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In the decision of Southwell Holdings Pty Ltd v Topple [2025] NSWSC 59, the Supreme Court of New South Wales considered whether an agent was entitled to remuneration under an agency agreement when an option deed was executed during the exclusive agency period, but the option was exercised after its expiry.
This decision provides valuable insights into the construction of standard form agency agreements, particularly regarding remuneration clauses linked to option deeds.
The dispute arose from an agency agreement between Southwell Holdings Pty Ltd (Southwell) and Barry Topple for the sale of Topple’s property in Marchmont, New South Wales. The agreement appointed Southwell as the exclusive selling agent from 23 October 2019 to 13 February 2020, followed by a non-exclusive agency period until the property’s sale or termination of the agreement.
During the exclusive agency period, Topple entered into a put and call option deed with Byron and Lea McIntyre on 11 December 2019. The call option was exercisable until 31 December 2021. The McIntyres exercised this option on 1 July 2021, leading to a sale of the property for $1.4 million on 15 July 2021. Southwell claimed $42,000 in remuneration, arguing entitlement under clause 3.1(a) of the agency agreement, which stipulated remuneration when a contract for the property’s sale was entered into during the exclusive agency period, including by way of an option being exercised.
The primary issue was the construction of clause 3.1(a) of the agency agreement. Southwell argued that the clause should be interpreted to entitle remuneration if an option was granted during the exclusive agency period and subsequently exercised, irrespective of when the exercise occurred. Conversely, Topple contended that the clause only entitled remuneration if the option was exercised during the exclusive agency period.
The Court was tasked with interpreting the following key provision:
Southwell proposed three potential interpretations:
Southwell contended that the third interpretation was most consistent with the commercial purpose of the agency agreement. It argued that excluding remuneration when the option was exercised post-expiry would undermine the value of the exclusive agency period, effectively allowing the principal to benefit from the agent’s efforts without compensating them.
Topple maintained that the clause was unambiguous and should be construed according to its ordinary meaning. Specifically, the parenthetical words “(which includes by way of an option being exercised)” focused on the timing of the option’s exercise, not the timing of its grant. Therefore, remuneration was only payable if the option was exercised within the exclusive agency period.
The Court (Mitchelmore J) held that the construction of clause 3.1(a) turned on the ordinary meaning of the words used, particularly the parenthetical phrase “by way of an option being exercised.” It concluded that this language unequivocally related to the timing of the option’s exercise, not its grant.
The Court found that:
The decision reinforces several key principles of contract interpretation:
This case underscores the importance of precise drafting in agency agreements, particularly concerning remuneration linked to option deeds. It highlights the necessity for agents to clearly delineate remuneration entitlements concerning both the grant and exercise of options within agency agreements.
The decision also illustrates the judiciary’s reluctance to expand the scope of contractual clauses beyond their plain meaning, reinforcing predictability in contract law. It serves as a cautionary tale for agents and principals alike to ensure the language of agency agreements unambiguously reflects their commercial intentions.
The Supreme Court’s decision to dismiss Southwell’s claim, with costs awarded to Topple, reinforces strict adherence to the language of commercial contracts. It illustrates that, absent ambiguity or absurdity, the court will uphold the ordinary meaning of the contract’s terms, even if it leads to a commercially disadvantageous outcome for one party.
Real estate agents and individuals entering into an agency agreement should carefully consider the drafting of the agreement. While standard form contracts can save time and costs in the short term, they may lead to situations where agents miss out on agency fees.
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Andrew is a Sydney-based solicitor with a strong background in commercial litigation and transactional legal work. He has acted for a broad range of clients across insolvency, estate disputes, and property-related matters. His experience also extends to drafting and negotiating commercial agreements, advising on business and property transactions, and preparing tailored estate planning documents.
Known for delivering clear, commercially minded advice, Andrew established Gouveia Legal to provide clients with legal services that are practical, accessible, and results driven. Whether navigating a dispute or managing a transaction, he brings a strategic approach grounded in understanding each client’s goals and delivering value at every stage.
Clients come to Andrew for straightforward guidance and a solicitor who takes the time to understand their situation and can get results.
In his spare time, Andrew likes to train Jiu-Jitsu, take his dog Henry for long walks and enjoys watching anything by Guy Ritchie or Martin Scorsese.
Melissa is an experienced lawyer with extensive expertise in personal injury law and a keen interest in immigration.
Holding a Bachelor of Medical Science and a Graduate Law Degree, she combines a strong analytical foundation with a compassionate approach to legal advocacy.
With significant experience working as both a plaintiff lawyer at Australia’s top firms and a legal representative for Australia’s insurers, Melissa brings a well-rounded perspective to every case she handles.
Known for her exceptional negotiation skills, Melissa is dedicated to securing the best outcomes for her clients. Her empathetic nature allows her to connect with individuals, understanding their unique challenges and providing clear, supportive guidance through complex legal processes. Committed to achieving justice, Melissa ensures her clients receive fair and timely resolutions to their claims, whether through skilled negotiation or robust representation.
In her spare time, Melissa enjoys fashion, going out with friends and family.
