Glover and Glover v Bartels

[2004] QDC 1

DISTRICT COURT OF QUEENSLAND

CITATION:	Glover & Glover v Bartels [2004] QDC 001
PARTIES:	MICHAEL JOHN GLOVER AND DEBORAH JANE GLOVER Plaintiffs v RALPH PAUL BARTELS Defendant
FILE NO/S:	D 3615 of 2000
DIVISION:	Civil jurisdiction
PROCEEDING:	Action for damages for solicitor’s negligence
ORIGINATING COURT:	District Court Brisbane
DELIVERED ON:	14 January 2004
DELIVERED AT:	BRISBANE
HEARING DATE:	19-21 November 2003
JUDGE:	Boulton DCJ
ORDER:	Action dismissed with costs to be assessed
CATCHWORDS:	Solicitors negligence – no notification of finance by finance date – not due to solicitor
COUNSEL:	Mr J Thompson for the plaintiffs Mr K Barlow for the defendant
SOLICITORS:	Gustafson’s Solicitors for the plaintiffs Barry & Nilsson for the defendant

1. The plaintiffs in this action were the purchasers of a residential property situated at 20-38 Murray Grey Drive, Tamborine.  The contract for purchase was dated 26 October 1999 and is Exhibit 6.  The defendant is a solicitor, the principal of the firm “Bartels” who handled the conveyance on the part of the plaintiffs.

1. The male plaintiff who handled all of the relevant negotiations had some advance contact with Mrs Bartels, the senior conveyancing clerk of the defendant, in relation to some special conditions which were then incorporated into the contract in a document Annexure “A”.  These conditions were prepared at the instigation of the male plaintiff with little or no input from Mrs Bartels.  However, the real estate agents following the execution of the contract sent a copy of the contract to the defendant and by letter dated  29 October 1999 addressed to the plaintiffs, the defendant accepted instructions to act on their behalf in the conveyance.  That letter is Exhibit 1. 

1. The terms of the letter Exhibit 1 are fairly standard as such letters go.  It mentions such important dates as to the date for settlement and the finance date and deals with such things as insurance cover, possible identification survey, searches etc.  It should be noted immediately that the issues in the present case concern a failure on the part of the plaintiffs and their solicitor to notify finance approval on or before the finance date.  In this regard the letter Exhibit 1 contains an egregious error.  It states:

“Finance

Pursuant to the contract, finance is due on 12 November 1999.  Please contact us and advise as to the outcome of your application for finance on or before that date.  Kindly note that if you do obtain approval for finance then written notice must be given to the vendor within two (2) business days of the loan approval date.  …”

1. The contract did not provide for notice to be given within two business days of the loan approval.  It provided expressly for notice to be given before 5 pm on 12 November 1999.  I will return to this aspect of the matter at a later stage. 

1. The plaintiffs had a long association with a Mr Humphreys who was then the manager of the Springwood agency of the Bank of Queensland.  The plaintiffs arranged an appointment with Mr Humphreys and an application was filled out at that interview.  This was on or about 28 October approximately a fortnight prior to the finance date.

1. In the male plaintiff’s evidence in chief he said that he contacted Humphreys during the following week which was the week commencing 1 November and nothing had been received from head office.  On the following Tuesday, 9 November, he again contacted Humphreys and was told that he received the documentation from the bank that the loan had been approved and expected the loan documents for signing the following Monday.  He said that on the same day he informed Mrs Bartels of this and that Mr Humphreys intended to fax to her a letter of approval “by the end of the week because it was the finance date and I wanted Bartels to have it before then”.  He was told by Humphreys that that would not be a problem but that he (Humphreys) was having a busy, busy week and a few appointments and things and that he wouldn’t get to it that Tuesday.  He went on to say:

“… because I didn’t have the copies of the details of the contract, I didn’t really refer to the clauses in the contract and I had this information that said I had two business days from the loan approval …
… so I figured I was informing her on the Tuesday, the 9th that the loan was approved ---- but I had two days after that date, that’s the 12^th of November, to – to get any formal notification to the vendor. 

