Notter v Girault

[2004] NSWSC 863

CITATION:	Notter v Girault [2004] NSWSC 863
HEARING DATE(S):	08/09/04
JUDGMENT DATE:	20 September 2004
JUDGMENT OF:	White J
DECISION:	1. Dismiss the Amended Summons; 2. Dissolve the injunction granted on 25 June 2004; 3. Direct that if the defendant wishes an enquiry as to damages pursuant to the plaintiff's undertaking as to damages given on 25 June 2004, the defendant file and serve a notice of motion and affidavit in support thereof within 28 days; 4. Refer the proceedings to a Master to enquire as to damages, if such notice of motion is filed; 5. The plaintiff pay the defendant's costs; 6. Exhibits to be returned after 28 days.
CATCHWORDS:	Contract - Sale of land - Forfeited deposit - Whether there was a revival of previous contract - Authority of licensed conveyancer to enter into a new contract for the vendor - Whether there were acts of part performance by purchaser - Claim for repayment of forfeited deposit.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) ss 54A, 55(2A)
CASES CITED:	Cameron v McGrath (1996) 40 NSWLR 39 Ashington Piggeries Limited v Christopher Hill Limited [1972] AC 441 Pianta v National Finance and Trustees Ltd (1964) 180 CLR 146 Strangas v Young (1975) 1 BPR 9123 Tweddell v Henderson [1975] 2 All ER 1096 Khouri v Khoury [2004] NSWSC 770 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Francis v Francis [1952] VLR 321
PARTIES :	Ruth Claudia Notter v Patricia Suzanne Maryline Girault
FILE NUMBER(S):	SC 3635/04
COUNSEL:	Plaintiff: W J Carney Defendant: G M McGrath
SOLICITORS:	Plaintiff: Carneys Lawyers Defendant: Hannaford Cox Connellan & McFarland

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
ONE DAY LIST

WHITE J

Monday, 20 September 2004

3635/04 Ruth Claudia Notter v Patricia Suzanne Maryline Girault

JUDGMENT

1 HIS HONOUR: The plaintiff in these proceedings was the purchaser of a property at 2345 Waterfall Way, Bellingen under a contract of sale entered into on 31 December 2003. The defendant was the vendor. The purchase price was $600,000. A 10% deposit was paid on exchange and was held by the vendor’s agent. The due date for completion of the contract was 30 January 2004.

2 On 24 January 2004 the purchaser’s solicitor, Mr Shalovsky, advised the vendor’s licensed conveyancer, Mr Hunter, that there would be some delay in settlement. This was not acceptable to the vendor. On 2 February 2004 the vendor issued a notice to complete requiring completion of the contract by 3.00 pm on 18 February 2004. No objection was taken to the validity of the notice to complete. The purchaser failed to complete the contract on 18 February. On 18 February 2004 Mr Shalovsky on behalf of his client, requested a further 14 days to sort out the problems his client was experiencing with the financing of the purchase. The vendor did not accept the proposal.

3 On 19 February 2004 the vendor through Mr Hunter, gave notice of termination of the contract and forfeiture of the deposit.

4 On 20 February Mr Hunter gave notice to the agent that the contract had been terminated and that the deposit was forfeited. He requested the return of the deposit. On the same day Mr Shalovsky asked Mr Hunter to obtain his client’s instructions regarding the proposed 14 day extension as soon as he was able to. In his correspondence Mr Shalovsky blithely ignored the fact that the agreement had been terminated. However Mr Hunter did not. On 24 February he wrote to Mr Shalovsky requiring him immediately to notify the agent to release the deposit to the vendor. He repeated that requirement on 25 February 2004, going on to stipulate the terms upon which he purportedly required Mr Shalovsky to write to the agent.

5 On 25 February Mr Shalovsky advised Mr Hunter that he was obtaining instructions from his client in relation to the request that he write to the selling agent authorising the release of the deposit. He pressed for a reply to his letter of 18 February and said that “our client still wishes to purchase the property if she is allowed a further fortnight so that she can resolve the financing problem.”

6 The agent declined to release the deposit without the written authority of both parties. This prompted Mr Hunter to lodge a complaint with the Department of Fair Trading against the agent. He also complained to the Legal Services Commissioner that Mr Shalovsky had not written to the agent to authorise the release of the deposit.

7 On 26 February 2004 Mr Hunter wrote to Mr Shalovsky in the following terms:

“Our client does NOT wish to sell the property to your client. The matter is at an end.
We require your letter addressed to the agent authorising the release of the deposit to the vendor immediately.”

