expanded definition of "purchaser" to include a prospective purchaser and a grantee or prospective grantee of an option. 2. Both sections upon which the Agent relied proceed expressly on the basis that purchaser includes a grantee of an option. Both are remedial provisions designed to protect persons who might become subject to the obligations to complete a conveyance. The fact that in both cases a special definition was required, which is absent from the Buyers Agency Agreement, tends to tell against the legislation being used to construe the terms of the agreement. 3. The Agent also relied on provisions in the Conveyancing Act 1919 (NSW). These are even more peripheral to the Buyers Agency Agreement, which does not mention that statute. 4. Also contrary to the Agent's submissions, little weight attaches to the use of the term "contract for sale" in cl 7 of the Buyers Agency Agreement. The premise of that agreement is that a Principal wishes to buy, not sell, land, and seeks to appoint an agent to assist in that task. From the perspective of both Principal and Agent, the anticipated conveyance is one of purchase, not sale. Clause 7, presumably, confirms that although the Agent may be authorised to negotiate and to bid at auction, that authorisation does not extend to executing a contract. The language in cl 7 departs from that of cl 3, but then cl 7 is found in the "boilerplate" provisions of the agreement, and may have derived from a different source. More importantly, given the infelicities in cl 3 itself, it is difficult to attach any great weight to the shift from "contract for the purchase" to "contract for sale" in a subsequent clause. 5. Some insights may be gained from construing cll 3(ii) and (iv) together. Not only does cl 3(iv) refer to 3(ii) but in at least one other respect those subclauses dovetail with one another. It will have been noted that event (f) in cl 3(ii) refers to a change of ownership of the shares of a company which itself owns land, while event (e) refers to other ways in which legal or beneficial ownership is transferred. That distinction is carried through to cl 3(iv), which distinguishes the exchange of contracts from "completion of the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above". The transfer there referred to is the transfer of the shares of the company owning the land, not the transfer of the land. 6. When those subclauses are read together, it may be seen that each of the events in cl 3(ii)(a)-(f) was regarded as giving rise to an "exchange". That is to say, the words in (iv) "on exchange of any of the contracts referred to in (a) to (f)" tend to connote that each of those contracts may be "exchanged". 7. However, the language falls short of stating or implying that each of the events in (a)-(f) necessarily will give rise to an "exchange". Indeed the infelicitous drafting of parts of the clause tends to suggest that not all of the limbs of cl 3(iv) will be satisfied by all of the events in (a)-(f). In particular, cl 3(iv) refers to "on exchange of any of the contracts referred to in (a) to (f)", as if those paragraphs invariably refer to contracts which are exchanged. But only (a)-(d) refer explicitly to a contract, and (e) expressly refers to "any other means whatsoever" by which the Principal becomes the legal or beneficial owner or both; that might readily extend to means other than through contract. There are non-contractual ways in which the legal or beneficial ownership may be transferred. Consider for example (and without intending to be exhaustive) (a) transmission by will; (b) the issuing of units by a trustee which holds the property on trust, and the redemption of all other units (cf MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; [1999] HCA 51), and (c) the acquisition of all of the shares in a corporate landowner by a scheme of arrangement. All of that said, bearing in mind the relatively informal way in which the form has been drafted, those possibilities do not significantly detract from the submission that cl 3 should be construed on the basis that the events in (a)-(f) each contemplate an exchange. 8. Contrary to the Principal's submissions, I have no difficulty in concluding that the option agreements which were executed are capable of falling within the literal meaning of cl 3(ii)(a). Each was in materially identical terms. The landowner granted to the Principal an option to purchase on the terms set out in a standard contract for the sale of land. The option could be exercised by serving a notice of exercise of option, together with a copy of the contract duly executed and dated and the balance of the 10% deposit (the option fee was treated, in the event the option was executed, as contributing to the deposit). Thereafter, the landowner was required to serve an executed counterpart of the standard contract. 