Leahy v Javni

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2018 00198

GAIL PATRICIA LEAHY	Plaintiff
v
PETER JAVNI	Defendant

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JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	21-22 April 2020
DATE OF JUDGMENT:	15 October 2020
CASE MAY BE CITED AS:	Leahy v Javni
MEDIUM NEUTRAL CITATION:	[2020] VSC 680

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CONTRACT LAW – Sale of Land formation – Offer and acceptance – Conditional offer – Whether defendant made conditional offer – Whether offer withdrawn - Electronic Transactions (Victoria Act) 2000, s 13A.

CONTRACT LAW – Formation – Offer and acceptance – Method of acceptance – Time of acceptance – When is acceptance conveyed to other party.

LEGAL PRACTITIONERS - Scope of authority – Actual or ostensible – Whether authority to receive notice of acceptance of offer.

SALE OF LAND – Cooling off provisions – Vendor’s right to retain percentage of deposit – Whether rights exist when deposit not paid – Sale of Land Act 1962 s 31(4).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W F Gilles	SLM Law
For the Defendant	Mr B Carew	Whyte Just & Moore Lawyers

HIS HONOUR:

Background

The plaintiff, Gail Patricia Leahy, was the owner of a house and property at Eastern Beach Road, Geelong (‘the Property’). Her case is that she entered into a contract to sell the Property to the defendant, Peter Javni, on 15 May 2017 (‘May contract’), but that he defaulted in paying the deposit of $450,000 and that she rescinded the contract because of that default. She claims the sum of $450,000 as a debt. She also claims the sum of $10,000 in respect of a previous contract of sale that she and Mr Javni entered into for the sale of the Property, but which Mr Javni terminated under the cooling off provisions in the Sale of Land Act 1962 (‘SLA’).

Mrs Leahy ultimately sold the Property to a third party for $4,000,000 with settlement occurring on 31 August 2018.

The first contract Mrs Leahy and Mr Javni entered into for the sale of the Property was dated 16 February 2017 for a price of $5,000,000, with a $500,000 deposit payable by 17 February 2017.

On 17 February 2017, Mr Javni by his lawyers, Whyte Just & Moore Lawyers, exercised his cooling off rights under s 31 of the SLA to terminate the first contract. Mrs Leahy claims $10,000, being 0.2 per cent of the purchase price, as her entitlement under the cooling off provisions.

Mr Cross gave evidence that at the time Mr Javni terminated the first contract, he said that he thought that he and his wife were over-extending themselves financially, that he still loved the Property and that he would still pursue it at a lower figure, but ‘couldn’t see value at $5 million’.[1] Mr Javni’s evidence was that he spoke to his wife and that both of them were not interested in purchasing the Property.[2] There was also evidence from the Leahys that they heard a telephone conversation between Mr Cross and Mr Javni at the time that Mr Javni terminated the first contract in which he gave as the reason that his wife did not like the Property, but said that he had made the final decision.[3]
[1]T 52-3.
[2]T 79.
[3]T 28 26,44.

Terms of the May contract

The purchase price under the May contract was $4,500,000, with a deposit of 10% payable by 18 May 2017. The balance of the purchase price was payable on settlement which was scheduled for 15 August 2017. The contract provided that if the contract ended by a default notice given by the Vendor, the deposit was forfeited to the Vendor as the Vendor’s absolute property, whether it had been paid or not (General Condition 28.4).

The May contract was signed on 15 May 2017. It is disputed whether Mr Javni’s signing of the contract this was a conditional offer, subject to the condition precedent that he obtain his wife’s approval for the purchase.[4] The effect of this argument would be that no contract could come into existence unless such approval was given.
[4]T 82.27-29, 86.4-7, 123.1-5; CB [12].

Mrs Leahy’s case

Mrs Leahy contends that delivery of the signed contract to Whyte Just & Moore Lawyers, as Mr Javni’s agent, at about 4:20pm on 15 May 2017 constituted effective communication of Mrs Leahy’s acceptance of Mr Javni’s offer, and so, from that point, there was a binding contract. Alternatively, Mrs Leahy contends that Mr Cross, as her agent, communicated her acceptance when he called at Mr Javni’s home at 4:30pm that day.[5]
[5]This contention was pleaded in an amendment to the Reply allowed at trial.

She also contends that in any event, the contract was completed by her signing the contract, after Mr Javni signed it. Accordingly, the attempt by Mr Javni to withdraw his offer by text message at 4:12pm was ineffective as a binding contract was already in place. She further argued that if the contract was subject to the condition precedent, Mr Javni did not establish that approval had not been given.

Mr Javni’s case

Mr Javni contends that his negotiations with Mr Cross as agent for Mrs Leahy formed a conditional contract under which any offer by him was conditional upon Mrs Javni first providing her approval to proceed with acceptance of the May contract. He signed the contract and provided it to Mr Cross subject to that condition. No contract could be created until that approval was given. Mr Cross’ delivery of the signed contract to Whyte Just & Moore Lawyers was not effective communication of acceptance, as they had no authority to accept the offer on his behalf.

Finally, he argues that no binding contract was made, as he revoked his offer at 4:12pm, via text. The same issue of revocation arises in respect of his conversation with Mr Cross at 4:30pm.

List of issues

The issues as they emerged at trial are:

Issue 1 – Is Mrs Leahy entitled to $10,000 pursuant to s 31(4) of the SLA in respect of the termination of the first contract?

Issue 2 – Was Mr Javni’s signing of the May contract subject to the condition precedent that Mrs Javni gave her approval to the purchase of the Property?

Issue 3 – Did Mrs Leahy accept Mr Javni’s offer by signing the May contract?

Issue 4 – Did Mr Javni withdraw his offer before it was accepted?

Issue 5 – Mrs Leahy’s communication of her acceptance of Mr Javni’s offer:

(a) Were Whyte Just & Moore Lawyers agents for Mr Javni with authority to accept notification that Mrs Leahy had accepted his offer?

(b) Did Mr Cross, in his conversation with Mr Javni at 4.30 pm on 15 May 2017, notify him that Mrs Leahy had accepted his offer?

Witnesses

Mr Leahy and Mr Javni have considerable experience in property transactions.

Mrs Leahy, with her husband, owns a number of properties. Her evidence suggests that Mr Leahy took the main role in the sale of the Property.[6]
[6]T 43.13-14.

In addition to Mrs Leahy, Mr Leahy and Mr Cross gave evidence as part of her case. However, because Mr Leahy had been recently involved in a bicycle accident and was still recovering and taking pain medication at the time he gave evidence, it was suggested that this may have affected his ability to recall details about the May contract.[7] I do consider that his recollection of particular telephone conversations and the times when they occurred were sometimes inaccurate. But when he was unable to remember specific events, he was candid in admitting so.[8]
[7]T 45.3-5.
[8]T 22.19.

Mr Cross acted as real estate agent for Mrs Leahy in the sale of the Property. He has been a real estate agent for 17 years, and during the last 13, he has been director of Abode Real Estate Consultants Pty Ltd, which trades as McGrath Geelong.

Early in his evidence, which was given remotely, Mr Cross gave specific details about events. This prompted Mr Javni’s counsel to query whether he was refreshing his memory using notes. Mr Cross admitted to reading from his outline of evidence. Because Mr Javni’s counsel was quick to raise this issue, only a small volume of preliminary evidence given in evidence in chief may have been affected by Mr Cross’ reference to his witness statement, none of which were decisive on the issues before me. He gave the remainder of his evidence without referring to any statements of evidence.

Mr Peter Javni - The defendant

Mr Javni was the only witness called as part of the defence case. He is an experienced business man, who with his family, has been involved in a number of property dealings.

Conclusions about witnesses

I consider that all the witnesses’ evidence was affected by the problems associated with attempting to recall the detail of conversations occurring almost three years ago. I have therefore placed weight on matters of context and surrounding circumstances in making important findings of fact. The telephone records provided a clear chronology for events. On some occasions, I have accepted part of the evidence of particular witnesses when it appears logical or supported by other matters, but not accepted other parts of that witnesses’ evidence.

Background to the May contract
Mr Cross arranges a meeting with Mr Leahy

Mr Cross said that Mr Javni was still interested in purchasing the Property. Mr Javni had asked him to keep in touch with him about the Property if the vendors reconsidered their position on price.[9] In the week prior to 15 May 2017, Mr Cross called Mr Javni about a commercial property and he said that during that telephone conversation, the Property was also discussed.[10]
[9]T 62.30-63.1.
[10]T 63.10-14.

Telephone records suggest that Mr Leahy rang Mr Cross on 15 May 2017, at 9:57am and 12:56pm.[11] Mr Leahy gave evidence that Mr Cross told him he was going to see Mr Javni to discuss the making of another offer for the purchase of the Property. Mr Leahy said he knew that Mr Javni remained interested in purchasing it for a lower price than the first contract price.[12] Mr Cross said that Mr Leahy instructed him not to go back to Mr Javni with a price, but to discuss the Property with him and, if he was interested in it at a price, to ‘secure that offer for their consideration’.[13]
[11]Court Book, Leahy v Javni (Supreme Court of Victoria, S ECI 2018 00198, Ginnane J, 21-2 April 2020) 167, 165 (‘CB’).
[12]T 22.19-22.
[13]T 69-70.

