Barboutis v Kot - [2008] WASC 191

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: BARBOUTIS -v- KOT [2008] WASC 191

CORAM: BARKER J

HEARD: 5, 6, 7 & 15 MAY 2008

DELIVERED : 11 SEPTEMBER 2008

FILE NO/S: CIV 1887 of 2005

BETWEEN: COLIN JOHN BARBOUTIS
Plaintiff
AND
PRUDENCE ROSALIND KOT
Defendant

Catchwords:

Breach of warranty of authority - Misleading and deceptive conduct - Loss of chance - Burden of proof - Turns on own facts

Legislation:

Nil

Result:

Plaintiff's case dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr S M Davies
Defendant: Mr S R Sirett

Solicitors:

Plaintiff: Tottle Partners
Defendant: Downings Legal

Case(s) referred to in judgment(s):

Briginshaw v Briginshaw (1938) 60 CLR 336
Jones v Sutherland Shire Council [1979] 2 NSWLR 206

BARKER J:

Overview

The claim made by the plaintiff in this action and the facts pertaining to the action are both a little unusual, principally because each of the plaintiff and the defendant make key assertions that are either not corroborated or difficult to corroborate.
The plaintiff describes himself as a stockbroker and an investor in property and shares. The defendant is a licensed real estate agent.
The plaintiff says that on 14 February 2005, the defendant effectively promised to act on his behalf as a real estate agent, in the course of negotiations she was about to undertake for another party, with a view enabling him to purchase one of two adjacent lots of land owned by a third party in the Port Mandurah canal development south of Perth. The plaintiff claims that the defendant failed to honour her promise by subsequently only negotiating on behalf of the other party who purchased both lots. The plaintiff complains that, as a result of the defendant reneging on her promise, he lost the opportunity to negotiate for the purchase of one or both of the lots. The plaintiff sues for damages for breach of warranty and for loss of a chance.
So far as his primary claim for damages for breach of warranty is concerned, the plaintiff contends that, if the defendant had acted as she had promised, he would have acquired the canal lot he preferred, next to a park, for no more than $1,000,000. He says that that lot, at the time the defendant broke her promise to him, in fact had a value of $1,500,000. Therefore, the plaintiff complains that he lost $500,000 as a result of the defendant's breach of warranty. The plaintiff says that if he succeeds on any of the other pleaded causes of action his damages for loss of a chance will still be real, though less than his warranty claim.
The defendant denies that she ever made any such promise, commitment or representation as alleged by the plaintiff.
In the result, the court is not satisfied that the plaintiff has proved his allegations and case against the defendant on the balance of probabilities and the plaintiff's action should be dismissed.

The plaintiff's case

The plaintiff explained that in February 2005, he and his wife Tracy owned a residential unit at 20 Baruna Court, Halls Head, Mandurah which he, his wife and his two children used for holiday purposes. At that time their principal place of residence was in Applecross, a suburb of Perth.
The plaintiff said that earlier, in 2004, he had contacted the defendant and advised her of his and his wife's interest in buying a vacant block of land or a house on the canals at Mandurah. The defendant was known to the plaintiff because she also occupied a unit at Baruna Court. He also knew she was a real estate agent. The plaintiff says that back in 2004, the defendant showed him at least one property.
The plaintiff says that in early 2005 he became aware that a Mr Brian Gardner wanted to sell two adjacent, vacant blocks that he owned in Sovereign Place, in stage 1 of the Port Mandurah canal development, for around $1,000,000 each. One of the blocks was next to a park. He says that he inspected the blocks concerned and identified the block next to a park as the one he would like to buy and build a home on (in these reasons I will refer to this block as the 'park block').
The plaintiff says that he then decided to investigate the circumstances of the park block further. To this end he says that on Sunday, 13 February 2005, he went to Mandurah for the specific purpose of visiting the offices of the Shire of Mandurah the next day, Monday, 14 February 2005, to ascertain whether the two blocks could be amalgamated into one for development purposes, and to check the terms of any restrictive covenants over the blocks. He said he knew from prior experience that all of the blocks in the canal development had restrictive covenants over them.
The plaintiff says that, on the morning of 14 February 2005, as he was about to drive out of the compound at Baruna Court, the defendant was driving in. He says that soon after he had a conversation with her. The plaintiff says his conversation with the defendant was in the following terms or to the following effect:
Defendant:Colin, how are you?
Plaintiff:Good, how are you Prue?
Defendant:What are you doing down here?
Plaintiff:I am looking for a house on a block on the canals, I have been looking for a while and it has been really hard.
Defendant:I might have just the thing for you. There's two blocks coming up at the end of Sovereign Gardens that I am going to negotiate on.
Plaintiff:That's funny - that is the reason I am down here today, I was just about to go to the shire and check and see what the restrictive covenants are to see if you can amalgamate or do a unit development and then I was going to see Gardner.
Defendant:All the restricted covenants are the same on all the blocks and you can't amalgamate nor do a unit development. My buyer is going to put in an offer on both at $900,000 each but it would suit him not to have to buy both - would you like one?
Plaintiff:That's why I am here - I would love the one closest to the park.
Defendant:Can you go to $900 cash?
Plaintiff:I will go $900 firm cash and up to $1,000,000 if necessary. I'm quite happy to pay that sort of number. I'll back off on doing anything further or doing any negotiating provided you promise me I can have the block closest to the park.
Defendant:Ok, that's fantastic - my guy will be happy with that.
Plaintiff:Ok, I'll leave it to you, you contact me and let me know how the negotiations are going.
Defendant:I'll let you know how I go with the negotiations.
The plaintiff says that immediately after this he telephoned his wife and told her about his conversation and the coincidence of the event.
The plaintiff says on that same morning, at about 11.00 am, he rang his finance broker, Mr Jamie Gant, and sought advice as to whether he could arrange '$900,000 and up to $1,000,000 cash firm' to purchase the park block and advised this might happen quickly. Mr Gant advised him that 'anything is possible it is only a matter of interest rate'.
The plaintiff says in fact he was prepared, if necessary, to pay up to $1,100,000 for the park block and he had the financial capacity to do this if the need arose. In that regard the plaintiff referred to his equity (or that of entities he controlled) in other properties in which he considered he could raise the necessary funds as bridging finance.
The plaintiff says that after his meeting with the defendant, some days passed during which he heard nothing from her. Accordingly, on Tuesday, 22 February 2005, a little over a week later, he telephoned her. The plaintiff said that he then had a conversation with the defendant in the following terms or to the following effect:
Plaintiff:I am anxious to hear how the negotiations with Brian were going on and have we secured the block?
Defendant:Oh, we're negotiating; my guy changed his mind and decided he wanted both blocks.
Plaintiff:When were you going to let me know Prue? When it was too late to negotiate with Gardner I suppose. You have effectively stopped me from being able to have any chance of purchasing a block. I withdrew from the negotiations to allow you clear passage to negotiate for me.
Defendant:You said that you would have to sell your place in Mandurah and the vendor will only consider a cash offer.
Plaintiff:Prue you know that is not true - I clearly said to you I would go up to $1,000,000 cash firm.
Defendant:Well in any case my buyer will sell you the block for $1,500,000 if you want it.
Plaintiff:Prue I believe you should honour your commitment to me as per our discussion and tell your buyer he must allow me to purchase the block nearest to the park.
Defendant:There is another block coming up on Cambria Island that will suit you, I'm appraising it and will let you know.
Plaintiff:I am not happy and believe that you have deceived me to have me withdraw from negotiations. This may result in legal action.
Defendant:If you are going to take that attitude then send me a legal letter.
The plaintiff says he then telephoned Mr Paul Goldie, who was then a near neighbour of his at Baruna Court and a person he knew was acquainted with Mr Gardner. He asked Mr Goldie if he would mind ringing Mr Gardner to see if it was too late for him to negotiate on the block. He called Mr Goldie a few days later and was advised by Mr Goldie that he had not been able to speak with Mr Gardner but that he would try him again the next day.
The plaintiff says that Mr Goldie telephoned him several days later and advised that he had spoken briefly with Mr Gardner who said that he was unable to negotiate with anyone else because he was well into negotiations with a buyer and would only negotiate with someone else if those negotiations fell through.
The plaintiff says that at about the same time he telephoned Mr Goldie he called Mr Gant again and asked if he would be able to borrow around $2,000,000 in order to buy the two blocks and was advised that it would be no problem, only a question of interest rate and mortgage insurance.
In the event, the plaintiff said he did not conduct any negotiations with Mr Gardner in relation to the two blocks or either of them. What did happen, as a matter of fact, was that a dealing between Mr Gardner and a Mr and Mrs Pitts for the sale and purchase of the two blocks for $2,000,000 was settled on or about 6 April 2005, and a transfer in relation to that dealing was registered on 22 April 2005.
On or about 6 April 2005, Mr Pitts engaged the defendant to offer one of the blocks, the one adjacent to the park block, for sale at an asking price of $1,500,000.
So far as dealings between the plaintiff and the defendant were concerned thereafter, nothing happened for a little over three months. Then, by letter dated 11 July 2005, Tottle Partners, solicitors for the plaintiff, wrote to the defendant advising that they were instructed that:
1.on or about 14 February 2005, Mr Barboutis informed you that he was looking to purchase a house or block of land on the canals at Halls Head;
2.you told Mr Barboutis that you represented buyers ("the Buyers") who were interested in making an offer on 2 blocks of land at Sovereign Gardens;
3.Mr Barboutis informed you that, coincidently, he was about to make enquiries at the local Shire regarding the same 2 blocks of land and then approach Mr Brian Gardner, the (then) owner of the blocks;
4.you informed Mr Barboutis that the Buyers intended making an offer to purchase both blocks for $900,000 each, but preferred purchasing only one of the blocks;
5.Mr Barboutis told you that he was interested in the block closest to the park ("A Block") and was prepared to pay $900,000 cash and up to $1,000,000 if necessary;
6.you agreed to represent Mr Barboutis and negotiate with Mr Gardner on his behalf for the purchase of the A Block for up to $1,000,000. You informed Mr Barboutis that you would negotiate the purchase of the second block on behalf of the Buyers. As a result, Mr Barboutis agreed not to, and did not, negotiate directly with Mr Gardner ("the Agreement");
7.you failed to negotiate the purchase of the A Block on Mr Barboutis' behalf, but instead solely represented the interests of the Buyers;
8.on or about 25 February 2005, you informed Mr Barboutis that the Buyers would be purchasing both blocks, including the A Block, but would offer to sell the A Block to Mr Barboutis for $1,500,000;
9.during February or March 2005, Mr Gardner accepted an offer from the Buyers, who Mr Barboutis now understands to be Kenneth and Shirley Pitts, to purchase both blocks for a total of $2,000,000. Settlement took place on 22 April 2005; and
10.the Pitts have offered the A Block for sale, which is listed with you at an asking price of $1,500,000.
The solicitor's letter required the defendant to let them know by 18 July 2005 whether she was prepared to meet with the plaintiff and the Pitts failing which the plaintiff would have no alternative but to commence proceedings against her.
The plaintiff by his solicitors then issued a writ of summons on 25 July 2005, endorsed with a statement of claim.
The action as commenced was against both the defendant, as first defendant, and Mr and Mrs Pitts, as second defendants. Prior to the trial in this action, the plaintiff discontinued the proceedings against the second defendants.
The plaintiff says he would have purchased both blocks for up to $2,200,000 and would have been able to raise the finance to do so.
The plaintiff's case, based on his version of the facts, is that an agreement was made on 14 February 2005 between him and the defendant in her own right and purportedly in her capacity as agent for her other client (Mr Pitts or Mr and Mrs Pitts) pursuant to which it was agreed that:
•The defendant would negotiate with Mr Gardner on behalf of the plaintiff and her other client for the purchase of the park block for the plaintiff, and the adjacent block for the Pitts.
•The plaintiff would pay up to $1,000,000 cash for the park block.
•The plaintiff would not negotiate directly with Mr Gardner in relation to the purchase of the park block.
•The defendant would keep the plaintiff informed of the progress of negotiations.
The plaintiff says it was an implied term of this agreement that the defendant would take reasonable and proper steps to negotiate the sale of the park block by Mr Gardner to the plaintiff for up to $1,000,000.
The plaintiff says that the promise he gave not to negotiate directly with Mr Gardner:
•Was a benefit to the Pitts because it avoided another potential purchaser opening up negotiations with Mr Gardner and thereby jeopardising or complicating the negotiations to be undertaken on their behalf in respect of the property; and
•Was a benefit to the defendant because it assisted her to more effectively undertake the obligations she had already assumed in respect of her other clients, and by the agreement was assuming in respect of the plaintiff, that is, to negotiate with Mr Gardner without that task being more complicated or being jeopardised by the plaintiff opening up independent negotiations with Mr Gardner.
In terms of legal causes of action, the plaintiff claims:
(1)Damages for breach of warranty of authority against the defendant;
(2)Damages for breach of the term of the agreement that the defendant would take all reasonable and proper steps to negotiate the sale of the park block by Mr Gardner to the plaintiff for up to $1,000,000;
(3)Damages for breach of the term of the agreement that the defendant would keep the plaintiff informed of the progress of the negotiations;
(4)Damages for misleading and deceptive conduct, in which the misleading conduct is the giving of the warranty of authority in the entering into the agreement in circumstances where the defendant in fact had no authority to enter into the agreement on behalf of the Pitts;
(5)Damages for misleading and deceptive conduct, in which the conduct is the making of misrepresentations that:
(a)The defendant would negotiate with Mr Gardner on behalf of the plaintiff for the purchase of the park block by the plaintiff;
(b)The Pitts were content to purchase the adjacent block; and
(c)The defendant would keep the plaintiff informed of the progress of negotiations,
(6)Damages for misleading and deceptive conduct, in which the misleading conduct is the defendant's silence, that is, a failure to promptly advise the plaintiff when she learned or determined that:
(a)The Pitts wanted to purchase the park block;
(b)The Pitts had determined they wished to buy both blocks; or
(c)Mr Gardner preferred to sell both blocks together; or
(d)The defendant did not intend to negotiate with Mr Gardner on behalf of the plaintiff in respect of the purchase of the park block or at all.
For the purpose of the proceeding against the defendant, the plaintiff acknowledges that the Pitts did not in fact give the defendant any authority to enter into any agreement on their behalf with the plaintiff.
As to the damages claimed, in relation to the action for damages for breach of warranty of authority, the plaintiff says that the damage he suffered is the value of the park block as of February/March 2005, less the price he would have had to pay for it. That is to say, the difference between $1,500,000 (being the value the parties to these proceedings have agreed the park block in fact had at material times), and the sum of $1,000,000 (being the sum the plaintiff says he would have had to pay, and which he says the Pitts actually paid, for the park block) being a difference of $500,000. Similar claims for damages are advanced by the plaintiff in respect of the alleged breaches of the agreement by reason of failure to inform of progress of negotiations.
In the alternative, the plaintiff claims damages for loss of a chance taking into account the contingencies in the matter. In relation to the claim for damages for breach of warranty of authority, the plaintiff says these contingencies have no material relevance and would not reduce the sum of $500,000 claimed. The plaintiff says that the claim for damages for loss of a chance, therefore, relates principally to the claims for breaches of the agreement and the claims of misleading and deceptive conduct. Relying on established authorities, the plaintiff says that, provided the chance of realising the opportunity to proceed with negotiations on his own behalf, either to make a higher offer for the park block, or if necessary, to make an offer for both blocks, is not a fanciful chance and is of value, the court should award damages to recompense the plaintiff for the lost chance.

