Burden v Chen - [2025] SADC 86

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BURDEN v CHEN & ORS
[2025] SADC 86
Judgment of his Honour Judge Burnett
11 July 2025
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ADMISSIONS - WITHDRAWAL
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - DISCHARGE BY AGREEMENT - NOVATION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - STATUTE OF FRAUDS, SECTION 4 - CONTRACTS TO WHICH APPLICABLE - CONTRACTS FOR SALE OR DISPOSITION OF LAND OR ANY INTEREST IN LAND
By an interlocutory application dated 30 December 2024, the third respondent has sought leave to file a defence to the claim of the applicant, a cross-claim against the applicant and a revised defence to a cross-claim issued by the first and second respondents (the proposed pleadings). Each of those pleadings allege that on about 22 December 2022 there was a novation to the third respondent of a contract that had been entered into on 27 August 2022 by the applicant and the first and second respondents in which the applicant agreed to sell land at Glenelg (the Property) to the first and second respondents (the Contract).
In his defence to the claim made by the first and second respondents, the third respondent admitted that there had been a breach of the Contract by the first and second respondents. The third respondent seeks to withdraw that admission by pleading the novation.
The applicant opposes the application on three bases. The applicant submits that:
(1)the third respondent has not provided an adequate explanation for the withdrawal of the admission such that leave should not be granted;
(2)the third respondent does not have reasonable prospects of establishing that there was a novated agreement as alleged; and
(3)the third respondent does not have reasonable prospects of satisfying the Court of the writing and signature requirements of s 26 of the Law of Property Act 1936 (SA)(the LPA) and therefore the novated contract is unenforceable.

Held:
(1)The third respondent is granted leave to file the defence to the claim of the applicant, a cross claim against the applicant for the return of the deposit and a revised defence to the cross claim.
(2)The Court has a broad discretion in determining whether to permit the withdrawal of an admission. The overring consideration is the interests of justice: Centrestate Exports Pty Ltd v Amarantos Shipping Co Ltd [2005] SASC 158, Juno Pharmaceuticals Pty Ltd v Millenium Pharmaceuticals Inc [2019] FCA 526 applied. Of significant weight in the present matter was that the application was made at an early stage of the proceedings, that there has been no delay or reliance upon the admission and that the withdrawal of the admission involved the different characterisation of conduct rather than the withdrawal of an admission to a specific fact. In these circumstances, the withdrawal of the admission does not provide a sufficient basis to refuse leave to file the proposed pleadings.
(3)A novation involves a triparte agreement in which the original contract (between the applicant and first and second respondents) is replaced and a novation by which a new party (the third respondent) is introduced in place of one of the original parties: Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd (2019) 19 BPR 39,031 applied. Subject to the possible application of s 26 of the LPA, the discharge of the earlier agreement and the creation of the new agreement may be implied: Hillman v Iacullo (2015) 90 NSWLR 422, Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd (2019) 19 BPR 39,031 applied. The allegations in the pleadings provided for a sufficient basis for an implied novation.
(4)The alleged novated agreement is a triparte agreement involving the discharge of the first and second respondents and the assumption of their liability in the new agreement between the third respondent and the applicant. Section 26 of the LPA applies to the whole contract and not just part of the contract: Horton v Jones (1935) 53 CLR 475 applied. For the purposes of s 26 of the LPA, written communications may be read together and constitute sufficient writing: Pipikos v Travans [2016] SASCFC 138 applied. Electronic communications may be sufficient: Kation Pty Ltd (No 2) [2012] NSWSC 356 applied; s 9 of the Electronic Communications Act 2000 (SA) considered. It is arguable that the email communications between the applicant and the third respondent are sufficient writing. Section 26 does not require the first and second respondents to sign the novated agreement, as they are not parties to be charged under that agreement.

Electronics Communications Act 2000 (SA) s 9; Law of Property Act 1936 (SA) s 26 ; NSW Conveyancing Act (NSW) s 54A; Uniform Civil Rules 2020 r 69.1, 69.2, 70.3, referred to.
Adelaide Brighton Cement v Hallett Concrete Pty Ltd (2020) 137 SASR 117; ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (2012) 245 CLR 338; Bye v Hand [2025] ACTSC 94; Centrestate Exports Pty Ltd v Amarantos ShippingCo Ltd [2005] SASC 158; Chapman v Australian Broadcasting Corp (2000) 77 SASR 181; Collins v Duke of Westminster [1985] QB 581; Drummond-Jackson v British Medical Association [1970] 1 All ER 1094; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523; Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd (2018) 19 BPR 39, 031; Harry v Fidelity Nominees Pty Ltd (1985) 41 SASR 458; Hillam v Iacullo (2015) 90 NSWLR 422; Horton v Jones 1935) 53 CLR 475; Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133; Juno Pharmaceuticals Pty Ltd v Millenium Pharmaceuticals, Inc [2019] FCA 526; Lyth v Ault and Wood (1852) 155 ER 117; McLeod v Cardiff Colliery Co NL [1925] VR 1; Olsson v Dyson (1969) 120 CLR 365; Pope v Harris Orchard [2010] SASC 354; Pillay v Lloyd [2000] SASC 208; Re United Railways of Havana and Regla Warehouses Ltd [1960] Ch 52; Robinson v Podosky [1905] St R Qd 118; Salter v Gilbertson (2003) 6 VR 466; Vickery v Woods (1952) 85 CLR 336, applied.

