Ciavarella v Polimeni

[2008] NSWSC 234

CITATION:	Ciavarella v Polimeni [2008] NSWSC 234
HEARING DATE(S):	28, 29 February 2008
JUDGMENT DATE :	20 March 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Order that the first and second defendants convey the relevant property to the plaintiff.
CATCHWORDS:	CONTRACTS [27][31]- Acceptance- Construction of tender document- Whether written notification of acceptance from vendor is mandatory- Held "Yes"- No written notification of acceptance- No formal contract. CONTRACTS [75]- Informal contract within the meaning of the "fourth class" of Masters v Cameron- Lack of written note or memorandum- Part performance- Acts constituting part performance must be in performance of the contract, not merely in reliance on it. ESTOPPEL [32]- Proprietary estoppel by encouragement- Whether fulfilment of expectation disproportionate or inequitable- Calculation of equitable compensation- Reasonable foreseeability of plaintiff's expenditure in reliance on the defendants' representation.
LEGISLATION CITED:	Conveyancing Act 1919, s 54A Duties Act 1997, s 304
CATEGORY:	Principal judgment
CASES CITED:	8 Parriwi Road Pty Ltd v Raffan [1970] 2 NSWR 428 Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 Australian Property & Management Pty Ltd v Devefi Pty Ltd (1997) 7 BPR 15,255 Barnes v Alderton [2008] NSWSC 107 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Cameron v Murdoch [1983] WAR 321 Cameron v Murdoch (1986) 60 ALJR 280; 63 ALR 575 (PC) Cauduro v Perpetual Trustee Co Ltd (1975) 1 BPR 9337 Craney v Bugg [1971] 1 NSWLR 13 CTM Nominees Pty Ltd v Galba Pty Ltd (1982) 2 BPR 9588 Dent v Moore (1919) 26 CLR 316 Eccles v Bryant & Pollock [1948] Ch 93 Enrico Furst & Co v WE Fischer Ltd [1960] 2 Lloyd's Rep 340 Fleetwood-Hesketh v Commissioners of Inland Revenue [1936] KB 351 GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Grant v GUS Properties (NSW) Pty Ltd (1981) 2 BPR 9465 Greasley v Cooke [1980] 1 WLR 1306 Grummit v Natalisio [1968] VR 156 Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519 ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 12 BPR 22,941 Jennings v Rice [2003] 1 P & CR 100 Levitt v Illawarra Seafoods Pty Ltd (1982) 2 BPR 9503 Maddison v Alderson (1883) 8 App Cas 467 Margripilis v Baird [1926] St R Qd 89 Masters v Cameron (1954) 91 CLR 353 McBride v Sandland (1918) 25 CLR 69 McPherson v King (1975) 1 BPR 9447 Myers v Ross (1935) 10 Fed Supp 409 N Litterco & Company Inc v Glassman Construction Company Inc 319 F (2d) 736 (1963) Nicholas v Paspaley Properties Pty Ltd v Commissioner of Taxes (1991) 103 FLR 305 Official Trustee in Bankruptcy v D'Jamirze (1999) 48 NSWLR 416 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Riches v Hogben [1985] 2 Qd R 292 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Stratulatos v Stratulatos [1988] 2 NZLR 424 TA Dellaca Pty Ltd v PDL Industries Ltd [1992] 3 NZLR 88 Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 Tasker v Small (1837) 3 My & Cr 63; 40 ER 848 Tinn v Hoffmann & Co (1873) 29 LT 271 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
PARTIES:	Anthony Mark Ciavarella (P) Giuseppe Polimeni (D1) Giuseppa Polimeni (D2) Balkar Singh (D3) Anandjeet Kaur (D4)
FILE NUMBER(S):	SC 1003/08
COUNSEL:	Dr C J Birch and S R Coleman (P) M W Hadley (D1 & 2) A M Gruzman (D3 & 4)
SOLICITORS:	Tierney & Dowd (P) Cater & Blumer (D1 & 2) Mackenzie & Vardanega (D3 & 4)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Thursday 20 March 2008

1003/08 – CIAVARELLA v POLIMENI

JUDGMENT

1 HIS HONOUR: The plaintiff seeks specific performance of an alleged contract for the purchase of a vineyard at Leeton (Farm 990) and associated water rights made in late November 2007. The total purchase price was $1,086,000. The first and second defendants are the registered proprietors of that vineyard in fee simple. I will refer to them as the vendors. The third and fourth defendants, a married couple, are persons who entered into a contract with the vendors in early December 2007 to purchase the same property. The total purchase price was $1,090,000.

2 The property is mortgaged in favour of the National Bank of Australia (NAB) for about $4,000,000.

3 The proceedings were expedited because it was feared that the harvest of grapes might be detrimentally affected if someone with funds was not able to maintain the vines.

4 When the matter first reached my list for case management, I was concerned about the rule in Tasker v Small (1837) 3 My & Cr 63; 40 ER 848 that in a suit for specific performance of a contract for the sale of land the only proper parties are the vendor and the purchaser.

5 This rule came into focus because the plaintiff wished to add NAB as a fifth defendant.

6 The plaintiff sought to retain the third and fourth defendants as parties because it would be necessary to remove their caveat from the title before there could be completion. The third and fourth defendants wished to remain parties. As I seemed to be the only person with problems about the state of parties, I allowed the case with those parties to proceed to trial. As should appear later, this may have been fortunate.

7 However, the NAB resisted being made a party. The reason why the plaintiff wished to have it as a party was that he alleged that the NAB had agreed to discharge its mortgage if the vendors could show that they had obtained the best price that they could reasonably obtain for the vineyard. The plaintiff said that he relied on this and would never have wanted to enforce a contract if he could only obtain title by paying out the bank.

8 I rejected the application to add NAB on two grounds. First, the form of pleading against the bank was defective as submitted by the solicitor then representing the bank and secondly the rule in Tasker v Small operated so that it was inappropriate to join the bank.

9 Dr Birch SC who appeared with Mr S Coleman for the plaintiff both at the case management stage and at the hearing objected that the rule in Tasker v Small has virtually been rendered obsolete by modern rules which require the court to adopt a procedure in each case that will efficiently deal with all the issues arising between the parties.

10 I do not consider that a single judge can hold that the rule in Tasker v Small is obsolete. In any event, its application means that the case can possibly be finalised without ever considering the problem with the NAB’s mortgage and if that problem cannot be avoided, it can be competently dealt with at a later stage of the proceeding when directions are made for the implementation of the decree. Thus, application of the rule in this case carries out the policy of the Uniform Civil Procedure Act and Rules.