Was that your belief at the time, was it?--  Certainly was until after the fact when I discovered I’d lost the contract because of that.”

1. According to Mr Glover he did nothing further until the afternoon of Friday, 12 November.  His evidence was that around 4 p.m. he phoned Mrs Bartels and asked her whether she had received a letter from the Bank of Queensland.  Mrs Bartels checked and said that they had not received anything from the bank.  His evidence was that he was not concerned and amongst other things said:

“Well, that’s probably because he’s had a busy week or he’s pre-occupied with whatever he’s been doing and it may have been overlooked but I expect that … the documentation to be in the bank on Monday and we’d organise a day to go and sign those loan documents.”

1. He denied that there was any mention made of the need to give written approval before 5 p.m. or of any advice as to how they might need to proceed in the absence of such approval.  He denied phoning Mr Humphreys on that afternoon.

1. This is an absolutely crucial series of events.  The male plaintiff’s evidence differs significantly from that of Mrs Bartels and to some extent from that of Mr Humphreys.

1. Mr Humphreys’ evidence was that the male plaintiff phoned him early in the afternoon on Friday, 12 November to ascertain the whereabouts of the approval letter to be faxed on to his solicitor.  Mr Humphreys telephoned head office and at 3.54 p.m. he received a facsimile of a letter of approval.  He proceeded to fax a copy of that letter, which was intended to be sent to Bartels, to another firm of solicitors not involved in this particular transaction.  The error was not discovered by anybody until the following Monday.  Had either the male plaintiff or Mrs Bartels telephoned Humphreys that afternoon the problem might easily have been rectified.  It simply was not done.

1. Mrs Bartels at no stage had any contact whatsoever with Mr Humphreys or the Bank of Queensland until the facsimile was received from Mr Humphreys on the Monday morning.  By then of course it was too late.  Her evidence was that she did receive the telephone call from the male plaintiff on the Friday afternoon with an inquiry as to whether she had received a facsimile from the Bank of Queensland.  On checking she said that she had not.  Her evidence of the conversation that ensued is vastly different from that of the male plaintiff.

1. Mrs Bartels had made file notes of the conversation she had with the male plaintiff on 9 November as the defendant was acting in two transactions, the purchase of Murray Grey Road and the sale of the plaintiff’s then residence.  There was a file note attached to each file.  That on the sale file was as follows:

“Mike Glover attended office, delivered forms.  Advised need to know re finance by 12 November.  Must notify vendors’ solicitors by 5pm Friday.”

1. The second note which was placed on the purchase file was as follows:

“Mr Glover delivered cheque for costs and authority etc advised settlement 26 November.  Still no advice re finance on purchase file.  He will chase Bank of Queensland and get back to me.  Advised we need to know by Friday to advise.  Yes, OK, he’ll chase up.”

1. She heard nothing until about 4.30 p.m. on the Friday afternoon when the male plaintiff telephoned her and enquired as to whether she had received a facsimile letter.  The following is her account of what occurred:

“He asked if I had received a letter and I said No I hadn’t received a letter from the bank and he was again going to chase up the bank and I informed him that we had to notify by 5pm today and he informed me that he had a verbal approval.  I asked him did he want to go unconditional without having seen a letter and he informed me No that the bank would have a letter by Monday.  He instructed me to obtain an extension for formal approval until the Monday.  

Q          Did you give him any other advice about the likelihood or otherwise of an extension?--  Yes, that the vendor could decline the extension and terminate the contract.

Q          And did he respond in any way to your advice?--  He still didn’t want to go unconditional without having a definite approval from the bank.”

