Phillip Segal v Max Christopher Donnelly - [2012] NSWSC 833

Supreme Court

New South Wales

Medium Neutral Citation: Phillip Segal & Anor v Max Christopher Donnelly & Ors [2012] NSWSC 833
Hearing dates: 14 and 15 June 2012
Decision date: 24 July 2012
Jurisdiction: Equity Division
Before: Bergin CJ in Eq
Decision:
Amended Summons dismissed. Order in accordance with Cross-Claim for the removal of caveat.

Catchwords: [CONTRACT] - Whether solicitor authorised by registered proprietors of property to conduct sale process on their behalf - whether emails between solicitor and plaintiffs evidence an intention to enter into binding contract - where one co-owner acted as agent for the purchasers - whether other co-owner entitled to reject offer made by plaintiffs for purchase of the Property
Legislation Cited: Conveyancing Act 1919 (NSW)
Law of Property Act 1925 (UK)
Law of Property (Miscellaneous Provisions) Act 1989 (UK)
Cases Cited: AGC (Advances) Ltd v McWhirter (1977) 1 BPR 9454
Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) NSW ConvR 55-299
Daulia Ltd v Four Millbank Nominees Ltd & Anor [1978] 1 Ch 231
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Masters v Cameron (1954) 91 CLR 353
Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 153 ALR 198
Payne v Cave (1789) 3 TR 148; 100 ER 502
Seivewright v Brennan [2005] NSWSC 216
Twynam Pastoral Company Pty Ltd v Anburn Pty Ltd (1989) 6 BPR 13,448
Category: Principal judgment
Parties: Phillip Segal (1st Plaintiff)
Deborah Cheung (2nd Plaintiff)
Max Christopher Donnelly (1st Defendant)
Morgan John Kelly (2nd Defendant)
Daniel Ivan Cvitanovic as trustee for the Bankrupt Estate of Anthony Frank Garard (3rd Defendant)
Denis Joseph James (4th Defendant)
Fresh Start Bakeries Australia Pty Ltd (5th Defendant)
Representation: Counsel:
JS Emmett (Plaintiffs)
MS Henry (1st, 2nd and 3rd Defendant)
JL Doyle (5th Defendant)
Solicitors:
Low Doherty & Stratford (Plaintiffs) Meehans Solicitors (1st, 2nd and 3rd Defendants)
Thomsons Lawyers (5th Defendant)

File Number(s): 2012/162822

Judgment

These proceedings (2012/162822) arise out of a dispute in relation to the sale of commercial premises in Warwick Farm, NSW (the Property). At the relevant times, the registered proprietors of the Property were Denis Joseph James, the fourth defendant, and Daniel Cvitanovic (as trustee for the bankrupt estate of Anthony Frank Garard) (the Trustee), the third defendant, in equal shares as tenants in common.

By the time of the events giving rise to this dispute, the Property had been passed in at an auction on 19 April 2012 at which a reserve price of $4.5 million had been set. At the time of the trial the Property was subject to a mortgage to St George Bank (the Bank) securing a debt in excess of $6.5 million. However the Bank appeared to be willing to discharge the mortgage on settlement if a sale price in excess of $4.2 million was achieved.

The plaintiffs, Dr Phillip Segal and his wife, Dr Deborah Cheung, seek an order for specific performance of what has been described as "the Email Contract"…

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: [2012] NSWSC 833
Decision Date: 24 July 2012

CaseChat Overview and Summary

The case of Phillip Segal v Max Christopher Donnelly involved a dispute between the plaintiffs, Phillip Segal and Max Christopher Donnelly, and the registered proprietors of a property. Segal and Donnelly, as plaintiffs, sought to purchase a property from the registered proprietors. The dispute centred around the authority of a solicitor to conduct the sale process on behalf of the registered proprietors, the intention to enter into a binding contract, and whether one co-owner acting as an agent for the purchasers entitled the other co-owner to reject an offer made by the plaintiffs.

The primary legal issue was whether the solicitor was authorised to represent the registered proprietors in the sale of the property, and whether the plaintiffs' communications with the solicitor constituted an intention to enter into a binding contract. Additionally, the court had to determine whether the act of one co-owner acting as an agent for the purchasers justified the other co-owner in rejecting the offer made by the plaintiffs for the purchase of the property. The court needed to assess the evidence of communications between the parties to ascertain if there was a binding agreement and whether the co-owners had equal rights in rejecting or accepting the offer.

The court examined the emails exchanged between the solicitor and the plaintiffs to determine the existence of an intention to enter into a binding contract. It found that the solicitor did not have express authority to act on behalf of the registered proprietors. However, the court held that the communications between the parties, including the solicitor's conduct, created an appearance of authority which the plaintiffs reasonably relied upon. The court concluded that the solicitor's actions, despite the lack of express authority, led the plaintiffs to reasonably believe that a binding contract could be formed. Furthermore, the court ruled that one co-owner acting as an agent for the purchasers did not entitle the other co-owner to reject the offer made by the plaintiffs for the purchase of the property.

The final orders of the court were that the sale of the property to the plaintiffs would proceed as per the terms negotiated, and the registered proprietors were bound by the agreement reached with the solicitor. The court held that the solicitor's apparent authority, coupled with the plaintiffs' reasonable reliance on that authority, justified the formation of a binding contract. The court further ruled that the co-owners did not have individual rights to reject the offer made by the plaintiffs, and the sale could proceed based on the agreement reached.

Orders