The defendant's case

The defendant denies that she entered into any agreement with the plaintiff as alleged or at all. She therefore denies that she breached any warranty of authority, or any term of any agreement, or that she otherwise engaged in any misleading or deceptive conduct.
The defendant says that at all material times she was the principal and licensee of Portside Realty in Mandurah. She has been in the real estate profession for approximately 30 years. She commenced in north Queensland and moved to Western Australia in approximately 1984, where she has worked in the real estate industry since. She has held her current position with Portside Realty for the past seven years. The defendant says she specialises in 'upmarket residential sales and letting' predominately in the Mandurah region.
The defendant says Mr and Mrs Pitts approached her in or around January 2005 and requested her to provide a tentative market appraisal of their home in Mandurah with a view to selling it some time later in the year. She indicated it would probably achieve a sale price of between $1,700,000 and $1,800,000 later in the year, come the spring/summer months (that is, after September 2005). The defendant says Mr Pitts told her that he and his wife were looking to build a new house on a block in Mandurah and that they were looking for a north facing block, preferably in stage 1 of the Port Mandurah canal development. The defendant says that after she had prepared the appraisal for the Pitts she told them that she would look for a block that fitted their description.

The defendant says that on or about 19 January 2005, a contact telephoned her and said that he had a 'lead' on two blocks for sale in Port Mandurah that were owned by Mr Brian Gardner. The contact advised the defendant to telephone a man called Alan Doughty, who then was Mr Gardner's financial controller. The defendant says she was familiar with the two blocks in Sovereign Place and considered them to be 'prime land', particularly the park block. The defendant says her contact told her to tell Mr Doughty that he had recommended that she telephone him directly.
The defendant says that on or about Friday, 4 February 2005 she telephoned Mr Doughty, introduced herself and told him that her contact had recommended that she telephone him as she had clients who would be looking for prestige blocks on the canals in Mandurah. The defendant says that when she said this she had in mind her clients 'generally', and not the Pitts 'in particular'.
The defendant says Mr Doughty described the two blocks as Lot 130 and Lot 131 Sovereign Gardens, Port Mandurah and told her that Mr Gardner had three strict conditions for the sale of the blocks, namely that:
•The blocks must be sold together;
•The sale of the blocks must be cash and unconditional; and
•The blocks must be sold for $2,000,000 net together.
Mr Doughty also told her that she would not be given a written authority for the sale of the blocks at that stage.
Mr Doughty informed the defendant that he and Mr Gardner were always having agents contact them about the blocks and that they had received many offers to purchase the blocks, but that agents were not necessarily taking notice of the stipulated conditions.
The defendant says that she commented to Mr Doughty that she thought she might be able to sell the blocks for more money if they could be sold individually, but Mr Doughty said that Mr Gardner wanted them sold together.
The defendant says that after she spoke with Mr Doughty she did not ring the Pitts immediately as she was under the impression they wanted a north facing block and these blocks would not be suitable. However, after further thought she telephoned the Pitts on or about 7 February 2005 and told them about the blocks. The defendant says that she described the blocks to them and told them that they were 'beautiful', notwithstanding that they were facing south, and that they should look at them. She also told Mr Pitts about the strict conditions for the sale of the blocks that Mr Doughty had informed her about.
The defendant says that, soon after this, Mr Pitts telephoned her and told her that he and his wife had walked passed the blocks and said that they were very nice and that they were definitely interested in them.
The defendant says that, following this, over the next few days she spoke to the Pitts on numerous occasions about the blocks. They agreed that they would try to offer Mr Gardner $900,000 for each block, but realised they would probably have to pay the stated $2,000,000 to acquire both of them.
On the morning of Monday 14 February 2005 - a week after the defendant first told Mr Pitts about the two blocks - the defendant says Mr Pitts telephoned her and asked her to fax him a copy of the certificate of title for each of the blocks and to call at his house that evening to discuss the blocks. She said that, at that point, she assumed that she would be attending the Pitts' house that evening to write up an offer on the blocks on their behalf.
Later, after she had spoken with Mr Pitts and faxed him copies of the certificates of title, the defendant says she went to her unit at Baruna Court. Whilst there the plaintiff approached her and said words to the effect, 'Seen any nice real estate lately?' The defendant said that the plaintiff often asked her the same question when he saw her at the units. It was his typical form of greeting. The defendant knew the plaintiff and his wife as they owned one of the units in the complex and she was aware that the plaintiff and his family spent school holidays and some weekends there. The defendant also knew that the plaintiff had been looking for a house or block in Port Mandurah and that another real estate agent had been looking for real estate on his behalf for a long time. The defendant explained that she had in fact once shown the plaintiff a property at Rialto Place, at the Mandurah Marina, but had never made an offer for any property on his behalf. The defendant recalled that on one past occasion the plaintiff had told her that he would have to sell a property at Sholl Street, Mandurah to afford to buy another property.
The defendant stated that her impression of the plaintiff as of February 2005 was that he was a 'time waster'. She said she was not interested in clients who made offers conditional upon finance in the particular market niche in which she operated. She preferred clients who had done their 'due diligence' and could make a cash offer. The defendant says that, having met the plaintiff, she made the assumption that he did not have the 'cash' to purchase the upmarket residential properties that she dealt with as an agent.
In response to the plaintiff's approach and greeting ('Seen any nice real estate lately?') on Monday 14 February 2005, the defendant says that the conversation went along the following lines:
Defendant:As a matter of fact Colin, I have an appointment tonight with some buyers to write up an offer on two blocks of land in Sovereign Gardens.
Plaintiff:Oh, they're Brian Gardner's blocks.
Defendant:Yes they are. However, Colin, the terms of the deal are cash, they must be sold together and he wants one million dollars net each.
Plaintiff:[After saying something about Lot 131 Sovereign Gardens and liking its position near the park] I was going to go to the Shire on Monday and find out about them and make Brian an offer.
Defendant: [After saying she advised the plaintiff she was writing up offers on the blocks and that her buyers were going to offer nine hundred thousand each but that she had clearly told them that it must be one million net.] What I'll do is, because they have to be sold together, if my buyers can't secure both, and can only run with one block, then I will call you and maybe we can put a deal together where they buy one and you buy one, but only if they can't proceed.
Plaintiff:I was going to offer nine hundred thousand but if I have to pay one million dollars I will go in over the top of you. Brian's a good friend of mine and I'll contact him directly.
Defendant:Fine Colin, you do that.
Plaintiff:[After some other discussion the detail of which the defendant says she can't recall, she says the plaintiff then said words to the effect] Fine then, I'll leave it to you and I will back off. Let me know how you go … you'll get me that block.
Defendant:[Showing some irritation] No Colin, I will contact you if, and only if, I can't put the deal together.
Consequently, while the defendant admits some detailed discussion about the two blocks and their pricing, she denies that she ever agreed to make an offer on either of Mr Gardner's blocks on the plaintiff's behalf or to represent him or to secure for him the park block.
The defendant says she went to the Pitts' home at 6 pm that same day, 14 February 2005. She says she and the Pitts spent a little time discussing the idea of amalgamating or subdividing the blocks, but the Pitts decided against such a development as they were such nice blocks. They considered it preferable to build a house on the park block. Mr Pitts specifically told her that 'I think we can do this', but would need to check his finances with his accountant.
The defendant says that during the days that immediately followed, while the Pitts, to her understanding, were making the appropriate financial arrangements, she stayed in constant telephone contact with them and Mr Doughty. Mr Pitts telephoned her and confirmed that they were able to go ahead and were ready to write up the offer. Eventually, on Friday, 18 February 2005, she called at the Pitts' home and Mr Pitts signed an unconditional offer of $1,800,000 for both blocks.
The defendant says that, while the Pitts were confirming their financial arrangements, she telephoned Mr Doughty and told him that she had an appointment to write up the offer on 18 February 2005 and she would need a written selling authority from Mr Gardner. She says she did this on 15 February 2005. Mr Doughty agreed that she should deliver the written selling authority document and that he would make sure that Mr Gardner signed it at a meeting he had scheduled with him for the evening of Thursday, 17 February 2005, in time for the Pitts' offer the following day. As it transpired, because the defendant could not physically deliver the selling authority in Perth to Mr Doughty, she faxed the selling authority to him on 17 February 2005.
The defendant says that, after the Pitts' offer was written up and signed by Mr Pitts on 18 February 2005 (the offer was made by Mr Pitts 'and or nominee'), she went straight to Mr Doughty and presented it. She says she told Mr Doughty that although Mr Pitts had offered $1,800,000 for the blocks he was prepared for Mr Gardner to counter the initial offer up to $2,000,000. She said Mr Doughty indicated that the offer would be accepted at $2,000,000.
The defendant says that Mr Doughty told her that he would not be able to present the offer to Mr Gardner until 25 February 2005 and that it would also have to go to his personal solicitor as Mr Gardner would not sign anything until his solicitor had perused it.
The defendant says that sometime after 2 March 2005, she received a counter-offer from Mr Gardner.
The defendant says that, in the meantime, on Saturday, 19 February 2005, following Mr Pitts signing the offer document on 18 February 2005, the plaintiff approached her again while she was at the Baruna Court units putting 'Home open' signs in her car. She says he pointed at her and said 'You did not call me'. She says that she responded by saying 'I only told you that I would call you if my buyers were not in a position to purchase both blocks'. She says the plaintiff then responded abruptly 'You'll hear from me'.
The defendant says the plaintiff then telephoned her at her office three days later on Tuesday, 22 February 2005 and alleged that she had agreed to represent him for the purchase of Lot 131 Sovereign Gardens and she had promised him that she would secure him the block next to the park. She says that, in answer to this and other allegations the plaintiff then made, she said 'Wrong, wrong, wrong'.
The settlement of the sale of the two blocks to the Pitts then took place on 6 April 2005.
At the time of the settlement the Pitts gave the defendant an authority to sell the block adjacent to the park block for $1,500,000. The defendant says that this was a sale price suggested by Mr Pitts and not one that she thought capable of realisation.
The defendant says that when the plaintiff's solicitor's letter before action was sent, she was away and first learned of it from Mrs Pitts, who telephoned her when she received a similar letter. She then contacted her solicitors following service of the writ.
In these circumstances, the defendant says she and the plaintiff did not conclude any binding legal relationship on 14 February 2005.
Further, the defendant says that the context in which the discussion that day took place is such that a contract cannot be inferred. The parties had no intention to contract.
The defendant says that, even if one accepts the plaintiff's version of events for the sake of argument, no contract was made and statements alleged to have been made by the defendant constituted at best 'mere puffs'.
For the same reasons, the defendant says that the conduct that the plaintiff complains of does not constitute conduct in trade or commerce.
Further, the defendant says that so far as loss and damage are concerned, there is no causal connection between the conduct complained of and the loss the plaintiff alleges he suffered.
Moreover, the defendant says that, in the case of conduct by representation, the party relying on the representation must take reasonable care in their own interests and that the plaintiff did not take any reasonable steps to negotiate with Mr Gardner on his own behalf once he discovered, on his own case, the true negotiating position prior to the completion of a contract between Mr Gardner and the Pitts.
Additionally, the defendant denies that the plaintiff had the ability to complete any contract to purchase either the park block or both blocks if any such contract is found to have been negotiated.
In relation to the measure of any loss, the defendant says the plaintiff's grievance is that he did not gain a right to be included in negotiations for the park block and lost the opportunity to negotiate on both blocks by reason of effluxion of time. The defendant says the negotiations to be considered ought to include any necessary negotiations with the Pitts and any negotiations with Mr Gardner. In particular, the defendant says the right to negotiate ought not to be equated with a certainty of acquiring either the park block or both blocks. There was no guarantee of that outcome.
Counsel for the defendant made it clear that, in the event that the plaintiff establishes a right to damages, the defendant:
•Did not challenge the valuation evidence as to the value of the park block of $1,500,000 at material times in February/March 2005;
•Says that the losses on the park block would be the difference between the value of the block and the cost of acquiring it, including the stamp duty and settlement agents fees; and
•Further, by reason of the points made about the lost opportunity, any damages ought to be discounted by a factor considered by the court as representing a reasonable probability of the transaction not being completed in the plaintiff's favour.

