Clarke v Franzen Pty Ltd & Ors

[2007] NSWSC 920

CITATION:	Clarke v Franzen Pty Ltd & Ors [2007] NSWSC 920
HEARING DATE(S):	13 to 16 August 2007
JUDGMENT DATE :	22 August 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Judgment for the Defendants.
CATCHWORDS:	REAL ESTATE AGENT – AUTHORITY – Whether real estate agent expressly given verbal authority to exchange contracts for sale on behalf of vendor.
LEGISLATION CITED:	Fair Trading Act 1987 (NSW) – s.42, s.45 Trade Practices Act 1974 (Cth) – s.52
PARTIES:	David John Clarke – Plaintiff Franzen Pty Ltd (formerly Franzen Malua Bay Real Estate) – First Defendant Carlene Annette Franzen – Second Defendant Ferdinand Franzen – Third Defendant
FILE NUMBER(S):	SC 5970/04
COUNSEL:	T.G. North SC, A.J. Paterson – Plaintiff D.R. Pritchard – Defendants
SOLICITORS:	Fitzpatrick Legal (Melbourne) – Plaintiff Henry Davis York – Defendants

5970/04 Clarke v Franzen Pty Ltd & Ors

JUDGMENT
22 August, 2007

Introduction

1    The Plaintiff (“Mr Clarke”) was the owner of waterfront property at Malua Bay on the south coast of New South Wales (“the Property”). The Property was sold to a Mr and Mrs Paterson in 2002, but the sale was completed only after Mr and Mrs Paterson obtained an order for specific performance against Mr Clarke. The First Defendant (“FPL”) is an incorporated real estate agent which acted for Mr Clarke on the sale. The Second Defendant (“Mrs Franzen”) is a director of FPL. The Third Defendant (“Mr Franzen”), who is the husband of Mrs Franzen, holds a real estate agent’s licence in his own name and is not a director of FPL.

2    Mr Clarke claims that FPL wrongfully exchanged the contract for sale of the Property, which he had executed, with the solicitors for Mr and Mrs Paterson, whereby he became bound to sell the Property to Mr and Mrs Paterson.

3    Mr Clarke asserts that the exchange of contracts effected by FPL was wrongful because:

– it was not authorised by him;

– in negotiating the sale and exchanging the contracts, the Defendants were in breach of their fiduciary duties to him as his agent in that they failed to disclose to him that FPL was also acting as the agent for the sale of Mr and Mrs Paterson’s property;

– in failing to disclose to him that FPL was also acting as agent for sale of Mr and Mrs Paterson’s property, FPL contravened s.52 Trade Practices Act 1974 (Cth);

– Mr and Mrs Franzen were involved in that contravention and also contravened s.42 and s.45 Fair Trading Act 1987 (NSW).

Mr Clarke also claimed that he agreed to a sale price in the contract of $950,000 in reliance on negligent advice of Mr Franzen that the market value of the Property was $1M whereas its true market value was considerably more than that. This claim was formally abandoned on the last day of the trial when both the Plaintiff’s and the Defendants’ expert valuers agreed that the value of the Property at the time of sale was between $950,000 and $1,085,000.

4    The Defendants assert that:

– Mr Clarke signed the contract in the presence of Mr and Mrs Franzen on 24 January 2004 and at that time expressly authorised and requested them to arrange for exchange of contracts that day;

– Mr Franzen disclosed to Mr Clarke that Mr and Mrs Paterson had listed their own property with FPL for sale;

– in any event, the fact that Mr and Mrs Paterson had listed their own property for sale with FPL was not a circumstance which the fiduciary relationship between FPL and Mr Clarke required FPL to disclose to Mr Clarke.

5    The critical events in question occurred at a meeting between Mr Clarke and Mr Franzen on 22 January, and between Mr Clarke and Mr and Mrs Franzen on 24 January 2002. Mr Clarke’s account of these meetings differs starkly from those of Mr and Mrs Franzen. The resolution of the differences depends essentially on findings of credit.

The Exclusive Agency Agreement

6    Mr Clarke had been making sporadic attempts to sell the Property since 1996. He had himself drafted and caused to be printed a brochure intended for use in selling the Property. The brochure reveals a fairly high degree of marketing ability. It lists the features of the Property attractively and persuasively. It is by no means an amateurish effort. It shows that Mr Clarke, despite displaying in the witness box the mannerisms of an unsophisticated person, has, in fact, quite a high degree of sophistication in the real estate market. Indeed, by January 2002 he had some degree of experience in real estate dealings. He had bought and sold a number of properties.

7    In about 1997, Mr Clarke instructed Mr and Mrs Franzen, who were then working with another real estate agent, to sell the Property by auction. The highest bid received was around $700,000. The reserve which Mr Clarke had placed on the Property was about $900,000 and the auction was unsuccessful.

8    Some time later, in about 1999, Mr Clarke listed the Property for sale with another agent. The sale was by auction but, again, the Property was passed in.

