Hearse v Staunton

[2010] NSWSC 954

CITATION:	HEARSE & ANOR v STAUNTON & ORS [2010] NSWSC 954
HEARING DATE(S):	Thursday 15 July 2010
JUDGMENT DATE :	1 September 2010
JURISDICTION:	Common Law
JUDGMENT OF:	Hall J at 1
DECISION:	In light of the conclusions expressed above, namely:- (1) that the defendant solicitors did not warrant or represent as alleged that they had the authority of Mrs Pallister to act for her as purchaser of the property; (2) that they did not warrant or represent that they had Mrs Pallister’s authority to make a binding contract on her behalf for the purpose of making her a co-purchaser of the property; (3) that the evidence does not establish that the parties had an intention to create contractual relations for the purchase of the property by Mrs Pallister, there should be judgment in favour of the third, fourth and fifth defendants and I so order.
CATCHWORDS:	CONTRACT – breach of warranty of authority – whether solicitor acting for the purchaser of a residential property represented or warranted that he had the authority to act for the purchaser’s wife in contracting on her behalf so as to make her a co-purchaser of the property - CONSTRUCTION OF DOCUMENTS – issues of construction of correspondence – request by letter to vendors’ solicitor to have the purchaser’s wife “added … as a joint purchaser pursuant to s.18(3) of the Duties Act 1997 …” – inconsistency in the letter – s.18(3) permitting exemption from duty when a “related person” is added to the transfer who is not a party to the contract – principles relevant to breach of authority – presumption that a solicitor does not have implied or ostensible authority to contract on behalf of a client in relation to a sale of land not rebutted – the solicitor did not make a representation or warranty as alleged – further no evidence of an intention to contract
LEGISLATION CITED:	Conveyancing Act 1919 Duties Act 1997 Instruments Act 1928 (Vic)
CASES CITED:	Abadeen Group Pty Limited & Anor v Bluestone Property Services Pty Limited & Ors [2009] NSWCA 386 Australian Broadcasting Corporation v XIVth Commonwealth Games Pty Limited (1988) 18 NSWLR 540 Baulkham Hills Private Hospital Pty Limited v GR Securities Pty Limited (1986) 40 NSWLR 631 Boulas v Angelopoulos (New South Wales Court of Appeal (Gleeson CJ, Kirby P and Samuels JA) BC9101486) Ciavarella v Polimeni [2008] NSWSC 238 Collen v Wright (1857) 8 El & Bl 647; 120 ER 241 Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95 Headon & Ors v Clancy (Supreme Court of New South Wales, Windeyer J, unreported 26 June 1997 at 5) Hearse & Anor v Pallister & Ors (Hall J, unreported 7 November 2007) Hearse & Anor v Pallister & Ors [2008] NSWSC 504 Hearse & Anor v Pallister & Ors [2009] NSWSC 406 Lee v Irons [1958] VR 436 Lee & Ors v Ross & Ors [2003] NSWSC 289 Leggo v Brown & Dureau Limited (1923) 32 CLR 95 Maffey v Hobart (1888) 14 VLR 888 Notter v Girault [2004] NSWSC 863 Peter Warren (Properties) Pty Limited & Ors v Jalvoran Pty Limited [2004] NSWSC 1149 Pianta v National Finance & Trustees Limited (1964) 180 CLR 146 South Australia v The Commonwealth (1962) 108 CLR 130
PARTIES:	Phillip Baden HEARSE & ANOR v STAUNTON & ORS
FILE NUMBER(S):	SC 2006/262913
COUNSEL:	P: R W Tregenza 3-5D: C Curtin
SOLICITORS:	P: Lander & Lander 3-5D: Henry Davis York

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HALL J

WEDNESDAY 1 SEPTEMBER 2010

No 2006/262913

PHILLIP BADEN HEARSE & ANOR v STAUNTON & ORS

JUDGMENT


HIS HONOUR

Introduction

1 These proceedings involve an action for damages by the plaintiffs who were the vendors of a property, 83 Cutler Road, Clontarf, in 2004. The third, fourth and fifth defendants were partners in the firm Staunton & Thompson, solicitors. That firm (in particular, Mr Staunton) acted on behalf of the purchaser of the property, Mr Mark James Pallister.

2 The plaintiffs initially commenced proceedings in the District Court by way of Statement of Liquidated Claim filed in the registry of that Court on 14 March 2005. In those proceedings, the plaintiffs claimed against Mr and Mrs Pallister, on the basis of an alleged breach of contract in failing to complete the purchase as required by a Notice to Complete dated 22 February 2005, namely, on or before 9 March 2005.

3 Those proceedings were subsequently continued in this Court by the Further Amended Statement of Claim filed on 6 July 2006. In due course, they were subsequently listed for hearing on 7 and 8 November 2007.

4 There was no appearance at the hearing of the proceedings on those dates by or on behalf of either Mr or Mrs Pallister. The circumstances concerning the events on that occasion were set out in a judgment I delivered on 7 November 2007 in Hearse & Anor v Pallister& Ors.

5 On 27 May 2008, judgment was given in favour of Mr and Mrs Pallister in the amount of $652,922.92 together with interest and costs (Hearse & Anor v Pallister & Ors [2008] NSWSC 504.

6 Judgment and orders were made on 2 July 2008 and entered on 3 July 2008.

Application by Mrs Pallister to set aside orders made against her

7 On 6 February 2009, Mrs Pallister made application to set aside the judgment and orders made against her.

8 In both her defence and first cross-claim she disputed that Staunton & Thompson had authority to act on her behalf as her solicitors and, in particular, disputed that they had any authority to contract on her behalf with the plaintiffs.

9 In the judgment on the application delivered on 20 May 2009, I held that Mrs Pallister had an arguable defence to the proceedings upon the basis that she was not a party to the contract for sale: Hearse & Anor v Pallister & Ors [2009] NSWSC 406. I determined that the circumstances concerning her failure to appear at the hearing had been adequately explained and that there had been an absence of personal fault by her in not appearing. The orders that had been made against her were, accordingly, set aside.

Evidence in the present proceedings

10 The these proceedings, the following affidavits were read in support of the plaintiff’s case:-

(1) Peter Jonathan Lander made 16 January 2007.

(2) Peter Jonathan Lander made 18 March 2010.

(3) Phillip Baden Hearse made 17 March 2010.

(4) Robyn Mignon Hayes Hearse made 23 January 2007.

(5) Vanessa Joan Pallister made 12 November 2008 paragraphs 1, 4, 7, 8, 9.

11 The following documents were tended on behalf of the plaintiff:-

(1) Exhibit A: Affidavit of Denis Michael Staunton sworn 26 November 2007, including paragraphs 1, 2, 3, 4, 5, 6, 8, 9, 10 (first and last sentences), 11 (first sentence), 13 (excluding second sentence), 15, 16 (excluding last sentence), 18, 19, 20, 21, 22 (from the beginning of the sentence up to the first comma), 23 (first two sentences), 25 (first sentence), and annexure D to that affidavit.

(2) Exhibit B: Contract for sale of land dated 16 December 2004 between plaintiffs and Mr and Mrs Pallister.

(3) Exhibit C: Report to creditors and further report to creditors.

12 The defendants relied upon the affidavit of Mr Staunton sworn 6 November 2007. Mr Staunton was cross-examined on his affidavit at the hearing on 15 July 2010.

