Hazelwood v Mercurio
[2021] VSC 362
•22 June 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2021 01701
| ROWAN ELIZABETH CLARE HAZELWOOD | Plaintiff |
| v | |
| FRANK ANDREW MERCURIO and DIANE HELEN JAMESON | First Defendants |
| THE REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 June 2021 |
DATE OF JUDGMENT: | 22 June 2021 |
CASE MAY BE CITED AS: | Hazelwood v Mercurio & Ors |
MEDIUM NEUTRAL CITATION: | [2021] VSC 362 |
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REAL PROPERTY – Caveats – Application for removal of a caveat under s 90(3) of the Transfer of Land Act 1958 (Vic) – Application by caveators to amend grounds of claim in caveat – Whether there is a prima facie case to be tried – BCA Asset Management Group Pty Ltd v Sand Solutions (Vic) Pty Ltd [2021] VSC 177, referred to – Whether there was a binding agreement between the vendor and the caveators for the sale of the property – Masters v Cameron (1954) 91 CLR 353, referred to – Where contract of sale not signed by the vendor – Whether correspondence from the vendor’s agent satisfies the requirements of s 126 of the Instruments Act 1958 (Vic) – Whether correspondence was a memorandum or note of an agreement in writing signed by a person lawfully authorised to sign such a note or memorandum – Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] 1 WLR 3674, referred to and distinguished – Finding that vendor’s agent was not lawfully authorised in writing to enter into a contract of sale for the property – Finding that the caveators did not establish a prima facie case to be tried – Order that caveat be removed stayed for seven days.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D F McAloon | Piper Alderman |
| For the First Defendants | Mr N A Frenkel | Peter Cooper |
| For the Second Defendant | No appearance |
HER HONOUR:
These reasons concern a dispute between the plaintiff, the owner of an apartment in a multiunit residential building in Flinders Street, Melbourne (‘vendor’) and the first defendants, who are disappointed prospective purchasers of the apartment (‘caveators’).[1] After reaching what was said by the caveators to be a binding agreement for the vendor to sell the apartment[2] to the caveators in February 2021, the vendor sold the apartment to another purchaser, Tall Poppy Investments Pty Ltd (‘new purchaser’). The contract of sale with the new purchaser was executed by the vendor after the caveators’ solicitors informed the vendor’s agent, Mr Toby Campbell of Caine Real Estate, of the caveators’ intention to lodge a caveat over the title of the apartment.
[1]The second defendant, the Registrar of Titles, has filed a submitting appearance.
[2]The caveators actually made an offer to purchase the apartment and one of two car parking spaces in the building owned by the vendor.
The caveat was lodged on 2 March 2021 by the caveators’ solicitor, Mr Peter Cooper. The grounds of claim was a ”part performed oral agreement” with the vendor. The vendor requested that the caveat be removed to permit the settlement of sale of the apartment to the new purchaser. The caveators refused, and the vendor issued a notice under s 89A of the Transfer of Land Act 1958 (Vic) (‘TLA’) (‘lapsing notice’). Subsequently, the caveators issued a proceeding in this Court (‘other proceeding’) claiming that the vendor and the caveators had entered into a binding contract of sale with respect to the apartment (‘alleged contract of sale’), which was partly in writing, partly oral, and partly to be implied, and sought relief in the way of specific performance of the alleged contract of sale. The caveators’ primary allegations were set out in paragraphs 2 and 3 of the statement of claim, as follows:
2.Between 11 and 26 February 2021, the Plaintiffs and the Defendant entered into an agreement whereby the Defendant agreed to sell, and the Plaintiffs agreed to purchase, the Property (the Agreement).
Particulars
The Agreement was partly in writing, partly oral and partly to be implied. Insofar as it was in writing, it was constituted by:
(i)an email from the Defendant’s estate agent, Toby Campbell (Campbell), to the Plaintiffs on 18 February 2021;
(ii)an email from the Second Plaintiff to Campbell on 19 February 2021;
(iii)an email from Campbell to the Plaintiffs, and the Plaintiffs’ solicitors, on 24 February 2021, together with an attached unsigned Contract of Sale which had been drawn by the Defendant’s solicitors and had been tailored to the Plaintiffs’ requirement that the Property include only one carpark, not two;
(iv)an email from the First Plaintiff to Campbell on 25 February 2021; and
(v)an email from Campbell to the Plaintiffs on 26 February 2021.
Insofar as it was oral, it was constituted by conversations between the Plaintiffs and Campbell between 11 and 16 February 2021 by telephone, including a conversation on 16 February 2021 in which Campbell said to the First Plaintiff words to the effect: “I’ve spoken to the vendor. We’re good to go.”