8 Mr Shalovsky was not deterred. On 26 February he wrote to Mr Hunter advising that new prospective purchasers had been identified for the purchase of his client’s property at Bronte. The financing for the purchase of the property at Bellingen was to have been made available from the proceeds of the Bronte property. He asked Mr Hunter to obtain instructions regarding extension of time and for any further claim for compensation. He did not address Mr Hunter’s requirement that authority be given to the agent for the release of the deposit. At no time did he contest that the contract of 31 December 2003 had been validly terminated.

9 On 27 February 2004 Mr Hunter wrote to Mr Shalovsky proposing a new contract for sale for the property be entered into upon certain terms. The sale price would be $594,000. The terms proposed included that the $60,000 deposit held by the agent be released to the vendor immediately, and that a letter addressed to the agent be faxed to Mr Hunter’s office by 5.00 pm on 1 March 2004. If it were not received, the vendor would not sell the property to the purchaser. If such a letter were received, the vendor was prepared to exchange contracts for the sale of the property by 5.00 pm on Friday 5 March, with the deposit payable under the new contract to be released to the client on exchange of the contracts. The offer was also conditional upon receiving written confirmation that the purchaser’s sale of her property at Bronte had been exchanged unconditionally by 5.00 pm on Wednesday 3 March 2004.

10 After obtaining his client’s instructions Mr Shalovsky replied on 1 March 2004. He observed that the vendor’s proposal effectively increased the sale price from $600,000 to $654,000. He asserted that that was an unreasonable windfall and that an appropriate level of compensation for the vendor would be about $10,000 plus interest for the delay in payment of the purchase price. He proposed that the current contract of sale be used subject to amending the purchase price and making suitable provision for additional compensation for the vendor. He proposed that the purchase price be increased to $610,000 and that his client would provide authority to the selling agent so that the deposit of $60,000 could be released to the vendor. The proposal thus involved the “revival” of the contract of 31 December 2003, presumably, by the vendor agreeing not to act on the notice of termination.

11 The vendor’s instructions to Mr Hunter in relation to this proposal were communicated in writing on 2 March 2004. Those instructions were not changed. She said that she had reconsidered the purchase price and felt that $620,000 plus interest was a fair amount. Her instructions were:

“1. Deposit must be released now.
2. New deposit must be sent to my account or Harbour Conveyancing Trust Fund.
3. New contract must be drawn and exchanged within a week from Mrs Notter exchange of contracts for her Bronte property.
4. Settlement must be on last week of March or first week of April latest.”

My understanding of the vendor’s instructions is that she required a total payment of $620,000 by release of the deposit of $60,000 under the terminated contract and by entry into a new contract for $560,000. She required that the deposit under the new contract be paid either to her or to her licensed conveyancer. Her instructions remained unchanged.

12 On 2 March 2004 Mr Hunter wrote to Mr Shalovsky. He conveyed his instructions in the following terms:

“1. The new sale price is to be $620,000 not $610,000
2. Penalty interest is to apply as per your facsimile dated 1 March 2004
3. The deposit holder is to be our firm, not the agent LJ Hooker Bellingen
4. Contracts must be exchanged unconditionally by 5.00 pm Friday March 2004
The above is subject to receiving your written confirmation of the above by 5.00 pm Wednesday 3rd March 2004. Further the $60,000 deposit from the previous matter which is held by the Agent is to be released to the Vendor by 5.00 pm Wednesday 3rd March 2004. Further your sale is to be exchanged unconditionally by 5.00 pm Wednesday 3rd March 2004.
Take note. There will be no further discussions, negotiations or extensions of time. If not agreed, the vendor will continue and enforce the legal proceedings which she has commenced against the purchaser.”

13 On its face this suggests that the proposal involved both the release of the existing $60,000 deposit and a new contract for the price of $620,000 with the new contract’s deposit to be held by Harbour Conveyancing. In his oral evidence Mr Hunter said that this was his understanding of the proposal. It was not Mr Shalovsky’s understanding. On 2 March Mr Shalovsky advised that he would see his client the next day to obtain her instructions but he believed that the terms of settlement proposed were very reasonable and he anticipated receiving instructions to settle the matter on those terms with two minor exceptions. One was that the release of the $60,000 deposit to the vendor should be extended to 6.30 pm on Wednesday 3 March 2004. The other was that there were to be some minor amendments made to the contract for sale of the purchaser’s property at Bronte before those contracts could be exchanged.

14 Mr Hunter agreed to the extension of time for the release of the deposit to 6.30 pm on 3 March 2004. He noted the information that the contract for sale of the purchaser’s Bronte property would be amended. It must have been clear to Mr Hunter that Mr Shalovsky understood his letter of 2 March to mean that the total sale price, including the release of the $60,000 deposit, would be $620,000. Having protested that the vendor’s proposal of 27 February 2004 was rapacious, Mr Shalovsky could not have regarded the terms of the 2 March proposal as being very reasonable unless he understood them in the sense indicated.