11 That digression was necessary as background, but I now return to the mainstream of the case.

12 The vendors were in an awkward financial position at the end of 2007: the drought had hit them badly and they owed NAB about four million dollars. It would seem that under the guidance of the farm debt management mediator and a representative of NAB, a strategy was worked out that the vendors should call for tenders to purchase the vineyard and water rights.

13 To carry out this strategy, a tender document was prepared, the essential parts of which are as follows:

“1.1 In these Conditions of Tender, unless otherwise indicated by the context:
(a) Acceptance Date means Friday 23 November 2007;
(b) …
(c) Closing Date means Friday 9 November 2007;
…

2. The Vendor invites offers for the purchase of the Property in accordance with these Conditions of Tender.

3.3 The lodgment by the Tenderer of the Tender Documents in accordance with clauses 3.1 and 3.2 constitutes an irrevocable Offer by the Tenderer to purchase the Property which Offer will remain open for acceptance by the Vendor at any time up to 5pm on the Acceptance Date.
4.1 Each Offer is made upon these terms and conditions:
(a) at any time up to and including 2 Business Days prior to the Closing Date the Vendor will be entitled to amend or vary these Conditions of Tender by notice in a daily newspaper either published or circulated in Sydney or by notice in writing to every Tenderer;
(b) the Vendor may at any time vary or extend the Closing Date and the Acceptance Date by notice in a daily newspaper either published or circulated in Sydney or by notice in writing to every Tenderer;
(c) the Vendor may withdraw the Property from tender or otherwise terminate these Conditions of Tender at any time prior to the Acceptance Date by notice in a daily newspaper either published or circulated in Sydney or by notice in writing to every Tenderer;
(d) the Vendor does not undertake to accept any Offer;
(e) the Vendor may accept an Offer after the Closing Date and before the Acceptance Date; and
(f) the Vendor may agree with the Tenderer to vary the Form of Contract.
5.1 If the Vendor accepts an Offer, the Vendor will accept that Offer by notifying a Tenderer in writing that the Offer has been accepted.
5.2 If the Vendor accepts an Offer, the Vendor as vendor and the Tenderer as purchaser will from the date of such acceptance be deemed to have entered into the Contract at the Price and otherwise upon the terms set out in the Form of Contract as completed in accordance with clause 3.1.
5.3 Within 2 Business Days (time being of the essence) of receiving the Vendor’s notification under clause 5.1, the Tenderer must deliver to the Vendor a bank cheque drawn in favour of the Vendor’s Agent for an amount equal to the difference between the Preliminary Deposit and the Contract Deposit. The Preliminary Deposit and the amount paid under this clause will constitute the deposit under the Contract.
6. The Vendor must as soon as possible after the Acceptance Date notify each unsuccessful Tenderer in writing that its Offer has not been accepted. As soon as possible after such notification, the Vendor’s Agent must return the Documents of each unsuccessful Tenderer and refund any Preliminary Deposit (or return any cheque for the Preliminary Deposit which has not been presented) to the relevant Tenderer.
7.2 A Tenderer must not in any way publicise its Offer or proposed Offer.
9.1 A notice or other communication required or permitted to be given by one party to another must be in writing and:
(a) delivered personally;
(b) sent by pre-paid mail to the address of the addressee specified in these Conditions of Tender; or
(c) sent by facsimile transmission to the facsimile number of the addressee with acknowledgment of receipt from the facsimile machine of the addressee.
9.2 A notice or other communication is taken to have been given (unless otherwise proved):
(a) if mailed, on the second Business Day after posting; or
(b) if sent by facsimile before 4 pm on a Business Day at the place of receipt, on the day it is sent and otherwise on the next Business Day at the place of receipt.”

14 It is also necessary to summarise cll 11 and 12 which state that the tender document states the whole contract and supersedes all prior oral representations and the like.

15 The tender document annexed a form of the 2005 edition of the contract for the sale of land. Whilst cl 3.1(d) of the tender document gave instructions as to how most of the blanks in the form were to be completed, no instructions were given with respect to special condition 44(n), which appeared as follows:

“For the purpose of the Stamp Duties Act, the Purchase Price of $ shall be apportioned as follows:

(i) Shares and Entitlements valued at $
per share: $ . 00

(ii) Land and Improvements $ .00
$ .00”

16 Four tenders were received of which the plaintiff’s was the highest at $1,061,000.

17 When the tenders were opened, the male vendor told his advisors that he was not at all happy with the result. After discussion, it was agreed amongst the vendors and their advisors that contact would be made with the four persons who had submitted tenders to see if any of them would increase their bids.

18 This was done, but the only person who was prepared to increase his bid was the plaintiff who said he would increase the bid by $25,000 to $1,086,000.

19 On Wednesday 21 November 2007, a meeting was held at the vendors’ solicitors’ offices. Mr Polimeni, the male vendor was there as were representatives of NAB, the lead estate agent, Mr Amato and two solicitors. At the meeting, Mr Polimeni said, “I have no other buyers. I agree to sell to Ciavarella for $1,086,000 … .”

20 A solicitor asked Mr Polimeni whether he could sign the contract that day. He said that as his wife was unwell, they would come in to the solicitors’ offices as soon as they could.

21 Straight after that meeting, Mr Amato telephoned the plaintiff and told him the Polimenis had accepted his offer of $1,086,000. The plaintiff asked him what happens next and was told to contact his solicitor as the agent had done his job and the legal people would now come into focus.

22 On Thursday 22 November 2007, the vendors’ solicitors wrote and faxed to the plaintiff’s solicitors a rather curious letter, the effect of which has been the subject of much debate before me.

23 The text of the letter, omitting the formal parts, is as follows:

“We refer to the above matter and in particular to your client’s tender received herein. We confirm that your client has increased his tender price from $1,061,000.00 to $1,086,000.00.
We note that our clients are mindful of accepting your client’s tender at the increased price, however note that the special conditions on the contract submitted by your client with the tender are an obsolete version. We enclose herewith a copy of the current special conditions and draw your attention to the difference between both editions being clause 44 (e). We would be pleased if you could advise whether your client consents to the substitution of the current special conditions and amendment of the amount on the front page to reflect the increased tender price.
We look forward to hearing from you.”

24 The letter bears on it a stamp impression that it was received on 23 November shortly before 5pm. However, as it was replied to about 4:26pm on Friday 23 November according to a facsimile time imprint, one cannot read too much into these times.

25 The reply to the letter agreed that the alterations could be made and asked for the counterpart of the contract to be sent to the plaintiff’s solicitors. There does not appear to have been any reply to that letter.