9    In about 2000, Mr Clarke listed the Property with another real estate agent, a Ms Edgar. In August 2001, a contract was prepared at a price of $890,000 for a sale to a certain E. Faenz-Branson. Mr Clarke signed the contract but, for some reason, the sale did not proceed.

10    At a New Year’s Eve party on 31 December 2001, Mr Clarke met Mr and Mrs Franzen, whom he had not seen for some years. Mr Franzen suggested that Mr Clarke should list the Property for sale through Mr and Mrs Franzen’s new real estate agency business, i.e. FPL.

11    On 15 January 2002, Mr Clarke attended Mr Franzen in his office and signed an Exclusive Agency Agreement listing the Property for sale with FPL by private treaty. The agreement contains the following relevant provisions:

“Agent’s opinion as to current reasonable selling price (including GST, if any): $1,000 000
(This opinion is not to be construed as a valuation and is given on the basis that it will not be relied upon for any purpose.)
Price at which the property is to be offered (including GST, if any): $1,000 000
Recommended method of sale: Private Treaty.
…
6. The Agent is not authorised to enter into or sign a contract for sale on behalf of the Principal.”

12    Mr Clarke says that at this meeting he told Mr Franzen that the price at which he wished the Property to be offered for sale was $1.2M, not $1M as stated in the Agency Agreement. He says that Mr Franzen said: “I need to write down my opinion as to what it is worth and I will put down $1M”.

13    Mr Franzen says that Mr Clarke expressly said that he wished to obtain a sale price of $1M or as close as possible, and that he accordingly wrote $1M in the Agency Agreement as the price at which the Property was to be offered.

The meeting of 22 January

14    On 18 January 2002, FPL wrote to Mr Clarke’s solicitor, Mr Nedwich, advising that it had been instructed to sell the Property and requesting preparation of a contract. On 19 January, Mrs Franzen received an enquiry from a Mr and Mrs Paterson about properties available for purchase. On 20 January, Mr and Mrs Franzen took Mr and Mrs Paterson to inspect Mr Clarke’s property.

15    On 21 January, Mr Franzen picked up from Mr Nedwich’s office a copy of a draft contract for the sale of the Property which had been prepared by Mr Nedwich. Later on the same day, Mr and Mrs Paterson again inspected Mr Clarke’s property with Mr Franzen. During the course of that inspection, they requested that FPL act as the agent for the sale of their own property at Malua Bay.

16    In the morning of 22 January 2002, Mr and Mrs Paterson signed an Exclusive Agency Agreement with FPL for the sale of their property. Later on the same day, while Mr and Mrs Franzen were at their home, Mr and Mrs Paterson said that they wished to offer $900,000 for Mr Clarke’s property, with a 10% deposit, subject to a 28 day “subject to finance” clause and with settlement to take place on or before 30 April 2002. According to Mr and Mrs Franzen, Mr Franzen immediately went to see Mr Clarke at his farm to convey the offer.

17    Mr Franzen says that he met Mr Clarke at the farm and told him the terms of the offer. He says that he added: “the Patersons have also listed their property with us but your sale doesn’t depend on the sale of their house”.

18    Mr Franzen says that Mr Clarke refused to accept $900,000 but said that he would accept $950,000 with a ‘subject to finance’ clause “as long as there is a quick exchange. I don’t want to be messed around”.

19    According to Mr Clarke, he received a telephone call from Mr Franzen early in the morning either of 22 or 23 January – the other evidence shows that it must have been 22 January. Mr Franzen said that he had a buyer for the property, that Mr Nedwich was sending the contracts to him, and that the buyers would like to sign the contract before they went back to Canberra before the weekend.

20    Mr Clarke says that about midday on 22 January, Mr Franzen came to his farm and put an offer of $900,000. He rejected that offer. Mr Franzen came back after ten minutes and made an offer of $950,000 subject to finance. According to Mr Clarke’s affidavit evidence, he said nothing to indicate that he would accept that offer. Mr Clarke says that Mr Franzen told him to come to his, i.e. Mr Franzen’s office, when he received the contracts from Mr Nedwich.

21    A witness called by Mr Clarke, Mr Lavender, says that he was present when Mr Franzen came to Mr Clarke’s farm property. Mr Lavender says that he strongly urged Mr Clarke, in Mr Franzen’s presence, not to accept an offer at a figure anything like $900,000 or $950,000 because the Property was worth far more than that. Mr Lavender, who is a long standing friend of Mr Clarke, has no expertise in the valuation of real estate.

22    Mr Clarke denies that Mr Franzen disclosed to him in the course of this conversation that Mr and Mrs Paterson had listed their property for sale with FPL. Mr Franzen, in turn, denies that Mr Lavender was present during this discussion.

23    According to Mr and Mrs Franzen, in the afternoon of 22 January, Mr Franzen returned to Mr and Mrs Paterson’s house where Mrs Franzen and Mr and Mrs Paterson were waiting for him. He told them that Mr Clarke would accept $950,000 and would agree to a ‘subject to finance’ clause if there was a quick exchange of contracts. Mr and Mrs Paterson agreed to $950,000 and said that they would pay a deposit of $95,000 the next day and would make an appointment to see their solicitor, Mr Clisdell.