13 On behalf of the Defendants, Exhibit 1 was tendered being Revenue Ruling Number DUT 10 of the Office of State Revenue New South Wales Treasury dated 9 March 1999.

The action for breach of warrant of authority

14 The plaintiffs’ action against the third, fourth and fifth defendants for breach of warrant of authority essentially relies upon communications made between Mr Staunton, acting on the instructions of Mr Pallister as purchaser, and Lander & Lander, solicitors, who acted on behalf of Mr and Mrs Pallister on the conveyance.

15 The contract for sale of the property was dated 16 December 2004. It and the counterpart contract were exchanged on 17 December 2004.

16 The contract for sale had originally been initially prepared showing Mrs Pallister as purchaser. Her name was subsequently deleted. The name “Mark James Pallister” was added in handwriting as the purchaser of the property. At the time of exchange, the position was, accordingly, that Mr Pallister was stated to be the sole purchaser of the property.

17 There are two pieces of correspondence that are central to the issues in the present proceedings. They consist of two letters written by Staunton & Thompson to Lander & Lander dated 16 December 2004 and 19 January 2005. The author of each of those letters was Mr Staunton.

18 I set out the terms of the letters.

(1) Letter dated 16 December 2004 :-

“…
We are ready to exchange subject to the following:
1. Additional Inclusions: Curtains, fixed floor coverings, insect screens, air conditioning
2. Special Condition 6: As previously discussed please add the following alterations and amendments:
a) On the fifth line delete ‘and stamp duty’;
b) Add a sentence at the end – ‘the Vendor may direct payment of the deposit only to the trust account of the stakeholder in that purchase contract which may be invested in accordance with Clause 3 hereof’.
3. Purchaser: Vanessa Joan Pallister will probably be added as a joint purchaser pursuant to Section 18(3) of the Duties Act prior to completion.
We await your advices.
…”

(2) Letter dated 19 January 2005 :-

“…
We enclose an unstamped Transfer for execution by the Vendors. Please return the Transfer to us for stamping purposes.
Please note that we have added Mrs Pallister as a joint purchaser pursuant to S.18(3) of the Duties Act, 1997. Please amend the counterpart Contract accordingly.
…”

19 It is to be noted at this stage that the affidavit of Mr Lander was to the effect that, he made handwritten notations on the letter of 16 December 2004 as follows:-

“Mr Staunton -
1. Insect screens & air conditioning included but there are no curtains or carpets
2.& 3. All agreed.”

20 Mr Lander said that he then faxed a copy of the letter of 16 December 2004 with the handwritten notations to Staunton & Thompson.

21 The plaintiffs allege that, by the letter of 19 January 2005, Staunton & Thompson represented that they had authority to contract on Mrs Pallister’s behalf by adding her to the contract as a co-purchaser of the property. On the basis that Staunton & Thompson did not in fact have any such authority from Mrs Pallister, they claim damages on the basis of alleged breach of warranty of authority. The claim against the third, fourth and fifth defendants is, accordingly, one for the damages that would have otherwise been recoverable from Mrs Pallister had such authority been granted to Mr Staunton.

22 The action for breach of warrant of authority, a well-established right of action, finds its classical exposition in Collen v Wright (1857) 8 El & Bl 647; 120 ER 241. In that case, Willes J said (at 657-658; 245):-

“I am of the opinion that a person, who induces another person to contract with him as the agent of a third party by an unqualified assertion of his being authorised to act as such an agent, is answerable to the person who so contracts for any damages which he may sustain by reason of the assertion being untrue … The obligation arising in such a case is well expressed by saying that a person, professing the contract as agent for another, impliedly, if not expressly, undertakes to or promises the person who enters into such a contract, upon the face of the professed agent being duly authorised, that the authority which he professes to have does in point of fact exist. The fact of entering into the transaction with the professed agent, as such, is good consideration for the promise …”

23 In Boulas v Angelopoulos (New South Wales Court of Appeal (Gleeson CJ, Kirby P and Samuels JA) BC9101486), Kirby P noted that there has been controversy as to whether the action is contractual, quasi-contractual or tortious in nature. It was also noted that it appeared that Willes J in Collen (supra) treated it as an action based on an implied contract, consideration for which is the entry into the transaction with the agent. Such an “implied contract” is enforceable, although it may not be evidenced in writing because it is collateral to any agreement for the sale of land.

24 In Bowstead and Reynolds on Agency, the cause of action of breach of warranty of authority is discussed in the following terms:-

“(1) Where a person, by words or conduct, represents that he a has actual authority to act on behalf of another, and a third party is induced by such a representation to act in a manner in which he would not have acted if that representation had not been made, the first-mentioned person is deemed to warrant that the representation is true, and is liable for any loss caused to such third party by a breach if that implied warranty, even if he acted in good faith, under a mistaken belief that he had such authority.
(2) Every person who purports to act as an agent is deemed by his conduct to represent that he is in fact duly authorised so to act, except where the purported agent expressly disclaims authority or where the nature and extent of his authority, or the material facts from which its nature and extent may be inferred, are fully known to the other contracting party.”

25 In Lee v Irons [1958] VR 436, the Supreme Court of Victoria (Pape J) set out the elements the plaintiff must establish in an action for breach of warranty of authority. His Honour stated (at 443):-

“… What then must the plaintiff establish in order to entitle him to relief against the defendant Berkley? I think he must establish five things: First, that the defendant Berkley did, in fact, sign a contract on behalf of, and which purported to be binding on, the defendant Irons. Second, that he either expressly or by implication warranted to the plaintiff that he was authorised by the defendant Irons to bind her by that contract. Third, that in entering into such contract, the plaintiff relied upon the warranty of authority so given. Fourth, that the defendant Berkley did have the authority so warranted. Fifth, that by reason of that lack of authority, the plaintiff sustained damages.”

Plaintiffs’ submissions

26 For the purpose of the submissions, it was accepted that the evidence established that Mrs Pallister did not request or authorise Staunton & Staunton to act so as to have her made a party to the contract for sale.

27 The letters of 16 December 2004 and 19 January 2005 from Staunton & Staunton to Mr Peter Lander, the notations made by Mr Lander on the letter of 16 December 2004 (which was faxed back to Mr Staunton) and entries made on the contract for sale of land by Mr Lander as requested in Mr Staunton’s letter of 19 January 2005 constituted the primary material to which the parties directed their submissions.

28 In his oral submissions, Mr Tregenza of counsel stated that the plaintiffs’ case, essentially, was that, by the letter dated 19 January 2005, Mr Staunton expressly or impliedly represented that he had Mrs Pallister’s authority on her behalf to purchase the property. In circumstances where an alleged agent (in this case said to have been Mr Staunton) does not have an authority, the party to whom the representation of authority was made may sue the person making it by reason of his/her lack of authority.

29 Reference was made in submissions to the fact, as has been noted above, that the contract for sale of the property had earlier carried the name of Mrs Pallister, but that her name had been crossed out and the name Mark James Pallister written in. That was the position at the time that it was delivered to Lander & Lander, solicitors. It was contended that with the (apparent) authority contained in the letter of 19 January 2005, Mr Lander wrote the word “stet” as well as “and” adjacent to the crossed out name of Mrs Pallister. It was said that this reflected an obvious intent of “re-introducing” Mrs Pallister as a party to the contract. In doing so, Mr Tregenza contended, Mr Lander accepted the request that had been made by Staunton & Staunton to do so.