26 It would seem that over the weekend of 24-25 November, the Polimeni family must have discussed the arrangements to sell and began or continued formulating other strategies.

27 The plaintiff put that the real situation was that the Polimenis were keeping the NAB at bay by going along with the sale by tender. However, they abused this process by utilising it to find the market value of the land, they then tried to keep the land in the family with the assistance of the third and fourth defendants. However, the plaintiff was kept as a back-up purchaser just in case the scheme did not come to fruition.

28 The evidence shows that there was some discussion between the defendants and the vendors’ son and his live in girlfriend, Michelle, that Michelle might repurchase the third and fourth defendants’ interest for slightly more than what they had paid for it.

29 The fact that Mr Polimeni agreed at the meeting of 21 November to sell to the plaintiff tells against it unless he was saying one thing in the presence of the bank officers and another within his family.

30 However, there is insufficient evidence to enable me to find that the process was a sham, even though I could infer that Mr Polimeni obviously knew the fourth defendant whom he always referred to as Anne, who appears to be the more significant player in this case than her husband.

31 This finding is really extraneous to the plaintiff’s case. In any event, there is nothing to suggest that the third and fourth defendants were not genuine actual purchasers on their own behalf even though they may have had some moral obligation to re-transfer the property at a subsequent date.

32 The plaintiff had paid a preliminary deposit of $5,000 with the tender. On Monday 26 November 2007, he paid the estate agent a further $103,600 to make up the ten per cent deposit required under the contract. The $108,600 deposit has never been returned.

33 I should note that both sides of the record submitted that they gained some comfort out of this. The plaintiff said that this was an aspect of his case that there had been part performance. Further, it showed that the vVendors had not complied with cl 6 of the tender document which required them to return deposits to unsuccessful tenderers. This showed, it was submitted, that they acknowledged that the plaintiff was not an unsuccessful tenderer.

34 The defendants put that, under the tender document in cl 5.3, time was of the essence and the full deposit had to be paid within two days of the vendors’ notification of acceptance. If the acceptance was on Wednesday 21 November, then the deposit would have had to been paid no later than Friday 23 November. As to the point that the deposit had not been returned, the riposte was that its return had not been demanded.

35 There is no need to enter into the discussion as there was never any assertion on behalf of the Polimenis that the deposit was not paid in time. It was common ground that the deposit was not returned and was treated at all times as a deposit.

36 On 6 December 2007, the vendors exchanged contracts in the 2005 edition of the standard form with the third and fourth defendants.

37 The plaintiff lodged caveat AD625460 to protect his position on 7 December 2007. On 21 December, the third and fourth defendants also lodged a caveat: their caveat is AD663124.

38 As will appear, the plaintiff relies for part of his case on the doctrine of part performance. He focuses on: (a) the payment of the deposit; and (b) the fact that he did not sell for profit his excess water allocation at the end of 2007 in reliance on his having a contract to purchase the subject land to which he intended to apply that allocation.

39 I have stated the facts as to (a). As to (b), it is unclear on the evidence when the decision was made not to sell the allocation. Part of it was sold on 7 November. The plaintiff knew no later than 7 December that there was a second contract exchanged on the property. He claims that he lost $307,375 as a result of the decision not to sell. He also says that when the rains came, the market price of water allocations fell, but I am not told when the rains came. I will return to this matter later.

40 The only evidence on this issue was contained in paragraphs 25 and 26 of the plaintiff’s affidavit of 7 February 2008 in which he deposed that “As a result of the acceptance of my tender, I decided to retain 500 megalitres from my high security allocations which were surplus to my needs ... so that I had sufficient water allocation to transfer to Farm 990 and allow me to irrigate and maintain the vines. If my tender had not been accepted I would have … sold my excess water allocation.”

41 The plaintiff deposed that he sold those water rights on 21 December. However, rains had fallen and he was only able to realize $242,625. As at 21 November, the market valuation was $550,000. Therefore, he claims a loss of $307, 375.

42 The plaintiff puts his case in a number of ways.

43 A. He first of all says that the tender or tender with the increased price, was an offer which was accepted. Admittedly it was not accepted in writing as envisaged by cll 5.1 and 9, but that was a default of the vendors. Thereupon, the contract in the form attached to the tender document came into being.

44 The plaintiff made a number of submissions to overcome the problem that there was no written notification of the acceptance.

45 First, he says that cl 5.1 means that the acceptance and the notification are two discrete steps and that the failure to notify does not nullify the fact of acceptance.

46 Secondly, he says that the vendors waived the written acceptance requirement and acknowledged that there was a binding contract.

47 Thirdly, he says that the requirement was for the sole benefit of the plaintiff and he waived it.

48 Fourthly, he says that there was a variation of the tender to dispense with the requirement and also to adjust other matters.

49 Fifthly, he says that people cannot rely on their own wrong or default: it was the vendors’ failure to give the necessary notice, and they cannot rely on this to defeat the purchaser.

50 B. If the above submissions fail, the plaintiff says that he made a counter offer which was accepted by the vendors.

51 C. The plaintiff relies on a proprietary estoppel that he was encouraged by the conduct of the vendors to believe that he had a contract and he spent monies in reliance on the supposed fact that there was a contract so that the minimum equity required to atone for the vendors’ unconscionable conduct would be to compel the vendors to transfer the property.

52 The defendants say that:

A. Cll 5.1 and 9 are part of the tender process and were not fulfilled;

B. The parties never reached the stage of an enforceable agreement;

C. Conveyancing Act 1919, s 54A, prevents reliance on any oral agreement;

D. Mrs Polimeni was never bound;

E. The vendors never committed a default: they merely relied on their rights;

F. Section 304 of the Duties Act 1997 operates to deprive the plaintiff of any contractual right;

G. The plaintiff was not ready willing and able to complete as he was unwilling to have the mortgage discharged;

H. In the light of the second contract, it would be inequitable to grant specific performance.

53 It seems to me that I can best deal with these contentions under the following headings:

(1) In the circumstances, did the parties’ actions pursuant to the tender document result in a binding contract? This question raised sub-questions, viz:

(a) (i) was written notification of acceptance mandatory?

(ii) could written notification be waived, and if so, was it waived?
(iii) was there any variation of the tender, and if so, what?
(b) Do the blanks in clause 44(n) of the form of contract annexed to the tender document have any, and if so what, significance?
(c) What, if anything, is the significance of the payment of the deposit on 26 November 2007?

54 (2) Does any conduct by or on behalf of the vendors prevent them from relying on their legal rights under the tender process?

