Iannello v Sharpe

Case [2007] NSWCA 61
Reported Decision: 69 NSWLR 452(2007) NSW ConvR 56-179

New South Wales


Court of Appeal


CITATION: Iannello & Anor. v. Sharpe [2007] NSWCA 61
HEARING DATE(S): 13 March 2007
 
JUDGMENT DATE: 
23 March 2007
JUDGMENT OF: Hodgson JA at 1; Santow JA at 40; Basten JA at 41
DECISION: 1. Appeal allowed. 2. Orders of the primary judge set aside, and in lieu thereof: (a) judgment for the purchaser on the vendors’ claim. (b) judgment for the vendors on the purchaser’s cross-claim. (c) subject to any previous orders, vendors to pay one-half the purchaser’s costs of the proceedings below. 3. Purchaser to pay the vendors’ costs of the appeal, and to have a certificate under the Suitors’ Fund Act if otherwise eligible.
CATCHWORDS: CONVEYANCING - Relationship between vendor and purchaser - Creation of contract by exchange of counterparts - Counterpart signed by purchaser altered by purchaser's solicitor without authority - Whether alterations material - Provision as to payment of part of deposit in the event of default - Whether a penalty.
CASES CITED: Ashdown v. Kirk [1999] 2 Qd.R. 1
Luu v. Sovereign Developments Pty. Limited [2006] NSWCA 40
Romanos v. Pentagold Investments Pty. Limited (2003) 217 CLR 367
PARTIES: Michael Iannello and Anna Iannello - appellants
Malcolm Sharpe - respondent
FILE NUMBER(S): CA 40480/06
COUNSEL: Mr. M. Orlov for the appellants
Mr. G. Inatey SC with Mr. E.A. Hyde for respondent
SOLICITORS: Verekers Lawyers, Sydney for appellants
Malcolm Johns & Co., Sydney for respondent
LOWER COURT JURISDICTION: Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S): SC2896/05
LOWER COURT JUDICIAL OFFICER: Windeyer J
LOWER COURT DATE OF DECISION: 13 July 2006
LOWER COURT MEDIUM NEUTRAL CITATION: [2006] NSWSC 713




                          CA 40480/06
                          SC 2896/05

                          HODGSON JA
                          SANTOW JA
                          BASTEN JA

                          Friday 23 March 2007
IANNELLO & ANOR. V. SHARPE
Judgment

1 HODGSON JA: On 13 July 2006, Windeyer J gave his decision in proceedings in which the appellants (the vendors) had sued the respondent (the purchaser) claiming among other things what was described as the balance of the 10% deposit under a contract of sale between the vendors and the purchasers; and in which the purchaser had cross-claimed for $225,000.00 which he had paid in connection with a purported contract of sale. The primary judge gave judgment for the purchaser on the vendors’ claim, and gave judgment for the purchaser on the cross-claim against the vendors for $225,000.00, and subject to any existing orders, ordered the vendors the pay the purchaser’s costs of the proceedings.

2 The vendors have appealed from those orders.


      CIRCUMSTANCES

3 The case arises out of the purported entry into a contract for the sale by the vendors to the purchaser of a house at Hunters Hill for a price of $4.5 million, by exchange of counterpart contract documents on 4 April 2003 at the office of the vendors’ solicitors. At the time of this exchange, $225,000.00 was paid as a deposit.

4 The documents as exchanged were in the same terms, but the evidence established…

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AGLC
Iannello and Anor. v Sharpe [2007] NSWCA 61
Case
[2007] NSWCA 61
Decision Date

CaseChat Overview and Summary

The dispute in *Iannello v Sharpe* concerned the validity of a contract for the sale of land, arising between the vendors, Iannello, and the purchaser, Sharpe. The primary judge had found in favour of the vendors. The appeal was heard in the Court of Appeal of New South Wales.

The Court of Appeal was required to determine two principal legal issues. First, whether alterations made by the purchaser's solicitor to a counterpart of the contract, without the purchaser's express authority, rendered the contract void. Second, whether a provision stipulating that part of the deposit would be forfeited in the event of default constituted an unenforceable penalty.

The Court of Appeal held that the alterations made by the purchaser's solicitor were not material and did not vitiate the contract. The court reasoned that the solicitor had implied authority to make such minor amendments as were usual in conveyancing practice. Regarding the deposit provision, the court found that it was not a penalty, as it represented a genuine pre-estimate of loss. Consequently, the appeal was allowed, the primary judge's orders were set aside, and judgment was entered for the purchaser on the vendors' claim and for the vendors on the purchaser's cross-claim. The orders concerning costs were also varied.

Orders

Orders of the court

1. Appeal allowed. 2. Orders of the primary judge set aside, and in lieu thereof: (a) judgment for the purchaser on the vendors' claim. (b) judgment for the vendors on the purchaser's cross-claim. (c) subject to any previous orders, vendors to pay one-half the purchaser's costs of the proceedings below. 3. Purchaser to pay the vendors' costs of the appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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