Kaza Investments Pty Ltd v Stirnemann - [2010] SADC 151

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
KAZA INVESTMENTS PTY LTD v STIRNEMANN AND ANOR
[2010] SADC 151
Judgment of His Honour Judge Barrett
10 December 2010
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHERE CONCLUDED CONTRACT
Plaintiff and defendant negotiated over sale and purchase of house property abutting plaintiff's surgery. Discussions over telephone and exchange of faxes. Later written contract signed by both parties. Whether a contract concluded - how many contracts concluded.
Held: Fax contract was the written form of the agreement over the telephone. Fax contract binding. Later written contract not binding because defendant withdrew offer. Unable to be satisfied that plaintiff signed contract before offer withdrawn.
Law of Property Act 1936 s 15, referred to.
Masters v Cameron (1954) 191 CLR 353; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622; Sinclair, Scott and Co v Naughton (1929) 43 CLR 310; Catanzaniti and Anor v Lee Road Pty Ltd [2005] SASC 419; GR Securities Pty Ltd v Baulkhan Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; Carter and Harland, Contract Law in Australia (3rd ed, 1996); Greig and Davis, The Law of Contract (1987); Heffy, Paterson and Robertson, Principles of Contract Law (2002), considered.

EQUITY - EQUITABLE REMEDIES - SPECIFIC PERFORMANCE - DEFENCES - FROM CONDUCT OF PARTIES - WANT OF FAIRNESS
Plaintiff sought specific performance of contract by defendant. Plaintiff had deferred settlement without notifying defendant. When defendant purported to withdraw from the agreement plaintiff tendered memorandum of transfer to defendant. Defendant did not execute transfer. Plaintiff did not press for settlement for several years. Whether unconscionable conduct on plaintiff's part disentitling it to specific performance.
Held: Plaintiff's conduct not so unconscionable as to disentitle it to relief. No hardship to defendant demonstrated. Specific performance ordered.
W and R Pty Ltd v Birdseye [2008] SASC 321; Dougan v Ley (1946) 71 CLR 142, considered.

KAZA INVESTMENTS PTY LTD v STIRNEMANN AND ANOR
[2010] SADC 151
Introduction

The plaintiff seeks an order against the defendant for specific performance of a contract for the sale and purchase of a house property. The defendant denies the existence of a contract or, alternatively, says that if there was a contract he lawfully terminated it. The defendant sues the third party solicitor seeking indemnity, or a contribution, against him for any liability he may be found to have towards the plaintiff. He says that the third party failed, or failed sufficiently, to carry out a duty of care he had to him.
Issues
1.Did the plaintiff and defendant enter a binding contract for the sale and purchase of the property?
2.If there was such a contract, which of two possible contracts was it? Was it the “fax contract” or the “Law Society” contract?
3.What were the terms of any binding contract?
4.Was any contract validly terminated?
5.Should the court order specific performance?
6.If the defendant is liable to the plaintiff, is the third party liable to indemnify him, or contribute towards indemnifying him, for any such liability?
Background
In 2002 Dr Fuller, the principal of the plaintiff company, was practising dentistry from a surgery on Beach Road, Christies Beach. He wished to purchase the house property which backed on to his surgery so that he could increase parking for his patients. The property at the back faced Erin Street, Christies Beach. Dyson Road joined Erin Street and Beach Road at the eastern end. The third party’s legal practice operated from premises facing Dyson Road but backing on to the Erin Street property. The three properties were within short walking distance.
The defendant owned the Erin Street property. He was working in the Northern Territory and he had leased the house to tenants. The defendant’s partner, Ms Bossenberry owned a house in Moana. That house was tenanted. She was having difficulty meeting her mortgage commitments in respect of that property.
In October or November 2002 Dr Fuller contacted Ms Bossenberry through the tenants living in the defendant’s house at Erin Street. He had discussions with her about buying the Erin Street house. All relevant communications relating to the purchase of the house were conducted between Dr Fuller and Ms Bossenberry. She kept the defendant in the Northern Territory informed of all communications. She appeared to be communicating with Dr Fuller on behalf of the defendant. There is no dispute that she was acting with the consent and authority of the defendant.
Although Dr Fuller was really only interested in purchasing the Erin Street property, Ms Bossenberry asked him if he would like to buy her property at Moana. He looked at the property but declined to buy it. Discussions then turned to the purchase price of the Erin Street property. At this stage Dr Fuller was proposing to buy the property in his own name.
Communications concerning sale and purchase
Initially Dr Fuller offered to pay $80,000 for the Erin Street property[1]. Ms Bossenberry rejected that offer. There were further verbal discussions between Dr Fuller and Ms Bossenberry. I infer that during those discussions Dr Fuller offered to pay $100,000.
[1] T89.
On what appears on the face of the document to be 7 November 2002, Dr Fuller sent a fax to the defendant confirming that offer (Exhibit P2). Dr Fuller began the fax by referring to recent discussions he has had with Ms Bossenberry. The fax has been referred to as “the fax contract”[2]. The typed document is in two parts. The first part purports to be an offer by Dr Fuller to purchase the property for $100,000. The salient aspects of the offer are:
1.The offer to pay $100,000;
2.The proposal that the purchase be made by Dr Fuller in his own name “and/or such other person or entity as I may subsequently nominate”;
3.Assuming acceptance of the offer, “settlement would be completed sometime during the week beginning 16 December”;
4.Dr Fuller was happy for the defendant’s tenancy arrangements on the property to continue;
5.If the defendant was to accept the offer he should sign the acceptance at the foot of the page and fax it back to Dr Fuller at a nominated, handwritten, fax number.