24    According to Mr Franzen, he then advised Mr Clarke that Mr and Mrs Paterson had accepted his counter-offer and asked him to contact Mr Nedwich to prepare the contract.

Payment of deposit

25    At 6.00 am on the following day, 23 January 2002, Mrs Franzen sent facsimile letters to Mr Nedwich and Mr Clisdell containing a sales advice which confirmed the agreement for sale at $950,000 and confirmed as special conditions that a 10% deposit was payable immediately, the contract was subject to finance being obtained within 28 days, and that settlement was to occur on or before 30 April 2002.

26    On the same day, Mr Nedwich prepared a contract in the terms of the sales advice and forwarded it to Mr Clisdell for consideration and for execution, if approved. A covering letter advised that the deposit should be paid at or prior to exchange of contracts and that exchange could be effected via the Document Exchange in Mr Nedwich’s office. Mr Clisdell received the letter and contract on 24 January.

27    There is no doubt that as at 23 January 2002 all parties and their respective solicitors contemplated that exchange of contracts would be effected between the solicitors, in the customary way.

28    At some time in the early afternoon of 23 January 2002, Mr and Mrs Paterson provided to Mr Franzen a cheque for the deposit of $95,000, and Mr Franzen immediately went to the bank to ensure that the cheque was deposited in FPL’s trust account.

29    According to Mrs Franzen, at about 3.00pm, while Mr Franzen was at the bank, Mr Clarke rang and enquired whether Mr and Mrs Paterson had paid the deposit. She told him that the deposit had been paid and that Mr Franzen was in the course of banking it. Mr Clarke expressed his satisfaction and enquired who was the solicitor acting on the conveyance for Mr and Mrs Paterson. When told that it was Mr Clisdell, he again expressed satisfaction. There is a contemporaneous diary note of this conversation in Mrs Franzen’s hand. Mr Clarke, however, denies that any such conversation occurred.

30    On 24 January 2002, Mrs Franzen wrote to Mr Nedwich and Mr Clisdell advising that FPL had received the deposit of $95,000 and was anticipating an early exchange. Again, at the time these letters were sent, it was the expectation of all parties that exchange of contracts would be effected between the solicitors.

The meeting of 24 January

31    According to Mrs Franzen, at about 1.00pm on 24 January 2002, while she was alone in the office, Mr Clarke unexpectedly arrived. He enquired if Mr Franzen was in. He said that he had been to see Mr Nedwich, who was away, and had picked up the contract for sale of the Property. He said that he wanted Mr Franzen to get the contract exchanged and did not want to lose the buyers.

32    Mrs Franzen says that she took Mr Clarke to her desk and rang Mr Franzen, explained what Mr Clarke wanted, and asked Mr Franzen to come into the office. It took Mr Franzen about ten minutes to arrive. In the meantime, Mr Clarke handed her the contract. She saw that it had been in an envelope which Mr Clarke was carrying and that Mr Clarke retained a covering letter. Mr Clarke said: “Where do I sign?” Mrs Franzen said: “Let me go through it with you”.

33    Mrs Franzen gave the following evidence:

“I noticed the completion date on the front page of the contract was incorrect. I then said to Clarke words to the following effect:
CF: ‘The settlement date is incorrect on this. It will need to be changed to 30 April or before.’
DC: ‘Yes, they have to see if they can get their finance.’
CF: [I then read out the remainder of the front page to Clarke] ‘The purchasers names are Fraser and Tracey Paterson’.
DC: ‘Are they married? Not that it matters.’
CF: ‘Yes.’
DC: ‘I thought Fraser was the man’s surname.’
CF: ‘No, that’s his Christian name.’

I then read out the purchase price. I said words to the following effect:
CF: ‘The purchase price is $950,000. The deposit of $95,000 has been paid and that leaves the balance of $855,000 to be paid.’
DC: ‘That’s right.’

I turned over the page and said words to the following effect:
CF: ‘Dave, this hasn’t got the finance clause in it. When is Rob Nedwich back in?’
DC: ‘He’s away. I want this exchanged today.’
CF: ‘I’ll ring Roger Clisdell and see what he says.’

I then rang Clisdell. Di Field, his secretary, answered the phone. I said to Di words to the following effect:
CF: ‘I have Dave Clarke here. He’s picked up his original contract and wants it exchanged. He has been into Rob Nedwich and Rob is away. I need to talk to Roger about this.’
DC: ‘Roger has the Patersons in with him at the moment. Just hold and I will talk to him.’