BURDEN v CHEN & ORS
[2025] SADC 86
Civil
Introduction

By an interlocutory application dated 30 December 2024, the third respondent, Mr Liu, has sought leave to file a defence to the claim of the applicant, a cross-claim against the applicant and a revised defence to a cross-claim issued by the first and second respondents (the proposed pleadings). Each of those pleadings allege that there was a novation of a contract that had been entered into on 27 August 2022 by the applicant and the first and second respondents in which the applicant agreed to sell the land at 5 Maxwell Terrace Glenelg (the Property) to the first and second respondents (the Contract). The proposed pleadings allege that the Contract was novated to the third respondent on about 22 December 2022.
These proceedings were consolidated with other proceedings (the separate proceedings) that had been issued by the first and second respondents against the third respondent. The joinder was on the basis that the question of leave to file the proposed pleadings and the adequacy of those pleadings may need to be addressed at a later stage. The third respondent has previously filed a defence to the claim of the first and second respondents in the separate proceedings in which he admitted that by their failure to settle, the first and second respondents breached the Contract. As the proposed pleadings withdraw that admission and seek to plead the novation, leave is required to file those pleadings.
The applicant opposes the application. She does so on three bases. First, it is submitted that the third respondent has not provided an adequate explanation for the withdrawal of the admission such that leave should not be granted. Secondly, it is submitted that the third respondent does not have reasonable prospects of establishing that there was a novated agreement as alleged. Thirdly, it is submitted that the third respondent does not have reasonable prospects of satisfying the Court of the writing and signature requirements of s 26 of the Law of Property Act 1936 (SA) and therefore the novated contract is unenforceable.
These reasons are given in the context of an interlocutory application in which the relevant issues included whether the proposed pleadings raised a defence and cross claim that was arguable. It can be expected that the parties will adduce further evidence at trial and provide more detailed submissions on the issues raised by the pleadings. These reasons therefore do not represent concluded views on any of the issues and should be read as only considering and determining whether the proposed pleadings raised matters that are arguable.
Factual background to the application
On 27 August 2022, the applicant and first and second respondents entered the Contract whereby the applicant agreed to sell the Property to the first and second respondents for the sum of $3.7m. A deposit of $200,000 was payable. It is alleged in the proposed pleadings that the deposit was paid by the third respondent. Under the Contract, settlement was fixed for 15 December 2022. The purchasers under the contract were expressed to be “Paul Samuel Sutton [the first respondent] and or nominee” and “Chang Chen” [the second respondent] and or nominee.”
The proposed pleadings allege that on about 28 October 2022, the respondents executed a document entitled “Conveyance by Direction” which recorded that the first and second respondents authorised the conveyance of the Property to the third respondent.
On about 10 November 2022, the respondents executed a Deed of Guarantee and Indemnity which recorded that the first and second respondents had entered into the Contract as agent for the third respondent and that the third respondent had agreed to comply with all of the obligations imposed on the first and second respondents as the purchaser under the Contract.
The third respondent engaged a Ms Wu to act as his conveyancer in relation to effecting settlement under the Contract. The proposed pleadings allege that the first and second respondents did not themselves engage a conveyancer or take any other steps for the purposes of settlement. There were no communications between the applicant and the first and second respondents in relation to settlement (other than in relation to a Notice of Default, which is referred to below).
There were a number of email communications between the applicant’s conveyancer, Ms Fazzolari, and the third respondent’s conveyancer in relation to settlement. These communications are critical to the contention of the third respondent that there had been a novation of the Contract to the third respondent. Those communications were:
(1)an email from Ms Fazzolari to Ms Wu dated 1 November 2022, providing notice that a PEXA invitation had been sent to Ms Wu;
(2)an email from Ms Wu to Ms Fazzolari dated 5 December 2022, which stated that “as you may know, the actual purchaser is now Mr Dadi Liu. I have been appointed to act as his conveyancer. Unfortunately, we may need to delay settlement as Mr Dadi Liu’s visa still hasn’t been granted…I confirm that Mr Dadi Liu is paying cash and his money is ready for settlement…Once Mr Did Liu’s visa is granted, we will apply for FIRB approval, it normally takes a week to get it. Then we can settle immediately”…
(3)a Default Notice issued on 21 December 2022 by the applicant to the first and second respondents (and emailed by Ms Fazzolari to Ms Wu), which stated that the document was sent by way of service and further stated “please let us know when settlement is ready to occur…”.
