Edwards v Belle Property Pty Ltd [2004] QDC 424

DISTRICT COURT OF QUEENSLAND CITATION: Edwards v Belle Property Pty Ltd [2004] QDC 424 PARTIES: INEKE EDWARDS Plaintiff And BELLE PROPERTY PTY LTD ACN 087 534 432 Defendant FILE NO/S: No 378/2003 DIVISION: PROCEEDING: ORIGINATING COURT: DELIVERED ON: 19 October 2004 DELIVERED AT: Brisbane HEARING DATE: 7 September 2004 JUDGE: Skoien SJDC ORDER: Judgment for plaintiff for $6477.98 with interest. CATCHWORDS: Employed salesperson; entitlement to commission; whether it continues after date of termination of employment. COUNSEL: Mr M.A. Jonsson for the plaintiff Mr L. Bowden for the defendant SOLICITORS: MacDonnells for the plaintiff Blake Dawson Waldron for the defendant [1] In this action Ms Edwards claims against Belle Property $85,974.909 (plus interest) as commission payable to her pursuant to a written contract. [2] The parties have agreed on the quantum of the claim and virtually all of the facts. The point left in dispute is whether, given those facts, Ms Edwards is entitled to any commission, other than the conceded sum of $6,477.98 (plus interest). -- 1 of 13 -- 2 The Facts [3] The only evidence was that given by Ms Edwards. She is an experienced salesperson who, in 2001, was engaged by Belle Property in that capacity in relation to an apartment development at Palm Cove, Cairns. Her engagement was under a written contract dated 4 January 2001 which was later superseded by a written contract dated 31 August 2001. There is no material difference between the two contracts. Belle Property was the sales agent for the development, the owner of which was The Beach Club. [4] Ms Anderson began her engagement on about 4 June 2001 and it ended on 13 November 2001. There was an on-site sales office but the development was at a very early stage. There were no plans of the development, merely some illustrated signs on the site. Ms Anderson was the only salesperson onsite until, in about October 2001, a casual assistant was employed by Belle Property. [5] Ms Anderson was approached by a number of people who had learned of the development and had some interest in ultimately buying a unit. She described the project to these people with a view to having them register their names and addresses with her so that she could maintain phone contact and forward advertising material. Once plans became available she would try to have each interested person sign an “Expression of Interest” in a unit on which $1000 would then be paid as a holding deposit. If the person remained interested she would have an option to purchase the unit signed and would send it to Belle Property’s solicitors, together with the documentation required by the Property Agents and Motor Dealers Act -- 2 of 13 -- 3 2000. In due course, if the person exercised the option, a contract of sale was signed by that person and by The Beach Club. [6] Ms Anderson kept a document called a “Live Vendor Report” (exhibit 1) in which she diarised her involvement in 15 sales which were ultimately completed. In evidence she was able to recall considerable detail of all of these purchasers, all being people with whom she had the initial and continuing contact. In each of these 15 cases Belle Property was paid its commission by The Beach Club. However only one of the 15 contracts (with Hitt) was signed while she was still engaged by Belle Property, and that is the instance in which Belle Property concedes that commission of $6,477.98 is owing to her. All of the remaining 14 contracts were signed after 13 November 2001 when her engagement ceased. [7] The cessation of the engagement was not consensual; Belle Property dismissed Ms Anderson. I was not asked to determine whether that dismissal was justified or not and would not be able to do so on the material before me. Contractual Terms [8] Relevant clauses of the written contract, which was entitled “Your Employment Agreement” are: “We wish to confirm the terms of your employment with us as follows: 1. Appointment You will be employed as a Salesperson and will be predominantly based at The Beach Club development, Palm Cove. 2. Duration Your appointment will commence on (fourth June 2001) and will continue indefinitely unless terminated in accordance with paragraph 12. -- 3 of 13 -- 4 3. Probation period (a) Your initial employment will be subject to a probation period of three (3) months. (b) During this period either party may determine your employment by giving seven (7) days notice. 4. Duties and Accountability (a) You will be responsible for assisting in our sales operations and will report to and be accountable to the Licensee in Charge. (b) In performing your duties you must: (i) ensure that target budgets are achieved; (ii) assist in the expansion and development of our operations; (iii) act in our best interests at all times, being faithful, diligent and exercising all due care; (iv) refrain from acting or giving the appearance of acting contrary to our interests; (v) use your best endeavours to protect and promote our good name and reputation; and (vi) perform your duties to the best of your ability. 