She then put the call through to Clisdell. Clisdell said words to the following effect:
RC: ‘I have Tracey and Fraser in with me at the moment to sign their contract.’
CF: ‘I have Dave Clarke with me at the moment, Roger. He has been in to see Rob Nedwich to sign his contract. Rob is away, so Dave has picked up his original contract and wants us to exchange it. I’ve looked at it and the settlement date is wrong and the finance clause isn’t in it.’
RC: ‘Yes I’ve noticed that. That’s OK. I will go through the contract with you and I will dictate the finance clause for both of us to write in the contracts as this was agreed between them.’

I then said to Clarke words to the following effect:
CF: ‘Roger Clisdell has the Patersons with him now. They are going to sign the contract for exchange. Roger says he will go through the contract with us and will tell me what to write in relation to the finance clause. Is that OK with you.’
DC: ‘Yes, that’s fine. I just want to sign it so it can be exchanged’.”

34    Mrs Franzen says that she changed the date for completion to 30 April and inserted the middle names of the purchasers, in accordance with Mr Clisdell’s dictation over the telephone. She read out the changes to the contract to Mr Clarke as she wrote them. Mr Clisdell then dictated the “subject to finance clause” which she read out to Mr Clarke as she wrote the words into the contract.

35    Mrs Franzen says that as she was speaking to Mr Clisdell and making these changes to the contract, Mr Franzen came into the office. After she had finished reading out the ‘subject to finance’ clause to Mr Clarke, she asked him: “Is this okay?” Mr Clarke assented. She then said to Mr Clisdell that Mr Franzen had just arrived and “we will drop the contract in to you later”. She then terminated the call.

36    Mrs Franzen says that after Mr Clarke greeted Mr Franzen, Mr Clarke said: “Where do I sign, Fred? I want you to get this contract exchanged. I do not want them pulling out like Debbie Edgar’s people”. Debbie Edgar was the real estate agent who had acted on the proposed sale of the Property for $890,000 in about 2000.

37    Mr Franzen then showed Mr Clarke where to sign the contract and he witnessed Mr Clarke’s signatures. Mr Franzen said: “We will drop the contract in to Roger Clisdell so the contracts can be exchanged”. Mr Clarke expressed his satisfaction.

38    Mr Franzen gave evidence about the meeting with Mr Clarke on 24 January to the same effect as the evidence of Mrs Franzen.

39    Mr Clarke’s evidence of the meeting on 24 January is starkly different. He says that at about 4.00pm he went to the Property and found an envelope from Mr Nedwich. He did not open the envelope but realised that it contained the contract for sale to Mr and Mrs Paterson. He took the envelope, unopened, to Mr and Mrs Franzen’s office because Mr Franzen had, in their discussion on 22 January, told him to take the contract there. He arrived at Mr Franzen’s office at about 4.15pm. Both Mr and Mrs Franzen were present. Mr Clarke said: “I’ve got the envelope from Kennedy & Cook [Mr Nedwich’s firm]”. Mrs Franzen said: “The buyers are going back to Canberra”.

40    Mr Clarke gave Mrs Franzen the contract, retaining the covering letter. Mrs Franzen then made a telephone call and appeared to be speaking to a solicitor. She wrote changes on a page of the contract. When she had finished she said to Mr Clarke: “I want you to sign here [pointing to the contract]. I want you to sign this sheet of paper for the changes to the contract”. Mr Clarke signed the document and gave it back to her. Mrs Franzen said: “We have to hurry. The buyers are going back to Canberra. We are running out of time”. Mr Clarke said: “This is going back to my solicitor to check the changes?” Mrs Franzen said: “Yes, Fred will take it in”. Mr Clarke understood that the contract which he had executed would be taken back to Mr Nedwich. He then left. He says this meeting was a short one.

41    There is no dispute that after the meeting with Mr Clarke, Mr and Mrs Franzen took the contract executed by Mr Clarke to Mr Clisdell’s office. Mr Clisdell was not available. They gave the contract executed by Mr Clarke to Mr Clisdell’s secretary, Ms Field, and she gave them the purchasers’ executed counterpart by way of exchange.

42    Mr Clisdell has given evidence. He says that he received the contract for sale of Mr Clarke’s property from Mr Nedwich on 24 January. Mr and Mrs Paterson made an appointment, through his secretary, to see him at 2.00pm that day. When they attended, Mr Clisdell read through the contract with them. During this conference, he received a telephone call from Mrs Franzen.

43    Mr Clisdell gave this evidence in his affidavit:

“I recall Carlene said words to the following effect:
Carlene: ‘Roger, I have Dave Clarke with me. He is anxious to exchange. We need to discuss the contract. The settlement date is wrong and I don’t have the finance clause in my copy.’
Me: ‘I also have Tracey and Fraser here. Yes, we need to put in the ‘subject to finance clause’ in the contract. Let’s go through the contract together.’

I recall Carlene was speaking to someone, who at the time I believed to be Clarke, as she indicated Clarke was with her in the office at the time she called me. As I spoke she repeated what I said, I assumed for the benefit of Clarke. I said words to the following effect:
Me: ‘I will amend the date for completion to 30 April 2002. The names of the Patersons are wrong …’

I also recall hearing Carlene ask Clarke, in words to the following effect: ‘You agree that there is to be a subject to finance clause in the contract?’