30 The provisions of s.18(3) of the Duties Act 1997 referred to in the letters of 16 December 2004 and 19 January 2005, do not relate or refer to the subject of amending contracts. However, Mr Tregenza submitted that the intention in the letter of 19 January 2005, against the background of Mr Staunton’s letter of 16 December 2004, made it clear, on any objective test, that the request made in the letter was for Mrs Pallister to be added as a party to the contract and not merely for her to be added as a transferee on the transfer. In this respect, Mr Tregenza’s submission was (Plaintiffs’ Outline of Submissions, paragraph 7):-

“The implication from their letter is that they are holding themselves out as having been authorised by Mrs Pallister to make the request”

31 In his submissions, Mr Tregenza relied upon the following formulation of the relevant principles in Halsbury’s Laws of England, 5th ed, Volume 1, paragraph 160:-

“ (ii) Warranty of authority
160 Warranty implied
Where any person purports to do any act or make any contract as agent on behalf of a principal, he is deemed to warrant that he has, in fact, authority for such principal to do the act or make the contract in question. If, therefore, he has no such authority, he is liable to be sued for breach of warranty of authority by any third person who was induced by his conduct in purporting to act as agent to believe that he had authority to do the act or make the contract, and who, by acting upon such belief, has suffered loss in consequence of the absence of authority …”

32 Mr Tregenza proceeded to deal with two points of challenge to the plaintiffs’ cause of action raised by Mr G Curtin of counsel on behalf of the defendants. Firstly, that there was no warranty. Secondly, the matters required for a contract to have been made by Mrs Pallister, if the defendant did have authority, were not complied with. I will consider each point in turn.

The letter of 19 January 2005 – a representation of a warrant of authority?

33 Mr Tregenza acknowledged that the terms of the letter of 19 January 2005 were “internally inconsistent” (t.10), but submitted nonetheless that they were “unambiguous”.

34 The statement in the letter “… we have added Mrs Pallister as a joint purchaser …”, in effect, Mr Tregenza argued stands for what it said. Accordingly, it did not state or convey that she was to be merely to be added as a “joint transferee”. The statement was relied upon as constituting an implied representation by Mr Staunton that he had authority to contract on Mrs Pallister’s behalf in relation to the contract for sale.

35 In support of that contention, Mr Tregenza relied upon the fact that the insertion of the term “purchaser” was inconsistent with the terms of s.18(3) of the Duties Act and due weight had to be given to that term.

36 Additionally, the request in the letter “Please amend the counterpart contract accordingly” he argued made it “… utterly clear what is being communicated”. The request, Mr Tregenza submitted, was a specific one directed at adding “something” to the contract.

37 Mr Staunton, in the course of his evidence, was cross-examined by Mr Tregenza in relation to the letter of 19 January 2005 as follows (transcript 15 July 2010, p.8-9):-

“Q. You dictated, or at least typed or authorised to be sent, as a sentence in this letter ‘please amend the counterpart contract accordingly’, didn't you?
A. Yes.

Q. By that you anticipated if your request was agreed to that Mrs Pallister's name would be added to the contract, as a party?
A. No.

Q. What did you then mean by the words ‘please amend the counterpart contract accordingly’?
A. It was a misstatement.

Q. Was it a misunderstanding as to what you wished to happen?
A. No, the words say to amend the counterpart contract accordingly was a miss [sic] statement by me.

Q. For what?
A. To do that.

Q. Well, you included in that letter a copy of the transfer which you had prepared, I take it?
A. Yes.

Q. And it named as purchasers both Mr & Mrs Pallister. That is correct?
A. In the transfer?

Q. In the transfer?
A. Only as transferees.

Q. That is correct. But, if it had been your intention to have Mrs Pallister added as merely a joint transferee there is no necessity for any other document to be amended?
A. Correct.

Q. Or any document to be amended. Isn't that correct?
A. Yes.

Q. So your request in those circumstances ‘please amend the counterpart contract accordingly’ was completely superfluous, wasn't it?
A. Yes.

Q. So it wasn't a misstatement, was it?
A. In the sense it more appropriately should have been reworded.

Q. See, you intended at that time for Mrs Pallister to be added as a party to the contract?
A. No.

Q. And you considered the addition of her name to the contract by Mr Lander on your authority would have been sufficient to form a valid contract for the sale of land including her as purchaser?
A. No.”

38 In the submissions for the plaintiff, I was invited not to accept Mr Staunton’s evidence and to proceed on the basis that I look at what Mr Tregenza termed “the objective position”.

39 Mr Tregenza’s submission was (transcript, p.10):-

“Mr Staunton could not have meant amend the Transfer because he had already had Mrs Pallister’s name on it. He meant and communicated amend the contract and the reference to purchaser in the preceding sentence makes it quite clear what amendment he wishes. That is, that she is to be added as a purchaser.
In my submission, although internally inconsistent, the letter is unambiguous and does not stand, in my respectful submission, to an alternative interpretation.”

40 Mr Tregenza accepted in submissions that it was necessary to read the letter of 19 January 2005 as a whole. The first sentence made reference to the document enclosed with it (the transfer) in which Mr and Mrs Pallister were named as “transferees”. Mr Tregenza continued his submissions (transcript, p.11):-

“So the reference in the first sentence of the second paragraph may be taken just as an observation as to what they had done or here done in respect of the transfer and used the word ‘purchaser’ incorrectly. If it ended there it might have been a different matter, but it did not. There is an invitation to amend the contract.”

41 It was, accordingly, submitted that a proposed amendment to the contract particularly in circumstances where the word “purchaser” had been used in the previous sentence, was directed to adding Mrs Pallister as a purchaser to the contract. He contended that Mr Staunton could not possibly have been referring to any other document.

42 Mr Tregenza called in aid in the construction of the letter the background circumstances including, as earlier stated, the letter of 16 December 2004 and the evidence of Mr Lander as to the custom and practice of a solicitor when a request was made to add a related party to a contract for sale of land: Mr Lander’s affidavit sworn 18 March 2010.

43 In relation to that evidence, the following points were emphasised:-

(1) Since the commencement of the Duties Act , Mr Lander himself had received requests from solicitors acting for purchasers in conveyancing transactions for a person to be added as a transferee to conveyancing transactions: Mr Lander’s affidavit, paragraph 6.

(2) His experience before January 2005 was that when such a request was made to a solicitor for the vendor, the solicitor usually required the contract for sale of land to be varied so that the transferee would be added as an additional purchaser: Mr Lander’s affidavit, paragraph 8.

(3) In relation to a particular conveyance referred to by Mr Lander between vendors Claydon and purchaser Billingham in which he acted for the purchaser, a request by Mr Lander on behalf of his client to add his wife as a transferee met with a proposal for an agreement to vary the contract which was subsequently made.

(4) It was Mr Lander’s opinion that s.18(3) of the Duties Act did not give any right to add a transferee. Accordingly, an agreement by the vendor to a proposal to add a related party to the transfer may be refused or given on condition that the proposed additional transferee become a party to the contract.

44 On the question of whether Mr Lander’s evidence went so far as to establish a practice or a custom, Mr Tregenza conceded that the evidence did not establish that there was always or uniformly requests in such cases made for the contract for sale to be varied to add an additional transferee to the contract. He stated (transcript, p.13):-

“I am not submitting that this is a custom and practice such that it would be implied into a contract, however this is evidence from an experienced solicitor which is consistent with the ordinary practices of conveyancing such that the letter of Mr Staunton must be read in the light of that experience. That is the background matrix of circumstances to which your Honour can have regard.”