(4)an email from Ms Wu to Ms Fazzolari dated 22 December 2022, which stated that she had received the Notice of Default and then went on to discuss the delay in the third respondent getting his visa but said that he should be able to get it before the new term starts. The email said “could you please discuss this with your client to allow more time for us to complete settlement;”
(5)An email dated 22 December 2022 from a Ms Jiang, the migration agent for the third respondent, to Ms Wu and Ms Fazzolari and others, stating that an outcome to the visa should be available before the commencement of the school term the next year. The email went on to say "if you would take those factors and allow extra time for them I think that would be befit[sic] to mutual parties..."
(6)an email from Ms Fazzolari to Ms Wu and Ms Jiang dated 22 December 2022 which stated: “Thank you for your emails and for the update on your client’s visa application. I have just spoken with my client and she has instructed us to proceed with charging interest if the property does not settle by the specified date in the notice of default. This contract was signed back in August and being such a long settlement tis should have all been finalised in time for the original date being the 15^th December 2022. We understand that there are timing restrictions, particularly at this time of the year which is beyond your contract, but once again there was ample time for this to be finalised. The due date for settlement as per the notice of default will remain the same. Please keep us updated as the visas are approved and when you lodge the application with FIRB so we have ample time to arrange for disconnections and final cleans/maintenance at the property.”
(7)an email from Ms Fazzolari to Ms Wu dated 11 January 2023 asking for an update on the visa and Foreign Investment Review Board (FIRB) approval;
(8)an email from Ms Jiang to Ms Wu and Fazzolari dated 13 January 2023 which advised there was no update from the Department of Home Affairs concerning the visa;
(9)an email from Ms Fazzolari to Ms Wu and Ms Jiang dated 18 January 2023 which asked whether there was any updates and that settlement was overdue and “we still don’t have any idea as to when settlement will be;”
(10)an email from Ms Jiang to Ms Wu and Fazzolari dated 18 January 2023 responding to the email from Ms Fazzolari as to the lack of progress;
(11)a further email from Ms Fazzolari to Ms Wu and Ms Jiang dated 18 January 2023 which stated that the applicant would be considering her options on termination of the Contract if there was not any progress by the end of the month.
The applicant terminated the Contract on 16 February 2023.
Pleadings
The applicant alleges that the first and second respondents breached the terms of that contract by failing to settle and/or engaged in misleading conduct. The applicant alleges that she suffered loss and damage in the sum of $724,459.69 on the resale of the Property. The applicant has not made any claim directly against the third respondent.
In their defence, the first and second respondents admitted that settlement did not occur on 15 December 2024 (being the date fixed for settlement) and pleaded that it did not propose to challenge the allegation that by failing to settle, they breached the terms of the Contract.
On 28 March 2023, the first and second respondents had brought the separate proceedings against the third respondent in which they claimed that the third respondent breached the terms of the Deed of Guarantee and Indemnity by failing to perform the first and second’s obligations under the Contract. It was further alleged that breach caused the first and second respondents to breach the Contract. The first and second respondents claimed an indemnity from the third respondent. At the time that the separate proceedings were issued, the applicant had not instituted these proceedings against the first and second respondents.
In his defence in the separate proceedings, the third respondent admitted that the failure on the part of the first and second respondents to settle resulted in a breach of the Contract by the first and second respondents. The third respondent denied that there was any failure on his part to settle.
Those allegations that were made by the first and respondents in the separate proceedings have been repeated in the cross claim made by the first and second respondent against the third respondent in these proceedings.
Withdrawal of an admission
Pursuant to Uniform Civil Rules 2020 (UCR) 69.1, a party is not able to amend a pleading under that rule (which permits an amendment without leave up until 14 days after discovery is due) if the effect of that amendment is to withdraw an admission. If an admission is being withdrawn in a proposed pleading, the party seeking to do so will need to seek leave under UCR 69.2.
In the present case, the third respondent needs leave to amend his defence to the claim brought against him by the first and second respondents in the separate proceedings which are now consolidated with these proceedings. In that defence, the third respondent admits that the failure to settle resulted in a breach of the terms of the Contract by the first and second respondents. This is inconsistent with the plea that there had been a novation of the Contract to the third respondent such that the liability of the first and second respondents under the Contact was discharged. Further, under the terms of the orders in which the consolidation of the separate proceedings to these proceedings was made, the adequacy of the proposed pleadings was to be reserved for later consideration.