The meeting on 15 May 2017

At about 2:20pm on 15 May 2017, [14] Mr Javni met with Mr Cross at the latter’s office. No one else was present in the meeting.
[14]T 64.16.

They first discussed a commercial investment property in South Geelong, but Mr Cross did not yet have authority to market it and was still getting it to market.[15] Mr Javni was not interested in it.
[15]T 54.10-12; 63.25-31.

The discussion turned to the Eastern Beach Property[16] and their accounts of this discussion differed.
[16]T 66.28-30.

Mr Cross said that he asked Mr Javni if he still had interest in pursuing the Property and he said that he did ‘at the right price’. He asked at what price Mr Javni would be prepared to purchase the Property and he responded ‘that at $4.5m he would still be a buyer for the Property’. He told Mr Javni that if he was to put forward another offer to the vendor on his behalf, that he would need to formalise it in a contract and that contract would need to be filled out and taken to the vendor for their approval or disapproval.[17] He said he would need a fully signed copy of the contract, ‘legal rep’ details for the Property and a part deposit cheque of $50,000 before he presented the contract of sale to the vendor.[18] Mr Javni said that he was ‘prepared to move forward if the vendor would accept those terms and meet him at that price’ and he asked him to come back to his property after ‘we had signed the contract’ to collect the part deposit of $50,000.[19] Mr Cross said that he did ask Mr Javni if he needed to contact Mrs Javni in relation to this discussion, but:

Mr Javni said that the purchase was his decision to make and that he had bought properties on behalf of the family in the past without consulting his wife. He also noted that it was his name going on the contract and not joint names going on the contract.[20]

[17]T 54.24-27, 54.31-55.5, 54-55.

[18]T 55

[19]Ibid.

[20]Ibid.

Mr Cross denied that Mr Javni said that Mrs Javni was not interested in the Property[21] or that he said the offer of the May contract was conditional upon her consent.[22]
[21]T 67.10-13.
[22]T 68.7-10.

Mr Javni’s account was that he met with Mr Cross in a meeting room where they discussed the commercial property. He was not interested in it. As he was about to leave, Mr Cross mentioned the Property and asked: ‘what if you can get it for 4.5 mil?’ Mr Javni said he again told Mr Cross that Mrs Javni was not interested in the house as it was too big and she wouldn’t feel comfortable there.[23]
[23]T 81.1-8.

But Mr Javni’s evidence continued that he then said that he wasn’t ‘quite interested’, but Mr Cross replied:

Look, I’ve got the contract here and if you sign this, you know, I can go through and I can have a look and see if we can get it at that price.[24]

[24]T 81.15-24.

He said that he signed the contract but noted that the offer was conditional:

I ended up signing the [May Contract], but I said before signing, I said, ‘You understand’ – as the conversation kept going, I said, ‘Look, you understand my wife is not interested in the [P]roperty,’ and he said, ‘Look, just have a go, let’s see if we can get 4.5[million],’ and I said, ‘Well, the only way is if I have to speak to my wife,’ and he said, ‘Well, look, if you sign this now, then you go talk to your wife and we’ll see when you call me back,’ because I said a number of times, ‘I can’t do anything until I speak to my wife,’ and he guaranteed me that he was not going to see the owners until I spoke to my wife.[25]

[25]T 82.18-29, 107.19-21.

The written contract did not contain a condition that Mrs Javni’s consent was required, a fact that Mr Javni said was due to him trusting Mr Cross.[26] Mr Javni was asked why his trust in Mr Cross changed between signing the May contract and his sending a text message at 4:12pm, in which he asked him not to see the Leahys as he wished to talk to his wife. He said that it was the way he felt after he left Mr Cross’ office.[27] He said that although at the time he signed the May contract he trusted Mr Cross, although later he became worried that he would approach the Leahys before he obtained Mrs Javni’s approval.[28]
[26]T 136.28.
[27]T 136.29-30.
[28]T 136.

Mr Javni had arrived at Mr Cross’ office at about 2:20pm and the contract was signed between 2:35pm and 2:45pm.[29]
[29]Ibid.

Mr Cross said that the May contract was drawn up by the receptionist at his agency after he passed her notes that he took of his discussions with Mr Javni. The contract contained a purchase price of $4,500,000, a reference to $50,000 having already been paid and lists Whyte, Just & Moore Lawyers as the purchaser’s legal practitioner or conveyancer. In cross-examination, Mr Javni’s counsel suggested that Whyte, Just & Moore Lawyers were listed as the purchaser’s legal representative, not on his instructions, but because they were the firm who prepared the legal documents to cancel the first contract. Mr Cross did not agree. It was also put to Mr Cross that he had an already prepared contract listing the sale price and Mr Javni’s legal representative or conveyancer. He denied this and said that the May Contract was prepared quickly because Mr Javni was waiting at his office.[30]
[30]T 67.19-27, 69.2-4

Mr Javni’s signature appeared on the first and third pages of the May contract, but not the second page where Whyte Just & Moore Lawyers were listed. He gave evidence that he did not see or read the second page, and there was no discussion about who would act for him as conveyancer. He said that he had not chosen Whyte Just & Moore Lawyers to act for him in the conveyance,[31] and that he had a number of conveyancers from whom he chose to handle his conveyancing transactions. Despite the evidence otherwise suggesting that he had not used his other conveyancers in some time,[32] he said that he had not cut ties with any of them.[33]
[31]T 96.4-12.
[32]T 99.14, 100.3.
[33]T 101.1.

I make findings in the Analysis section of issue two about whether in this meeting, Mr Javni required his signing the contract was subject to the condition that Mrs Javni approve the purchase of the Property. But, at this point, I will deal with the issue about whether the contract was pre-prepared before the meeting.

I consider that it is probable that Mr Cross had a contract substantially prepared before the meeting commenced in view of the fact that he intended to discuss Mr Javni’s interest in the Property, the comparatively short time the meeting lasted and the fact that, although the purchase of the Property was discussed later in the meeting after the commercial property was discussed, there was still time to have the contract signed. There may have been a need for the receptionist, who Mr Cross said prepared the contract, to add some details to the otherwise pre-prepared contract. However, I do not consider that this issue is critical in the determination of the issues in this proceeding.

Mr Javni said that Mr Cross told him that the only way he could go and talk to the owners was if he gave him ‘a form of a cheque with $50,000’ and he would then go and see if they were interested in signing at that price.[34] After the meeting, Mr Javni returned to his home in Geelong and drew a cheque for part payment of the deposit in the amount of $50,000 payable to the real-estate agent’s trust account. He gave it to Mr Cross, who had travelled to his home, who deposited it into his firm’s trust account on the same day.
[34]T 131.

Mr Javni said that after giving Mr Cross the cheque he tried to contact Mrs Javni, who was at work but could not get through to her. She worked as an aged carer and often turned her phone off while working: ‘most of the time her phone will be in her bag while she’s looking after the elderly’.[35] He did not leave a message.[36] His phone records were not in evidence as he explained:
[35]T 84.26-28.
[36]T 126.8.

JAVNI:I couldn't find them.
COUNSEL:Why is that?
JAVNI:I think there's a number of calls I've made and they weren't recorded as well. Some of the calls from Dodo didn't show up, I've got no idea why. I made two calls to my wife prior to that and couldn't get through.[37]

Mrs Javni’s phone records, which might have recorded incoming missed calls, were not in evidence.

3:00pm – Mr Cross rings Mr Leahy

[37]T 85.20-5.

Mr Leahy gave evidence that at around 3:00pm, Mr Cross telephoned and told him that Mr Javni had made an offer of $4,500,000 for the Property.[38] Mr Leahy said that he had discussed this figure with Mr Cross at some time before the offer was made.[39]
[38]T 21; CB 271.
[39]T 30.23-4, 31.6-8.

Mr Leahy said that he immediately rang Mrs Leahy who decided to accept the offer.[40] She said that Mr Cross also phoned with the same news.[41] She thought it odd for Mr Javni to want to enter into the contract if the first contract had been terminated because Mrs Javni did not like the Property. But, in fact, she did not believe that Mrs Javni’s discontent with the Property was the reason for the first contract being terminated.[42]
[40]T 20.25-27.
[41]T 46.5.
[42]T 46.6-12.

Mrs Leahy’s signs the May contract

Mr Cross said that at about 3:00pm, he went to the Leahys’ home for a short time where Mrs Leahy signed copies of the contract.[43] Mrs Leahy said that he gave no indication that there would be issue with the May contract.[44]
[43]T 46.21.
[44]T 46.25-6.

