Baycrown Pty Ltd v IVI Pty Ltd

[2005] HCATrans 1031

[2005] HCATrans 1031

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B55 of 2005

B e t w e e n -

BAYCROWN PTY LTD

Applicant

and

IVI PTY LTD

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 16 DECEMBER 2005, AT 10.54 AM

Copyright in the High Court of Australia

MR J.A. GRIFFIN, QC:   If the Court pleases, I appear with MR P.W. HACKETT for the applicant.   (instructed by Walsh & Partners)

MR H.B. FRASER, QC:   If the Court pleases, I appear with MR D.M. LOGAN for the respondent.   (instructed by Quinn & Scattini)

GLEESON CJ:   Yes, Mr Griffin.

MR GRIFFIN:   May I start with the issue of whether the Court of Appeal properly adjudicated on the concluded contract matter.  Your Honours have seen that it is our submission that the Court of Appeal did not adjudicate on matters which were raised at paragraphs 33, 34 and 35 of our client’s outline of submissions to the Court of Appeal.  The issue was whether, when the respondent purported to accept the applicant’s offer to sell, it had sufficient notice of the prior withdrawal of the offer by the applicant to prevent it from communicating a valid acceptance.  By that time Mr Moss, who sent the acceptance of the offer, had already had a conversation with Gahan, the agent, and Gahan had been told by the vendor that emails had been sent withdrawing the offer.  Although Gahan had been told unambiguously that the offer had been withdrawn, both Gahan and Moss testified that in their subsequent conversation Gahan merely said that Baycrown wanted to withdraw the offer, not that it had withdrawn.  Their evidence in that respect was accepted and applied and the Court of Appeal did not go beyond that in its analysis of the issue. 

Now, it has, of course, long been established that it is not only if the offer of sale has been actually withdrawn that an offeree is precluded from accepting it.  An offeree cannot accept an offer if it has come to his knowledge that the offeror no longer intends to sell the property to him.  That is the effect of Dickinson v Dodds where the purchaser learned from an independent source that the vendor had been either offering or had agreed to sell the land to another party and he thereupon sent a formal acceptance of the offer.  The Court of Appeal held that there was no contract because Dickinson was precluded from accepting by reason of the knowledge of Dodds’ conduct.

Now, it was said in that case of course, and it is of course the case, that the onus is on the party asserting that a binding contract existed.  In this case, the day before the purported acceptance ‑ ‑ ‑

GUMMOW J:   Well, the principles seem to be settled, do they not?

MR GRIFFIN:   Yes, they do, your Honour.  The applicant’s solicitor had sent two emails expressly withdrawing the offer to sell the property to the respondent.  They were sent at 5.30 pm on 23 October, the evening before the relevant conversation between Gahan and Moss.  One of these was to the respondent’s solicitor, Mr Martinez of Cleary Hoare, and that email was copied to the agent, Mr Gahan.  Mr Martinez was held by the trial judge not to have authority to receive a withdrawal of an offer, but it was never disputed that that email was sent.  The second email was the copy to Gahan. 

As to Gahan’s position, Baycrown had executed a document appointing Gahan its agent, but Gahan was an agent known to the respondent who had been brought into the transaction by Moss of IVI.  Moss had, in fact, initiated the negotiations for the proposed sale by approaching Gahan and asking him to get involved, asking him to approach Baycrown to see if Baycrown would sell the property.  It was not contended that Gahan was IVI’s agent for the purpose of receipt of a withdrawal of offer, but the fact was that Gahan had a much closer association with IVI than he did with Baycrown.

Gahan claimed not to have read the email at the time he had his conversation with Moss.  However, he had by that time had a conversation with Mr Van Asperen, the principal of Baycrown, who had told him, as the trial judge held, that the offer was withdrawn.  The trial judge accepted Mr Van Asperen’s evidence and Mr Van Asperen testified that he had said to Gahan, “We’ve cancelled the contract.  It was done by email last night.”  Van Asperen said there were two phone calls, one at 11 am and one at 1.30 on the 24th, and Gahan said there was one which was between 1.30 and 2.00.