Insofar as it was to be implied, it was to be implied from the need to give business efficacy to the Agreement and by operation of law.
3. There were terms of the Agreement that:
(a)the Defendant would sell the Property to the Plaintiffs for the purchase price of $750,000;
(b)the deposit of 10% ($75,000) would be paid on the day of sale; and
(c)the balance of the purchase price ($675,000) would be paid at settlement on 12 March 2021.
(emphasis in original)
The caveators asserted that the vendor breached the alleged contract of sale by refusing to sell the apartment to them, and that they were ready, willing and able to perform their obligations under the alleged contract of sale. In the alternative, the caveators claimed that the vendor (through Mr Campbell) made false and misleading representations regarding the proposed sale of the apartment, which they relied upon to their detriment, and accordingly, the vendor was estopped from denying the truth of the representations. While the statement of claim claims damages as a form of relief, the evidence and submissions of the caveators make it clear that the caveators’ primary objective is to compel the vendor to transfer the apartment to them on the terms in the alleged contract of sale.
In her defence and counterclaim filed in the other proceeding on 15 June 2021, the vendor:
(a) asserted that the alleged contract of sale, as pleaded by the caveators, was not capable of supporting the relief claimed by the caveators by reason of s 126 of the Instruments Act 1958 (Vic) (‘Statute of Frauds’);
(b) asserted that the caveators do not have, and never had, a caveatable interest in the apartment;
(c) asserted that the caveators lodged the caveat without reasonable cause;
(d) admitted that she has refused to sell the apartment to the caveators, but said that she was under no obligation to do so;
(e) denied the making of the representations;
(f) observed that the caveators have provided no particulars of the material disadvantage said to have been incurred by them in reliance upon the alleged representations;
(g) referred to the dealings between her and the new purchaser on and after 2 March 2021; and
(h) claimed that the vendor is entitled to compensation pursuant to s 118 of the TLA.
On 21 May 2021, the vendor issued this proceeding, seeking the removal of the caveat from the title of the apartment. Following the filing of the parties’ evidence and the exchange of the written submissions by the parties on 16 June 2021, the caveators filed a summons seeking to amend the grounds of claim in the caveat to substitute the claim “Agreement between the following parties dated 11-26 February 2021” for the claim that there had been part performance of an oral agreement. The consensus between the parties is to the effect that the outcome of the application to amend the caveat should rise or fall with the outcome of the vendor’s application to remove the caveat. Having regard to the principles governing applications to amend caveats, I agree that the merits of the caveators’ claim is the most significant factor to take into account when determining the current application to amend the caveat.
The vendor relied upon an affidavit made on 24 May 2021. In her affidavit, she deposed, in summary, as follows:
(a) on or around 19 January 2021, she authorised her husband to execute an Exclusive Sale Authority with Caine Real Estate (‘authority’) to market the apartment and two separately titled car parking spaces, with an estimated selling range of $800,000-$880,000, and exhibited a copy of the authority;
(b) on 18 February 2021, Mr Campbell sent her an email telling her that he had located a potential purchaser of the apartment and one of the car parking spaces, and an alternative purchaser for the second car parking space;
(c) based upon this proposal, she instructed Mr Campbell to amend the contract of sale to prepare a separate contract for the second car parking space. She was not prepared to sell the apartment with a single car parking space unless she had a separate buyer for the second car parking space, and her husband instructed Mr Campbell to continue to hold inspections of the apartment and market the apartment and both car parking spaces;
(d) she referred to the correspondence between Mr Campbell and the caveators between 18 February 2021 and 26 February 2021;
(e) on 26 February 2021, Mr Campbell told her he had located an alternative buyer who was prepared to purchase the apartment and both car parking spaces. After some negotiations, she received a contract of sale executed by the new purchaser on 4 March 2021, with a price of $856,000, and a settlement date of 1 April 2021.
(f) the new purchaser paid a deposit of $100,000 to Caine Real Estate on 4 March 2021; and
(g) she deposed as to the correspondence with the solicitors for the caveators in March 2021, the issue of the lapsing notice, and correspondence between her solicitors and the new purchaser’s solicitors regarding her inability to settle with the new purchaser by reason of the presence of the caveat. Among other things, the new purchaser demanded payment of all lost rental income accruing at a rate of $500 per week from the original settlement date of 1 April 2021.
The vendor also relied upon an affidavit of her solicitor, Mr Samuel Williams of Piper Alderman, sworn on 24 May 2021, which exhibited a Notice of Default issued by the new purchaser dated 21 May 2021.
