Catanzariti v Lee Road Pty Ltd

[2005] SASC 419

Supreme Court of South Australia

(Full Court)

CATANZARITI & ANOR v LEE ROAD PTY LTD

Judgment of The Full Court

(The Honourable Acting Chief Justice Perry, The Honourable Justice Bleby and The Honourable Justice Anderson)

9 November 2005

CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - AUTHORITY OF AGENTS - CONSTRUCTION AND EXTENT OF AUTHORITY

Appeal against order for specific performance of a contract for the sale of land made following a trial in the District Court - the trial judge held that the vendors' agent had ostensible authority to negotiate the terms of the sale agreement and that the authority extended to his execution of a memorandum or note in writing satisfying the requirements of s 26 of the Law of Property Act 1936 - that requirement was satisfied by the exchange of correspondence between the vendors' agent and the purchaser - the contract was enforceable notwithstanding that it was contemplated that a formal written contract would subsequently be executed - appeal dismissed.

Law of Property Act 1936 s 36, referred to.
Masters v Cameron (1954) 91 CLR 353; Ford v Young (1882) 8 VLR 93; Humphries v Humphries [1910] 2 KB 531; Dal Pont, Law of Agency Butterworths [20.7] 521; Rama Corp Ltd v Proved Tin & General Investments Ltd [1952] 2 QB 147; Freeman & Lockyer v Buckhurst Park Properties (Magnal) Ltd [1964] 2 QB 480; Newton King v Wilkinson (1976) 2 NZLR 321; Parker v Barnett [1890] 16 VLR 214; Voumard, The Sale of Land 5th edition [2350]; The Laws of Australia The Law Book Company Ltd, Vol 28, Real Property at 28.18 [15]; Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] 133 CLR 72; Rossiter v Miller (1878) 3 App Cas 1124; Godecke v Kirwan [1973] 129 CLR 629; Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284; Powell and Berry v Jones and Jones [1968] SASR 394; Allen v Carbone (1975) 132 CLR 528, considered.

CATANZARITI & ANOR v LEE ROAD PTY LTD
[2005] SASC 419

Full Court:  Perry ACJ, Bleby and Anderson JJ

1. PERRY ACJ.        The appellants, Patrick Catanzariti and Guiseppe Catanzariti are the registered proprietors of a vacant allotment of industrial land at Burton. Following a trial in the District Court, the court made an order for specific performance by the appellants of an agreement for the sale by them of the land to the respondent, Lee Road Pty Ltd.

2. In their appeal to this Court, the appellants contend that the trial judge erred in finding that there was a binding contract between the parties for the sale and purchase of the land. They make other complaints to which I will in due course refer, as to other findings by the trial judge.

   Background

3. Only one witness was called at the trial, namely, the respondent’s sole shareholder and managing director, Mr Garry Rogers. His evidence was accepted by the trial judge, and there has been no challenge to it on the appeal.

4. In the result, there is little or no dispute about the facts.

5. Mr Rogers lived in Tasmania at the relevant time. He conducted a business in Tasmania and in other States of building factories and renting them out.

6. Shortly before the transaction now in question, he was asked by a client to see if he could find land in South Australia upon which a warehouse might be built to the client’s specifications.

7. As a result, he came to South Australia on 16 July 2003. He inspected land in the Salisbury/Elizabeth area.

8. He saw a signboard on the land in question (“the land”) which is situated at Diment Road, Burton. From the signboard, he saw that the vendor’s agents were Taarnby & Taarnby Real Estate (“Taarnby & Taarnby”).

9. On the same day, that is, 16 July, he rang Mr Carlo Peluso of that firm. He obtained some information from Mr Peluso which suggested to him that zoning and other features of the land would make it suitable for the proposed development. When he asked Mr Peluso what price was being sought for the land, he was told that it was for sale for $600,000.

10. He responded by saying that he would continue to inspect other areas and would come back to Mr Peluso if he was interested.