Later that day, after he had his conversation with Moss which resulted in Moss accepting, Gahan wrote the letter, exhibit 7, page 1, and someone realising the importance of this letter arranged for it to be known.  Page 1 in the application book.  Your Honours see, looking at that letter, in the third paragraph, and this is from Gahan to Moss, third paragraph:

About 2pm today I rang Tom as I had not heard from him to speak with him regarding the same matter.  He then proceeded to inform me that he had withdrawn his offer via a e-mail he had sent to me late last night.

That statement relates to that conversation Gahan had had with Van Asperen before he spoke with Moss. 

So the position is that before the conversation with Moss, Van Asperen had told him that the offer had been withdrawn and had referred to the emails, and after the conversation he wrote a letter saying that what Van Asperen had told him was that the offer had been withdrawn.  No explanation was forthcoming as to why the unambiguous conversation became ambiguous when relayed to Moss.  It is also to be noted that Moss purported to accept the offer a very short time after he had the conversation with Gahan.  The acceptance by Moss was at 3.25.  That is about one and a half hours after the conversation with Gahan. 

Another matter which was drawn to attention in the outline is that by accepting the offer at that time without any further communication with Baycrown, Moss left unresolved the issue he had been raising in negotiations with Van Asperen.  Moss had previously declined to sign the contract because he had been insisting on an agreement to a different lot configuration, an insistence which he abandoned when he sent the acceptance of the offer.  Now, the Court of Appeal evaluated the matter solely by examining what Gahan and Moss claimed to have said to each other.  This appears at pages 58 to 59.  At the foot of page 58 Justice Keane said:

There is no special formula that must be used to successfully communicate the withdrawal of an offer but it is essential that it be made clear to the offeree that the offeror no longer wishes to proceed.  It would have been a simple matter for Mr Gahan to say to Mr Moss that the appellant had withdrawn the offer.  On any view of the evidence of Mr Gahan and Mr Moss as to what passed between them in this regard, it is clear that this simple message was not conveyed.

Now, at paragraph [58] of the application book at page 17 it will be seen that the trial judge had a similar approach to the issue and it is submitted that it is not possible to adjudicate this issue, as either the primary judge or the Court of Appeal did, by simply accepting the evidence of Gahan and Moss to the effect that Gahan spoke to Moss in terms of Van Asperen thinking of withdrawing the offer as opposed to having withdrawn the offer.  Rather, it is necessary to evaluate the evidence against the body of evidence relating to the issues other than what Gahan and Moss claimed to have said to each other and then determine whether in the light of all the evidence the respondent had satisfied the onus of proving that there was a binding contract.  The adjudication of the issue by the Court of Appeal had to recognise the vested interest both Gahan and Moss had in asserting that no actual withdrawal was communicated; Gahan because he had a substantial commission to save, and Moss because he was seeking to support the transaction.  It is one of those cases in which it is simply not possible to dispose of the issue by a credibility finding, and that is in reality what the courts both did. 

Finally, in what I have said on this issue I have mentioned matters that are referred to in those paragraphs of the outline of argument that went to the Court of Appeal, paragraphs 33, 34 and 35 which are at pages 33 to 34 of the application book.  We say they were not adjudicated upon at all; rather, the court merely applied the evidence of Gahan and Moss despite their vested interest and despite the apparent inconsistency of the evidence with objective evidence, to say nothing of the haste exhibited by Moss in accepting without any apparent inquiry and without waiting to see the content of the emails following the conversation with Gahan and without waiting for the lot configuration issue to be resolved even though that was the issue that prevented him from signing at that point.  The Court of Appeal should also have considered whether the evidence of Moss, viewed in the context of matters to which we have drawn attention, was sufficient on the Dickenson v Dodds principle to have prevented him from accepting the offer. 

