A conjunction agent whose claim to a substantial commission on the sale of a landmark Gold Coast property was hosed out by the District Court in August 2020 will live to fight another day.
Three appeal judges have directed a re-hearing and pointed the way to an ultimate win in favour of virtual agent, Best Price Real Estate.
Best Price (Scott Westwood) had recruited Trevato Pty Ltd who signed up for the $8.35mil buy of the iconic Cav’s Steakhouse site in Labrador on 31 October 2019 with a contract that noted Gold Coast agency Equity 2 Pty Ltd as the listing agent.
Then followed email chatter from Trevato’s David Turner that he was in the course of finalising a joint-venture agreement with octogenarian developer Arthur Lowe.
The pro forma conjunction agreement Westwood submitted to E2’s Mr Holmes specified Trevato as buyer. It was signed by Holmes and returned to Westwood on 4 December – the same day as the vendor agreed to Turner’s request for the contract to be rescinded and a replaced by one selling the site to Aelone Pty Ltd, his joint venture partner.
The re-documentation was promptly accomplished and Aelone settled in January 2020.
Shortly before completion, Westwood made demands addressed to Holmes and to the vendor for a payment of its share of commission as per the conjunction agreement, notwithstanding the sale was not to Trevato.
Commission was deducted from the settlement proceeds with Best Price receiving $176k – on account of its agreed 66% share and $66k being retained in the trust account of the vendor’s solicitor pending resolution of the dispute between the agents.
E2 promptly filed proceedings following settlement seeking the return of the $176k from Best Price in “restitution” and payment to it from the vendor’s solicitors trust account of the $66k held in abeyance.
It contended it had acquiesced to the payment to Best Price only because it was under duress from the threat of the conjunction agent to interfere with the buyer’s completion of the contract.
E2’s application to strike out Best Price’s defence was successful. The order also refused Westwood’s company leave to re-plead its defence with the trail judge considering the claim was indefensible.
It appealed on the basis that E2’s agreement should be interpreted as one of a commission split not just in the event of a sale to Trevato but – having regard to related emails – any sale that “your prospective purchaser” settles.
And if the conjunction agreement was incapable of any interpretation extending beyond Trevato itself, its purpose was after all – so ran Westwood’s argument – to reward his company with a share of the commission for the “introduction” of the buyer if it completed the purchase.
Justice McMurdo in delivering the lead judgment saw some relevance to these arguments if the defence were to be re-pleaded on a wider basis. He deliberated on whether “your prospective purchaser” could be consrued as a reference to any entity associated with its principal, Mr Turner.
He observed that the new contract with Aelone was as a result of the deed of rescission with Trevato and was guaranteed by Turner and Trevato. Furthermore, the Aelone joint-venture is in fact controlled by Turner himself.
Ultimately the court upheld the lower court’s decision to strike out the defence that was confined to interpretation of the conjunction agreement but allowed the appeal to permit Best Price to re-plead on all issues. It noted the restitution claim still had to be dealt with in any event and that the “summary judgement” the trial judge had purported to order was irregular and should not stand.
Justice McMurdo identified the critical issue for the final decision as to whether Westwood will keep what he has already received plus an additional $180k (total 2/3 comm $290k) will be the extent of the agents’ knowledge of the JV deal having already been reached by the time the conjunction agreement was signed.
“It is not unlikely that the vendor’s real estate agent, was then aware and if so, that knowledge might provide a basis for a yet un-pleaded defence of unconscionable conduct,” his Honour wrote. “There is a sufficient indication of it in the evidence and it is in the interests of justice that the entirety of the dispute between the parties be determined by a trial”.
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