55 (3) If the answer to both questions (1) and (2) is “No”, was a binding contract otherwise brought into existence? Sub-issues are:

(a) the application of the principles discussed in Masters v Cameron (1954) 91 CLR 353;


(b) the authority of solicitors to amend contracts;

(c) the absence of Mrs Polimeni; and

(d) other factors.

56 (4) If the answer to question (3) is “Yes” is such contract:

(a) unenforceable because of the operation of s 54A of the Conveyancing Act 1919?
(b) if 4(a) is answered “Yes” does the doctrine of part performance save it?
(c) one which has not created any proprietary rights as a result of the operation of s 304 of the Duties Act 1997?
(d) if 4(c) is answered “Yes” would payment of duty now save the contract from invalidity retrospectively?

57 (5) Other issues including:

(a) the case in proprietary estoppel; and

(b) The fate of the proceeds of the crops harvested since November 2007.

58 (6) The result of the case.

59 I will deal with these matters seriatim.

60 (1)(a)(i) It will be remembered that cl 5.1 of the tender document said, “If the Vendor accepts an Offer, the Vendor will accept that Offer by notifying a Tenderer in writing that the Offer has been accepted.”

61 The operation of other parts of the tender are affected by the time of acceptance. First, the date of accepting the offer is the date of the deemed contract (cl 5.2). However, that date is not necessarily the trigger for payment of the balance of the deposit which trigger is the receiving of the notification by the tenderer. It must also be noted that the date of accepting an offer is not the “Acceptance Date” which is defined as 23 November 2007.

62 Clause 5.1 clearly is ambiguous. It is odd that it almost imitates a well-known problem with wills in making an absolute statement and then restating it with qualification.

63 The clause could mean that if the vendor was minded to accept the offer then the exclusive method of doing so is by notifying the successful tenderer of that fact.

64 However, there are substantial difficulties in taking this construction. These include that if this were meant, the clause could have been expressed far more simply. Secondly, there is confusion in using the present tense (“accepts an Offer”) followed by a phrase using the future (“will accept that Offer”). Thirdly, “notifying” probably connotes the tenderer having the acceptance come to his or her attention, not just the fact of the vendor transmitting a notification. If so, clause 9 means that there can be three different dates which will count as the date of acceptance depending on whether the written notification is personally handed to the tenderer, faxed or mailed. Furthermore, why does cl 5.2 use the words “date of such acceptance” yet cl 5.3 refers to the tenderer receiving the notification?

65 Of course, the vendor will know which means they used to notify the tenderer so that they can compute the date of acceptance. However, that date is central to the scheme and that the purchaser’s solicitors and others might not be aware of the mode of transmission of the notification of the acceptance. Further, there might well be cases where a fax was sent at 4:30pm on Friday 23 February (and so deemed to have been received on the next business day, Monday 26 February) and then a copy personally handed to the tenderer at 5pm that day, which would be and deemed to be effective on 23 February.

66 The other principal interpretation is that first the vendor accepts and then, subsequently and as a discrete matter there is a notification.

67 Of course, it is fundamental to the law of contract that as almost an invariable rule, acceptance must be communicated. However, the mode of communication is at large and may even be by a person other than the acceptor. See in general Chitty on Contracts Vol 1 (29th ed) at [2-041]–[2-042A].

68 If this alternate construction is adopted, there is a contract from the moment of communication or deemed communication of the acceptance.

69 There are problems with this alternate construction, indeed much the same problems as with the other method of construction. The date of acceptance is still unclear. There may be a difference between the date that the fact of acceptance is communicated to the successful tenderer and the date the successful tenderer receives the formal notification. However, the tense of the verbs in cl 5.1 is respected as the vendor accepts and then passes into the future with the notification.

70 A similar problem with alternate constructions of this nature occurs in cases where an option says that a person is to exercise the option and accompany the notice of exercise with a document such as an executed pro forma lease or contract. Although the cases vary depending on the words used, the majority of those cases construe such clauses as meaning that the option is exercised on notification and that the sending of the document is a condition subsequent. See 8 Parriwi RoadPty Ltd v Raffan [1970] 2 NSWR 428; McPherson v King (1975) 1 BPR 9447; Grant v GUS Properties (NSW) Pty Ltd (1981) 2 BPR 9465; Levitt v Illawarra Seafoods Pty Ltd (1982) 2 BPR 9503.

71 The message from those cases seems to me to be that it is preferable to adopt a construction that the notification is not an essential part of the acceptance, if such construction is reasonably open.

72 The same flavour appears from 19th century cases where an offer is phrased in terms that it is to be accepted by telegram or return of post. Again, each contract must be construed according to its words, but the trend is to regard the words as not mandating that the acceptor use a telegram or the like, but to indicate a short period for acceptance. An example is Tinn v Hoffmann & Co (1873) 29 LT 271 and see Chitty op cit at [2-060].

73 However, in the ultimate, none of the speculation in the preceding paragraphs really goes to the heart of the problem. This is because when a contract states that an acceptance is to be communicated in a particular manner whether that is mandatory or directory. Chitty at [2-058] correctly states the general rule that an offer which requires the acceptance to be communicated or expressed in a particular way can generally only be accepted in that way, though the requirement can be waived.

74 As Dixon CJ and Fullagar J said in Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 at 111-2, for an acceptance to be operative, it must be in a manner reasonably contemplated by the offeror.

75 In the instant case, there are so many provisions that depend on there being a written notification, it must be a primary focus. This being so and for the other reasons set out above the only feasible view is that a written notification of acceptance was mandatory.

76 1(a)(ii) Mr Hadley, who appeared for the vendors put that this was not a situation where waiver could enter the picture and cited Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 in support of that submission. I must confess that I do not accept the submission nor do I find anything in the Perri case to support it.

77 However, there are indeed some juristic problems with the concept of waiver of the prescribed method of bringing about a contract.

78 In Enrico Furst & Co v WE Fischer Ltd [1960] 2 Lloyd’s Rep 340 at 449, Devlin J noted that waiver does not vary the terms of a contract, but is conduct on the part of a party to a contract which affects his remedies for breach by the other party.

79 What is really meant by the submissions on waiver is that the conduct of the parties showed that they had dispensed with the need for the communication of the acceptance to be in writing.

80 There are two aspects of this so-called waiver which must be considered. First, the vendors could have waived the notification in writing requirements by their conduct accepted by the plaintiff and, secondly, the plaintiff may have been able to waive the requirement as a condition wholly for his benefit.

81 The conduct said to constitute a waiver by the vendors consists of:

(a) authorising Mr Amato to telephone the plaintiff and inform him of the success of his tender;

(b) realising that there was no writing yet allowing the solicitors to write their letter of 22 November 2007; and

(c) accepting and retaining the deposit.