15 On 3 March Mr Shalovsky advised that the anticipated exchange of the Bronte property was to take place on Friday 5 March 2004.

16 New contracts were not exchanged between the vendor and the purchaser on 5 March 2004. Nor was an instruction given to the agent to release the deposit. By a letter dated 5 March 2004 Mr Hunter stated that as the purchaser had failed to meet deadlines in respect to the deposit and other issues, his client would proceed with action in respect of the purchaser’s breach of contract, damages and loss on resale.

17 On 8 March 2004 Mr Hunter sent a draft contract of sale to Mr & Mrs Churches, who were interested in purchasing the Bellingen property.

18 On 8 March 2004 Mr Shalovsky and Mr Hunter had two telephone conversations. The purchaser says that in the second of those conversations a new agreement was made for the sale of the Bellingen property, or, the original contract was varied and the vendor, through Mr Hunter, agreed not to enforce the termination of that contract.

19 According to Mr Hunter, in the first conversation that took place at about 2.00 pm, Mr Shalovsky told him that his client was coming to see him later that afternoon and that he (Mr Shalovsky) would fax Mr Hunter a letter addressed to the agent releasing the deposit.

20 According to Mr Shalovsky, in the first conversation Mr Hunter said that he was following up his letter of 2nd March and would like a response to that letter and that he also wished to confirm that Mr Shalovsky would be sending a letter to the agent to release the deposit. Mr Shalovsky says that he told Mr Hunter that he was still waiting to confirm his instructions but that, subject to those instructions, he believed that they could probably settle the matter along the lines that they had discussed and, assuming that that was so, he should be able to send the letter to the agent to release the deposit by 6.00 pm that evening.

21 I do not accept that Mr Hunter said to Mr Shalovsky that he wanted a response to his letter of 2 March 2004. That statement would be inconsistent with his letter of 5 March which said that all negotiations were at an end. I do accept that Mr Hunter telephoned Mr Shalovsky requiring him to send a letter to the agent to release the deposit.

22 I do not accept Mr Hunter’s version of the conversation, that he was told in unqualified terms by Mr Shalovsky that he would send a letter that afternoon addressed to the agent releasing the deposit. Nothing in the preceding negotiations suggested that the purchaser or Mr Shalovsky would acquiesce to the assertion by the vendor of her right to forfeit the deposit. Mr Shalovsky never denied that right, but he sought to negotiate a new arrangement for his client which would avoid the forfeiture of the deposit on the payment of an increased price. I think it much more probable that Mr Shalovsky’s response to Mr Hunter’s demand that he send a letter to the agent releasing the deposit was that he told Mr Hunter that he believed he could obtain his client’s instructions to settle the matter along the lines previously discussed and, if that could be done, then he would send a letter to the agent releasing the deposit. In other words, I do not accept that either party moved from the position which she had previously taken in correspondence.

23 Mr Hunter says that the second conversation was very short. He says that Mr Shalovsky told him “My client is with me now. Contracts have not exchanged on her sale. There is still some negotiating to be done… some minor changes. All being well I hope to settle her sale around 8 April. I will fax you a letter to release the deposit to the vendor on the previous contract.” And that he said “OK”. Mr Hunter made a file note in these terms.

24 Mr Shalovsky made a file note of the first conversation on 8 March, but not the second. His reason, he said, for not keeping a file note of his second conversation was that he immediately confirmed its contents in a letter of the same date to Mr Hunter. According to Mr Shalovsky in the second conversation he said to Mr Hunter:

“As I anticipated, we can settle this matter. My client agrees to proceed to settlement on the terms and conditions set out in the existing contract for sale subject to the proposed amendments including increasing the purchase price from $600,000 to $620,000. The extra $20,000 is for compensation for your client’s loss and inconvenience and is in addition to her entitlement to interest at 10% as already provided for in special condition 5. I will write to the selling agent to authorise the release of the $60,000 deposit. I will also arrange for the exchange of contracts for the sale of my client’s home at Bronte as soon as possible with only four weeks to settlement to minimise any delays at the end settling the purchase of this property at Bellingen.”

25 He says that Mr Hunter replied “That is agreed but I need you to send the letter to the agent immediately”. He agreed to attend to that matter immediately.

26 Mr Hunter had no authority from the defendant to make a contract on her behalf in those terms. His only authority was as set out in paragraph 11 above. His client required not that the parties proceed to settlement on the existing contract subject to its being amended, but that the deposit on the terminated contract be released and that new contracts be entered into with the deposit on the new contract to be held by her or by Harbour Conveyancing. I therefore start from the position that it is unlikely that Mr Hunter would have given an unconditional assent as deposed to by Mr Shalovsky.