6.On acceptance Dr Fuller would arrange for a lawyer to prepare “further necessary paperwork” to be forwarded to the defendant,
[2] Exhibit P2.
The second part of the document purports to be a typed acceptance of the offer by the defendant.
There are three relevant handwritten endorsements as follows:
1.The figure of $100,000 is crossed out and $110,000 is substituted. Dr Fuller’s signature is beside the alteration.
2.Dr Fuller’s signature is at the bottom of the offer.
3.What purports to be the defendant’s signature is at the bottom of the acceptance.
It is common ground that Dr Fuller wrote his own signatures and Ms Bossenberry wrote the defendant’s signature on the acceptance with the defendant’s consent.
There was oral and written evidence about the reasons for the endorsements on the fax contract.
On what appears to be the same day as Dr Fuller’s fax to the defendant (7 December), Ms Bossenberry sent a fax to Dr Fuller (Exhibit P5). It seems to be in reply to the fax contract. In her evidence Ms Bossenberry did not think the fax was in reply to the fax contract but it is hard to see how her reference to a fax could be anything other than the fax contract. Ms Bossenberry’s fax of 7 November says:
Hi Simon,
Thanks for your fax.
I have slept on your proposal and thankyou for the offer.
However, due to my disastarous(sic) financial situation I would require an amount of $110, - $115, to enable this to be of benefit to me.
Sorry for being difficult!!
If you can negotiate on this I would be happy to sign today.
Thanks
Regards
Carole
I find that fax is in reply to Dr Fuller’s fax contract. I so find despite Exhibit P5 bearing a printed endorsement suggesting it was transmitted at 11.03 on 7 November and Exhibit P2 bearing an endorsement suggesting it was transmitted at 15.15 on 7 November. I agree with Mr Royle for the defendant that it is likely that Exhibit P2 was sent on 6 November. Ms Bossenberry in Exhibit P5 speaks of “having slept on your proposal”. I think she slept on the proposal on the night of 6 November. I so find.
Ms Bossenberry is unclear about what happened. In my view it is plain that Dr Fuller and Ms Bossenberry spoke by telephone. Dr Fuller agreed to pay $110,000. Ms Bossenberry accepted. I think it is clear that Dr Fuller had signed at the bottom of the original offer before he sent it to the defendant. Ms Bossenberry changed the $100,000 to $110,000 after she and Dr Fuller agreed the higher price. She then wrote the defendant’s signature at the bottom of the acceptance and sent the fax to Dr Fuller on 7 November. He then signed alongside the altered figure. I think he signed the same day. The copy of the fax which he produced in court had his signature alongside the figure in blue biro. His signature at the bottom is in faxed ink[3]. That is how Dr Fuller remembers it[4]. I find that events occurred in the way I have just described. The fax contract was signed by Dr Fuller on 6 November and sent to the defendant. Ms Bossenberry and the defendant “slept on” the proposal. Ms Bossenberry sent Exhibit P5 to Dr Fuller on 7 November. The two of them then spoke on the telephone and agreed the higher price. She signed the fax contract on the defendant’s behalf after altering the consideration. She then sent the amended fax to Dr Fuller who signed the alteration. His acceptance was both communicated orally over the telephone and by sending the Law Society contract which included the revised consideration.
[3] T58.
[4] T123-127
The plaintiff submits that the so-called fax contract became a binding contract in one of two ways; first, Dr Fuller made a faxed offer to purchase the property for the sum of $100,000. By return fax and by telephone the defendant (through Ms Bossenberry) rejected that offer. By telephone Dr Fuller made a further offer of $110,000 which Ms Bossenberry accepted. Ms Bossenberry confirmed Dr Fuller’s further offer (or the defendant’s counteroffer) and the defendant’s acceptance by changing the figure and signing the acceptance. Dr Fuller’s later signature alongside the altered figure is written confirmation of the verbal offer. There is no evidence suggesting Dr Fuller sent back to the defendant the copy of the fax bearing his signature alongside the figure. On this scenario offer and acceptance at a price of $110,000 had been concluded over the telephone, and Exhibit P2, in its altered state, was written confirmation of the agreement.
The second scenario is that once Dr Fuller’s offer to pay $100,000 was rejected, Ms Bossenberry made a counter offer by altering the fax and sending it back to Dr Fuller. Unlike the first scenario Dr Fuller’s acceptance of the counter-offer is not communicated over the telephone. Instead it is communicated by Dr Fuller’s solicitor sending the defendant a letter dated 15 November (Exhibit P6) which enclosed the Law Society contract. The Law Society contract had $110,000 as the consideration.
The plaintiff submits that on either of these scenarios the fax contract contains the full necessary elements for a contract for the sale of land. It provides for:
·The name of the vendor;
·The name of the purchaser;
·A description of the land;
·The consideration.
The contract provided for a time for settlement – “sometime during the week beginning the 16^th December”. It did not make time of the essence.