1. Mrs Bartels then telephoned the conveyancing clerk at the plaintiffs’ solicitors, Lisa Noble, and advised that the client had a verbal approval and that they would need an extension until Monday to provide them with a formal approval.  Ms Noble promised to get instructions and get back.  She did not do so and Mrs Bartels again tried to ring her just before 5 p.m. without success.  Mrs Bartels made no file note of these last minute conversations. 

1. I much prefer the evidence of Mrs Bartels as to what occurred on 9 November and what occurred on the afternoon of 12 November.  To start with it conforms more closely with the evidence of Mr Humphreys.  The male plaintiff might have been given to understand all along that finance would be likely to be approved but Mr Humphreys does not support the contention that there was an express verbal approval given on 9 November.  It is therefore unlikely that Mrs Bartels was informed of such verbal approval on that date.   Secondly, Mr Humphreys confirms that it was the male plaintiff who phoned him on the afternoon of the twelfth and is fortified in this by the copy of the fax which he then obtained from head office.

1. Mrs Bartels is fortified in her recollections of 9 November by file notes which confirm that there was no approval forthcoming at that point of time and that the male plaintiff took it upon himself to “chase up the bank”.  Furthermore the file notes make it clear that the male plaintiff was made aware of the critical time for notice to be given viz.  5 p.m. on 12 November. 

1. The attempts of the male plaintiff in cross examination to rely upon a two day period following 12 November were very damaging to his credit.  Mrs Bartels had given evidence that he was expressly told of the mistake sometime during the week commencing 1 November and that she had caused the form of the letter to be corrected throughout the office.  No complaint whatsoever is made in the pleadings suggesting reliance on that error despite the fact that it would have been very material.  The position taken by the male plaintiff in cross examination also differs significantly from that taken by him during examination in chief.

1. The male plaintiff presented as an extremely intelligent and articulate person with a lot of practical expertise.  He was able to frame the special conditions for the contract following his own inspection of the dwelling.  He claimed to have a long and fruitful relationship with the Bank of Queensland and Mr Humphreys in particular and handled all negotiations for finance with Mr Humphreys directly.  Mr Humphreys agreed that this was standard practice and that the bank would not have any dealings or consider itself authorised to have any dealings with the solicitors unless authorised by the client to do so.

1. Mrs Bartels came under some criticism for not contacting the male plaintiff on Friday, 12 November to enquire as to finance approval.  Her explanation for this was that she had explained very clearly to the male plaintiff on 9 November that 5p.m. on the 12^th was the crucial time and Mr Glover had undertaken the responsibility of pursuing the bank.

1. She also said that it was relatively common for finance institutions to be communicating their written approval only a short time prior to 5 p.m.   She was not made aware beforehand of the male plaintiff’s request to Mr Humphreys to fax to the solicitors a copy of the written approval.  Her first notification was received when Mr Glover telephoned her and asked her if she had received a fax.  At that stage Mr Glover himself had not received a written approval.

1. It is worth noting that the letter of the Bank of Queensland dated 9 November 1999 which was faxed in error to a Mr Peter M. Williams, solicitor, by Mr Humphreys at 4.09 p.m. on 12 November 1999 does not contain the loan details.  This was important information for Mr Glover despite his protestations to the contrary.  Expert witnesses, Mr Purcell and Mr Gregory and Mrs Bartels herself said it was dangerous to go unconditional without having seen the terms of the loan yet seemingly this information was available from head office as early as 9 November but was not obtained by Mr Humphreys until the afternoon of the 12^th and the documentation including presumably the loan details was not going to be made available until the following Monday, 15 November.

1. This was quite slack communication between Mr Glover and Mr Humphreys on an issue of manifest importance which was further compounded by Mr Humphreys sending the copy of the letter to Mr Williams instead of Mrs Bartels.  This cannot be laid at the feet of Mrs Bartels.

1. If the male plaintiff had been confident of the fact that Mr Humphreys had received an approval in writing which had satisfactory terms and conditions there would have been no reason for him to refuse to go unconditional on the contract.  The conclusion is inescapable that Mr Glover and Mr Humphreys had failed to address the issue in sufficient time. 