9. The option contract provided that upon receipt of a notice of exercise and the completed contract, "the Grantor will be bound to sell and the Grantee bound to purchase the Property on the terms set out in the Contract and the Contract will be deemed to be entered into upon the day of exercise of the Call Option": cl 2.4(a). The parties acknowledged and agreed that the exchange of executed counterparts of the standard contract for the sale of land was "intended only to permanently record the detailed terms of the Contract" and that they "intend to be and will be bound by the Contract on the date of and by virtue of the exercise of the Call Option". 10. The best characterisation of the option agreement is that the grantors for valuable consideration "[promised] to sell the property (or whatever the subject matter may be) upon condition that the other party shall within the stipulated time bind [itself] to perform the terms of the offer embodied in the contract'". The words are those of Griffith CJ in Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678; [1910] HCA 20, considered and applied by Gibbs J in Laybutt v Amoco Australia Pty Ltd at 71. The option agreement should not be characterised as an offer together with a contract not to revoke it. That is neither its form nor its substance. In particular, the fact that the parties formally and expressly agreed that they would be bound upon the exercise of the option, rather than upon the exchange of executed contracts for the sale of land, tells in favour of the conditional contract characterisation, and against the latter characterisation. 11. All of this contradicts aspects of the reasoning of the primary judge. It is plain that owners who had granted options had become bound to sell their properties in the event that the option was exercised, and that they had become bound without any exchange. I accept the Agent's submission that the reliance by the primary judge on Horne v James was not to the point; to be fair, I did not understand the Principal to seek to defend that aspect of the reasoning in this Court. 12. Against this conclusion, the Principal placed weight on the similarly worded option considered by Bryson J in Tonitto v Bassal (1990) 5 BPR 11,258. Bryson J considered whether the option in that case was a conditional contract or an offer coupled with a promise not to withdraw it on the basis that the protection which would be given to an offeree differed in those two cases: see at 11,271. That is a different purpose from the purely contractual question which arises in this appeal. Another reason why it is not necessary to address whether the premise of Bryson J's analysis is correct (a matter as to which this Court heard no submissions) is that an appeal was unanimously allowed: Tonitto v Bassal (1992) 28 NSWLR 564. The reasoning of Bryson J does not in those circumstances assist resolving the present controversy. Contextual considerations 1. I accept the Agent's submissions that by proceeding to negotiate and obtain option agreements, rather than standard form contracts for the sale of land, the Agent was facilitating the commercial purpose of the retainer. Further, once the option agreements were obtained, it was left to the Principal in its discretion to exercise the option. 2. Questions of uncommerciality were relevant to both of the constructions propounded by the parties. 1. On the Principal's construction, the Principal could delay until the end of the option period before determining whether to exercise the options, and might for reasons entirely unconnected with the deals negotiated by the Agent, choose not to do so (for example, a perceived downturn in the property market, or conditions imposed by Council which made the proposed development less profitable than expected). If so, then the Agent's entitlement to fees beyond the $22,000 retainer, even if the Agent was completely successful in achieving the goal of options over the whole of the Property would be subject to a discretion on the part of the Principal. 2. On the Agent's construction, the Agent was entitled to some $600,000 - $700,000 in fees for securing option agreements which could quite easily be valueless unless all of the land was acquired and a commercially favourable decision on development consent was made by the Council. 1. I also bear in mind that the Agent was paid $22,000 on retainer and could terminate on 7 days' notice. The retainer is small compared to the fees potentially available under the Buyers Agency Agreement. However, it is far from trivial, and it was paid in circumstances where it was at all times open to the Agent to walk away, on seven days' notice, from future obligations if it so chose. Conclusion on construction 1. Does the entry into option agreements for the purchase of land, including by the exchange of executed counterparts, satisfy the clause? I have concluded, on balance, that it does not, although for somewhat different reasons than given at first instance. 