The caveators relied upon an affidavit made by Mr Frank Mercurio, one of the caveators. The other caveator, Ms Diane Jameson, Mr Mercurio’s partner, filed a short affidavit verifying the matters deposed to by Mr Mercurio.
Mr Mercurio deposed, in summary, as follows:
(a) the caveators are both financial advisors. They live in Brisbane, but travel to Melbourne frequently for business and other purposes;
(b) he owns a small apartment in the same building as the apartment (‘building’), with no car parking space, and the building is well located for their professional commitments, being directly behind 101 Collins Street. For some time, he and Ms Jameson have considered expanding their Melbourne home, but were mainly interested in buying a larger Flinders Street facing apartment in the building. The apartment was exactly what the caveators were looking for;
(c) on 10 February 2021, the caveators arrived at their Melbourne home (opposite the corridor from the apartment), and were informed by a neighbour that the apartment was on the market. Later that day, he sent a text message to Mr Campbell;
(d) shortly after inspecting the apartment the following morning, the caveators made an unconditional offer to purchase the apartment and one car parking space for $750,000, with settlement to take place within seven days. Later that day, Mr Campbell emailed Ms Jameson a brochure in relation to the apartment, which referred to two car parking spaces;
(e) on 16 February 2021, Mr Campbell telephoned him and told him that he had found a purchaser for the other car parking space, and that the vendor had accepted the caveators’ offer for the apartment and one car parking space;
(f) on 17 February 2021, the caveators spoke to a Melbourne-based architect with respect to some proposed refurbishments of the apartment, and engaged a solicitor, Mr Peter Cooper, to act as their conveyancer for the purchase;
(g) also on that day, he and Ms Jameson exchanged text messages with Mr Campbell regarding the air conditioning units at the apartment, and on the following day, which of the car parking spaces they preferred;
(h) on 18 February 2021, he and Ms Jameson received an email from Mr Campbell, which stated as follows:
Subject: Confirming - 416/108 Flinders Street, Melbourne
Hi Di & Frank,
If you could confirm the below points for me then I’ll be able to start the paperwork.
Also, do you have a local conveyancer (Melbourne/VIC) if not I can send you the details for a few to choose from?
Full Name/s of Purchaser/s (include middle names) –
Current Residential Address –
Price - $750,000
Deposit - 10%
Settlement - We had discussed 14 days, which from tomorrow would be the 5th of March, happy to discuss if you have a real preference for something close to that.
Solicitors Details –
New paperwork is getting drawn up on our end so nothing for you to do at this stage.
Kind regards,
Toby
(i) on 19 February 2021, Mr Ms Jameson replied as follows:
Morning Toby
Thanks for yesterday’s email. The following is the information you require:
Purchasers
Frank Andrew Mercurio & Diane Helen Jameson
[address provided]
Settlement - Friday, 12 March 2021 (we will be in Melbourne that day)
Lawyer
Peter Cooper
Email: [email protected]
Phone:
0394170026 and mobile 0430468127
All the best
Di
(j) on 24 February 2021, Mr Campbell sent the caveators and their solicitor an email attaching an unsigned vendor’s statement and contract of sale. The email stated as follows:
Just received and forwarding, I haven’t reviewed myself yet so let me know any questions you have and I’ll work through them.
(k) the unsigned contract of sale referred to the vender by name, and to the apartment and the particulars of title of one of the car parking spaces, but did not include the name of the purchasers, the selling price, or the date for settlement;
(l) on 25 February 2021, Mr Mercurio replied as follows:
Toby –
Why are there no numbers and signatures on this contract?
(m) on 26 February 2021, Mr Campbell replied:
Hi guys,
Just hit send as soon as I received and so you could have your people quickly review it before signing;
(n) later that day, Mr Ms Jameson sent an email to Mr Campbell requesting that the contract of sale be updated and signed by the vendor, but she received no response; and
(o) also on 26 February 2021, the caveators’ solicitor sent Mr Campbell an email requesting details of the vendor’s solicitors in order to set up a PEXA workspace for settlement, but received no response.
Mr Mercurio deposed as follows:
On the morning of Monday, 1 March 2021 I spoke with Campbell who said that someone else had purchased Unit 416 and both car spaces. I said to him words to the effect “That’s outrageous. We had a deal”. He responded by saying that it was more convenient for the client to deal with one buyer rather than two buyers. I reiterated to Campbell that this was unacceptable as we had a deal. I was perplexed and confused by this turn of events.
On Monday, 1 March 2021 my partner called Campbell but only received a text message in reply at 9.54 am stating “Hi Di, just in a meeting, Will call straight after”. I am informed by my partner and believe that she did not receive a return phone call from Campbell ...