Might I turn to the second point raised.  As your Honours have seen from the application book, the respondent IVI sought and obtained from the primary judge, Justice Philippides, a declaration that the contract in writing between the plaintiff and the defendant was a valid contract binding on the defendant.  It is apparent from the respondent’s written outline that the respondent does not dispute the fact that it did not disclose in those proceedings the fact that it entered the contract for another entity, namely, Norfolk Estates Pty Limited.  The terms of that authority are relevant, the authority ‑ ‑ ‑

GUMMOW J:   Was this information that was available to your side at the time of the proceedings before the Court of Appeal?

MR GRIFFIN:   It was in the sense that the authority had been produced, but it was not produced in the proceedings and its significance was obviously overlooked.  It was not until the specific performance proceedings were issued that the plaintiff companies made their position clear in relation to the authority because it is then that the statement of claim issued in that proceeding.  That appears at page 99 of the application book and at page 103 your Honours see the second plaintiff’s alternative claim to the first plaintiff’s claim and this is the Norfolk Estates’ claim:

In the alternative to paragraph 5, the second plaintiff says as follows:

(a)      by a document styled An Authority to Enter Nominee Contract dated and made on 23 October 2002, the second plaintiff authorised the first plaintiff to enter into the contract pleaded in paragraph 5 as agent for the second plaintiff.

(b)      the first plaintiff made that contract as agent for the second plaintiff.

The authority appears at page 98 and your Honours see that it is in these terms:

Norfolk Estates . . . hereby authorises and requests that you enter into a contract on its behalf and as its agent for the purchase of the property specified in the Schedule.

Having obtained the declaration, the respondent and Norfolk Estates issued that second proceeding that I have just taken your Honours to.  The statement of claim was delivered after the appeal.  Your Honours see that they make alternative claims for specific performance relief.  Now, in response to the contention that, having regard to the nature of the agency and the nature of the proceedings, the fact of the agency had to be disclosed in the proceedings under appeal, the respondent says a number of things, none of which, in our respectful submission, is sustainable.  First it said, quoting a passage in Bowstead on Agency that relies on the 1916 English decision of Sebright v Hanbury:

In an action . . . for specific performance of a contract of sale of land, the plaintiff is not entitled to interrogate the defendant for the purpose of ascertaining whether he was acting as agent for an undisclosed principal. 

Now, if that is a correct statement of the law as it previously stood, it was plainly abrogated in Queensland by rule 18 of the Uniform Civil Procedure Rules which provides:

If a person is suing or being sued in a representative capacity, the plaintiff or applicant must state the representative capacity on the originating process. 

In Queensland, therefore, the vendor is entitled to know at least from the outset of any court proceedings that the purchaser is acting in a representative capacity.  In the light of the terms of the authority, IVI had to be suing in a representative capacity in this case.  The beneficial interest in the land was plainly divested in Norfolk Estates and it was that company’s responsibility to pay for the purchase.  It is submitted that, having regard to the terms of the authority, the beneficial interest in the contract and the land reposed in Norfolk Estates.

Next it is said that the authority did not go to any issue in the proceedings.  Now, in our submission, that is likewise not the case.  The issue in the case, as your Honours have seen, was whether a contract had been formed, and the existence of a principal was directly relevant to that issue.  The context was one, as your Honours have seen, in which the respondent’s acceptance was sent after the vendor had sent two emails withdrawing its offer.  When the principal of Baycrown had told Gahan, the agent, that the offer had been withdrawn and Gahan had subsequently spoken to Moss, the principal of IVI, in circumstances in which it was thought that the respondent IVI was the purchaser, the case of course focused, as the judgments in the application book indicate, on the communication between Gahan and Moss on behalf of IVI.  But as we know, the court held that what Moss learned in that conversation did not preclude Moss from accepting the offer on behalf of IVI.

However, no wider investigation was undertaken because, of course, it was not thought that there were any parties relevant to offer and acceptance other than Baycrown and IVI.  Had it been known that the real purchaser was Norfolk Estates, the question as to what Norfolk Estates came to know about Baycrown’s withdrawal would undoubtedly have been investigated as were the questions of communications passing between IVI as agent and Norfolk Estates as principal, particularly in the period in which Baycrown was taking action with the apparent intent of the withdrawal of its offer.  As IVI was agent only, it was no doubt obtaining instructions from Norfolk at various points.  The relationship between Cleary Hoare and Norfolk would also have become relevant.