82 It must be remembered when considering waiver that, although the plaintiff was the offeror, as Mr Hadley acknowledged, the vendors were the masters of the situation. They and their advisors had formulated the tender document which was a document that advantaged the vendors over any purchaser. Thus one might more easily conclude that they retained power to dispense with conditions.

83 However, an essential element in waiver is that the person who allegedly waives must have intended to waive: Myers v Ross (1935) 10 Fed Supp 409 at 411 adopted by Stephen J in a case of waiver by election in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 647.

84 It does not seem to me that, even putting the juristic matters to one side, there would be sufficient here to show waiver of or even an intention to waive a core term of the tender process.

85 The other way of looking at the matter is to ask whether the provision of notification in writing was a condition solely for the benefit of the purchaser, if so, the purchaser may usually dispense with it or waive it.

86 I do not consider one can say that the provision was for the sole benfit of the purchaser. As I have noted, other obligations hinge on the time of giving or receiving the written notification.

87 Accordingly, I do not consider that waiver operates as a means of escape form the primary finding.

88 (1)(a)(iii) It is clear from the facts set out at the commencement of these reasons that there were variations in the tender. Furthermore, it must be appreciated that the original tender document contained a provision that the vendors reserved the right to consider non-conforming tenders.

89 The tender changed by the plaintiff increasing the offer from $1,061,000 to $1,086,000 and by amending clause 44(e) of the annexed contract. This was acknowledged by the exchange of letters between the solicitors on 22/23 November 2007. The increase in price had been worked out before 21 November. However, if the contract had already been made when Mr Amato telephoned the purchaser on 21 November, the second was an amendment to the contract made by authority rather than amendment as to the terms of the tender.

90 I do not see how one can say that there was any further variation to the tender on the material which I have already discussed.

91 It follows that question (1) must be answered “No”.

92 (2) I believe that I have already discussed all the relevant material when dealing with question (1) and that it must follow from that discussion that this question must also be answered “No”.

93 (3) As there was no formal contract because there was no written notification of acceptance, I need to ask whether there was an informal contract.

94 It is clear that no later than 23 November 2007, all the terms of the contract, with the possible exception of cl 44(n) had been agreed and, on 26 November, the purchaser paid the deposit.

95 If there thus appears to have been offer and acceptance and, subject to what is discussed in the sub-questions, a contract came into existence no later than 23 November 2007.

96 (3)(a) In Masters v Cameron (1954) 91 CLR 353 at 360, the High Court noted that:

“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.”

97 In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628 (affirmed by the Court of Appeal as GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631), MH McLelland J said that there was really a fourth category, namely where the parties were content to be bound immediately and exclusively on the terms which they had agreed upon whilst expecting to make a new contract in substitution for their first contract, containing, by consent, additional terms.

98 In the present case, there is no doubt that the parties contemplated a final document drawn up by their lawyers. Indeed, had the tender document been more tightly drawn, upon acceptance of the offer, a formal document would have been created.

99 Mr Hadley for the vendors says that the case falls under the second of the classes of case noted in Masters v Cameron. He reminded me that the authorities make it clear that a situation may fall under the second head notwithstanding that the parties have completely agreed on all the terms of their bargain.

100 Mr Hadley has good support for this submission in the long line of cases stemming from Eccles v Bryant& Pollock [1948] Ch 93 to the effect that the complexity of land transactions and the amount of money involved make the court lean to the view in the absence of contrary factors that the parties would not have intended to be bound legally until a formal exchange of contracts.

101 However, in the present case, the vendors were virtually compelled to sell. They had the bank looking over their shoulder and “assisting” them to set up a regime under which the highest purchaser would be selected and committed to a vendor-favourable form of contract at an early date.

102 The actions of the male vendor and the vendors’ agent as well as that of both parties’ solicitors immediately after 21 November and before the following weekend are consistent with this scenario.

103 In my view the case is one of the fourth class of Masters v Cameron. The parties intended to be bound immediately, but both of their solicitors realised that there were at least some adjustments to be made and that the contract to be exchanged would differ in minor details to that already in existence.

104 (3)(b) I now pass to the matter of the authority of solicitors to amend contracts.

105 The basic rule was laid down by the High Court in Magripilis v Baird [1926] St R Qd 89 and affirmed by Needham J in this Court in CTM Nominees Pty Ltd v Galba Pty Ltd (1982) 2 BPR 9588.

106 The rule is that unless the client has expressly authorised or has held out his or her solicitors as an agent with greater authority, a solicitor’s authority to amend or make a contract on behalf of the client is limited to matters of conveyancing and does not extend to matters of contract.

107 As has been noted, the problem centres around cl 44(n) of the draft form of contract which was not completed.

108 Mr Del Gigante, the plaintiff’s solicitor gave evidence that there was a custom among the solicitors in the Murrimbidgee Irrigation Area (MIA) to apportion the purchase price of land holdings in the region so that the purchaser paid the minimum stamp duty and that the formula used was one which had passed the scrutiny of the revenue authorities.

109 I accept that evidence. However, there was nothing to suggest that this formula was known outside the conveyancers of the MIA including the parties to the present transaction.

110 The plaintiff says, however, that this evidence shows that the apportionment was a matter properly within the conveyancing authority of solicitors. He says that the parties would have no concern at all as to the apportionment, because they would still be paying or receiving the same total consideration.

111 Mr Hadley put that to the contrary, the uncertainty went to the purchase price for the sale of the land which was one of the fundamental terms of any contract for the sale of land.

112 Mr A Gruzman who appeared for the third and fourth defendants put that it was wrong to say that the vendors would not be affected by the apportionment. He put that the vendors’ capital gains tax position would be affected by the amount received for the land and also by the amount received for the water rights.

113 There was, however, no evidence in the present case that there was any effect at all on these matters. Indeed, because of the drought, the value of the land was very much down on what it had been. However, it may be that the value of the water rights had increased. As the land value was probably the principal part of the package, and as the vendors had not adduced any evidence on this matter, I am not disposed to find that it is a relevant factor.

114 Although the case is close to the borderline, I consider that, in view of Mr Del Gigante’s evidence, the matter should be considered one within the conveyancing authority of a solicitor.

115 (3)(c) Once upon a time, one did not concern oneself too much if a wife did not sign a contract for a joint sale and presumed that if nothing was said that the husband was agent. Those days have gone and, nowadays, if a wife is a co-vendor, one looks to see that she has fully participated in decisions. However, this is not a situation where one size fits all. In the instant case, the sale was being sponsored by the bank, the female vendor had assented to the basic arrangements, she was suffering severe ill health and she never protested at what her husband was doing. The only inference I can draw is that the husband acted as her agent.