27 Mr Shalovsky sent Mr Hunter a letter dated 8 March 2004 referring to their telephone conversation that afternoon. He stated that:

“The parties have come to the following agreement:
1. The parties will still proceed to settlement on the terms and conditions set out in the existing Contract For Sale except that the sale price is to be increased from $600,000 to $620,000.
2. The parties acknowledge that –

a. the payment of the additional $20,000 is for compensation for loss and inconvenience suffered by the vendor, and

b. this payment of monetary compensation is in addition to the vendor’s entitlement compensation by interest of 10% per annum (as already provided for in special condition 5 in the existing contract for sale)

3. The purchaser is to immediately authorise the selling agent in writing to release the $60,000 deposit to the vendor.
4. The purchaser is to exchange contracts for the sale of her home at 35a Murray Street, Bronte as soon as is possible by all reasonable endeavours.”

28 He enclosed a letter addressed to the agent. Mr Shalovsky’s letter to the agent stated that the dispute between the parties had been resolved. It went on to say that:

“the purchase will still go ahead on the terms and conditions in the existing Contract For Sale except that, in lieu of her rights to terminate the contract, forfeit the deposit and sue our client for any further loss, the vendor, Patricia Girault, would accept the following compensation for her loss and inconvenience…”.

In the last paragraph, Mr Shalovsky asked the agent immediately to release the $60,000 deposit directly to the vendor or to her licensed conveyancer, Harbour Conveyancing.

29 Although this correspondence does not say so in so many words, it is implicit in the assertion that the parties would proceed on the terms and conditions in the existing contract for sale and that the vendor would not rely on her “rights to terminate” the contract and forfeit the deposit, that the $60,000 was to be treated as the deposit under the “existing contract for sale” but that it would be released immediately to the vendor.

30 Mr Hunter did not reply to this correspondence. He said the reason he did not reply was that he had already made it clear that the agreement was at an end. He said that things received from Mr Shalovsky were all over the place, and there was a limit to how many times he had to keep saying that the agreement was at an end.

31 I do not accept that this was the reason why Mr Hunter did not respond to the correspondence. In my view the reason he did not respond to the correspondence was because he wanted to obtain the $60,000 deposit to which he believed his client was entitled, (as indeed she was, subject to any relief against its forfeiture which the purchaser might have been entitled to seek). Mr Hunter gave evidence that his only concern when he was talking to Mr Shalovsky on 8 March was to get the deposit released.

32 On the other hand I would not be satisfied merely from the fact that Mr Shalovsky purported to record an agreement reached in a telephone conversation with Mr Hunter, that in fact an agreement in those terms was reached. Mr Shalovsky’s credit was damaged by the evidence which the plaintiff was compelled to adduce from her solicitor, Mr Carney, to allow his affidavit to be read. His first affidavit sworn on 25 June 2004 gave no admissible evidence as to the agreement alleged to have been made on 8 March 2004. Orders had been made for the plaintiff to file and serve any further affidavits by Friday 3 September 2004. I heard the matter on Wednesday 8 September 2004. Mr Shalovsky’s affidavit was only provided to the defendant on the morning of the hearing. Initially I refused leave for parts of it to be read. I revoked that order after evidence was adduced that it was not through any fault of the plaintiff or of the plaintiff’s current solicitor that the evidence was provided so late. The fault lay primarily in Mr Shalovsky not keeping promises which he made to the plaintiff’s solicitor. It also emerged that Mr Shalovsky’s practising certificate had been suspended pending a report into irregularities in relation to his trust account. His correspondence also revealed a tendency to ignore unpalatable facts.

33 I think the probabilities are that Mr Shalovsky outlined the proposal which he had previously made in the letter of 1 March 2004 but referring to an increase in the purchase price from $600,000 to $620,000 rather than to $610,000. Part of that proposal was that the purchaser would authorise Mr Shalovsky to write to the agent authorising the release of the $60,000 deposit. I think it probable that Mr Hunter said “OK” to the statement made by Mr Shalovsky that Mr Shalovsky would write to the agent authorising the release of the deposit to the vendor and send him a copy of that letter. I think it probable that Mr Hunter did not respond specifically to the rest of the proposal, but that he did not say anything to reject it. I consider that Mr Shalovsky believed on the basis of what Mr Hunter said that Mr Hunter was assenting not only to his writing to the agent for the release of the deposit, but to the entirety of the proposal.