There was no further communication between the parties between 7 and 13 November. It appears that during that time Mr Sim (a partner in the third party firm of solicitors) prepared the Law Society contract (Exhibit P3/P4). The schedule to the contract describes the purchaser as the plaintiff company, not Dr Fuller himself. The fax contract had provided for the substitution of another entity for Dr Fuller as the purchaser. The settlement date is shown as 19 December. The consideration is $110,000.
Mr Sim either posted the Law Society contract to the defendant with a letter of 15 November 2002 on that date or he did it by an email of 18 November (Exhibit P6). There had been a telephone call between Mr Sim and Ms Bossenberry on 13 November during which they discussed where to send the contract so that the defendant could sign it. There was no further discussion about the consideration.
In my view it is clear that there had been a verbal agreement between Dr Fuller and Ms Bossenberry, on behalf of the defendant, that the purchase price was $110,000. I find that Ms Bossenberry altered the figure to $110,000 after the telephone call with Dr Fuller during which he agreed to the higher price. I find that he signed the fax contact when it was returned to him. He instructed Mr Sim to prepare the Law Society contract in accordance with the agreement. There was no further discussion between the parties about the consideration. It had been agreed.
Dr Fuller did not send to the vendor the altered fax contract, but, on the plaintiff’s case, there was no need for him to do so. There had been a verbal agreement, the parties had endorsed the altered consideration and the Law Society contract was to be prepared in accordance with that agreement.
For a little time after 18 November the parties acted as if they were proceeding in accordance with an agreement for sale and purchase. In the email of 18 November Mr Sim said “Please post the contracts back asap as any delay will delay settlement”.
On 25 November Mr Sim telephoned Ms Bossenberry to follow up the return of the Law Society contract. It had not been returned. Ms Bossenberry said that the contract had been signed and that she would post it by that day’s mail. Mr Sim asked Ms Bossenberry to also return the authority for the discharge of the mortgage on the property.
Ms Bossenberry returned the signed contract and authority to Mr Sim, although it is not clear when that occurred. There is a file note of Mr Sim’s on 28 November which says his secretary rang Ms Bossenberry on that day saying that they had not received the contract or the authority. The file note says that they received the authority “a short time later”. I find as a fact that the contract had not been returned before 28 November. I find also that it was returned sometime after the secretary’s telephone call – I cannot be sure whether it was later that day or a few days later.
It is an admitted fact (paragraph 5) that the defendant signed his name on the Law Society contract between 15 November and 9 December inclusive. He also initialled each page. The contract was certainly received by Dr Fuller on or before 9 December 2002. Two copies of the contract were received but only one copy of the schedule. In paragraph 8 of the schedule headed “Exceptions and Reservations” Ms Bossenberry wrote “I am unable to move furniture etc until mid January at the lastest (sic)”.
Settlement did not take place in December, or at all. The defendant says that it was critical for him to have settled in December. Ms Bossenberry says she made that very clear to Dr Fuller. Dr Fuller denies he was ever told that the settlement date was important. He denies that he was ever told that it was critical to the defendant that it take place in December. In effect the defendant says that settlement in December was an essential term of the contract. Dr Fuller denies that. He says that without realising there was urgency to settle in December, he decided to defer settlement until after Christmas. He says he wanted more time to organise a loan for his purchaser company rather than relying on bridging finance. He noted that the defendant apparently wanted to keep some furniture in the house until January and, because the contract had not been returned until possibly as late as 9 December, it was going to be a rush to arrange settlement before Christmas.
I note the following dates:
·The contract was returned somewhere between 28 November and 9 December.
·The fax contract provided for settlement in the week beginning 16 December.
·The Law Society contract provided for settlement on (Thursday) 19 December. Mr Sim’s office closed for Christmas at midday on Monday 23 December.
·Neither Dr Fuller nor Mr Sim notified the defendant of any delay in settlement. I find that whatever passed between the defendant or Ms Bossenberry on the one hand and Dr Fuller or Mr Sim on the other before 28 November, there was no contact between either side between 28 November and the New Year. The last contact before Christmas was on 28 November when Mr Sim’s secretary telephoned Ms Bossenberry following up on the as yet unreturned contract.
Before making findings about whether there was a binding contract I turn to discuss the question of the settlement date.
Was the date of settlement an essential term of any contract?
The question of what is an essential term in a contract is a factual one. In general the date of settlement is not an essential term. The parties are in disagreement about the importance of the time of settlement. Dr Fuller says that he heard nothing from the defendant or anyone on his behalf that settlement before Christmas was important, much less critical, to the defendant. He says that he instructed Mr Sim to defer settlement for the reasons I have already mentioned.
The evidence about the importance of settlement before Christmas comes from Ms Bossenberry rather than the defendant himself, although he supports her evidence. Ms Bossenberry said that for some months towards the end of the year she had been under pressure from her bank to pay arrears on the mortgage she had over her own house at Moana. She said that she feared that her bank would foreclose on her mortgage. She did not make clear in her evidence how settlement on the sale of the defendant’s house would solve her problems. She had no proprietary interest in the defendant’s house. However it may be that the defendant would then be in a position to help her financially so that she could pay her arrears. If this is so she did not make it clear in her evidence. It may be that she thought that if the bank did foreclose on her mortgage, the couple would need the house at Erin Street to live in. That is what both the defendant and Ms Bossenberry said. However, Ms Bossenberry’s second “cancelling” fax of 6 January 2003 says that the Erin Street property has been relet. The defendant’s evidence suggested it remained tenanted thereafter.
