Clarke v Paterson

[2003] NSWCA 160

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Clarke v Paterson [2003]  NSWCA 160

FILE NUMBER(S):
41212/02

HEARING DATE(S):               17 June 2003

JUDGMENT DATE: 17/06/2003

PARTIES:
David John Clarke (Appellant)
Fraser Laurie Paterson (Respondent)
Tracey Lea Paterson (Respondent)

JUDGMENT OF:        Ipp JA Davies AJA   

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):          3424/02

LOWER COURT JUDICIAL OFFICER:     Young CJ in Eq

COUNSEL:
T North SC / RW Evans (Appellant)
TJ Morahan (Respondents)

SOLICITORS:
Fitzpatrick Teale (Appellant)
Hozack Clisdell Lawyers (Respondents)

CATCHWORDS:
Contract
sale of land
whether parties entered into a contract
whether real estate agent had authority to participate in exchange of parts of contract
objective test

LEGISLATION CITED:
Property, Stock and Business Agents Act 1941, s 84AB

DECISION:
Appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41212 of 2002

MEAGHER ACJ
IPP JA
DAVIES AJA

Tuesday, 17 JUNE 2003

DAVID JOHN CLARKE  v  FRASER LAURIE PATERSON & ANOR

JUDGMENT

1. MEAGHER ACJ:  The Court is now in a position to give judgment and I ask Davies AJA to give the first judgment.

2. DAVIES AJA:  This is an appeal from a judgment of Young CJ in Eq.  His Honour declared that there was a valid and binding contract for the respondents to purchase and for the appellant to sell a property at 92-94 Yugura Street, Malua Bay.  His Honour ordered that the contract be specifically performed.

3. The appeal has been brought on the ground that the appellant’s real estate agents, who participated in the exchange of the parts of the contract, did not have authority to do so. 

4. The principle to be applied is that expressed in Chitty on Contracts, General Principles, 25th edition, para 41, where this is stated:-

   “The normal test for determining whether the parties have reached agreement is to ask whether an offer has been made by one party and accepted by the other. In answering this question, the courts apply an objective test: if the parties have to all outward appearances agreed in the same terms upon the same subject-matter neither can generally deny that he intended to agree. An unexpressed qualification or reservation on the part of one party to an apparent agreement does not normally prevent the formation of a contract. The theory, popular in England in the nineteenth century, that there can be no contract without a meeting of the minds of the parties, has been largely discredited as it would tend to produce commercially inconvenient results.”

5. The point made in Chitty was discussed by the High Court of Australia in Taylor v Johnson (1983) 151 CLR 422 where Mason ACJ, Murphy and Deane JJ at pages 427 to 430 examined the approach to be taken. Their Honours mentioned the past conflict between the subjective and the objective approaches to contract and stated, at 429, that the clear trend in decided cases and academic writings has been to leave the objective theory in command of the field.

6. The objective facts which are relevant in the present case are, first, that the respondents made an offer which the appellant accepted.  Secondly, the appellant signed one part of the contract, which had been drawn up by the appellant’s solicitor and slightly amended, and the respondents signed the other part.  Both parts as signed were identical.  Thirdly, on 24 January 2002, the respondents paid the agreed deposit of $95,000.  Fourthly, on the same day, the appellant’s real estate agents exchanged parts with the respondents’ solicitor.  Fifthly, thereafter, the respective solicitors held the exchanged parts of the contract, the respondents’ solicitor holding the part signed by the appellant and the appellant’s solicitor holding the part signed by the respondents.  Neither solicitor made any complaint about that. 

7. The matter proceeded between the solicitors as if a contract was on foot.  The respondents’ solicitor wrote in February to say the contract was unconditional.  Subsequently, the respondents’ solicitor made requisitions on title and the appellant’s solicitor replied to those requisitions.  Even the appellant, himself, proceeded as if the contract was on foot.  As appears from a letter from the real estate agents, the appellant requested the postponement to a later date of the date for settlement.

8. In setting out these facts, I have said that the parts as signed were identical.  That is because an exchange took place and there has been no matter raised which suggests that the parts were not identical.  The mere fact that there was an exchange suggests that the two parties who were exchanging acted properly in the exchange and that there was identity between the parts.  No dispute was raised before his Honour on that point.  That is not to say that the point was admitted but, had there been any significance in the point, the other part of the contract, which is not in evidence, could have been called for and could have been put in evidence.

9. I have said that the real estate agents exchanged parts with the respondents’ solicitor.  That finding of his Honour has been challenged but there is in evidence a letter from the respondents’ solicitor.  It was put in the appellant’s case and it stated:

   “The Contract was exchanged on 24 January 2002, the date it bears. The Vendor was represented by their Agents and the Contract was exchanged at our office with the writer’s secretary, Diane Field.”

10. His Honour considered that that letter, having been put in evidence by the appellant, was available as evidence for all purposes.  I agree with that view.

11. Taking an objective approach, these facts justify the conclusion that the parties entered into a contract.  To all outward appearances they did so.  They executed their respective parts of the written contract.  Those parts were exchanged and the parts were then held by the respective solicitors.  The deposit was paid and was held by the real estate agents.

12. This view accords with paragraph 20 of the appellant’s affidavit.  The appellant deposed:

    “The following day, the 27 January 2002, being a Sunday, I saw Fred Franzen opposite my Burrie Road property putting up a “For Sale” sign on another property which is on the other side of the road.  I had a conversation with him to the following effect:-

    David Clarke:          “I don’t want to go ahead with my sale.”

    Fred Franzen:          “Mate, I think it’s a done deal.”

    David Clarke:          “Well, I want to get out of it.”

    Fred Franzen:          “It’s a done deal.”

