The directors of a Gold Coast real estate agency have been sued by its former sales manager for his share of commissions he claims agency personnel would have earned had they not closed the business just 14 months into his three-year override deal.
Matrix Global Real Estate Pty Ltd enticed veteran sales agent Gary Teis out of retirement into a commission only sales manager role at its Paradise Waters office in April 2018.
The part-time terms it offered allowed him to invoice the agency for $500 for each auction he performed and 60% of the gross comm on his sales.
Teis also negotiated in the agreement he prepared, an entitlement to 10% of the gross commissions paid to Matrix from sales made by salespeople he trained.
In recognition that the arrangement would produce far less income than his customary $150k in his first year and that it accommodated its low revenue base, the parties agreed it would remain in force for three years.
Teis set about advertising for consultants, screened the applicants’ resumes, organized appointments and conducted the interviews. He appointed 11 commission-only agents to the staff, each engaged on a 12 month independent contractor agreement that could be ended by either party on one month’s notice.
For at least the first three months Teis directed agency personnel on off-the-plan sales at a Milton, Brisbane project from which he received very little income because the people involved had not been his trainees.
Disharmony that began in January 2019 between Matrix’s directors Lin Du and Vivienne Dong – who “could no longer work together” – forced the sudden closure of the business in June that year.
The “increasing rift” between the directors included a complaint by Ms Dong to police against the conduct of her colleague.
They agreed to go their own separate ways but shared the same Admiralty Drive office and Ms Dong retained the business name.
The 10 sales agents still with Matrix were offered a choice as to whether they wished to join Ms Dong’s real estate business or that of Ms Du.
Teis received his overriders that were paid to Matrix after the shutdown in respect of earlier sales.
Calculating that each of the salespeople would have earned annual commission of $100k, he asked to be compensated for the early termination at the rate of $10k per agent over the remaining 1.75 years, totalling $175k.
Teis’s deal had also committed the Matrix directors to include him as a 50/50 conjunction agent on at least 6 sales in the Paradise Waters locality which – he contended – would have yielded for a typical $3m residence at average commission of 2.5%, $75k per sale. His half share of agency income from the five conjunctions that hadn’t been delivered was on his figures, $188k.
Although he offered to accept significantly less than the total $362k demanded, resolution could not be achieved. Teis then sued Matrix, Du and Dong.
The clash came before Judge Michael Kent in June in the Southport District Court where the former sales manager argued that the agreement contained an implied obligation that the company would remain in business for at least three years.
It had to be understood that way, he protested “because it was always going to take time for the trained salespersons to get up to speed in terms of results, and thus the time guarantee was necessary to properly compensate him for his expertise”.
Matrix and its directors were at pains to demonstrate to the court that by the time it ceased operations it had fewer than 10 sales staff and that many of those who had been trained by the plaintiff had left the business.
They asserted that the specification of a three-year period during which Teis was entitled to his overrider was neither a contractual promise nor an undertaking on Matrix’s part or on their part as directors, to continue to trade for three years.
Judge Kent agreed. Implication of such term was not necessary for the business efficacy of the contract nor pursuant to any obligation to do all that was reasonably required for the performance of the contractual obligations.
“What occurred on this occasion was a supervening event,” he wrote in his 28 page reasons, “namely the unforeseen falling out of the directors which made it impossible for the business to continue and in effect frustrated performance of the contract in a way not contemplated”.
Teis’s claim was dismissed.
Matrix had counterclaimed for the commission of which it had been deprived because Teis had allegedly neglected to secure a signed form 6 in relation to his introduction of the buyer who acquired a Banora Point residence. This claim was also dismissed because “on the evidence, [the seller] was determined to avoid paying commission” and signing any further agent appointment given he had an existing exclusive appointment with another agency, The Professionals at Pottsville.