The Court has a broad and unfettered discretion in determining whether to permit the withdrawal of an admission.[1] The overriding question is what is in the interests of justice.[2] The party seeking to withdraw an admission should provide an explanation as to why the admission is being withdrawn.[3] In Centrestate Exports Pty Ltd v Amarantos Shipping Co Ltd,[4] Debelle J summarised the principles in relation to the exercise of the discretion to grant leave to withdraw an admission:
The overriding consideration is the interests of justice. The Court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal. It is plainly necessary to have regard to all relevant factors including the nature and importance of the admission, the circumstances in which the admission was made, whether the admission was made deliberately or inadvertently, the reason given for the application to withdraw, the detriment or prejudice which might be caused to the other party and the stage which the proceedings have reached, and whether the admission is contrary to the facts. The list of relevant factors affecting the Court’s decision will plainly vary from case to case.
[1] Bye v Hend [2025] ACTSC 94, [11] and the cases stated therein.
[2] Ibid.
[3] Ibid, [14].
[4] [2005] SASC 158, [32].
Both counsel also referred to the decision in Juno Pharmaceuticals Pty Ltd v Millenium Pharmaceuticals Inc[5] where Besanko J referred to the relevant principes in broadly similar terms. Besanko J stated:
The overriding consideration in determining whether to grant leave to withdraw an admission is the interests of justice. In determining where the balance lies, a number of matters which overlap and interact are relevant. They are the circumstances in which the admission came to be made, the strength of the case now advanced that the admission is or may well be incorrect, whether the applicant has done all he or she could do to establish that the admission is incorrect, whether the applicant has acted in a transparent and straightforward fashion, any delay in making the application to withdraw the admission, the significance of the admission to the respective cases of the parties, prejudice to the applicant if the admission is not withdrawn and to the respondent if it is, general prejudice to the applicant and the respondent and finally, case management principles as discussed in AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 and embodied in ss 37M and 37N of the Federal Court of Australia Act 1976(Cth).
[5] [2019] FCA 526.

Applying these statements of principle, the following matters are relevant to the exercise of the discretion in the present case.
First, this is not a case where the applicant has acted to his detriment on the admission. The proceedings are still at an early stage. The admission was made in the separate proceedings and therefore did not directly affect the applicant in the progress of her claim against the first and second respondents. This is not a case where the proceedings have significantly advanced based on the admission.
Secondly, the admission and its withdrawal raised an important issue. The third respondent wishes to raise the question of novation as a defence to the claim of the applicant. The issue of novation is also central to its cross claim against the applicant. There will be a further issue regarding the implication of a term which will impact upon whether the cross claim is successful.
Thirdly, the admission was made in the circumstances which I have described, namely the defence of the claim made by the first and second respondents in the separate proceedings. The admission is not of a factual matter but of the characterisation of the email communications between the conveyancers of the parties. It is not therefore a plea that is contrary to the facts.
Fourthly, I accept that the admission was deliberately made. The admission was made in a defence pleading to claims made by the first and second respondents. Each of the allegations was specifically pleaded to. The third respondent admitted the allegation that the first and second respondent’s failure to settle resulted in a breach of the Contract by the first and second respondents. There is no suggestion or evidence that the pleading was by accident.
Fifthly, in his affidavit filed in support of this application, the third respondent explained how the admission was made and why he now seeks to withdraw that admission and plead novation of the Contract. That affidavit explains that the defence in the separate proceedings was prepared and filed at a time when no claim had been made by the applicant against the first and second respondents. The third respondent was only responding to claims made against him by the first and second respondents which did not allege any loss and sought an indemnity. The third respondent further deposed that if no claim was made by the applicant, then the first and second respondents would not have suffered any loss and that would be the end of the matter.
It was after that defence had been filed in the separate proceedings that a claim was made by the applicant against the first and second respondents. At that time, the third respondent deposed that he further considered his rights against the applicant and examined in greater detail the communications that had taken place between his conveyancer and the conveyancer for the first and second respondents. As stated previously, the admission concerned the characterisation of communications, rather than a fact.
The applicant disputes the adequacy of that explanation and submitted that it was not credible to say that the third respondent did not turn their mind to the nature and extent of the potential exposure to the applicant. The applicant submitted that the defence filed by the third respondent indicates that he turned his mind to the liability that the first and second respondents had, under the Contract, to the applicant.
I consider the explanation of the third respondent to be adequate. It is not possible on this application to say that the explanation is not credible. As stated earlier in these reasons, the proposed pleadings are based on a different characterisation of the communications between the conveyancers of the applicant and the third respondent. The underlying facts that give rise to the characterisation remain the same.