2. First, while it is true that granting an option is capable with only slight straining of language to fall within the language of cl 3(ii)(a) "enters into a contract for the purchase of the Property", the most obvious meaning of those words is an ordinary contract for the sale of land, obliging the vendor to convey title to the Principal, rather than the grant of an option leaving its exercise to the discretion of the Principal. 3. Secondly, the infelicities in the standard form tend to confirm "contract for the purchase of the Property" bears its ordinary meaning, rather than the slightly strained meaning of obtaining an option which is never exercised. On this basis, if and when the option is exercised, then there will be a "contract for the purchase of the Property" which engages cl 3(ii)(a). 4. Thirdly, a construction whereby the granting of the option does not, but its exercise does, engage cl 3(ii)(a) avoids the result that the clause might be engaged once upon the grant of the option, and then again upon its exercise. I do not accept the Agent's supplementary submission that when the call option is exercised, "even if that involves the parties exchanging further sale contract documents, no new or different contract is entered into." Putting to one side the legal niceties, and bearing in mind the relatively informal language intended to be read and understood by a real estate agent and his or her client and designed to satisfy the disclosure required by law, supplying an executed contract for the sale of land following exercise of the option is to be understood as naturally falling within the cl 3(ii)(a). 5. Fourthly, it is appropriate to read all limbs of cl 3 together. Although there is some infelicity in the reference to "any of the contracts referred to in (a) to (f)", the sense of the second half of cl 3(ii) is that the fee is payable upon demand if completion does not occur through the Principal's default. Clause 3(iv) proceeds on the basis that the fee will be due or payable on at least two dates: the "exchange of contracts" in its opening words, or the default which is the subject of the closing words. The only way to read "default" is by reference to the obligations imposed by the contracts or other dealings referred to earlier in the same clause. But, as the Agent very properly acknowledged, an unexercised option can never result in any "default" by the Principal. 6. Another way of putting this last point is this. Clause 3(iv) is about identifying the time at which the fee is payable. It proceeds on the basis that it will be payable at multiple times. The earlier time is when a transaction is entered into pursuant to which the Principal obtained a legally enforceable right to obtain the Property. The latter time is directed to circumstances where the Principal is in default of the obligations to which it has become subject by reason of that transaction. An unexercised call option, which gives the Principal the right but imposes no obligation to acquire title to the land, is incapable of satisfying the second half of the clause. 7. Clause 3(iv) is to be read harmoniously with cl 3(ii). That reasoning suggests that the fee is not payable until the Principal is subject to an obligation to acquire the property, which carries with it the possibility that the Principal might default, rather than merely enjoying a right to acquire it. 8. Fifthly, I do not accept the Agent's submission that this is an uncommercial result because it permits the Principal to exercise the option after the expiry of the Buyers Agency Agreement. Clause 3(v) points against that being a practical risk. It extends the Agent's entitlement to the buyer's fee if a Property is introduced by the Agent prior to the termination of the Agreement, and any of the requirements in cl 3(ii), including cl 3(ii)(a), are satisfied in the 12 months after such termination. I see no reason to question the commerciality of that 12 month period, selected by the parties. On the facts of this case, all save the last of the options obtained by the Agent would have expired before the 12 month period for which cl 3(v) provides had expired. 9. Sixthly, my conclusion is confirmed by conventional principles pursuant to which the agreement is to be construed in a common sense and business-like fashion. True it is that the Agent's entitlement to a buyer's fee is contingent upon the Principal exercising the options, and that is something outside the Agent's control. However, the Agent was free to walk away from the agreement on 7 days' notice, and the Agent was to be paid $22,000 in any event, and enjoyed in addition a right to be paid a further fee for early termination by the Principal. The retainer and the early termination fee were amounts payable irrespective of the obtaining or exercise of the options. That tends to confirm that the balance of the buyer's fee – which could be hundreds of thousands of dollars, dwarfing the retainer and termination fee – was dependent upon the options being exercised. 