McCleary v Dien Australia Pty Ltd - [2021] WASC 272

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   McCLEARY -v- DIEN AUSTRALIA PTY LTD [2021] WASC 272
CORAM:   TOTTLE J
HEARD:   17 MAY 2021
DELIVERED          :   12 AUGUST 2021
FILE NO/S:   CIV 3093 of 2017
BETWEEN:   NEIL McCLEARY
TRACEY ANNE McCLEARY
Plaintiffs
AND
DIEN AUSTRALIA PTY LTD
Defendant

Catchwords:

Agency - Actual authority - Extent of putative agent's authority - Whether express or implied authority to enter into sales contract at a discounted price - Turns on own facts

Agency - Ostensible authority - Holding out by principal - Representation by conduct - Whether reliance on representations reasonable

Agency - Ratification - Ratification by principal of agent's unauthorised conduct - Ratification by silence or acquiescence

Strata titles - Contract for the purchase of strata titled property - Whether contract excludes or restricts operation of the Strata Titles Act 1985 (WA) - Whether provisions void by operation of s 70A of the Strata Titles Act 1985 (WA)

Legislation:

Strata Titles Act 1985 (WA), s 70, s 70A, s 70B

Result:

Judgment for the plaintiffs

Category: B

Representation:

Counsel:

Plaintiffs	:	Mr P A Walker
Defendant	:	Mr A P Hershowitz

Solicitors:

Plaintiffs	:	Taylor & Taylor Lawyers Pty Ltd
Defendant	:	Robertson Hayles Lawyers

Case(s) referred to in decision(s):

Australian Securities and Investments Commission v Atlantic 3-Financial (Aust) Pty Ltd [2006] QCA 540; [2007] 2 Qd R 399
Balanced Securities Ltd v Dumayne Property Group Pty Ltd [2017] VSCA 61; (2017) 53 VR 14
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Blatch v Archer (1774) 98 ER 969
Bolton v Lambert (1889) 41 Ch D 295
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Fitzgerald v FJ Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215
Jones v Peters [1948] VLR 331
Learn & Play (Rhodes No 1) Pty Ltd v Lombe [2011] NSWSC 1506
MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Pourzand v Telstra Corporation Ltd [2014] WASCA 14
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 264 CLR 1
Scots Church Adelaide Incorporated v Fead [1951] SASR 41
Suncorp Insurance and Finance Co Ltd v Milano Assicurazioni SpA [1993] 2 Lloyd’s Rep 225
Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93
Tipperary Developments Pty Ltd v The State of Western Australia [2009] WASCA 126
Union Bank of Australia Ltd v Rudder [1911] HCA 39; (1911) 13 CLR 152
Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 6] [2020] WASC 302
Yona International Limited v La Reunion Francaise SA [1996]…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2021] WASC 272
Decision Date

CaseChat Overview and Summary

In the matter of McCleary v Dien Australia Pty Ltd, the High Court of Australia was tasked with determining whether the defendant, Dien Australia Pty Ltd, had actual authority to sell an apartment at a discounted price, and whether this sale was in accordance with the terms of the Development Agreement. The plaintiffs, McCleary, argued that the sale of apartment 28 at a discounted price of $695,000, with payment made within three business days, was unauthorised and constituted a breach of the Development Agreement. The defendant contended that the sale was within the scope of the agent's actual authority.

The central legal issue was whether Dien Australia Pty Ltd, through its agent 13 O'Connor, had the actual authority to sell apartment 28 at the discounted price. The court had to examine the terms of the Development Agreement and consider whether the agent's actions were within the scope of the authority granted to them by the principal. The Development Agreement explicitly prohibited selling at a price lower than the agreed price without the owner's consent, and the court needed to determine if the defendant's actions fell outside this restriction.

The court held that Dien Australia Pty Ltd did not have actual authority to sell apartment 28 at the discounted price. The starting point for the court's analysis was the prohibition in clause 10.2 of the Development Agreement, which explicitly restricted the sale of apartments at a price lower than the agreed price without the owner's consent. The court found that the defendant's acquiescence in the sale of apartments with the benefit of 'furniture packages' did not expand the agent's actual authority, as these benefits did not involve a direct reduction in the purchase price. Moreover, the sale at a discounted price did not constitute a method of raising further capital as authorised by clause 4 of the Development Agreement. The court emphasised that the sale converted capital in the form of an interest in land into cash, rather than raising additional capital. Therefore, the sale was not in accordance with the terms of the Development Agreement.

The court concluded that Dien Australia Pty Ltd did not have actual authority to sell apartment 28 at the discounted price. The sale was in breach of the Development Agreement, and the plaintiffs were entitled to the relief sought. The final orders were to be determined based on the court's findings and the relief requested by the plaintiffs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

There was no dispute about the concept of actual authority. For present purposes the short description given by Murphy JA in Pourzand v Telstra Corporation Ltd,[191] is sufficient to identify the essential elements of the concept. In Pourzand Murphy JA stated:[192][191] Pourzand v Telstra Corporation Ltd [2014] WASCA 14.[192] Pourzand v Telstra Corporation Ltd [129].Actual authority is a consensual arrangement between principal and agent whereby the principal grants to the agent, and the agent accepts, the principal's authority to act on the principal's behalf to undertake certain matters or tasks. Actual authority may itself be either express authority or implied authority. I do not accept 13 O'Connor had actual authority to sell apartment 28 at the discounted price of $695,000 with payment being made within 3 business days for the following reasons. First, the starting point is, 13 O'Connor's authority to sell was confined by the prohibition in cl 10.2 of the Development Agreement that, '[t]he Developer must not sell ... at a price lower than the price settled with the Owner without first obtaining the Owner's consent'. Secondly, I do not accept the defendant's knowledge and acquiescence in the sale of apartments with the benefit of 'furniture packages' expanded 13 O'Connor's actual authority. The 'furniture packages' were a financial incentive or benefit to purchasers but they did not involve a direct reduction in the purchase price. Rather Next Generation Homes (Australia) Pty Ltd and or its subsidiaries' agreed to provide a voucher redeemable with Interior Design Elements Pty Ltd.[193] More importantly, however, acquiescence in the provision of 'furniture packages' valued at $10,000 on a sale of an apartment for $499,000,[194] a benefit with a face value of 2 per cent of the sale price was far removed from the 20 per cent direct reduction in the price of apartment 28. Acquiescence in the former is not a manifestation of assent to the latter. [193] Exhibit 4.14, 2204.[194] Exhibit 4.14, 2203. Thirdly, the sale of apartment 28 at a discounted price on the basis that the purchase price was payable effectively immediately was not a method of raising further capital authorised by cl 4 of the Development Agreement. The sale did not raise further capital at all - it converted capital in the form of an interest in land into cash - there was no increase in the net capital available for the purposes of the development. The sale provided cash flow but that should not be confused with capital raising. Further, the plaintiffs' contention in respect of cl 4 would involve construing the Development Agreement as operating in a manner that permitted apartments to be sold on terms that provided for the payment of the purchase price to be made before settlement and for the price to be applied to finance the development rather than it being held on trust as required by pt V of the Strata Titles Act. The plaintiffs' construction of cl 4 of the Development Agreement would involve contraventions of the legislation and a court construing a contract will presume the parties did not intend for its terms to operate in a manner that contravened the law.[195][195] Fitzgerald v FJ Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215, 237 (Kirby J); Australian Securities and Investments Commission v Atlantic 3-Financial (Aust) Pty Ltd [2006] QCA 540; [2007] 2 Qd R 399, [66] (McMurdo J).