Sixthly, it is relevant to consider the respective prejudice that the parties may suffer if permission is granted or refused to withdraw the admission. If permission is not granted, the third respondent will suffer the prejudice of not being able to rely upon a potential defence to the claim of the applicant and therefore the cross claim made against him by the first and second respondents. The applicant submits that she will suffer prejudice in that it will have to respond to a claim that complicates what otherwise would be a straightforward contract claim. Neither party contended that there was any additional prejudice beyond those matters. The weight given to the question of prejudice will therefore depend on an assessment of whether the proposed defence has any merit. If the defence arguably has merit, then there is prejudice to the third respondent in not being able to rely upon that defence and the prejudice suffered by the applicant in responding to that claim is of lesser weight. On the other hand, if the proposed defence is not arguable, then the applicant will suffer prejudice by having to deal with the matter. For the reasons that appear later in these reasons, I consider that the proposed defence raises matters that are arguable.
Seventhly, it is relevant to take into account the stage of the proceedings at which the application has been made and case flow management considerations. There has been no delay by the third respondent in bringing the application. The application was brought soon after the consolidation of the proceedings. The application has been brought at an early stage of the proceedings and therefore the disruption to the orderly progress of the matter if leave is granted will be relatively minimal. The applicant may need to plead an alternative case, namely a claim against the third respondent in the event that a novation was found and also a defence to the proposed cross claim made by the third respondent. However, they are not matters that would greatly affect the orderly progress of the matter.
Eighthly, if they can be assessed, the merits of the plea relating to the novation are relevant. The applicant has contended that the plea of novation cannot be maintained for two reasons: first, because the allegations made in the proposed defence (and by extension, in the proposed cross-claim and the revised defence to the cross claim) do not establish the elements necessary for a novation and secondly, because the alleged novation is not enforceable because it is not in writing as required by s 26 of the Law of Property Act. I will deal with these matters later in these reasons. Apart from those matters, it is not appropriate in an interlocutory application of this nature to consider the merits and express any opinion on those merits. To do so, would be expressing an opinion without hearing the full evidence or embark on a mini-trial. If s 26 does not preclude the plea and if a proper basis for the plea has been made out, the Court should conclude for the purposes of this application that the issue of novation is arguable. This is therefore a neutral factor in the determination of this application.
Taking into account all of the matters discussed above, I do not consider that the fact that the proposed pleadings seek to withdraw an admission provides, in the circumstances, a reason not to permit the pleadings to be filed. Of significant weight in the present application is the early stage of the proceedings and the relatively minimal impact the withdrawal of the admission will have on the progress of the matter. Further, it is also of some weight that the withdrawal of the admission involved the different characterisation of conduct rather than the withdrawal of an admission to a specific fact.
Sufficiency of pleading
A proposed pleading or amended pleading will not be permitted if it is liable to be struck out as disclosing no reasonable cause of action or defence.[6] A reasonable cause of action or defence means one with some chance of success when only the allegations in the pleadings are considered.[7] In Adelaide Brighton Cement v Hallett Concrete Pty Ltd,[8] Doyle J discussed the difference between an application for a strike out and an application for summary dismissal and held that in a strike out application attention is focused on the applicant’s pleading. In a strike out application, evidence might be permitted of the documents referred to in the pleading and some evidence to understand the pleaded case in its proper context, but not ordinarily of the underlying merits. The affidavit evidence fulfils that purpose in the present case.
[6] See Pope v Harris Orchard [2010] SASC 354, [24]. UCR 70.3.
[7] Drummond-Jackson v British Medical Association [1970] 1 All ER 1094; Chapman v Australian Broadcasting Corp (2000) 77 SASR 181; [2000] SASC 146; Pillay v Lloyd [2000] SASC 208.
[8] (2020) 137 SASR 117; [2020] SASC 161, [66].
A novation involves:[9]
The discharge of a contract by a new agreement with a third party who undertakes the liability of the contract, and is accepted by the creditor in the place of the original contractor or debtor. All the parties to the original contract must consent to the new agreement.
[9] Robinson v Podosky [1905] St R Qd 118,122.
In Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd (Fu Tian),[10] Barrett AJA (MacFarlan and Gleeson JA agreeing) held:
Where, as here, there are two parties to the original contract (vendor and purchaser), a novation by which a new purchaser is introduced in the place of the original purchaser will not be established unless it is found that a subsequent “tripartite agreement” (to adopt the expression used by all members of the High Court in Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 was made among the two original parties and the incoming party (that is, the substituted purchaser). Essential elements of the tripartite compact are: first, agreement by the substituted purchaser with the vendor that, upon the vendor’s releasing the original purchaser from his obligation to purchase, the substituted purchaser will accept and perform, as against the vendor, the obligation to purchase undertaken at inception by the original purchaser (including, of course, the obligation to pay the balance of the purchase moneys); second, agreement by the vendor with the substituted purchaser both to sell to the substituted purchaser and to accept the substituted purchaser’s promise to perform the purchase obligation in place of the original purchaser’s; and third, agreement between the vendor and the original purchaser with the concurrence of the substituted purchaser, that the purchase obligation undertaken by the original purchase at inception is discharged.
[10] (2018) 19 BPR 39,031, [31]; [2018] NSWCA 282.