45 Mr Tregenza relied upon the terms of the letter of 16 December 2004 in which it was stated that Mrs Pallister “… will probably be added as a joint purchaser pursuant to S.18(3) of the Duties Act prior to completion”. The phrase “a joint purchaser”, is said to represent a statement conveying that Mrs Pallister would become a (joint) purchaser of the property.

46 The submission, accordingly, on behalf of the plaintiffs was that the letter of 19 January 2005 constituted a warranty containing within it a representation that Mr Staunton had authority from Mrs Pallister to contract on her behalf. The alleged representation was said to have been either actual or implied from the circumstances associated with the transaction. It was acknowledged, however, that there was no express statement such as “I now act for Mrs Pallister” or, “I have been instructed that …”. The submission was that Mr Staunton did not need to make such a statement, it being contended “That is implicit in the letter itself … and shows it is a warranty that he has that authority …”.

47 Mr Tregenza, accordingly, submitted that the statement inviting the amendment of the counterpart contract constituted an implicit representation that he had instructions from Mrs Pallister for her to be joined as a party to it. On that basis, it was contended that the first two limbs of, what was said to be, the test identified by Isaacs J in Leggo v Brown & Dureau Limited (1923) 32 CLR 95 at 106 were satisfied:-

“… The essentials are (1) assertion of authority; (2) inducement by asserting; (3) transaction which but for that assertion the other party would not have entered into. Where they co-exist, there is a warranty …”

48 In a response to a submission made in the written submissions for the defendants on the topic of whether there was a basis for concluding that the parties, through their solicitors, had the requisite intention to contract, Mr Tregenza submitted that the letter from Mr Staunton dated 16 December 2004 was significant. He argued that it could be considered to have been an offer to treat, anticipating the addition of Mrs Pallister as a joint purchaser. Reliance, in this respect, was placed upon the statement of Mr Lander in his affidavit to the effect that he wrote the notation (at the bottom of the letter) and faxed it back to Mr Staunton, “All agreed”. Accordingly, so the argument went, the letter of 16 December 2004 was an offer to treat and that Mr Lander’s notation, “All agreed” was essentially an offer by Mr and Mrs Hearse’s to accept Mrs Pallister as a party to the contract. This “offer”, it was argued, was later accepted by or on behalf of Mrs Pallister by the letter of 19 January 2005.

49 When Mr Staunton wrote back a month later and said “Please amend the counterpart contract accordingly”, it was argued that he was effectively accepting the “offer” said to have been made by Mr Lander’s handwritten notation.

50 On this basis, there was said to have been evidence of a clearly expressed intention to have concluded a contract with Mrs Pallister other than by way of a formal exchange of contracts. The addition of Mrs Pallister’s name as a purchaser on the counterpart contract, it was contended, in effect acted as an exchange. There were two counterpart contracts in identical terms. Accordingly, these circumstances were said to explain why a further formal exchange of contracts did not occur. I will return to consider this line of argument below.

51 Alternatively, it was put for the plaintiffs that, in regard to the statement in the letter of 19 January 2005 “please amend the contract accordingly”, this constituted a clear intention to have a contract, other than by way of a formal exchange of contracts and “… it can be well understood why you would not have a further formal exchange” (transcript, p.16).

52 Finally, it was submitted that the presumption, in the cases of the sale of land to the effect that a binding contract does not exist until there has been a formal exchange of contracts, did not apply on the facts of the present case. In any event it was argued, the presumption was displaced by the terms of the letter of 19 January 2005.

53 On the question of damages, Mr Tregenza submitted that damages arise in accordance with established principles, namely, that the plaintiffs were entitled to recover damages from the defendants for breach of warranty of authority for what they could have recovered from Mrs Pallister had there been a contract with her. Reliance was placed upon evidence which established that Mrs Pallister is “a woman of substance” (transcript, p.17) and would have been able to pay the damages. Mr Pallister, on the other hand, has been made bankrupt and the assets of his estate consist of proofs of alleged loans from companies being wound up.

54 Finally, in relation to the quantum of damages, reliance was placed upon the Schedule of Damages set out in my judgment of 27 May 2008.

Submissions for the defendants

55 In his written submissions dated 14 July 2010, Mr Curtin of counsel emphasised that the plaintiffs must establish both of the elements that formed the basis of the doctrine of breach of warranty of authority. The first is that there was a representation of authority to effect a particular purpose (that is, that a person has actual authority to act on behalf of another for a particular purpose). Second, that a third party is thereby induced to enter into a contract. He submitted in this latter respect the evidence did not prove that the necessary contractual intention had been established.

56 Accordingly, Mr Curtin submitted that, in the present case, neither of the essential elements of the cause of action had been satisfied.

(1) The representation

57 The submission for the defendants on the question of “representation” was that the letter of 16 January 2005 did not convey a statement to the effect that Mrs Pallister wished to become a party to the contract for sale, as distinct from a request that she be added as a transferee on the instrument of transfer.

58 Whilst it was acknowledged that the letter of 19 January 2005 invited the plaintiffs to amend the counterpart contract, the letter in terms referred to and enclosed a draft transfer containing Mrs Pallister’s name as a co-transferee. The fact that the enclosure sent with the letter and referred to in it was the transfer, not a fresh front page of the contract with Mrs Pallister’s name added, was an important one.

59 In addition, in determining the subject and intent of that letter, reliance was placed upon the third sentence of the letter which, whilst stating that Mrs Pallister had been added as a co-purchaser, this was said to have been done “pursuant to s.18(3) of the Duties Act 1997”.

60 Mr Curtin argued that this was of particular significance because the asserted right to have added Mrs Pallister as a transferee in terms of s.18(3) only operated if Mrs Pallister was not, in fact, a party to the contract but was added as transferee only.

61 Section 18(3), he emphasised, operated only where a transfer was not in conformity with a contract for sale. The classic example of this was where the purchaser under the agreement and the transferee under the transfer were “related” persons.

62 Accordingly, it was argued that, at its highest, the letter asserted two inconsistent matters, one, (addition as a transferee alone) which resulted in no additional duty (by reason of the terms of s.18(3)) and, one, (being the addition to the contract and transfer) which would result in further ad valorem duty and involve a superfluous reference to an irrelevant statutory provision, namely, s.18(3).

63 Given what was said to be the irreconcilable nature of those two matters, Mr Curtin contended that it could not be said that there was a clear unambiguous representation as to the authority of the defendants’ solicitors in relation to a clearly identified purpose.

64 Mr Curtin contended that the submissions for the plaintiffs on the construction that should be placed on the letter of 16 January 2005 was flawed in two aspects. The first was that the submissions depended upon taking particular statements in the letter in isolation from the letter as a whole. Secondly, the submissions did not take into account all the objective circumstances bearing upon the proper construction of the letter. Mr Curtin observed that the plaintiffs’ submissions correctly acknowledged that there was an inconsistency in the letter of 16 January 2005. An inconsistency of the kind in question, said to have been “ambiguous”, in this case was said to be of particular importance in determining the proper construction to be given to the letter.

65 An alternative submission relied upon by the defendant solicitors was that (assuming the first submission was rejected), any representation was not one to the effect that the defendants’ solicitors had the requisite authority to bind Mrs Pallister, but that they were merely authorised to negotiate a purchase to be completed by her signature. In this respect, reliance was placed upon the line of argument in Lee v Irons (supra) at 447.