Two things are clear from the evidence: First Ms Bossenberry’s bank did foreclose on her mortgage on 30 December 2002. Second, Ms Bossenberry knew nothing of the foreclosure until sometime in January of 2003. A Default Notice (Exhibit D36) and Notice of Possession pursuant to a Memorandum of Mortgage was sent to Ms Bossenberry by her bank on 18 December but she did not receive it. Ms Bossenberry was not in Adelaide in December or early January. She learned in January from her tenant that the bank had changed the locks on the house. Enquiries of the bank’s solicitors revealed that foreclosure had occurred on 30 December. Ms Bossenberry’s evidence about her communications with the bank leading up to the foreclosure was very confusing. She sought to establish that she knew that the bank had foreclosed or was about to foreclose but all she was able to say was that she did not understand what the bank was really doing. She produced correspondence from the bank which merely demonstrated that towards the end of 2002 she was a few hundred dollars in arrears. I think it unlikely that the bank would foreclose if the arrears amounted to only a few hundred dollars. Equally I think it unlikely that the bank would foreclose without giving reasonable notice of an intention to do so. Ms Bossenberry’s evidence on these topics was confusing and unsatisfactory and she produced no documentation in support of her contention that she believed that she was about to lose her house. Nor did she explain why the loss of her house made it critical that settlement of the sale of the defendant’s house take place before Christmas.

While the connection between the fates of the two houses was never satisfactorily explained, it is possible, at least in the minds of the defendant and Ms Bossenberry, that there was some connection. On 24 December, Ms Bossenberry sent Dr Fuller an email (Exhibit P7) to Mr Sim saying:
Hi Andrew, Cameron is not sure what is happening regarding settlement which was 19 he has instructed me to let you know that he now would like to cancel the contract thank you regards Caroline.
I find as a fact that the parties did not agree that the settlement date, whether it be “in the week of the 16 December” (fax contract) or “19 December” (Law Society contract), was an essential term. I accept the evidence of Dr Fuller that neither Ms Bossenberry nor the defendant ever suggested to him that settlement before Christmas was critical to them. I find that he deferred settlement without knowing that the defendant regarded the settlement date as an essential term. I think there is every reason to think he would have tried to arrange settlement before Christmas if he had thought the defendant regarded settlement before Christmas as critical. I find that, however more convenient it might have been for him to defer settlement, he was willing, and, subject to the documentation being completed in time, able to settle before Christmas. If the defendant’s claims that Dr Fuller had obtained the property cheaply are correct, there is all the more reason for him to settle at a time that did not jeopardise the sale. Despite the defendant’s claims that the sale price was low, I make no finding that that was so. Nor do I make a finding that Dr Fuller regarded the price as low. Nevertheless I find that if he had been told that settlement before Christmas was critical to the defendant, he would have attempted to achieve settlement in time.
I reject Ms Bossenberry’s evidence that she made it clear to Dr Fuller that so far as the defendant was concerned before Christmas was critical. I reject her evidence that she suggested to Dr Fuller that time was of the essence for either or both her or the defendant. Her evidence on that topic is unsatisfactory.
On 6 January 2003, the day Mr Sim returned to work, Ms Bossenberry sent another email to him (Exhibit P8) reiterating the defendant’s wish not to proceed with the matter. It read,
Hi Andrew, this is my second email, can you please let me know that you have received Cameron’s instructions not to proceed with the selling of 12 Erin Street. As he has not heard from you he had re-rented the property. Can you please notify me that all is OK with you not to proceed, he is notifying the bank today so that the account can be unfrozen. Thanks. Regards Caroline.
Mr Sim sought instructions from Dr Fuller in a letter to him of 10 January (Exhibit P9). He told him of the telephone conversation he had had with Ms Bossenberry in which he had told her he could not give her legal advice because he was acting for him.
The defendant submits that before Dr Fuller signed the Law Society contract he, by way of Ms Bossenberry’s emails of 24 December and 6 January, had withdrawn his agreement to sell. He points to a passage in Mr Sims’ letter to Dr Fuller of 10 January in support of that contention. In the letter Mr Sim says,
Although you have not signed the contract that can quickly be remedied.
In a letter to the defendant of 13 January Mr Sim said he was acting on Dr Fuller’s behalf and he asserted that, so far as Dr Fuller was concerned, there was a legally binding contract. He enclosed the Transfer for signing by the defendant along with the Settlement Statement. Mr Sim said that when he wrote that letter he believed that Dr Fuller had signed the contract. As mentioned earlier two copies of the Law Society contract have been tendered as exhibits. Exhibit P3 has with it a schedule. The contract is signed by the defendant and witnessed by Ms Bossenberry. The defendant’s initials appear on each page of the contract and of the schedule. Exhibit P3 is signed by Dr Fuller and witnessed by Mr Sims. The date of 9 December 2002 is alongside Dr Fuller’s signature. Dr Fuller has initialled each page of the contract and the schedule.
