Lawrence v Crispin
[2015] SADC 93
•12 June 2015
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
LAWRENCE & ANOR v CRISPIN & ANOR
[2015] SADC 93
Judgment of His Honour Judge Slattery
12 June 2015
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE
The defendants owned a property at Chandlers Hill. The plaintiffs were the owners of a property at Highfield Drive Aberfoyle Park. The defendants entered into a contract of sale to purchase the Aberfoyle Park property from the plaintiffs subject to the sale of the defendants Chandlers Hill property. The plaintiff Ms Peters was a real estate agent who acted on behalf of the plaintiffs to procure the contract of sale with the defendants on the Highfield Drive property. The plaintiff Ms Peters was later retained as a commissioned agent in the sale of the defendants' property at Chandlers Hill. The terms of the Highfield Drive contract were that the defendants were obliged to settle on that contract if they obtained a contract of sale on their Chandlers Hill property of the sum of $650,000 or such lesser sum as agreed by them as vendors. The plaintiff Ms Peters prepared and the plaintiffs and defendants both signed two addenda to the Highfield Drive contract extending the time for the defendants to achieve a sale of their Chandlers Hill property.
The defendants signed a contract for sale of the Chandlers Hill property for $640,000. The defendants allege that they orally terminated the Highfield Drive property by agreement with only one of the plaintiffs, Ms Peters prior to signing the contract of sale of the Chandlers Hill property.
Whether the plaintiffs and the defendants orally terminated the Highfield Drive contract; whether the plaintiff Lawrence clothed the plaintiff Peters with any ostensible authority; whether upon entry into the Chandlers Hill property contract the defendants were contractually obliged to complete the Highfield Drive property contract.
Held:
1. That the Highfield Drive property contract was not terminated at any time prior to the execution by the defendants of the contract to sell the Chandlers Hill property;
2. That the defendants became liable to the plaintiffs upon execution of contract of sale of the Chandlers Hill property in the evening of 18 July 2011 to then proceed to settlement of the sale and purchase of the Highfield Drive property;
3. That the plaintiffs suffered loss and damage as a result of any failure on refusal of the defendants to attend to the settlement of the sale of the Highfield Drive property;
4. The plaintiff Peters was an agent with limited actual authority to act on behalf of the plaintiff Lawrence and Peters was not the ostensible agent of Lawrence for any purpose including to agree to the oral termination of the Highfield Drive property contract.
Land and Business (Sale and Conveyancing) Act 1994 (SA) s 7; Law of Property Act 1936 (SA) ss 26, 29, 34; Statute of Frauds 1677 (Imp) s 4, referred to.
Tallerman and Company Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1956] 98 CLR 93; Spencer v The Commonwealth of Australia (1907) 5 CLR 418; Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221; Higgins v Statewide Development Pty Ltd [2010] NSWSC 183; Goss v Lord Nugent (1833) 5 B Ad 58; Morris v Barren & Co [1918] AC 1; British & Beningtons Ltd v North Western Cachart Tea Company Ltd [1923] AC 48; Adamson & Ors v Hays & Ors (1973) 130 CLR 276; GPT R E Ltd v Lend Lease Real Estate Investments & Anor [2005] NSWSC 964; Stern v McArthur (1988) 165 CLR 489; Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Freeman & Lockyear v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480; Cabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co Pty Ltd (1975) 133 CLR 72; Northside Developments Pty Ltd v Registrar General (1990) 170 CLR 146; Brick and Pipe Industries v Occidental Life Nominees Pty Ltd (1990) 3 ACSR 649; Darrell McGregor (Contractor) Ltd v Mountain Lake Holdings Ltd & PJL Lewis [2006] NZHC 591, considered.
LAWRENCE & ANOR v CRISPIN & ANOR
[2015] SADC 93Summary of the Issues
The plaintiffs in this matter, Mr Neal Anthony Lawrence and Ms Melissa Peters, were joint registered proprietors of 1 Highfield Drive Aberfoyle Park (the Highfield Drive property). On 28 January 2011 they appointed Brock Harcourts Morphett Vale where Ms Peters worked as an agent, to sell the Highfield Drive property.
The defendants are Mr Trevor Crispin and Mrs Leanne Crispin. In 2011 both defendants were trustees of the Havilah Investment Trust. In March 2011, in their capacities as trustees, the Crispins were the joint registered proprietors of a property at 11 Coastview Court Chandlers Hill (the ‘Chandlers Hill Property’).
On 29 March 2011 the defendants signed a contract agreeing to purchase the Highfield Drive property. The contract was subject to a special condition that the defendants enter into a contract for the sale of the Chandlers Hill property on or before 13 May 2011 that would become unconditional on or before 27 May 2011 for a purchase price of $650,000 or, any lesser sum accepted by them, and with settlement on such contract taking place on or before 30 June 2011.
On 29 March 2011, the defendants signed the Form 1 (Vendors Statement) issued pursuant to section 7 of the Land and Business (Sale and Conveyancing) Act 1994 (SA) in respect of the Highfield Drive property.
On 23 May 2011 Ms Peters, commenced employment at Open Door Real Estate as a Sales Consultant on a commission-only remuneration basis. Ms Liz Reece took over responsibility for the Highfield Drive property as an agent employed at Brock Harcourts, Morphett Vale.
The defendants failed to secure a contract for the unconditional sale of the Chandlers Hill property and on 26 May 2011 both the plaintiffs and the defendants signed an addendum to the contract of sale for Highfield Drive to allow an extension of time for compliance with the special condition in Annexure 2 until 30 June 2011.
On 7 July 2011 the defendants engaged Open Door Real Estate, where Ms Peters now worked, to act as the sales agent for the marketing and sale of the Chandlers Hill property.
The Chandlers Hill property remained unsold and on 16 July 2011 a second addendum to the Highfield Drive contract of sale was signed by both the plaintiffs and the defendants. This second addendum allowed an extension of time for compliance with the special condition in Annexure 2 until 30 August 2011.
On 16 July 2011 Ms Peters presented the defendants with a proposed contract for the purchase of the Chandlers Hill property for a purchase price of $640,000 signed by a prospective purchaser. Mr and Mrs Crispin did not accept this offer and they put a counter offer of $645,000 to the prospective purchaser by amending the proposed contract to record this counter offer. This counter offer was rejected by the prospective purchaser.
On 17 July 2011 Ms Peters held an open inspection at the Chandlers Hill property. By this time Mr Biszczak the principal of the firm Open Door Real Estate had assumed the role as agent in charge of the sale of the Chandlers Hill property. When the defendants returned home following the conclusion of the open inspection they found the proposed contract together with a letter from Ms Peters requesting that the defendants reconsider the offer on the Chandlers Hill property. On 17 July 2011 Mr Crispin had a discussion with Andrew Biszczak. The defendants allege they advised Mr Biszczak that if they could not sell the property for a minimum of $650,000 (and thus acquire a net surplus of $100,000) then they would withdraw the Chandlers Hill property from the market. The defendants further allege that Mr Crispin advised Mr Biszczak that they would only accept an offer of $640,000 if they were released from their initial contract of sale with the plaintiffs for Highfield Drive so that they could purchase a property of lesser value and thus retain a net sum of approximately $100,000; they say that Mr Biszczak advised them to contact Ms Peters to discuss terminating the initial sale of contract.
On 18 July 2011 there was a telephone conversation between Ms Peters and Mr Crispin. The plaintiffs plead that Mr Crispin rang Ms Peters and advised her that the defendants unilateral decision was that they were not going to purchase the Highfield Drive property. The plaintiffs allege Ms Peters advised Mr Crispin he may not be able to cancel the contract and that he should contact his conveyancer, and that she would contact Mr Lawrence; Ms Peters immediately contacted Mr Lawrence who suggested a $5,000 reduction in purchase price on the Highfield Drive property; Ms Peters telephoned Mr Crispin back and offered the defendants the discounted sale price. He refused that offer on behalf of both of the defendants.
The defendants alternatively allege that Mr Crispin rang Ms Peters and advised her that the defendants had not received an acceptable offer of at least $650,000 on the Chandlers Hill property; as a result they did not wish to proceed with the initial sales contract on the Highfield Drive property. The defendants allege that Ms Peters agreed to mutually terminate the initial contract of sale by saying words to the effect of “Yes you can cancel the contract”.
On 18 July 2011 the defendants attended at Open Door Real Estate, accepted the offer to sell the Chandlers Hill property for $640,000 to the prospective purchaser and signed the proposed contract. The defendants allege that when they so attended that they only did so in reliance on and as a result of the initial contract of sale for Highfield Drive being terminated by mutual agreement.
On the evening of 18 July 2011 the defendants contracted to purchase another property located at 17 Charlson Rise Happy Valley. The settlement date for this contract was to occur on 22 August 2011.
On 18 July Mr Crispin sent an email to Ms Peters on behalf of the defendants requesting that the plaintiffs sign an attached addendum already signed by the defendants purporting to be an agreement to mutually cancel the Highfield Drive sale contract following the verbal conversation between Mr Crispin and Ms Peters. The plaintiffs did not reply to this email nor sign the proposed addendum agreement.
The plaintiffs plead that at no time on 18 July 2011 or at any other time did they agree, or purport to agree, to a cancellation of the initial contract of sale.
The settlement of the Chandlers Hill property under the contract of sale between the defendants and Mr and Mrs S occurred on 26 August 2011. The plaintiffs contend that this settlement of the Chandlers Hill property constituted the satisfaction of the special condition stated in Annexure 2 of the initial contract of sale. The plaintiffs further contend that under the initial contract of sale for Highfield Drive, as Annexure 2 was satisfied through the settlement on 26 August 2011, settlement of the initial contract of sale on the Highfield Drive property was due to occur on or before 26 September 2011 (being thirty days thereafter). The plaintiffs allege that that defendants breached the initial contract of sale by failing to settle on the 26 September 2011. The defendants deny that any settlement was due to occur, or that any breach subsequently occurred, as they maintain that the initial contract of sale was terminated by oral agreement on 18 July 2011.
On 5 October 2011 solicitors acting for the plaintiffs issued to the defendants a notice to complete in accordance with the terms of the Highfield Drive contract of sale. This required the defendants to settle the purchase of the Highfield Drive property on 24 October 2011. The defendants maintained there was no basis that any such notice could be issued as the contract had been mutually terminated on 18 July 2011.
On 18 October 2011 the solicitors for the plaintiffs sent a letter to the solicitors for the defendants referring to the notice to complete, and providing a final adjustment statement dated that same day. The defendants again maintain that there was no basis that any letter or statement could have been sent as the contract had been mutually terminated.
On 24 October 2011 a conveyancer acting for the plaintiff attended at the Land Titles Office to complete settlement on the Highfield Drive property. The plaintiffs plead that the defendants further breached the initial contract of sale by failing to settle on that day. The defendants maintain that they were not required to settle on 24 October 2011 in accordance with the initial contract of sale as it had been mutually terminated on 18 July 2011.
On 27 October 2011 the plaintiffs elected to terminate the initial contract of sale in accordance with clause 15.7 of the contract. Solicitors acting for the plaintiffs issued and served a notice of termination for the Highfield Drive property on the defendants. The defendants deny that the contract was liable to be terminated on 27 October 2011 through the issuance of this termination of contract as they maintain that it had previously been mutually terminated on 18 July 2011.
The plaintiffs then appointed Brock Harcourts Mile End to auction the Highfield Drive property on 12 December 2011. It did not sell at auction on this date. Following this failure to sell at auction the plaintiffs then appointed Ray White Christies Beach as their agent to sell the Highfield Drive property. The plaintiffs plead that they took these steps in order to mitigate the loss they sustained through the defendants’ alleged breach of the initial sale of contract. The defendants deny that the plaintiffs have suffered any loss by reason of the mutual termination of the initial contract of sale on 18 July 2011.