10. I would dismiss ground 1 of the appeal. Misleading and deceptive conduct 1. Section 18 of the Australian Consumer Law prohibits a person from engaging in conduct in trade or commerce which is misleading or deceptive or likely to mislead or deceive, and s 236 confers a right to damages caused by a contravention of that prohibition. Ground 2 of the appeal challenged the conclusion that the Agent's demands to be paid were misleading or deceptive, and grounds 3 and 4 challenge the reasoning that Mr Nigro's evidence was unchallenged and sustained a finding that the demands caused the payments to be made. 2. The entirety of the reasoning of the primary judge on whether the demands were statements of fact or opinion has been reproduced above. 3. The claimed entitlement to fees was necessarily a statement of legal conclusion, as to the Agent's entitlement under the Contract. Contrary to submission made by the Principal, it did not matter whether Mr Exarhos said, for example, "All we are asking is for our fees that are due and nothing more", or words to that effect which were repeated on a number of occasions, or else rendered an invoice. All are statements of a legal conclusion of an entitlement to a contractual right. It is immaterial that Mr Exarhos did not expressly say that his opinion or his position was that the fees were payable. The prohibition in s 18 does not turn on the form of the words used. It turns on the nature of the impugned conduct. 4. A similar issue arose in Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 concerning a market release that a company "is pleased to announce that it has entered into a binding contract with [CREC] to build and finance the railway component of the Pilbara Iron Ore and Infrastructure Project". Heydon J said of this at [94]: "The ASX announcement was not expressly stated in the language of opinion, but what it said about the CREC agreement being a 'binding contract' was identifiable as an opinion. The binding quality of an alleged contract is an inherently controversial matter of professional judgment. It is distinct from the historical facts that negotiation occurred and a written agreement was signed. In its early days, the Full Court of the Federal Court, in a judgment to which Bowen CJ was party, said: 'An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing.'" 1. The reference was to the judgment of Bowen CJ, Lockhart and Fitzgerald JJ in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88. 2. This reasoning is not especially new. Similar questions arose in chancery when rescission for innocent misrepresentation was sought. In one such case, Smith v Land & House Property Corp (1884) 28 Ch D 7 at 15, Bowen LJ said that "where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion". The same point was made by Lord Merrivale in Bisset v Wilkinson [1927] AC 177 at 183-184. 3. The position was that an experienced property developer and a real estate agent were in dispute as to the legal effect of a contract they had entered into by completing a standard form which was not directed to attempts to obtain options from a multitude of landowners. Whether and if so when any entitlement to commission arose was a question of law, based on the legal effect of the contract on undisputed facts. I see no basis for construing what Mr Exarhos said and wrote as other than his opinion that the fees were due and payable. 4. The Principal sought to meet that reasoning by pointing to Mr Nigro's evidence that he had not received a copy of the Buyers Agency Agreement until October 2016. I do not accept that submission. 1. It can only be an answer to the first payment of $50,000, for the later payments of $150,000 by the Principal all post-dated the (re)supply of the Buyers Agency Agreement by Mr Exarhos. 2. There are further difficulties faced by the Principal in relation to that initial payment, insofar as it precedes the entirety of the pleaded conduct said to have been misleading or deceptive. True it is that the primary judge said that that was not how the case had been conducted. But his Honour did not identify in terms any of the misleading or deceptive conduct, let alone that which preceded the payment of $50,000 on 23 August 2016. The payment preceded the rendering of any invoice, so that cannot have been the misleading or deceptive conduct. The Principal's written submissions at trial identified the same exchanges which the trial judge reproduced, all of which commenced on 20 October. 