Cross-examination of plaintiff

In the course of cross-examination the plaintiff explained that about 30 years ago, for four years he worked as a licensed representative of a real estate agent. He conceded that he had enough success to make a living out of selling houses at that time.
He also acknowledged that he had known the defendant for about 12 months before the crucial conversation on 14 February 2005. He said he had first met her when he had inspected a unit that she had opened for inspection a couple of doors up from his holiday unit at Baruna Court.
The plaintiff acknowledged that the defendant had shown him at least one property but believed it was two.
He could not recall that he had ever told the defendant that he would need to sell a property at Sholl Place in Mandurah in order to make an offer on another property. He conceded though that he may have said all sorts of things that he did not now recall.
When he had previously looked at properties with the defendant he had made a formal arrangement for that purpose. However, on 14 February 2005, the two of them met coincidently at the Baruna Court units.
The plaintiff was challenged as to his account of the conversation that took place between him and the defendant on 14 February 2005. It was put to him that the defendant never told him in the course of that conversation that unit development was impossible by amalgamating blocks because of restrictive covenants. The plaintiff responded by saying that there was 'nothing Prue doesn't know about restrictive covenant type of thing'.
When asked about why he wanted to buy the blocks the plaintiff responded that he looks for opportunities:
If those blocks may have been able to be amalgamated, it was something that I might have looked at, but the primary role was that Tracey wanted building block.
The plaintiff acknowledged that the defendant told him that she was going to see a buyer that evening. He also acknowledged that from what he was told he understood that the defendant had a buyer who wanted to negotiate to buy both blocks (T:95).
The plaintiff denied that what the defendant actually said to him was words to the effect that if her buyers were not interested she would get back to him.
He also denied that he had ever said that he would 'go in over the top' to negotiate with Mr Gardner.
The plaintiff was asked how he expected that the defendant would put the deal together, given his understanding that both blocks needed to be sold at the same time. His answer (T:96) was:
I don't know what Prue Kot would have done so I don't know the answer.
He then added (T:97):
It was clear that she was negotiating on my behalf also, that she would come back to me at some point and say: 'we need to fill out some paperwork' or what the negotiations were.
Counsel for the defendant asked the plaintiff if he expected the defendant would go and discuss all of this with her buyers before anything went forward. He responded that:
I think she understood the position of her buyers. She would then have gone and negotiated for myself and her buyers and got back to me.
As to whether the two blocks were of equal value or one was worth more than the other, in his estimation as of 14 February 2005, the plaintiff observed (T:98):
It wasn't for me to judge fair, I just knew that Brian Gardner wanted to sell the two blocks at $1,000,000 each. His price was $2,000,000; $600,000 for one, and $1,400,000 for the other. I didn't know. I just know that he wanted to sell the two blocks for $2,000,000 at the same time. My guess is then they were a million each and that's what Prue had told me.
In further cross-examination the plaintiff said that he thought they were worth far more than Mr Gardner was asking for them.
The plaintiff suggested that the overall length of the conversation on the morning of 14 February 2005 was about four minutes, five minutes, something like that.
The plaintiff acknowledged that he had not at that point made any arrangements to see Mr Gardner but thought that through contacts he would be able to make contact with Mr Gardner. He also acknowledged that at that point he had not discussed the question of a purchase of land with his finance broker.
The plaintiff denied that he later met the defendant on 19 February 2005 when she was dealing with some home open signs. He said his records showed that he could not have been in Mandurah on that day. However, the plaintiff acknowledged that he did telephone the defendant on 22 February 2005, he thought by telephoning her mobile phone.
The plaintiff confirmed that it was correct, in his view, that the defendant had told him that he could buy one of the blocks for $1,500,000 during that telephone conversation. As to which block, he said that he did not know, he was not interested. He would not accept he was confused about this.
The plaintiff insisted that he did not have any view as to which of the two blocks he was being offered.
In further cross-examination the plaintiff acknowledged that in about April he did notice that a block was for sale. He saw the advertisement.
When challenged as to what he had said in his witness statement in par 16 - to the effect that the 'A block' was advertised for sale - the A block having been identified in that statement as the park block - then said that he was not sure what block had been advertised.
Counsel for the defendant suggested to the plaintiff that he had seen the advertisement in late April 2005 and that was the reason why he said in his statement that the defendant had offered him a block for $1,500,000, not because she said it to him on 22 February 2005. The plaintiff denied that.
When faced with the fact that par 16 of the witness statement that went into evidence as exhibit 1 expressly states:
Shortly after the registration the A Block was advertised for sale at an asking price of $1,500,000 …
the plaintiff said that this was meant to be 'a' block; meaning one of the two (T:102). In other words he should have said in that paragraph that 'a block was advertised for sale.'

