RWSC Pty Ltd v Gregory & Anor

The plaintiff, RWSC Pty Ltd, carries on business as a real estate agent under the name “Richardson & Wrench Sydney City Commercial” (“R&W Commercial”)

R&W Commercial alleges that in early 2014 it entered into an arrangement (“the Arrangement”) with the first defendant, Mr William Gregory, whereby Mr Gregory would:

Mr Gregory is the sole director and sole shareholder of the second defendant, The Gregory Investments Group Pty Limited (“Gregory Investments”).

R&W further contends that:

R&W Commercial alleges that Mr Gregory represented to it that he was a licensed real estate agent pursuant to the Property and Stock Agents Act 2002 (NSW) (“the Act”).

Mr Gregory denies making such a representation but admits that neither he nor Gregory Investments held such a licence at the relevant time.

R&W Commercial:

By a Cross-Summons, Mr Gregory claims damages of some $9.9 million pursuant to his asserted entitlements under the Arrangement.

R&W Commercial seeks declarations the Arrangement was “null, void, and otherwise of no effect ab initio” and “unenforceable” by reason of ss 8(2) and 9(2) of the Act.

Those sections provide, relevantly:

Mr Gregory contends that the Arrangement constituted a contract of employment between him and R&W and that he is entitled to bring the Cross-Claim notwithstanding the fact that he did not hold a real estate agent’s licence under the Act at the relevant time.

In these circumstances, by Notice of Motion filed on 24 February 2021, R&W Commercial sought an order pursuant to r 28.2 of the Uniform Civil Procedure Rules that the following question be determined separately, and prior to any other question in the proceedings:

R&W Commercial’s case is that even if, as Mr Gregory asserts, he was an employee of R&W Commercial, he was required by the Act to be licensed and, because he was not licensed, he is not entitled to bring the cross-claim.

It is common ground that determination of the factual question of whether Mr Gregory was an employee will be complex and likely to take up several days’ hearing time.

Mr Young and Ms Robb-Vujcic put the R&W Commercial’s case for a separate question this way in their written submissions:

In effect, R&W Commercial’s case was that the proposed separate question could be decided on the assumption that Mr Gregory was an employee of R&W Commercial; and in the hope that the answer to the separate question would obviate the need to determine whether, as a matter of fact, this was so.

In written submissions Mr Furlan, who appeared for Mr Gregory, foreshadowed an argument that Mr Gregory was an “assistant real estate agent” for the purposes of the Act and that, accordingly, s 8 of the Act has no application.

Mr Young, who appeared with Ms Robb-Vujcic for R&W Commercial, pointed out that this argument had not been pleaded. Accordingly, after the motion proceeded for some time on 7 April 2021, it was adjourned to 9 April 2021 to enable Mr Furlan to produce amended pleadings dealing with the matter.

The Amended Commercial List Response incorporated the amendments foreshadowed concerning Mr Gregory’s alleged status as an “assistant real estate agent”.

The Amended Cross-Summons and Commercial List Cross-Claim Statement also incorporated a hitherto unpleaded claim of restitution.

By that claim, Mr Gregory contends that, even if, as R&W Commercial contend, any agreement between Mr Gregory and R&W Commercial is of no effect or unenforceable by reason of ss 8 and 9 of the Act, he is entitled to “restitution … by way of a quantum meruit”.

Mr Young accepted that there was no proper basis upon which R&W Commercial could resist Mr Gregory amending his pleadings to make this allegation.

Mr Young also accepted that the amendment had the consequence that a favourable answer to R&W of their proposed separate question would not be dispositive of Mr Gregory’s cross-claim.

Mr Young accepted that it followed that R&W Commercial’s Notice of Motion of 24 February 2021 should be dismissed.

I am now dealing with the costs of that notice of motion.

Mr Young submitted that R&W Commercial should have its costs of the cross-claim because the amendments introducing the quantum meruit claim fundamentally changed the scope of the issues to be considered in the case and that:

Mr Young did not rely on any evidence to make this submission, but his ready and candid acceptance on 9 April 2021 of the matters at [23] points to the probability that it is correct.

Mr Young also submitted that:

Where an application or case is withdrawn without any determination on the merits, it is often appropriate to make no order as to costs. [2]

However, in this case, R&W Commercial’s application for a separate question was problematic in that it was, in a sense, hypothetical.

During argument, I raised the question of what facts could be agreed for the purpose of determining any separate question.

One possibility was the facts asserted by Mr Gregory in his List Response and Cross-Claim List Statement concerning his alleged employment by R&W Commercial.

Thus, the following emerged as a possible formulation of a separate question:

The emphasised passage reflected Mr Young’s instructions that R&W Commercial was not prepared to admit such matters for all purposes.

The difficulty was going to be that posing and answering a separate question on this basis could, in the long run, have created more problems than it might appear to solve.

To adopt a colloquial expression referred to by the Full Court of the Federal Court in Kockums AB v Commonwealth of Australia, [3] “what might seem the longest way around is the shortest way home”. [4]

That case involved a separate question answered by the trial judge on the basis of a number of assumptions. [5] The Full Court ultimately concluded that the appropriate answer to the separate question was “Inappropriate to answer”. [6]

Their Honours said: [7]

The authorities urge caution against deciding separate questions on the basis of facts agreed only for the purpose of the separate question.

Thus, in Tilling v Whiteman [8] their Lordships refer to the practice of deciding preliminary points when the correctness of the facts “remain to be tried”. Lord Wilberforce said: [9]

It may be argued that, in this case, the facts are “complicated” and the legal issue sought to be decided is “short”.

But the potential difficulties can be illustrated by assuming that the answer given to the question at [33] was “yes”.

In that event, Mr Gregory would not have been able to prosecute his cross-claim. The question of whether he was in fact an employee would have ceased to be relevant because of that fact and because that issue is not relevant to R&W Commercial’s case.

Mr Gregory would have had to decide either to seek leave to appeal from the determination of the separate question (which would cause the proceedings as a whole to be delayed whilst that application was determined) or to wait until determination of R&W Commercial’s claim (in which the question of whether or not he was employed would not be determined), and then appeal the separate question. If that appeal were to be successful, the matter would have had to be remitted for the further hearing of Mr Gregory’s cross-claim, in the course of which the factual question would have to be determined.

Thus, although determination of a separate question in the terms set out at [33] above might, in the short term, have simplified matters, it might well, in the long term, have made them more complicated.

For those reasons, I was disinclined to order the separate question sought by R&W Commercial.

The belated amendment made in the pleadings by Mr Gregory put the matter beyond question.

However, I accept that had the quantum meruit claim been pleaded from the outset, R&W Commercial may well not have brought the application for a separate question at all.

The position is thus that R&W Commercial made an application that would probably not have been successful, but which would probably not have been made at all had the quantum meruit claim been pleaded timeously.

In those circumstances, my opinion is that the fair order to make is that the costs of the R&W Commercial’s motion be its costs in the cause.

I also order that:

I stand the proceedings over for further directions on 7 May 2021.