116 Accordingly there is nothing in this point.

117 (3)(d) The “other matters” which affect the answer to this question are the matters to be considered under question (4). Subject to these matters, question (3) must be answered “Yes”.

118 (4)(a) Essentially, s 54A of the Conveyancing Act 1919 renders unenforceable any contract for the sale of land which is not evidenced by a note or memorandum of the contract signed by the persons to be charged thereon. The section clearly applies and there is no note or memorandum to satisfy the requirements of the section. Thus, this objection is fatal unless the doctrine of part performance can save the contract.

119 (4)(b) As to the doctrine of part performance, it must first be noted how the doctrine operates. The equity court has no more warrant than any other court to ignore the commands of statute. However, as the old maxim pithily puts it, “Equity will not allow a statute to be used as a cloak for fraud.” Accordingly, if it would be fraudulent in the eyes of equity for the opposing party to rely on the statute, equity will order that that party execute a note or memorandum of the contract and will then proceed to grant specific performance. The plaintiff is not given relief because of the contract, rather the conduct of the parties subsequent to the contract raises an equity; see eg Maddison v Alderson (1883) 8 App Cas 467 at 475; McBride v Sandland (1918) 25 CLR 69 at 77.

120 In order for the defendants’ conduct in and about the contract to raise an equity sufficient to apply the doctrine of part performance, the plaintiff must have done acts in performance of the contract: Maddison v Alderson (1883) 8 App Cas 467. The exact limitation, whether the court looks for acts permitted by the contract as well as those required by it or what otherwise, is a nice question for law school moots (see the discussion in Meagher, Gummow & Lehane, Equity Doctrines & Remedies (4th ed) at [20-185]) but need not trouble me in this case.

121 The plaintiff relies on two acts of part performance: (a) payment of the deposit; and (b) that the purchaser did not sell his excess water rights for the 2007 season, relying on the fact that he had bought the subject property on which the water could be used.

122 Dr Birch agreed that (a) alone was insufficient and the authorities clearly support that view; see eg Maddison v Alderson at 479; ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 12 BPR 22,941 at 22,960 [327]. However, he says that it is a factor that can be added to other factors to allow a court to find part performance. I agree.

123 My focus must then be on (b).

124 I noted earlier the evidence as to the plaintiff’s decision not to sell his excess water entitlement. That evidence was rather vague. I invited further written submissions on this and other matters and these were duly furnished.

125 The written submissions were not able to elucidate the evidence in any more detail than at the hearing. The onus is on the plaintiff to show that he made the decision not to sell the excess water rights until after the informal contract was made. The only evidence is that the decision was a result of the acceptance of the tender. This must mean Mr Amato’s oral communication of 21 November.

126 As I have noted above, any informal contract came into being no later than 23 November. If the decision to retain the water was made at or before the oral acceptance, it pre-dated the contract which is sought to be enforced and thus cannot be an act of part performance as any act to be classed as part performance must take place subsequent to the informal contract.

127 In view of the fact that the plaintiff, on whom the onus lay, did not tender any more precise evidence of when he made his decision to retain the excess water allocation, I consider I need to infer it was more likely than not immediately upon the communication of the acceptance.

128 Even if this finding were unjustified, the case in part performance must fail. It is clear on the authorities that the act must be in performance of the contract not merely in reliance on the contract. Thus in TA Dellaca Pty Ltd v PDL Industries Ltd [1992] 3 NZLR 88, Tipping J held that where a person who had agreed to take a lease on premises surrendered the lease on his former premises, that act was merely in reliance on the contract for lease and not in performance of it and did not qualify as an act of part performance. His Honour held that acts preparatory or ancillary to the performance of the contract were insufficient.

129 The same result had been reached by Gillard J in Grummit v Natalisio [1968] VR 156 where a plaintiff was not permitted to rely on his expenditure for surveying and sending applications to water authorities to amalgamate his allocation in the light of his purchase of neighbouring land as a sufficient act to constitute part performance.

130 Again in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, demolition work on the plaintiff’s own property in reliance that they had a contract on the defendant’s property was held by Brennan J not sufficient to constitute part performance.

131 Here the act of retaining the water allocation was not connected with the property being purchased.

132 In an attempt to escape from this conclusion, Dr Birch put that cl 44(e)(iii) of the substituted special conditions required the purchaser to acknowledge that he may have to transfer 168 megalitres of water entitlement to the water authority before it would process his application to transfer the water rights associated with Farm 990.

133 However, this argument does not improve the situation. The clause is dealing with the associated transfer of the water rights, not the agreement for the sale of land which is affected by s 54A of the Conveyancing Act.

134 Even if the view expressed in the preceding paragraph was erroneous, the act of retaining water allocation was not for the purpose of the possibility in providing the 168 acres, it was, as Mr Ciaverella said, for the purpose of irrigating and maintaining the vines. It was an act in reliance on the contract, not in performance of the contract.

135 Thus, neither alone nor together can the acts relied on by the plaintiff constitute part performance.

136 (4)(c) Section 304(1) of the Duties Act 1997, so far as is relevant, reads as follows:

“An instrument that effects a dutiable transaction or is chargeable with duty under this Act is not available for use in law or equity for any purpose … unless … it is duly stamped.”

137 Section 304 is the successor to a whole raft of similar sections in stamp duty legislation throughout the world. Its immediate predecessor in NSW is s 29 of the Stamp Duties Act 1920.

138 As Hill, Duties Legislation notes at [24.0550] point 2, “An unstamped instrument is, while unstamped, struck with legal sterility. It is in the eyes of the law a nullity because the force of law has been removed from the transaction embodied in it.”

139 That statement is fully supported by authority. The best root of title for it is the decision of the High Court in Dent v Moore (1919) 26 CLR 316 at 324. See also Australian Property & Management Pty Ltd v Devefi Pty Ltd (1997) 7 BPR 15,255 and Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519, 524.

140 The present section, although differing in language from the former s 29 is, to my mind, to the same effect.

141 Generally speaking, stamp duty is imposed on documents, not transactions. In the instant case, there is no signed document constituting the contract. What is there then that can be dutiable?

142 The decision of the English Court of Appeal in Fleetwood-Hesketh v Commissioners of Inland Revenue [1936] 1 KB 351 would tend to the conclusion that the solicitors’ letters were dutiable. However, see Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes (1991) 103 FLR 305.

