Stirnemann v Kaza Investments Pty Ltd

The Supreme Court of South Australia, constituted by Doyle CJ, Vanstone and Peek JJ, heard an appeal concerning whether a binding contract for the sale of land had been formed between the parties. The dispute arose from facsimile transmissions exchanged between the appellant and respondent, one of which referred to "further necessary paperwork to be prepared by a lawyer." A formal Law Society pro forma contract was subsequently drafted and executed by the appellant, but its execution by the respondent was uncertain.

The primary legal issues before the court were whether the facsimile transmissions constituted a binding agreement, whether the phrase "further necessary paperwork to be prepared by a lawyer" indicated that a binding agreement had not yet been concluded, and if this phrase was equivalent to a "subject to contract" clause. Additionally, the court considered whether the trial judge had erred in admitting the formal Law Society contract as extrinsic evidence to determine the existence of a binding agreement, and whether the judge had made an error in awarding costs.

The Full Court dismissed the substantive appeal, holding that the facsimile transmissions did indeed form a binding agreement for the sale of the property. The court found that the case fell within the first category described in *Masters v Cameron*, where parties intend to be bound immediately but propose to enter into a formal document for convenience or to record the terms. The phrase "further necessary paperwork" was interpreted as merely indicating that a lawyer would be engaged to handle the administrative aspects of the transfer and settlement, not that essential terms were still open for negotiation. The court did not find it necessary to definitively rule on the admissibility of the formal Law Society contract as extrinsic evidence, given its conclusion on the binding nature of the facsimile agreement.

However, the appeal was allowed to a limited extent concerning the costs order. The court varied the costs order to award the appellant an amount equivalent to two days' counsel fee, rather than the one day's fee awarded by the trial judge, to adequately compensate for costs incurred due to an adjournment of the trial.