Principal wins $633,000 legal victory over employee

A long-term real estate relationship has been shattered after an office manager was found to have withheld income from head office.

The Queensland District Court ruled in favour of Ken Guy Real Estate after it sued former employee Robert George Midgley for breach of contract.

The judge ordered Mr Midgley to pay $633,000 to Ken Guy Real Estate – including $254,000 in interest – and to also pay the agency’s legal costs.

Ken Guy, the principal, started the agency in the late 1970s. Mr Midgley worked there in the early 1990s and then returned to manage its Noosa office from early 2000 until October 2007.

The dispute centred around the nature of the relationship during that second stint.

Mr Midgley argued in court that it was a business partnership – but that this was kept secret because the agency’s six other office managers were only employees.

However, the judge agreed with Mr Guy’s claim that it was an employee-employer relationship.

The catalyst for the breakdown of their relationship came in April 2007, when Mr Midgley registered the business name of ‘Ken Guy Real Estate Bli Bli’ and started operating an office in Bli Bli in the name of a company that he controlled.

As an employee, Mr Midgley was required to transfer more revenue to head office than would have been required by a partner.

The judge said that Mr Midgley’s company “received all but a few commissions from sales through the Bli Bli office”.

Mr Midgley argued that this was due to an agreement he reached with Mr Guy in January 2007.

However, the judge accepted that Mr Guy knew nothing about this so-called agreement until August 2007.

Matters came to a head that month when Mr Guy made an unannounced visit to the Noosa office, according to the judge.

“On the sale secretary’s desk he found a number of settlement files which named Ken Guy Real Estate Bli Bli as the selling agent,” the judge said.

“He discovered 14 contracts. He looked at the trust account ledger for Noosa and found no entries corresponding with deposits recorded in those contracts.

“He then rang the office at Bli Bli… and spoke to a female employee who told him that sales were good. He became very concerned.”

[Related: Fake agent cops fine and seven-year ban]

promoted stories

REB Events