1. When it became evident that Mrs Bartels had not received a fax from Mr Humphreys it was up to Mr Glover to contact Mr Humphreys or to authorise Mrs Bartels to do so.  By this time it must have been obvious to Mr Glover that he had not been provided with the terms and conditions and that going unconditional was a risky option.  He elected to give Mrs Bartels instructions to notify a verbal approval and request an extension to provide the written approval to the following Monday which Mrs Bartels promptly did. 

1. With the benefit of hindsight it may well be that Mrs Bartels could have telephoned the male plaintiff earlier on the Friday and stressed the importance of the 5 p.m. deadline.  That might have been even more likely to succeed if it had been done on the Wednesday or the Thursday.  Mrs Bartels’ response is that she had already done that on the Tuesday.  Her conduct of the matter was therefore in close accord with the expert opinion of Mr Purcell and Mr Gregory.  The case against the defendant therefore fails.

1. Before leaving the issue of liability it is desirable that I mention that following the refusal of the vendors of the Murray Grey property to proceed, there were some manoeuvrings on the part of the plaintiffs by Mr Bartels, solicitor, acting on the advice of Counsel to break the deadlock.  Correspondence to this end gave a version of events closely following that of Mrs Bartels but containing the assertion that “no extension of time was requested”.  This arose from what might seem a rather fragile argument that what had been conveyed was a verbal approval and that the delay to the following Monday was merely to enable the written letter to be sent.  This ingenious distinction was not the product of Mrs Bartels herself and in no way affects the reliability of the account of the conveyancing transaction that she gave.

Damages

1. It is necessary, however, that I address the question of damages where the approach taken on behalf of the plaintiffs is fairly unusual.

1. The plaintiffs put their existing home on the market it seems in about mid October and it was at this stage that the male plaintiff telephoned Bartels concerning costs and put the name of Bartels on the contract document for sale of that home.  He told Helen Bartels that the parties were looking to purchase another home and that very likely Bartels would be requested to act in that purchase as well.

1. When the Murray Grey property came up the male plaintiff faxed a copy of special conditions to Mrs Bartels and had a telephone conversation with her.  He said that her response to the query about the special clauses was that they would be fine if the vendor could be prevailed upon to agree to them.  Mr Glover also claimed to have outlined in this telephone conversation in some detail the features of the Murray Grey property that interested them.  He was asked in examination in chief:

“Before you go on to that, can you tell us what were the features of the property that you discussed just in summary, those you discussed with Mrs Bartels?--  In detail?  Generally it was the fact that it was a master built home by the builder for his family and it was a very high quality finish for the property, that it was in a rural area because that was what we were looking for.

Yes?--  It had the features that both my wife and I agreed on.

You mentioned the ------?--  The office capability for myself.

Is there anything else you mentioned to Mrs Bartels that you can recall about the features of the house?--  That it was just that it was a large and light, airy property.”

1. The contract was finally signed on 27 October and on 28 October Mr Glover got a copy of the contract from the agents.  He faxed a copy of the front and back pages to Bartels requesting that they handle the conveyancing.  That was on 28 October.

1. Mrs Bartels does not deny that a conversation took place about special conditions with a response such as that referred to above.  However, she has no memory of an extensive discussion concerning features of the Murray Grey property and thinks it unlikely that such a conversation took place having regard to their irrelevance to the conveyancing role.

1. Mrs Bartels gave evidence that it was only on receipt of the contract document that a conveyancing file was opened as it frequently happened that potential clients would make enquiries which did not result in instructions being given to act.  It was following receipt of the contract that the letter dated 19 October 1999 Exhibit 1 was sent to the plaintiffs.  The plaintiffs’ claim is in damages for negligence or breach of contract.  If in negligence it is based upon loss of such a nature as to have been foreseeable to the defendant at the time that the purchase was lost by their negligence.  It is submitted that if Mrs Bartels had turned her mind to it she would have foreseen as a usual or probable consequence of her negligent behaviour that the plaintiffs would lose a purchase which contained specific benefits such as those identified to Mrs Bartels in the abovementioned telephone conversation.