It must therefore be possible to interpret the parties’ dealings as rescinding or terminating the original agreement and the creation of a new agreement.[11] If it is not clear that the original party’s obligation is discharged both the original party and the new party will be liable under the agreement.[12] The words “and /or nominee” do not amount to a novation but are a direction to the vendor to transfer to the purchaser or nominee.[13]
[11] ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (2012) 245 CLR 338; [2012] HCA 6; Re United Railways of Havana and Regla Warehouses Ltd [1960] Ch 52, 84, 86.
[12] Lyth v Ault and Wood (1852) 155 ER 117.
[13] Harry v Fidelity Nominees Pty Ltd (1985) 41 SASR 458; Salter v Gilbertson (2003) 6 VR 466; [2003] VSCA 1.
Subject to the possible application of s 26 of the Law of Property Act, the discharge of the earlier agreement and the creation of the new agreement may be implied. In Hillam v Iacullo,[14] the court held that although the parties may make express provision for the discharge of the earlier agreement, the same result may occur impliedly.[15] The Court emphasised that novation ultimately depends on discerning the objective intention of the parties.[16] In Fu Tian, the Court held that if the vendor, with the acquiescence of the original purchaser, agreed to accept the promise of the new purchaser to perform in place of the original purchaser, that finding will be sufficient to ground a further finding that the original purchaser was released.[17] The Court quoted the following passage from Windeyer J (dissenting) in Olsson v Dyson[18]
However, the requirements of our law are satisfied by a tacit agreement to extinguish the former obligation, and this is inferred when an inconsistent obligation is by agreement substituted.[19]
[14] (2015) 90 NSWLR 422; [2015] NSWCA 196.
[15] Ibid, [57].
[16] Ibid citing Vickery v Woods (1952) 85 CLR 336, 345; [1952] HCA 7 and Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, [78]; [1999] NSWCA 323.
[17] (2018) 19 BRP 39,031, [34]; [2018] NSWCA 282.
[18] (1969) 120 CLR 365; [1969] HCA 3.
[19] (2018) 19 BRP 39,031, [32]; [2018] NSWCA 282.
The applicant submitted that Fu Tian was distinguishable because in that case the original purchaser was a party to the relevant emails that were the basis of the discharge of the earlier agreement and the creation of the new agreement[20]. However, as counsel for the third respondent submitted, the Court of Appeal did not make its finding based on any express agreement but on the basis of an implied agreement.
[20] Ibid, [7], [8] and [10].
In paragraph 9 of the proposed defence, the third respondent sets out the matters that it pleads give rise to the implied agreement that there was a new agreement between the applicant and the third respondent for the transfer of the Property and a discharge of the Contract between the applicant and the first and second respondents. In relation to the alleged new contract between the applicant and the third respondent, at paragraph 9.28, it is pleaded that the implied agreement was made on or around 22 December 2022 although certain communications are also relied upon that took place in January 2023. These communications (on 22 December 2022 and also on 11 January 2023 and 18 January 2023) are capable of providing a basis for contending that the third respondent had impliedly entered into an agreement with the applicant whereby it was agreed that the third respondent would purchase the Property. The communications convey that the third respondent is solely responsible for the payment of the purchase price and the applicant accepts this position.
The applicant submitted that there is nothing inconsistent with the first and second respondents remaining purchaser under the Contract and the third respondent making arrangements as their nominee to effect settlement. That is one characterisation of the communications but equally it cannot be said that the alternate characterisation that the third respondent was, with the knowledge and acquiescence of the applicant, assuming the obligations of the purchaser was not arguable and does not have any chance of success. This is so despite the default notice that was issued on 21 December 2022 which was addressed to the first and second respondents (although sent to the conveyancer of the third respondent, it was admitted by the third respondent in his defence to have been served on the first and second respondents). The Notice of Default is not determinative because some of the critical communications that are relied upon by the third respondent occurred after that date. The communications relied by the third respondent have some chance of success in that they might be said to be capable of suggesting that the third respondent had assumed the position of the purchaser.
There must also be an implied agreement between the applicant and the first and second respondents to discharge the existing agreement between them. In paragraph 9.28, it is pleaded that an implied agreement to discharge the first and second respondents arises from the matters pleaded in paragraph 9. The matters that are pleaded in paragraph 9 that specifically relate to the conduct or omissions of the first and second respondents are the matters pleaded in paragraphs 9.13, 9.14 and 9.28. Those matters or omissions are: (1) the first and second respondents did not take any steps to engage anyone to act on their behalf for the purpose of having the Property conveyed to them; (2) the applicant did not ever communicate with the first and second respondents with a view to facilitating the settlement of the Property into the names of the first and second respondents. Those omissions must be considered in the context of the communications alleged to have taken place between the applicant and the third respondent (through their conveyancers) and also the alleged conversation referred to at the auction when it was alleged that there was a discussion about the replacement of the first and second respondents by another party prior to settlement.