On the 8 July 2012 a contract on the Highfield Drive property was executed between the plaintiffs and a third party for the amount of $440,000 and settlement occurred on 26 August 2012.
The plaintiffs claim that they have suffered loss and damages as a result of the defendants’ breach of the initial contract of sale relating to the Highfield Drive property. The defendants deny that the plaintiffs’ are entitled to the relief claimed or to any relief at all, by reason of the claimed oral mutual termination of the initial sale contract on 18 July 2011.
The defendants plead that the oral agreement they allege occurred between Ms Peters and the defendants on 18 July 2011 to mutually terminate the contract, occurred with the express or alternatively with the apparent or ostensible authority of Mr Lawrence. The defendants rely on the fact that they dealt only with Ms Peters in all dealings concerning the initial contract of sale prior to the termination of the contract. They further rely on the fact that when the alleged termination occurred Ms Peters did not indicate that the termination was subject to her obtaining the authority of Mr Lawrence to terminate the initial contract of sale. The defendants therefore plead that Ms Peters represented to the defendants that she had complete authority to deal with the contract on behalf of both herself and Mr Lawrence, and that it was reasonable for the defendants to rely on this representation. The plaintiffs deny that any such mutual termination occurred.
Issues for Determination
The issues for my determination in this matter may be summarised as follows:
1.Did the plaintiffs and the defendants at any time prior to the evening of 19 July 2011 terminate the Highfield Drive property contract.
2.If no to question one, did the defendants become liable to the plaintiffs upon execution of settlement of the Chandlers Hill property to then proceed to settlement of the sale and purchase of the Highfield Drive property.
3.If yes to question two, has the plaintiffs suffered loss and damage as a result of the failure on refusal of the defendants to attend to the settlement of the sale of the Highfield Drive property.
4.If yes to question three, which is the proper measure of the damages suffered by the plaintiffs.
It is self evident that if the answer to question one is yes, it is not necessary to address the other questions.
The material facts
The plaintiffs were the owners of the Highfield Drive property. The defendants, in their capacity as trustees of the Havilah Investment Trust, were the owners of the Chandlers Hill property.[1]
[1] T219 lines 10-12.
The plaintiffs gave a residential sales agency agreement to Brock Harcourts Morphett Vale in respect of the sale of Highfield Drive.[2] The range of prices was $545 - $565,000 which was eventually changed to $510 - 550,000. The vendors’ asking price was stipulated as $545,000. The documents signed by the plaintiffs also contained the usual terms under the Real Estate Institute of South Australia standard residential sales agency agreement terms and conditions.[3]
[2] T33 lines 33-36.
[3] P1 pages 1-19.
The defendants signed a sole agency agreement for the sale of the Chandlers Hill property with D C Crow (Mr Dean Crow) for a period of 90 days.[4] That agreement is dated the 26 March 2011.[5]
[4] T219 lines 23-25.
[5] P1 pages 21-34.
By a document dated 29 March 2011 the defendants delivered to the plaintiffs a notice of offer to purchase the Highfield Drive property for $535,000 with a deposit of $5,000 and a settlement of 90 days.[6] The offer was made subject to the sale of the Chandlers Hill property.[7]
[6] P1 page 35.
[7] T34 lines 11-13.
Following the delivery of that notice of offer, a residential contract was entered into between the plaintiffs and the defendants. The contract is dated 29 March 2011.[8] The same date as the date of the offer.[9]
[8] P1 pages 36-49.
[9] T34 lines 34-36.
The sales person named on the offer document is Ms Peters[10] In her evidence, Ms Peters said that she gave advice to the defendants and in particular to Mrs Leanne Crispin that she was a co-vendor of the property with her former partner Mr Neal Anthony Lawrence. The Highfield Drive property was being sold because Ms Peters and Mr Lawrence had separated and they were selling their home as a result.[11]
[10] P1 page 35.
[11] T33 lines 14-18.
Ms Peters said in her evidence that the Crispins were aware that she was the agent and the vendor.[12] After she dropped off the offer document, she made Mrs Crispin aware in a phone call that she was the vendor as well as being the agent. She gave Mrs Crispin the option not to proceed in the event that that was a matter of concern to her.[13]
[12] T34 lines 23-30.
[13] T34 lines 23-30.
Ms Peters, prepared the residential contract for the sale of the Highfield Drive property. The agent is named as Brock Harcourts Morphett Vale, the former employer of Ms Peters. The contract purports to be in the name of Havilah Investment Trust as purchaser. The trust has no legal existence and is not capable of being bound as a purchaser. It is the trustees of the trust who are required to execute the contract as purchasers. The execution clause of the contract records the execution for and on behalf of the trust by Trevor Ian Crispin and Leanne Elizabeth Crispin as directors of the trust. [14] There is no indication of a corporate trustee of the trust.
[14] P1 page 49.
There are annexures to the contract. The relevant annexure is Annexure 2 which contains special conditions relating to the purchase contract being made subject to the sale and settlement of the purchasers’ property. There are items within the annexure. The first term of Annexure 2[15] says that the agreement is subject to the purchaser entering into a contract for the sale of the purchasers property (the Chandlers Hill property) on or before the date described in item 2 and that contract becoming unconditional on or before the date described in item 3 for not less than the price described in item 4 (or if the purchaser accepts a lesser sum then that lesser sum) and settlement on that contract taking place on or before the date described in item 5.
[15] P1 page 40.
Item 1 is the description of the property. Item 2, which is the date by which the purchaser is to enter into a contract is expressed as 13 May 2011. Item 3, which is the date by which the contract is to become unconditional, is described as 27 May 2011 and Item 4, the price for the purchasers property, is expressed as $650,000. Item 5, being the date of proposed settlement is 30 June 2011. The contract was duly signed.
At the time of the creation of the contract, Ms Peters said that there were discussions about the sale of the Chandlers Hill property. At that time, the Crispins wanted to sell the property but they were not ready to have it on the market.[16] The Crispins had elected to appoint an agent, Mr Dean Crow but before the property could properly be put on the market some work needed to be done on some floorboards.[17]
[16] T35 lines 2-4.
[17] T35 lines 6-10.
In relation to the formulation of Annexure 2 to the sale contract[18] Ms Peters gave evidence that the dates described in Items 2, 3, 4 and 5 of annexure 2 were ultimately guestimates by the parties. She said that the parties were mutually agreed that those dates were satisfactory.[19]
[18] P1 page 40.
[19] T35 lines 19-25.
A copy of the contract was not given to the Crispins at the time of its execution. The document was executed at their home and the copy was sent to them by email.[20] That email included the Form 1 Vendor’s Statement.[21]
[20] T36 line 2.
[21] P1 page 50 et seq.
Settlement did not occur on the Highfield Drive contract with the defendants on the date proposed.[22] The defendants were not able to achieve the sale of their property before 13 May 2011. Ms Peters gave evidence that her understanding was that the Chandlers Hill property did not go on the market for sale until about that time.[23]
[22] T38 lines13-15.
[23] T38 line 18.
To ensure the preservation of the Highfield Drive contract, Ms Peters attended to the preparation of various addenda to the contract. On 26 May 2011, Ms Peters sent to Mr Trevor Crispin, an addendum extending the time limits by a month to enable the defendants to sell their home.[24] The addendum is reproduced in exhibit P1 at page 82. It is signed by the plaintiffs and the defendants. Under the addendum, the defendants were now required to enter into a contract on the Chandlers Hill property by 30 June 2011 and the contract is to become unconditional by 29 July 2011. The purchaser details specified in item 2 of schedule 2 will now be known as Trevor Ian Crispin and Leanne Elizabeth Crispin as executors of the Havilah Investment Trust. It is unclear to me why the trustees of a trust would be called executors but the meaning appears clear enough, namely that they are to be treated as in their capacity as trustees.
[24] P1 page 79.
On the 23 day of May 2011, Ms Peters was employed as a commissioned saleswoman by Open Door Real Estate.[25] The principals of that business were Sonia and Andrew Biszczak. The email of 26 May 2011 disclosed that Ms Peters had now commenced working with Open Door Real Estate as a commission sales person.[26]
[25] T36 line 9.
[26] P1 page 79.
By a residential sales agency agreement,[27] the defendants appointed Open Door Real Estate as its agent for the sale and purchase of the Chandlers Hill property. The document at exhibit P1 page 86 records that the agents estimate of the selling price range was $599-649,000 and the vendors selling price is $649,000.
[27] P1 pages 86-91.
I am satisfied on the evidence that as at the date of the execution of this document on 7 July 2011, the defendants were quite aware that Ms Peters was now employed by Open Door Real Estate. The agency document is signed on behalf of Open Door Real Estate by Mr Biszczak.
Ms Peters said that in relation to the sale of the defendants’ home, she was working in conjunction with the agency principal, Andrew Biszczak. Mr Biszczak wanted to work on the property because his view was that it was a prestige property.
At the same time the plaintiffs sent to the defendants a further addendum.[28] The addendum was sent on 13 July 2011 in an email from Melissa Peters to Trevor Crispin. Under the terms of this addendum to the contract of 29 March 2011 between the plaintiffs and the defendants, the special conditions specified in Annexure 2 now required the purchasers to enter into a contract on the Chandlers Hill property on or before 30 August 2011 and for the contract to become unconditional by 31 August 2011.
[28] P1 pages 92-94.
At no time did the defendants identify to the plaintiffs or to anybody else, that they were treating the contract of 29 March 2011 between themselves and the plaintiffs as terminated. The defendants continued to execute the addenda proffered to them by the plaintiffs. The defendants did not exercise their contractual rights to refuse to execute the addenda and to treat the contract as terminated by effluxion of time. The addendum document was signed on 16 July 2011. Andrew Biszczak witnessed the execution of the addendum by both the plaintiffs and the defendants.[29]
[29] P1 page 94.
Evidence of Ms Peters: Offers on the Chandlers Hill Property
Ms Peters gave evidence that an interstate purchaser rang the office of Open Door Real Estate expressing an interest in purchasing the Chandlers Hill property.[30] He said that he was only in Adelaide for less than a day for business. An arrangement was made to schedule a viewing of the property. The purchasers’ name was Timothy S. Ms Peters opened the property to Mr S on the 16 July 2011.[31]
[30] T42 lines 17-24.
[31] T42 lines 22-24.
Mr S expressed considerable interest in purchasing the property. He indicated that he intended to put an offer of $620,000.[32] Ms Peters spoke with Mr S and negotiated an increase in the offer price to $640,000. The offer was a cash unconditional offer.[33] Ms Peters gave evidence that she viewed the offer very favourably and this was particularly because no offer had previously been made either to them as agents or to the previous agents.[34] There is a history obtainable in relation to the presentation of the property for sale. It is recorded on a system called RP Data Property System – Property View. It is called ‘On the Market – For Sale’.[35] That system reports that the property was first presented to the market on 9 April 2011 under a normal sale offering. A normal sale offering means that it is not an auction. The price range was set at $650 - 700,000. The same price range was offered on 16 April 2011. On 30 April 2011 the price range offered was $640 – 660,000. That was again offered on 7 May 2011 and 14 May 2011 as well as 28 May and 14 June 2011. On 11 June 2011, the price range was adjusted to $600 - 650,000 and that was the price range offered on 18 June 2011. The first offering by Open Door Real Estate was on the 20 July 2011 and it was offered at $649,000.
[32] T42 lines 31-35.
[33] T43 line 1.
[34] T43 lines 1-5.
[35] P1 page 96.