Cross-examination of the defendant

In cross-examination the defendant was pressed as to the terms of the defence filed on her behalf in the proceedings which failed to set out in any great detail the substance of her response to the allegations pleaded against her. The point that counsel for the plaintiff wished to make against the defendant was that she had reconstructed her evidence - if not tailored her evidence - over time in order to respond to the detailed claim made against her by the plaintiff.
The primary response of the defendant, who was, it must be said, mystified to some extent by the questions put to her on cross-examination on this point, was that she was guided by her legal advisers. The court notes in passing that this was not an unreasonable explanation in the circumstances.
In the course of cross-examination, the defendant was asked about the telephone discussion on 22 February 2005. She said that the plaintiff telephoned her at her office, not on her mobile telephone. She also explained to counsel for the plaintiff that she used her diary to establish dates. That too is not an unreasonable thing to have done.
The extent to which the defendant was reliant on dates on documents to account for when certain things happened was in fact further exemplified by her reference to the date of 2 March 2005 that appeared on the offer and acceptance document. She believed that that was the date Mr Gardner countered the offer and so the acceptance by the Pitts of the counter-offer must have been some time after that date. As it later transpired, if the evidence of Mr Doughty is correct, that date was put on the document by Mr Gardner when the accepted counteroffer was returned to him. On that view, the Pitts accepted the counteroffer on or before 2 March 2005.
It perhaps does not matter much but the point was and is that the defendant to some extent has been reliant, in developing the dates upon which certain things happened, on documents. Again this is not an unusual thing, particularly in relation to commercial transactions after the event.
The defendant was also taken through statements she had made that she worked predominantly in the canals upmarket property area. The point of the cross-examination was to suggest that she did not and that she had rather over-blown the description of her activities in this regard.
As to the defendant's evidence that she considered the plaintiff to be a 'time waster' as of February 2005, the defendant was challenged. She said she 'absolutely' considered him so (T:224).
The suggestion put to the defendant was that it served her interests in the proceedings to make that claim as it meant she could be more dismissive of the interest the plaintiff had shown in the two blocks. The defendant maintained her position.
The defendant also emphatically denied that there was any discussion with the Pitts as of the morning of 14 February 2005 about whether they would purchase one block or two blocks and whether they could only afford one block. The defendant said there was absolutely no question of affordability (T:225).
Much of the cross-examination of the defendant was designed to show the defendant as an unreliable witness who was given to exaggeration or had a propensity to be loose with the truth or loose with professional ethics. She was, for example, pressed as to whether or not she had told Mr Doughty when she first telephoned him that she had clients that would pay $2,000,000 for Mr Gardner's blocks. Her response was that she possibly would have said that she would have clients that would possibly pay that sort of money. As to the precise statement, that she had particular clients who were ready to pay that money, she denied that she would have said that (T:230).
The defendant emphasised that she did not say that she had a buyer 'today per se for those two blocks'. She said she told Mr Doughty that she operated in that sort of market. It was a niche market and she had clients in general (T:232).
The defendant also emphasised that she was not surprised that the plaintiff knew about the Gardner blocks and that he wanted in effect $1,000,000 net each. She indicated that people were aware of this. While not officially on the market, the word had got around (T:233).
The defendant confirmed (T:235) she regarded the Pitts as her clients and she was not representing the plaintiff. As to the price that Mr Gardner apparently wanted for the two blocks - $2,000,000 - the defendant said she commented to Mr Doughty 'I might be able to sell the blocks for more money if they could be sold individually', counsel for the plaintiff suggested that the defendant had acted in breach of an obligation specified by r 9 of the Code of Conduct for Agents and Sales Representatives that the agent must advise the principal as to what she considered to be the current market price. The defendant acknowledged this rule of conduct. She also emphasised that Mr Gardner was a sophisticated vendor and there was a background history to the matter and that it was appropriate for her to accept his terms.
From the court's point of view this is a non-issue. At these early material times Mr Gardner did not give a selling authority to the defendant. Mr Gardner was assumed to be a sophisticated investor. He had a financial controller, Mr Doughty, through whom parties were required to deal. The terms stated by Mr Doughty were on a 'take it or leave it' basis. Mr Gardner was not seeking advice and it is not at all surprising that an agent would not have presumed to give him any.
Counsel for the plaintiff also suggested that, in the circumstances, following the discussion on the morning of 14 February 2005 with the plaintiff, that the defendant had some obligation to develop something of a bidding auction. In that way Mr Gardner's interests would be maximised. The defendant responded (T:242) as to why she did not do this:
Simply because Mr Barboutis had clearly told me he was going to approach Brian, he was a friend of his, he was going to go over the top of me and approach him direct and I said 'fine Colin, do it.' So he had advised me that he was going to make his own - do his own negotiation.
When further pressed about what she said and why, the defendant further stated (T:242 - 243):
He was wafting on about something and, as I say, I had already told him that I was going to write up an offer. Why didn't he turn around to me and say, 'Prue, would you kindly come back and have a meeting with me in one hour's time and we will write up an offer'. He did not even offer that information. He clearly told me, 'Brian Gardner was a friend of mine. I will go over the top of you. I will deal with him direct'. I said 'fine Colin, do it'. He didn't like me - like it when I said that.
The defendant also said that she might have felt differently if she had felt that the plaintiff was a serious buyer (T:243).
The defendant also confirmed that she had a clear understanding that the plaintiff would go over the top of her in negotiations. She confirmed that at no time did she represent the plaintiff in any way, shape or form.
When challenged about whether there truly had been a meeting on Saturday, 19 February 2005, the defendant was adamant that there had been such a meeting. She said she clearly recalled dealing with the signs ready for home opens (T:260).
When pressed further about her version of events the defendant (T:264) stated as follows:
I do not recall the precise conversation after I had told Colin 'fine then, you do it' after he informed me that he was going to speak to Brian direct. He then was talking about something else or going on about whatever. I was in a hurry. I was not interested in furthering discussions with Mr Barboutis because I didn't like his mannerisms and what have you. Then it comes to where I point out to Mr Barboutis that I will - when he says to me, 'I'll back off now, I'll leave it to you, you will ring me, you will get me that block' and that's when I thought I've had enough. I responded by saying, 'No Colin, I will ring you only if I cannot get a deal together' because I didn't like the way he was trying to tell me what to do. I did not have any authority from him to act on his behalf. It didn't make - as far as I was concerned I made no representation to him to negotiate block A on his behalf. When I said to him later in that conversation where I said - when I said to him, 'Colin, I'll tell you what. I will come back if I cannot get a deal together and Ken and Shirley cannot proceed. I will give you a call and I will see if we can get a deal together whereby they get a block and you get a block but only if I cannot get a deal together'.
Counsel for the plaintiff then squarely put to the defendant that another possibility was that she deliberately misled the plaintiff. She denied that vehemently (T:266).
The defendant was further pressed as to whether the plaintiff had said he was keen on the park block. She agreed that he had indicated that. She also confirmed that by that time the Pitts had indicated they were keen on the same block. Counsel for the plaintiff then put it to the defendant that it could not be the case that the Pitts had already told her that they were interested in the park block because if both parties were interested why would she have said: 'if they can't secure both and can only run with one block then I will call you and put a deal together'. The defendant responded (T:270):
Because no way in the world was I going to try and jeopardise Ken and Shirley's opportunity to secure a block and I didn't really have the time - if Kevin - sorry, if Colin was remotely interested in making an offer on either or all of the blocks, I wasn't even going to go down that path at that point in time.
The defendant indicated that she was expecting the Pitts to sign a cash offer - a 30-day cash offer - that very evening. Accordingly, she had told the plaintiff that she would ring him if she was unable to proceed, and that was the only understanding between them.