11. After making some other inquiries, he decided to pursue the matter with Mr Peluso, whom he rang the next day, that is, 17 July. He said that he was prepared to pay $400,000 for the land on an unconditional contract, and that he would be prepared to settle in 30 days. Mr Peluso said that he would speak to the vendors and let him know whether or not the offer was acceptable. Mr Peluso said that he would send a copy of the certificate of title to the land to Mr Rogers.

12. Mr Rogers returned to Melbourne on the same day, that is, 17 July, and saw that a facsimile had been sent to his Melbourne office attaching a copy of the certificate of title and giving some dimensions of the land.

13. The next day, that is, 18 July, Mr Peluso spoke to Mr Rogers and said that his clients were not prepared to accept $400,000 for the property. Mr Rogers said that he was still interested, and asked Mr Peluso to ascertain from the vendors the price at which they would be prepared to sell.

14. After that conversation, on the same day Mr Rogers wrote a letter to Mr Peluso in the following terms:

    Carlo,

    Thank you for your time in regard to my enquiry and subsequent offer on your site at Lot 55 Diment Road Burton.

    I understand how difficult it can be for an agent when they are acting in the best interests of the vendor and they have an offer in front of them that does not meet the vendor’s expectations.

    On my limited knowledge of the area I believe my proposed price is fair and realistic. I do not dispute that the site would be relatively easy to develop in terms of size and flat terrain but after my enquiries to the council there are considerable costs to meet compliance with internal driveways, drainage and car parking areas that will add considerable cost to the development.

    I also believe that an offer such as mine, which is unconditional and cash 30 days has merit and whilst eventually if someone comes along with an offer which is subject to all sorts of conditions, I am sure you are well aware that the end result for the vendor may be no better.

    I have another option at Wingfield but as I am leaving for a stint overseas on Monday I need to act if my negotiations with you are not to proceed. If your vendor reconsiders I would need to know this today.

    Regards,

    GF Rogers

    PS I will be in Melbourne today please contact me on mobile [phone] or fax [phone].

15. On about 22 July 2003, Mr Peluso rang Mr Rogers to say that the vendors would accept $410,000. When Mr Rogers asked for confirmation in writing, at about 10.20 am on that day, Mr Peluso sent a facsimile to Mr Rogers on the letterhead of Taarnby & Taarnby, as follows:

    Lot 55 Diment Road Burton

    Vendors will accept

    $410,000 plus GST

    30 day settlement/Unconditional contract.

16. Mr Rogers then spoke again to Mr Peluso and said that he would need to confirm with his principal to see if he would proceed on that basis. He said that he thought that it would be acceptable.

17. Mr Peluso said that a deposit of 10 per cent or $41,000 was required and was to be paid to Taarnby & Taarnby. Mr Peluso said that he would send details of the bank account into which the deposit was to be paid. Mr Rogers’ evidence was that Mr Peluso asked that a copy of the “pay-in slip” verifying payment into the account be sent to him as evidence of confirmation that they had “concluded the contract”.

18. Mr Rogers then received instructions from his principal, when he was given authority to go ahead with the transaction. Mr Rogers sent a facsimile message to Mr Peluso on the afternoon of the same day, that is, 22 July, which read as follows:

    Lee Road Pty Ltd

    
    

    Old Princes Highway, Longwarry, VIC 3816

    22^nd July 2003

    Mr C Peluso
    Taarnby & Taarnby
    47 Woodville Road
    WOODVILLE  SA  5011
    By Fax:  [phone]

    Carlo,

    Thanks you for all your assistance in this matter, I have now confirmed with my boss that we are prepared to proceed on the figure you put forward today being $410,000 plus GST. I confirm as previous that the contract will be unconditional and settlement thirty (30) days.

    The contract is to be in the name of Lee Road Pty Ltd, Old Princes Highway, Longwarry North, Victoria, 3186.

    Could you please advise me as to the paperwork procedures for the contract and the payment of the deposit at your earliest convenience including your bank account details, BSB, Account Number / Name etc.