I did not hear Clarke’s response, however, I recall Carlene said words to the following effect to me:
Carlene: ‘Yes, that’s fine Roger.’

I then proceeded to draft and dictate a finance clause over the phone. I wrote the words I was dictating on page 2 as clause 8 of the ‘Annexure to contract for sale of land’. I dictated and wrote the following words:
Me: ‘THIS CONTRACT IS SUBJECT TO AND CONDITIONAL UPON THE PURCHASERS OBTAINING FINANCE FROM EITHER WESTPAC BANKING CORPORATION OR ANZ BANK LIMITED. SUCH APPROVAL IS TO BE OBTAINED WITHIN 28 DAYS OF THE DATE OF THIS CONTRACT UPON SUCH APPROVAL IN WRITING, THIS CONTRACT SHALL BECOME UNCONDITIONAL. IN THE EVENT THAT FINANCE APPROVAL IS NOT OBTAINED WITHIN 28 DAYS THEN THE PURCHASERS MAY RESCIND THIS CONTRACT AND THE PROVISIONS OF CLAUSE 19 SHALL APPLY WITH THE DEPOSIT BEING REFUNDED TO THE PURCHASERS.’

…

As I dictated these words over the telephone, I recall hearing Carlene repeating the words out loud. I also recall Carlene saying, I assumed to Clarke, words to the effect:
Carlene: ‘How about that, is that ok?’

Carlene then said to me words to the effect:
Carlene: ‘Yes, that’s fine Roger. Are Fraser and Tracey ready to exchange?’
Me: ‘I’ll have the contracts signed now and we can be ready to exchange today.’
Carlene: ‘That’s very good Roger.’

I cannot recall what further arrangements were made in relation to the exchange, but it was to occur that day.”

44    In cross examination, Mr Clisdell was a little less precise in his recollection about his conversation with Mrs Franzen, but he repeated that Mrs Franzen had told him that she had Mr Clarke with her, that Mr Clarke was keen to proceed, that he went through the contract with her making the variations to the settlement date and to the purchasers’ names, and dictating a ‘subject to finance’ clause. He also gave this evidence:

“Q. Yes. You see it's also fair to say, isn't it, that when you finished your conversation with Carlene Franzen on the twenty fourth of January 2002 you still thought that Mr Nedwich and yourself would be effecting the exchange, that's fair too, isn't it?
A. Look, I can't recall whether I thought that or not.

Q. Well, when you finished the conversation, no appointment had been made with you during the conversation to effect an exchange, had there?
A. No, but I understood exchange was likely to take place that day.

Q. Imminent?
A. That's right.”

45    In short, there are no material inconsistencies between Mr Clisdell’s account of his conversation with Mrs Franzen on 24 January and Mrs Franzen’s account of that conversation.

Events after 24 January

46    Mr Clarke says that within a day after the meeting with Mr and Mrs Franzen on 24 January he had changed his mind about selling the Property. He says that he believed that the contract had not been exchanged by Mr and Mrs Franzen, but that it had only been taken by them back to Mr Nedwich.

47    Mr Clarke says that at about 7.00pm on 26 January 2002 he telephoned his solicitor, Mr Nedwich, and told him that he did not wish to proceed with the sale of the Property to Mr and Mrs Paterson. He says that Mr Nedwich said that he would “look into it and let me know”. He says that Mr Nedwich did not tell him that the contracts had already been exchanged.

48    Mr Nedwich was not called to give evidence.

49    The following events occurring after 24 January 2002 are not in dispute.

50    On 31 January 2002, Mr Clisdell sent a letter to FPL advising that contracts had been exchanged on 24 January 2002.

51    On 6 February 2002, Mr Clisdell sent to Mr Nedwich requisitions on title. The requisitions on title were answered by Mr Nedwich by letter dated 30 April 2002. There is no correspondence or other document in evidence suggesting that Mr Nedwich ever questioned with Mr Clisdell, Mr and Mrs Franzen or Mr Clarke whether the contract had been validly exchanged.

52    A diary of FPL dated 7 February 2002 records that a settlement date earlier than 30 April was discussed between Mr and Mrs Paterson and Mr Clarke. Mr Franzen says that on 7 February he had a conversation with Mr Clarke in which Mr Clarke agreed to settle the contract in late February and told Mr Franzen that he would get a storage container to store the contents of the Property.

53    Mr Clarke agreed in cross examination that in February 2002 Mr Franzen told him that Mr and Mrs Paterson wanted a settlement earlier than 30 April and asked if he would agree. Mr Clarke admitted that he did not then tell Mr Franzen that he did not wish to settle the contract, nor did he say anything to Mr Franzen to the effect that Mr Franzen had had no authority to exchange the contracts on his behalf. However, Mr Clarke said in cross examination that even at the time of this conversation with Mr Franzen he knew that he was not going to settle the contract with Mr and Mrs Paterson and that he “was going to end up in court over this case”: T40.