1. Mr Thompson who appeared on behalf of the plaintiffs submitted that if damages were assessed for breach of contract the special attractiveness of the house as outlined brought the claim within the second limb of the rule in Hadley v Baxendale.

1. Following the loss of the Murray Grey property the plaintiffs entered the market for rural residential properties and purchased such a property at 193 Shaws Pocket Road, Luscombe on 17 April 2000 for $185,000.  This property was situated on a larger parcel of land and with significantly better views but the residence was inferior to that at Murray Grey Road.  To upgrade the Luscombe property it is alleged in paragraphs 17(c) and 17(d) of the Statement of Claim that a cost of $151,129.03 would be incurred.  Furthermore paragraph 1(e) of the Statement of Claim alleges costs of cleaning up the Luscombe property in the amount of $6,928.13.

1. At the commencement of the proceedings Mr Barlow who appeared on behalf of the defendant formally admitted that the renovations reflected in Mr Dunleavy’s sketches Exhibit 4 would cost or be likely to cost what Mr Dunleavy had estimated and that such costs were reasonable.  Mr Barlow made such admissions though on the basis that the cost of such renovations were not properly claimable.

1. Other parts of the loss suffered are particularised in paragraph 17(a) and (b) of the claim and relate to expenses in relation to the Murray Grey property which were thrown away and the interim costs of obtaining temporary accommodation prior to acquiring the Luscombe property.  These total $1,586 and $2.080.92 respectively.

1. The prayer for relief in the claim is for damages in the sum of $200,000 for negligence and/or damages in the sum of $200,000 for breach of contract plus interest on damages pursuant to the Supreme Court Act 1995.

1. I am not satisfied that a conversation involving any specific description of the Murray Grey property took place with Mrs Bartels.  That conversation it should be noted, is alleged to have occurred at a time before a contract was signed and prior to the defendant being given instructions to act on the conveyance.

1. It was accordingly not reasonably in the contemplation of the parties nor was it reasonably foreseeable that on losing the Murray Grey Road purchase the plaintiffs would proceed to purchase on the open market and at a much reduced price a property which was inferior in certain respects and then seek to redress the inferiority by extensive additions and renovations.

1. The plaintiffs are prima facie entitled to the loss suffered when the contract for the purchase of Murray Grey Road fell over.  The purchase price in the contract Exhibit 6 was for $255,000.  Mr Michael Iverson for the defendant valued the property as at 26 October 1999 at $260,000.   Mr Lackey valued the property as at the same date at $265,000.  The property was purchased at our about the time by Lahnee Michelle Bult for $264,000. That was on 18 November 1999.  Mr Lackey conceded under cross examination that he relied upon this sale and that if the sale had contained an allowance of $4,000 for furniture a valuation of $260,000 would have been warranted.  I accept that figure.  The valuation by Mr Lackey of land and improvements on a replacement basis at $370,000 is not indicative of the market value of the property and is not therefore an appropriate basis for the plaintiffs’ loss.  No loss is claimable as a result of the plaintiffs’ subsequent purchase of the Luscombe property.

1. Counsel for the defendant submits that the only claimable items apart from the above are the costs wasted on the Murray Grey Road purchase though not including the architect’s fee referred to in paragraph 17(a) of the claim.  That is a figure of $984 and the costs of re-locating referred to in paragraph 17(b) with the exception of insurance, building, and pest inspection fees which in the case of the last mentioned two, cannot be claimed twice and in respect of the former would have been incurred in any event.  The resulting figure is $1,628.80.  The total is $6,628.80.  I assess damages in that figure.