Mr Cross returns to his office

After leaving the Leahys’ home with the contracts now signed by both parties, Mr Cross returned to his office to process them.

3:56pm – Mr Javni tries to contact Mr Cross

Mr Javni said that he called Mr Cross at 3:56pm, but was unable to reach him. He said that he was calling to try and ‘cancel’ the contract.[45] He said that he felt pressured when signing the contract and that felt that he should cancel it.[46]
[45]T 85.16-19.
[46]T 85.1-3.

4:12pm – Mr Javni texts Mr Cross

At 4:12pm, Mr Javni sent the following text message to Mr Cross:

Hi Jim, Can you not see the people about house Eastern Beach I want to have a talk to my wife about it.[47]

[47]CB 157.

In cross examination, Mr Javni was asked why he sent this text if he had Mr Cross’ word that he would not see Mrs Leahy until the condition precedent of Mrs Javni giving permission had been met. He answered that he had a general feeling of worry because he felt he had been pushed into signing the contract.[48] He said that:

Well, I got a bit pressured in the office and I know I stated to Mr Cross not to go to the owners until I had spoken to my wife and I tried ringing my wife and I couldn’t get through and it was getting late in the afternoon. I was under a bit of pressure and I thought that I had better cancel the contract before the end of the day.[49]

[48]T 123.6-8, 30-1.

[49]T 85.1-7.

Counsel for Mrs Leahy asked why he would be withdrawing a conditional offer if the condition precedent triggering the offer had not yet occurred. Again, Mr Javni referred to his general worry that Mr Cross would see Mrs Leahy in any event.[50]
[50]T 127.20-2.

4:20pm – Mr Cross delivers the signed contract to Whyte, Just & Moore Lawyers

At about 4:20pm, Mr Cross went to the offices of Whyte, Just & Moore Lawyers in Geelong and delivered the signed contract. Upon returning to his car, he noticed that he had a missed call from Mr Javni and had received the above mentioned text message.[51]
[51]T 71.18-23.

4:27pm – Mr Cross sends a text message to Mr Javni

Mr Cross said he tried to return Mr Javni’s call without success. He sent a text message to him which was received at 4:27pm:

Hi Peter, I’ve tried returning your calls, with no success, I am dropping over to your home now, Kind regards, Jim.[52]
[52]CB 157.

4:30pm – Mr Cross arrives at Mr Javni’s home

Around 4:30pm, Mr Cross returned to Mr Javni’s home and said that he confirmed the offer had been accepted. He said he was greeted at the door by Mr Javni and he gave him a copy of the executed contract. They shook each other’s hand and Mr Cross said to Mr Javni ‘you’ve bought well’ to which Mr Javni replied ‘Yes, I think I have bought well’.[53] Mr Cross says that there was neither discussion about the offer being withdrawn or the conditional nature of the offer.
[53]T 57.20-30; 72.13-23.

Mr Javni’s version of this conversation differed significantly. He said that he did not accept the contract and told Mr Cross that he had not had a chance to speak with his wife. He described the events as follows:

[H]e rang the doorbell at the front gate. I opened the door and he was standing there with a signed contract, and I spoke to him from the doorway and he was on the other side of the fence and I've said to him, 'Listen, I've sent you a text. I've tried calling you and I've tried to tell you not to go to the owners as I haven't spoken to my wife yet. I haven't been able to speak to my wife and as far as I'm concerned that contract is not valid.' Mr Cross said, 'Well, bad luck, I've already sent it to JWM [sic] and the contract has been signed by both parties,' and then he left.[54]

[54]T 85.31-86.10. ‘JWM’ should be ‘WJM’ being Whyte, Just & Moore Lawyers.

Mr Cross then left. Mr Javni said that he did not accept a copy of the May contract from Mr Cross.[55] I consider it probable that he did not accept the copy of the contract.
[55]T 108.8-10.

4:38pm – Mr Cross calls Mr Leahy

The telephone records showed that Mr Cross phoned Mr Leahy at 4:38pm, but he was confused in his evidence about the content of this conversation. At one point he said that Mr Cross told him that Mr Javni had signed the contract and that Mr Cross would attend their home to see Mrs Leahy and have her sign it, but in cross-examination, he said that Mr Cross was attending, or had just attended, Mr Javni’s solicitors office, ‘but all was looking good’.[56] But, later he gave evidence that Mr Cross told him that he had been to Mr Javni’s solicitor’s office and dropped off the executed contract.[57] When inconsistencies in his evidence were put to Mr Leahy, he said he could not specifically recall the 4:38pm telephone conversation.[58] It appears more likely that in that conversation, Mr Cross told Mr Leahy about his visit to Mr Javni’s home.
[56]T 35.29-31.
[57]T 36.26-37.2, T25.5-11.
[58]T 25.5-11.

Mr Leahy also said that he did not think that Mr Cross contacted him that day to raise any issue with the status of the contract[59] and Mr Cross did not raise with him Mr Javni’s 4:12pm text message.
[59]T 36.7-8.

4:45pm – Mr Cross calls Mrs Leahy

Mrs Leahy said that the last time she spoke to Mr Cross was at approximately 3:00pm which is when Mr Cross attended her house to have the May contract executed.[60]
[60]CB 37; T 60.4-7.

However, Mr Javni’s counsel asked Mrs Leahy about a telephone record showing that Mr Cross called her at 4:45pm, a call which lasted 22 seconds.[61] She said that she did not recall this telephone conversation and that she was stressed that day and that she ‘tried to block all that stuff out’.[62] Mr Javni’s counsel asked Mrs Leahy whether in this call, Mr Cross told her that there was an issue with Mrs Javni not approving the offer. Mrs Leahy denied this, saying that the issue was never raised on the day.[63]
[61]CB 162.
[62]T 47.14-19.
[63]T 48.8-14.

Another possible purpose of the 4:45pm call is that Mr Cross telephoned Mrs Leahy to confirm that he had delivered the contract to Mr Javni. Mrs Leahy did give evidence that Mr Cross told her that he had attended Mr Javni’s house to deliver a copy of the contract.[64]
[64]T 48.15-18.

Mr Javni contacts Whyte Just & Moore Lawyers

After Mr Cross left, Mr Javni contacted Whyte Just & Moore Lawyers to arrange an appointment for the following day. He cancelled the cheque for $50,000.

Events after 15 May 2017

Mr Javni either attended White, Just & Moore Lawyers’ office on 16 May 2017 and met with Mr A Jolly, a lawyer at that firm, or spoke to him on the telephone.[65] Mr Jolly sent a letter that day to SLM Law, Mrs Leahy’s lawyers, enclosing a s 31 notice and purportedly terminating the contract under the cooling off provisions (‘the Notice’).[66]
[65]T 88.1-2.
[66]CB 158.

SLM Law responded to the Notice by letter, stating that it was invalid pursuant to s 31(5) of the SLA.[67] The letter said:

Our instructions are to advise you that the Contract of Sale is not at an end and the Notice forwarded by you is invalid and of no effect.
Section 31 of the Sale of Land Act does not give the Purchaser a cooling-off period if the Purchaser and the Vendor have previously signed a Contract for the sale of the same land in substantially the same terms.[68]

[67]CB 171. The letter does not say the sub-section, only ‘s 31’.

[68]Ibid.

Whyte, Just & Moore Lawyers replied on the same day, saying that the first contact and the May contract were not substantially similar and that they were obtaining instructions about the method by which the May contract was formed.[69]
[69]CB 173.

Mr Javni did not contend at the trial that he was entitled to terminate the May contract under the cooling off provisions of the SLA.

In cross-examination, Mr Javni was asked to explain why he considered it necessary to terminate the May contract in view of his contention that it had never come into existence. He answered:

That's the only way I could think of legally, closing off the contract that - or writing back to the other people that we're not interested in buying it.[70]

[70]T 111.1-5.

On 19 May 2017, Mrs Leahy’s solicitors served a default notice on Mr Javni noting that he had failed to pay the deposit of $450,000 payable under the May Contract by 18 May 2017 pursuant to General Condition 11 of the Contract (‘Default Notice’).[71]
[71]CB 175.

On 22 May 2017, Whyte, Just & Moore Lawyers wrote to SLM Law outlining Mr Javni’s defence, being the conditional nature of the contract and the absence of the satisfaction of the condition precedent triggering the May contract.[72] Counsel for Mrs Leahy noted that it took the six days between the first letter on 16 May 2017 and the letter of 22 May 2017 before Whyte, Just & Moore Lawyers made reference to a conditional offer. Mr Javni agreed.[73] When asked to explain why it took so long for Mr Jolly to write to Mrs Leahy about the conditional offer, Mr Javni said ‘I’m unable to give you that answer. I have no answer’.[74]
[72]CB 182-3.
[73]T 115.26-30.
[74]T 116.2-5

On 27 June 2017, SLM Law served a rescission notice on Mr Javni alleging that he had failed to pay the deposit under the May contract pursuant to the same General Condition outlined in the Default Notice (‘Rescission Notice’). The Rescission Notice confirmed that the contract would be rescinded pursuant to General Condition 28(2) if the default was not remedied.