54    On 18 February 2002, Mr Nedwich wrote to Mr Clarke requesting instructions as to whether 28 March 2002 was a suitable date for settlement of the contract. A file note in Mr Nedwich’s file, dated 19 February 2002 and apparently made by an employee of the firm, records: “Attendance Dave Clarke: we had written to him requesting an early settlement on his sale. He is not sure if he is going to be in a position to settle early. He will keep us informed as to how he is placed, he will do his best”.

55    Significantly, this note does not record any protest by Mr Clarke as to exchange of contracts, nor does it indicate an unwillingness on his part to proceed with settlement of the contract. On the contrary, it indicates that Mr Clarke was willing to co-operate in achieving an early settlement.

56    On 25 March 2002, Mr Nedwich sent a transfer of the Property to Mr Clarke for signature in readiness for settlement. There is no reference in the letter to any reluctance on the part of Mr Clarke to proceed with settlement.

57    A diary note made in Mr Clisdell’s file dated 27 March 2002 records that an employee of Mr Nedwich advised that settlement would not occur on 28 March. It also records a conversation with Mrs Paterson in which she advised that Mr Clarke had said that he had not had time to move out of the Property and would not be settling the contract until 30 April.

58    A diary note of Mr Franzen, dated 17 April, records a telephone conversation in which Mr Clarke informed him that he would be moving out of the Property that weekend. Mr Clarke also said that he had bought a storage container to store the furniture from the Property before settlement. In cross examination, Mr Clarke agreed that he had bought such a container.

59    A file note in Mr Nedwich’s file, dated 30 April, records a conversation with Mr Franzen in which Mr Franzen advises that Mr Clarke was unwilling to settle the contract.

60    Mr Franzen says that on 30 April he had a conversation with Mr Clarke who said that he had changed his mind and now did not wish to sell the Property, indicating that he could get more money for it. Mr Clarke does not deny that this conversation took place.

Findings of fact

61    Where the evidence of Mr Clarke conflicts with the evidence of Mr and Mrs Franzen, I prefer the evidence of Mr and Mrs Franzen and I accept it. My reasons are as follows.

62    Mr Clarke’s evidence was improbable and inconsistent in a number of respects. He said that at a meeting with Mr Franzen on 15 January 2002 at which the Exclusive Agency Agreement was signed, he insisted that the Property was to be offered at $1.2M, not $1M as recorded in the Agreement. I do not accept that Mr Clarke would have signed the Agreement if it had contained a figure for sale which was $200,000 below the figure upon which he was insisting.

63    As I observed Mr Clarke in the witness box, he appeared to be a strong minded person who insists firmly on his views. He was in 2002 fairly sophisticated in real estate dealings. Mr Franzen is not an overbearing person. It is improbable that Mr Clarke would have meekly accepted Mr Franzen’s suggestion to market the Property at a price very substantially below Mr Clarke’s own opinion as to its true value.

64    Further, there was no reasonable basis for Mr Clarke to have held the view that the Property was then worth anything like $1.2M. He had tried unsuccessfully to sell the Property for about six years. The highest sale price negotiated was $890,000. It is inherently probable that Mr Clarke would have been willing to accept $1M as a realistic price rather than a price very substantially beyond any amount previously offered. This conclusion is supported by the joint valuations of the experts retained by both sides, who agreed that the market value of the Property in January 2002 was between $950,000 and $1,085,000.

65    It is significant that Mr Clarke did not admit in his affidavit of 23 November 2005 that he had agreed to sell the Property for $950,000 in his discussion with Mr Franzen at his farm on 22 January and that he made that admission reluctantly when pressed in cross examination. The inherent probabilities all show that Mr Clarke must have accepted the offer of $950,000 at that meeting. Had there been no express acceptance of the offer by Mr Clarke, it is difficult to believe that Mr Franzen would have led Mr and Mrs Paterson to pay a deposit of $95,000 on the following day and that he would have gone to the trouble of preparing and sending sales advices to the parties’ solicitors.

66    Further, in view of the long and unsuccessful endeavour of Mr Clarke to sell the Property, resulting in an offer no higher than $890,000, it is inherently probable that Mr Clarke would have wished to accept with alacrity the offer of $950,000 and to exchange contracts as quickly as possible to secure a sale at that figure.

67    Mr Clarke’s reluctance to admit what was obvious, namely, that he agreed to the sale at $950,000, demonstrates the general unreliability of his evidence.

68    I do not accept the evidence of Mr Lavender as to what transpired in the discussion between Mr Franzen and Mr Clarke on 22 January. Mr Lavender is a close friend of Mr Clarke and was obviously highly partisan in giving his evidence. He expressed in very strong terms his dislike of Mr Franzen. In any event, his evidence was undermined by Mr Clarke’s concession in cross examination that he had in fact agreed to accept the $950,000 offer in the discussion with Mr Franzen.