Exhibit P4 does not have a schedule attached. Exhibit P4 is signed only by the defendant, witnessed by Ms Bossenberry. Each page is initialled by the defendant. There is no endorsement by Dr Fuller.
There is a contradiction between the date of 9 December 2002 next to Dr Fuller’s signature on Exhibit P3 and Mr Sims’ letter to Dr Fuller of 10 January in which he says that the contract has not been signed. Neither Dr Fuller nor Mr Sim has a memory of the contract being signed on 9 December. Each says that he assumes the contract was signed on that day because of the endorsement of the date. Mr Sim offers an explanation for what he said in the letter of 10 January but he does not assert an actual recollection of what happened. He postulates[5] that when he wrote the letter of 10 January he was looking at the unsigned copy of the contract (Exhibit P4) and he had forgotten that he had witnessed Dr Fuller’s signature on Exhibit P3 on 9 December. The inference is that he became aware of the signed copy before he wrote to the defendant on 13 January asserting the binding contract.
[5] T140
I do not reject Mr Sims’ explanation. It may be correct. I do not find as fact that Dr Fuller and Mr Sim did not sign the contract on 9 December. They may well have. However, on the evidence I have before me, I cannot be satisfied on balance that they did sign the contract on 9 December. Neither has a distinct recollection of having done so and there is the uncertainty caused by Mr Sims’ letter to Dr Fuller. While I do not find that Dr Fuller did not sign the contract on 9 December 2002, I will assume he did not for the purposes of my factual and legal analyses.
Settlement never took place. The defendant did not execute the transfer sent to him on 13 January 2003. He had made it clear in the emails of 24 December and 6 January that he did not wish to proceed with the sale. Dr Fuller sought to settle on 26 June 2008, but he could not do so in the absence of an agreement by the defendant.
I find as a fact that Dr Fuller always wished to proceed with the purchase. The defendant invites me to find that Dr Fuller has lead no evidence to support his contention that he was willing and able to settle before the defendant’s emails purporting to withdraw from the agreement on 24 December and 6 January. I decline to make that finding. I find that Dr Fuller was in a position to proceed with settlement before Christmas, or at least he was able to put himself in such position if he thought settlement before Christmas was an essential term of the contract. I find that he deferred settlement for the reasons I have already mentioned and, when in January he was told that the defendant wished to withdraw the offer, he took steps to try to effect settlement. He instructed Mr Sim to prepare the Transfer and Settlement Statement and those documents were sent to the defendant.
Was there a contract?
I return to the question of whether there was a contract for the sale and purchase of the property
I have already found that Ms Bossenberry (and the defendant) considered (or “slept on”) Dr Fuller’s offer in the fax contract to purchase the property for $100,000. By fax (Exhibit P5) and, I find by telephone, Ms Bossenberry rejected that offer. I find that over the telephone Dr Fuller and Ms Bossenberry agreed that the purchase price would be $110,000. It does not matter how one characterises their exchanges over the telephone, ie whether there was an offer by Dr Fuller to pay $110,000 accepted by Ms Bossenberry, or whether there was a counter offer by Ms Bossenberry to sell for $110,000 accepted by Dr Fuller. I am satisfied that there was a verbal agreement about the consideration. Each then endorsed the fax contract acknowledging that agreement. Ms Bossenberry signed the acceptance of the altered offer and sent the fax to Dr Fuller. For his part, Dr Fuller signed alongside the altered consideration, having already signed the original offer before sending the fax to the defendant.
The fax contract contemplated that there would be a later written record of the agreement. Two passages in the fax contract make that clear:
This purchase would be in my name and/or such other person or entity as I may subsequently nominate.
As soon as I receive your acceptance I will arrange for further necessary paperwork to be prepared by a lawyer and forward it up to you.
The plaintiff submits that the fax contract was a binding agreement. There was a verbal agreement between Dr Fuller and Ms Bossenberry on the telephone of which there was a written memorandum. However one characterises what was said by each on the telephone, there was an agreement for the sale and purchase of the property for $110,000. Both parties endorsed the fax contract indicating their agreement. It was a term of the fax contract that there would be a further written agreement but that was merely a term of the fax agreement. The fax agreement was not conditional upon the execution of the later written agreement. There are no words to that effect. The fax agreement was not in my view an agreement to enter an agreement. It was itself the agreement, but its fuller expression would be set out in a later written agreement. It was a term of the fax agreement that Dr Fuller might nominate another entity as the purchaser in the later agreement. The agreement is of the first class of contract referred to in Masters v Cameron (1954) 91 CLR 353 at 360, namely:
… one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller and more precise but not different in effect.
Alternatively it might be characterised as the fourth category described by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 (citing Knox CJ, Rich and Dixon JJ in Sinclair, Scott and Co v Naughton (1929) 43 CLR 310 at 317), namely:
… one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
In conformity with the agreement Dr Fuller forwarded the Law Society contract to the defendant for execution, which the defendant did. In further confirmation of the agreement Mr Sim, on behalf of Dr Fuller, followed up with Ms Bossenberry the execution by the defendant of the document.