34 I attribute Mr Hunter’s failure to respond to Mr Shalovsky’s letter of 8 March 2004 to his intending to use the letter written by Mr Shalovsky to the agent, to induce the agent to release the deposit. On 9 March 2004 Mr Hunter wrote to the agent. He sent the agent a further copy of the facsimile from Shalovsky & Associates dated 8 March 2004 and referred to the last paragraph of the letter to which I have referred in paragraph 28. It seems that a Mr Cox of the agent’s office at LJ Hooker Bellingen, had told the vendor that the facsimile was too vague in respect of the deposit being released to the vendor. Mr Hunter said that the last paragraph of the facsimile from Shalovsky & Associates was not vague but specific, and the deposit was to be released immediately to the vendor.

35 He went on to say that the matter had been terminated and the deposit was forfeited to the vendor. This time he threatened to report the agent not only to the Department of Fair Trading but also to the police. He sent a copy of his correspondence to the Department of Fair Trading. In the course of this transaction, Mr Hunter frequently threatened those with whom he was dealing with complaints to their professional or regulatory bodies if they did not accede to his demands. He carried out the threats. I deplore that conduct. It is not the way a conveyancing practice should be carried on.

36 On 9 March Ms van Zanten of LJ Hooker Bellingen wrote to Mr Hunter. She noted that from Mr Shalovsky’s fax that the matter “is proceeding on the terms which I outlined in a previous fax to yourself.” This was a reference to a fax of 1 March 2004 in which Ms van Zanten told Mr Hunter that she had spoken with the purchaser and that the purchaser wished to purchase the property again, the purchase price to be $610,000 with the deposit of $120,000 and a special condition in the contract that the deposit be forfeited if there was a default. In her fax of 9 March 2004 Ms van Zanten said that she had not received any information from Mr Hunter’s firm confirming that the sale was proceeding. She asked for such confirmation so that she could release the monies which he required. Mr Hunter faxed back a note that the matter would only be discussed when he had the deposit monies.

37 On 11 March 2004 Mr Weick, apparently the principal of LJ Hooker Bellingen, wrote again to Mr Hunter. He said:

“I have spoken with Mr Shalovsky this day and he has notified me in writing that your firm has notified his firm that the sale of Girault to Notter is going to proceed on the basis that the front page of the contract will now read $620,000 with the deposit of $60,000 to be released before new exchange of contract has taken place. This is due to the fact that Ms Girault requires this money to finalise her purchase elsewhere. I look forward to contact from your office when exchange of contracts have been executed. I am now at liberty to release the deposit of $60,000 to Ms Girault. Could you please forward me detail as to where the money is to be deposited.”

38 The deposit was released on 11 March 2004.

39 There was no confirmation from Mr Hunter to Mr Shalovsky that the sale would proceed on the basis that the front page of the contract would read $620,000 with the deposit of $60,000 to be released “before new exchange of contract has taken place”. There was no confirmation by Mr Hunter or the vendor of the terms of Mr Hunter’s letter of 8 March 2004. However, it must have been apparent to Mr Hunter on 11 March 2004 that Mr Shalovsky and the agent were proceeding on the basis that he had agreed to the matters set out in Mr Shalovsky’s letter of 8 March. This explains his failure to respond to the correspondence. He did not want to risk having the instructions to the agent withdrawn by disputing the basis on which Mr Shalovsky, on behalf of the purchaser, was proceeding.

40 On 15 March 2004 Mr Hunter sent to Mr Shalovsky new front pages and special conditions of a proposed new contract of sale. The purchase price under that contract would have been $560,000 with a $56,000 deposit to be paid to the vendor’s conveyancer. On 26 March 2004 Mr Shalovsky advised Mr Hunter that contracts for the sale of his client’s home at Bronte had been exchanged that day.

41 It does not appear that any steps were taken by the purchaser to exchange contracts for the purchase of the Bellingen property. On 30 March 2004 Mr Hunter advised Mr Shalovsky that the vendor had exchanged contracts with another purchaser. The letter continued that “the proposed new matter with your client is at an end”.

42 On 7 April 2004 Mr Shalovsky contended that the vendor was contractually obliged to sell the property to the purchaser. The agreement which was asserted to exist was said to comprise the original contract for sale and Mr Shalovsky’s letter dated 8 March 2004 which confirmed his telephone conversation with Mr Hunter on that day. Mr Shalovsky then set out steps which he contended that the purchaser had taken to the vendor’s knowledge whereby she changed her position in reliance on that agreement. The letter foreshadowed a claim that the vendor was estopped from denying the existence of an agreement. However no claim based on estoppel was argued before me. Nor did the plaintiff give evidence that she had made any assumptions based upon the correspondence of 8 March 2004 and altered her position to her detriment in reliance on those assumptions.