69    Mr Clarke says that, having received in the mail the contract for sale of $950,000 on 24 January, he came to Mr and Mrs Franzen’s office for no reason other than that Mr Franzen had told him to come when he received the contract. I regard that evidence as inherently improbable. Mr Clarke did not say what reason Mr Franzen had given for the unusual request that he bring the contract to Mr Franzen’s office. Mr Clarke was experienced enough in real estate transactions to know that the usual procedure for exchange of contracts was for him to sign the contract and return it to Mr Nedwich for exchange. Mr Nedwich’s letter of 23 January told him so again.

70    It is inherently probable that Mr Clarke arrived, without previous appointment, at Mr and Mrs Franzen’s office on 24 January bringing the contract with him because Mr Nedwich himself was unavailable at the time – as asserted by Mr Clarke to Mrs Franzen and as corroborated by Mr Nedwich’s diary showing that he had a partners’ meeting at midday – and Mr Clarke wished Mr and Mrs Franzen to effect exchange of contracts quickly. There is no other obvious reason for Mr Clarke’s attendance with the contract. It is quite implausible that Mr Clarke thought that Mr and Mrs Franzen were going to do nothing more than take the executed copy of the contract back to Mr Nedwich to exchange in due course. Mr Clarke himself could have taken the executed contract back to Mr Nedwich for that purpose.

71    It is inherently improbable that Mrs Franzen would have made variations to the contract in Mr Clarke’s presence without discussing them at all with Mr Clarke, and that she would then simply have directed him to sign the document. Mr Clarke is, to my observation, not the sort of person who would agree to do something simply because he was told to do it. Mrs Franzen is not, to my observation, an overbearing person.

72    Further, Mrs Franzen’s evidence that she read out the changes to the contract to Mr Clarke as she was making them in discussion with Mr Clisdell on the telephone is corroborated by both Mr Clisdell and Mr Franzen. Mr Clisdell’s evidence is that he received the telephone call from Mrs Franzen while Mr and Mrs Paterson were with him. Mr Clisdell’s appointment diary confirms that their appointment with him had been made for 2.00pm. This evidence supports Mr and Mrs Franzen’s account that the meeting with Mr Clarke occurred in the early afternoon of 24 January and contradicts Mr Clarke’s evidence that he arrived at the office of FPL at about 4.15pm.

73    Further, there is a significant discrepancy in the accounts which Mr Clarke has given of what was said in the meeting of 24 January. In the proceedings commenced by Mr and Mrs Paterson against Mr Clarke for specific performance of the contract, Mr Clarke swore an affidavit dated 22 September 2002 in which he recounted that meeting with Mr and Mrs Franzen. In that account, he said that the conversation ran thus:

“It was getting late in the afternoon and Carlene Franzen then said ‘we have to hurry. The buyers are going back to Canberra. We are running out of time’ . She then gave me a cuddle and said ‘Fred will take it in’ referring to my solicitor.”

74    In paragraph 39 of his affidavit of 23 November 2005, Mr Clarke recounted the conversation thus:

“Carlene Franzen: ‘We have to hurry. The buyers are going back to Canberra. We are running out of time.’

David Clarke: ‘This is going back to my solicitor to check all the changes?’

Carline Franzen: ‘Yes, Fred will take it in’ .”

75    It will be noticed that in the second account Mr Clarke has attributed to himself the question: “This is going back to my solicitor to check all changes”, whereas that statement is not made in the first affidavit. When pressed on this inconsistency in cross examination, Mr Clarke said that “I expected it to go back to my solicitor, whether I said it or not, that’s what I expected”. He conceded that he had no recollection of those words being said. He said: “Words mightn’t have been said. If the words weren’t said, I expected that anyway”: T99.15. When Mr Clarke gave this evidence, I gained the distinct impression that he had consciously endeavoured to improve his evidence in his second affidavit although he had no actual recollection of saying the words “this is going back to my solicitor to check on the changes?”

76    It is highly improbable that, had Mr Clarke telephoned Mr Nedwich on 26 January and instructed him that he did not wish to proceed with the sale, Mr Nedwich would nevertheless have proceeded with the conveyance to the point of sending a transfer to Mr Clarke for signature in readiness for settlement. If Mr Clarke had indeed made up his mind by 26 January not to proceed with the sale, it is inconceivable that he would have given instructions and information to Mr Nedwich to enable him to answer requisitions on title, as Mr Clarke conceded in cross examination that he did. As I have noted, Mr Nedwich has not been called by Mr Clarke to verify Mr Clarke’s evidence as to the conversation of 26 January. No explanation for Mr Nedwich’s absence has been given.

77    It is highly improbable that, if Mr Clarke had indeed changed mind about the proceeding with the sale by 26 January, he would have confirmed in February that he would do his best to settle early, as requested by Mr and Mrs Paterson. If he had decided not to proceed with the sale in January, it is inconceivable that he would have told Mr Franzen in April that he was moving out of the Property in readiness for settlement, and had bought a container to store his furniture. Yet Mr Clarke concedes that this is what he told Mr Franzen.