The course of dealing between the applicant and the third respondents, (through their respective conveyancers), and the absence of any dealings or communications between the applicant and the first and second respondents, arguably gives rise to an inference that the agreement between the applicant and the first and second respondents has been abandoned.[21] As the third respondent submitted, the discharge aspect of the novation was satisfied, at least arguably, by the applicant accepting the inconsistent obligations of the third respondent. In these circumstances, I do not consider that it can be said that the third respondent has no chance of success in his claim for novation.
[21] Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, 528; Collins v Duke of Westminster [1985] QB 581.
Section 26 of the Law of Property Act
The applicant contends that the alleged novated agreement does not comply with s 26 of the Law of Property Act and is unenforceable. Therefore, the applicant contends that leave should not be granted as the proposed pleadings do not disclose a reasonable defence. The third respondent submitted that the applicant’s argument was, in effect, a summary judgment application. I do not consider that to be a proper characterisation of the applicant’s contention. The applicant’s contention is that the proposed pleadings do not raise a reasonable defence. That is akin to the strike out test. If the proposed pleading, on its face, does not disclose a reasonable defence, the Court would not grant leave for that pleading to be filed.
Section 26 of the Law of Property Act provides:
(1) No action shall be brought upon any contract for the sale or other disposition of land or of any interest in land, unless an agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some person thereunto by him lawfully authorised.
(2) This section does not affect the law relating to part performance, or sale by the court.
The third respondent submitted that the part of the novated contract that related to the alleged discharge of the first and second respondents from its liability under the Contract was not required to be in writing.
It is not possible to divide the novated agreement into separate parts. The alleged novated agreement is a triparte agreement involving the discharge of the first and second respondents and the assumption of their liability in the novated agreement by the third respondent. In those circumstances, the Statute of Frauds will apply to the whole of the novated contract and not just part of the contract. In Horton v Jones,[22] Rich and Dixon JJ held:
If a contract, which is not evidenced by writing, contains more than one promise and, although one of the promises is of a description to which the Statute of Frauds applies, another or others are not, the whole contract is unenforceable except when the promises are not only themselves severable but may be referred to and supported by independent or divisible considerations or divisible parts of a consideration capable of distribution (cf. Hodgson v. Johnson [3]). There is nothing to support an interpretation of the contract sued upon which would bring it within the exception.
[22] (1935) 53 CLR 475, 485; [1935] HCA 7.

It will only be in cases where the separate promises constitute a distinct agreement that the Statute of Frauds might not apply to the collateral promise. Thus, in Hoyt’s Pty Ltd v Spencer,[23] Knox CJ held that a distinct collateral agreement may be valid and enforceable even though the main agreement was required to be in writing. A novated agreement is not such a distinct agreement. It is a triparte agreement where the two aspects of the agreement are inextricably linked. In McLeod v Cardiff Colliery Co NL,[24] Mann J (Schutt J agreeing) considered, as part of the appeal in that case, whether there was sufficient memorandum of the agreement of novation to satisfy the Statute of Frauds. It is implicit that Mann J considered that the novated agreement needed to comply with the statute, the question for consideration being whether in the circumstances of that case, there was sufficient writing.
[23] (1919) 27 CLR 133,139.
[24] [1925] VLR 1.
The next question that arises is whether in fact the alleged novated agreement complies with the requirements of s 26. The third respondent relies upon the Contract and then the email communications which are alleged to form the basis of the novation. The applicant submitted that where a novation is alleged, there must be a written record of the agreement to discharge the original purchaser and there was no such record in the present case. The applicant further submitted that if the communications could be read consistently with there being an attempt to settle by a nominee, the requirements of s 26 would not be satisfied.
The parties were not in dispute in relation to the principles governing the application of s 26 of the Law of Property Act. Relevantly, for current purposes those principles include that exchanges of written correspondence may be sufficient to satisfy s 26.[25] Two or more documents may be read together and documents may be incorporated by reference.[26] An email signature may be sufficient if the requirements of the relevant Act are satisfied[27] or the person’s name is included on the document in circumstances where the person or their agent has expressly or impliedly represented that the name can be treated as a signature.[28] The note or memorandum must sufficiently indicate the parties to the contract, the subject matter and the terms of the contract, including both the promise and consideration and it must import an agreement or acknowledgment of an agreement to the terms stated in the writing.[29]
[25] ANZ Banking Group Ltd v Wilden (1990) 102 ALR 289, 297-8.
[26] Pipikos v Trayans [2016] SASCFC 138, [86].
[27] Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119.
[28] Kation Pty Ltd v Lmru Pty Ltd (No 2) [2012] NSWSC 356, [31].
[29] Catanzanti & Anor v Lee Road Pty Ltd [2005] SASC 417, [59].