143 I mentioned this matter during the argument. Although Mr Gruzman clearly took the point that s 304 meant that no rights had been created, no one dealt with the Fleetwood-Hesketh point. In those circumstances, and, because a decision can have no bearing on the result of the case, it is sufficient merely to mention the point and move on.

144 (4)(d) In Official Trustee in Bankruptcy v D’Jamirze (1999) 48 NSWLR 416, Hodgson CJ in Eq distinguished most of the cases on s 29 cited earlier and noted they were all cases where there had not been any payment of the duty even up to the time of hearing. His Honour held that, where a document had merely been stamped late, it was fully effective ab initio.

145 Dr Birch argued that I should follow this decision. He even suggested that it was appropriate to adjourn the case after decision and before making formal orders during which period, the duty could be paid.

146 Mr Gruzman put that D’Jamirze was not a specific performance case and that in such a suit the plaintiff has to show that he is ready willing and able to carry out the contract and has, at the date of the institution of the suit, carried out the contract so far as the same needs to be carried out of his part. This includes payment of the stamp duty.

147 Mr Gruzman’s analysis may be historically correct, but more modern authorities have shown a more pragmatic approach and that, generally speaking, if at the hearing the plaintiff shows himself ready willing and able to perform, including being ready willing and able to pay all duties, then the court may make the order sought.

148 I respectfully agree with the decision in D’Jamirze and, had the matter become necessary, I would have allowed the payment of duty before pronouncing the formal order.

149 (5)(a) The case in proprietary estoppel really raises much the same issues as have been considered in questions 3 and 4. The basic proposition advanced is that the conduct of the Polimenis and their agents and solicitors induced the plaintiff to accept that he had a contract and, on that basis, he altered his position to his detriment including the loss he suffered by not selling his excess water entitlement, a loss said in the statement of claim to be $307,375.

150 I recently analysed the elements of proprietary estoppel in Barnes v Alderton [2008] NSWSC 107 and I do not intend to repeat what I said there.

151 On the facts, there is no doubt that, with authority, Mr Amato communicated to Mr Ciavarella that he was the successful tenderer. There is also no doubt that in reliance on that communication, Mr Ciavarella paid the deposit and retained solicitors to deal with the conveyancing consequences. Further on the evidence to which I have already referred, Mr Ciavarella relied on the communication not to dispose of his excess water entitlements.

152 In Barnes v Alderton at [58]-[59] I noted that if there was a legally binding promise, there was no room for applying principles of proprietary estoppel, but if not, one had to remember that one was dealing with an independent equity against the conscience of the promisor and one was not endeavouring to extend the ambit of the law of contract. In this connection, I quoted the wise words of McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 301.

153 The above brief analysis would show that the elements of a proprietary estoppel by encouragement have been made out. Thus my focus must be on discretion and remedy.

154 Mr Gruzman puts that because it was known that there was a second contract from at least 7 December, it would be inequitable to give the plaintiff relief in proprietary estoppel. With respect, I consider that this overstates the position. The plaintiff has an equity, perhaps only what is classed as a “mere equity”, as of at least 26 November and the third and fourth defendants have an equity as of 6 December. That latter equity may be an equitable estate if that second contract were specifically enforceable which may or may not be the case.

155 Probably the way to deal with the situation is to take into account the third and fourth defendants’ position when considering remedy. In my view this is a relevant factor when considering the appropriate remedy.

156 Dr Birch puts that the appropriate remedy is to order that the vendors enter into a contract with the plaintiff in proper form.

157 The authorities indicate that where there is a proprietary estoppel by encouragement, the usual remedy is the fulfilment of the promise: see Barnes v Alderton at [67] et seq and cases there cited.

158 However, the usual rule as to remedy does not apply where the fulfilment of the promise would be disproportionate to the detriment suffered or would otherwise be inequitably harsh.

159 Thus I must ask myself whether the fulfilment of the expectation would be disproportionate or otherwise inequitable: see Jennings v Rice [2003] 1 P & CR 100 and Barnes v Alderton.

160 On such a question, I consider that it is relevant to take into consideration the position of the third and fourth defendants who have, without any mala fides being established against them, contracted to purchase the same property.

161 In the present case, were there an enforceable promise and the plaintiff or the third and fourth defendants left to his or their remedies at law, it would seem that the highest value of Farm 990 at the date of breach, 6 December, 2007 was $1,090,000. The contract price was $1,086,000 therefore the damages would not exceed $4,000 plus the loss of the money paid to solicitors for conveyancing work which was useless plus perhaps some incidental expenses.

162 However, I would infer, that the rains in December would have increased the value of Farm 990 over and above the $1,090,000 mark (but I have no evidence as to by how much), so that, if the expectation were fulfilled, the plaintiff would obtain a property at a discount on present day values.

163 Although the matter is finely balanced, I do not consider that making an order that the expectation be fulfilled is so disproportionate to the detriment that I should decline to follow that path.

164 Accordingly I should provide the “usual” remedy of making an order to fulfil the expectation.

165 At first blush the finding that what was unenforceable as a contract can be resurrected under a principle of proprietary estoppel may appear internally inconsistent. However there is precedent for this. In N Litterco & Company Inc v Glassman Construction Company Inc 319 F (2d) 736 at 740 (1963) Fahy J giving the reasons for judgment of the US Court of Appeals District of Columbia Circuit noted that the issue as to the applicability of the Statute of Frauds is no longer germane in the light of the court’s holding that no contract was created. In that case the court granted relief on the ground of promissory estoppel.

166 The actual order may be difficult to formulate as the promise was made in the context that NAB would discharge its mortgage on the vendors obtaining the best price possible for the property.

167 If I were not of that view, or if the primary order cannot be carried out difficult questions (would) arise as to the quantum of equitable compensation to be awarded. In case the matter should go further, or, in case the primary order is impossible to implement because of the attitude of NAB, I should briefly deal with those questions.

168 As to the loss of the sale of the water allocation, there is no evidence as to when the price fell from $1,100 per megalitre. Therefore, had the water allocation been sold at the date of breach, as at 6 December, there may well have been no loss. It would thus not be necessary to consider whether the loss in value of the water allocation reasonably flowed from the breach.

169 Thus, to compensate the plaintiff on the basis of the damages he would have received had there been a contract at law, would produce very little. Furthermore, it would seem that the vendors’ financial situation was marginal so that there might well be difficulty in the plaintiff actually receiving in cash any damages awarded.

170 There is no argument about the quantum of the plaintiff’s loss on the sale of his water rights. The principal problem is that there is no evidence that the vendors ever contemplated that such a loss would be incurred.

171 Although I have not found any authorities directly on the point, nor were any referred to in submissions, I must ask myself how can it be against conscience to allow a person to incur expenditure when one does not know it will be incurred.