On Monday, 1 March 2021, our solicitor sent an email to Campbell which stated, amongst other things, that if a signed contract of sale in our favour was not received by 12 noon on 2 March 2021, a caveat would be lodged without further delay or notice ...
Mr Mercurio then deposed as to the lodgement of the caveat, the issue of the lapsing notice, and the filing and service of the statement of claim in the other proceeding. He concluded as follows:
In essence, there are two reasons why my partner and I seek to maintain the caveat until the hearing and determination of our claim in proceeding No. S ECI 2021 01253.
Firstly, Campbell had told me that the vendor had accepted our offer and this was confirmed in the subsequent email exchanges referred to above. The only outstanding matter was signing the contract of sale. It is unacceptable to my partner and I that the vendor has tried to break our agreement because she subsequently received a ‘better offer’.
Secondly, Unit 416 is special to my partner and I for the reasons set out in paragraph 3 above.
In response, the vendor relied upon an affidavit affirmed by Mr Campbell on 9 June 2021. Mr Campbell deposed as follows:
I do not intend this affidavit to constitute an exhaustive summary of all interactions and items of correspondence in which I have been involved in relation to this matter. Instead, I make this affidavit for the purpose of responding to and clarifying events that occurred and statements that have been attributed to me in the Mercurio Affidavit.
Mr Campbell then went on to depose as to his knowledge of the building, and estimated that, on average, more than ten apartments in the building would be marketed and sold in any one year. Information he has access to shows that there are 189 apartments in the building, and that so far in 2021, seven properties have been sold, and another seven are currently listed for sale, with two of these being two-bedroom apartments. On 4 March 2021, an apartment substantially similar to the apartment, but on a higher level of the building, sold for $845,000.
Mr Campbell went on to depose as follows:
At paragraph 8 of the Mercurio Affidavit, Frank Mercurio states that he made a verbal offer to purchase apartment 416 and a single car space on 11 February 2021 for $750,000, with settlement to occur within seven days of a contract being signed. I recall Frank Mercurio making that offer to me and also imposing a very short deadline, being either 5pm that day, or 5pm on the next day, Friday, 12 February 2021 (Offer).
I passed this Offer on to the vendors of apartment 416, but as at 5pm on 12 February 2021 it had not been accepted.
Statement in Mercurio Affidavit
At paragraph 14 of the Mercurio Affidavit, Frank Mercurio refers to a telephone call he received from me on the afternoon of 16 February 2021 and says that during that phone call I said words to the following effect:
1That the vendor of Apartment 416/108 Flinders Street, Melbourne had accepted the offer of Mr Mercurio and his partner, Diane Helen Jameson, for the purchase of Apartment 416; and
2That the vendor of Unit 416/108 Flinders Street, Melbourne had also accepted an offer from another purchaser for the other car park.
(the Statements).
These Statements are inaccurate in that it is my usual practice to avoid confirming an offer has been accepted, or a sale completed, until a written agreement has been signed. I have adopted this practice because I know that any sale of real property must be in writing and only come after the information in section 32 of the Sale of Land Act 1962 (Vic) has been provided.
I cannot remember the exact words I used during the phone call referred to in paragraph 9, but I do remember that I did not believe a sale had been completed at the time of the phone call and I therefore had no intention of conveying that fact to Mercurio.
Relevant legal principles
The principles governing applications of the current kind were recently summarised by Derham AsJ in BCA Asset Management Group Pty Ltd v Sand Solutions (Vic) Pty Ltd,[3] as follows:
[3][2021] VSC 177.
(a)under s 89(1) of the Transfer of Land Act 1958 (Vic) (‘TLA’), a caveat can only be lodged by a person claiming an estate or interest in the Land. The estate or interest must be established to the requisite standard by the person who lodged the caveat, if the caveat is challenged;
(b)the plaintiff’s application is made pursuant to s 90(3) of the TLA, where any person adversely affected by a caveat lodged under s 89 of the TLA is permitted to ‘bring proceedings in a court against the Caveator for the removal of the caveat’;
(c)section 90(3) of the TLA empowers a court to ‘make such order as the court thinks fit’, and thus gives the Court a discretion. The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions. The procedure is consequently interlocutory in substance, even though it may give rise to a final order;
(d)the principles applicable were dealt with by Warren CJ in Piroshenko v Grojsman. They are well settled. The authorities establish the following:
(i) the Court’s power under s 90(3) of the TLA is discretionary;
(ii)the Caveator bears the onus of establishing that there is a prima facie case to be tried that it does have the estate or interest in land as claimed;
(iii)if the Caveator establishes a prima facie case to be tried in relation to the estate or interest claimed, the Caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial; and
(iv)there is a relationship between the strength of the case in establishing a prima facie case to be tried and the extent to which the Caveator must establish the balance of convenience favours the Caveator; the stronger the prima facie case, the more readily the balance of convenience might be satisfied. It is sufficient that the Caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the Land in question in accordance with its normal proprietary rights.[4]
[4]Ibid [9].