Mr Javni did not remedy the default alleged to have occurred in the Default Notice or the Rescission Notice and, on Mrs Leahy’s case, the May contract was accordingly rescinded.

I next consider the legal issues arising from the facts that I have described.

Issue 1 – Is Mrs Leahy entitled to $10,000 pursuant to s 31(4) of the SLA in respect of the termination of the first contract?

Section 31(4) of the SLA states:

Where a contract for the sale of land has been terminated in accordance with the provisions of [s 31] the purchaser shall be entitled to the return of all moneys paid by him under that contract except for the sum of $100 or 0.2 per centum of the purchase price (whichever is the greater) which may be retained by the vendor.

Mrs Leahy contended that, as vendor under the first contract, she was entitled to $10,000, being 0.2% of the purchase price payable under the first contract, pursuant to s 31(4) of the SLA.

Mr Javni contended that the operation of s 31(4) of the SLA was conditional upon moneys having been paid by the purchaser to the vendor. Because no moneys had been paid at the time the first contract was terminated under the cooling off provisions, s 31(4) was not enlivened because there was no money to be retained by Mrs Leahy.

Analysis of Issue one

In my opinion, s 31(4) applies when a contract has been terminated after the purchaser has paid moneys under the contract to the vendor. It states that all moneys are to be returned to the purchase save for the amount stipulated. No money was paid under the contract, so s 31(4) does not apply. No authority was referred to which supported Mrs Leahy’s claim for the $10,000 and her reading s 31(4) as if it said ‘all moneys that should have been paid or were promised to be paid by him under the contract’ rather than its actual wording of ‘all moneys paid by him under the contract’. I see no basis for reading s 31(4) as referring to moneys that should have been paid.

Mrs Leahy’s first claim fails.

Issue 2 - Was Mr Javni’s offer subject to the condition precedent that Mrs Javni gave her approval to the purchase of the Property?
Mrs Leahy’s case

Mrs Leahy submitted that the May contract was not subject to a condition precedent and was capable of being immediately accepted by Mr Javni by signing it. The terms of the document indicated that the parties intended to be immediately bound by it upon the vendor signing the contract after it had first been signed by the purchaser. Effect must be given to that intention.[75] Viewed objectively the document was capable of being accepted and was accepted by Mrs Leahy signing it. Furthermore, Mr Javni indicated that he intended to be bound by the contract because he paid part of the deposit. Mr Cross’ evidence supported this proposition, as he said that he was told by Mr Javni that if the vendor was to agree to reduce the price to $4,500,000, he would purchase the Property, and that this offer was unconditional.
[75]The plaintiff relied on Nurisvan Investment Ltd & Anor v Anyoption Holdings [2017] VSCA 141, [106] and the passage quoted in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 631.

Mrs Leahy also submitted that if the contract was subject to the condition precedent, Mr Javni had not proved that the condition had not been fulfilled.

Mr Javni’s case

Mr Javni’s case was that the May contract was subject to the condition that Mrs Javni approve the purchase of the Property before any contract was created and that he told Mr Cross of that condition in their meeting at about 2:15pm.

Mrs Javni never approved the purchase of the Property, so no contract came into existence. His text of 4:12pm also supported the existence of the condition precedent. It was implausible that, for the first time in the text, he would have mentioned the need for Mrs Javni’s approval. It was also implausible that the text was not mentioned when Mr Cross called at Mr Javni’s home to give him the signed contract. Mr Javni’s mention of the need to talk to his wife would have alarmed Mr Cross as Mr Javni had withdrawn from the first contract.

Analysis of Issue two

The form of condition precedent for which Mr Javni contends is one whereby, unless Mrs Javni gave her consent to Mr Javni purchasing the Property, no contract between him and Mrs Leahy for the sale and purchase of the Property would come into existence.[76]
[76]Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537.

Despite Mr Javni’s position that his offer under the May contract was conditional on him obtaining the consent of Mrs Javni to proceed with the purchase, in his examination in chief, he referred on occasion to cancelling the May contract as opposed to withdrawing the offer.[77] He had cancelled the first contract pursuant to s 31 of the SLA.
[77]T 78.24, 85.6, 85.18.

I do not consider that Mr Javni’s offer under the May Contract was conditional as he contends. I find that in the meeting commencing about 2:20pm, he did not require or mention that his offer was subject to the condition that Mrs Javni first approve the purchase of the Property. I consider it more likely that Mr Cross as he said he did, asked him if he needed to talk to his wife and he said that he did not. I consider that after he signed the May contract he may have had second thoughts about the purchase and then sought to ‘pause’ events. I have reached that conclusion for the combination of the following reasons.

Mr Javni was experienced in property dealings, but, despite that, no written condition requiring his wife’s approval was added to the conditions of the May contract. He signed the contract without any condition being added to it. His assertion of ‘duress’ or pressure has to be considered in the context of his property experience. He gave no details of that ‘duress’ or ‘pressure’ and I do not consider that Mr Cross imposed any on him.

After Mr Javni signed the contract, he then drove to his home, where he wrote a cheque for $50,000, a substantial sum of money, by way of part payment of the deposit and gave it to Mr Cross. During that interval, he had time to reflect on what he was doing.

There is no record of Mr Javni telephoning Mrs Javni on that afternoon. He was unable to provide his telephone records to show that he had tried to phone or message her so as to seek her approval for the purchase. I was not convinced by his explanation for being unable to produce those records.

The terms of the text message of 4:12pm were equivocal and do not state that the contract was conditional upon Mrs Javni’s consent. At most, the text message was a request that Mr Cross not see the Leahys about the contract that afternoon, which Mr Cross was entitled to do or not do. Similarly, Mr Javni’s evidence of what he said to Mr Cross when he called with the signed contract at 4:30pm was equivocal and did not go beyond the terms of the text. His statements more suggest, that on second thoughts, he wished more time to consider his position.

As mentioned, Mr Javni referred in his evidence in chief to ‘terminating’ or ‘cancelling’ the May Contract, which rather suggests that he might of thought that he could again use the cooling off provisions to terminate the contract, rather than considering that no contract had been created because of a precondition. This conclusion gains support from the letter sent by Whyte Just & Moore Lawyers on 16 May 2017 purporting to terminate the contract under the cooling off provisions, whereas, the suggestion of a contract subject to a condition precedent was first raised in his solicitor’s letter six days later on 22 May 2017.

Mrs Javni was not called as a witness to produce her telephone records that might have shown incoming calls from Mr Javni.

Counsel for Mrs Leahy submitted that the rule in Jones v Dunkel[78] applied because of Mr Javni’s failure to call Mrs Javni and that the Court should infer that the uncalled evidence would not have assisted his case.[79] The Court had not heard from Mrs Javni whether she had approved the purchase of the Property or not.
[78](1959) 101 CLR 298, 320 (Windeyer J).
[79]T 196.11-12.

Mr Javni’s counsel submitted that the rule in Jones v Dunkel did not apply, as the decisive issue was what was said in the discussion with Mr Cross in his office. Mrs Javni’s evidence could not add to that. He also submitted that Mr Javni’s evidence that his wife’s consent was a condition of him accepting the offer was not challenged in cross-examination.[80] But, I consider that it was, in the following passage:

I suggest to you the story was made up after you realised you couldn't cool off the contract; that's correct, isn't it?[81]

The ‘story’ in this question was clearly Mr Javni’s evidence that he required Mrs Javni’s consent for the purchase.

[80]T 167.1-12.

[81]T 134.23-5.

It has to be kept in mind that Mr Javni said that he withdrew his offer in the text of 4:12pm and before he had been able to contact Mrs Javni. The question is whether, under s 55 of the Evidence Act 2008, Mrs Javni’s evidence could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding, namely, whether Mr Javni had imposed a condition precedent to the formation of the contract in his meeting with Mr Cross.

In my opinion, Mr Javni’s case is that he decided to add the precondition of Mrs Javni’s approval without reference to her. Her evidence was not relevant to that issue. She was not a party in the proceeding and on balance, I do not consider the failure to call her justifies a Jones v Dunkel inference.

Issue 3: Did Mrs Leahy accept Mr Javni’s offer by signing the May contract?

An initial question is whether Mrs Leahy accepted Mr Javni’s offer before he purported to withdraw it. He submitted that the May contract could not be formed until the acceptance of his offer was communicated to him and he also queried whether Mrs Leahy actually accepted the offer by communicating her acceptance effectively.

Mrs Leahy submitted that at no time there was any requirement to communicate the acceptance of the offer to Mr Javni as he knew that he would be bound upon her signing the contract.

I do not accept Mrs Leahy’s submission that the contract was formed when she signed it. That acceptance had to be communicated to Mr Javni.[82]
[82]See, eg Dickinson v Dodds (1876) 2 Ch D 463 (‘Dickinson’), CA; Nyulasy v Rowan (1891) 17 VLR 663; Farmers’ Mercantile Union & Chaff Mills Ltd v Coade (1921) 30 CLR 113; Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd [1994] 1 VR 74, 83 (Hedigan J) (‘Nunin Holdings’).