66 In support of his first submission, Mr Curtin referred to a number of authorities including Ciavarella v Polimeni [2008] NSWSC 238 and Notter v Girault [2004] NSWSC 863 to the effect that solicitors do not have implied or ostensible authority to contract on behalf of clients in relation to the sale of land. In other words, solicitors do not have legal authority to bind their clients to such contracts.

67 Mr Curtin contended that it is reasonable to proceed upon the basis that the solicitors for the plaintiffs would have been well aware of the legal principle that solicitors do not have such implied or ostensible authority. Accordingly, a prudent solicitor acting for the vendors, being aware of such a principle, would also be aware that Mr Staunton could not bind Mrs Pallister unless he had his client’s express authority.

68 A further matter or circumstance said to be of importance is the fact that enclosed with the letter was the unstamped transfer. It was forwarded to the plaintiffs’ solicitors pursuant to clause 4.1 of the contract, which required the purchaser to serve a form of transfer at least 14 days before the completion date. The letter was specifically directed to the transfer itself.

69 The letter of 16 December 2004 was said to be another circumstance to be taken into account. The terms of it were not framed as to suggest that Mr Staunton believed that he was required to enter into negotiations with the vendors either directly or through their solicitors for the addition of Mrs Pallister as a further transferee. The letter simply advised the vendor’s solicitors of a probable intention to add Mrs Pallister to the contract prior to completion, the inference being that the decision to do so was simply a matter for proposed transferee to decide having regard to the exemption available under s.18(3). Subsequently, in the letter of 19 January 2005, it was stated, “We have added” Mrs Pallister to the contract. It was said that this was not the language of negotiation but was in the nature of advice that this was a matter the purchaser was entitled to require. It was said to have been entirely consistent with a decision by the purchaser to invoke the available exemption under s.18(3) of the Duties Act, a matter of no particular concern to the vendors.

70 The objective and reasonable purpose or reason for wishing to invoke s.18(3), it was submitted, was to avoid any further liability for ad valorem duty than the amount of $2 which was then payable in the event of a related person being added to the transfer as a transferee.

71 The fact that the letter referred to Mrs Pallister having been added to the transfer but that it did not refer to the counterpart of the contract (“please note that we have added Mrs Pallister …”) was said to underline the point that the reference to “joint purchaser” was clearly an inaccurate reference. Further, the ensuing reference to the fact that that had been done “pursuant to s.18(3) of the Duties Act …” reinforced the fact that what was intended to be conveyed by the letter was that Mrs Pallister had been added to the transfer as an additional transferee pursuant to and for the purpose of attracting the operation of that provision. That, it was emphasised, was a well-understood practice where a purchaser and a transferee are “related” persons.

72 Accordingly, when read in context, so the argument went, the reference to “joint purchaser” could only be taken as an intended reference to Mrs Pallister’s inclusion on the transfer as a joint transferee. The last sentence of the letter “please amend the counterpart contract accordingly” was said to be a “nonsense sentence”.

(2) The issue of intention to contract

73 I turn to Mr Curtain’s submissions that, if there was any representation in the letter of 19 January 2005, it was not one that the solicitors had authority to bind Vanessa Pallister but that they were merely authorised to negotiate a purchase to be completed in due course by her signature. As earlier indicated, in support of this contention, reliance was placed, by way of analogy, upon the decision of the Supreme Court of Victoria (Pape J) in Lee v Irons (supra). In order to deal with the submission, it is necessary that I here set out the particular facts and analysis in that case.

74 Lee v Irons (supra) involved an action by the plaintiff against the first defendant, Mrs Irons, for an order that she, as vendor, specifically perform a contract for the sale of a certain property to the plaintiff. The plaintiff, alternatively, sought, as against the other defendant, (the agent), damages for breach of warranty of authority. The first defendant alleged that the agent was not authorised by her to sell the property upon the terms of the contract in question and, in this respect, relied upon the provisions of s.128 and s.129 of the Instruments Act 1928 (Vic).

75 The question for decision in the case was whether the contract evidenced by a sale note had been proved as required by the statutory provisions. Section 128 of the Instruments Act substantially reproduced the provisions of s.4 of the Statute of Frauds and was a provision which was peculiar to Victoria. The effect of s.128 and s.129 read together was that no action could be brought to charge any person upon any contract or sale of land unless the agreement upon which the action was brought or some memorandum or note thereof was in writing and was signed by the party to be charged or some other person lawful authorised in writing signed by the party so charged.

76 The plaintiff’s specific performance action was based upon a written document which, in part, was a receipt of monies paid on account of the deposit. It also provided for the payment of the balance of the deposit at a specified time and the balance of the purchase money on a later date. The document was signed by the purchaser. It was also signed by the agent but not his principal, the defendant/vendor.

77 Pape J stated that the problem posed in the case was one of construction of the sale note and that, when the surrounding circumstances were examined, he was satisfied the document was not one whereby the defendant had entered into any contract with the plaintiff purporting to bind the defendant.

78 Pape J went on, assuming the contrary to his finding in that respect, to examine whether the agent did, in fact, sign a contract on behalf of Mrs Irons. The question was whether he either expressly or by implication warranted that he was authorised to bind her by the contract. Pape J stated:-

“… I think it is clear that he made no express warranty, and the question then is whether he impliedly so warranted. In my view, he cannot be held to have impliedly warranted that he had such written authority.”

79 In relation to the question of a warranty by the agent in that case, Pape J added (at 447):-

“The only matter that is relied upon in this case as giving rise to the implication that the agent warranted that he had a written authority is the fact that he signed the sale note. By signing the sale note, if he warrants anything, he either warrants that he had authority from the vendor to make a sale to be completed by the vendor’s signature, or that he had the vendor’s written authority to bind her. For the reasons given, I think that the agent here made no warranty at all, but if he did, I am of opinion that the only warranty which ought to be implied is a warranty that the agent was authorised to make a sale to be completed by the vendor’s signature. The implication of a term depends upon the presumed common intention of both parties to the contract …”

80 Accordingly, it was found that the agent had not represented to the plaintiff that he had the written authority that was required by s.129 of the Instruments Act to sign the contract. (In New South Wales there is no similar requirement for a written authority in respect of an agreement for sale of land. A solicitor, however, is required to have express authority.)

81 As earlier indicated, Mr Curtin relied, by way of analogy upon the decision with Lee v Irons (supra). He argued that, in the present case, the issue as to whether Mr Staunton warranted that he had an express authority to bind Mrs Pallister was much the same, insofar as it raised a question as to whether Mrs Pallister was able to rely upon the Statute of Frauds equivalent otherwise available to her by virtue of the provisions of s.54A and s.23C of the Conveyancing Act 1919.

82 The submissions for the defendants raised the issue as to whether (even assuming there was a “representation”) an otherwise enforceable contract between the plaintiffs and Mrs Pallister could have existed (Defendants’ Written Submissions, paragraph 17). This, it was emphasised, was an issue of particular importance because the plaintiffs had no cause of action against the defendants’ solicitors unless an enforceable contract otherwise arose.