43 Even if the plaintiff agreed to the release of the deposit on the assumption that the vendor had agreed to the terms of Mr Shalovsky’s letter of 8 March 2004, the fact remains that the vendor was entitled to forfeit the deposit. The purchaser did not suffer any relevant detriment.

44 The contract for sale made by the vendor with Mr and Mrs Churches was for an amount of $545,000. This is a relevant consideration on the claim for relief against forfeiture of the deposit. The vendor would be entitled to damages from the plaintiff of $55,000 plus the costs of resale and possibly other general damages, against which the forfeited deposit would be offset. (Cameron v McGrath (1996) 40 NSWLR 39).

45 The issues which were argued before me were:

(a) whether a contract for sale of land had come into existence on 8 March 2004, or an agreement had been made on 8 March 2004 to “revive” the contract of sale of 31 December 2003 by the vendor agreeing not to rely upon her termination of that contract and by the variation of its terms in accordance with the letter from Mr Shalovsky of 8 March;

(b) if so, whether Mr Hunter had express, implied or ostensible authority from the vendor to enter into such a contract;

(c) whether the agreement was for the sale or other disposition of land within s 54A of the Conveyancing Act 1919 (NSW) and unenforceable unless evidenced by a note or memorandum in writing signed by the defendant or some other person lawfully authorised by her;

(d) whether there was a sufficient act of part performance; and

(e) whether the purchaser was entitled to an order for repayment of the deposit pursuant to s 55(2A) of the Conveyancing Act .

Agreement on Terms of 8 March Letter

46 I have not accepted the evidence of either Mr Shalovsky or Mr Hunter in relation to the second telephone conversation on 8 March 2004. I infer from the position which the parties took before that day, and from their correspondence and actions after that day that it is probable that Mr Shalovsky outlined his client’s proposal in substance as it is recorded in his letter of 8 March, that Mr Hunter said “OK” in response to the statement that Mr Shalovsky would write to the agent authorising it to release the deposit and to provide a copy of that letter to Mr Hunter, but that he did not respond directly to the earlier part of the proposal. Nonetheless his assent to one part of what was put to him and his failure to reject the balance induced Mr Shalovsky to believe that he had agreed to the whole of the proposal.

47 The matter is to be tested objectively. As Lord Diplock said in Ashington Piggeries Limited v Christopher Hill Limited [1972] AC 441 at 502:

“In each of the instant appeals the dispute is as to what the seller promised to the buyer by the words which he used in the contract itself and by his conduct in the course of the negotiations which led up to the contract. What he promised is determined by ascertaining what his words and conduct would have led the buyer reasonably to believe that he was promising. That is what is meant in the English Law of Contract by the common intention of the parties. The test is impersonal. It does not depend upon what the seller himself thought he was promising, if the words and conduct by which he communicated his intention to the seller would have led a reasonable man in the position of the buyer to a different belief as to the promise; nor does it depend upon the actual belief of the buyer himself as to what the seller’s promise was, unless that belief would have been shared by a reasonable man in the position of the buyer.”

48 Objectively considered, Mr Hunter’s silence as to part of the proposal and his assent to part, reasonably implied an assent to the whole proposal. To put it another way, I am satisfied that Mr Shalovsky did not make an unconditional offer to write to the agent to authorise the release of the deposit. That offer was part of a wider proposal. Mr Hunter’s agreement to Mr Shalovsky’s writing to the agent impliedly extended to the whole proposal.

Mr Hunter’s Authority

49 That is not however enough for the plaintiff to succeed in this action. The first difficulty the plaintiff faces is that Mr Hunter had no actual authority to make such an agreement. I have set out the terms of his authority in paragraph 11. He was not authorised to make a contract for the vendor, as distinct from negotiating and drawing up terms for a new contract to be exchanged. The terms to which Mr Hunter impliedly assented did not contemplate a new exchange of contracts. Nor did they provide both for the release of the deposit of $60,000 to the vendor and the payment of a new deposit to be paid to the vendor or her licensed conveyancers. Nor did they provide for the exchange of contracts for sale of the purchaser’s Bronte property by 9 March 2004. They were therefore outside his authority.

50 A solicitor does not have implied or ostensible authority to contract on behalf of his clients to sell land. (Pianta v National Finance and Trustees Ltd (1964) 180 CLR 146 at 152; Strangas v Young (1975) 1 BPR 9123 at 9124.) In Strangas v Young the Court of Appeal described the normal retainer of a solicitor for the vendor as being to confer “implied authority extending to all subordinate acts necessarily or ordinarily incidental to the express authority to act.” In Pianta v National Finance and Trustees Ltd Barwick CJ said (at 151) that the solicitor was:

“retained, in the capacity of the solicitor, to settle written terms of sale which he could advise his clients to accept and sign. For this purpose he could negotiate and agree with the representatives of the respondent the terms which the respondent could be expected to accept or, if the representatives were so authorised, which they could accept on behalf of the respondent and which the solicitor could advise his client as satisfactory in their interest. But this does not confer on the solicitor authority to contract on behalf of the clients to sell the land. If he is to have that authority it must be given by expressly or by necessary implication.”