    Regards,

    G F Rogers (signed)

    NB    I am contactable on mobile phone [phone] or facsimile today [phone].

19. Events then moved quickly. Less than an hour after Mr Rogers’ facsimile would have been received, Mr Peluso sent by facsimile to Mr Rogers a printed contract in the standard form approved by the Real Estate Institute of South Australia, with variable particulars inserted appropriate to the terms which had been agreed. Mr Peluso also sent a statement in the form required under s 7 of the Land and Business (Sale and Conveyancing) Act 1994. This set out particulars of the land which were required to be supplied to the purchaser before settlement. Those documents were forwarded under cover of a facsimile letter which read:

    Taarnby & Taarnby

    
    

    Real Estate

    
    

    47 Woodville Road, Woodville, SA 5011

    22^nd July 2003

    Attention:     Garry Rogers
                   Lee Road Pty Ltd

    Fax:          [phone]

    Garry,

    Please initial every page of the Contract and Schedule Pages 1-9 of 10 and a Managing Director to sign Page 10 of 10.

    Managing Director to sign Page 5 of 5 of Form 1 Statement under Section 7.

    $41,000 deposit payable to Taarnby & Taarnby Trust Account.

    Commonwealth Bank
    BSB:  065127       Account:    10016604

    Vendors will sign the contract in my office on Wednesday 23^rd July at 4.00 pm.

    I will fax you the fully signed contract immediately upon Vendors signing the full Contract.

    Kind Regards

    CARLO PELUSO (signed)

20. Mr Rogers initialled the contract, including the schedule to it, and signed the contract and the s 7 statement, as suggested in the letter from Taarnby & Taarnby. In anticipation of him doing so, Mr Peluso had already signed both the execution clauses in the contract, that is, the clauses for execution by the purchaser and the vendor, as witness, notwithstanding the fact that Mr Rogers signed subsequently, in Mr Peluso’s absence, and the vendor had not at that stage, and did not thereafter, sign.

21. Mr Rogers arranged for the return of the signed documents to Mr Peluso. A bank cheque in the sum of $41,000 in favour of Taarnby & Taarnby Trust Account was paid into the bank account which had been designated by Mr Peluso on 23 July. On the same day the respondent’s secretary sent to Mr Peluso by facsimile a copy of the bank cheque and the deposit slip which had been stamped by the Commonwealth Bank.

22. After Mr Rogers had arranged for the deposit to be paid, he rang Mr Peluso to thank him for his help. Mr Peluso then said that the vendors had changed their minds and that they would not sign the contract.

23. On 25 July 2003, the respondent lodged a caveat for registration on the title of the land to protect its interest as purchaser.

24. Some weeks later, Taarnby & Taarnby sent to Mr Rogers a cheque for the amount of the deposit, which he has held without banking it.

25. By letter of 12 August 2003, solicitors for the appellants advised Taarnby & Taarnby that the appellants wished to withdraw the property from sale.

26. On 3 November 2003, the respondent instituted the proceedings in the District Court seeking an order for specific performance of the contract, damages and associated relief.

27. In their defence, the appellants denied liability and asserted that no contract for sale and purchase of the land was concluded. They pleaded that the respondent had submitted an offer by way of the partly executed contract note to the appellants for acceptance, but they declined to execute it.

28. Alternatively, they pleaded that no action could be brought by the respondent upon any alleged contract for sale of the land, in that there was no agreement in writing “signed by the defendants or a person lawfully authorised by them to execute the same” as required by s 26(1) of the Law of Property Act 1936.

    The Trial Judge’s Reasons for Judgment

29. The trial judge first addressed the question whether Mr Peluso was the appellants’ agent with authority to bind the appellants to an enforceable contract for the sale of the land. She referred to the terms of the written Sales Agency Agreement dated 1 July 2003 pursuant to which Taarnby & Taarnby was appointed agent of the appellants for the sale of the land at a price of “$600,000-$650,000, or at such other price as the vendor may specify in writing”.