His Honour referred to the references in the authorities to the “prima facie case” test, and the “serious question to be tried” test, which are used interchangeably. He preferred the former, stating that:
The Caveator must establish that they have a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat, and the preservation of the status quo pending trial.[5]
[5]Ibid.
He went on to refer to the two-step process undertaken in applications of the current kind, as follows:
First, the Caveator must establish that there is a prima facie case – that there is a probability on the evidence before the Court that the Caveator will be found to have the asserted legal or equitable rights or interest in the land. Second, having done so, the Caveator must establish that the balance of convenience favours the maintenance of the Caveat on the title until trial and that the probability of success is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[6]
[6]Ibid.
Finally, his Honour reaffirmed that a caveat is not available as a bargaining chip, observing as follows:
The lodging of a caveat is a serious business. It has the potential to affect commercial transactions and the lives and financial interests of others.[7]
[7]Ibid.
For present purposes, given the nature of the dispute between the parties (where the vendor asserts that the caveators have no claim whatsoever to a caveatable interest in the apartment), it is not necessary to consider the distinction between the prima facie case test and the “serious question to be tried” test. If it is seriously arguable that the caveators have an interest in the apartment capable of being protected by a caveat, the argument would then proceed to the second step, being the balance of convenience. On the facts of the current case, if there is a serious question to be tried that the caveators have the asserted interest in the apartment, there is no dispute that the vendor’s conduct in selling the apartment to the new purchaser, and proceeding to settle with the new purchaser, will extinguish any interest of the caveators in the apartment. While the ultimate result of the other proceeding might be affected by what oral representations were made by Mr Campbell to the caveators, the question of whether the alleged contract of sale satisfied the requirements of the Statute of Frauds is capable of, in effect, summary determination, given that all of the documents relied upon by the caveators, along with the authority, are in evidence, and the issue of whether these documents are capable of complying with the Statute of Frauds has been fully argued before me.
Submissions
In the interests of expedition, I do not propose to canvass the submissions of the parties at any great length. The critical issue in the current application is whether there was a binding agreement between the vendor and the caveators for the caveators to purchase the apartment. It was common ground (and uncontroversial) that, if there was such an agreement, then the caveators, as purchasers under a contract of sale, would have something akin to an equitable interest capable of being protected by a caveat.
In the absence of any part performance on the part of the caveators, the primary hurdle facing the caveators is the Statute of Frauds. The caveators submitted that the email communications between them and Mr Campbell were sufficient to comply with the Statute of Frauds. The emails were in writing, they included all of the critical terms of the alleged contract of sale, and Mr Campbell was the author or the recipient of the emails. Further, the dealings between the caveators and the vendor brought the transaction within the fourth category in Masters v Cameron,[8] that is:
... the parties were content to be bound immediately and exclusively by the terms which they agreed upon whilst expecting to make a further contract in substitution for the first contact, containing, by consent, additional terms.[9]
[8](1954) 91 CLR 353.
[9]See The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd [2019] VSCA 91 [22].
The vendor, on the other hand, submitted that the email correspondence between the Mr Campbell and the caveators could not constitute a binding agreement, within the terms of the fourth category in Masters v Cameron[10] or otherwise, as this correspondence does not comply with the Statute of Frauds. In the absence of any part performance on the part of the caveators (which has been conceded by the caveators) the caveators’ claim to an interest in the apartment capable of being protected by a caveat falls at the first hurdle. The vendor submitted that the question of whether the communications between the parties fall within the fourth category in Masters v Cameron[11] does not arise, as the vendor did not sign any of the relevant communications. The emails between the caveators and Mr Campbell amounted to no more than a series of pre-contractual encounters between an agent and a prospective purchaser.
[10](1954) 91 CLR 353.
[11]Ibid.
Both parties submitted that the balance of convenience fell in their favour. The caveators submitted that the sale of the apartment to the new purchaser would render their claims in the other proceeding nugatory. The vendor submitted that the maintenance of the caveat would expose her to significant liabilities to the new purchaser. Both submissions have merit.