In Niesmann v Collingridge[83] where an offer was made which was said to have been verbally accepted. Rich and Starke JJ said:

It seems to us that the parties did conclude an agreement in the terms of the offer. The plaintiff made a firm offer, for a small consideration, in which all the essential terms of the bargain were stated, and it was not expressed to be conditional or subject to acceptance in writing or the execution of a contract in writing, but simply that the purchase money should be paid at or within certain times from the date of signing a contract. This unconditional offer the plaintiff duly accepted, and so concluded the agreement.[84]

[83](1921) 29 CLR 177.

[84]Ibid 184.

To establish communication of her acceptance of Mr Javni’s offer to him, Mrs Leahy first relied on Mr Cross’ delivery of a copy of the signed contract to Whyte, Just & Moore Lawyers at about 4:20pm. This contention depends on Mr Javni’s offer not having been withdrawn by the 4:12pm text, an issue that I consider below.

Issue 4: Did Mr Javni withdraw his offer before it was accepted?

Before dealing with the issue of the acceptance of Mr Javni’s offer, I will consider whether he withdrew that offer.

As I have concluded that the contract was not subject to a condition precedent, it is necessary to consider whether Mr Javni effectively withdrew or revoked his offer by either sending the text at 4:12pm or by any statement that he made to Mr Cross at 4:30pm.

Mr Javni contended that he withdrew the offer in his 4:12pm text message to Mr Cross. Pursuant to s 13A(1)(a) of the Electronic Transactions (Victoria) Act 2000, this text message was received by Mr Cross at that time, given that it was then able to be read by Mr Cross. This latter proposition was not disputed.

There was also the question of whether Mr Javni withdrew the offer in his conversation at his home with Mr Cross at 4:30pm. Although this latter point was not Mr Javni’s primary argument, I consider that it should be addressed, because of the leave given to Mrs Leahy to rely on that conversation as a notification by Mr Cross, on her behalf, of her acceptance of his offer.

Mrs Leahy’s contends that the text message sent by Mr Javni to Mr Cross was not a withdrawal of offer. At no time did Mr Javni say the offer was withdrawn, nor did he act in a manner consistent with withdrawing it. Once the contract was signed by Mrs Leahy, the offer was accepted and the bargain was concluded. Mr Javni was bound by the May Contract.

Applicable legal principles

It is clear that an offer may be withdrawn or revoked by the offeror at any time prior to acceptance of the offer being communicated to the offeror.[85] The question is what is required to be shown for a revocation or withdrawal to be effective.
[85]Goldsborough Mort & Co Ltd v Quinn (1910) 10 CLR 674, 678; Nunin Holdings (n 82) 85 (Hedigan J).

In Financings Ltd v Stimson,[86] Lord Denning stated that it was sufficient that an offeror had made clear that he did not wish to proceed with the matter.[87] Lord Donovan similarly held that ‘if an offeror makes it clear that he does not want to go on with the transaction, it is properly treated as a revocation of his offer’.[88]
[86][1962] 3 All ER 386 (‘Stimson’).
[87]Ibid 388.
[88]Ibid 389-90.

In Dickinson v Dodds,[89] James LJ rejected the assertion that there must be an express and actual withdrawal of an offer, that one must say ‘[n]ow I withdraw my offer’.[90] In circumstances where the offeree, Dickinson, knew the offeror, Dodds, had sold the property which formed the subject of the contract between them to a third party, James LJ concluded that Dickinson ‘knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, ‘I withdraw the offer’.[91] Mellish LJ, with whom Baggallay LJ concurred, also concluded that once an offeree knows that the offeror has sold the property to a third party, it was too late for the offeree to accept the offer, and no binding contract could be formed by the offeree communicating his acceptance to the offeror.[92]
[89]Dickinson (n 82).
[90]Ibid 472.
[91]Ibid.
[92]Dickinson (n 82) 474-5. The headnote of the reported decision records ‘An offer to sell property may be withdrawn before acceptance without any formal notice to the person to whom the offer is made. It is sufficient if that person has actual knowledge that the person who made the offer has done some act inconsistent with the continuance of the offer, such as selling the property to a third person’.

The first instance and appeal decisions in IVI Pty Ltd v Baycrown Pty Ltd,[93] to which I refer in detail in connection with issue five below concerning the solicitor’s authority to receive notices of acceptance of contractual offers, also considered what constitutes an effective revocation. In that case, an email had been sent by the vendor offeror (Baycrown) to the purchaser’s solicitor on the evening of 23 October 2002, purporting to withdraw the vendor’s offer. It was held, at first instance and on appeal, that the email was not an effective revocation, as the solicitor had no actual or ostensible authority to receive it.
[93][2004] QSC 430 affirmed in IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205.

In that case, it was also argued by the vendor that the offer had been withdrawn orally. The evidence in that regard was as follows: on the morning of 24 October 2002, the agent appointed by the vendor, Mr Gahan, was told by a director of Baycrown, Mr Van Asperen, that an email had been sent the previous day withdrawing the offer. After that conversation, Mr Gahan telephoned Mr Moss, a representative of the purchaser. At that stage, neither Mr Gahan nor Mr Moss had seen the email.[94] Mr Gahan gave evidence that he said to Mr Moss ‘[Mr] Van Asperen is wanting to pull out of the contract. He’s referred me to an email which I’ll have to go home to see’.[95] Mr Moss’ evidence was that Mr Gahan had said that he thought that the vendor wanted to withdraw, or that ‘the Dutchman is thinking about pulling out of the contract’.[96] Mr Moss gave further evidence that he thought it was a ‘ploy’, and that the agent was trying to pressure Mr Moss to sign the contract.[97] Later that day, Mr Moss by faxed letter accepted the vendor’s offer.
[94]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430, [17]-[19] (‘IVI Trial’).
[95]Ibid [21].
[96]Ibid [22]-[23].
[97]Ibid [24].

At first instance, Philippides J held:

While it seems likely that as Mr Van Asperen maintains, he did inform Mr Gahan on 24 October 2002 that he had withdrawn the offer … the critical issue is what Mr Gahan told Mr Moss and whether what Mr Moss was told was such as to amount to an effective revocation. In determining whether there was an effective revocation, the focus is on the information communicated to the offeree, and what effect that information should reasonably have had on the mind of the offeree.[98]
…
I am not satisfied, on the basis of the evidence, that it was brought home to Mr Moss that the offer had been withdrawn or that that was the effect which Mr Gahan’s communication should reasonably have had on Mr Moss … It is possible that Mr Moss suspected that Mr Van Asperen was getting cold feet over the offer. However, that is not sufficient … I accept the submission made on behalf of IVI that it cannot be said that the nature of the communications to Mr Moss by Mr Gahan was not such [sic] that Mr Moss should reasonably have concluded that the offer had in fact been withdrawn.[99]

[98]Ibid [58].

[99]Ibid [61]. See also JW Carter, Lexis Advance, Carter on Contract [03-160].

On appeal, Keane JA, after quoting the above paragraph, stated:

In relation to this latter holding, in my respectful opinion, the conclusion which her Honour reached cannot be assailed. There is no special formula that must be used to successfully communicate the withdrawal of an offer but it is essential that it be made clear to the offeree that the offeror no longer wishes to proceed. It would have been a simple matter for Mr Gahan to say to Mr Moss that the appellant had withdrawn the offer. On any view of the evidence of Mr Gahan and Mr Moss as to what passed between them in this regard, it is clear that this simple message was not conveyed.[100]

[100]IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205, [26] (Keane JA, Mullins J agreeing at [50]) (‘IVI Appeal’) citing Dickinson (n 82) 472-3; Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040, [53].

A recent decision which considers whether ambivalent language can constitute an effective revocation or withdrawal of an offer is Darke J’s judgment in Realm Resources Ltd v Aurora Place Investments Pty Ltd.[101] In that case, the parties disputed whether a binding sublease had been entered into between Realm as sublessee and Aurora as sublessor. Realm had executed the sublease as a deed and delivered it to Aurora, but before Aurora had executed and returned it, Realm’s legal representatives purported to withdraw from the proposed sublease. His Honour concluded that as Realm had signed and delivered a deed, it was bound by it so that it could not be recalled.[102] As a result, it was not necessary for his Honour to deal with the issue of whether the purported withdrawal was effective, however he did so. While the comments were obiter, they are relevant and persuasive in the present case.
[101][2019] NSWSC 379 (‘Realm Resources’).
[102]Ibid [95].

The purported withdrawal was in an email sent by Realm’s legal representatives dated 24 August 2017. It relevantly stated:

We are instructed that our client has not yet provided the fitout guarantee, paid any amounts to the landlord (other than the holding deposit under the heads of terms and the bank guarantee) or taken possession of the premises.
We are instructed to request that you do not arrange for the landlord to sign the lease at this stage, and that you hold the lease signed by the tenant in escrow pending further communication from us.[103]

[103]Ibid [29].