    David Clarke:          “It can’t be a done deal. They haven’t got the finance.”

    Fred Franzen:          “They’ve got three Banks offering them the money.””

13. The appellant’s case is based upon his allegation that he had an understanding that “nothing was binding until my solicitor exchanged the contracts”.  The appellant’s solicitor did not participate in the actual exchange, which was handled by the real estate agents, but he did receive and hold the part signed by the respondents. He took no objection to the exchange and, when requisitions on title were made, he responded to those requisitions.

14. The appellant gave this evidence inter alia:

    “14.     At about 4.00 p.m. on the 24 January 2002, I attended the property and found an envelope from my solicitors Kennedy & Cooke.  I then went to Franzen Malua Bay Real Estate with the envelope and arrived there at about 4.15 p.m.  When I arrived Fred Franzen and his wife Carlene Franzen were in the office.  I had a conversation with Fred and Carlene as follows:-

    David Clarke:  I’ve got the envelope from Kennedy & Cooke.
    Carlene Franzen:  The buyers are going back to Canberra.

    I then opened the envelope and sat down at a desk opposite Carlene Franzen and read the front page of the contract to check the offer price.  Carlene Franzen took the documents and then made a telephone call.  She appeared to be speaking to another solicitor.  I noticed that she commenced to write changes onto a page in the contract prepared by my solicitor.  I heard some of the conversation including the words “subject to finance”.  I also heard other things which I did not understand.  When Carlene Franzen had finished writing, she said to me “I want you to sign here” pointing to the contract and “I want you to sign this sheet of paper for the changes to the contract”.  When she told me to sign I did.  I wished to have advice in relation to the changes.  I did not have the opportunity to read the contract with the changes put forward by the Estate Agents and the person on the phone.  I thought that as the contract was to be sent to my solicitor, I should have an opportunity to get advice before exchange.   At no stage did I instruct Franzen Malua Bay Real Estate to exchange contracts on my behalf nor had I received any legal advice in relation to the changes which had been suggested over the telephone.

    15.      I would not have signed the Contract if I was told that it was going to be exchanged.  I needed to discuss the changes that had been made with my solicitor before the contracts were exchanged.  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”.  I then said “I will go now”.  This all happened very quickly in a short meeting.”

15. What is significant about this evidence is that, if the appellant had a reservation about the contract, he did not express it.  He signed the contract.  The only changes made to the document drawn by the appellant’s solicitor were that the settlement date was changed, the full names of the purchasers were inserted and a clause as to finance was added.  The appellant expressed no dissent to any of these matters.  He initialled the alterations.  Subsequently, he decided not to sell the property, but that was not because of any particular term with which he disagreed.  The agents would have understood the appellant to agree to the contract when he put his signature to it and initialled the alterations. 

16. Moreover, when Mrs Franzen, one of the real estate agents, said “We have to hurry.  The buyers are going back to Canberra.  We are running out of time.  Fred will take it in.”, the appellant said nothing other than, “I will go now.”, the real estate agents would have understood the appellant to be agreeing that they should take the signed part of the contract into Batemans Bay for the purpose of exchange.  The appellant did not inform them that he did not wish settlement to proceed until he had an opportunity to discuss the matter with his solicitor.  Nor, for that matter, did he so inform his solicitor.  He did not contact his solicitor until 26 January 2002, two days after the parts had been exchanged.

17. The appellant did not inform them that he did not wish settlement to proceed until he had an opportunity to discuss the matter with his solicitor.  Nor, for that matter, did he so inform his solicitor.  He did not contact his solicitor until 26 January 2002, two days after the parts had been exchanged.

18. The appellant acted in a way which showed that he agreed with the contract and that he approved of the matter being dealt with in a hurry because the respondents were going back to Canberra.  It follows that any unexpressed reservation or qualification which the appellant may have had in his own mind but which was unexpressed did not lead to a failure of the parties to enter into a contract.

19. Counsel for the appellant relied on s 84AB of the Property, Stock and Business Agents Act 1941 which provides inter alia:-

    (3)A real estate agent may participate in the exchange or making of contracts for the sale of residential property, subject to subsection (4).

    (4)If a prospective party to a proposed contract for the sale of residential property for whom a real estate agent acts in relation to the exchange or making of the contract notifies the real estate agent, or it is apparent from the proposed contract, that a solicitor is or will be acting for the party, the real estate agent may only participate in the exchange or making of the contract if expressly authorised to do so by the party or the solicitor.

    …

    (6)A contract is not invalid merely because of the failure of a real estate agent to comply with subsection (4).

20. What happened in the office of the real estate agents on 24 January 2003 may not have amounted to an express authorisation of the agents to participate in the exchange of the parts of the contract or in the making of the contract.  Nevertheless, it certainly amounted to authorisation to the agents to make the changes to the contract which the appellant initialled and to authorisation to the agents to take the part of the contract, which was signed by the appellant, into Batemans Bay for the purpose of exchange.

21. Section 84AB expressly provides that a contract is not invalid merely because of the failure of a real estate agent to comply with subs (4). It follows that the contract was not rendered invalid by the failure of the real estate agents to obtain express authority.

22. I have not dealt with all the matters which were discussed by the learned trial Judge or were raised in the submissions before this Court.  The reasoning of his Honour is set out with his Honour’s usual care and clarity.  I see no error in his Honour’s approach or reasoning. 

23. I would dismiss the appeal with costs.

24. MEAGHER ACJ:  I agree with his Honour.

25. IPP JA:  I agree.

26. MEAGHER ACJ:  The orders of the Court therefore are that the appeal is dismissed with costs.

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LAST UPDATED:               11/07/2003