The defendant submits that the so called fax contract is no contract at all. It lacked detail. It contained no provisions for adjustment of rates and taxes, there was not definite settlement date and it had no default provisions. At best it was an agreement in principle or an agreement to agree. It might not even be that. Ms Bossenberry’s alteration of the fax contract amounts to a counter offer. Even if Dr Fuller accepted that counter offer by endorsing the fax contract when it was returned to him, he did not communicate that acceptance to the defendant. Acceptance has to be communicated for there to be an agreement. The sending to the defendant of the Law Society contract was the proposed agreement which, at best, was contemplated by the fax contract. It was executed by the defendant, but not executed by the plaintiff before the defendant withdrew the offer on 24 December 2002. The court should not find that Dr Fuller executed the Law Society contract on the date it bears, namely 9 December.
The defendant further submits that the fax contract was not, as the plaintiff asserted, an agreement of the sort contemplated by the first category in Masters v Cameron, but by the third category, namely:
… one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
I am persuaded by the submission by the plaintiff that the fax contract was a binding agreement. I reject the defendant’s submission to the contrary. I explain why.
Reasons why the fax contract is a binding contract
It is not disputed the that the parties were negotiating about the sale and purchase of the property. It is not disputed that Ms Bossenberry was acting as agent for the defendant. The defendant has never suggested that Ms Bossenberry said or did anything without his authority. The parties each signed the fax contract and I have already found that they did so after verbal discussions between Dr Fuller and Ms Bossenberry on the telephone on 7 November. I find they both signed the fax contract in its final, altered, form on 7 November 2002. Offer and acceptance occurred verbally and by the sending of the Law Society contract.
The defendant’s submission focused too narrowly on the fax document itself. The evidence makes it clear that the parties signed the document having reached verbal agreement on the telephone. That scenario replicates that described in Masters v Cameron before the judges in that case proceeded to discuss the classes into which an agreement might be assigned. Their Honours said:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiations shall be dealt with by a formal contract, the case may belong to any of three classes.
It may be that, on the facts of a particular case, none of the classes is apt, but in this case both parties nominate a class. The plaintiff nominates the first and the defendant nominates the third.
I mention two uncontroversial principles. First, it is a matter of construction of the facts of the case as to which class is applicable (Catanzariti and Anor v Lee Road Pty Ltd [2005] SASC 419 at [85] per Perry J (Bleby and Anderson agreeing)).
Second, whether or not there was a concluded agreement, and if so what were its terms, is to be determined objectively not subjectively. In GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634F, McHugh J, speaking for New South Wales Court of Appeal said:
… the intention of the parties … must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances.
Returning to the facts as I have found them in this case, it is clear that until 24 December 2002, both parties had reached agreement for the sale and purchase of the property. The fax contract was the written memorandum representing the agreement reached by Dr Fuller and Ms Bossenberry over the telephone on 7 November. The consideration of $110,000 was agreed on the telephone. Each party endorsed the fax contract with the amended consideration. The property was known to both and identified in the contract. The defendant was the identified vendor and Ms Bossenberry was acting as his agent. The parties agreed that Dr Fuller might nominate another entity as the purchaser. The defendant does not suggest that it mattered to him which entity became the purchaser.
A specific settlement date was not fixed in the fax contract but settlement was expressed to take place in the week beginning Monday 16 December 2002. Ironically the defendant’s insistence in these proceedings that the settlement date was an essential term because that had been made clear to Dr Fuller early in the negotiations reinforces my view that, looking at the matter objectively, the parties reached agreement on the essential terms of their contract on 7 November. On the defendant’s case it might be expected that if Dr Fuller had sought to renege on the fax contract the defendant would have been anxious to enforce his agreement. I have found that the settlement date was not agreed to be an essential term, but the defendant’s position at trial flies in the face of what he says was his position in November 2002.
It is true that not all the terms of the contract had been included in the fax contract. The exact settlement date had not been fixed, rates and taxes had not been adjusted, etc. The identity of the purchaser had not been determined. However I find that the parties each contemplated that those matters would be incorporated into the later written agreement. To use the words of the joint judges in Masters v Cameron, the parties:
… propose(d) to have the terms restated in a form which will be fuller and more precise but not different in effect.
The actions of the parties after 7 November are consistent with there being an agreement already reached. On Dr Fuller’s instructions Mr Sim set about drafting the Law Society contract. He completed that task on or before 13 November. On 13 November he telephoned Ms Bossenberry to find out how he might best get the contract to the defendant for signing. He sent the contract and other necessary documents on 18 November. The letter he sent to the defendant on that day with the necessary attachments was dated 15 November. The letter and contents were emailed on 18 November. In the email he asked for the signed documents to be sent back as soon as possible as any delay would delay settlement (Exhibit P6). Mr Sim followed up the request for a prompt return of the documents on 25 and 28 November. The documents were returned on or after 28 November. I do not conclude that there was any unwillingness on the defendant’s part to proceed with the agreement at that stage. That said, the 10 day (or longer) period between receiving the documents on 18 November and returning them on or after 28 November is not entirely consistent with the defendant’s claimed insistence to Dr Fuller that settlement was urgent and critical.
I think the request on 18 November for an early return of the documents suggests that, at that stage at least, Dr Fuller was working towards settling on 19 December, the settlement date set out in the Law Society contract. Later, without notifying the defendant, he instructed Mr Sim to defer settlement. While that conduct was certainly highhanded, I do not think that Dr Fuller took that course knowing the defendant had any urgency about settlement. When the defendant purported to get out of the agreement, Dr Fuller instructed Mr Sim to take steps to achieve settlement.