51 There was no material to suggest that Mr Hunter as a licensed conveyancer had any wider authority, or that the defendant held him out as having any wider authority.

52 This is fatal to the plaintiff’s claim, apart from her claim for repayment of the deposit.

Agreement Required to be in Writing Signed by or on Behalf of the Vendor

53 The second objection is that there is no note or memorandum of the agreement of 8 March signed by or on behalf of the defendant. As the existing agreement had been terminated, there was as at 8 March 2004 no contract for the sale of land in existence between the parties. There was no dispute as to the validity of the termination. Hence the agreement of 8 March must have been one for the sale of an interest in land within the meaning of s 54A of the Conveyancing Act. Even if it were a variation of the existing agreement, as the variation included a variation as to price, for the agreement to be enforceable it had to be in writing and signed by or on behalf of the defendant. (Tweddell v Henderson [1975] 2 All ER 1096.) In other words, the only writing signed by or on behalf of the vendor (being the 31 December 2003 contract) did not contain the terms as to price which the plaintiff asserts. Therefore, unless there is a sufficient act of part performance, the contract is unenforceable

Part Performance

54 The plaintiff submitted that the vendor’s conduct in authorising the agent to release the deposit was a sufficient act of part performance. This was the only act of part performance relied on.

55 The authorities on the doctrine of part performance were recently reviewed by Barrett J in Khouri v Khoury [2004] NSWSC 770. I have drawn on his Honour’s analysis. In Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Brennan J said (at 432):

“In order that acts may be relied on as part performance of an unwritten contract, they must be done under the terms and by the force of that contract and they must be unequivocally and in their nature referable to some contract to the general nature of that alleged.”

56 In Khouri v Khoury Barrett J cited the approach to be taken as summarised by Smith J in Francis v Francis [1952] VLR 321 at 340:

“It is necessary to exclude from consideration the evidence of the alleged parol agreement between the parties and to look at the act relied upon in the light of the surrounding circumstances as revealed by the rest of the evidence: see McBride v Sandland (1918) 25 CLR 69 at pp 77-8; Cooney v Byrnes (1922) 30 CLR 216 at pp 222, 224; Madison v Alderson (supra) at pp 479, 483-4; Dale v Hamilton (1846) 5 Hare 369 at p 381; Broughton v Snook [1938] Ch 505 at pp 514-5. The act cannot amount to sufficient part performance unless, when so considered, it points plainly, and not merely in an equivocal fashion, to the existence of an agreement between the parties falling within the general class to which the agreement alleged belongs.”

57 The mere direction by the purchaser to the agent to release the deposit is not unequivocally referable to the making or variation of an agreement for the sale of land. The surrounding circumstances which can be considered at least include the fact that the deposit was paid under a contract dated 31 December 2003, that that contract was terminated by the vendor for the purchaser’s failure to complete after time had been made essential, and that the vendor had forfeited the deposit as she was entitled to do. The authority to release the deposit, if considered apart from the terms of the letter to the agent, is entirely consistent with the plaintiff meeting her contractual obligations to the defendant following termination of the contract of 31 December 2003. The question then is whether the giving of the authority to the agent to release the deposit to the vendor can be considered an act of part performance because of the terms of the instruction to the agent.

58 The statements by Mr Shalovsky in his letter of 8 March 2004 to the agent, that the dispute between the parties had been resolved and as to the basis upon which the purchase would go ahead, are as much parol evidence of the terms of the oral agreement as the evidence of the conversations themselves. Those statements are not part of the “act relied upon” or of the “surrounding circumstances as revealed by the rest of the evidence” to which regard can be had.

59 The plaintiff did not rely upon any other act as being a sufficient act of part performance. As the giving of authority to the agent to release the deposit is not a sufficient act of part performance the claim to enforce the agreement of 8 March 2004 fails on this ground also.