30. There was no written communication from the appellants to Taarnby & Taarnby nominating a lower price.

31. She held that Mr Peluso:

    [66]… had actual authority to act as the agent for the defendants in the sale and the purchase of the land, and in particular, to negotiate with Mr Rogers on the price to be paid for it, and other terms, to offer the property for sale on the form of contract issued by the Real Estate Institute of South Australia Incorporated and to accept the payment of a deposit in respect of a sale or proposed sale.

32. That conclusion was, in my view, fully supported by the terms of the sales agency agreement. But the trial judge did not go so far as to find that Mr Peluso had actual authority to enter into a contract for the sale of the land on the terms negotiated with Mr Rogers.

33. However, she held that “Mr Peluso had the apparent or ostensible authority of the defendants to communicate and correspond with Mr Rogers as he did”.

34. She then defined the remaining issues to be addressed in terms of two questions, namely, whether a binding contract between the plaintiff and the defendants for the sale and purchase of the land had come into existence, and if so, whether the respondent was prevented from enforcing it by reason of s 26(1) of the Law of Property Act 1936.

35. As to the first question, the trial judge rejected the appellants’ contention that the parties never proceeded beyond the stage of negotiation and did not reach a concluded agreement.

36. She held that the mere fact that the parties contemplated the execution of a formal agreement embodying the terms of the contract did not necessarily indicate that the parties had not proceeded beyond the stage of negotiation. She held that the case fell into the first of the three categories identified in Masters v Cameron,[1] that category being:

    … one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

    [1] (1954) 91 CLR 353 at 360.

37. She held that the facsimile sent on 22 July 2003 by Mr Peluso to Mr Rogers confirming his verbal advice that the appellants would accept $410,000 for the land should be characterised as an offer from the appellants or confirmation of an oral offer already made in those terms. She went on to hold that the letter from Mr Rogers to Mr Peluso sent by facsimile shortly afterwards was an acceptance of the offer. She held that the essential terms, namely the identification of the land, the purchase price, the deposit and the fact that the contract was to be unconditional and that settlement was to be within 30 days, were confirmed in the two documents taken together.

38. Alternatively, if she was wrong in that conclusion, she held that the letter enclosing the printed contract for execution could properly be regarded as a formal offer made on behalf of the appellants which was accepted by Mr Rogers on behalf of the respondent on his execution of the documents as requested by Mr Peluso and by his payment of the deposit.

39. As to the second question, she held that there was a sufficient memorandum or note in writing to satisfy the requirements of s 26(1) of the Law of Property Act 1936 in the exchange of facsimile messages which took place on 22 July 2003.

40. Alternatively, she held that the letter from Mr Peluso to Mr Rogers dated 22 July 2003 enclosing the contract and other documents was:

    … to be characterised as an offer by the defendants, accepted by the plaintiff by Mr Rogers’ executing the documents as requested, and paying the deposit, then those documents on their own constitute a memorandum of the contract between the parties for the sale of the land.

41. She held that the documents when read together or the letter of 22 July and attached contract and other documents contained sufficient particulars of the contract to satisfy the requirements of the section.

42. On the issue of the authority of Mr Peluso to sign on behalf of the appellants so as to bind them to the agreement, she held that he had “at the least” ostensible authority to do so.

43. In the course of her findings as to ostensible authority, she made reference to the principle of estoppel. This appears from the following passage in her reasons:

    [121]In my opinion, while there is no evidence of actual authority given to Mr Peluso to sign a contract, or a memorandum or note of it, the defendants should not be permitted to deny the authority of their agent to sign a note or memorandum of the agreement he made on their behalf, an agreement to which the defendants are otherwise bound. The same principle of estoppel as applies to a denial of the authority of the agent to come to a concluded agreement on their behalf, should apply to a denial by the defendants of the authority of the agent to sign a memorandum or note of the agreement between the plaintiff and the defendants.