83 In the course of his reasons (with whom Gleeson CJ and Samuels JA generally agreed), Kirby P stated:-

“If the primary contract alleged would, in any event, have been unenforceable, then there is no loss to the plaintiff. He would not be entitled to damages. See Pow v Davies (1861) 1 B & S 220; 121 ER 697; Warr v Jones (1876) 24 WR 695 …”

84 In developing the submission, reference was made to two lines of authority. The first was concerned with the approach to be taken in the search for an intention to create contractual relations in a particular case. Such a search requires an assessment of the state of affairs between the parties based upon the objective circumstances that may properly be taken into account in deciding whether there existed the necessary contractual intention (which include what was conveyed or said and what was done): Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95 per Gaudron, McHugh, Hayne and Callinan JJ at [25].

85 The reference to authority in relation to this submission included the judgments of the Court of Appeal in Abadeen Group Pty Limited & Anor v Bluestone Property Services Pty Limited & Ors [2009] NSWCA 386 at [110]-[117] and Australian Broadcasting Corporation v XIVth Commonwealth Games Pty Limited (1988) 18 NSWLR 540 per Gleeson CJ at 549A and 549E.

86 The second line of cases were those that established the importance of an exchange of contracts for the sale of land and whether there was an intention to contract in the absence of an exchange of counterpart contracts. Relevant authorities included Baulkham Hills Private Hospital Pty Limited v GR Securities Pty Limited (1986) 40 NSWLR 631 per McHugh J at 634C to F; Headon & Ors v Clancy (Supreme Court of New South Wales, Windeyer J, unreported 26 June 1997 at 5); Lee & Ors v Ross & Ors [2003] NSWSC 289 (Palmer J at [40]-[41]) and Peter Warren (Properties) Pty Limited & Ors v Jalvoran Pty Limited [2004] NSWSC 1149 (White J at [25]-[31]).

87 In the present case, the defendants, in particular, relied on the fact that there was no exchange of counterpart contracts with Mrs Pallister’s name having been added as a co-purchaser. The contention, in this respect, was that it could not have been the intention of the parties to have entered into a binding contract on Mrs Pallister’s behalf in circumstances where no exchange of counterpart contracts occurred.

88 In support of this contention, the defendants relied upon the fact that conveyancing practice in New South Wales is such that it is presumed that there is no binding contract without an exchange of written contracts. A court will not lightly attribute an intention to the parties to forego the protection afforded by an exchange of contracts.

89 Accordingly, it was argued that, in circumstances in which the presumption applies in conjunction with the relevant objective circumstances, there could not be said to have come into existence a binding and enforceable agreement between the plaintiffs as vendors and Mrs Pallister.

90 In accordance with authority, there was no intention to contract and no cause of action for breach of warranty of authority could lie. In this respect, reference was made to the judgment of the Court of Appeal in Boulas (supra). I will briefly summarise the facts in that case.

91 The appellant had been the highest bidder at an auction for the sale of land. The land was knocked down to him. He believed that he had thereby secured an enforceable contract with the vendor of the land. However, the land was knocked down for a price less than the reserve price which the vendor had reserved and believed was in force. The auctioneer had knocked it down in the mistaken belief that the vendor had agreed to withdraw his reserve price. The first issue was whether an enforceable contract had been secured in circumstances by the appellant under the law of auctions. The second issue, in the event that there was no enforceable contract, was whether the appellant could recover damages against the auctioneer who conducted the auction in a claim for damages for breach of warranty of authority. At first instance, both claims were reflected.

92 I have earlier set out the observations of Kirby P to the effect that the absence of an enforceable primary contract would mean that a plaintiff, in an action for breach of warranty of authority by an agent, would be unable to prove loss and, accordingly, no entitlement to damages. On the facts in Boulas (supra), Kirby P observed at 33:-

“It was, no doubt, with the difficulty of proving actual loss in mind, that the appellant argue that the auctioneer had warranted that there would be a contract with the highest bidder or that he had authority to sign the contract. I cannot accept these submissions. The relevant cause of action is based on the implied promise that the agent had authority to enter the relevant transaction, not that the transaction will be enforceable. Nor do I see anything in the evidence to suggest that either Mr Kelly (the auctioneer) or the estate agency warranted that they would sign the contract.”

93 It was submitted for the defendants that the presumption had not been rebutted in this case. Accordingly, the contention was that, even if the defendants had had the requisite authority to contract, no binding contract between the plaintiffs and Mrs Pallister came into existence.

94 In reply, Mr Tregenza contended that the letter of 19 January 2005 was itself a statement to the contrary of the presumption, that is to say, was evidence that a formal exchange of contracts was not required. He argued that the “representation” by Mr Staunton that Mrs Pallister was to be added as a co-purchaser and to amend the contract accordingly, carried the inference that he would amend his counterpart contract and that would then operate as the sole contract. Mr Tregenza also submitted that the letter of 19 January 2005 was sufficient to satisfy the requirements of s.54A of the Conveyancing Act when read with the contract.

Consideration

95 As the above summation of the competing submissions indicates, the first issue for determination in the proceedings is whether Mr Staunton, by his letter of 19 January 2005, expressly or impliedly, warranted that he had authority to contract on behalf of Mrs Pallister. That issue, in turn, raises two questions. Firstly, what is the proper construction of the various statements contained in the letter, having regard, in particular, to inconsistent statements within it? Secondly, in light of the answer to that question, did it, in fact, contain a representation that Mr Staunton had Mrs Pallister’s authority to enter into a binding contract on her behalf?

96 It is clear from the authorities in relation to an action for breach of warranty of authority that the plaintiffs have the onus of establishing that Mr Staunton made a representation of the kind described by Willes J in Collen (supra), namely, “an unqualified assertion of his being authorised to act as the agent” of Mrs Pallister for the purpose of making her a party to the contract for sale.

(1) Construction of the letter of 19 January 2005

97 The letter of 19 January 2005 was written in brief terms. In construing its terms, I have regard to the following:-

(1) Mr Staunton’s letter of 16 December 2004 was, in a sense, a precursor to the letter of 19 January 2005 in that it raised or addressed the same subject matter. They are sufficiently linked to make the former a relevant circumstance to be taken into account on the construction of the later letter.

(2) The letter of 16 December 2004 was written before exchange of contracts had taken place. It did not propose or suggest that before any contract was made that Mrs Pallister was or should or may be made a party (a co-purchaser) to the contract. Paragraph 3 of the letter, though using the terms “purchaser” and “joint purchaser” , foreshadowed probable action at a later time for the specific purpose of invoking the provisions of s.18(3) of the Duties Act , prior to completion of the contract.

(3) The letter of 19 January 2005, as earlier noted, stated that enclosed with it was an unstamped transfer for execution by the vendors with a request for it to be returned for stamping purposes. The third sentence of the letter commencing “Please note that we have added …” is clearly a further reference to the transfer document itself. That sentence, as with the letter of 16 December 2004, referred to the action of adding Mrs Pallister’s name to the transfer on a particular basis, namely, pursuant to s.18(3) of the Duties Act . An inconsistency or ambiguity arises by reason of the phrase “as a joint purchaser” in that sentence.

(4) The transfer identified the “Transferee” as “Mark James Pallister and Vanessa Joan Pallister” . Against the entry “tenancy” , the phrase appears “Joint Tenants” . Whilst it is possible that Mr Staunton may have intended in his abovementioned letters to refer to the phrase “joint tenant” instead of “joint purchaser” , I do not believe that that conclusion is one open to be drawn by me in circumstances in which Mr Staunton did not, in his affidavit sworn 6 November 2007 or in his evidence on 15 July 2010, suggest that he had made a specific error of that kind.