3. There is also the fact that the Principal abandoned, early in the hearing, its pleaded case that Mr Nigro had not within the 48 hours required by s 55(1)(c) of the Property, Stock and Business Agents Act been served a copy of the agency agreement. Precisely when and how this occurred does not completely appear from the record, but it evidently occurred at the outset of the hearing, because page 13 of the transcript records "s 55 has gone away with the surgery that was just done to the claim". The litigation proceeded on the basis thereafter that there was no issue that s 55 was complied with, and, in particular, the Agent's witnesses were not cross-examined on their evidence that Mr Nigro was given a copy of the Buyers Agency Agreement immediately after it was executed. It is inconsistent with the forensic choices made at trial for the Principal now to be permitted to contend that it was not established that a copy of the Buyers Agency Agreement was not provided to Mr Nigro. 1. The Principal also sought to rely upon what was said by French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [32]: "If the conduct is said to consist of a statement made orally or in writing, the first question to be asked is what kind of statement was made. Was it a statement of historic or present fact made on the basis that its truth was known to its maker? Was it a statement of opinion? That is to say was it a statement of 'judgment or belief of something as probable, though not certain or established'?" 1. It was submitted that the last sentence from that passage precluded Mr Exarhos' unequivocal demands to be paid a fee from being statements of opinion. But the passage is taken from a section of his Honour's reasons which set out general principles. It is not to be understood as prescribing necessary conditions for what conduct, which is said to contravene s 18 of the Australian Consumer Law, is an "opinion". Of course, many statements involve elements both of statements of fact and of opinion. To return to what was tolerably clear 135 years ago, Bowen LJ observed in the passage mentioned above that "it is often fallaciously assumed that a statement of opinion cannot involve the statement of a fact". 2. As was said in J D Heydon, Heydon on Contract (Thomson Reuters 2019) at [14.260], "A statement about a topic which is inherently disputable, open to disagreement or not based on certain knowledge is likely to be an opinion." Mr Exarhos' statements, unequivocally asserting a present right to be paid, made and repeated when it was known that the parties were in dispute, were opinions as to the legal entitlement, which could only be resolved definitively by a court. 3. As the joint judgment in Forrest observed at [33], it may not ultimately be profitable to classify a statement by reference to whether it is "fact" or "opinion" or a combination of both. The question is whether there was a contravention of s 18. In the circumstances giving rise to this appeal, where the underlying conduct was undisputed (entry into written contract between the parties, and the obtaining of option agreements), the assertions that the buyers fee was payable could not be understood as anything more than the Agent's view of the construction of the Buyers Agency Agreement. 4. There was no suggestion that Mr Exarhos did not genuinely believe in a construction of the agreement that entitled his company to be paid on the execution of an option agreement. As the parties' submissions in this appeal well illustrate, the contract which they had entered into amply supported reasonably held divergent views. 5. It follows that the conduct was not misleading or deceptive or likely to mislead or deceive. Ground 2 is made out. That conclusion means that grounds 3 and 4 fall away. I shall nonetheless address them concisely. 6. Contrary to what the primary judge said at [58], Mr Nigro was cross-examined on his evidence that that he made the payments because he believed what Mr Exarhos told him about the fees being payable. Not only was there cross-examination, but the cross-examination yielded an admission. Mr Nigro accepted that there was a dispute between the men as to when the agents were entitled to obtain fees. Further, the Principal's letter of demand dated 10 April 2017 spoke directly to the circumstances in which payments were made: "Our client made payments in relation to the Agency Agreement to the Agent in good faith as an advance payment of the potential commissions ..." 1. The reasoning of the primary judge cannot stand. These grounds are made out. Restitution 1. The primary judge considered, although only briefly because it was not necessary on the view he took as to misleading and deceptive conduct, that Mr Nigro suffered from a mistake of fact that the payments were due and payable. 2. However, 1. the first payment was made before there was any demand by the Agent; 2. as noted above, the letter of demand on behalf of the Principal dated 16 April 2017 referred to the payments as being made in good faith and in advance on account, and 3. the primary judge found at [64] that the payments were made "on the basis that if, at the end of the day, they were found to not in fact be owing, they would be repayable". 1. It is also to be borne in mind that the exchanges between the parties are to be understood in a context where the Agent was free to walk away on 7 days' notice. 