78    The inconsistencies and implausibilities which suffuse Mr Clarke’s evidence are highlighted in two glaring examples. When asked why he did not tell Mr Nedwich before the end of April that he would not proceed with the contract and that the contract had been exchanged without his authority, Mr Clarke said: “because he was probably in on it” – an allegation by Mr Clarke of dishonest collusion between Mr Nedwich and the other parties for which there was not the slightest shred of evidence. I regard this explanation by Mr Clarke as fabricated – and his demeanour when he gave it reinforced my conclusion.

79    The second example was Mr Clarke’s explanation as to why he told his solicitor on 19 February 2002 that he would “do his best” to achieve an early settlement. He gave this evidence:

“Q. Do you remember telling somebody from Mr Nedwich's office that you weren't sure if you were going to be in a position to settle the sale to the Patersons early, that you will keep them informed as to how you were placed and you would do your best?
A. Yeah.

Q. You said something like that to them?
A. Yeah.

Q. I gather from your earlier answer to me a few moments ago, at the time you said that you did not really have any intention of settling at all?
A. That's right.

Q. You were actually not making a correct statement?
A. I was, you know, getting someone to act for me.

Q. You were not making a correct statement to your own solicitors, is that what you are telling me?
A. Yeah.”

Mr Clarke was, in effect, saying in this evidence that in February 2002 he was deliberately misleading his own solicitors about his intention to settle the contract. Mr Clarke’s subsequent action in moving out of the Property and acquiring a container to store his furniture coupled with Mr Clarke’s demeanour when giving this evidence, led me to the conclusion that this evidence was deliberately untrue.

80    In making findings as to Mr Clarke’s credit which are based, in part, on demeanour, I take into account that Mr Clarke said towards the end of his cross examination that he was feeling unwell and was confused. To my observation, Mr Clarke did, indeed, appear to be a little unwell in the concluding minutes of his evidence. However, he did not demonstrate confusion and indisposition throughout his evidence generally and I do not think that the glaring improbabilities which I have recounted can be explained away by temporary indisposition or confusion.

81    In strong contrast to the evidence of Mr Clarke, the evidence of Mrs Franzen was careful, consistent, plausible and supported at critical points by contemporaneous records and by Mr Clisdell’s evidence. Despite rigorous cross examination, Mrs Franzen did not move from the evidence which she gave in her affidavit, particularly as to the meeting with Mr Clarke on 24 January. Mr North SC, who appears with Mr Paterson for Mr Clarke, criticises Mrs Franzen for adhering so closely to the evidence in her affidavit. He says that Mrs Franzen merely memorised her affidavit and consistently repeated its contents. I did not get that impression at all. Mrs Franzen impressed me as a witness who, although under some pressure, was honestly endeavouring to be accurate. She appeared to have a clear actual recollection of the events in question.

82    Likewise, Mr Franzen impressed me as a careful and honest witness. He, too, was searchingly cross examined but his evidence remained consistent and plausible. Whenever he could not recall something which had been said, he was frank in saying so.

83    Mr Franzen’s evidence that Mr Clarke told him at the end of April that, in effect, he had now changed his mind about selling the Property because he thought it was worth more money, is corroborated by the evidence of Mr O’Donnell, a former neighbour of Mr Clarke. Mr O’Donnell says that in about April 2002 Mr Clarke said to him that he thought he had sold the Property too cheaply, that he had changed his mind and would get out of the sale because he could get more money for the Property.

84    Mr O’Donnell has had a serious falling out with Mr Clarke since 2002. Nevertheless, I accept his evidence. He was frank about his hostility towards Mr Clarke but he was not shaken in his evidence about what Mr Clarke told him. That evidence is consistent with the whole history of the conveyancing transaction from January to April 2002, as emerges from the contemporaneous records to which I have referred.

85    For these reasons, I accept the evidence of Mr and Mrs Franzen. I make the following findings of fact:

– on 22 January 2002, Mr Clarke informed Mr Franzen that he accepted an offer of $950,000 for the sale of the Property to Mr and Mrs Paterson;

– on 22 January 2002, Mr Franzen informed Mr Clarke that Mr and Mrs Paterson had listed their own property for sale with FPL and that the sale of Mr Clarke’s property and the sale of Mr and Mrs Paterson’s property were not interdependent;

– on 24 January 2002, Mr Clarke attended the office of FPL and signed a contract after the variations to the document agreed between Mrs Franzen and Mr Clisdell had been read to him and approved by him;

– on 24 January 2002, Mr Clarke expressly instructed Mr and Mrs Franzen to exchange contracts that day with Mr Clisdell;

– Mr and Mrs Franzen procured exchange of contracts in accordance with the express authority of Mr Clarke.

86    It follows from these findings that Mr Clarke has failed to make out the factual basis upon which his claims in the proceedings are founded. Accordingly, there must be judgment for the Defendants on the Amended Statement of Claim.

87    I will hear the parties as to costs.

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