Legal transfer of title will not be a basis for ship sale and purchase brokers to receive a commission, unless the terms of the brokerage agreement make that clear.
The Queensland Supreme Court case of Superyacht Technologies Pty Ltd v Mackeddie Marine Pty Ltd & Ors [2012] QSC 401 will be of interest to those involved in the engagement of brokers for ship sale and purchase.
The case considered whether or not Superyacht Technologies Pty Ltd (Superyacht) was entitled to a commission fee under two separate brokerage agreements it had with Mackeddie Marine Pty Ltd (Mackeddie) in which it was to manage the sale of the luxury yacht Platinum. The decision highlights the importance of understanding how vessels are sold and setting out in clear terms the basis or circumstances upon which a broker is entitled to receive a commission. Legal transfer of title will not be a basis to receive a commission, unless the terms of the brokerage agreement make that clear.
The first agreement authorised Superyacht on and from 19 May 2008 to manage the sale of Platinum. On 27 June 2008, Mackeddie transferred 24 of 64 shares in Platinum to Peninsula Searoad Transport Pty Ltd (Peninsula) under a bill of sale. Superyacht alleged that this transfer entitled it to a fee pursuant to clause 4 of the first agreement.
Applegarth J noted that the court will seek to ascertain what the parties meant by the words they have used, and the starting point for this analysis is the natural and ordinary meaning of the words. According to Clause 4, the transfer of a legal interest in a share of the yacht was not an event which gave rise to an entitlement to the fee. The bill of sale transferred a legal, as distinct from a beneficial, interest in Platinum.
As a result of an oral agreement reached between Mackeddie and Peninsula, Applegarth J held that Peninsula acquired a 37.5% beneficial interest in the ownership of Platinum prior to the first agreement coming into existence. A fee was not payable when the shares were transferred in order to reflect the acquisition of a beneficial interest in the ownership of the yacht, an acquisition that occurred prior to the commencement of the agreement.
The second agreement commenced on 4 August 2008, authorising Superyacht and the Burgess Group, an overseas broker, as Joint Central Agents, to manage the sale of Platinum.
On 15 October 2009, notice was given to Superyacht terminating the agreement. Platinum was sold to AM Bennett Pty Ltd (AM Bennett) and the sale was completed in or about August 2010. AM Bennett became the sole registered owner of Platinum on or about 10 September 2010. It was not disputed that none of the Joint Central Agents or their Sub-Listed Brokers introduced AM Bennett to Platinum.
The main issue in dispute was whether Superyacht was only entitled to commission under clause 9(b), if Platinum was sold to a purchaser introduced to Platinum by the Joint Central Agents or one of their Sub-Listed Brokers. The relevant terms of clause 9(b) provided:
"If this Agreement is terminated and the Yacht is transferred, sold or conveyed (or in the event that a Buyer acquires a beneficial interest in the Yacht in accordance with Clause 4) within twelve (12) calendar months thereafter to a Buyer who was introduced to the Yacht during the term of this Agreement, then the full fee as set out in Clause 4 shall be payable to the Joint Central Agents."Superyacht and Mackeddie submitted to the court different interpretations of clause 9(b). Superyacht argued for a plain reading of clause 9(b). Mackeddie argued that words should be read into clause 9(b) so as to mean that Superyacht would be entitled to commission if AM Bennett was "introduced to the Yacht by the Joint Central Agents or by a Sub-Listed Broker".
On the decision of the interpretation of clause 9(b), Applegarth J held that the "plain and unambiguous words" of clause 9(b) support Superyacht's interpretation. His Honour declined to read words into the clauses, and emphasised that the meaning of clause 9(b) should be ascertained by considering its text in the context of the agreement. His Honour noted that both interpretations of the clause had the potential to produce a "seemingly unjust, unreasonable or uncommercial result" however he preferred the interpretation which permitted Superyacht to obtain the benefit of a maturing sale, when the buyer was introduced to the yacht by an outside agent. Such an interpretation was consistent with an agreement which appoints Central Agents to manage the sale "on a Central Agency basis" and is supported by the clear words of 9(b).
The decision of Applegarth J emphasises that courts will not be inclined to read words into a contract or clause where they are not required. Although dependant on the individual agreements and clauses within, the decision also suggests that agreements which appoint Central Agents to manage the sale of a vessel, may be read to allow Central Agents to recover a fee even where they did not introduce the Buyer to the Seller. Ultimately however, the decision emphasises that each agreement will be read in the way which best reflects the parties intentions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