2. I would accept the Agent's submissions impugning the finding that Mr Nigro's mistaken view that the payments were owing caused the payments to be made. Mr Nigro's evidence was that he believed there was no obligation to pay until the option was exercised. He said "My understanding was always at the end at settlement", and that he had a "clear agreement". It is also impossible to reconcile the primary judge's finding with the fact that the first payment preceded any demand, and the terms of the letter of demand. 3. The pleading was based on a payment made by mistake, or by using improper pressure, in circumstances where the Agent had no entitlement to payment. Those pleaded claims cannot be made out. 4. No case was advanced at any stage by the Principal that the monies were paid on account, by way of advance. This point was made squarely during the Agent's oral submissions in this Court: "What is pleaded is that by reason of the $200,000 obtained - that was obtained using improper pressure, and in circumstances where the first defendant had no legal entitlement to payment. (b) First plaintiff paid to the defendants the sum of 200,000 under the mistake that it was liable to pay such amount as to the first defendant. Then the defendant is then unjustly enriched. So there wasn't a claim pleaded that said the payments were made on the basis that they were advances, and that they would be repayable in the future if it was found that they were not in fact owing, and indeed that claim in our submission is impossible to reconcile with the claim that was pleaded by (e) that the payment was made under a mistake that the principal was liable to make the payment." 1. No response was made to that submission, quite possibly for the good reason that there was no answer to it. There was no notice of contention. The trial having been conducted on a particular basis, and with cross-examination narrowed in light of the pleaded case, it would seem, prima facie, to have been too late to apply to amend. Orders 1. The result is that neither the reasoning of the primary judge based on misleading and deceptive conduct, nor the obiter reasoning based on restitution, can stand. In the absence of any basis for sustaining the judgment on the amended statement of claim, the judgment in the amount of $178,000 must be set aside. However, for the reasons given in addressing ground 1, the Agent's cross-claim was correctly dismissed. The orders I propose leave in place order 3 made on 26 April 2019. 2. As noted above, insofar as orders were made in favour of JRNN and against Mr Exarhos, it was conceded that those orders had to be set aside. 3. In this Court, the Agent has failed on the question of construction, but has succeeded in setting aside the judgment against it. The Principal has succeeded on construction, but has failed to defend its judgment based on misleading and deceptive conduct and restitution. The appropriate exercise of the costs discretion is that there be no order as to the costs of the appeal, with the intent that the parties bear their own costs. 4. The costs discretion at first instance also falls to be re-exercised. The orders which should have been made were orders dismissing both sides' claims. In those circumstances, the appropriate order is that there be no order as to costs, once again with the intent that the parties bear their own costs. 5. I propose these orders: 1. Appeal allowed in part. 2. Set aside orders 1 and 2 made on 26 April 2019, and in lieu thereof, order that the amended statement of claim be dismissed. 3. Set aside the costs orders made on 28 June 2019. 4. Note that there are no orders as to the parties' costs at first instance or on appeal, with the intent that the parties bear their own costs. 1. PAYNE JA: I agree with Leeming JA. 2. WHITE JA: The circumstances giving rise to this appeal are set out in the reasons for judgment of Leeming JA which I have had the advantage of reading in draft. I agree with his Honour's reasons on the topics of misleading and deceptive conduct and restitution which require that the judgment entered for the respondents against the appellants be set aside. 3. I take a different view in relation to the construction of the Buyers Agency Agreement. I would allow the appeal not only in respect of the judgment entered against the appellants, but I would also give judgment for Norton Property Group for $200,620 (being the balance of the claimed buyer's fee unpaid under the Buyer's Agency Agreement) plus pre-judgment interest against the respondents. 4. It was common ground at trial that the Agent's buying fee became owing if the Agent introduced to the Principal a vendor of any of the properties referred to under the box headed "Property" if any of paragraphs (a)-(f) of cl 3(ii) was satisfied. The respondents pleaded that: "Pursuant to the terms of the Agency Agreement on its proper construction, if Norton Property Group introduced one or the other or both of the respondents to a vendor of a property, or a particular property recorded on the Agency Agreement, and one or the other or both of the plaintiffs entered into a contract for the purchase of any such property, then Norton Property Group was entitled to a fee calculated according to the terms of the Agency Agreement." 