The caveators did not submit that their alternative claim, to the effect that the vendor represented to the caveators that she would sell the apartment to them, such that she was estopped from resiling from that representation (‘estoppel claim’), as pleaded by them in the other proceeding, gave rise to an immediate equitable interest in the apartment capable of being protected by a caveat. I shall make some observations regarding the estoppel claim later in these reasons.
Analysis
Section 126 of the Instruments Act 1958 (Vic) provides as follows:
Certain agreements to be in writing
(1)An action must not be brought to charge a person upon a special promise to answer for the debt, default or miscarriage of another person or upon a contract for the sale or other disposition of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note.
(2)It is declared that the requirements of subsection (1) may be met in accordance with the Electronic Transactions (Victoria) Act 2000.
The caveators relied upon numerous authorities to support their contention that what amounts to “writing signed by the person” for the purpose of complying with the Statute of Frauds is to be construed liberally. The caveators also referred to the decision of the English Court of Appeal in Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd[12] (‘Golden Ocean Group’) in support of the proposition that an exchange of emails between parties to a negotiation can constitute an agreement in writing for the purpose of the Statute of Frauds. Further, the caveators submitted that Mr Campbell was cloaked by the vendor with the actual and ostensible authority to “sign” on her behalf. In Golden Ocean Group,[13] the Court found that a broker engaged by one of the parties to the negotiations could bind its principal to the agreement evidenced by the exchange of email correspondence.
[12][2012] 1 WLR 3674.
[13]Ibid.
The caveators relied upon the following documents in support of their submission that an agreement in writing had been concluded between the vendor and the caveators:
(a) the email from Mr Campbell to Ms Jameson on the afternoon of 18 February 2021 (see paragraph 9(h) above), which was headed ”Confirming – [apartment address]” and referred to the critical terms of the contract of sale, including the price, the deposit, and the settlement date;
(b) Ms Jameson’s reply the following morning, 19 February 2021 (see paragraph 9(i) above), which provided the details of the purchasers, the settlement date, and the contact details for the caveators’ solicitor;
(c) the email from Mr Campbell to Ms Jameson of 24 February 2021, which was copied into Mr Mercurio and the caveators’ solicitor, which enclosed a draft contract of sale and an unsigned s 32 statement. The draft contract of sale identified the vendor by name, and referred to only one of the car parking spaces (such that it was specifically tailored to the requirements of the caveators); and
(d) the email sent by Mr Campbell on 26 February 2021 (see paragraph 9(o) above) in response to Mr Mercurio’s queries the night before as to why the draft contract of sale contained no numbers or signatures.
The caveators submitted that the correspondence above contained all of the essential terms of a contract for the sale of land, and manifested an intention on the part of both the vendor and the caveators to transfer the apartment to the caveators on those terms, with the execution of a final contract of sale being a formality only. As Mr Campbell had the actual or ostensible authority to bind the vendor, the communications above bound the vendor to sell the apartment on the terms referred to in those communications, thus entitling the caveators to lodge a caveat.
As noted above, the caveators relied upon the decision of the English Court of Appeal in Golden Ocean Group Ltd.[14] In that case, the Court upheld a decision of the judge at first instance not to set aside service out of the jurisdiction in a dispute as to whether the foreign party was bound to guarantee a charterparty because the documents exchanged between the parties failed to comply with the English equivalent of the Statute of Frauds. Being an application to set aside service outside the jurisdiction, the application was akin to a strike-out application.
[14]Ibid.
The Court of Appeal held, relevantly:
(a) it is not necessary, for the purposes of the Statute of Frauds, for a contract of guarantee to be in a single document, provided that the terms of the contract were evidenced in writing;
(b) the inclusion of the sender’s name in an email constituted “signing”, for the purpose of compliance with the Statute of Frauds; and
(c) the proposed guarantor’s broker had the actual authority to “sign” on behalf of its principal.
The members of the Court of Appeal observed that the object of the English equivalent of the Statute of Frauds and its predecessor legislation was to forestall argument (and opportunities for perjury) regarding the terms of any oral agreements with respect to certain types of agreements, and to reduce the risk of inexperienced people being led into onerous obligations they did not understand. Accordingly, the Statute of Frauds did not preclude a finding that an exchange of written correspondence, consistent with accepted contemporary business practice, could amount to a binding contract.
Counsel for the vendor submitted that it is noteworthy that his researches discovered no instance of the decision in Golden Ocean Group[15] being followed in this or any other Australian jurisdiction, and in any event, it is not common business practice for contracts of sale of land to be concluded through exchanges of emails between prospective purchasers and real estate agents.
[15]Ibid.