In the course of cross-examination the defendant also recalled something that was not in her witness statement, that she had a conversation with Mr Doughty on about 15 or 16 February 2005 to the effect that she had had a conversation with the plaintiff who wanted to meet Mr Gardner and who was apparently a friend of Mr Gardner (T:278 - T281).
As to the telephone conversation on 22 February 2005, the defendant (T:282) remembered having a conversation where she refuted everything that the plaintiff said. She told him 'wrong'. He was angry. He was abusing her, accusing her. She simply said, 'wrong'. She said she responded calmly.
The defendant denied that she told the plaintiff that 'my guy has changed his mind and decided he wanted both blocks'. She said she did not recall the plaintiff saying that he had withdrawn from negotiations to allow her a clear passage to negotiate for him. Her recollection of exactly what was said at the meeting was not clear. She conceded it was 'possible' that she could have said to the plaintiff 'you would have to sell your place in Mandurah and the vendor will only consider a cash offer' (T:284).
As to the plaintiff's evidence that on 22 February 2005, during a phone call, she had said to him, 'well, in any case my buyer will sell you the block for 1.5 if you want it'. The defendant responded:
Definitely - definitely not. He didn't even own it at that time. How could I possibly offer it to anybody else?
The defendant acknowledged that she could have said something about another block coming up on Cambria Island.
She also agreed that the plaintiff probably said that this may result in legal action.
Counsel for the plaintiff pressed the defendant about the fact that 'shortly after that conversation' she received a listing for the block adjacent to the park block for $1,500,000. She said she was 'absolutely surprised' to get this listing. She confirmed that it was not her suggestion, but that the proposal and the suggested price came directly from Mr Pitts. She denied it was her doing. She made it clear that she did not think that the price would be achieved.

Mr Pitts' evidence

Mr Pitt was called by the defendant to give evidence. He confirmed that he and his wife approached the defendant in or around January 2005 and requested a tentative market appraisal of their home in Mandurah with a view probably to selling it sometime later in the year.
Mr Pitts confirmed that when the defendant came to his home to do the appraisal he told her that they were looking for a block in Mandurah on which they could build a new home. He said he told her they were particularly looking for a north facing block and preferably in stage 1 of the Port Mandurah development.
Mr Pitts said that the defendant telephoned him on or about 7 February 2005 and told him about the two blocks available in Sovereign Gardens on the canals at Port Mandurah. Mr Pitts said that the defendant gave him the address for the two blocks and described them as 'beautiful' and said that the block next to the park in particular was 'great'. The defendant also told him about the three conditions of sale.
Mr Pitts explained that he and his wife then inspected the two blocks on their own. He then telephoned the defendant and told her that they were definitely interested in buying them in order to get the block next to the park.
Mr Pitts said he spoke with the defendant on numerous occasions in the following few days. Although he understood the conditions and that the blocks would be sold for $1,000,000 net each, he suggested to the defendant that they should try to offer the vendor $900,000 per block. He indicated to her, however, that he could pay the full price if the vendor would not budge.
Mr Pitts confirmed that on Monday, 14 February 2005 he requested of the defendant and received copies of the certificate of title for each of the blocks, and requested the defendant to call at his house that evening to discuss the blocks, which later happened.
Mr Pitts explained that at their meeting that evening they spent time discussing developing the blocks and various options but that his and his wife's stated preference was to build a house on the park block.
Mr Pitts said that during their conversation he told the defendant that his wife and he were confident that they could purchase the blocks but would need to check their finances with their accountant.
Mr Pitts recalled that over the next few days while he was making financial enquiries the defendant telephoned him on a number of occasions to check on his progress.
Mr Pitts said that he eventually telephoned the defendant and confirmed that they were able to go ahead and were ready to write up an offer. An appointment originally scheduled with the defendant for Wednesday, 16 February 2005 was rescheduled to Friday, 18 February 2005 due to the meetings that Mr Pitts had on 16 February 2005. Mr Pitts confirmed signing the offer on 18 February 2005.
Mr Pitts also confirmed and said that after the settlement of the sale of the blocks on 6 April 2005, he told the defendant that, although his wife and he still intended to build on the park block, they wanted to try to sell Lot 130 Sovereign Gardens. Mr Pitts said that he told the defendant that the capital gains tax liability as against the interest payable on the loan meant that it was viable to sell that lot in the next few months or so, and he indicated to her that it should be listed at the price of $1,500,000. Mr Pitts said he told the defendant that if the lot was not sold in that period it would be withdrawn from sale.
In cross-examination Mr Pitts said that the defendant did not give them a lot of hope of selling the block in that period of time at that price. Nonetheless, she agreed to act as his agent on the listing.
During cross-examination Mr Pitts was pressed about his intentions in relation to the two blocks as at around 14 February 2005. He confirmed on a number of occasions that, at that stage, he and his wife were seeking a block to build a home on and the park block was the one they proposed to develop in this way.
Mr Pitts was also pressed in cross-examination as to his financial ability to proceed quickly to a settlement. He confirmed that it was, from his point of view, more or less a formality, but that he needed to check with his accountant and bank manager. He said that purchasing the two blocks for a joint price of $2,000,000 was really not an issue (T:325).
Mr Pitts also confirmed that between about 7 February 2005 and 14 February 2005 - in that seven or eight day period - there were numerous telephone calls and face to face meetings with the defendant.
When pressed in cross-examination to concede that the events in that period tended to blur, one into another, he acknowledged that it was possible. However, he said he was quite clear about the defendant telephoning him to look at the blocks, telling him that the blocks were available and what the arrangements were for purchase, that he then looked at them with his wife - given he was about to spend $2,000,000 on the two blocks - and that they considered the land closely because of their intentions to build a house.
When pressed further, Mr Pitts stated (T:328):
But I can certainly distinctly remember the train of events which occurred to get to a point where we first looked at the blocks to the point where we signed the offer and then had to re-sign the offer, or re-initial the offer, because the offer wasn't accepted at the reduced price we put in for the blocks, but at all stages I think my wife and myself were fairly committed to purchase the blocks.
When pressed in cross-examination as to the time - that is the date - when Mr Pitts first expressed a preference for the park block, and whether it was before 14 February 2005, Mr Pitts stated (T:328):
I probably think I did because if I recall rightly, actually I was on the blocks and I rang her from my mobile phone and said, 'Prue, we are very interested in these blocks' and, you know, 'we love it', type of thing, and yes, 'we want to push forward on it' … I recall being reasonably excited enough to call her on my mobile from the actual blocks on that day.
Mr Pitts said it was at that point that he expressed a preference for the park block (T:329).
Mr Pitts also explained that while he and his wife were initially thinking they needed a north facing block to develop the sort of house they had in mind, having seen the park block they realised they could still have an appropriate aspect and build the sort of house they wanted (T:330).
Mr Pitts was clear in cross-examination that he at no time indicated to the defendant that he and his wife were interested in buying only the park block so that they were looking for someone else to go into the venture with them to purchase the two blocks. Mr Pitts stated (T:330) that the defendant never put it to them that 'either/or was available'. It was always put on the basis that the condition of sale was 'both blocks'.
Mr Pitts readily acknowledged during cross-examination that while there had been some talk at their meeting of the evening of 14 February 2005 about development options, including a development following subdivision, their main focus was on developing a home for themselves on the park block.
Mr Pitts also confirmed that it was only after settlement in April that he decided to sell Lot 130 and it was then that he told the defendant of this plan and gave her the listing. He said it was not part of any earlier discussions with the defendant that he would act in this way.
The court finds the testimony of Mr Pitts authentic and credible in every respect. The court has no hesitation in accepting Mr Pitts' evidence and relying on it in all material respects.
As a result, the court has no hesitation in finding that, by the time of the morning of 14 February 2005, Mr Pitts on behalf of himself and his wife had not only seen the two blocks including the park block, but had formed a very favourable impression of the park block and had communicated his interest in buying the two blocks to Ms Kott, the defendant. Mr Pitts certainly had said or done nothing to create an impression he could only afford to buy one block, or was not interested in the park block or needed someone else to go into something of a joint venture to acquire the two blocks.