Other Submissions for the Plaintiff

60 It was also submitted for the plaintiff that:

“When Todd Hunter allowed his client to take the deposit money he was acknowledging that there was no need for further exchange, his forwarding of the front of a ‘new’ contract and special conditions without the balance of the standard form contract is evidence that the payment of extra Moines under the contract and the release of the deposit moneys are evidence of the existence of a contract not a proposed contract or one subject to exchange.” (sic)

61 Mr Hunter did not acknowledge that there was no need for a further exchange of contracts before his client would be contractually bound to sell the land to the plaintiff. His forwarding front pages and special conditions of the contract of sale on 15 March 2004 was consistent with his client then being prepared to exchange contracts for the sale of the property to the plaintiff. His covering letter of 15 March 2004 requested Mr Shalovsky to copy the “balance pages from original terminated contract” which were in Mr Shalovsky’s possession. The letter of 15 March 2004 is not consistent with the vendor’s recognising that there was a contract then in existence.

62 It was also submitted for the plaintiff that on 27 February 2004 Mr Hunter waived the defendant’s rights under the old contract to terminate it as his advice that a new contract would be entered into was inconsistent with the defendant’s purported rights under the old contract. I do not understand that submission. The letter of 27 February 2004 was only consistent with Mr Hunter’s insisting on his client’s right to the forfeited deposit under the contract which had been terminated, whilst proposing a new contract to be entered into by exchange by 5 March 2004 pursuant to which the deposit which would be payable under that contract would also be released on exchange.

Claim for Return of the deposit

63 This claim was made by amendment on the day of the hearing. Ultimately Mr McGrath of counsel who appeared for the defendant did not oppose that claim being heard with the balance of the proceedings.

64 In his written submissions, Mr W J Carney, counsel who appeared for the plaintiff, put this claim in the following way:

“At all times the plaintiff would have been able and is still able to have its deposit refunded pursuant to s 55 of the Conveyancing Act 1919 (NSW) if it is unjust and inequitable not to do so (see Gogard Pty Ltd v Satnaq (1999) NSWSC 1238 at para 334) and in the circumstances of this case the fact that an agreement had been entered into to either exchange, or settle by 8.4.04 and that on 26/3/04 Todd Hunter was aware that the plaintiff would now be in a position to exchange or settle the exchange with the Church’s was clearly unjust and inequitable.”

65 From Mr Carney’s oral submissions I understand the plaintiff’s contention to be that Mr Hunter acted unjustly and inequitably by not disclosing to the plaintiff the proposed sale of the property to the Churches on 26 March 2004. That was the same day as that on which Mr Shalovsky advised Mr Hunter that his client had sold her Bronte property. Mr & Mrs Churches’ offer of $545,000 was accepted on 22 March 2004.

66 I have not been able to understand the claim that it was unjust or inequitable for the vendor to retain the deposit under the contract which she validly terminated, because after the contract had been terminated she did not disclose to the plaintiff that she was in negotiations with another buyer.

67 I am concerned that Mr Hunter obtained the release of the deposit for his client by impliedly assenting to Mr Shalovsky’s proposal of 8 March and by allowing the purchaser to labour under the misapprehension that the deposit would be applied towards a new contract. However his client was entitled to insist on the purchaser giving instructions to the agent to release the deposit. If the purchaser contended she was entitled to relief against forfeiture of the deposit pursuant to s 55(2A) of the Conveyancing Act, it behoved her to claim such relief at the time, not to ignore the vendor’s repeated demands whilst putting up proposals for a new contract.

68 There was nothing unjust or inequitable in the termination of the first contract. The vendor was entitled to the deposit. Given that she has re-sold the property at a loss of $55,000, before selling expenses and any other damages, there is nothing inequitable in her being allowed to retain the deposit. It cannot be said in the present circumstance that the vendor is seeking to make a windfall profit at the expense of an innocent purchaser. Indeed it appears that the amount of the deposit would be roughly equivalent to the likely damages to which the vendor would in any event be entitled. This is a powerful reason against making an order in favour of the plaintiff under s 55(2A) of the Conveyancing Act. I do not think it is inequitable or unjust for the vendor to retain the deposit.

69 For these reasons the Amended Summons will be dismissed. On 25 June 2004 Young CJ in Eq granted an injunction until further order restraining the defendant from dealing with the property. That injunction should be dissolved. The defendant is entitled to an enquiry as to damages pursuant to the plaintiff’s undertaking as to damages. I make the following orders:

(1) Dismiss the Amended Summons;
(2) Dissolve the injunction granted on 25 June 2004;
(3) Direct that if the defendant wishes an enquiry as to damages pursuant to the plaintiff’s undertaking as to damages given on 25 June 2004, the defendant file and serve a notice of motion and affidavit in support thereof within 28 days;
(4) Refer the proceedings to a Master to enquire as to damages, if such notice of motion is filed;
(5) The plaintiff pay the defendant’s costs; and
(6) Exhibits to be returned after 28 days.

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Last Modified: 09/23/2004