Ms Peters gave evidence that she negotiated with Mr S in the kitchen of the home at Chandlers Hill. She said that she had a draft contract ready with her and that is her usual process.[36] Once they had negotiated to a figure of $640,000, she put that figure straight into the contract.[37] The contract discloses the offer at $640,000. [38] She obtained the signature of Mr S to the contract. She then went back to the office and phoned Mr Trevor Crispin, and informed him of the offer.[39] She asked to meet with Mr and Mrs Crispin that night and they met in the evening at the property. She thought it was sometime around 5.30-6pm and they sat and discussed the matter at the kitchen table of the premises.[40]
[36] T44 lines 2-3.
[37] T44 lines 5-7.
[38] P1 pages 97-105.
[39] T44 lines 14-18.
[40] T44 lines 22-27.
Ms Peters gave evidence that she explained the offer to the defendants and the terms and conditions of the offer. She expressed her view to the defendants that it was a very good offer because it was a cash unconditional offer.[41] There was discussion between Mr Peters and the defendants about Mr Crispin being concerned about costs and problems of moving the pool table down the stairs.[42] It was a property on a number of levels on a steep site.
[41] T44 lines 30-33.
[42] T44 lines 34-37.
Mr Crispin then suggested that they would counter sign the offer at $645,000. The figure of $640,000 was then crossed out and a figure of $645,000 was then inserted.[43] There was an addition on page 2 of the contract in the schedule. As well as all floor coverings, light fittings and window treatments being included, the defendants inserted other items to go with the sale namely a pool table and a fridge in the kitchen. It was on that basis that the defendants added in a figure of $5,000.
[43] T45 lines 1-5.
Ms Peters then left the defendants property and rang Mr S. She explained to Mr S that the defendants had counter signed the property contract and she informed him of the counter offer.[44] Mr S said that he was not interested in a pool table and the fridge and that he was not prepared to move on the $640,000 offer.[45]
[44] T46 lines 17-21.
[45] T46 lines 21-23.
Ms Peters gave evidence that on the 16 July 2011 she called Andrew Biszczak, the principal of the business and asked him to take over the negotiations.[46] Ms Peters thought that the offer made by Mr S was a good offer and was upset about the fact that over the sum of $5,000, the vendors may be willing to lose a sale when no-one else had made an offer near that price. As far as Ms Peters is aware, Andrew Biszczak then took over the contract and she had no further dealings with the contract.[47] She later learned that the contract was settled at $640,000.
[46] T47 lines 3-8.
[47] T47 lines 9-11.
There was a further open inspection held by Ms Peters. There was no interest.
That day, she left a note on the kitchen bench of the property.[48] She left a copy of the contract and the note said that she had left the contract from yesterday for them to reconsider. [49] In the note she said that she thought that it was the very best offer that they would get and that she had tried everything to get the buyer to pay more but that she had had no luck. She said that they needed to make a decision because the buyer was waiting and she did not want to lose the buyer. She did not receive any response from the defendants to the note that she had left on the table.[50]
[48] T48 lines 1-4.
[49] P1 page 106.
[50] T47 lines 16-17.
Ms Peters understanding was that from 18 July 2011 Andrew Biszczak took over the negotiations on the contract and although she knows that the contract was finalised at $640,000, she does not know when the contact was ultimately accepted.[51]
[51] T47 lines 22-29.
Alleged termination by Mr Crispin
Ms Peters gave evidence that on 18 July 2011, she received a telephone call from Mr Crispin.[52] She thinks the call was at about 11am. She has dated and timed the call from her telephone records.[53] She recalls that immediately after receiving the call from Mr Crispin, she rang Neal Lawrence.[54] There is a call recorded to Neal Lawrence at 1.18pm. Ms Peters therefore surmises that she received the call from Mr Crispin at about 1pm.
[52] T47 lines 32-34.
[53] P1 page 115.
[54] T49 lines13-15.
Ms Peters said that in the telephone call, Mr Crispin said something about loving his wife and not wanting her to be a slave to the Chandlers Hill property.[55] He said that they loved that home and they built it but in the circumstances, they were not prepared to go ahead with the Highfield Drive contract. Ms Peters said that she was quite taken aback by this statement and said to Mr Crispin that she was not sure that he was entitled to make that decision and urged him to speak with his conveyancer and she would immediately speak with Neal Lawrence. She recalls that there was nothing said about the Chandlers Hill contract with Mr S and there was nothing said about purchasing another home in that telephone call.[56]
[55] T49 lines 21-26.
[56] T51 lines 5-9.
Ms Peters said that she then called Neal Lawrence and told him the contents of the telephone call with Mr Crispin. During that call, Neal Lawrence proposed that they drop the asking price for the Highfield Drive contract by $5,000 and that the contract could be counter signed.[57]
[57] T51 lines 10-18.
Following her conversation with Mr Lawrence, Ms Peters phoned Mr Crispin and put the offer reduced by $5,000. The response of Mr Crispin was to the effect that he and his wife were looking at properties at $40,000 cheaper but he did not identify any of those properties.[58] She thinks her phone call to Mr Crispin was at about 1.18pm by reference to her telephone records.[59]
[58] T51 lines 26-29.
[59] P1 page 115.
Ms Peters then gave evidence that she called Neal Lawrence back and told him that the Crispins did not accept the counter offer. She also told Mr Lawrence that she had said to Mr Crispin that he should speak to his conveyancer but she has no clear memory of whether she told Mr Lawrence about the discussion about them looking at homes that were $40,000 cheaper.[60] She intended to speak to the conveyancer for herself and Mr Lawrence, Bertram & Co. She recalls speaking to Christine Bertram about the legality of the termination.[61]
[60] T52 lines 26-31.
[61] T53 lines 16-20.
At that stage, Mrs Peters did not form any view about the legality of the situation. Her feeling was of disbelief, panic, confusion and distress. Despite her six years experience in real estate she had never come across this situation where the purchaser was telling her that they wanted to cancel a contract.[62]
[62] T53 lines 34-38.
She then also tried to call Chris Gill from a firm of solicitors Corsers but he was unavailable. She tried to call him multiple times.
She then spoke to Liz Reece, the agent at Harcourts who had taken over her files when she left.[63] She asked to meet with Liz Reece to explain to her what had happened. She did have a meeting with Liz Reece at the Brock Harcourts office at Morphett Vale. In that meeting she explained to Liz Reece the telephone call from Mr Crispin, the position of herself and Neal Lawrence, and that Ms Reece should expect a telephone call from Mr Crispin at some stage.[64] She said that she was not happy for the contract to be cancelled in any way.[65]
[63] T54 lines 8-10.
[64] T54 lines 20-23.
[65] T54 lines 27-31.
Ms Peters recalls that in that meeting, she felt quite distressed, angry and confused and that she was shaking and her expressions would have made it obvious to Liz Reece that she was upset.[66]
[66] T55 lines 1-6.
After the meeting with Liz Reece, she was very upset and rang her sister and cried to her about what was happening.[67] She made a number of calls to Mr Gill at Corsers Conveyancing. She rang a number of times at 3.09pm, 3.34pm, 3.55pm and 4.02pm on that day. She could not speak to Chris Gill.[68]
[67] T55 lines 13-14.
[68] T57 line 2.
She recalls that at some stage during a telephone call when she did eventually speak to Chris Gill, it was pointed out to her that Schedule 2 of the contract refers to the price of $650,000 but also includes a reference to “or such lesser sum as the vendor agrees”.[69] When she heard that and recalled that that is what the contract said, she formed the view that the Crispins simply could not just elect to avoid the contract.[70]
[69] T57 lines 34-35.
[70] T58 lines 2-5.
Ms Peters gave evidence that she did receive an email from Mr Crispin at about 3.09pm that day but her recollection is that she did not open it until the next day because of all of the things that were happening, on the 18th July. She recalls seeing the letter the next day on the 19th.[71] The email of the 18th July encloses an addendum to the contract. In it is a document which says as follows:[72]
To Neal Anthony Lawrence and Melissa Peters
Dear Neal and Melissa,
As discussed this morning and mutually agreed we wish to terminate our contract dated 29 March 2011 to purchase 1 Highfield Drive Aberfoyle Park as of today.
After many months of trying to satisfy the contractual arrangements of selling our property at 11 Coastview Court Chandlers Hill for a minimum of $650,000, we believe that the market will not allow us to move forward and complete the transaction, as to date we have no offers that meet this criteria.
We wish to remove the obligation of both parties to continue under the conditions of the contract, which will allow both parties to enter into the new contract on the abovementioned properties.
[71] T61 lines 18-22.
[72] P1 pages 116-117.
Also on that day, she received a telephone call from Mr Crispin.[73] In the email from Mr Crispin at 4.37pm on 26 July, Mr Crispin said that they had to work out a solution to the problem and that they thought that she (Ms Peters) was acting in their best interests and they would like to come to a resolution of the problem. He said that there was no way that they could settle on both contracts.[74]
[73] P1 page 164.
[74] T65 lines 36-38.
The difficulty facing the defendants was that they had purchased another home and had entered into a cash unconditional contract for that other home.
Ms Peters responded to the email from Mr Crispin on 27 July at 10.17am.[75] She again urged the Crispins to contact their agent Liz Reece and their conveyancer.[76] Ms Peters gave evidence that she refused to call Mr Crispin back.[77] Her response was by the email of 27 July.[78] Mr Crispin responded to that email by an email of Thursday 28 July at 10.48am.[79] In the email, he said that Ms Peters was not correct. He asserted that the instructions clearly given were that they would not proceed with the sale of the house for less than $650,000 and that is why they initially rejected the offer of $640,000. He also asserted that Ms Peters knew that their objective was to downsize and reduce the mortgage and that was not met with the offer of $640,000 and that they had only proceeded with the signing of the contract of sale on their new home, once they had an agreement with Ms Peters to terminate the contract on the Highfield Drive property. That would allow them to purchase a less expensive home.
[75] P1 page 163.
[76] T67 line 6-10.
[77] T70 lines 2-3.
[78] P1 page 163.
[79] P1 page 162.
Ms Peters gave evidence that she did not respond to this email and it was following the receipt of this email and negotiations in relation to it that she was dismissed from her employment with Open Door Real Estate.[80] The email of 28 July 2011 was copied to Liz Reece at Brock Harcourts.[81] That caused Ms Peters significant distress and as far as she was concerned, there was nothing further she wanted to say to Mr Crispin because she had said everything to him in the email of the previous day.[82]
[80] T71 lines 26-35.
[81] T71 lines 31-34.
[82] P1 page 163.
Ms Peters gave evidence that she did not understand the expression “objective” set out in the email of 28 July.[83] She had never been informed of such an objective in her negotiations.
[83] T72 line 4; T73 line 4.
Mr Crispin then wrote an email of some five pages to Andrew Biszczak.[84] Following the receipt of the letter, Ms Peters employment was terminated. Ms Peters said that she did not see this email at the time.[85] She received a notice of termination on 29 August 2011.[86] She received no explanation as to her termination.[87] She recalls that Mr Biszczak did ask her not to pursue the matter against the Crispins because he did not want any negative connotations between clients and a new business. Despite the request from the Biszczak’s, the plaintiffs decided that they would pursue a right of legal action and it was following that decision that Ms Peters’ was dismissed.[88]
[84] P1 pages 170-174.
[85] T74 lines 3-10.
[86] P1 page 200.
[87] T73 lines 34-36.
[88] T74 lines 3-10.
Neal Lawrence did write a letter to the Crispins[89] and the Biszczak’s (Open Door Real Estate) did respond to the Crispins’ letter by letter of 2 August 2011.[90] In the letter, Mr Biszczak said that he took control of the sale process from 16 July 2011 when a potential cash purchaser had been identified. Mr Biszczak says that at no time did they discuss anything about the fact that Ms Peters was to terminate her existing contract with the Crispins. He confirms that the only discussion was a cash unconditional contract for the Crispins to consider.
[89] P1 page 176.