5. Remuneration (a) You will be paid in accordance with the remuneration and benefits package as detailed in the attached schedule. (b) The salary component of your package will be paid fortnightly and directly by electronic funds transfer into a bank/building society account nominated by you. 6. Superannuation We will contribute to a superannuation scheme nominated by you an amount in accordance with the provisions of legislation relating to superannuation 7. Hours of Work You will be required to be on site six days per week between the hours of 9am to 11am and 4pm to 6pm including holidays and Sundays. Days off may be arranged in agreement with our licensee in charge of the Port Douglas office such that another member of staff is available to fulfil our obligations to operate the sales office at the Beach Club during the specified hours 8. Annual Leave You will be entitled to such annual leave as is provided by the Annual Holidays Act, 1944(NSW) 9. Long Service Leave You will be entitled to such long service leave as is provided for by the Long Service leave Act, 1955 (NSW). 10. Sick Leave (a) If you are absent from work on account of personal illness or injury by accident, you will be entitled to be paid sick leave, subject to the following conditions and limitations. (b) You will inform us of: (i) your inability to attend work as soon as reasonably practicable; and (ii) as far as practicable state the nature of the injury or illness and the estimated length of your absence -- 4 of 13 -- 5 (c) You will furnish us such evidence of your illness or injury as we may reasonable require. (d) You will be entitled to five (5) days sick leave for the first year of employment, and eight (8) days sick leave for each year thereafter. (e) Sick leave will not accumulate from year to year. 11. Termination (a) If you become incapacitated by illness or injury which prevents you from performing your agreed duties for a period exceeding the sick leave or other leave entitlements, we may terminate your employment by giving you not less than one (1) months written notice or by paying you one (1) months salary instead. (b) Your employment can be terminated, effective immediately, and without payment of remuneration or any other benefits other than the remuneration or benefits accrued to the date of termination if you: (i) breach any of the terms or conditions set out in this Employment Agreement; (ii) are charged with a criminal offence which in our reasonable opinion brings us into disrepute; (iii) are incompetent or continually or significantly neglectful in the performance of your duties; (iv) become bankrupt or make any composition or arrangement with your creditors generally, or take advantage of any statutes for the relief of insolvent debtors; (v) commit any act of wilful or serious misconduct. (c) We shall in addition to our rights of termination set out above be entitled to terminate your employment at any time without cause. If we wish to do so (other than for reasons arising out of resignation or death) we will be required to pay you on the date of such termination an amount equivalent to four (4) months of your base salary. 12. Consequences of Termination (a) On termination of your employment you agree to: (i) return all property belonging to us which is in your possession; (ii) not represent yourself in any way as being connected with or interested in our business; (iii) pay or repay to us all sums which are then owing to us whether they are due to be paid on that day or not. Remuneration Schedule 1. Base Salary (to include car allowance and superannuation). Three or less exchanged contract sales per month at $750/wk gross. More than three exchanged contract sales per month at $1000/wk gross. 2. Commission payable: ƒ Three or less sales per month at 1.2% commission. ƒ More than three sales per month at 1.35% commission. All commission will become payable only upon being received by Belle Property and will be paid within 30 days of being received by Belle Property.” -- 5 of 13 -- 6 [9] It was common ground that the term “exchanged contract sales”, where used in the Remuneration Schedule (a term appropriate in New South Wales) should be read as “contracts signed by The Beach Club and a purchaser”, that is a binding signed contract according to Queensland practice. [10] Paragraph 2 of the Employment Agreement contains an obvious error in that the reference to termination (“paragraph 12”) should read “paragraph 11”. That is the paragraph which sets out the circumstances in which termination of employment can occur. Paragraph 12 sets out the consequences of that termination. The Issues [11] The case for Ms Andersen, as pleaded, is that she was the “effective cause” of all 15 of the sales, that Belle Property has received its commission for each of them and therefore, pursuant to para. 2 of the Remuneration Schedule, she became entitled to her commission at the time of each receipt by Belle Property, calculated at the rate specified in para. 2. The case for Belle Property as argued (and exemplified by the concession referred to in para. [6] above) is that under the terms of the agreement her right to commission was limited to binding signed contracts entered into while she was employed by Belle Property, to be paid to her at the specified time and rate. Mr Bowden, counsel for Belle Property, did not admit, but did not dispute that she was the effective cause of all 15 completed sales and there was no evidence that any other person took part in the negotiations with any of the purchasers. -- 6 of 13 -- 7 [12] The terms of the agreement make it clear that Ms Anderson’s engagement was not the usual agreement to retain a commission agent where the central question is usually whether the agent was the effective cause of a sale. Rather, as its title indicates, it was an agreement by which Belle Property and she entered into a master and servant relationship. This is emphasised in the Employment Agreement by, for example, her being bound to work at a certain place (para. 1), her being