I am prepared to accept, for present purposes at least, that a contract of sale of land need not be contained in a single, self-contained document in order to comply with the requirements of the Statute of Frauds. I am also prepared to accept, again at least for present purposes, that a sender of an email, by identifying themselves as the sender of the email, can be considered to have “signed” the email.
Further, I accept, again for present purposes only, that the Statute of Frauds should be construed as to accommodate “accepted contemporary business practices”. That much is evident from the reference in s 126(2) to the Electronics Transactions (Victoria) Act 2000 (Vic), although it could be argued that that provision may preclude the validity of any electronic transactions which do not comply with that Act. It is not necessary to resolve that question for present purposes, although I agree that the conclusion of contracts for the sale of land by exchange of email correspondence hardly amounts to a widespread contemporary business practice.
However, the most significant hurdle facing the caveators in the current application is that the correspondence relied upon by them was “signed” not by the vendor, but by Mr Campbell. I agree with the submissions advanced by the vendor to the effect that while Mr Campbell was authorised to market and endeavour to sell the apartment, he was not, by reason of the terms of the authority, authorised to enter into a contract for the sale of the apartment.
The authority is a standard form document authored by the Real Estate Institute of Victoria. In addition to the terms referred to in paragraph 6 of these reasons, the authority includes the following terms:
Item 8. Agent’s Role
The Agent will advertise, market, and endeavour to sell the property.
Clause 1.13 of the General Conditions of the authority provides as follows:
1.13 “sold” is –
(a) the result of obtaining a binding offer; unless
(b)the Property is in a retirement village in which case “sold” is completion of the settlement of the contract of sale and the purchaser, or resident who will reside at the Property, having entered into a contract for services with the manager of the retirement village; and
(c)in sub-clause (b) “resident” and “retirement village” have the meanings in the Retirement Villages Act 1986
and “sale” and “sell” have corresponding meanings.
Clause 13 of the General Conditions provides as follows:
13. The Vendor authorises the Agent to do any or all of the following –
13.1instruct the Vendor’s Australian legal practitioner or conveyancer to prepare a Sale of Land Act section 32 statement and a contract of sale, agree the content of either document and advise and agree other amendments or additions to either document as may be desired or required at any time;
13.2fill-up a standard form contract or contract to record the sale of the Property as permitted by the Estate Agents Act 1980 (the contract) or under any amending or superseding legislation;
13.3negotiate and, with the Vendor’s prior approval, agree and record - or have the Vendor’s Australian Legal Practitioner or conveyancer record - the final terms and conditions of, and then obtain the signatures of the Vendor and the purchaser to, the contract;
13.4attend to the exchange of the contract between the vendor and the purchaser;
13.5receive the purchase price, or any part of it, payable for the Property;
13.6to receive: a cooling-off notice given by a purchaser under the Sale of Land Act 1962 or any amending or superseding legislation, advice or a notice about a loan sought by a purchaser, advice or a notice about a pest inspection report and/or a building condition report, even if the Agent’s authority has formally expired on the sale of the property.
13. 7to make public the sale price paid for, and other details of, the Property without disclosing the name of Vendor or the purchaser, in the interest of maintaining an informed property market. This authorisation is effective: notwithstanding a condition in the contract of sale for the Property, to which the Agent is not a party, purporting to restrict the availability of information about the sale of the Property and even though the Agent’s authority formally expired on the sale of the Property.
In my view, there is a material difference between the definition of “sell” in the authority, and the phrase “endeavour to sell”. However, the most compelling support for the proposition that the vendor had not authorised Mr Campbell to “sign” on her behalf (even setting aside the fact that the authority was executed by the vendor’s husband, not the vendor herself) is to be found in clause 13 of the General Conditions of the authority. First, there is no express reference to Mr Campbell being authorised to sign any contract of sale on behalf of the vendor, as one might expect, had he been given the authority to do so. All he was expressly authorised to do was to “fill-up” a standard form contract or contract to record the sale of the property, and to negotiate the terms of the contract. Significantly, the authority provides for Mr Campbell to obtain the signatures of the vendor and the purchaser on any contract of sale, and to attend the exchange of contracts. In short, the terms of the authority contemplate the vendor and the purchaser personally executing any contract of sale. Accordingly, in the absence of any document signed by the vendor personally, or any evidence of any document in which the vendor expressly executes any binding contract of sale, no legally enforceable agreement for the sale of the apartment came into existence, and thus the caveators’ claim to a caveatable interest in the apartment fails.
For completeness, the decision in Golden Ocean Group[16] does not assist the caveators. In particular, there is a material difference between the English equivalent of the Statute of Frauds and the Statute of Frauds itself. The provision under consideration by the Court in Golden Ocean Group[17] reads as follows:
No action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith or some other person thereunto by himself lawfully authorised.