    [122]Where it has been established that an agreement for the sale and purchase of the land has been concluded by the agent of the defendants, with their apparent or ostensible authority, it does no injury to the purpose of the provisions of section 26(1) of the Law of Property Act 1936 for the defendants to be estopped from denying their agent’s apparent or ostensible authority to sign a memorandum or note of the agreement. (for example, Ford v Young;[2] Humphries v Humphries.[3])

    [123]The defendants are, in the circumstances as I have described them, in my opinion, estopped from denying the existence of a sufficient written memorandum or note of the agreement reached on their behalf by their agent, Mr Peluso. The act of the defendants’ agent in signing a memorandum or note of the agreement, which he had apparent authority to conclude on their behalf, is to be regarded as the act of the defendants.

    [2] (1882) 8 VLR 93 at 105 and 107.

    [3] [1910] 2 KB 531.

44. I will deal now with the grounds of appeal.

    Ground 1:     That the learned trial judge erred in law and denied the appellants procedural fairness by her finding that the appellants were estopped from denying that the defendants’ agent Peluso was a person lawfully authorised to sign a memorandum or note of the agreement on their behalf when:

    1.1    Estoppel was not pleaded by the respondent

    1.2    Estoppel was not argued by the respondent

    1.3    Estoppel was not addressed by the defendants

    1.4    There was no proper basis for a finding of estoppel

45. I have referred to the passages in which the trial judge referred to estoppel.

46. This ground of appeal is misconceived. Estoppel is simply an aspect of ostensible authority, vide Dal Pont, Law of Agency:[4]

    The vehicle through which the law prevents a person from resiling from the legal consequences of a state of affairs for which he or she has been responsible is the doctrine of estoppel. The process of determining those circumstances in which a principal has vested in another ostensible authority to contract on the principal’s behalf therefore essentially amounts to that of ascertaining whether the doctrine of estoppel prevents the principal from denying that authority. Ostensible authority has for this reason been termed “agency by estoppel”.

    [4]  Butterworths [20.7] 521, citing Rama Corp Ltd v Proved Tin & General Investments Ltd [1952] 2 QB 147 per Slade J at 149-150.

1. The learned author then goes on to refer to a passage in the judgment of Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties (Magnal) Ltd:[5]

   An “apparent” or “ostensible” authority … is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.  (Emphasis added)

   [5] [1964] 2 QB 480 at 503.

2. Estoppel did not have to be pleaded or expressly argued. As to this aspect of the matter, the argument pivoted on the question whether or not, on the evidence, it was proper to conclude that Mr Peluso was clothed with ostensible authority to sign a memorandum or note of the agreement, and for that matter, to enter into the agreement on behalf of the appellants.

3. The learned trial judge did not err in referring to estoppel in the context of a discussion of the question of ostensible authority.

   Ground 2:     That the learned trial judge erred in law in finding that the requirements of s 26(1) of the Law of Property Act 1936 had been shown

4. In this ground I read the word “shown” to mean “satisfied”.

5. Section 26 provides:

   26(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.

6. For the purposes of this case, the “party to be charged” within the meaning of those words in the section is each of the plaintiffs, as vendors.

7. The section is not brought into play unless there is a contract for the sale of the land in question. I deal elsewhere with the question whether or not the trial judge rightly concluded that there was such a contract.

8. Assuming the correctness of her finding in that respect, the question gives rise to two further questions. They are whether there is “an agreement” or “some memorandum or note[6] thereof” in writing, and if so, whether the agreement, memorandum or note was signed by the appellants or by some person lawfully authorised by them.

   [6]  The agreement, memorandum or note may be constituted by more than one document: see Newton King v Wilkinson (1976) 2 NZLR 321.

9. The words of the section distinguish between an agreement on the one hand, and a memorandum or note of a contract on the other.

10. The contract may, of course, be entirely oral. In such a case, it is enforceable if there is a memorandum or note answering to the requirements laid down in the section.

11. The trial judge dealt with the correspondence as though it constituted a note or memorandum within the meaning of the section. However, the respondent pleaded in its particulars of claim that the correspondence constituted the contract of which it sought specific performance.