His Honour concluded:

The email sent by Maddocks on 24 August 2017 would not have been effective to withdraw the offer. The terms of the email fail to clearly convey that the offer was withdrawn, or that Realm no longer wished to proceed. The language of the email is ambivalent in that regard. It contains a request to Aurora’s solicitors to not arrange for Aurora to sign the sublease ‘at this stage’, and to hold the sublease signed by Realm in escrow pending further communication. The email seems to do no more than request that Aurora pause while Realm further considers its position. It would have been a simple matter to state, in effect, that any offer was withdrawn, but the email failed to do so.[104]
[104]Ibid [100] citing Stimson (n 86) 1188, 1190; IVI Appeal (n 100) [26].

Application of principles to present facts

The observations of Darke J in Realm Resources[105] are, in my opinion, applicable in this case. The text message sent by Mr Javni at 4:12pm was ambivalent and did not clearly convey that he did not wish to proceed. At most, it suggested that he did not wish to proceed ‘at this stage’, and was seeking further time to consider his position and discuss it with Mrs Javni. It did not foreclose the possibility that he would in fact proceed, but merely conveyed that he wished to put his decision whether to withdraw or proceed ‘on hold’ or to ‘pause’ to further consider his position. In my view, it cannot be said that that communication should have reasonably brought home to Mr Cross that Mr Javni had withdrawn his offer.[106]
[105]Ibid.
[106]See, eg, IVI Trial (n 94) [58], [61]; IVI Appeal (n 100) [26].

It convenient to also consider at this point, whether Mr Javni withdrew his offer in his conversation with Mr Cross and Mr Javni at his home at 4:30pm, Mr Javni gave evidence that he said to Mr Cross first:

Listen, I’ve sent you a text. I’ve tried calling you and I’ve tried to tell you not to go to the owners as I haven’t spoken to my wife yet. I haven’t been able to speak to my wife and as far as I’m concerned that contract is not valid.[107]

[107]T 86.3-7.

On the other hand, Mr Cross said that there was no such discussion and that he gave Mr Javni a copy of the contract signed by both parties and they then exchanged pleasantries about Mr Javni having ‘bought well’.

I do not consider that either account is likely to actually contain what was said on that occasion. I consider it probable that Mr Cross did tell Mr Javni that Mrs Leahy had accepted his offer and that Mr Javni said that he needed more time to talk to Mrs Javni. It is likely that he would have mentioned that wish as he had mentioned that in in his text a few minutes beforehand. However, I do not accept that Mr Javni said that he was terminating the contract or withdrawing his offer. Mr Javni’s belief that the contract was not valid does not operate as a withdrawal of his offer. The May contract, as formed, was capable of acceptance.

Even if I accepted all of Mr Javni’s account of the conversation at 4:30pm, it would be difficult to conclude that the language used by Mr Javni takes his position any further than the text message. It rather reflects or recites the contents of the text message and asserts that the ‘contract is not valid’. I accept that the mere fact that Mr Javni spoke in terms of a concluded contract as opposed to withdrawing an offer is not fatal to his claim of effective revocation. So much is made clear by Lord Denning in Financings Ltd v Stimson, where he stated, ‘I am aware that the defendant did not in terms revoke the offer, for the simple reason that he thought the agreement was concluded. But he made it clear that he did not wish to proceed with the matter and that is all that was necessary’.[108] But in my view, it cannot be said that Mr Javni by the words ‘I haven’t been able to speak to my wife and as far as I’m concerned that contract is not valid’[109] made it clear that he did not wish to proceed with the matter. As with the analysis of the content of the text message, at most it conveyed that he sought further time in which to consider his position and expressed the view that the May contract was not valid.
[108]Stimson (n 86) 388.
[109]T 86.6-7.

I conclude that Mr Javni did not withdraw his offer in the conversation at his home with Mr Cross at about 4:30pm.

Issue 5: Mrs Leahy’s communication of her acceptance of Mr Javni’s offer:
(a)Were Whyte Just & Moore Lawyers agents for Mr Javni with authority to accept notification that Mrs Leahy had accepted his offer?
(b) Did Mr Cross, in his conversation with Mr Javni at 4:30pm on 15 May 2017, notify him that Mrs Leahy had accepted his offer?

This issue concerns first whether Mrs Leahy’s communication of her acceptance of Mr Javni’s offer occurred by Mr Cross leaving a copy of the signed contract at the offices of Whyte Just & Moore Lawyers at about 4:20pm.

The alternative possible method of acceptance relied on by Mrs Leahy, which I consider below, was by Mr Cross informing Mr Javni of the acceptance when he called at his home at about 4:30pm.

Mr Javni signed the first and third pages of the May contract at his meeting with Mr Cross, but not the second on which Whyte, Just & Moore Lawyers were recorded as his ‘legal practitioner or conveyancer’.[110]
[110]CB 111.

The question of the solicitors’ authority to receive notification of acceptance of Mr Javni’s offer raises three issues: first, did Mr Javni appoint them; second, did Whyte Just & Moore Lawyers have knowledge that they were appointed and so consent to that appointment; and third, if they did consent to their appointment, what was the scope of their authority?

It is clear enough that in law, by signing the May contract, Mr Javni did appoint Whyte Just & Moore Lawyers as his legal practitioners. The SLA does not require each page of a contract for the sale of land to be signed, nor does the common law of contract. It is irrelevant whether in fact a signing party has read the terms of a contract, the presence of a signature on the document is a declaration that that person understands the terms of the contract and intends to be bound by those terms.[111] A signature, wherever placed on the document, will suffice if it reasonably appears that it was intended to cover every part of the writing.[112] Thus, in law, Mr Javni appointed Whyte, Just & Moore Lawyers as his legal practitioners.
[111]Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 181[46].
[112]See, eg, Clohesy v Maher (1880) 6 VLR (L) 357; Firstpost Homes Ltd v Johnson [1995] 1 WLR 1567; MP Management (Aust) Pty Ltd v Churven [2002] QSC 320, [33].

So far as the second question is concerned, it seems clear enough that Whyte Just & Moore Lawyers did accept appointment to act as his lawyers in connection with the conveyance. The important issue is the third: the scope of their authority and whether it included receiving notice of Mrs Leahy’s acceptance of Mr Javni’s offer.

To form a contract, acceptance of an offer alone is generally not sufficient. The fact of acceptance must be communicated to the offeror. Prior to that point, the offeror is free to withdraw the offer.[113] Where an offeror has authorised an agent to receive notification of acceptance, then notice to the agent is treated as notice to the offeror personally. However, the scope of the agent’s authority must include receiving such notice. If the agent is authorised merely to transmit the notification rather than to receive it on behalf of the offeror, then receipt by that agent is not communication of acceptance to the offeror.[114]
[113]Nunin (n 82) 83 (Hedigan J). See generally J W Carter, Contract Law in Australia (LexisNexis Butterworths, 6^th ed, 2013) [3]-[26].
[114]Batt v Onslow (1892) 13 LR (NSW) Eq 79.

A solicitor has no authority to enter into a contract on behalf of a client unless he or she has express and clear authority from the client to do so, or such authority is a necessary implication.[115] Absent this, a solicitor’s authority is, depending on the particular retainer, generally limited to negotiating on the client’s behalf in anticipation of a contract being entered into.[116] In Ciavarella v Polimeni,[117] Young CJ in Eq stated the general rule that a solicitor’s authority was ‘limited to matters of conveyancing and does not extend to matters of contract’.[118]
[115]Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146, 152 (Barwick CJ ) (‘Pianta’). See also Zhang v VP302 SPV Pty Ltd (2009) 223 FLR 213, [33]-[45]; G E Dal Pont, Law of Agency (LexisNexis Butterworths, 3^rd ed, 2014) [8.27] (‘Dal Pont’s Law of Agency’); IVI Appeal (n 100) 205.
[116]See, eg, Pianta (n 115) 152 (Barwick CJ), 153 (Kitto J), 154 (Menzies J), 154 (Windeyer J), 158 (Owen J).
[117][2008] NSWSC 234 (Young CJ in Eq).
[118]Ibid [105]-[106] citing Magripilis v Baird [1926] St R Qd 89 and CTM Nominees Pty Ltd v Galba Pty Ltd (1982) 2 BPR 9588.