[90] P1 page 181-182.
Mr Biszczak records that after some consideration by the Crispins, they came in late on 18 July 2011 and accepted the written offer for a cash unconditional purchase of their property for an amount that was only $9,000 less than the listing price. It was only at that time, that they did raise some aspect of the contract with the plaintiffs and the only contact Mr Biszczak had with the contract was that there had been an extension on the contract conditions. Implicitly, Mr Biszczak denies any allegation made by the Crispin’s that the Biszczaks knew that the Chandlers Hill property owned by the Crispins should not be sold without Melissa Peters (and Mr Lawrence) first having agreed to terminate the contract for Highfield Drive. Mr Biszczak asserts that:
… you should have given us the termination notice dated 27 July 2011 on 18 July 2011. You did not.
Evidence of Mr Lawrence
Mr Lawrence said that he was 43 years of age and he had lived with Ms Peters for about a year or slightly shorter. They had purchased the Highfield Drive property in 2010 and had not held it for a period of 12 months at the time they decided to separate. When they decided to separate they arranged for the Highfield Drive house to be sold and they would separate the proceeds.
He recalls that an offer for purchase of the home was received from the defendants.[91] The offer was acceptable.[92] He was also aware of the schedule and the fact that the defendants wanted to sell their home and wanted to be allowed 30 days to sell their home. He signed each of the addenda. When he did sign each of the addenda, he was aware from what he had been told by Ms Peters that the defendants had not sold the Chandlers Hill property.[93]
[91] P1 page 35.
[92] T153 line 32; T154 line 3.
[93] T154 lines 12-34.
The first addendum was signed by him because he and Ms Peters agreed to extend the time for the defendants to sell their home.[94] He said that the first extension date passed without the defendants having sold their property and therefore he agreed for a second addendum to be executed extending the time further to the 30th and 31st of August 2011. All four participants agreed to the addenda.[95]
[94] P1 page 83.
[95] T154 lines 35-36.
He was also aware that the defendants had real trouble selling their property through the agency of Dean Crow, and he was also aware that Ms Peters became involved in the selling of that property as a retained agent.[96] Her recalls that somewhere around 16, 17 or 18 July 2011 he first became aware that an offer had been made on the property owned by the defendants and therefore, there was a real possibility that the Highfield Drive property was going to be sold. At that time, he was living at the property and Ms Peters had moved out.
[96] T155 lines 4-13.
The next he heard about the matter was that he received a telephone call from Ms Peters. He said that she was hysterical and crying and was plainly upset and agitated.[97] He said that he was at work when he received the call. Ms Peters told him that the defendants wanted to reject the contract. He recalls that all he said to her was that they could not do that.[98] He said that he got another call from Ms Peters a short time later within about an hour. He recalls saying in that conversation that they ought to consider reducing the Aberfoyle Park property price by $5,000 just to get the sale over and done with because he had had enough of the matter at that stage.[99] Ms Peters said that she would put that offer to the defendants. He had a further conversation with Ms Peters after that time and he thought that she was so hysterical that she was at the point of breakdown.[100] She said that the defendants were still refusing to move forward and a $5,000 was not enough.[101] He says that she said something to him about loving his wife but he could not move forward any longer.[102] He said her state was quite upset. She was manic, crying, she had an elevated voice, and was obviously agitated.
[97] T156 lines 30-33.
[98] T156 lines 34-35.
[99] T158 lines 11-15.
[100] T158 lines 21-22.
[101] T158 lines 33-38.
[102] T158 lines 33-38.
At some stage he became aware that Ms Peters had consulted a conveyancer and he thinks it was Bertram and Co. After that, they went through the contract together. He thinks it might have been after the advice was received from Bertram and Co. When they went through the contract they identified Schedule 2 and in particular identified that the figure for sale by the defendants was $650,000 or such lesser sum that the defendant agrees to. He said he became much less agitated about the situation after that time.
Mr Lawrence recalls receiving an email from the defendants which attached the further document which was a proposed addendum to a contract.[103] It effectively called upon them to give up their rights under their contract. He said he had no intention of signing it and would not sign it because he was never agreeable to that proposition.[104] He then saw a further email later in the day from Mr Crispin to Ms Peters[105] and prior to that time, he had not been aware that the defendants had purchased another house.[106] He is quite certain that this was the first time he became aware of that fact.
[103] P1 page 116; 117.
[104] T160 lines 16-20.
[105] P1 page 164.
[106] T160 lines 34-36.
He then had input into a response.[107] He does recall receiving a response being the email of the defendants of 28 July 2011.[108] He saw the defendants’ cancellation of contract by mutual agreement document.[109] He refused to sign that.[110]
[107] P1 page 163.
[108] P1 page 162.
[109] P1 page 166.
[110] T162 lines 1-2.
Mr Lawrence said that he knew that they wanted to preserve the price for the property at Highfield Drive because the market was declining.[111] He denied the assertion that he signed the second addendum in the hope that $650,000 was achieved. He said he kept signing it because of the interest shown by the Crispins in the Highfield Drive property. Mrs Crispin wanted to come over and do weekly gardening. Also, Mrs Crispin asked for permission to show people through the house. He denied that the addenda were being signed to allow Open Door Real Estate more time to see if they could achieve a sum of $650,000 or a sale price that the vendor agreed to.[112] He thought it was probable that in light of what was going on and the interest of the Crispins in the property, that even a further addendum would be signed but he does not think that any other addenda were signed after the second one. He said that the only reason that he could not allow Mrs Crispin to do the gardening on a weekly basis was for insurance reasons. They asked to be allowed to show family members through the property, and he did leave a key and left the house open for them.
[111] T165 lines 10-20.
[112] T177 lines 19-27.
Evidence of Mr Crispin
Mr Trevor Crispin gave evidence that the Crispins had lived at Chandlers Hill for about 11 years and in early 2011 decided that it was a very large property with very few people living in it and they wanted to downsize to a smaller house.[113] As a consequence they decided to put their house on the market and they entered into a sales agency agreement with Dean Crow.[114] The range of selling prices within the sales agency agreement was $650 – 700,000. The vendors asking price was $650,000.[115] It was after the appraisal by Mr Crow that the range of $650 – 700,000 was decided upon. That occurred after they did a comparison of sales.
[113] T219 lines 10-22.
[114] P1 pages 21-34.
[115] T219 lines 36-38.
Soon after that decision was made, they saw the Highfield Drive property.
They went to one of the open inspections and met the plaintiff Ms Peters at one of them and they think this probably was about mid to late March 2011.[116]
[116] T221 lines 2-6.
After inspecting the property, the defendants submitted an offer[117] and signed a contract on the weekend after the offer was put.[118] Mr Crispin became aware that Ms Peters was the agent and the vendor at the time he signed the contract but he understood that his wife had that information much earlier.[119] Ms Peters informed them at the signing of the contract that she and Mr Lawrence had owned the property for less than 12 months and they had separated.[120]
[117] P1 page 35.
[118] P1 pages 36-49.
[119] T221 lines 19-25.
[120] T221 lines 28-31.
Mr Crispin said that at the time of the discussion at the signing of the contract, she was told that they had been discussing the market value of their property, that they were downsizing and that they wanted a net profit of $100,000 on the sale of their property.[121] He was referring to the content of the second schedule. He said that $650,000 would be the lowest that they would go. His explanation was that because he was close to 50 years of age and thinking about accumulating funds for retirement, he wanted a net result of around $100,000.[122]
[121] T222 lines 1-7.
[122] T222 lines 12-18.
He identified on the written portion of the schedule[123] that the figure of $650,000 is in his writing. He identified that Ms Peters wrote the balance of the schedule and he thought the timeline of dates within the schedule was reasonable to enable the sale of the properties.[124] Mr Crispin said that he had an understanding that if they did not get $650,000 for their home they would not move forward on the purchase of the Highfield Drive property. He recalls that he asked Ms Peters to confirm that if the offer received on the Chandlers Hill property was less than $650,000, then they would not need to proceed with the Highfield Drive property.[125]
[123] P1 page 40.
[124] T222 lines 21-37.
[125] T223 lines 1-5.
Notwithstanding that Mr Crispin said that he was insisting on a figure of $650,000, he agreed that the advertising range initially was $650 – 700,000. He agreed that the range in the end came back to $600 – 650,000 by the end of the agreement with Mr Crow because Mr Crow thought that they were restricting their market.[126] The lower price range was due to the lack of interest. In answer to a question from me, Mr Crispin agreed that he had received no offers for the property at any of the ranges advertised by Mr Crow.[127] He said that Mr Crow was still confident that he could negotiate up on the price of a figure of not less than $650,000.
[126] T224 lines 28-38.
[127] T227 lines 28-33.
Mr Crispin confirmed by email of 26 May 2011[128] that he received advice from Ms Peters that she had commenced working for Open Door Real Estate.[129] At about that time, they were getting towards the end of the sales agency agreement period with Dean Crow, there were no results coming (there were no offers) and Ms Peters said to them that her new employer Andrew Biszczak was extremely good and that they might consider him.[130] This conversation occurred sometime after 26 May 2011.
[128] P1 page 79.
[129] T225 lines 12-17.
[130] T225 lines 20-27.
There was a first addendum to the contract for Highfield Drive.[131] That document was emailed to Mr Crispin by Ms Peters, there was a request for signing and dating and return.[132] This was an extension of a further 30 days upon the contract timetable. The Crispins signed and returned that addendum and sometime after that time, Andrew Biszczak commenced as their agent for Chandlers Hill. He thinks it was sometime shortly after the Dean Crow agency terminated and after the commencement of that agency, he had a number of discussions with Andrew Biszczak about sales. There was an outline of strategy and how Mr Biszczak had achieved significant results.
[131] P1 page 82.
[132] T225 lines 31-36.
Mr Crispin agreed that he set a vendor selling price of $640,000[133] but he said that when he consented to that he made similar comments to Mr Biszczak as he made to Dean Crow. He said that he had a $650,000 limit. Mr Biszczak explained the position that people searched the web on price limits and a figure of $649,000 would come up under a different limit than $650,000 and this was a far better strategy in relation to persons using the internet to search for homes.[134]
[133] P1 page 86.
[134] T227 lines 7-17.
The property was then marketed and advertised by Open Door Real Estate.[135]
[135] P1 pages 19-20.
Sometime after the first addendum lapsed, he received an email of 13 July 2011[136] in which Ms Peters said there had been a very successful private viewing and hoped there would be good news shortly. Attached to that email was the next addendum.[137] He thinks that there was a conversation on or about that date and he became aware that there was to be another open inspection on the 16th and a potential purchaser was to attend on that day.[138] The details given were that this person was from Sydney.
[136] P1 page 125.
[137] T228 lines 11-17.
[138] T228 lines 20-23.
The second addendum was signed on 16 July 2011 and he is certain that it was signed before an open inspection. Mr Biszczak was at the open inspection and Mr Biszczak was the person who put the addendum in front of him, asked him to sign it and witnessed it.[139] At the time that, it had already been signed by the two plaintiffs and after he signed he left the property to enable the open inspection to take place.[140] Soon after the open inspection his wife received a text message indicating that there was some good news coming following from the open inspection.[141]
[139] T229 lines 1-4.
[140] T229 lines 11-14.
[141] T229 lines 16-23.
Offer on the Chandlers Hill Property
Mr Crispin gave evidence that he expressed his disappointment at the offer of $640,000.[142] He said the bottom line was that they wanted $650,000. He was taken to the contract that was signed by Mr S.[143] The original offer was $640,000 and they amended the offer to $645,000. He said that was really a last ditch effort. He said that he told Ms Peters that he was not happy with $640,000, reinforced that they were downsizing and that they needed to get about $100,000 from the property. He said that when they had a discussion about the amendment to $645,000, Ms Peters said that the offer of $640,000 was a good offer, it is a good contract because it is cash unconditional and they would not really want to lose the purchasers.[144] He said that he then had a discussion with his wife about whether or not they should take the property off of the market. It was really only a last ditch effort to counter offer $645,000. Also at that time, Mr Crispin said that he asked Ms Peters to reduce the price of Highfield Drive property but she refused.