(emphasis added)
[16][2012] 1 WLR 3674.
[17]Ibid.
First, it is noteworthy that the provision above does not apply to contracts for the sale or other disposition of an interest in land, but applies only to contracts of guarantee. However, the critical difference for the purposes of the current application is the difference concerning the execution of documents by agents. The provision above refers to “some other person ... lawfully authorised”, while s 126(1) of the Instruments Act 1958 (Vic) refers to “... a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note”.
Accordingly, the provision applicable in this jurisdiction regarding the authority of agents to bind their principals to contracts for the disposition of interest in land is substantially stricter than that provided for in the provision considered in Golden Ocean Group,[18] which, I note, only applies to contracts of guarantee, not the disposition of interests in land.
[18]Ibid.
Further, for completeness, s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (UK), which governs contracts for the disposition of interests in land, provides as follows:
Contracts for sale etc. of land to be made by signed writing
(1)A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.
(2)The terms may be incorporated in a document either by being set out in it or by reference to some other document.
(3)The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract.
Accordingly, it could be said that the English equivalent of the Statute of Frauds, insofar as it applies to the disposition of interests in land, imposes even stricter requirements than s 126(1) of the Instruments Act. The terms of the provision above reinforce my view that the decision in Golden Ocean Group[19] is readily distinguishable from the current case.
[19]Ibid.
In the face of the above, the hurdle facing the caveators in establishing that there is a serious question to be tried that the documents relied upon by them constitute a legally binding contract of sale is in my view insurmountable.
The caveators submitted that the question of whether there was a binding contract of sale for the apartment is one which should be the subject of a full trial, with discovery of documents, and the cross‑examination of witnesses, particularly Mr Campbell, whose affidavit was said to have been very carefully worded. That may well be the case, and one does wonder what was said to lead the caveators to sincerely believe that they had concluded the transaction. However, unless the process of discovery was to lead to the disclosure of a document in which the vendor not only confirmed her acceptance of the caveators’ offer, but also expressly authorised Mr Campbell to execute a contract of sale on her behalf, I doubt the process of discovery and cross‑examination would greatly assist the caveators. I doubt very much that there is any document in existence which satisfies both of these criteria. In the unlikely event there is such a document in existence, it should have been disclosed by the vendor in accordance with s 26 of the Civil Procedure Act 2010 (Vic).[20]
[20]In my view, s 26 applies to all civil proceedings, not simply proceedings commenced by writ.
Accordingly, the caveators have not satisfied the first limb of the two stage test referred to in the authorities. As such, strictly speaking, it is not necessary for me to consider where the balance of convenience lies. That is a vexed question in the current case. On the other hand, notwithstanding the evidence of Mr Campbell to the effect that the sale of properties equivalent to the apartment is not a rare event, I accept that the apartment is particularly suitable to the caveators’ needs. On the other hand, the vendor not unreasonably considered that, in circumstances where there was no executed contract of sale in place, she was free to deal with the apartment as she chose, and she now has an exposure to claims by the new purchaser. However, she entered into the contract of sale with the knowledge that the caveators asserted that a concluded agreement had been reached with them, such that in entering into a contract of sale with the new purchaser, she assumed the risk of the caveators being able to make good their claim. On balance, had it been necessary to decide the question, I would have held that the balance of convenience favoured the caveators, given that the maintenance of the caveat would not preclude the vendor from bringing a claim for compensation against the caveators.
Other matters
In their statement of claim filed in the other proceeding the caveators have also sought relief based upon their estoppel claim. It was not contended by the caveators that the vendor’s application in this proceeding could be resisted by reason of the estoppel claim, properly so, given that this was not a ground of claim in the existing caveat, or the caveat as sought to be amended.
However, the estoppel claim is a claim which might, given the expectation said to have been engendered by the representations alleged to have been made by or on behalf of the vendor, give rise to injunctive relief, given that the primary remedy which would fulfil those expectations would be a transfer of the apartment to the vendors. Now is not the occasion for commenting upon the merits of any claim for injunctive relief on either an interim or final basis, save to say that the detriment said to have been suffered by the caveators seems somewhat scant. Further, any grant of interim interlocutory relief would ordinarily carry with it the requirement to give an undertaking as to damages, which, in the current circumstances, is not an illusory requirement.
Accordingly, while I will accede to the vendor’s application to remove the caveat, I will stay the orders for seven days to provide the caveators with an opportunity to bring an application for injunctive relief in the other proceeding, in the event they choose to do so.
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