bound to perform her duties in certain ways (para. 4), during specified hours (para. 7), her entitlement to superannuation (para. 6) and sick leave (para. 10). [13] The fact that an employed person (that is, a servant) is employed under an agreement which provides for the payment of a wage or salary as well as a commission based on performance is not unusual. Many employed sales people receive remuneration that way. In Sellars v London Counties Newspapers [1951] 1 K.B. 784 the successful plaintiff was just such a person. What that case emphasised was that the plaintiff’s entitlements to commission rest squarely on the terms of his employment. See per Evershed M.R. at 792; per Singleton LJ at 798; per Birkett LJ at 799. [14] In Sellars, where the facts were rather similar to this case, Singleton and Birkett LLJ found that commission was payable to the plaintiff, who was the defendant’s advertising representative, for advertisements for which he had obtained orders while employed and which the defendants published after his dismissal. Evershed MR dissented. The importance of Sellars is the insistence of all members of that court that the right to commission “must depend on the contract between the parties” (per Singleton LJ at 798). -- 7 of 13 -- 8 [15] In Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1935) 54 CLR 361 the following passage in the joint judgment of Dixon and Evatt JJ appears at 379-80:- “When the parties themselves have provided for the determination of the contract on a given contingency, the consequences flow altogether from their contractual stipulation and are governed by their intention, either actual or imputed. In the present case, however, all the agreement expressly says is that in any of the specified events it shall immediately terminate and be at an end. In applying such a compendious provision to a continuing relationship of the complicated character which the agreement establishes some guidance may be found in the nature of the agreement and of the obligations to which it gives rise. But primarily it remits the inquiry to a general consideration of what is involved in the sudden termination of an executory agreement under which liabilities are accruing from day to day. We are concerned only with a liability to pay a liquidated demand. In general the termination of an executory agreement out of the performance of which pecuniary demands may arise imports that, just as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence if it depends upon a further act of performance. If the title to rights consists of vestitive facts which would result from the further execution of the contract but which have not been brought about before the agreement terminates, the rights cannot arise. But if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or is contingent upon some event, not involving further performance of the contract, does not prevent it maturing not an immediately enforceable obligation.” [16] Ms Edwards’ employment was terminated by Belle Property by a letter dated 12 November 2001 (exhibit 20) which effected the termination on 13 November 2001. while the letter did not refer to any provision of the Employment Agreement its terms make it clear that the termination was effected under para. 11(b)(iii) for alleged incompetence. As I have said I have no basis to make any finding on whether that ground was properly relied on because, although the evidence of Ms Edwards (the sole witness) was to the effect that she performed her duties diligently the point was not really litigated. In any event the terms of para. 12 of the -- 8 of 13 -- 9 Employment Agreement make it clear that as from 13 November 2001 the relationship of master and servant was at an end. [17] That does not however, conclude my enquiry. The question remains, to pick up the phraseology of Westralian Farmers (para. [14] above), whether on 13 November 2001 all the facts had occurred which entitled Ms Edwards to the commissions she claims (in which case they would be “benefits accrued to the date of termination” as para. 11(b) of the Employment Agreement puts it) or whether her right to those commissions depended on facts which would result from further execution of her employment agreement but which had not been brought about before that date. If the answer to that is in her favour then the fact that the right to payment was future or was contingent upon some event not involving further performance of the contract did not prevent it maturing into an enforceable obligation on the part of Belle Property and as I have said all of the 15 commissions sued for are part of commissions actually received by Belle Property from the Beach Club. [18] The answer to the central question must depend on the terms of the agreement, in particular the Remuneration Schedule. [19] Under the Employment Agreement Ms Edwards was employed from 4 June 2001 to 13 November 2001. According to the Remuneration Schedule during that time she was entitled to a base salary (which included car allowance and superannuation) the amount of which depended on the number of binding signed contracts entered into. If there were one, two or three per month the base salary was $750 per week gross, which I take to mean before deduction of PAYE tax, superannuation contributions and any other sum which might be agreed. If there were four or more binding -- 9 of 13 -- 10 signed contracts the base salary was $1000 per week gross. In passing, I observe that the fact that the base salary per week involved a consideration of the number of events occurring per month