[142] T230 lines 1-4.
[143] P1 page 97.
[144] T230 lines 31-38.
There was an open inspection of the property on 17 July 2011 and after the open inspection, Ms Peters left some documents on the kitchen table. There was a note indicating that there was no luck at the open inspection. The only people who turned up were two couples who turned out to be neighbours and they did not show any interest. The handwritten letter[145] and the other documents that they received indicated that the counter offer of $645,000 was rejected. The best offer from the market was $640,000.
[145] P1 page 106.
Mr Crispin said that after receiving the letter, he and his wife had lengthy discussions and they formed the view that the price of $640,000 would not get them to where they wanted to be and if they could not get the contract they wanted, they would stay in the house.[146]
[146] T233 lines 1-11.
He said that he told Mr Biszczak over a long discussion that the offer of $640,000 does not meet the Highfield Drive contract and does not get them to where they want to be.[147] He said he wanted to keep advertising and Mr Biszczak said that they would not get a better offer. Mr Crispin formed the view that if he could not get people to move on the contract, that is the potential purchaser or the plaintiffs, he thought that he would let all of the contracts lapse and run the sale process at another time and in a different market.[148]
[147] T233 lines 17-21.
[148] T233 lines 17-38.
He said that his conversation with Mr Biszczak occurred on the night of 17 July and this was a day after Mr Biszczak had witnessed his signature on the addendum extension extending the time to 30 August 2011 and 31 August 2011 respectively.[149]
[149] P1 page 94.
The evidence of Mr Crispin is that Mr Biszczak as the principal of the business Open Door Real Estate had attended to witnessing the execution of the addendum of 16 July 2011 for Highfield Drive. On Mr Crispin’s evidence, on the evening of the next day, Mr Biszczak had a discussion with Mr Crispin, in which Mr Crispin indicated that he was not prepared to go ahead with the contracts and would let them lapse. It was Mr Biszczak who arranged for the execution of the contract with Mr and Mrs S of the purchase of the Chandlers Hill property in circumstances where Mr Biszczak knew of the addendum, knew of the contract in relation to the Highfield Drive property and apparently said nothing about the fact that the defendants were contractually bound to that contract because of the addendum that they had executed in the presence of Mr Biszczak.
It is difficult to accept that evidence in circumstances where Ms Peters had withdrawn from the agency because of her perceived difficulty in proceeding with the matter and Mr Biszczak had taken over the agency as the principal of the business. So much is reflected in the letter from Open Door Real Estate to the defendants dated 2 August 2011.[150] That letter is a contemporaneous document sent by Mr Biszczak under his letterhead to the defendants. In paragraph 2 he reiterated that at the time of the agency with Open Door Real Estate, the defendants had a prior contract through another agent to purchase a property part-owned by Melissa Peters. In paragraph 3 of the letter Mr Biszczak says that the agency obligation was to sell his property. That obligation was performed and Mr Biszczak took independent and complete control of the sale process from Saturday 16 July 2011 when he identified a potential cash purchaser and obtained an offer in writing for Mr and Mrs Crispin to consider. Paragraph 4 is informative. It reads as follows:
At no time did I tell you nor did you ask me, that Melissa Peters was to terminate her existing contract with you. I simply advised you that there was a cash unconditional contract for you to consider.
You considered that and after some consideration came in late on 18 July 2011 and accepted the written offer for a cash unconditional purchase of your property, for an amount of only $9,000 less than your listing price.
We were not privy to any direct discussions you had with Melissa Peters. I witnessed an extension of the contract conditions for you on 16 July 2011.
You did raise with us Melissa’s existing contract but at that time we had no idea what your arrangements were with her.
[150] P1 pages 181-182.
Alleged cancellation of the contract
Mr Crispin gave evidence that he spoke to Ms Peters via a phone call on 18 July.[151] He said the phone call was made at around midday. He had taken the day off of work because he had decided that his wife and he had some things to discuss and they needed to go through all of the options before them.[152] They would then make a decision about what they would do. It was in that background that he gave Ms Peters a telephone call.
[151] T238 lines 32-35.
[152] T239 lines 2-10.
He again advised Ms Peters that they would not accept the offer of $640,000. He said that this was the third time that he had spoken with Ms Peters to inform her that they would not accept that offer.[153] They would not continue with that purchase. Mr Crispin also gave evidence that he made abundantly clear to Mr Biszczak in the afternoon and evening of 17 July 2011 that they would not accept the offer of $640,000.
[153] T239 lines 14-26.
Mr Crispin gave evidence of the conversation, as he alleged it to have occurred on 18 July at about midday. He said that he spoke to Ms Peters and told her that they (he and his wife) would not accept the offer of $640,000 and they could not continue with the purchase. He said that Melissa Peters then said to him words to the effect would you like to cancel the contract on our house. He said “yes, Melissa at $640,000 we won’t sign the contract. It doesn’t meet out financial goals and it doesn’t meet our conditions. We’d like to terminate. Would you terminate the contract?” Melissa Peters replied “yes”.[154]
[154] T239 line 30-32.
He said that he then thanked her for allowing “… us both to move forwards, we can sign the contract to sell our house, you can sell yours or put it back on the market and Open Door will get the commission for the sale of our house…”.[155]
[155] T239 lines 30-36.
Mr Crispin said that there was no discussion at that time of what would happen if she did not agree to cancel the contract. She had just said yes and there was no need to discuss that topic. He asserted that she said yes to cancelling the contract. She did not say anything else. He said that she was not surprised and he formed the opinion that she knew what he was talking about. She did not at any time say that she would need to talk to Neal Lawrence.
There is nothing else about that conversation that he can remember.
In her evidence, Ms Peters strenuously denied that any such conversation had taken place. There is therefore a complete contradiction between the witnesses about what occurred during that conversation. The oral acceptance of the termination of the contract by Ms Peters, in concert with Mr Crispin, is the basis of the defendants defence to the plaintiffs’ claim. The defendants claim that a contract for the sale and purchase of the land may be mutually orally terminated. The defendants rely upon the High Court decision in Tallerman and Company Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd[156]. I will consider those matters later.
[156] [1956] 98 CLR 93.
It will be necessary for me to return to this conversation. In order to resolve what might be seen to be diametrically opposed versions, it will be necessary for me to assess the whole of the background objective facts and to then come to a conclusion. There are a number of preliminary matters that need to be mentioned. Ms Peters gave unchallenged evidence that as a result of being told by Mr Crispin that the defendants were not prepared to proceed with the contract on the Highfield Drive property, that she became very distressed. She said that she spoke to a number of people in a very highly agitated and distressed state. The defendants accept that Ms Peters would have been distressed as a result of the conversation that she had with Mr Crispin. At one level, the acceptance of that distress is in contra distinction to the calm nature in which Mr Crispin said Ms Peters received the news of their intention not to proceed with the contract at $640,000 for the Chandlers Hill property and the announcement of their intention to terminate the contract with the plaintiffs. The evidence of Mr Crispin was that Ms Peters relatively calmly received that news and in the same fashion agreed that the contract should be terminated.[157]
[157] T240 lines 17-23.
Later in these reasons I will discuss my assessment of the witnesses. It is clear to me from my observations of Ms Peters in the witness box that she is a highly excitable, easily agitated woman. It is very difficult to accept that she would have received the news of the Crispins and have made an agreement to terminate the Highfield Drive contract in a calm and measured way as described by Mr Crispin. To the contrary, in the background of the separation from Mr Lawrence, the need to sell the house to resolve the financial circumstances of that relationship and for a number of other reasons, I do not accept that Ms Peters would have accepted that news or would have made that agreement in a calm, detached and level headed way. I am not able to accept Mr Crispin’s evidence to that extent. I will return to assess this matter in the background circumstances of the case based upon the objective evidence before the court.
Mr Crispin gave evidence that Ms Peters called back some five to ten minutes later and said these words:[158]
Would we change our mind if she dropped the price by $5,000.
[158] T241 lines 8-9.
Mr Crispin said that he replied that he would not do that because “it does not get us to where we want to be”. He said that they had seen properties for $50,000 less that would suit their needs.[159]
[159] T241 lines 11-13.
That was the end of the conversation. Mr Crispin gave evidence that he and his wife had been looking at other properties since March 2011. They became aware of a property in March that they liked. It had a contract on it and that contract failed. That was the property at Happy Valley (the Happy Valley property) and the Crispins gave evidence that they committed to a contract for that property in the evening of Monday 18 July 2011.
Mr Crispin gave evidence that he had a number of conversations with Mr Biszczak in the afternoon and evening of Sunday 17 July 2011. He said that in those conversations, he told Mr Biszczak that he was completely dissatisfied with the offer of $640,000. He said that he told Mr Biszczak that the only way he would accept the contract is if the plaintiffs cancelled their contract and that Mr Biszczak would need to have a discussion about that.[160] In answer to a question from me, Mr Crispin said that Mr Biszczak could be in no doubt about his unhappiness with the contract being $640,000.[161] He said that his decision at the time on the evening of 17 July 2011 was not to proceed with the contract at a price of $640,000.
[160] T241 line 35; T242 line3.
[161] T242 lines 4-7.
It was in that context, that the defendants said that they went to the offices of Open Door Real Estate in the afternoon of 18 July 2011[162]. They both thought that they were at the premises at about 4.00 pm in the afternoon. They intended to sign the contract for $640,000. Mr Crispin said that when he and his wife arrived at the premises, Ms Peters was leaving.[163] He said there was a conversation in the doorway and his wife said to Ms Peters words to the effect:[164]
I’m sorry it didn’t work out with buying your house.
[162] T241 lines 21-23.
[163] T242 lines 27-31.
[164] T242 lines 36-37.
Ms Peters said words to the effect:[165]
That’s okay, these things happen for a reason sometimes.
[165] T243 lines 1-2.
Mr Crispin said that Ms Peters did not express any protest or disappointment and certainly did not suggest that she disagreed with the cancellation.
It was then that the defendants proceeded to the office of Mr Biszczak and signed the contract for the sale of the Chandlers Hill home at $640,000. They thought that it was a matter of urgency on their part because they had signed a contract to settle in four weeks time.[166] Mr Crispin said that they had both been looking for a similar property within that time frame and had already identified the Happy Valley property. They knew the agent for that property quite well, he made a phone call to the agent and told the agent that they were interested in purchasing the Happy Valley property.
[166] T243 lines 16-29.
The Happy Valley property was at 17 Charlson Street Happy Valley. It was after the contract was signed for the sale of the Chandlers Hill property, that they went and signed a contract to purchase the Happy Valley property.[167] Mr Crispin thought that that was signed at about 5.00pm. The offer was agreed to by the vendors of the Happy Valley property later that evening.
[167] T246 lines 1-9.
Mr Crispin confirmed that prior to going to the offices of Mr Biszczak on 18 July, he had prepared an email to Ms Peters dated 18 July which was sent at 3.09pm.[168] Attached to it was a document called an addendum document. Mr Crispin confirmed that he drew the document himself and he did not seek any assistance in drawing the document. It reads as an addendum to the contract dated 29 March 2011.[169] In the first lines of the addendum, it reads:
Dear Neal and Melissa,
As discussed this morning and mutually agreed we wish to terminate our contract dated 29 March 2011 to purchase 1 Highfield Drive Aberfoyle Park as of today.
[168] T244 lines 1-7.
[169] P1 pages 116-117.