1. The respondents contended that by entering into the call option agreements the second respondent did not enter into "a contract for the purchase of the Property". 2. The evidence of the commercial purpose and surrounding circumstances of the Buyer's Agency Agreement was sparse. However, one clear objective surrounding circumstance was that the parties intended that the properties would be secured for the Principal by its entering into call option agreements with the vendors of the properties. 3. Leeming JA has referred to the relevant terms of the option agreements (at [69] and [70]) and concludes that the better characterisation of the option agreements is that the grantors for valuable consideration promised to sell property upon condition that the other party should, within the stipulated time, bind itself to perform the terms of the offer embodied in the contract (at [71]). I agree. Although, depending upon its terms, an option may be characterised as an offer together with a contract not to revoke it, or as a conditional contract, in this case, contrary to the view of the primary judge, the options are properly characterised as conditional contracts for the purchase of the properties. 4. The terms of the relevant parts of cl 3 of the Buyer's Agency Agreement are set out in the reasons for judgment of Leeming JA. It is convenient however to reproduce here the critical terms, being the latter part of cl 3(ii) and cl 3(iv). 5. Clause 3(ii) provided: "... the Principal hereby agrees to pay the fee in accordance with this agreement in the event that the Agent introduces to the Principal a vendor of a property or the Property and the Principal: a enters into a contract for the purchase of the Property; b procures another person or entity to enter into a contract for the purchase of the Property (whether by novation or otherwise); c where the Property is owned by a company, enters into a contract for the purchase of any shares of that company; d where the Property is owned by a company, procures a further person to enter into a contract for the purchase of any of the shares of that company (whether by novation or otherwise); e by any other means whatsoever becomes the legal and beneficial owner or both of the Property; or f where the Property is owned by a company, by any means whatsoever becomes the legal and beneficial owner or both of any of the shares of that company." 1. Clause 3(iv) provided: "The Agreed Fee in 3 ii is due and payable by the Principal on exchange of any of the contracts referred to in (a) to (f) above or on completion of the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above or upon demand if any of the contracts referred to in (a) to (d) above or the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above are not completed owing to the default of the Principal." 1. Clause 3(ii) prescribed the events upon which the Principal agreed to pay the fee. Clause 3(iv) stipulated when the fee would be due and payable. 2. The respondent submitted that options are usually referred to as being granted rather than being the product of an exchange of contracts. 3. Paragraphs 3(ii)(a)-(d) provided that the Principal would become liable to pay the fee if the Agent introduced to the Principal a vendor and the Principal entered into a contract of a kind described in any of (a)-(d). The expression used was entry into a contract, not exchange of a contract. Paragraph 3(ii)(e) recorded the Principal's agreement to pay the fee if the Agent introduced it to a vendor of a property and the Principal became the "legal and beneficial owner or both of the Property". The inclusion of the words "or both" in this paragraph means that the phrase "legal and beneficial owner" should be read as "legal or beneficial owner". This is also clear from cl 3(iv). Paragraph (e) applied where the Principal became a legal or beneficial owner of the Property by means other than entry into a contract falling within (a)-(d). Paragraph (f) applied where the Agent introduced to the Principal a vendor of shares in a company that owned the property and the Principal became the legal or beneficial owner of the shares. 4. There is no requirement in cl 3(ii) that any of the contracts referred to be entered into by way of an exchange of contracts. The Principal would be liable to pay the fee whether a contract for the purchase of the Property was entered into by exchange of contracts, or by offer and acceptance contained in correspondence, or by an offer accepted by conduct (at least if the offer so accepted were enforceable against the vendor pursuant to s 54A of the Conveyancing Act 1919 (NSW)). 