I find that the fax contract was a binding contract. That being so the defendant was in breach of the agreement by purporting to withdraw from it by the emails of 24 December 2002 and 6 January 2003, and also by failing to sign the Memorandum of Transfer when it was sent to him on 28 January 2003.
Was the Law Society contract binding?
I turn to the Law Society contract. Was it binding? I find that it is not. I explain why. I have already made the findings of fact that lead me to this conclusion I have found that the Law Society contract was the formal agreement contemplated by the parties when they signed the fax contract. The defendant signed it on that understanding. I think his addition of the Reservation and Exception in clause 8 of the Schedule is of no real consequence in considering the contractual relationship of the parties. Upon Dr Fuller initially the Schedule, it became an agreed term. There is no evidence suggesting that Dr Fuller had any objection to the furniture remaining in the house. When the defendant told Dr Fuller by email on 6 January that he had relet the property, Dr Fuller indicated his consent to that course by instructing Mr Sim to include that consent in the letter of 13 January. It is true that Dr Fuller gave as one of his reasons for deferring settlement that the defendant had indicated he wanted to leave furniture in the house until January, but he never expressed any disagreement with the conditions.
If the Law Society contract is the only potentially binding contract, the defendant’s signature on that contract represents the offer. Even if Dr Fuller did sign the contract on 9 December, that acceptance was never communicated to the defendant. Generally acceptance has to be communicated to the offeror[6].
[6] Carter and Harland Contract Law in Australia 3^rd Ed (1996) 44 at [226]; Greig and Davis The Law of Contract (1987) 280; Heffy, Paterson and Robertson Principles of Contract Law (2002) 68.

The plaintiff submits that a contract may be concluded by conduct[7]. It suggests that the very sending by the defendant of the email on 24 December seeking to withdraw from the contract is an acknowledgement by conduct of the existence of the contract. I reject that submission. The existence of a contract is to be determined objectively. Looking at the defendant’s conduct, can it be said objectively that he, a non-lawyer, can be taken to have acknowledged an agreement by trying to get out of it? I think not. I decline to find that the defendant’s conduct on 24 December is conduct from which an agreement should be inferred.
[7] Heffy, Paterson and Robertson Principles of Contract Law (2002) 74, citing Farmers Mercantile Union and Chaff Mills Ltd v Coad (1921) 30 CLR 113 and Greig and Davis The Law of Contract (1987) 249-250.
There is a further obstacle for the plaintiff in proving that the Law Society contract was binding. For reasons I have already discussed, I am not able to be satisfied that Dr Fuller signed the contract before the defendant purported to withdraw from it. While he may well have signed on 9 December, I cannot be satisfied he did. Accordingly I find that the Law Society contract was not a binding agreement between the parties.
Consequences of binding nature of fax contract
The fax contract provided for settlement in the week beginning 16 December 2002. The plaintiff acknowledges that settlement did not take place because of its default. The benefit of the contract was assigned from Dr Fuller to the plaintiff by a deed of assignment dated 6 June 2008 (Exhibits P11 and P20) pursuant to s 15 of the Law of Property Act 1936. The plaintiff sought settlement on 26 June 2008 (Exhibit P21). The plaintiff did everything necessary to achieve settlement on that date including attending at the appointed time and place with a bank cheque for the purchase price. The defendant did not attend. The plaintiff’s default ceased on that date. After 26 June 2008 the defendant is in default.
Should specific performance of the contract be ordered?
Specific performance is an equitable remedy. It is a remedy more readily granted where there is a “special value” for a purchaser of land[8]. In this case the property in question abuts the plaintiff’s property. Dr Fuller said it was his desire to provide his patients with more parking. In W and R Pty Ltd v Birdseye [2008] SASC 321, Doyle CJ[9] discussed the principles which guide the granting or withholding of the equitable remedy of specific performance. At [90] to [96] His Honour said that unconscionability on the part of a plaintiff might disentitle him to the remedy but that will not necessarily be so. It may be just in all the circumstances to grant the relief sought even where the plaintiff does not come to the court with “clean hands”. That will be so, for example, where there is not a sufficient nexus between the impugned behaviour and the granting of the relief. The court must consider the behaviour of the parties, the adequacy of alternative remedies, such as damages, and any hardship that might be caused to a defendant.
[8] See Dougan v Ley (1946) 71 CLR 142 at 150 per Dixon J.
[9] [86] to [105], Duggan J agreeing at [130] to [133].
In this case I have described Dr Fuller’s failure to discuss the deferral of settlement with the defendant as highhanded. I have found that while the plaintiff was, or could have made itself, ready to settle before Christmas 2002, Dr Fuller chose to defer settlement. However it is not irrelevant to note that the defendant did not return the documents to Dr Fuller until at least 28 November, some 3 weeks before the proposed settlement date of 19 December. In fact the documents may not have been returned until a little after 28 November. The documents had been sent to the defendant 10 days earlier. The defendant did nothing between 28 November and 19 December to follow up on settlement. He did nothing between Thursday 19 December and Tuesday, Christmas eve, when he sent the first “cancelling” email.