Both the defendants in their evidence confirmed that this addendum[170] was never executed and returned by the plaintiffs. Other similar documents in a different form or with different headings to a similar effect were sent to the plaintiffs seeking the plaintiffs’ written response to the termination of the Highfield Drive contract. None of those were signed and returned.
[170] P1 page 117.
Defendants’ understanding of the contract
Mr Crispin confirmed that as he understood the content of Schedule 2 of the contract for sale and purchase of Highfield Drive, he and his wife were not obliged to accept any offer for a figure under $650,000. They were required through their agents to use their best efforts to achieve a sale of $650,000 for Chandlers Hill and if that was not achievable, they were not obliged to proceed with the purchase. He also agreed that he always understood that if the property did sell for less than $650,000 he and his wife were still obliged to purchase the property at Aberfoyle Park. [171] He said that he always understood at the time that they would need to cancel the contract.
[171] T256 lines 16-20.
Mr Crispin had his attention drawn to the annexure to one of his documents in the tender bundle.[172] He confirmed that this was a document that he received as an annexure to an email from his conveyancer, Mr Bruce Twelftree. He agreed that the underlinings on the document in blocks one and three were on the document when he received them. He was able to later confirm that this document was sent to him with an email from Bruce Twelftree to himself dated 26 July 2011 at 1.28pm. In cross examination, Mr Crispin again said that he always understood that the contract for the Highfield Drive property could not be “left hanging” if he and his wife accepted an offer for $640,000 because of the terms within annexure 2 special conditions to that contract.[173] He said that he understood that he would still be bound to purchase at that time and he said that he thought that Bruce Twelftree was doing his duty as a conveyancer to remind him of that fact although he did not think that he needed reminding. His attention was also drawn to the content of the addendum sent on 18 July 2011 at 3.09pm.[174] He denied that he was purporting to cancel as a purchaser alone and maintained that the parties were intending to terminate by a mutual agreement.[175] He did confirm that Bruce Twelftree’s advice was that you could not just cancel on their verbal termination, but Mr Crispin also disagreed that he merely told Ms Peters that they were not proceeding with the contract.[176] He said that she agreed that the contract was at an end. Mr Crispin maintained that he did not ever believe that he thought that he was not obliged to go through with the contract if the offer was under $650,000 and that was why Bruce Twelftree was bringing the matter to his attention.[177]
[172] P1 page 159.
[173] T257 lines 7-15.
[174] P1 pages 116-117.
[175] T257 lines 28-37.
[176] T258 lines 13-17.
[177] P1 page 159; 155.
Evidence of Mrs Crispin
Mrs Leanne Crispin gave evidence. Initially in her evidence when taken to the contracts for the Aberfoyle Park property, [178] she said that she remembered a discussion with Ms Peters when the Crispins told Ms Peters that they had to get $650,000 for the Chandlers Hill property, that they did not wish to sell below that price, that if they could not get above that price they would let the contract expire or there would need to be a mutual agreement to terminate it because it would not meet their financial goals.[179]
[178] P1 page 36; 40.
[179] T304 lines 2-7.
When Mrs Crispin gave her evidence, my observation was that she appeared to speak in rote fashion. She quite frankly admitted that she delegated all dealings in the matter to her husband Trevor and, in a question from me, she admitted that most of what she could say about the matter was communicated to her from her husband. For example, she said that she had a recollection that on the morning of the 18th of July 2011, her husband had a telephone discussion with Melissa Peters and then after that discussion he said that Melissa Peters had agreed that they could mutually terminate the contract and that they were no longer obligated to buy the Aberfoyle Park property.[180] I am satisfied that her memory has been informed by what she has been told by her husband.
[180] T307 lines 14-30.
Mrs Crispin also gave evidence of a conversation at the Open Door Real Estate office in the late afternoon of 18 July 2011. There was a passing discussion at the real estate office premises. Ms Peters was leaving the premises as they were arriving. She said to Ms Peters words to the effect that she was sorry that it had not worked out with them buying her house, and Ms Peters said that is okay these things happen for a reason.[181] It was put to her that Ms Peters may have said everything happens for a reason. However, in my opinion, on whatever version may be accepted of that conversation, it does not add to the forensic task that is to be undertaken here. That is because this conversation could be as much informed by a belief on the part of the defendants that because they got less than $650,000 for the Chandlers Hill home then they were not bound to proceed with the Highfield Drive property. That view point is consistent with the documents which followed which I have discussed above. That view point is likely to have been in the mind of Mrs Crispin, because that was her husband’s state of mind at the time. That would explain her statement. The unusual aspect about the conversation is that Ms Peters did not say anything more than to use an aphorism about everything happening for a reason but she may well have misunderstood what Mrs Crispin was saying and she may have been referring to the fact that they were only able to get $640,000 for their premises. It is to be recalled that this is a conversation in a doorway when participants in the conversation are going in opposite directions. The result of this matter would not turn on such a conversation which is to be categorised as a “by the by” conversation between people passing in a doorway. I am not prepared to give the conversation any further weight than that.
[181] T306 lines 7-9.
Assessment of witnesses
In my view, the matters that were in the minds of the defendants as described in the evidence given by Mr Crispin above cannot be accepted. In the ascertainment of facts in this matter, it is my intention to rely upon the objectively available facts as they arise in the evidence. I am not prepared to assess the position of the plaintiffs or the defendants on the basis of demeanour alone. I found the plaintiff Melissa Peters an unsatisfactory witness in some respects because of her tendency to embellish her story with irrelevant matters. It was often the case that Ms Peters embellished answers she gave although it may be said that the answers given by her, on topic, were largely credible. The difficulty with the evidence of Ms Peters was that she was not able to remain focused upon answering questions on the relevant topics but apparently saw it as necessary to continually embellish her answer to better make her case.
The evidence given by Mr Lawrence was generally straight forward. Mr Lawrence displayed some unfortunate tendencies to become aggressive in giving his evidence however, I was generally satisfied that Mr Lawrence was attempting to answer the questions put to him to the best of his ability. I am also satisfied that he did so truthfully. However again I would not be satisfied about the evidence given by Mr Lawrence that directly relied upon the veracity of the evidence given by Ms Peters. To a very large extent, Mr Lawrence relied upon Ms Peters in the liaison between them and the defendants.
I am also satisfied that the evidence given by Mrs Crispin was generally derived from information given to her by Mr Crispin and therefore was coloured by that relationship. Mrs Crispin was quite frank and credible when she said she almost entirely relied upon her husband and left to him all of the arrangements concerning the sale and purchase of the properties. I formed the view that I could get little assistance from the evidence given by Mrs Crispin because she quite freely acknowledged that she was generally only repeating matters that had been communicated to her by her husband.
Factual Position
It is in that context that I turn to consider the factual position as it subsisted on 16, 17 and 18 July 2011. It is apparent from the cases of the parties that the axis about which this case revolves is the events of 18 July. For the reasons which follow, I am satisfied on the balance of probabilities that on 18 July 2011 Mr and Mrs Crispin were operating on the basis that, if they signed a contract for the sale and purchase of the Chandlers Hill property for a figure of less than $650,000 then they were not bound by Schedule 2 of the contract for the purchase of the Highfield Drive property. In my opinion, the belief of the Crispins is clearly demonstrated within the documentation which passed between the various parties soon after 18 July 2011. I am not prepared to accept the evidence of the defendants to the contrary. I do not accept the evidence of Mr Crispin that he was aware that the defendants were bound to the Highfield Drive contract at the time they entered into the Happy Valley contract. By extension I do not accept the evidence of Mr Crispin that he knew at the time that it was necessary to terminate the Highfield Drive contract first before entering into the Happy Valley contract. That point of view also accords with the general logic of events as they occurred on the 16, 17 and 18 July 2011 and as events transpired after those dates.
Following the events of 18 July, Mr Crispin sought advice of Mr Bruce Twelftree. On 9.17am on 26 July, Mr Twelftree sent to Mr Trevor Crispin an email[182] in the following terms:
Trevor have you sent this to Brocks at Morphett Vale or just to the vendors?
Did the second addendum get signed as this is extending the contract to 30 August?, if it was signed then the contract may still be alive until 30 August (you may get an offer for $650,000)
This addendum should be enough but perhaps it could have a heading “Termination of Contract” and also ask for the deposit to be returned to you at 11 Coastview Court.
Bruce
[182] P1 page 129.
Mr Crispin gave evidence that at the time of the sending of this email, Mr Twelftree was aware that the defendants had purchased the Happy Valley property.[183] He was also aware that the Chandlers Hill property had been sold and settlement was imminent.[184] In that background, Mr Twelftree was giving advice to the defendants that they may still be obliged to purchase the Highfield Drive property. It is not to the point that this advice may or may not be correct. The important feature is that the advice was being given by Mr Twelftree after him receiving the second addendum signed by the plaintiffs and the defendants extending the contractual terms until 30 and 31 August 2011. In his email, Mr Twelftree was plainly raising some doubts that he had in his mind that the defendants may not have been in a position to treat the Highfield Drive property contract as at an end because of the addenda that had been signed by all of the parties. When he refers to “addendum” in the third paragraph, he is referring to the document proffered on 18 July 2011 at 3.09pm by the defendants to the plaintiffs.[185]
[183] T259 lines 10-12.
[184] T259 lines 13-16.
[185] P1 pages 116-117.
There is a second important matter to be identified. Mr Twelftree does not identify in his email to the defendants that they had informed him that there had been an oral termination of the contract. Mr Crispin agreed with the proposition in cross examination that the logical meaning of the words is that that though the Chandlers Hill property has been sold for $640,000 that does not trigger an obligation to purchase the Highfield Drive property.[186] There was still a possibility within the second addendum period that the defendants may receive an offer of $650,000 or more for the Chandlers Hill property and that would trigger the obligation to purchase the Highfield Drive property. That understanding could only be obtained if Mr Twelftree has not been told that a figure of $640,000 purchase price for the Chandlers Hill property may also trigger the obligation to purchase in the event of the absence of a mutual termination.
[186] T259 lines 21-32.
Within the same judgement, a basis of surrender of an interest is discussed by Barrett J at [67]-[68]. His Honour refers to the first edition of “Williston on Sales” (Samuel Williston, “The Law Governing Sales of Goods at Common Law and under the Uniform Sales Act” (1909) at page 149) and said as follows:[259]
The text states the general proposition that the Statute of Frauds (s26 Law of Property Act) does not mention contracts of rescission or discharge which “are therefore not affected by its terms”. The appended footnote refers to Goss v Lord Nugent (above) and Wlschner v Ward 115 Ind 219; 17 NE 273 (1888) that adds:
An exception to this rule should perhaps, be made in the case of contract relating to land, as such contracts create immediately an equitable interest in the land. Equitable interests are within the statutes… the contract to rescind necessarily involves the surrender of an interest in land.
[259] Higgins v Statewide Development Pty Ltd [2010] NSWSC 183 at [67].
Barrett J then said at [69] as the matter was not fully argued and did not arise in the pleadings, he would not consider them further.
The plaintiffs submitted that whereas difficulties may arise under section 26 Law of Property Act, section 29 of the Law of Property Act provided the necessary solution. However, as I have said, section 29(1)(a) deals with the prohibition of any interest in land being created or disposed of except by writing signed by the person creating or conveying the same. Section 29(1)(c) provides that a disposition of an equitable interest must be in writing, signed by the person disposing of same. In my opinion, the meaning of this provision is that no interest in land can be created except in writing, signed by the person creating or conveying that interest. Similarly, no interest in land can be disposed of except by writing signed by the person creating or conveying the interest. A conveyance is defined in section 7 of the Law of Property Act as follows:
Conveyance includes a mortgage, charge, lease, assent, vesting, declaration, disclaimer, release, surrender, extinguishment, and every other assurance of property or of an interest therein by any instrument, except a will; convey has a corresponding meaning.