could have led to nice questions of interpretation and calculation. However no one based any argument on the point. [20] The base salary could only have been payable during the actual term of employment of Ms Edwards. That obvious fact is emphasised by para. 11(b) of the employment agreement. Even para. 11(c) which deals with termination of employment without cause and which provides for a payment in that event of four months of base salary, to my mind, is merely a provision for liquidated damages. And as the base salary was payable only during employment, then the binding signed contracts referred to in para. 1 of the Remuneration Schedule would only be binding signed contracts entered into during employment. [21] Paragraph 2 of the Remuneration Schedule which sets the rate of commission also differentiates for the purpose of setting the rate between numbers of events per month. But whereas para. 1 speaks of “exchanged contract sales” (that is contracts signed by the Beach Club and by a purchaser), para. 2 simply speaks of “sales”. Is that variation significant and if so what does it signify? [22] The argument of Mr Jonsson for Ms Edwards was that “sales” in para. 2 refers to ultimate sales for which she was the effective cause. The argument of Mr Bowden was that “sales” bears the same meaning as “exchanged contract sales” in para. 1, or in other words that “sales” was simply a shorthand expression for the expanded phrase used in para. 1. -- 10 of 13 -- 11 [23] There are, I think, a number of reasons why Mr Bowden’s submission should be preferred. First, had it been intended that the “sales” in para. 2 were all sales for which Ms Edwards had been the effective cause, no matter when effected, one would expect the agreement to have said so. That is all the more evident when one looks at the emphatic terms in which para. 12 is expressed; the termination severed all commercial relationship between Ms Edwards and Belle Property. Second, the division of commission rates into two categories bears an obvious resemblance to the division of base salary rates, the entitlement to such salary being limited to the employed period. Third, the identification of the cut-off point as the date of termination of the employment would give certainty to the agreement so far as time was concerned. Fourth, the identification of the existence of a binding signed contract to purchase would give certainty to the fact which was necessary to prove performance by her of her contractual obligations. [24] The alternative interpretation would, I think, create uncertainty. If time were permitted to elapse between the date of termination of employment and the date of the signing of a contract by The Beach Club and by a purchaser, how long might pass before the connection of Ms Edwards with the sale should be seen to be too remote? What might be the effect of the intervention in that period of other sales representatives. What might be the effect of quite independent influences on the mind of the purchaser. In these circumstances would it be necessary for Ms Edwards to establish effective cause? I repeat that the Employment Agreement does not mention that concept. How should Belle Property know how to deal with the commission it received in such circumstances; should it retain the sum possibly owing to Ms Edwards and if so for how long? -- 11 of 13 -- 12 [25] An examination of the majority judgements in Sellars makes it clear that what Singleton and Birkett LJJ allowed the plaintiff was commission on orders for advertisements which he had personally obtained for the defendants, or which had been received directly by the defendants as a result of his efforts before the date of termination of his employment. That is expressed by Singleton LJ at 798.5 and 799.2 and Birkett LJ at 799.9 and 802.5. So at the date of termination he had done all that his employment required of him on his employer’s behalf and his employer then had an offer which it was able to convert into a binding agreement with the prospective advertisers simply by publishing the advertisements. In that sense he had earned his commission when his employment was terminated. In this case, by contrast, the 14 ultimate purchasers in respect of whom commission is sought had not become legally bound to purchase on 13 November 2001. At that date Ms Edwards had not earned her commission for any of them. This is, I consider, consistent with the extract from Westralian Farmers cited at para. [15] above. As at 13 November 2001 “a further act of performance” was required, namely the obtaining of signed binding agreements in the 14 disputed instances. Alternative Grounds [26] Mr Jonsson put to me alternative arguments based on an equitable assignment of Ms Edwards’ commission to Belle Property as well as a claim on indebitus assumpsit. Those arguments depended on my acceptance that Ms Edwards had, when her employment was terminated, an accrued right to commission. That depends on the Employment Agreement and I have found that the agreement gave no such right (other than the conceded one). This alternative ground does not advance Ms Edwards’ case. -- 12 of 13 -- 13 Conclusion [27] The plaintiff is entitled to judgment on the conceded transaction (Hitt) for $6477.98 with interest thereon. Mr Bowden has not challenged the rate of interest submitted by Mr Jonsson (which seems to me to be a reasonable rate) which is set out in a document which I have marked exhibit 21. The interest to date of judgment may be calculated by reference to that exhibit. I will hear argument on costs. -- 13 of 13 --