The question of whether a solicitor has authority to receive notices is more complicated. The mere fact that a solicitor is acting or has acted for a client does not necessarily authorise him or her to receive notices on behalf of the client.[119] Furthermore, while a solicitor may in some circumstances be treated as a client’s alter ego for the purposes of imputation of knowledge, so much is true only for the purposes of, and within the limits of, the specific authority.[120] A client may, however, hold out solicitors as his or her medium of communication by having previously authorised the solicitors to make offers or other communications on his or her behalf, that is, there may be ostensible authority for the solicitors to act as the client’s medium of communication.[121]
[119]See, eg, IVI Appeal (n 100) [2] (McPherson JA), [33]-[37] (Keane JA).
[120]See, eg, Nowrani Ltd v Brown [1989] 2 Qd R 582, 587 (‘Nowrani’) citing Sargent v ASL Developments Ltd (1974) 131 CLR 634; IVI Trial (n 94) [33]-[42] citing Legione v Hateley (1983) 152 CLR 406.
[121]Dal Pont’s Law of Agency (n 115) [8.30], [20.60].

Therefore, the scope of the agent’s authority must be identified and, in this case, whether the solicitors had authority to make the contract.

The nomination of a firm of solicitors as the purchaser’s solicitor in a contract for the sale of land operates only to give that firm authority once the contract comes into existence for the purpose of completing the conveyance and does not make the firm in advance the purchaser’s agent for receiving notices. This is the position both with respect to actual authority and ostensible authority, that is, the inclusion of a firm’s name as ‘purchaser’s solicitor’ in a contract is not a relevant ‘holding out’ by the purchaser that the named solicitor has authority to receive notices.[122]
[122]Brentwood Properties Pty Ltd v Verduci Constructions Pty Ltd (Supreme Court of Victoria, Batt J, 7 August 1995, BC9503905) 9 (‘Brentwood’); IVI Appeal (n 100).

Two decisions are instructive in this regard. In Brentwood Properties Pty Ltd v Verduci Constructions Pty Ltd,[123] Batt J considered whether the vendor’s acceptance by execution of offers by the purchaser constituted by the purchaser’s signature on two contracts for the sale of land was communicated to the purchaser as required in order to conclude each contract.[124] A solicitor had been nominated by the purchaser as its solicitor in the contract of sale. The vendor submitted that, by so doing, the purchaser had ‘clothed [him] with ostensible or apparent (if not actual) authority to act’ as the purchaser’s solicitor and so was the purchaser’s agent to receive, amongst other things, notification of the vendor’s acceptance of the purchaser’s offer.[125]
[123]Brentwood (n 122).
[124]Ibid 2.
[125]Ibid 9.

Batt J stated:

But it seems to me that the question is whether there had been here such clothing with ostensible or apparent authority. The [vendor] submitted that the [purchaser] … had made the clearest possible representation to the [vendor] that Mr Pastro was its solicitor, in that [the purchaser] signed the two contracts which contained as part of the particulars of sale the information ‘Purchaser’s solicitor: John Pastro & Co’ on the page headed ‘Particulars of sale’. It pointed out that [the purchaser] had initialled that very page of each document twice …
The [vendor] submitted, and in this in my view was correct, that, if Mr Pastro had been clothed with ostensible or apparent authority, it was immaterial whether Mr Pastro was actually instructed. It seems to me, however, that the information on the page in question in each form of contract signed by the [purchaser] … was to be operative only if a contract came into existence or, in other words, that the information was to be taken as meaning that Mr Pastro was the [purchaser’s] solicitor in the matter of the contract of purchase. To put it in yet another way, the [purchaser] was holding him out as agent only if its offer was accepted. Accordingly, it is circular to rely upon the many notifications to Mr Pastro showing or implying acceptance as showing that the [purchaser] was given notification … Therefore I do not rely on notice to Mr Pastro as the [purchaser’s] agent by holding out of the [vendor’s] acceptance of the offer in respect of each lot.[126]

[126]Ibid 9-10.

The decision of Batt J in Brentwood Properties Pty Ltd v Verduci was cited by the Queensland Court of Appeal in IVI Pty Ltd v Baycrown Pty Ltd, which addressed whether a withdrawal of offer by the offeror vendor was effectively communicated to the offeree purchaser, rather than whether an acceptance was effectively communicated to the offeror, as was the case in Brentwood Properties Pty Ltd v Verduci and as is in issue in the present case. A solicitor from Cleary Hoare, Mr Martinez, was advising the purchaser on taxation issues with respect to the transaction, and knew that his details had been included by the purchaser as the ‘purchaser’s solicitor’ in a draft contract. His involvement in respect of pre-contractual negotiations however, was limited to passing on an email of proposed changes to the draft contract from the vendor’s solicitor to a representative of the purchaser. No other communication between the vendor’s solicitor and Cleary Hoare took place until the vendor purported to withdraw its offer by email to Mr Martinez. Without being aware of the content of the email, the purchaser accepted the vendor’s offer.

The Queensland Court of Appeal held that the solicitors had neither actual nor ostensible authority to accept the notice of revocation on behalf of the purchaser, and so a binding contract was formed when the purchaser communicated its acceptance of the vendor’s offer.

In respect of actual authority or implied authority, McPherson JA stated:

Of course, notice of revocation or withdrawal of an offer will be effective if it is communicated to or received by an agent authorised by the offeree to receive it. The offeree’s solicitor may be constituted the agent of the offeree for the purpose of receiving such notice. But the mere fact that a solicitor is acting for the offeree does not authorise him or her to receive such notice on behalf of the offeree or make his receipt of it the equivalent of communication of a notice of withdrawal or revocation to the offeree himself. It all depends on what the solicitor has been authorised to do on behalf of the offeree.
The fact that, if in due course a contract transpires between offeror and offeree, someone has been nominated to be the offeree’s solicitor for the purpose of attending to settlement or completion of the contract is not enough. It does not make him or her in advance the agent of the offeree for the purpose of receiving notice of withdrawal or revocation of the offer before the contract has been formed or concluded. Making a contract on behalf of a client is not something that a solicitor has implied authority to do: Nowrani Pty Ltd v Brown [1989] 2 Qd R 582, 586. On the face of it, the meaning that ordinarily attaches to the designation ‘purchaser’s solicitor’ in a written form of contract not yet concluded is that it will be operative only if and when the contract comes into existence: ibid, and see Brentwood Properties Pty Ltd v Verduci (1995) BC 9503905, at 10 (Sup Ct of Victoria; Batt J).
A solicitor has no general authority to make contracts on behalf of a client and derives none simply from being described prospectively as the solicitor for that client if and in the event a contract ensues.[127]

[127]IVI Appeal (n 100) [2]-[4] (McPherson JA).

Similarly, Keane JA identified[128] the ‘heavy weight’[129] of relevant English and Australian authorities addressing the fallacy that a client might have a ‘standing agent’ to receive notice of material facts.[130] His Honour distinguished cases where there had been a chain of correspondence passing between the solicitors acting upon instructions for each party, noting that, in those cases, there could be no doubt of the authority of the solicitor who has actually been instructed to conduct the negotiations.[131] His Honour concluded:

Cleary Hoare had no role as a go-between in the negotiation of the contract between the [vendor] and the [purchaser]. That they might have later had authority to receive communications from the [vendor] in the event that a contract was concluded is of no assistance at all to the [vendor] when seeking to show that this authority existed before the contract was concluded. The later authority would only have derived from the terms of the contract to that effect once the contract had been concluded.[132]

[128]Ibid [33]-[37] (Keane JA).

[129]Ibid [38] (Keane JA).

[130]White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164, [128] (Powell JA).

[131]IVI Appeal (n 100) [33] (Keane JA) citing Singer v Trustee of the property of Munro [1981] 3 All ER 215, 218.

[132]Ibid [32] (Keane JA) citing Nowrani (n 120) 586 and Sargent v ASL Developments Ltd (1974) 131 CLR 634, 649, 658-9.

The Court of Appeal also rejected the vendor’s argument that the solicitors had ostensible authority to accept communications directed to the purchaser. In support of this argument, the vendor pointed to the identification of the firm of solicitors as the ‘buyer’s solicitor’ in the draft contract. Keane JA stated that, as a first step in a case of ostensible authority, the vendor must establish that the purchaser had held out Cleary Hoare as its agent to receive documents which would affect the purchaser’s legal rights.[133] Referring to key authorities on agency his Honour noted that:

[T]he boundaries of the ostensible authority of an agent are drawn according to what the principal represents, whether implicitly or explicitly, about the authority of the agent and the extent to which these representations have been relied upon by the third party.[134]

[133]Ibid [41] (Keane JA).

[134]Ibid [42] (Keane JA).

His Honour concluded that the most which could be represented by the inclusion of Cleary Hoare in the draft contract was that they had been nominated by the purchaser to act on its behalf as the purchaser’s solicitor in the event that a contract was actually concluded, and otherwise had only represented that Cleary Hoare was retained to provide advice in respect of the transaction.[135] The vendor had failed to identify any words or conduct on the part of the purchaser by which it had represented to the vendor that Cleary Hoare represented the purchaser in relation to the receipt of communications concerning the conclusion of negotiation; the substantive matters of the contract were in fact settled between a representative of the purchaser and the vendor’s solicitor. Further, no evidence of reliance had been adduced.
[135]IVI Appeal (n 100) [46] (Keane JA) citing Brentwood (n 122).