(5) The statement to the effect that Mrs Pallister had been “added to the Transfer as a joint purchaser pursuant to s.18(3) of the Duties Act …” is an inconsistent, if not, confused one, given that a transfer instrument, of course, records the name of the transferor(s) and the transferee(s). It does not employ the terms “vendor(s)” or “purchaser(s)” , it always being possible, of course, that a transfer of title in a particular case may include a transfer to a non-purchaser (namely, to a “related person” ).

(6) The relevant provisions of s.18(3) of the Duties Act employed the phrases “the purchaser under the agreement” and “the transferee under the Transfer” where they are “related persons” . The statement in the second paragraph of Mr Staunton’s letter of 19 January 2005 was expressed in terms that were consistent with an intention to add Mrs Pallister’s name to the transfer (which was done) with the intent and for the purpose of attracting or invoking the exemption available under the provisions of s.18(3), on the basis that she was not a co-purchaser.

(7) The suggested construction of the letter contended for on behalf of the plaintiffs relies heavily upon the phrase “joint purchasers” and “Please amend the counterpart contract accordingly” appearing in the letter. Those expressions, of course, favour that construction. However, they must, in accordance with accepted principles of construction of documents, not be taken in isolation from the context in which they appear. The letter must be read as a whole.

(8) The approach to construction referred to in the preceding paragraph, indicates that the principal subject matter of the letter of 19 January 2005 was the transfer instrument which, as earlier stated, was enclosed with the letter. There are three references to it in the letter including the request for it to be returned for stamping purposes. The second sentence, in effect, drew attention to the transfer ( “Please note that we have added …” ) consistent with the fact that Mrs Pallister’s name had been added to the transfer “pursuant to s.18(3) of the Duties Act …” for the purpose of obtaining the permitted statutory exemption in the case of a transfer to a “related person” . The phrase appearing in that sentence “as a joint purchaser” is to be considered and understood in that context.

(9) Similarly, the last sentence of the letter of 19 January 2005, “Please amend the counterpart contract accordingly” is, of course, also consistent with the proposition contended for by the plaintiffs. However, it is necessary to consider whether, as a final statement in the letter, it alters the overall construction of the letter.

(2) Revenue Ruling on liability for ad valorem duty

98 The parties’ submissions addressed the question as to whether, in the event that Mrs Pallister was made a party to the contract for sale of the property she would thereby be liable to ad valorem duty. As I understood Mr Curtin’s argument, he contended that Mrs Pallister would have been subject to additional duty in the event that she became a co-purchaser under the contract. This, he argued, was an objective circumstance to be considered in determining the construction of the letter of 16 January 2005. That letter, he argued, clearly demonstrated that it was only ever intended that Mrs Pallister be added as a transferee as a “related party” so as to obtain an exemption from duty pursuant to the provisions of s.18(3) of the Duties Act.

99 Mr Curtin tendered a Revenue Ruling No DUT 10 of the Office of State Revenue, New South Wales Treasury, dated 9 March 1999. The document was conditionally marked as an exhibit, Exhibit 1 in the proceedings (transcript, p.6).

100 Mr Tregenza argued that including Mrs Pallister as a co-purchaser would not constitute what he described as a “on-sale by Mr Pallister to Mrs Pallister” (transcript, p.20). Mr Tregenza elaborated (at p.20):-

“Now, if she comes in as a purchaser for a half interest in this land, then Mr Pallister is then only purchasing a half interest in this land. So they both incur one half each of the duty, which is the total duty that Mr Pallister would have incurred anyway. My submission is that the addition of Mrs Pallister to a contract would have been duty neutral. It would not have increased it. It would not have reduced it. There may have been other procedures. One way that it could be affected was that the contract with Mr Pallister could have been formally rescinded and duty paid, apply to be refunded and then the duty paid again on the sale of Mr and Mrs Pallister. Again, revenue neutral.”

101 Mr Tregenza also contended:-

“… The question of duty is an utter red herring again, in that the same amount of duty is going to be paid on this transaction, no matter how it is structured. There is no on-sale. It is simply an addition of Mrs Pallister as a party to the contract.”

102 Mr Curtin took issue with these submissions, contending that if they were correct, then the provisions of s.18(3) would be “superfluous”.

103 Following the hearing, Mr Curtin forwarded his Supplementary Submissions dated 28 July 2010 to which was attached a copy of a Revenue Ruling No DUT 11, entitled Agreement for the Sale or Transfer of Dutiable Property – Cancelled Agreements.

104 Those documents were forwarded by him upon the basis of arrangements worked out between counsel whereby Mr Tregenza was permitted to rely upon further written submissions.

105 Mr Tregenza relied upon his Further Supplementary Submissions dated 16 August 2010.

106 In relation to questions raised or arising out of the reference in the letter of 19 January 2005 to s.18(3) of the Duties Act, I note two matters raised by Mr Tregenza in his last-mentioned submissions. The first is the well-accepted principle that the objective determination of the intention of the parties from a series of communications exchanged by them over a period of time is one that permits, indeed requires that regard be given to particular circumstances surrounding the exchange of communications. Reference was made in this respect to the observations of Gleeson CJ in ABC v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 549. Secondly, the relevant circumstances must be capable of throwing light on the meaning of documents which the Court is required to consider. In this case, Revenue Ruling DUT 11 was said to be incapable of throwing any light on the matter where the Ruling was not in fact in the contemplation of the parties. It therefore does not form part of the circumstances in which the contract was entered.

107 I consider that there is considerable force in Mr Tregenza’s submissions on this aspect. The question is, of course, the proper construction of the terms of the letter of 19 January 2005 having regard to relevant objective surrounding circumstances. As Mr Tregenza submitted, there is no evidence from either Mr Staunton or Mr Lander that they were aware of or had in mind Revenue Ruling DUT 11 or its terms, and on that basis I accept that it cannot be said to be relevant to the issue of the intention of Mr Staunton in writing the letter.

(3) Conclusions on the issue of representation or warranty

108 The terms of the letter of 19 January 2005 did not contain any express representation or warranty by Mr Staunton that he had Mrs Pallister’s authority to contract on her behalf.

109 In those circumstances, the question is whether Mr Staunton impliedly so warranted. In my opinion, the answer to that question is that he did not impliedly warranted that he had Mrs Pallister’s authority to contract on her behalf in relation to the sale of the Clontarf property. In relation to that conclusion, the following matters are noted:-

(1) It is, of course, for the plaintiffs to establish on the probabilities that the implication relied upon ought to be drawn.

(2) The terms of the letter of 19 January 2005 are not, in themselves, capable of supporting the implication of an unqualified assertion or warranty that Mr Staunton had Mrs Pallister’s authority to act as her agent in making her a party to the contract. The letter does not convey either that Mr Staunton was acting for Mrs Pallister nor indicate that he had received her instructions in relation to any aspect of the contract. The letter was entirely consistent with the fact that he continued to act only on Mr Pallister’s instructions.

(3) In the circumstances of the present case, where the alleged agent is a solicitor and the subject matter of the relevant transaction is the sale of land, as a matter of principle, the solicitor does not have implied or ostensible authority from his or her client to amend or make a contract on behalf of the client in relation to a contract for the sale of land: Pianta v National Finance & Trustees Limited (1964) 180 CLR 146 per Barwick CJ at 151; Ciavarella (supra) at [104] to [106], per Young CJ in Eq (as his Honour then was); Notter (supra) at [50] per White J. The solicitor for the plaintiffs, being experienced in conveyancing matters, may be taken as being aware of that long-established principle.

