Ekaterini Mastoris v Joanne Marie Whitfield

[2004] NSWSC 1272

CITATION:	Ekaterini Mastoris v Joanne Marie Whitfield [2004] NSWSC 1272
HEARING DATE(S):	31 January 2005
JUDGMENT DATE:	4 February 2005
JUDGMENT OF:	Barr J at 1
DECISION:	See para. 16
CATCHWORDS:	Contract for sale of land - purchaser's failure to pay deposit and purchase price - contract rescinded - whether defendant contracted as principal or agent - whether plaintiff entitled to summary judgment for resulting loss.
PARTIES :	Ekaterini Mastoris, Joanne Marie Whitfield
FILE NUMBER(S):	SC 011975/2004
COUNSEL:	M Einfeld QC and Neill for plaintiff D Cassidy QC and Jauncey for defendant
SOLICITORS:	Klonis & Co Jack Rigg

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

GRAHAM BARR J

4 FEBRUARY 2005

11975/2004 EKATERINI MASTORIS v JOANNE MARIE
WHITFIELD
JUDGMENT

1 HIS HONOUR: This is an application for summary judgment. At the conclusion of the hearing I announced that I would grant leave to the defendant to amend her Defence insofar as it put the quantum of the plaintiff’s claim in issue and that I would order the entry of judgment for the plaintiff for the amount claimed other than in two specified respects. I said that I would give reasons later. These are my reasons and the formal orders.

2 The plaintiff, Mrs Ekaterini Mastoris, owned a house in Coogee and put it up for auction. Her agent was a firm called N G Farah - Coogee and the salesman concerned was one Jason Black. The defendant and her mother, Mrs Edwards, attended the auction. Mrs Edwards was known to Mr Black because she had previously inspected the property. She told the defendant that she was going to bid. She told Mr Black that she was buying the property for the defendant. She said that she would bid but that the defendant would have to “register” as she, Mrs Edwards, had no photographic identification. Accordingly, the defendant signed a document which authorised her to take part in the auction. The auction proceeded and Mrs Edwards bid. The property was knocked down to her for $6,000,000. The terms of sale included a term that a deposit be paid forthwith, but Mrs Edwards did not have a cheque. It was a Saturday and she said that she would have a cheque by Monday morning. Mr Black said that that would be alright. Mr Farah asked whose name should go on the contract as purchaser and Mrs Edwards said that it should be the defendant’s, that it was her house. Mr Black said something about the consequences that might follow if the defendant should sign the contract and Mrs Edwards not produce the deposit. The only relevance of what he said is that it brought forth an assurance from Mrs Edwards that she would have the cheque. She told the defendant to sign the contract. Accordingly, the defendant’s name was inserted in the contract as purchaser and the defendant signed the contract.

3 Mrs Edwards did not pay the deposit as required and neither did the defendant. The plaintiff rescinded the contract as it was entitled to. She negotiated with the underbidder at the auction and secured a sale to that person for $4,950,000.

4 In her Statement of Claim the plaintiff claims from the defendant the sum of $1,075,108.16, comprising the difference between the price agreed between her and the defendant and the eventual sale price, namely $1,050,000, the costs of the auction, which were $19,387.36, the legal costs of auction, amounting to $4,950 and interest foregone because of loss of use of the deposit, calculated at $770.80.

5 In her Defence the defendant pleaded that the she had executed the contract only as agent for her disclosed principal, Mrs Edwards. She filed a Cross-Claim against Mrs Edwards but it appears that she never served it. There was no action on the Cross-Claim in the hearing before me.

6 At the commencement of the hearing Mr Cassidy QC, for the defendant, sought leave to amend the Defence in a number of respects. The application was resisted on the grounds that the notice of intention to seek leave to amend was given too late and that it would be futile to allow the amendment because the proposed changes would not as a matter of law assist the defendant. Although the notice of intention to seek leave to amend was given very late, I am satisfied that the plaintiff was able to deal with the issues thereby raised and I would not refuse leave on that ground.