Although I think it was a minor consideration, the defendant added a term to the Schedule saying that he would not be able to remove all furniture until possibly mid January. I have found that, as highhanded as Dr Fuller’s behaviour was, he did not defer settlement knowing that delay would cause difficulty to the defendant. To this day it is not clear exactly what difficulty the deferral caused. The defendant relet the property sometime before 6 January 2003 (Exhibit P8). He has retained possession of the property ever since. No hardship has been demonstrated by the defendant in the event that specific performance is granted.
On the other hand the plaintiff did not press the defendant for settlement between 28 January 2003, when Mr Sim sent the Memorandum of Transfer to the defendant, and 6 June 2008 when the plaintiff attempted settlement.
In my view neither Dr Fuller’s behaviour nor that of the plaintiff is such as to disentitle the plaintiff to the specific performance it seeks. There is not a sufficient nexus between the impugned behaviour and the granting of the relief. The defendant did not do all he could to effect settlement.
I do not think an award of damages would suffice as a remedy for the plaintiff. It wants the land to provide patient parking.
I will hear further from the parties about the precise terms of the order. It may be that the terms of the order can be couched so as to avoid any present inconvenience to the defendant. So far I have heard nothing about any possible inconvenience.
Dr Fuller gave evidence that he remains ready and able to settle. He is willing to pay any interest which the court orders him to pay.
I will also hear the parties about what financial adjustments should be ordered. Mr Magarey for the plaintiff has made some helpful written submissions about interest due to the defendant. That entitlement to interest should be offset by rent the defendant has received, or has been in a position to receive, since December 2002. I have not yet heard from Mr Royle on that topic.
Is the third party liable to indemnify the defendant or contribute towards indemnifying him for his liability to the plaintiff?
I think the short answer to this question is that submitted by Mr Hoile for Mr Sim. The defendant has not demonstrated he suffered any loss by anything done to him by Mr Sim. My orders will have the effect of requiring him to transfer his property to the plaintiff for the sum he agreed upon on 7 November 2002. He has remained in possession of the property ever since. There will be a financial adjustment to take into account interest due to him and a set-off for rent he has received. I know nothing about the circumstances of the repossession of Ms Bossenberry’s house in Moana, but there is no suggestion the defendant had any proprietary interest in that house. Ms Bossenberry certainly had no proprietary interest in the defendant’s house in Erin Street.
The more complete answer to the question is that it is plain Mr Sim was never engaged by the defendant to act for him. It is clear that he was engaged by Dr Fuller. Dr Fuller instructed him and undertook to pay his fees. Dr Fuller made it clear to Ms Bossenberry that he would pay the legal fees. The fax agreement provides that Dr Fuller will pay the legal fees. In his letter to the defendant of 15 November (Exhibit P6) Mr Sim said:
If you have any uncertainties or queries about the content of the Contract, please do not hesitate to telephone me. However, if you require your own solicitor to check through the terms of the Contract and to advise you about it then that is to be at your expense.
It is true as Mr Royle submitted that Mr Sim carried out functions that it might be expected of a vendor or a vendor’s representative would carry out. Mr Sim obtained from Ms Bossenberry on 13 November 2002 sufficient information to enable him to complete the Law Society contract. He carried out a council search, EWS search and all the searches ordinarily carried out on behalf of a vendor. He obtained the defendant’s authority to obtain payout details from the defendant’s bank and obtained those details pursuant to that authority. He prepared the Law Society contract and sent it to the defendant.
However these tasks were carried out by Mr Sim in conformity with the agreement in the fax contract that Dr Fuller would pay the legal fees. While it may have appeared to the defendant that Mr Sim was acting for him, it is clear that he was not
It might be a slightly different question whether Mr Sim owed some duty of care towards the defendant. Mr Sim may have put himself in a position where the defendant relied on him to exercise some professional care towards him. However once there was a dispute between Dr Fuller or the plaintiff, and the defendant, Mr Sim was prevented from acting contrary to his instructions from Dr Fuller or the plaintiff. He did not advise the defendant of Dr Fuller’s instructions to defer settlement. That would have put him in a difficult position if he knew that the settlement date was critical for the defendant. However I have found that Dr Fuller did not know that, and there is no basis for inferring that Mr Sim did.
Once the defendant indicated he wished to withdraw from the agreement Mr Sim wrote to him on 13 January (Exhibit P10) making it clear he was acting for the plaintiff and was seeking, on the plaintiff’s behalf, to proceed towards settlement. He did not in that letter advise the defendant to seek his own legal advice, but as I have earlier pointed out, he had already done that in his letter of 15 November (Exhibit P6). That earlier letter really makes it clear that Mr Sim was acting for the plaintiff.
In the circumstances I find that Mr Sim was not professionally obliged to do for the defendant any more than he did. He was at all times acting for the plaintiff or Dr Fuller. He had made that sufficiently clear to the defendant at least from 15 November. He is not liable to the defendant for any loss the defendant may have suffered, although I find that the defendant has not demonstrated he has suffered any loss.
Conclusion
I find that the plaintiff is entitled to specific performance of the fax contract. The benefit of that contract has been assigned by Dr Fuller to the plaintiff. I will hear the parties further about the precise terms of the order for specific performance and about any financial adjustments which should be made.
I dismiss the defendant’s claims against the third party.
I will hear the parties as to costs.