172 There are three possible answers to this problem. The first is that the ordinary method of satisfying the equity created by a promise is to fulfil that promise. It follows that any lesser award must also be within power.

173 The second is that one only grants a remedy to the extent that it would be against the conscience for the defendant not to compensate the plaintiff in the way proposed. This can be considered in two different ways: (a) one looks to see what it is that the defendant has acquiesced in or encouraged; or (b) one looks to see what the plaintiff did in reliance on the defendant’s promise.

174 What authorities there are tend in my view to follow approach (b).

175 On approach (a), it might be noted that there are cases where the circumstances show that the promisor is content that the plaintiff improve the property in any way he or she thinks fit because the property is to pass to the plaintiff in fee simple in due course; see eg Cameron v Murdoch (1986) 60 ALJR 280; 63 ALR 575 (PC).

176 However, where that is not the scenario, I cannot see any equity against the conscience as to why a plaintiff should be compensated for expenditure that he or she would not have incurred but for the promise where a reasonable person would not have foreseen that such expenditure would be incurred.

177 Mr Robertson’s learned dissertation on the subject, “Satisfying the Minimum Equity: Equitable estoppel remedies after Verwayen” (1996) 20 MULR 805, notes that the usual approach in the cases where the expectation is not to be fulfilled is to compensate the plaintiff for his or her expenditure incurred in reliance on the promise.

178 However, here again, there must be some limit on the expenditure for which compensation must be awarded to atone for the unconscionability. For instance if a father promised a son that he would be given property when his mother died and the son in reliance on the promise borrowed a large sum of money and lost it all gambling, the father would not be ordered to pay the son the amount he had borrowed. There must be a reasonable foreseeability of the expenditure that might be incurred in reliance on the promise.

179 As I have said, there is little in the authorities on this type of problem.

180 One useful illustration of how one tackles the problem is provided by Stratulatos v Stratulatos [1988] 2 NZLR 424. In that case, a mother promised her son and daughter-in-law that they could live in her house while the mother was alive and thereafter the son would own the house. The son died early and the mother and daughter-in-law fell out. However, the young couple had done extensive renovations to the mother’s knowledge and there had been a significant capital appreciation. McGechan J valued the improvements, the increase in capital value and made an order for equitable compensation based on a proportion of the capital appreciation, the value of the improvements, less an occupation fee.

181 Basically, an equitable proprietary estoppel only arises if the defendant makes a promise which would tend to induce a course of conduct: see Greasley v Cooke [1980] 1 WLR 1306 at 1313 per Waller LJ. It must logically follow that it is only the expenditure that a reasonable person might expect to flow from the inducement that should be laid against the conscience of the defendant.

182 In saying this I have not overlooked what Robert Goff J said in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 at 104-7 and what Brinsden J said at first instance in Cameron v Murdoch [1983] WAR 321 at 351 that at least in some forms of proprietary estoppel conscience may be affected by factors of which the promisor was unaware.

183 Thus, I consider that the compensation to be awarded is in respect of expenditure which one might reasonably foresee be incurred, but not otherwise.

184 Was the retention of the 500 megalitres reasonably foreseeable by the Polimenis? I do not consider that there is sufficient evidence to enable me to hold that it was.

185 However, there is evidence to the effect that 168 megalitres would be required to compensate Murrumbidgee Irrigation Limited before the transfer of the allocation was effected. It was accordingly foreseeable that this amount would be retained.

186 The claimed loss is $307,375. On my calculation, 168/500 of this sum is $103,278.

187 Accordingly if the appropriate order were for equitable compensation I should order equitable compensation in this sum plus loss of solicitors’ cost plus loss of interest on the deposit. I would thus round up the compensation to $110,000.

188 As there are doubts as to the financial situation of the vendors, there should be an equitable charge over Farm 990 to secure the order for equitable compensation in the sum of $110,000.

189 (5)(b) In view of what I have said above, it is not necessary to deal with any other matter, but I should make some remarks on one matter which was alluded to earlier.

190 Special condition 45 of the contract is as follows:

“Approximately 200 hectares of the property is planted to grape vines. The vendor makes no warranty about the quality or condition of any vines on the property either at the date contract or any time thereafter. The vendor shall not be required to care for, tend, maintain or water any vine located on the property between the date hereof and completion, nor shall the vendor be required to undertake any activity of a viticultural nature in relation to the property . The purchaser cannot make a claim or requisition or rescind or terminate in respect of the matters disclosed in this clause.”

191 This clause would seem to indicate that the grape vines and their produce pass to the purchaser. This would appear to be the position under the general law, see Butt, Land Law (5th ed) at [336]. However, see Cauduro v Perpetual Trustee Co Ltd (1975) 1 BPR 9337.

192 If a vendor makes a contract on 1 January to sell Blackacre to X and on 2 January to sell Blackacre to Y, it is quite incorrect to say that X cannot get specific performance because of the contract with B. The true analysis is that, if A’s contract is specifically enforceable, A is granted specific performance and B has a remedy in damages. B cannot get specific performance in such a situation because it is impossible for X to fulfil his contract; see eg Craney v Bugg [1971] 1 NSWLR 13. Accordingly, it may well be wrong to say that B has an equitable estate in Blackacre arising out of the 2 January contract.

193 However, if the first contract is unenforceable, the second contract may, if all else is in order, be specifically enforceable.

194 What I have just said may be relevant with respect to the caveat lodged by the third and fourth defendants. I will say no more on this topic as it may need to be fully argued in due course.

195 (6) The result of the proceedings is that although the claim for specific performance must be dismissed, the plaintiff is entitled to an order that the vendors convey the property to him to fulfil the equity of proprietary estoppel.

196 However, as I have noted great care will need to be exercised in formulating the order.

197 Questions may also arise as to what is to happen to the third and fourth defendants’ caveat and what are the rights between the plaintiff and the NAB.

198 I also expect that there will be detailed submissions as to costs.

199 As the plaintiff has succeeded on a subsidiary claim, it may be that each party pay their own costs.

200 If the defendants are entitled to any costs, a question is whether the defendants are only entitled to one set of costs. Indeed, it might be argued that the third and fourth defendants are not entitled to any costs as an unnecessary party, however, as the plaintiff joined them, this may be difficult to maintain.

201 It seems to me wise, therefore, to list the matter for mention before me at 9:30am on Thursday 3 April 2008. I would expect to be told what further court time is needed to finalise the matter and whether any new proceedings need to be instituted to bring this about. Should that date not suit counsel, provided my Associate is notified by the previous week, some other date can be fixed.

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