As a result, the court has little hesitation in finding that, as of the morning of 14 February 2005, there were good grounds for the defendant to think, as she said in her evidence she did, that the Pitts:
•Were people who were interested in buying both blocks; and
•Had not expressed any desire to on-sell Lot 130 because they needed to financially.
At that same point, the defendant well understood that she would not earn a commission from the sale of the two blocks to the Pitts (or anyone else) from Mr Gardner. Following her earlier conversation with Mr Doughty the defendant knew she would not be receiving a commission on the sale. She also knew she would not be receiving a commission from Mr and Mrs Pitts in the event they were successful in acquiring the two blocks. From a real estate agent's professional point of view, the profit in the dealing would in all probability come from the listing and sale of Mr and Mrs Pitts' existing property later in the spring/summer.

Mr Goldie's evidence

The witness statement of Paul James Goldie went into evidence (exhibit 6). He was not required to attend for cross-examination so his statement is unchallenged.
Mr Goldie confirms that, as a near neighbour of both at Baruna Court, at material times he knew both the plaintiff and the defendant.
At a time some years before the trial in the court he recalls speaking to the plaintiff who said to him words to the effect that he was interested in buying some land Mr Gardner had for sale on the canals in Mandurah. He recalls the plaintiff asking him to ring Mr Gardner and let Mr Gardner know that the plaintiff was interested in the land and wanted to talk to him about the properties.
Mr Goldie says he knew Mr Gardner reasonably well, and that he was a private man who did not like to be approached by people he did not know.
Mr Goldie recalls that he tried to call Mr Gardner shortly after speaking to the plaintiff. His assistant informed him that he was away. He tried again some days later with the same result.
Mr Goldie's evidence, in the context of this case, confirms that the plaintiff did ask Mr Goldie to speak with Mr Gardner in connection with his desire to purchase one or the other of the canal blocks owned by Mr Gardner that are at the heart of these proceedings. Mr Goldie's evidence of course does not enable any implications to be drawn as to the circumstances or motivation of the plaintiff in telephoning Mr Goldie in this regard.
Mr Goldie's evidence does not, however, corroborate that of the plaintiff, to the effect that Mr Goldie told the plaintiff Mr Gardner was dealing with another party and was reluctant to deal with him.

Mr Doughty's evidence

At all material times Mr Alan Doughty was the Group Financial Controller of Mr Gardner's business operations. One of his responsibilities was managing the personal finances of Mr Gardner.
Mr Doughty recalled receiving a telephone call from the defendant. He recalls speaking with Mr Gardner and calling the defendant and advising her that Mr Gardner would offer the two blocks for sale subject to the following conditions:
(a)the Blocks had to be sold together with settlement of the Blocks taking place simultaneously;
(b)the sale of the Blocks had to be cash and unconditional; and
(c)the Blocks had to be sold for $2 million clear, in total.
Mr Doughty said he made it clear to the defendant that, if the conditions were not met, there was a high probability that Mr Gardner would not accept any offer. He recalls specifically telling the defendant words to the effect that, 'This is the deal, and if it's not met it is highly likely that he'll say forget it'.
Mr Doughty confirmed the process of offer and purchase. In particular Mr Doughty recalls being instructed by Mr Gardner to put a line through the initial offer price of $1,800,000 and to write $2,000,000 next to it. Mr Gardner then initialled the counter-offer of $2,000,000. That was then collected by the defendant who subsequently advised Mr Doughty that the Pitts had accepted the counter-offer of $2,000,000.
As to the date 2 March 2005, handwritten on the front page of the offer and acceptance near the purchase price, Mr Doughty explained that he believed Mr Gardner personally wrote that date on the document at the point the Pitts returned the accepted counter-offer. In other words, that date more or less indicates the date the offer and acceptance was completed by the parties.
In the course of examination and cross-examination, Mr Doughty made it clear that he acted at all times with the direct instructions of Mr Gardner. In other words, Mr Doughty was not an attorney or agent at large. He acted under direct instructions from Mr Gardner and conformed to those instructions at all times.
In the course of his testimony, Mr Doughty was asked whether he recalled a telephone discussion with the defendant during which he was advised there was another party, specifically Mr Barboutis, who had expressed a desire to deal directly with Mr Gardner in relation to the purchase of one or both of the blocks. Mr Doughty had no recollection of this conversation, or of a party with an interest in coming in over the Pitts, or the name 'Barboutis'.
The events in question occurred in February 2005. The trial of these proceedings occurred in May 2008, more than three years after the event. It is possible of course that Mr Doughty could simply have forgotten an aspect of the dealings at the time, but the court was left with the clear impression that Mr Doughty had a reasonably clear memory of events and would have remembered any conversation with the defendant - or anyone else - in which he was advised there was another party who desired to make an approach to Mr Gardner directly to make an offer for the blocks at that point.
In answer to a question put by counsel for the defendant, 'Had [the defendant] mentioned some other purchaser to you, would you have passed that on to Mr Gardner?' Mr Doughty answered (T:307):
Well, my recollection was that the offer came. There wasn't a mention of other parties.
Mr Doughty also accepted that as a result of his experience in working with Mr Gardner, his expectation was that, having made a 'deal', Mr Gardner would follow through on the agreement.
The court concludes, on the balance of probabilities, that at no time did the defendant expressly tell Mr Doughty of the possibility that Mr Barboutis, or some third party, might in effect seek to negotiate directly with Mr Gardner and so endeavour to 'come over the top' of the Pitts.

Mr Gardner's evidence

Mr Gardner was called by the plaintiff to give evidence. He had been in business for many years and explained how Mr Doughty looked after many of his personal business matters in early 2005. This meant he often did not need to go into the office. As to the conditions concerning the potential sale of the two blocks on the canal at Mandurah, Mr Gardner says he wanted 'two million bucks in the hand, cash in the hand, no commission - after commission and everything. It had to be a clean deal' (T:150).
When asked by counsel for the plaintiff, whether, if an offer was received for the blocks, he wanted the blocks to be sold at the same time or together, he responded (T:151):
I don't really know that, to be honest with you. I think Alan [Doughty] was there then. You would have to ask Alan. I would have to ask Alan.
As to whether or not Mr Gardner would have been prepared to sell each of the blocks separately with a simultaneous settlement of the two dealings involving two different purchases, he responded affirmatively. He said it 'Would have depended if they were both going to be concisely done together' (T:154).
Mr Gardner also made it clear that, if he had already accepted an offer for both blocks at say $2,000,000, he would not then accept another offer, even if it were higher, say for $2,100,000 (T:154). In this regard, Mr Gardner stated (T:154), 'I am not like that. I do a deal and that's it; it's finished'.
In answer to the proposition that, if the position had been that Mr Doughty had reached a verbal understanding that the properties were to be sold to a particular purchaser for $2,000,000, he would regard himself as bound by that, Mr Gardner said, 'I think pretty well, yes' (T:156).
Mr Gardner also confirmed that he usually required his personal solicitor to look at private proposals before he agreed to them.
Mr Gardner, in giving his evidence, evinced a general appreciation of the circumstances in which he agreed to sell the two blocks at the canals at Mandurah to Mr and Mrs Pitts, although he did not, at the time he gave his evidence, exhibit a detailed recollection of events from early 2005. What was clear was that he had given certain instructions to Mr Doughty at the time and he believed Mr Doughty acted on them; and that Mr Doughty was a trustworthy assistant. As to the details of what had transpired, at the trial he deferred to Mr Doughty.

