Iannello v Sharpe - [2006] NSWSC 713

Reported Decision:
(2006) NSW ConvR 56-162

New South Wales

Supreme Court

CITATION: Iannello v Sharpe [2006] NSWSC 713

HEARING DATE(S): 12 and 13 July 2006

JUDGMENT DATE :
13 July 2006

JURISDICTION: Equity Division

JUDGMENT OF: Windeyer J at 1

DECISION: Judgment for the defendant on the plaintiffs' claim and for the cross-claimant on the cross claim

CATCHWORDS: VENDOR AND PURCHASER - contract for sale of land - amended by solicitor prior to exchange - no evidence of amendment being authorised by purchaser - contract did not come into existence - purchaser entitled to return of deposit

PARTIES: Michael Iannello and Anna Iannello (Plaintiffs/Cross-defendants)
Malcolm Sharpe (Defendant/Cross-claimant)

FILE NUMBER(S): SC 2896 of 2005

COUNSEL: Mr A M Gruzman (Plaintiffs/Cross-defendants)
Mr E Hyde (Defendant/Cross-claimant)

SOLICITORS: McBride Harle & Martin (Plaintiffs/Cross-defendants)
Malcolm Johns & Company (Defendant/Cross-claimant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Windeyer J

Thursday 13 July 2006

2896/05 Michael Iannello & ORS v Malcolm Sharpe

Judgment

1 HIS HONOUR: The plaintiffs are the vendors to the purchaser, or at least that is the basis upon which they put their claim, under a contract for sale dated 4 April 2003 of a property 6 Crescent Street, Hunters Hill, the purchase price being $4,500,000. A deposit of the amount of five per cent, namely, $225,000, was paid on exchange.

2 The contract was ultimately terminated by the vendors. It is clear that it was terminated because the purchaser was unable to find the money to complete it. The deposit which was paid on exchange was accounted for by payment to the vendors in accordance with the contract. They claim to forfeit that amount and claim the balance of the deposit, namely $225,000, and in addition they claim damages.

3 The only issue which arises on the pleadings is whether or not a contract came into existence. If it did then it is in my view clear that there would be no defence to the claim of the plaintiff. If it did not, that is of course an end to the matter. The plaintiff would not be entitled to forfeit of the deposit or to obtain payment of that amount of the deposit not paid and the purchaser defendant would be entitled to judgment on his cross-claim, which in essence is a claim for refund of the amount which was paid on exchange.

4 So that there is no undue suspense, I will say that I have come to the conclusion that the plaintiffs' claim fails. That is a conclusion which I must say I very much regret having to come to. All merit is on the side of the plaintiff. There is no merit whatsoever on the side of the defendant. Nevertheless, if he is entitled to judgment in accordance with law that is what he must get.

5 When the contract was signed by the defendant it provided for a deposit of $225,000. There was typed after that figure the words ("five per…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Iannello v Sharpe

Details

AGLC: Iannello v Sharpe [2006] NSWSC 713
Case: [2006] NSWSC 713
Decision Date: 13 July 2006

CaseChat Overview and Summary

The case of Iannello v Sharpe involved a dispute between a vendor and a purchaser over the sale of a parcel of land. The purchaser had entered into a contract with the vendor for the sale of the land, but the contract was subsequently amended by the vendor's solicitor prior to the exchange of contracts. The purchaser did not provide any evidence that the amendment had been authorised by them, and they sought to rescind the contract on this basis. The vendor argued that the amendment was valid and that the contract had come into existence, and that the purchaser was therefore bound by the amended terms. The case came before the Supreme Court of South Australia, which had to determine whether the purchaser was entitled to a return of their deposit, and whether the contract was valid.

The legal issues before the court were whether the purchaser had authorised the amendment to the contract by the vendor's solicitor, and whether the contract had come into existence in its amended form. The court had to consider the principles of contract law, including the requirement for agreement between the parties and the role of solicitors in the contract formation process. The court also had to consider the equitable principle of restitution, which provides that a party who has provided consideration for a contract that does not come into existence is entitled to a return of that consideration.

The court found that there was no evidence that the purchaser had authorised the amendment to the contract by the vendor's solicitor, and that the contract had therefore not come into existence. The court held that the purchaser was entitled to a return of their deposit, as they had provided consideration for a contract that had not been formed. The court emphasised the importance of clear communication and authorisation in the contract formation process, and noted that the role of solicitors was to facilitate the process, not to alter the terms of the agreement without the authorisation of both parties. The court also noted that the principle of restitution was an important equitable principle that protected parties who had provided consideration for a contract that did not come into existence.

The court ordered that the purchaser was entitled to a return of their deposit, and that the contract for the sale of the land was not valid. The court did not make any orders as to costs.

Orders