Under s 9 of the Electronics Communications Act 2000 (SA), in the circumstances described in that section, the requirement for a signature may be satisfied by the sending of the email. Section 9 provides:
(1) If, under a law of this jurisdiction, the signature of a person is required, that requirement is taken to have been met in relation to an electronic communication if—
(a) a method is used to identify the person and to indicate the person's intention in respect of the information communicated; and
(b) the method used was either—
(i) as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement; or
(ii) proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence; and
(c) the person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in paragraph (a).
There will be issues at trial as to whether: (1) the requirements under s 9 have been made out; (2) whether the parties are bound by the statements made by their respective conveyancers. These matters however do not detract from the conclusion that it is arguable, for the purposes of this application, that the email communications, adopting the Contract, constitute sufficient writing for the purposes of s 26 of the Law of Property Act. That was the conclusion reached, although obiter, in Fu Tian. Barrett AJA (Macfarlan and Gleeson JJA’s agreeing) held:[30]
Counsel for the appellant submitted that the writing requirement arising under s 54A of the Conveyancing Act 1919 (NSW) was not satisfied in relation to a contract between Park Cho and Fortune. No ground of appeal is addressed by that submission which, in any event, cannot be accepted. The whole of the solicitors’ correspondence commencing with the emails of 5 April 2016 and undertaken with the respective parties’ consent constituted or included a sufficient note or memorandum.
Section 26 of the Law of Property Act is in similar terms to s 54A of the NSW Conveyancing Act.
[30] [2019] FCA 526, [44], FN 13.
It is not the case that the novated contract fails to comply with s 26 because the first and second respondents have not signed the novated agreement. The first and second respondents are not persons to be charged under that agreement. The third respondent is charged by the claim of the applicant. The applicant is charged by the cross claim of the third respondent.
Although the first and second respondent do not have to sign the novated agreement, there still must be sufficient writing to indicate the discharge of the first and respondents from their liability from under the Contract. In my opinion, there is sufficient writing where the writing has arguably been signed by the parties to be charged (in this case the applicant and the third respondent by their email communications), and by implication these communications necessarily indicate the discharge of the Contract between the applicant and the first and second respondents. I have come to this conclusion for the following reasons: (1) the writing required by s 26 must sufficiently indicate the parties to the contract, the subject matter and terms and must import an agreement or an acknowledgement of an agreement. The emails passing between the conveyancers of the applicant and the third respondent arguably do this together with the Contract and the Deed of Guarantee and Indemnity; (2) the decision in Fu Tian suggests that sufficient writing may exist where the discharge of the existing contract is implied. In Realestate.com.au Pty Ltd v Hardingham,.[31] Edelman and Steward JJ held that the terms of a contract include implications from the words that are expressed. The implication from the words in their context are included as part of that which is express. The term as a whole remains as an express term. Arguably the discharge of the existing contract is implied from the express words and is therefore part of the express words.
[31] (2022) 277 CLR 115, [103].
Section 26 does not apply in so far as the third respondent is only defending the claim of the applicant. In such the case no action has been brought by the third respondent to enforce the contract. There is authority to the effect that a defendant who is only defending an action and is not counterclaiming or indirectly enforcing an oral agreement against a plaintiff, may rely on an oral agreement falling within the statute as a defence to a claim.[32] An oral agreement falling within the statute which rescinds a prior written agreement may be set up as defence to an action on that written agreement.[33]
[32] See Morris v Baron [1918] AC 1; Head v Kelk [1963] SR (NSW) 340,348.
[33] Morris v Bacon [1918] AC 1.
Therefore, s 26 arguably will not apply to the proposed defence to the applicants claim or the defence to the cross claim of the first and second respondents. It will apply to the cross claim made by the third respondent against the applicant
The applicant made a further submission that there was not sufficient writing for the purposes of s 26, because the third respondent had pleaded in the proposed defence that the novated contract contained an implied term that the rights and obligations of the parties were subject to the third respondent obtaining a visa and approval from the FIRB to proceed with the purchase. Section 26 of the Law of Property Act does not preclude, where appropriate, the implication of a term. There will be issues whether the proposed term will be implied but that is not a matter that needs to be determined in the present application. It is a sufficient answer to the claim in its current form, for the third respondent to plead the novated contract as discharging the liability of the first and second respondents and hence its liability under the cross claim. It may be that the applicant will amend its claim if leave is granted to the third respondent to file the proposed pleadings, to plead an alternate case against the third respondent. It is in this response to such a plea that the implied term will become a critical issue.
Conclusion
It follows from these reasons that the third respondent be granted leave to file the defence to the claim of the applicant, a cross-claim against the applicant and a revised defence to a cross-claim issued by the first and second respondents in the form annexed to the affidavit of Charlotte Jane Viergever made on 30 December 2024.