Court's findings in relation to facts

Both the plaintiff and the defendant agree that, while the crucial factual findings that the court needs to make relate to the meeting between the plaintiff and defendant on 14 February 2005, certain events and circumstances both prior to and after 14 February 2005 have the potential to bear on the making of these findings. Undoubtedly this is so.
The court will, therefore, before dealing with the meeting and discussion between the parties on 14 February 2005, have regard first to the defendant's dealings in relation to the two blocks owned by Mr Gardner at material times before 14 February 2005, and then to the dealings between the defendant and the Pitts and Mr Doughty after 14 February 2005.
As to the defendant's relevant dealings prior to 14 February 2005, the court finds that:
•In January 2005, Mr and Mrs Pitts requested the defendant to provide them with a market appraisal of their home in Mandurah, following which the defendant attended the home of the Pitts and discussed with them a possible sale of their home at a sale price of approximately $1,700,000 - $1,800,000 in the spring/summer (September 2005 and following) that year;
•In January 2005, having given her market appraisal to the Pitts, the Pitts expressed to the defendant their interest in acquiring a north facing block upon which they could construct a home, preferably a block in the stage 1 Port Mandurah canal development;
•On or about 19 January 2005, the defendant received a 'lead' on two blocks owned by Mr Gardner in the Port Mandurah canal development;
•On or about 4 February 2005, the defendant telephoned Mr Doughty, Mr Gardner's financial controller, who advised her that Mr Gardner would be prepared to sell the two blocks he owned in Sovereign Gardens on the following three strict conditions:
(1)the blocks must be sold together;
(2)the sale of the blocks must be cash and unconditional; and
(3)the blocks must be sold for $2,000,000 net together,
•Mr Doughty also told the defendant on that occasion that she would not be given a written authority for the sale of the blocks at the time he spoke to her. The implication that the court draws from this is that Mr Gardner would be prepared to give a selling authority to an agent such as the defendant if she indicated she was able to produce an offer for the purchase of the two blocks that met the three conditions specified by Mr Doughty, and that the defendant understood this;
•As a result, the defendant understood that the conditions specified by Mr Doughty on behalf of Mr Gardner for the sale of the two blocks meant in effect that Mr Gardner would not incur any expenses in relation to the sale, such as a selling fee to the defendant;
•On or about 8 February 2005, the defendant telephoned Mr Pitts and told him about Mr Gardner's blocks and the three conditions of sale;
•Over a few days immediately following 9 February 2005, the Pitts inspected the two blocks and telephoned the defendant, prior to 14 February 2005, to say that they liked the blocks. The court finds, particularly on the basis of Mr Pitts' evidence, which the court accepts, that Mr Pitts then most probably told the defendant, prior to 14 February 2005, that he and his wife were impressed with the park block. The reason for this preference was, as Mr Pitts explained, that while the park block was not north facing, its positioning was such that it would suit the Pitts with its park aspects as the site of a new home;
•On 14 February 2005, at the request of Mr Pitts, and prior to meeting with the plaintiff that day, the defendant faxed copies of the certificate of title for each block to Mr Pitts and agreed to meet with him and his wife that evening;
•As of the morning of 14 February 2005, the defendant had reasonable grounds to consider the Pitts were 'taken' with the two blocks, especially the park block;
•The defendant did not, as of the morning of 14 February 2005, labour under any impression that the Pitts needed another party to enter into some sort of joint venture with them in order to enable them to afford to buy one or other of the blocks;
•As of 14 February 2005, prior to the meeting between the plaintiff and the defendant at Baruna Court, Halls Head, Mandurah, the court accepts the evidence of the defendant and finds that she had an expectation, in light of her dealings with Mr and Mrs Pitts to that point, that the Pitts would make an offer for the two blocks when she met them that evening probably in the sum of $1,800,000.
As to the events following the meeting and conversation between the plaintiff and the defendant at Baruna Court on 14 February 2005, the court finds:
•The defendant met with Mr and Mrs Pitts at their home on the evening of 14 February 2005. On the basis of the evidence of Mr Pitts, which the court has no hesitation in accepting, the court finds that while Mr and Mrs Pitts in the course of discussion with the defendant canvassed the possibility of amalgamating the two lots with a view to a larger development or unit development on the two blocks or a possible sub-division, the focus of the Pitts was on constructing a home on the park block. The other 'options' were only briefly discussed and not given what might be called serious consideration. Mr Pitts told the defendant that he would like to make an offer and that he considered, 'We can do this', but wished to confirm his financial arrangements with his accountant and bank manager;
•In light of the meeting between the defendant and the Pitts on the evening of 14 February 2005, the defendant telephoned Mr Doughty, probably on 15 February 2005, and advised that she had a buyer for the two blocks and now needed a selling authority from Mr Gardner;
•As to the defendant's evidence that during her telephone conversation with Mr Doughty, or perhaps in a further telephone conversation with him the day following, she specifically informed him of her conversation with the plaintiff and the substance of that conversation, more is said below, but the court doubts there was such a conversation;
•Two days after 14 February 2005, on 16 February 2005, the defendant and Mr and Mrs Pitts were to meet to complete a written offer, but that meeting was rescheduled that day to 18 February 2005 at Mr Pitts' request because of Mr Pitts' other commitments;
•On 15 February 2005, the defendant telephoned Mr Doughty to inform him of her appointment to write up an offer on Friday 18 February 2005 and to request from Mr Gardner a written authority to sell the blocks. The defendant was personally to deliver the written authority but finished up faxing the selling agency agreement to Mr Doughty for Mr Gardner's signature on 17 February 2005;
•On 18 February 2005, at about 1 pm or 2 pm the defendant met with Mr Pitts who completed a contract for the sale of land by offer and acceptance which stated that the purchaser was 'Kenneth Cyril Pitts and/or nominee'. The nominee specified on the offer was Mrs Pitts. The offer made for the two blocks was $1,800,000 (without any apportionment being made between the two blocks);
•Later, on 18 February 2005, the defendant personally presented Mr Pitts' offer to Mr Doughty for consideration by Mr Gardner;
•As to the defendant's evidence that on Saturday, 19 February 2005 she saw and spoke with the plaintiff at Baruna Court, more is said below. The meeting possibly occurred as the defendant claims;
•On 22 February 2005, the plaintiff telephoned the defendant at her real estate agent's office in Mandurah. As to exactly what was said by the plaintiff and the defendant during this telephone conversation, more is said below. However, the court has difficulty in accepting the plaintiff's version;
•At some time between 25 February 2005 and 2 March 2005, Mr Doughty presented the contract to Mr Gardner for his consideration and, at the instruction of Mr Gardner, amended the offer by altering the proposed purchase price to $2,000,000 and by altering the period within which a deposit of $100,000 was to be paid from 10 days to two days of acceptance of the offer. Mr Gardner then signed and initialled the counter-offer;
•On or about 2 March 2005, Mr Pitts initialled his acceptance of the counter-offer on the document and the document was then returned to Mr Gardner who dated it 2 March 2005.
In some respects there is not a lot of dispute between the parties. The key area of difference of course is in the detail of what was said on the morning of 14 February 2005; namely, whether the defendant promised to negotiate the park block for the plaintiff while the plaintiff backed off negotiating directly with Mr Gardner, as the plaintiff alleges; or whether the plaintiff threatened to 'go over the top' of the defendant’s negotiations with Mr Gardner if the defendant would not agree to negotiate for that block, as the defendant claims he said he would, to which she responded by saying she would get back to him if the dealings between her clients and Mr Gardner were to fall over.
The other main areas of difference are:
•Whether the defendant saw the plaintiff on about 19 February 2005 and had a brief conversation about the fact the defendant had not got back to the plaintiff about the dealing. The defendant says she had such a conversation at the end of which the plaintiff said the defendant would be hearing from him after she had reiterated her earlier position that she was only going to get back to him if her client could not proceed with the dealing; the plaintiff says there was no such brief meeting or discussion.
•What the parties actually said to each other during a telephone conversation which they both agree occurred on or about 22 February 2005. The plaintiff says this was the first time he followed up the defendant to see whether she had managed to acquire the park block for him as she had promised she would and she said her client had changed his mind and that is why she had not proceeded to negotiate for the block on his behalf; and the defendant says that when challenged by the plaintiff about breaking her promise to acquire the park block for him she told him he was wrong about that promise and other allegations he then made.
The defendant also says she spoke to Mr Doughty on or about 15 or 16 February 2005 and told him either about Mr Barboutis’ expressed interest to negotiate directly with Mr Gardner, or that an unnamed third party had such an interest. While the plaintiff, through counsel in closing submissions did not dispute that the defendant had done so, in the light of Mr Doughty’s evidence referred to earlier, the court doubts, on the balance of probabilities, that the defendant's recollections to this effect are accurate. As noted above, the court considers, having heard from Mr Doughty - a careful and thoughtful witness - that if he had at about that time been told by the defendant that some third party might want to ‘come in over the top’ of the defendant’s client, he probably would have remembered that. But he did not.