12. I do not think that the difference is of consequence in this particular case. Whether the exchange of correspondence constituted an agreement, or a memorandum or note of an oral agreement already reached, the requirements as to what must be specified in the writing are the same. The parties, the subject matter and the terms of the contract, including the price, must be specified, and the document must “import” or “acknowledge” an agreement: see Parker v Barnett[7] per Higginbotham CJ:[8]

    The memorandum or contract must sufficiently indicate the party 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.[9]

    [7] [1890] 16 VLR 214.

    [8] Ibid at 221.

    [9]  And see Voumard, The Sale of Land, 5^th edition [2350] and The Laws of Australia, The Law Book Company Ltd, vol 28, Real Property at 28.18 [15].

13. In my view, the facsimile sent from Mr Peluso to Mr Rogers in the morning of 22 July 2003, the letter signed by Mr Rogers sent by facsimile in the afternoon of the same day, and the facsimile and letter signed by Mr Peluso sent to Mr Rogers later that same afternoon attaching the printed contract and other documents together constituted either a contract in writing or a memorandum or note of an oral contract in the same terms, the oral contract being the terms of the telephone discussions between Mr Peluso and Mr Rogers which were confirmed by the facsimile transmissions.

14. Putting those documents together, the vendors were identified; the price stated; the contract was to be unconditional; settlement was to be within 30 days; and a deposit of $41,000 was to be paid to Taarnby & Taarnby. It was a further term that the printed contract enclosed with the second facsimile message from Mr Peluso was to be executed by the parties.

15. The remaining question was whether Mr Peluso had been “lawfully authorised” by the appellants to sign the facsimile transmissions to which I have referred emanating from Taarnby & Taarnby.

16. In this case, the agent was not called and the appellants did not give evidence.

17. It was conceded by the respondent that there was no proof of actual agency.

18. The question then is whether there was proof of ostensible authority and whether proof of ostensible authority is sufficient to satisfy the requirements of s 26.

19. I have already referred to the dictum of Diplock LJ in Freeman & Lockyer v Buckhurst Park Property (Magnal) Ltd (supra) in which he makes it clear that it is a representation made by the principal to the contractor which may, depending upon the circumstances, create an estoppel giving rise to “apparent” or “ostensible” authority.

20. In a further passage in the same case, Diplock LJ said:[10]

    The representation which creates “apparent” authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal’s business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal’s business has usually “actual” authority to enter into.

    [10] [1964] 2 QB 503

21. Although it is clear that the representation giving rise to the estoppel cannot be made by the agent as opposed to the principal, a finding of ostensible authority may be made if the principal has put the agent into a position or allowed him to act in a position from which the ordinary inference would be by persons dealing with the agent that he had the principal’s authority to conduct the relevant transaction on the principal’s behalf.

22. So much is clear from the dictum of Gibbs, Mason and Jacobs JJ in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd:[11]

    Lush J found that Peter McWilliam had not ostensible or apparent authority to enter into the contract to purchase the machine. In this connexion his findings of fact which we have already related are significant but there is no need to repeat them. The question of ostensible authority fell to be determined by the application to the facts as so found of the appropriate principles of law. These principles have been compendiously stated in the judgments in Freeman & Lockyer v Buckhurst Park Properties (Magnal) Ltd,[12] and the significant passages therefrom are set out in the reasons of the learned trial judge. There is no need to repeat them here. He implicitly found that the appellant believed that Peter McWilliam had actual authority to enter into the contract and there can be no doubt that that was so. He also found that in the circumstances the representation or holding out that Peter McWilliam has actual authority could not be made merely by Peter McWilliam himself. This conclusion cannot be challenged. There are circumstances where the actual representation of authority may be made by the agent but in such cases it will be found that the relevant representation is made by the principal (or by the person to whom the principal has given actual authority) either by a previous course of dealing or by putting the agent in a position or by allowing him to act in a position from which it can be inferred that his actual representation of authority in himself is in fact correct. It is therefore always necessary to look at the conduct of the principal (or the person to whom he has actually delegated authority).  (Emphasis added)

    [11] [1975] 133 CLR 72 at 78.