Similarly, McPherson JA rejected the vendor’s assertion that Mr Martinez had ostensible authority to receive notice of the revocation by reason of the fact that he had been held out as the purchaser’s solicitor or agent for the purpose of ‘negotiating the transaction’. McPherson JA considered that Mr Martinez’s limited involvement in passing on an email was insufficient to justify an assumption that Cleary Hoare was authorised to receive a withdrawal of revocation of the vendor’s offer.[136]
[136]IVI Appeal (n 100) [5]-[6] (McPherson JA).

In Law of Agency, Professor Dal Pont, referring to the decision in IVI Pty Ltd v Baycrown Pty Ltd states:
[T]he decision … should not be construed to suggest that courts are never inclined to infer the existence of implied authority in this regard. Where the circumstances of the case, including the terms of the dealings between agent and principal, reveal implied authority to be necessary for the practical workings of the relationship, an inference of such authority may be made.[137]
[137]Dal Pont’s Law of Agency (n 115)[8.30] citing Riltang Pty Ltd v L Pty Ltd (2002) 12 BPR 20, 281.
The decision of Nowrani Pty Ltd v Brown,[138] cited by the Court of Appeal in IVI Pty Ltd v Baycrown Pty Ltd, is also relevant. In issue was whether a solicitor engaged to complete a contract for the sale of land had authority to vary the contract. McPherson J considered an argument that the inclusion of a provision in the contract relating to notices meant that the solicitor named in the contract was authorised to receive or accept notifications of variations.[139] His Honour did not accept this argument, stating:

Both the clause itself and the particular words ‘notice’ and ‘advice’ in the last sentence confirm that the subject-matter is not the making of offers to vary, or the communication of acceptance thereof, but the provision of a method of effecting service of notices that are expressly or impliedly contemplated by the contract as likely to be given by one party to the other. The expression ‘for the purposes of this contract’, which introduces the final sentence, shows that to be so. In applying cl.24 one should, in my opinion, therefore start with the interpretative presumption that it is designed to serve only those provisions of the contract, and perhaps also of statutory enactments incorporated by implication, as refer to a notice or advice to be given by one party to the other, as the clause itself says, ‘pursuant to this contract’. Varying contractual terms is not something that is done ‘pursuant to’ or even ‘for the purposes of’ the contract, but is done for the purpose of altering that contract.[140]
[138]Nowrani (n 120).
[139]The clause is set out in full at Nowrani (n 120) 586-7.
[140]Nowrani (n 120) 587.

The clause 17 issue

Clause 17 of the May contract stated:

17. SERVICE
17.1 Any document sent by -
(a) post is taken to have been served on the next business day after posting, unless proved otherwise;
(b) email is taken to have been served at the time of receipt within the meaning of section 13A of the Electronic Transactions (Victoria) Act 2000.

17.2 Any demand, notice or document required to be served by or on any party may be served by or on the legal practitioner or conveyancer for that party. It is sufficiently served if served on the party or on the legal practitioner or conveyancer -
(a) personally; or
(b) by pre-paid post; or
(c) in any manner authorised by law or the Supreme Court for service of documents, including any manner authorised for service on or by a legal practitioner; or

(d) by email.
17.3This general condition applies to the service of any demand, notice or document by or on any party, whether the expression 'give' or 'serve' or any other expression is used.

Mr Javni’s counsel submitted that Mrs Leahy had attempted to rely on cl 17, a service provision, in a similar manner, that is, to authorise the solicitors nominated in the contract to receive notice of acceptance.[141] He submitted that even if the solicitors were properly appointed agents, cl 17 had no effect as it only operated after a contract had been formed.
[141]See T 145.3-5,

While cl 17 is not in identical terms to the clause considered by McPherson J in Nowrani Pty Ltd v Brown, and it does not include the words ‘for the purposes of this contract’,[142] Mr Javni’s position in this regard is supported by that decision.[143] For example, cl 17.2 provides ‘any demand, notice or document required to be served’ and cl 17.3 provides that ‘this general condition applies to the service of any demand, notice or document by or on any party, whether the expression ‘give’ or ‘serve’ or any other expression is used’. I consider that these terms refer to a contract that has already been formed and not to a stage when negotiations for a contract are still continuing.
[142]Nowrani (n 120) 587.
[143]T 15.13-28, 145.3-19.

Application of principles to the facts

There was no evidence that, prior to the contract being executed, Mr Javni actually and expressly authorised Whyte Just & Moore Lawyers to be his agent for the purposes of receiving notification of Mrs Leahy’s acceptance of his offer so as to form a contract. Furthermore, no argument was made or could be made that such authority would arise by ‘necessary implication’.[144]
[144]See, eg, Pianta (n 115).

The question then is whether Whyte Just & Moore Lawyers had ostensible authority to accept notification of Mrs Leahy’s acceptance on behalf of Mr Javni. It is clear from the authorities discussed above that its mere nomination as the purchaser’s solicitor in the contract was not a relevant holding out by Mr Javni that it had authority to receive notification of acceptance so as to make the contract, as opposed to acting in the conveyance once the contract was on foot.

In my opinion, there were no words or conduct which were a relevant ‘holding out’ by Mr Javni. The only possible conduct was Whyte Just & Moore Lawyers’ involvement in terminating the first contract. But there was no evidence that Whyte Just & Moore Lawyers were involved in the negotiation or were a ‘go-between’ in respect of either the first contract or May contract.[145] Further, there was no indication in the letter sent 17 February 2017 terminating the first contract, that the firm acted for Mr Javni in an ongoing capacity, or even in relation to all matters concerning that transaction.[146]
[145]See IVI Appeal (n 100) [32].
[146]Cf Kestel v Superannuation Complaints Tribunal [2010] FCA 1300, [18]-[21].

Mr Javni gave evidence that he had alternated or switched between using three conveyancing firms over the years, including Whyte Just & Moore Lawyers. Reliance was placed on his concession in cross-examination that he had not used the other two conveyancers for some time.[147] But this fact has nothing to do with the issue of the existence of any of ostensible authority.[148] All that the Leahys knew on this question was that Whyte Just & Moore Lawyers had acted for Mr Javni in terminating the first contract. That this was the case is clear from the following exchange in cross-examination of Mr Javni:

COUNSEL: And the previous solicitors, the previous contract, the first contract that you cooled off you used Whyte Just & Moore, didn’t you?
JAVNI:Correct.
COUNSEL: And there’s no reason to suggest why they wouldn’t be your solicitors for the next conveyance, would it?
JAVNI:I've explained earlier it depends on pricing who charges me the most on doing the conveyancing. That's why I have three different groups.[149]

[147]T 101.2-5.

[148]See, eg, IVI Trial (n 94) [47].

[149]T 101.6-13.

The relevant question is not whether it was reasonable for Mrs Leahy to assume that Whyte Just & Moore Lawyers would act for Mr Javni again in a conveyance, but whether there was a representation or holding out by Mr Javni that Whyte Just & Moore Lawyers were authorised to receive notice of acceptance on which Mrs Leahy relied. In my view, there was no relevant representation or holding out and therefore, Whyte Just & Moore Lawyers had no such authority.

Mr Cross’ delivery of the May contract signed by Mrs Leahy to Whyte Just & Moore Lawyers was not communication to Mr Javni of her acceptance of his offer.

Mrs Leahy’s acceptance of Mr Javni’s offer communicated by Mr Cross at 4:30pm

However, I consider that Mr Cross, as agent for Mrs Leahy, did convey her acceptance of Mr Javni’s offer when he called at his home at 4:30pm. I find that Mr Cross did in effect tell Mr Javni that Mrs Leahy had accepted his offer or had signed the contract and that he attempted to hand a copy of the signed contract to Mr Javni.

His refusal to accept the signed contract would not prevent a contract coming into existence. This was not a case where the contract provided for acceptance by exchange of signed parts or copies.[150] The contract was created when Mr Javni was put on notice by Mr Cross’ oral communication that Mrs Leahy had signed the contract and accepted the offer.
[150]See Rymark Australia Development Consultants Pty Ltd v Draper [1977] QdR 336; Manyk v Forster (1990) VConvR 54-388; [1990] VicSC 442 (Full Court of Supreme Court of Victoria, 24 September 1990).

Conclusion

My conclusion and finding is that the May contract was made between Mrs Leahy and Mr Javni.

Mr Javni did not dispute that if the May contract was validly formed, then he was liable in debt for the deposit of $450,000. This debt arises because of the obligation to pay the deposit under General Condition 11.1 and the forfeiting of the deposit under General Condition 28.4 upon the rescission of the contract by a default notice given by Mrs Leahy, whether the deposit has been paid or not.

Accordingly, Mrs Leahy succeeds in her claim against Mr Javni for the sum of $450,000 and is entitled to judgment in that amount.

Her claim for the sum of $10,000 in respect of the first contract fails.

I will receive written submissions from the parties as to the appropriate orders, including as to interest and costs.

[2020] VSC 680

15 October 2020