(4) In circumstances in which there was no express warranty or representation, and where the principle in (3) applies, I consider that the dicta of Higginbotham CJ in Maffey v Hobart (1888) 14 VLR 888 at 886 is apposite, wherein it was stated:-

“Where a person deals with another who is an agent of the apparent contracting party, the obligation generally rests upon him to ascertain the authority of a person with whom he deals.”
In the present case, as noted above, there was neither a representation that Mr Staunton acted for Mrs Pallister nor was any clarification sought or inquiry made on behalf of the plaintiffs of Mr Staunton as to his authority to act for Mrs Pallister. Nor did Mr Staunton’s correspondence or communications suggest that he had any particular or general authority from Mrs Pallister to obtain a variation of the existing contract for sale so as to make her a co-purchaser.

110 I am of the opinion that, taking the letter of 16 January 2005 as a whole, and in context, including in particular, the letter of 16 December 2004, the letter of 19 January 2005 was neither an express or implied unqualified assertion by Mr Staunton that he was authorised by Mrs Pallister to act as her agent for the purposes of making her a party to the contract for sale. I consider the proper construction of the letter is that Mr Staunton was saying in it that Mrs Pallister was to be added to the transfer as a transferee on a specified basis, as had been foreshadowed was likely in the letter of 16 December 2004. The evident, indeed, express purpose was a desire to gain the permitted exemption under s.18(3) available for a related person transferee but who is not a party to the contract.

111 Accordingly on its proper construction, I do not consider that the letter written by Mr Staunton on 19 January 2005 constituted or contained either an express or implied representation that he had authority from Mrs Pallister to act on her behalf so as to bind her as a party to the contract for the sale of the Clontarf property.

(4) Conclusion on the issue of intention to contract

112 On what I have concluded is the proper construction of the letter of 19 January 2005, it follows that the plaintiffs must fail in their action for breach of warranty of authority. However, it is appropriate to also express my conclusion upon the further issue relied upon by the defendants, namely, that the plaintiffs did not (apart from the question of Mr Staunton’s authority) establish that an enforceable contract otherwise arose. That is a matter which has required a consideration as to whether the parties by their words and actions intended to create contractual relations.

113 Circumstances may show that parties to communications did not intend, or cannot be regarded as having intended, to give rise to legally enforceable obligations that are capable of adjudication by the Courts: South Australia v The Commonwealth (1962) 108 CLR 130 at 154 per Windeyer J; Ermogenous v Greek Orthodox Community (supra) at 105 per Gaudron, McHugh, Hayne and Callinan JJ. In this context it has also been observed that the question in a case such as the present, namely, whether there was an intention in the parties to make a concluded bargain, is not the same as, although in a given case it may be closely related to, the further question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contact: ABC v XIVth Commonwealth Games Limited (supra) per Gleeson CJ at 548.

114 The general principle in accordance with the authorities referred to earlier is that in New South Wales, ordinary conveyancing practice has become so entrenched that it is presumed that there is no binding contract without an exchange of written contracts. The presumption, of course, may be rebutted, by proof of circumstances that are contrary to and capable of displacing the presumption.

115 I have earlier outlined, as to how, according to Mr Tregenza’s argument, the correspondence should be construed in terms of “offer” and “acceptance”. I will deal with the argument as a discrete issue.

116 That argument (that an agreement was made) asserted that the letter of 19 January 2005 is to be seen in the context of earlier communications. Mr Tregenza argued that it may be taken as an acceptance of an offer by Mr and Mrs Hearse, through Mr Lander. As earlier noted, in explaining this proposition, he relied upon the letter written by Mr Staunton on 16 December 2004 to Lander & Lander and Mr Lander’s notations on it. These included, in relation to point three of the letter (which noted that Mrs Pallister would probably be added as a joint purchaser pursuant to s.18(3) of the Duties Act), Mr Lander’s note, “All agreed”. A copy of the letter with the notations was faxed back to Staunton & Thompson.

117 As also recorded above, but repeated here for convenience, Mr Tregenza’s contention was that the letter of 16 December 2004 was, effectively, an offer to treat and that, Mr Lander writing back saying “All agreed”, was essentially saying that Mr and Mrs Hearse, as vendors of the property, offered to have Mrs Pallister as a party to the contract for sale. When Mr Staunton wrote back on 16 January 2005 requesting Mr Lander “to amend the contract accordingly”, this was effectively an acceptance of the offer that Mr Lander had made by his handwritten notation.

118 I do not, with respect, consider that this analysis, relying as it does upon the letter of 16 December 2004 (with the handwritten notations) and the letter of 19 January 2005, is valid. Point 3 of the letter of 16 December 2004 suffered from the same element of inconsistency or ambiguity that later emerged again in the letter of 19 January 2005. The statements in the letter of 19 January 2005 to which I have earlier referred, were, at the very least, ambiguous, if not confusing and could not therefore be taken as an unequivocal statement of acceptance of any asserted “offer” said to have been made by Mr Lander. For that reason, I do not consider that Mr Lander’s expression of agreement could be taken as an “offer” to accept the addition of Mrs Pallister as a joint purchaser as distinct from him intending that she would be accepted as a joint transferee for the purposes of s.18(3). Mr Lander did not, in his affidavit, suggest, in terms, that he proceeded upon the former basis.

119 I do not, in any event, as earlier indicated, regard the letter of 19 January 2005 and/or the surrounding circumstances, as being sufficient to displace the presumption that applies, based on conveyancing practice, that parties to a sale of land transaction do not intend to be bound until a formal exchange of contracts occurs. In reaching this conclusion I have had regard to the principles and propositions stated in the authorities to which I have earlier referred. In particular, as observed by White J in Jalvoran (supra), a court will not lightly attribute to knowledgeable parties an intention to forego the protection afforded by an exchange of formal contracts.

120 Additionally, given in particular that the contract for sale in this case related to a very valuable residential property, it is, in my opinion, appropriate to conclude that, if, contrary to my findings and conclusions, it had been established that it was the intention of the parties to make Mrs Pallister a party to the contract, that intention would and could have readily been effected by means of either a fresh exchange of contracts or by a formal agreement to vary the existing contract. Neither course of action was adopted in this case.

121 Accordingly, I have concluded that, even if it could be said that the defendants’ solicitors had represented that they held the relevant authority to contract for Mrs Pallister (which they did not have), the objective circumstances do not establish either an intention in the parties to enter into a binding contract between the plaintiffs and Mrs Pallister or action undertaken as necessary to have done so.

122 In light of the conclusions expressed above, namely:-

(1) that the defendant solicitors did not warrant or represent as alleged that they had the authority of Mrs Pallister to act for her as purchaser of the property;

(2) that they did not warrant or represent that they had Mrs Pallister’s authority to make a binding contract on her behalf for the purpose of making her a co-purchaser of the property;

(3) that the evidence does not establish that the parties had an intention to create contractual relations for the purchase of the property by Mrs Pallister,

there should be judgment in favour of the third, fourth and fifth defendants and I so order.

123 In relation to the question of costs, I grant leave for the proceedings to be re-listed for the purpose of hearing any submissions on that question.

**********