5. Clause 3(iv) described three circumstances in which the fee that the Principal agreed to pay became due and payable. The first was on the exchange of any of the contracts referred to in (a)-(f). Only paras (a)-(d) refer to the entry into contracts. The second was on completion of the transfer of legal or beneficial ownership or both referred to in (e) and (f). The third was "upon demand if any of the contracts referred to in (a)-(d) above or the transfer of the legal or beneficial ownership or both referred to in (e) and (f) above are not completed owing to the default of the Principal." 6. In the case of an exchange of contracts referred to in (a)-(d) the third limb of cl (3)(iv) would have no work to do because the fee would already have become payable on exchange of contracts. The Principal's subsequent default in completing a contract would not affect the Agent's already accrued right to the payment of the fee. The third limb of cl (3)(iv) has work to do either if the Principal enters into a contract referred to in cl 3(ii)(a)-(d) otherwise than by way of exchange of contracts, or if the Principal were to acquire the legal or beneficial ownership of the Property, or of shares in a company that owns the Property, without a contract, but defaulted on any obligation assumed. 7. In most cases it would be expected that the Principal would acquire legal or beneficial ownership of the Property, or of shares in a company that owned the Property, by a contract entered into either by the Principal itself, or by someone procured by the Principal, to purchase the Property or the shares. In such a case, if contracts were exchanged, the third limb of cl 3(iv) would have no work to do. But it could have work to do in any other case. 8. In the present case the option agreements were entered into by exchange of contracts. The third limb of cl 3(iv) is inapplicable. 9. Once it is concluded that the option agreements are properly characterised as conditional contracts of purchase, then it follows that no new contract of purchase would be entered into when the condition was satisfied by service of notice of exercise of the option (Petelin v Deger Investments Pty Ltd (1976) 133 CLR 538 at 542). If it be correct that entry into the call options is not entry into a contract for purchase of the Property within cl 3(ii)(a), then the Agent would not become entitled to the fee under cl 3(ii)(a) on exercise of the options. It may be accepted that on completion the Agent would become entitled to the fee pursuant to cl 3(ii)(e). On completion the Principal would become the legal or beneficial owner of the Property "by any other means", that is, by completion of, and not entry into, the contract for purchase. 10. Leaving the call options out of cl 3(ii)(a) leads to the awkward construction that although the parties intended that properties would be secured by entry into call options, the fee would become payable only on completion, or on demand if completion did not occur because of the Principal's default, when the first limb of cl 3(iv) provides for the fee to be payable on exchange, such that the second and third limbs apply as a fall-back position. 11. Further, cl 3(ii) and (iv) are part of a standard form, that can apply not only to cases where properties are secured by taking call options, but by unconditional contracts of purchase where the Principal will immediately incur obligations that potentially engage the third limb of cl 3(iv). I draw no inference from the fact that the third limb would have no application in the case of an unexercised call option, that it confines cl 3(ii)(a) to contracts of purchase under which the Principal assumes immediate obligations. The third limb of cl 3(iv) could still have work to do. 12. I do not consider that the third limb of cl 3(iv) can govern the construction of the words "a contract for the purchase of the Property" in cl 3(ii)(a). That is the tail wagging the dog. 13. The better construction is that the call options, being conditional contracts of purchase, are contracts for the purchase of the Property within the meaning of cl 3(ii)(a), and the buying fees became payable on exchange of the call option deeds. 14. I would make the following orders: 1. Appeal allowed. 2. Set aside orders 1 and 2 made on 26 April 2019, and in lieu thereof order that the amended statement of claim be dismissed. 3. Set aside the costs orders made on 28 June 2019. 4. Direct entry of judgment for the first appellant against the first and second respondents in the amount of $200,620 together with interest thereon pursuant to s 100 of the Civil Procedure Act 2005 (NSW). 5. Order that the respondents pay the appellants' costs of the proceedings below and of the appeal. 6. Order that the appellants not attempt to execute the judgments against the first respondent without prior leave of the Court. ********** ANNEXURE A 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: 21 February 2020