    [12] [1964] 2 QB 480.

23. In this case, the appellants acquiesced in the erection by Taarnby & Taarnby of an advertising hoarding on the land announcing themselves as agents for the sale of the land.

24. They furnished to Taarnby & Taarnby written authority to negotiate for the sale of the land, albeit subject to a limit as to the price. On the evidence, there can be no doubt that the appellants were aware that Mr Peluso was negotiating with Mr Rogers.

25. During the course of addresses the trial judge inquired of counsel for the appellants, Mr Ross-Smith, as to what the appellants’ position was with respect to the existence and scope of the authority of Taarnby & Taarnby. Mr Ross-Smith is recorded in transcript as saying:

    The point of this trial, on authority, is there was authority for the agent to negotiate the terms of the contract, and we don’t for the purposes of this trial dispute that. We accept that, like it or not, what actual authority we gave the agent, that when he was negotiating and agreeing things he was doing so with at least ostensible authority, and we accept that we are caught by that. It is not for Your Honour to worry about whether it was with actual authority, because we accept that there is ostensible authority for the agent to negotiate and we accept that he did, and we accept that certain things were agreed between the agent and the purchaser.

26. In a further exchange between Mr Ross-Smith and the trial judge it is clear that Mr Ross-Smith conceded that the agent was authorised to agree the essential terms of the contract.

27. However, the position taken by the appellants through their counsel was that even although ostensible authority in that sense was conceded, the appellants denied that the agent had authority to sign a memorandum or note under s 26(1) of the Law of Property Act. Mr Ross-Smith returned to this aspect of the matter towards the end of his reply on behalf of the appellants. He is recorded as saying:

    This is to clarify where the parties are apart. There was authority as part of the authority to negotiate, for letters to be sent and for Peluso to sign them. Where there is no authority and the plaintiff hasn’t proved it was to sign the letters in a different capacity, that is for the purposes of signing a memorandum under s 26, and that’s ultimately the difference between us. … I wanted Your Honour to hear it again so that the issues were clear between us.

28. The difficulty with the position taken by the appellants as it appears in those passages of the transcript, is that if Mr Peluso was authorised to negotiate and agree terms of sale, it would not seem to be open for the appellants to suggest that he could not conclude the terms of an agreement for the sale of the land.

29. Putting it another way, it seems to me that if the appellants conceded, as they clearly did, that Mr Peluso was clothed with ostensible authority to negotiate the terms of an agreement for the sale of the land, there was nothing in the circumstances giving rise to the ostensible authority to prevent the conclusion being reached that the scope of the ostensible authority extended to authorising the agent to sign an agreement or a memorandum or note of it. No limitation of the agent’s authority in that respect was communicated by the appellants in any way to the respondent.

30. On the hearing of the appeal, Mr Frayne of counsel for the appellants put the argument in a slightly different way. He submitted that when s 26(1) speaks of a person “lawfully authorised” by the person to be charged to sign the agreement, memorandum or note, that requirement could only be satisfied if there was an express authorisation by the appellants or Taarnby & Taarnby or Mr Peluso to do so, and no such express authorisation was proved.

31. In my view, as a matter of construction of s 26, there is no reason to limit the concept of authorisation in that way.

32. Once ostensible authority is made out, it is as good as actual authority. The principal is estopped from denying actual authority.

33. While it must be accepted that there is very little direct authority on the point, I am of the view that the conclusion which I have expressed is consistent with principle.

    Ground 3:     That the learned trial judge erred in fact and in law in finding that the agent Peluso had authority to conclude an agreement between the appellants and the respondent

34. For the reasons which I have already given, in my view, this ground is not made out.

    Ground 4:     That the learned trial judge erred in law in finding that there was a binding contract between the appellants and the respondent for the sale and purchase of land

35. In support of this ground the appellants contended that the trial judge should have found that it was the intention of the parties not to make a concluded bargain. As for the printed contract forwarded by Mr Peluso to Mr Rogers, although executed by the latter on behalf of the respondent, it was never executed by or on behalf of the appellants.