So in circumstances in which the true purchaser, to use the words of Lord Lindley in Keighley Maxsted, was Norfolk Estates.  Baycrown would have been entitled to disclosure of documents held by Norfolk in relation to the matter including documents relative to the formation or otherwise of the contract.  That is shown by the Abu Dhabi Case, which we have also given your Honours, where proceedings instituted by an agent who was acting for an undisclosed principal were stayed when the agent declined to disclose documents that were in the possession of the principal. 

GUMMOW J:   Is there any defence filed to this later application and which was launched in May this year?

MR GRIFFIN:   Yes, there is a defence, your Honour.

GUMMOW J:   Page 95 of the book?

MR GRIFFIN:   Yes, there is a defence and it has been filed, but it is not in the book.  Justice Webster said that the central question was whether the plaintiff was the real or the nominal plaintiff, the answer to which was determined by whether he had any beneficial interest in the action.  He said that the principal was the real plaintiff, the agent was the nominal plaintiff and the agent had no interest in the proceedings other than his right to bring them, and the right to bring the proceedings was a mere technical right.  Now, knowing that Norfolk Estates was the real purchaser, its documentation would have been important in two ways.  First, it would have been relevant in relation to whether Norfolk Estates learned from the emails or otherwise that the applicant had stated that the offer was

withdrawn and, secondly, it would have been relevant in regard to communications at the time between Norfolk Estates as principal and IVI as agent.

Then it is said that the applicant became aware of the terms of the authority prior to the appeal but, as I have said, the authority was not produced in the proceedings.  It was first produced to solicitors who handled the applicant’s conveyancing as part of the tender of performance of the contract by the purchaser and those solicitors were not the solicitors on the record in the original action or the appeal.  The significance of the terms of the authority obviously only became relevant when that statement of claim was delivered.  Furthermore, the context was one in which IVI had propounded that it was the purchaser of the land, and that is apparent from a quote that we have given your Honours at page 92.  It is a quotation from what my learned friend Mr Fraser said on the occasion of the trial in the IVI matter and he said:

It related to this matter, your Honour, in that the joint venture was to be in relation to the purchase by the Plaintiff of the subject land from the Defendant.

So what the court was told and what we were told was that the land was being purchased by the plaintiff and there was a prospect of a joint venture with another company.  The critical difference, of course, was that in the true situation the existence of Norfolk Estates was highly relevant to the issues at hand, namely, the issue of offer and acceptance, whereas the prospect that IVI was going to enter into a future joint venture had no relevance to offer an acceptance at all.  So the conduct of the respondent ‑ ‑ ‑

GUMMOW J:   Mr Griffin, just a minute, what is the defence, if any, pleaded to paragraph 9 in the new proceeding, paragraph 9 at page 101?  Paragraph 9 pleads the declaration made by Justice Philippides.

MR GRIFFIN:   Your Honour, I am sorry, I cannot recall at this point.  So the conduct of the respondent commencing with its failure to comply with rule 18, in our submission, has been brought about by a serious miscarriage of justice and, with respect, the Court should grant special leave on this issue as well even though it was not in issue before the Court of Appeal.  The issue is purely a legal point.  There are no relevant factual issues in dispute.  The existence of the terms of the authority are not disputed.  Those are our submissions, if the Court pleases.

GLEESON CJ:   Thank you, Mr Griffin.  We do not need to hear you, Mr Fraser.

The decision of the Court of Appeal in this matter turned on the application of settled principles to the particular facts and circumstances of the case which does not raise an issue suitable to a grant of special leave to appeal and we are not persuaded that the interests of justice require such a grant.  The application is dismissed with costs.

We will adjourn for a short time to reconstitute.

AT 11.15 AM THE MATTER WAS CONCLUDED