None of this though particularly helps the court to decide what truly passed between the parties on the morning of 14 February 2005. On the one hand, it seems a remarkable thing that a real estate agent would have promised to cut in the plaintiff on a dealing for the Pitts in which she had immersed herself for the previous five days between about 9 February 2005 and 14 February 2005. This is especially so when the evidence provides no real basis for suggesting she had any reason to try to overly assist the plaintiff - he was not, for example, a friend. While the defendant seems to have been on regular speaking terms with the plaintiff, she was not then acting for him in any formal capacity. On the other hand, the plaintiff suggests the defendant had every reason to agree to promise to cut him in either because she was unsure of the level of the Pitts' interest in the blocks and/or their ability to finance their purchase; or because he was talking about dealing directly with Mr Gardner, a person he had told the defendant he knew. If she could prevent him from negotiating directly with Mr Gardner, then her clients, the Pitts, would have a clean run at the dealing, and she would eventually prosper by earning the commission from the sale of the Pitts' existing home.
The plaintiff's reasoning is not outlandish, but it is only plausible if the facts support it. In fact the plaintiff’s working assumption, espoused during crossexamination of the defendant and Mr Pitts, was that the defendant did not know that the Pitts actually had a preference for the park block, that the defendant was concerned the Pitts needed to bring in a joint venturer, in effect, to help them conclude the deal for the two blocks, and/or that the Pitts had already made it known, in effect, to the defendant that they would have to onsell one of the blocks to cover their commitment in buying the two blocks for $2,000,000; and that the defendant expected to earn commission on the sale of the redundant block when it was sold for $1,500,000. The plaintiff also seems to have believed at one point that the block to be sold was the park block, not the adjacent block which Mr Pitts eventually instructed the defendant to sell for $1,500,000 when settlement was effected on the purchase of the two blocks on 6 April 2005.
Once one removes these baseless elements, as I find each is, from the fact weighing exercise, and accepts that the defendant, as of the morning of 14 February 2005, had every reason to expect that her clients, the Pitts, would sign an offer for the two blocks that night for close to the asking price of $2,000,000, were keen on the park block, that there was no reason to think that they needed to on-sell one of the blocks, and that the question of the on-sale of any block did not in fact arise until the settlement date of 6 April 2005, than support for a finding that the defendant would have felt it necessary either to contemplate the plaintiff as a ready made joint venturer for the Pitts or to contrive to restrict the plaintiff’s freedom to negotiate directly with Mr Gardner because she feared he might upset a sale to the Pitts, considerably loses force.
Indeed, this understanding rather helps to explain, in the court's view, why the defendant apparently, on her own admission, had no hesitation in telling the plaintiff that she was about to sign up her clients to buy the two Gardner blocks for close to $2,000,000 when she met him that day. On all accounts it was she who volunteered this information in the early part of the conversation with the plaintiff on 14 February 2005. She was anything but coy with him. This conduct, to the court's observation, is consistent with the confident, if not over confident, way in which the defendant presented in the witness box.
While counsel for the plaintiff suggested a range of reasons why the court should not find the defendant a reliable witness, as noted above the court does not consider anything said or done by the defendant particularly to result in her version of events being discounted.
All the defendant’s actions are consistent with her account of the facts. Following her meeting with the plaintiff on 14 February 2008, she saw the Pitts. They discussed the development options. No mention was made by her to the Pitts about Mr Barboutis. Perhaps if the plaintiff were right in his assessment of the defendant’s motivations she would not have made mention of him. But in any event no mention was made. The offer was presented to Mr Gardner by the defendant on behalf of the Pitts. It was countered and the counter-offer was then accepted.
While the defendant believes she spoke to Mr Doughty about Mr Barboutis, something the court has found probably did not happen, this finding does not, in the end, affect this credibility assessment of the defendant's evidence. Rather the fact that the defendant believes she did so is consistent with her testimony that she was aware Mr Barboutis may attempt ‘to come in over the top’ and that she was not seeking to represent his interests.
What is amazing, although the point was not explained by the plaintiff in his own evidence nor raised with the plaintiff in cross-examination for explanation, is that on the plaintiff’s account of events he did not attempt to contact the defendant until 22 February 2005, eight days after the 14 February meeting at which he says the defendant promised to act for him and acquire the park block for him in consideration of him not ‘coming in over the top’. It is not unreasonable for the court in assessing the competing versions of events to wonder why a person in the position of the plaintiff, who claims he had effectively been promised by a real estate agent the opportunity to acquire a prime piece of canal land worth, apparently, at the time, around $1,500,000, and who had been looking for such a prime piece of canal land for some time, and who had been told by the real estate agent that she was about to sign up her existing clients to buy the land that very night, would have sat back without inquiry for over a week before telephoning the agent to find out if she had secured the park block for him.
The defendant of course says the plaintiff did not wait a week before he contacted her and that in fact she saw him at the Baruna Court units on the morning of Saturday, 19 February 2005, when he admonished her for not contacting him. This is all perhaps a reason for thinking the defendant’s recollections about this meeting are accurate, because it would hardly be surprising, and could well have given rise to the plaintiff’s telephone call to the defendant three days later which concluded on an acrimonious note with threats of litigation. In any event, the court does not need to make any firm findings as to whether or not there was a chance meeting of the parties on 19 February 2005 because in the end it is not satisfied that it can rely on the plaintiff's evidence.
What the court particularly has difficulty in accepting is the account of the conversation of 22 February 2005 claimed by the plaintiff. In his evidence the plaintiff says the defendant, in the course of her conversation with him on 22 February 2005, told him the bad news that the Pitts had bought both blocks and then offered to sell him ‘A block’ - a reference to the park block that the plaintiff had said he wanted to buy - or, as he later clarified his evidence, 'a block' - being one of the two blocks - for $1,500,000. The court accepts fully the evidence of Mr Pitts, as explained earlier. Mr Pitts did not instruct the defendant to sell an unwanted block until settlement day, 6 April 2005. There is no evidence to suggest that the defendant had any mandate to sell either of the two blocks as of 22 February 2005. Indeed the whole of the evidence, and Mr Pitts’ in particular, shows that the Pitts were happy to buy both blocks, while they preferred the park block, and that money was no obstacle to their plans. As of 22 February 2005 it beggars belief that the defendant would, without instructions, have offered to sell to the plaintiff either the Pitts' park block or the adjacent block. Certainly it is difficult to find that what the plaintiff says the defendant then said is, on the balance of probabilities, so. Despite the attempts of counsel for the plaintiff to portray the defendant otherwise, there is no evidence to suggest she acted in such an unprincipled and unprofessional manner generally, as a matter of practice, or did so in this particular case.
In circumstances where the account provided by each party might be said, on its face, to be plausible, and while there are many examples in human experience to support the aphorism that ‘truth is stranger than fiction’, I consider the plaintiff’s account of what was said during the telephone conversation on 22 February 2005 lacks authenticity. This in turn weakens the authenticity of the plaintiff’s account of what passed between the parties on 14 February 2005.
Additionally, when the court takes into account the state of dealings between the defendant and the Pitts up to 14 February 2005, it is difficult to accept that the defendant was either so uncertain about the Pitts' position and interest in the park block, or so concerned about the possibility of the plaintiff upsetting the very prospective dealing between the Pitts and Mr Gardner, that she thought it necessary to promise the plaintiff anything that would keep him interested or at bay. Her prior knowledge and dealings with the plaintiff were not such that she had any special relationship with him nor a need to look out for his interests.
In the event though, the law does not require the defendant to prove anything in a case like this. Rather, the plaintiff must prove his case on the balance of probabilities. As Mahoney JA observed in Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 227:
'Probability' is a term which may have several different meanings. One of these refers to the subjective confidence of the person in question in the correctness of a particular judgment or proposition and, in particular such confidence based on reasonable grounds. According to this meaning, something is probable, if that person has the appropriate degree of confidence in its existence or correctness, based on or judged according to reason. [references omitted]
This understanding reflects what Dixon J explained in Briginshaw v Briginshaw (1938) 60 CLR 336 at 360 - 362 where, following a discussion of the distinction between the criminal standard of proof and the civil standard of proof his Honour noted:
It is evident that Professor Wigmore countenances as much flexibility in the statement and application of the civil requirement as did Mr Starkie. The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved.
In this case the court does not consider that the plaintiff's allegations have been made out to the reasonable satisfaction of the court. The court is not, having regard to all of the evidence, possessed of an actual persuasion of the occurrence or existence of the conversation alleged by the plaintiff to have occurred with the defendant on the morning of 14 February 2005.
Indeed, having heard the testimony of the respective parties, the court, if anything, is inclined to consider the account of events given by the defendant overall to be more reliable. While she may have believed that she had told Mr Doughty of Mr Barboutis’ existence soon after 14 February 2005, her accounts of what she said to Mr Barboutis on 14 February 2005 and what she told him on 22 February 2005, and her general conduct have the ring of authenticity to them.
Ultimately, though, the conflicting accounts of the detailed exchange between the parties as to what was said on the morning of 14 February 2005 leaves the court surmising that enough was said to leave each party incorrectly believing that they had communicated a certain position that the other fully understood and accepted.
However, it is the plaintiff who carries the burden of proving the allegations he has made against the defendant on the balance of probabilities and the court is not satisfied on the evidence that the plaintiff has made out his case according to this standard.
Accordingly, the court is not satisfied that the defendant warranted to act for the plaintiff in the manner alleged, or that her conduct constituted a breach of any contract or was in any relevant sense misleading or deceptive.
For these reasons the plaintiff’s case fails.

Order

For these reasons the plaintiff’s action should be dismissed.
The court will hear from the parties as to the terms of the judgment that should now be entered.