36. I have already expressed the view that a concluded agreement was reached. However, in doing so, I did not refer to the arguments put in support of the proposition that the intentions of the parties was that there was to be no concluded agreement unless and until they had executed a formal agreement.

37. I will deal with those arguments now.

38. Effectively, the appellants call into question the characterisation by the trial judge of the outcome of the negotiations between Mr Peluso and Mr Rogers as falling within the first of the three categories of cases referred to in Masters v Cameron.[13] In that case in their joint judgment Dixon CJ, McTiernan and Kitto JJ observed:[14]

    Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may  be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

    In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decision on this branch of the law the proposition ins insisted upon which Lord Blackburn expressed in Rossiter v Miller[15] when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded:

    “… as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed.”[16]

    [13] (1954) 91 CLR 353.

    [14] Ibid 360.

    [15] (1878) 3 App Cas 1124.

    [16] (1878) 3 App Cas at 1151.

39. It will always be a question of construction on the facts of the particular case as to which category is applicable. The trial judge correctly approached the matter as a question of construction, in the course of doing so referring to the following dictum of Walsh J in Godecke v Kirwan:[17]

    It has been held repeatedly that the question is one of construction in each case of the document or documents which are put forward as showing that a contract was made. … In Von Hatzfeldt-Wildenburg v Alexander[18] Parker J used language which has been cited with approval in many later cases. He said:

    “It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored.”

    [17] [1973] 129 CLR 629 at 638.

    [18] [1912] 1 Ch 284 at 288-289.

40. In this case, while it was clearly contemplated that a formal written contract would be drawn up and signed, the three facsimiles exchanged between Taarnby & Taarnby and Mr Rogers on 22 July 2003 identified the essential terms of the contract and did not contain any reservation to the effect that the agreement was expressed to be “subject to” or “conditional upon” the execution of the formal contract.

41. As the trial judge pointed out, “… there is no evidence relating either to the parties themselves or to any conventional practice as to a usual method of conveyancing, from which such a condition could be inferred, notwithstanding the absence” of such words.[19]

    [19]  Reasons for judgment [91] citing Masters v Cameron (1954) 91 CLR 353 at 362-363; Powell and Berry v Jones and Jones [1968] SASR 394 at 410; Allen v Carbone (1975) 132 CLR 528 a 532-533.

42. Furthermore, this was not a complicated transaction. The land was vacant land and unencumbered. Settlement was to be within 30 days.

43. The second of the facsimiles sent by Mr Peluso on that day, as the trial judge pointed out, was in terms which assumed that it was understood that Mr Rogers would sign the attached contract on behalf of the respondent and that the deposit would be paid. There was a firm, unqualified intimation that the vendors would sign the contract the next day in Mr Peluso’s office.

1. There is nothing in the terms in which the three facsimiles of 22 July 2003 were cast to suggest that there was anything further to be negotiated.

2. In my view, the trial judge correctly found that the parties had reached a concluded agreement on 22 July, but at the same time that they intended to have the terms incorporated in a more complete way in a formally drawn-up written agreement.

   Ground 5:     The learned trial judge erred in ordering specific performance of the land sale contract

3. Once the learned trial judge had correctly concluded that the parties had reached a binding contract, and that the requirements of s 26(1) of the Law of Property Act were satisfied, there were no circumstances which could properly operate to deflect her from ordering specific performance.

4. I would dismiss the appeal.

5. BLEBY J. I agree that the appeal should be dismissed for the reasons given by Perry A/CJ. I have nothing to add to those reasons.

6. ANDERSON J.     I have read the draft reasons prepared by Perry A/CJ. I agree with his conclusions and with the reasons he gives. I would also dismiss the appeal.