If it be accepted that the purchaser under an uncompleted sale of land has an equitable interest in land, which in my opinion cannot be in doubt, then it is arguable that through the rescission there has been a disposition because there has been a conveyance by virtue of the fact that there has been a release. It would follow that it being a conveyance, which is defined to include a release, then for section 26 and section 29 of the Law of Property Act, there has been a disposition of an interest in land and there has been no writing. The plaintiffs argue that this is merely a surrender of an equitable interest. It is alleged to be the abandonment of the right to sell by the plaintiffs and so, based upon the reasoning of Barrett J at [64] in the Higgins decision it is a surrender of the equitable interest both for section 26 of Law of Property Act and for section 29(1)(a) and (c) of the Law of Property Act.
The plaintiffs also referred to the decision of the High Court in Adamson & Ors v Hays & Ors.[260]This case concerned an oral agreement for the adjustment of the holding of various mineral claims on Crown land in Western Australia and for one of the holders of those mineral rights to offer to a third party an option to acquire a fifty percent interest in the claims upon certain specified terms and conditions including it being subject to a prior agreement being reached by other parties. A question for consideration by the High Court was whether or not a mineral claim under the Mining Act 1973 (WA) constituted land. The plurality, Menzies, Walsh, Gibbs and Stephen JJ held that a mineral claim under the Mining Act of Western Australia constituted land within the definition of land in section 7 of the equivalent of the Law of Property Act (SA) as expanded by the definition of mines and minerals in that section. Under the South Australian equivalent, land is defined to mean land of any tenure and mines and minerals whether or not held apart from the surface and … mines and minerals include any strata or seam of minerals or substances in or under the land and powers of working and getting the same. Therefore, although the relevant provisions of the comparative acts are not identical they are to the same effect.
[260] (1973) 130 CLR 276.
The leading judgements of the High Court were written by Walsh J and Gibbs J. Walsh J held at page 295 that if there was to be a change in the respective rights of the claim holders then it was necessary for there to have been writing as required by section 34(1)(1) of the Property Law Act (WA) the equivalent of section 26 Law of Property Act (SA). It was not possible to grant a decree of specific performance in respect of the contract reached between the parties. His Honour held (at page 296) that the agreement reached between the parties which was called a pooling agreement, was intended to take effect immediately and was directed to an immediate settlement of the entitlement to the claims:
This being a settlement which would make it possible for the appellants “out of their interests in the said claims” to offer the option… and would permit the other agreed dealings with other parties with their respective interests in the claims.
The agreement reached between the parties contemplated that there would be changes in the share rights of the parties to the pooling agreement under the Mining Act. This was a dealing with the equitable interest in the claim which would have been otherwise effective but for the lack of writing because, as his Honour has held there was an intentional disposition of an equitable interest in claims which were required to be reflected in writing. At page 297 his Honour held as follows:
It was argued that s34(1)(a) had no operation for the reason that it applies only when there is some kind of formal assurance and not when, as it was submitted occurred in this case there is a mere contract without more. But in my opinion, it is not correct to say that the rights created by the agreement were mere contractual rights. If it be held, as I think it should be, that the agreement dealt with rights which were interest in “land” as defined, I am of the opinion that the conclusion must follow that the agreement was rendered ineffective by s34(1)(a) unless that provision should be construed as applying only to legal interests in land. It was not argued however, that it should be so construed and it would be difficult to support that construction… (under) the same Act which makes a deed necessary for the conveying or creating of a legal estate. If s34(1)(a) is taken to apply to the creating and to the disposing of equitable interests there is no reason, in my opinion, for denying its application to an oral agreement by which the parties agree that property shall be held as to the beneficial ownership thereof in certain shares or for holding that it can apply only to an oral statement expressed in the formal language that would be appropriate to a formal conveyance or grant.
Gibbs J reached the same conclusion at pages 303-304. His Honour concluded that (the equivalent of section 26 Law of Property Act) may now refer to agreements that operate as immediate transfers and to contracts to transfer in future and may thus cover much of the field… and … the provisions of section 34(1)(a) must be given their natural meaning, without any inhibition that may be caused by a consideration of their history. It therefore follows that the provisions of the agreement providing for the grant of options will fall within section 34(1)(a) and being by parol, will be ineffective to create or dispose of any interest in their claims, if interest in claims are interests in land.
On the question of whether the defendants’ interest in the land constituted an equitable interest because it was the subject to the condition that the Chandlers Hill property must be sold, the plaintiffs relied upon the decision of White J in the New South Wales Supreme Court in GPT R E Ltd v Lend Lease Real Estate Investments Ltd & Anor[261] especially at 41 et seq. In that decision White J was dealing with the interpretation of a contract which contained pre-emptive rights. His Honour was called upon to decide whether a conditional call option constituted a disposition or an alienation of an interest in property. On that point, his Honour found that by one party entering into a put and call option deed which was subject to conditions precedent, the party who entered into the deed was dealing with its interests in the property in accordance with the ordinary concepts of dealing. Under the equivalent of the Law of Property Act provisions, the entry into the put and call option did not effect a sale, assignment transfer or declaration of trust and so the question of whether it was a disposition or assumption of obligations. White J relied upon the decisions of the High Court in Stern v McArthur[262] and Chan v Cresdon Pty Ltd.[263] His Honour summarised the law at [55] as follows:
…a purchaser under a contract, with a vendor’s obligation to convey is subject to an unfulfilled condition, has an equitable interest in the property which is sufficient to support a caveat, notwithstanding the purchaser is not then entitled to an order for specific performance of the vendors obligation to convey, but is entitled only to equitable relief in the form of an order to compel the vendor to do that which is necessary on his part to be done to cause the condition to be satisfied… and an injunction to restrain the vendor from dealing with the land inconsistently with the purchasers contractual rights… (citations omitted)
[261] [2005] NSWSC 964.
[262] (1988) 165 CLR 489 at [522]-[523] per Deane and Dawson JJ.
[263] (1989) 168 CLR 242 at [252]-[253].
White J, then went on to state at [62] as follows:
In Stern v McArthur Deane and Dawson JJ (at 523) when referring to the position of the purchaser under an unconditional contract of sale, but whose right to a transfer was contingent on the payment of the purchase price, said that the purchaser had acquired an equitable interest in the land measured by the protection which equity would afford him and to that extent the vendors beneficial interest was diminished. I do not consider that it follows from the extrapolation of this statement to conditional contracts, that the measure of protection which equity would afford Westfield means that GPT has already parted with or disposed of an interest in the property. Accepting as I must that Westfield has acquired a contingent equitable interest, its equitable interest is imposed on not carved out of the legal estate… GPT remains the owner of its interest. It has not parted with the beneficial ownership. Such contingent equitable interest as Westfield has is commensurate with its right, which equity will protect to compel GPT to honour its contract. It operates as an imposition on GPT’s title not as a subtraction from it.
The argument of the defendants was that that at the time that they entered into the contract to purchase the Highfield Drive property, subject to the sale of their own property at Chandlers Hill, they had a contingent equitable interest in the Highfield Drive property. The condition was inserted entirely for their benefit and they could call for the purchase of that property at any time. In other words it was not necessary to await the sale of the Chandlers Hill property in order for the defendants to be in a position to call for a transfer to them of the Highfield Drive property. That equitable interest was imposed on and was not carved out of the legal estate of the plaintiffs in the Highfield Drive property.
If it was necessary for me to decide the point, then, in my opinion, there is great attraction in the approach of Barrett J in his Honour’s decision in Higgins. However, as the comments by Barrett J at [62] etc are obiter only, and as they are inconsistent to an extent with the decision in Tallerman and are not cited by the learned authors of the Laws of Australia, it is difficult to do more than to suggest that his Honour’s reasoning is very persuasive. The reasoning is persuasive on the basis of the ascertainment of the interest in the Highfield Drive land held by the defendants which was an imposition on the title of the plaintiffs and not carved out of the legal and beneficial estate owned by the plaintiffs in that land. As well, the different wording of the Law of Property Act and the definitions of conveyance and disposition, largely marry with those provisions as they were considered by Barrett J in Higgins. In my opinion, the matters expressed by Barrett J in Higgins are generally consistent with and do not depart from the approach favoured by the High Court in Stern v McArthur and Chan v Cresdon as discussed by White J in the GPT R E Ltd decision.
Authority of Ms Peters to cancel the contract
The defendants also contended that at all relevant times, Ms Peters was acting with the ostensible authority of the plaintiff Neal Lawrence. In his text the Law of Agency Professor Dal Pont deals with ostensible authority at Chapter 20.[264] The defendants relied upon that discussion and upon the relevant passages in Halsbury’s Laws of Australia at Chapter 15, the author of which is also Professor Dal Pont. At paragraph 15-60 of the Laws of Australia, the learned author says as follows:
[15-60] Agency by Estoppel (Ostensible or Apparent Authority)
Agency by estoppel arises where one person by words or conduct represents to another that a third person has been authorised as agent, and in reliance the other person enters into transactions with the third person within the scope of that ostensible authority. The first mentioned person is estopped from denying the fact of the third persons agency under the general law of estoppels and it is immaterial whether the ostensible agent has no authority or merely acted in excess of the actual authority.
[264] Law of Agency 2nd Edition (2008) Dal Pont, G. Lexis Nexis Butterworths.
In this case, the first mentioned person is Neal Lawrence and the third person is Melissa Peters. The other person is the defendants.
The author goes on to say that:
..the holding out may be by acts of the principal or by the principal allowing the agent to hold herself out as having authority. No representation made solely by the agent as to the extent of his or her authority can amount to a holding out by the principal.
The principal cannot set up a private limitation upon the agent’s actual authority so as to reduce the ostensible authority. That is, so far as third persons are concerned, the ostensible authority is the sole test of his or her liability. If, however, the agent is held out as having only a limited authority to do, on behalf of the principal, acts of a particular class, the principal is not bound by an act outside that authority even though it may be an act of that particular class.
The onus lies on the person dealing with the agent to prove either actual or ostensible authority, and it is a question of fact in each case whether the ostensible authority exists for the particular act for which it is sought to make the principal liable. Fulfilling this onus requires affirmative proof of conduct amounting to holding out, the holding out being to the particular individual rather than merely to persons in general who may not have acted on that appearance. But where the third party knows, or should have know (in the sense of being put upon enquiry) that the agent’s actual authority is exceeded, the principal is not bound even though the unauthorised transactions are within the scope of the agents ostensible authority. [citations omitted]
The usual authorities referred to in this area include the decision of Freeman & Lockyear v Buckhurst Park Properties (Mangal) Ltd[265] applied by the High Court in Cabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co Pty Ltd[266]; Northside Developments Pty Ltd v Registrar General[267] and Brick and Pipe Industries v Occidental Life Nominees Pty Ltd[268]. These principles have been applied in South Australia regularly.[269] In response to my question of identifying evidence leading to a conclusion of conduct amount to the holding out by Mr Lawrence of Ms Peters, the defendants’ response was that at all material times Mr Lawrence permitted Ms Peters to deal with the matter and his is the act of a principal. She was the only person with authority to negotiate with prospective purchasers. The defendants pointed to two central pieces of evidence. Ms Peters provided two executed addenda to the defendants as the other party to the transaction. However, as I pointed out in argument, Ms Peters provided the two addenda and they were both executed by both of the plaintiffs. This would lead to the conclusion that Ms Peters was acting with the actual authority of Mr Lawrence in preparing and then seeing to the execution of the documents which were executed by him. This leads to the conclusion that she had his actual authority and there was no holding out by him. The defendants submitted that this action was a permitting by Mr Lawrence of Ms Peters to act in such circumstances where they could form the impression that she was in fact in a position to bind Mr Lawrence. However, as I again pointed out in argument, this was no more than a circumstance of actual authority.