7 The proposed amended Defence is poorly drafted and sometimes hard to understand. The best approach, I think, is to summarise in my own words the issues it appears to raise. Apart from the assertion, repeated in various ways, that the defendant contracted only as agent for a disclosed principal, Mrs Edwards, the document seems to make these assertions about liability -

1 The plaintiff did not sign a copy of the contract;
2 There was no exchange of contracts (para 2 (a));
3 The effect of the agreement made orally by Mr Black on behalf of the plaintiff to extend the time for payment of the deposit had the result that there was no note or memorandum for the purposes of s54A Conveyancing Act (para 2 (c));
4 The conduct of the plaintiff, her solicitor, Mr Farah and Mr Black was unconscionable in that the agent (which I assume means Mr Farah) knew or ought to have known that the plaintiff (which I think means the defendant, though it may mean Mrs Edwards) lacked the capacity to pay the purchase price (para 11 (a));
5 There was a cooling-off period which was still in force at the time that the plaintiff rescinded the contract. The agent did not inform the plaintiff (by which I think is meant the defendant) of her right to rescind the contract, did not provide her with a copy of the contract and did not properly explain her obligations to her. If the defendant had known of her right to rescind the contract she would have rescinded it (para 11(g)-(m));
6 The unconscionable conduct of the plaintiff, her solicitor, Mr Farah and Mr Black occurred in trade or commerce (para 12); and
7 The same conduct was misleading and deceptive and occurred in trade or commerce.

8 There is no substance in the contention that the plaintiff did not sign a copy of the contract. She did and the copy became Exhibit B. Mr Cassidy was unable to cite authority for the proposition the counterpart signed by the plaintiff had to be shown to have been handed to the defendant in a formal exchange. I think that there is no such rule. It is sufficient for the plaintiff’s purposes to show that the defendant signed and made over the counterpart of the contract which she signed. That document is Exhibit A.

9 All s54A Conveyancing Act requires is some memorandum or note of the agreement for the sale of land or a written agreement, signed by the party to be charged. The fact that Mr Black permitted an extension of time to pay the deposit does not rob the defendant’s counterpart of the contract, Exhibit A, of that character.

10 There is no substance in the assertion that the plaintiff, her solicitor or agent or any employee of her agent acted unconscionably. The evidence shows that Mrs Edwards intended to pay for the property and for the defendant to be the purchaser, that the defendant intended to be the purchaser in her own right and that everybody on the plaintiff’s side knew those things. The suggestion that the plaintiff or anybody on her behalf knew or even suspected that Mrs Edwards would not have the money to pay for the property is without evidence and, I conclude, without foundation.

11 Section 66S Conveyancing Act provides a cooling-off period for every contract for the sale of residential property, during which the purchaser may exercise certain rights. In effect the purchaser may withdraw from the contract up until the end of the fifth day after the day on which the contract is made. By subs (1), however, the section is made subject to the provisions of s66T. That section provides, in part, that there is no cooling-off period for a sale of residential property if it is sold by public auction. There is no substance in the assertion that the defendant had the benefit of s66S.

12 I have already rejected the assertion that there was any unconscionable conduct on the part of the plaintiff, her solicitor, her agent or her agent’s employee. The same may be said for misleading and deceptive conduct. That would be enough to deal with the last two items of the proposed defence which, I suppose, are intended to call in aid some part of the Trade Practices Act 1974. A further difficulty the defendant has is that her assertion that the property was sold in trade or commerce appears to be speculative.

13 For these reasons I refuse the application to amend the Defence except insofar as it puts quantum in issue.

14 The Defence as pleaded asserts, as I have said, that the defendant contracted not on her own behalf but only as agent for a principal whose identity she disclosed, namely Mrs Edwards. The facts which I have related, and which do not appear to be in dispute, show that that is not the case and that the defendant entered the contract as purchaser intending to be the purchaser and to have the property for herself. The only part Mrs Edwards was to play was to pay the purchase price. As Stephen J said in Gorman v Norton (1887) VIII NSWLR 479 at 486, there is a general principle that where parties sign an agreement in their own names they are liable upon that agreement unless it appears on the face of the document that they are only contracting as agents.

15 In my opinion the plaintiff has made out her case for an order for summary judgment. She should have the amount by which the eventual sale price fell short of the contract price and the amount she has claimed for loss of use of the deposit. However, I disallow her claim for the costs of the auction and the legal costs associated with it because she incurred them before the contract was entered into and neither resulted from any default on the part of the defendant.

16 The orders I make are as follows -

1 Grant leave to the defendant to file in Court returnable immediately a motion seeking leave to amend the Defence;
2 Grant leave to amend the Defence in order to challenge the amount claimed by the plaintiff but otherwise dismiss the motion;
3 Direct the entry of a verdict and judgment for the plaintiff against the defendant in the sum of $1,050,770.80;
4 Order the defendant to pay the plaintiff’s costs.

17 The exhibits may be returned.

Last Modified: 07/16/2007