[265] [1964] 2 QB 480 at [498].
[266] (1975) 133 CLR 72.
[267] (1990) 170 CLR 146.
[268] (1990) 3 ACSR 649.
[269] See Cantanzariti v Lee Road Pty Ltd [2005] SASC 419.
The second circumstance pointed out by the defendants was that by virtue of the fact that Mr Lawrence permitted Ms Peters to conduct all of the dealings, he was holding her out as having been clothed with his authority. In particular the defendants pointed to the fact that Ms Peters made a call back to the defendants on 18 July 2011 offering to reduce the price by a figure of $5,000. It was argued that from Mr Crispin’s perspective, she was holding herself out to have actual authority to bind both herself and Mr Lawrence. By Ms Peters putting a proposal to Mr Crispin and asking to reduce their asking price by $5,000, this would mean that Mr Crispin would have to reconsider the position and this was more in the nature of Mr Lawrence clothing Ms Peters with authority to make important decisions.
I am unable to accept that submission because in my opinion it is a non sequiter. On the defendants case, the oral agreement allegedly binding both Ms Peters and Mr Lawrence had been made at 12 o’clock on that day. Any phone call after that day was, on the defendants case, an attempt to renegotiate a contract whereas the evidence of both parties was that the call back made by Ms Peters was in the context that she was asking the defendants to reconsider their decision, made unilaterally to terminate the Highfield Drive contract. The defendants argued that the formation and presentation of the addenda to the contract showed a course of conduct. However, in my opinion they were no more than the occasions of actual authority. The defendants also attempted to argue that they were not privy to any limits on the authority of Ms Peters. However, that argument would only be relevant in the circumstances where it might be said that Ms Peters exceeded her authority. There is no evidence or assertion to that effect. It is also put on behalf of the defendants that at the time of the discussion about midday on 18 July, if the defendants case is to be believed, Ms Peters said nothing about the fact that she would need to consult Mr Lawrence about the oral termination. I am unable to accept this argument for the same reasons.
The defendants also submitted that the court should not look at this matter in any process of looking at a snapshot but should look at it in terms of the cumulative dealings. The defendants in particular relied upon a decision of Darrell McGregor (Contractor) Ltd v Mountain Lake Holdings Ltd & PJL Lewis[270] referred to at paragraph 20.19 of the text Law of Agency referred to above. Although I accept the defendants’ submission, that decision bears close reading. This was an appeal in New Zealand from a decision of a District Court judge. It was heard by a single judge, Randerson J in the High Court of New Zealand. The relevant facts of the matter were that the first respondent, Mountain Lake, commenced development of an Alpine Village in Queenstown New Zealand. Mountain Lake engaged PL Design Ltd to carry out design work and obtain prices for the work. Mr Lewis was the principal director of PL Design
[270] [2006] NZHC 591.
McGregor Contractors was engaged to carry out preliminary site clearing works. Mr Darrell McGregor, the principal of McGregor Contractors, had previously worked with Mr Lewis who resided in Queenstown. Further work was necessary on the site before construction of the Alpine Village could commence and this included the extension of a culvert, the filling of a gully and other earthworks. A discussion took place between McGregor and Lewis concerning the additional works and including prices. During this discussions, Lewis requested McGregor Contractors to place fill on the site in the absence of any further contract being let for earthworks.
McGregor Contractors then arranged to place a substantial quantity of fill on the site and this was achieved on a progressive basis from early June 2002 over a period of several months.
McGregor Contractors did not win the contract for the additional site works and Mountain Lake was not satisfied with the quality of the fill that McGregor Contractors had placed on the site. McGregor Contractors was asked to remove the fill, it refused, and another contractor was retained to remove the fill. The cost was $40,770 and Mountain Lake then sued McGregor Contractors in trespass for the cost of removing the unwanted fill.
Mr Lewis did not have any actual authority (express or implied) to act as the agent of Mountain Lake nor to request the placement of the fill. At trial, McGregor Contractors contended that even though Lewis did not have actual authority, he had ostensible or apparent authority to do so and if that was correct, then there could be no claim in trespass because the entry by McGregor Contractors onto the site had been authorised by Mountain Lake’s agent to place fill onto the property. The trial judge found that Lewis did not have any authority to authorise the dumping of the fill and he had no authority to act as the agent of Mountain Lake and no authority, express or implied, to authorise McGregor Contractors to dump the fill. The court found in favour of Mountain Lake against McGregor Contractors. The trial judge did not consider the argument of ostensible authority finding that in the absence of any actual authority, there was no authority in Lewis to bind Mountain Lake and so the claim against McGregor Contractors succeeded.
At paragraphs [19]-[21] inclusive, Randerson J was critical of the decision of the findings of fact made by O’Driscoll J at first instance. Randerson J was satisfied that although there may well have been no apparent authority for Lewis to have entered into any contractual arrangements with the contractor, he considered that apparent authority to request or authorise the placement of fill on the site as involving “a function of a lower order”.[271] His Honour went on to say that:
There may not have been a binding contract at that time for further work at the site but, at the least, Mr Lewis had requested and authorised a significant step to be taken in advance of a further contract being entered into.[272]
[271] Darrell McGregor (Contractor) Ltd v Mountain Lake Holdings Ltd & PJL Lewis [2006] NZHC 591at [21].
[272] Darrell McGregor (Contractor) Ltd v Mountain Lake Holdings Ltd & PJL Lewis [2006] NZHC 591at [21].
His Honour then summarised the position at paragraphs [22] and [23] as follows:
While there does not seem to be any evidence of any express holding out by Mountain Lake in relation to Mr Lewis, the cases show that a course of dealing may be sufficient to establish a holding out by the principal. Here, Mr McGregor was aware by the time Mr Lewis’ request was made, that Mountain Lake was the developer and principal. He knew that Mr Lewis had authority at least to obtain prices from contractors and there had been the prior dealing over the site clearance contract through Mr Lewis. And, according to Mr McGregor’s evidence (if accepted), he had not then received the works order form but was told by Mr Lewis that he was going to get the culvert contract.
Viewed objectively from the perspective of Mr McGregor, it may well have been open for the Judge to conclude that Mr Lewis had been held out by Mountain Lake as at least having sufficient authority on its behalf to request or authorise the placement of fill (free of charge) on the site. It is reasonable to assume that Mountain Lake was content to allow Mr Lewis to deal with contractors and had not taken any steps to draw attention to any limits on his authority other than the need for a works order if contracts were to be let.
As will be seen, his Honour has not made a finding that Mr Lewis was held out by Mountain Lake as having authority on its behalf to request or authorise anything at all on its behalf including the placement of fill. His Honour finds that it may well have been open for the judge to conclude that. Based upon that assumption, his Honour finds that it might be reasonable to assume that Mountain Lake was content to allow Mr Lewis to deal with contractors and had not taken any steps to draw attention to any limits on his authority other than the need for a works order if contracts were to be let. In my opinion, that will depend upon the evidence to be led in relation to the matter, if further evidence is to be led or in respect of further findings that might be made.
Randerson J dealt with that issue at [24] of his judgement when, his Honour identified that the trial judge did not make any specific findings on the issue even though he accepted Mr McGregor’s evidence as generally being truthful. His Honour felt bound to send the matter back for further consideration by the trial judge because he was not able to make findings of credibility necessary to determine the issue.
Therefore, the case stands for no more than a proposition that it is possible to identify a cumulative course of dealings wherein by commission or omission, a principal clothes a person with sufficient ostensible authority and in respect of which, a court may make a finding that the principal is thereby estopped from denying that the agent has the necessary authority to bind the principal under the concepts and criteria of ostensible agency.
In my opinion, there is no such conduct in the case at bar. I am not able to accept the contentions of the defendants that it is open for me to infer that Mr Lawrence clothed Ms Peters with authority to conduct all relevant dealings in relation to the property on his behalf. I am also unable to accept the submission that Mr Lawrence would have been content to permit Ms Peters to obtain the best outcome and that, in that context, she had ostensible authority to orally agree to the discharge of the Highfield Drive contract.
I am unable to accept that submission and the submission of the defendants that Mr Lawrence ought to be estopped from denying that he authorised the cancellation.
In my opinion, a survey of the relevant documents in exhibit P1 discloses that at all material times, Mr Lawrence was a person who gave actual authority to Ms Peters to act on his behalf in and about the maintenance of the contract between the plaintiffs and the defendants for the sale and purchase of the Highfield Drive property. That was the limit of the involvement between Mr Lawrence and the defendants, through Ms Peters, that is relevant to this case. Mr Lawrence had no connection with and no interest in (because he could not) the contract in respect of Chandlers Hill save and except that Schedule 2 of the Highfield Drive property contract was made subject to the successful sale of that property. Apart from that connection, the documents disclose that Ms Peters acted as the agent for Mr Lawrence in the preparation and execution by Mr Lawrence of the addenda which extended the effect of that contract. Mr Lawrence executed both of those addenda as well as having executed the contract for sale of the Highfield Drive property. There is no evidence of any course of dealing in which Mr Lawrence knew or ought to have known of any action on the part of Ms Peters, on his behalf, purporting to bind him or act for him which could lead to any basis of estoppel against Mr Lawrence denying any ostensible authority of Ms Peters. To the contrary, Mr Lawrence was involved in all of the aspects of the transaction concerning the Highfield Drive property because there were really three steps in that process. The first was the execution of the contract, and the second and third were the execution of the addenda. After that time, it was a matter for the defendants to determine the price at which they sold the Chandlers Hill property. That was a matter entirely out of the purview, and necessarily, the knowledge of Mr Lawrence.
Therefore, the only acts of Ms Peters done in connection with the authority of Mr Lawrence were to ensure the extension of the contract. She did this on behalf of both of them. She had actual authority to do so.
The defendants were unable to point to any words or conduct of Mr Lawrence which represented to them that Ms Peters had been authorised as his agent and in reliance thereon, the defendants entered into a transaction with a third person. In my opinion, the defendants have not discharged the onus upon them to prove the ostensible authority of Ms Peters. Because of the nature of the matters as they transpired between the plaintiffs and the defendants, the defendants should have known that in dealing with Ms Peters (and even if it be accepted that she agreed to an oral termination of the contract), then in so far as she purported to bind Mr Lawrence she exceeded her authority. In those circumstances Mr Lawrence is not bound by the alleged conduct of Ms Peters. I am fortified in that conclusion by the fact that all of the documents produced by the defendants in aid of the purported termination required the execution of Mr Lawrence. It was never suggested that Ms Peters may sign for and on behalf of herself and Mr Lawrence. In cross examination, Mr Crispin (and by extension Mrs Crispin) accepted the proposition that agents do not sign contracts for the sale and purchase of land for and on behalf of their principals except in the most extraordinary circumstances where there is a full disclosure of authority and there is, for example, authority in the nature of a power of attorney. That is not this case. I am therefore unable to accept the argument of the defendants in relation to the alleged ostensible authority of Ms Peters. In my opinion, the result is that even if it be accepted that Ms Peters accepted an oral termination of the contract for the sale and purchase of the Highfield Drive property, such oral acceptance did not bind Mr Lawrence and there has been no effective rescission of that contract. In my opinion, the contract subsists for the benefit of the plaintiffs. In any event I do not accept that Ms Peters accepted any oral termination of the Highfield Drive contract.
Decision
In answer to the questions postulated by me, my answers are:
1.No;
2.Yes;
3.Yes;
4.The measure of damages is in contract and, the plaintiffs should be placed in the same position as if terms and conditions of the Highfield Drive the contract had been fulfilled.
I will hear the parties on the question of the quantum of damages, costs and interest.
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