Venuti v Toop Real Estate Group Pty Ltd - [2004] SASC 169

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
VENUTI & ANOR v TOOP REAL ESTATE GROUP PTY LTD
Judgment of The Full Court
(The Honourable Justice Perry, The Honourable Justice Bleby and The Honourable Justice Gray)
9 June 2004
PROFESSIONS AND TRADES - AUCTIONEERS AND AGENTS
Application for leave to appeal against decision of a single judge - single judge dismissed an appeal from a decision of a magistrate following trial - auctioneer asked for clarification from a bidder who bid well over the reserve price - auctioneer believed bid was a mistake - whether auctioneer breached any duty to vendors in questioning the bid - obligations and authority of auctioneers discussed - application for leave to appeal dismissed.
Law of Property Act 1936 (SA) s 26, referred to.
Venuti and Venuti v Toop Real Estate Group Pty Ltd [2004] SASC 23 ; Chaney v Maclow [1929] 1 Ch D 461; Phillips v Butler [1945] 1 Ch D 358, considered.

VENUTI & ANOR v TOOP REAL ESTATE GROUP PTY LTD
[2004] SASC 169
Full Court: Perry, Bleby and Gray JJ

PERRY J. I concurred in the dismissal of this application for leave to appeal. I agree with the reasons of Gray J for doing so.
BLEBY J. I agree with the reasons of Gray J for dismissing this application for leave to appeal.
GRAY J. This is an application for leave to appeal to the Full Court from the decision of a judge of this Court. The learned judge dismissed an appeal from a magistrate following a trial. The judge also refused leave to appeal.
In 1996 George Anthony Venuti and Carolyn Anne Venuti instructed Toop Real Estate Group Pty Ltd to sell their suburban home property at auction. Prior to the auction two formal offers were made, one for $232,000 which was rejected by the Venutis, and the other for $259,000 in respect of which the purchasers exercised their rights to cool off. Six open inspections of the property were held prior to auction. The property was advertised with a price guide of “$200,000 plus”.
The auction took place on 1 December 1996. The auctioneer was Anthony Toop. The first bid was made by Gregory Turner. The bid was for $270,000. Mr Toop queried Mr Turner’s bid. He enquired whether it was Mr Turner’s intention to bid that amount.
The magistrate was unable to make any finding as to precisely what had been said, but was satisfied that Mr Toop gave Mr Turner the opportunity to revise his bid. Mr Turner apologised and said that he meant $170,000 not $270,000 and revised his bid to $170,000. The auction proceeded. There were further bids, but all fell short of the reserve price. The property was passed in. Mr Turner made no further bid beyond the initial revised bid of $170,000. The property sold some weeks later for $215,000 to a person who had not attended the auction.
The magistrate concluded that Mr Turner had made a genuine mistake. He considered that Mr Toop had acted appropriately in seeking to clarify the initial bid. The magistrate found nothing sinister in these events. The judge on appeal agreed. He reviewed the evidence and concluded that the findings made by the magistrate were open on the evidence.
On appeal the judge addressed the duty of an auctioneer in the following terms:[1]
Clearly an auctioneer is under a duty to exercise proper skill and care in conducting the auction. The auctioneer, amongst other things, has a duty to secure a binding contract that has been entered into by the purchaser. Failure to secure a contract in writing as required by s 26 of the Law of Property Act 1936 would give rise to the potential liability.
The judge later reasoned: [2]
The bid was not accepted by the auctioneer because as has already been discussed he believed it was a mistake. If the bid had been accepted, the offer from Mr Turner would have converted into an oral contract only.
Such a contract is not enforceable as a contract relating to the sale of land until there is a signed note of memorandum of the contract - see Law of Property Act 1936 s 26(1).
Also see generally for the discussion above Halsbury’s Law of Australia at [30-120], and the authorities referred to therein.
[1] [2004] SASC 23 at [16]
[2] [2004] SASC 23 at [22]
Counsel for Mr and Mrs Venuti sought leave to appeal on the grounds that the learned judge erred:
-in failing to find that the conduct of the auctioneer was in breach of his contractual obligations to the appellants.
-in failing to find that the obligation of the auctioneer in the circumstances was in this matter to accept the bid of the bidder in the absence of any further bid.
-in failing to hold that the findings of the learned trial Magistrate did not deal with the critical issue in relation to the conduct of the auction.
-in failing to deal with the fundamental and significant issue of the conduct of the auction.
-in law in holding that if the bid had been accepted by the auctioneer that only an oral contract in relation to land would have come into existence.
The principles which govern a grant of leave are well settled. The applicant must establish that an important point of principle arises, or alternatively that the interests of justice require a grant of leave.
The primary submission of Mr and Mrs Venuti was that the magistrate had made errors of fact. It was said that the judge in reviewing the evidence had erred in not substituting other findings.
It was the Venutis’ case that Mr Turner was a genuine bidder and that he had not made a mistake in his initial bid of $270,000. It was submitted that the magistrate should have found that Mr Toop suggested to Mr Turner that he had made an error and enquired whether his bid should have been $170,000. It was said that this sequence of events led Mr Turner to change his bid. Mr Toop’s conduct was said to be a breach of his duty as an auctioneer.
It was submitted that Mr Turner and Mr Toop were friends. This was said to provide the explanation for Mr Toop’s conduct. It was then contended that had Mr Toop not breached his duty by intervening in the way he did that the property would have been sold for at least the initial bid of $270,000. It was claimed that the applicants were entitled to damages for the loss of chance of having the property sold for that amount.
It was finally submitted that the judge had erred in concluding that in the event of the property being knocked down to Mr Turner at $270,000 the offer would have converted into an oral contract only and would have been unenforceable. It was said that this conclusion was wrong as a matter of law.
The magistrate at trial was unable to make precise findings about what had been said between Mr Toop and Mr Turner at the auction. This inability resulted from the delay of almost six years in the initiation of proceedings by the Venutis. Given the long delay and the probability of reconstruction the magistrate was justified in reaching his conclusions of fact. He was entitled in the circumstances to make imprecise findings. There was no reason to doubt the correctness of those findings or the correctness of the judge’s acceptance of those findings on appeal. Accordingly this application for leave must be refused.
However there is substance in the submission that the judge erred as a matter of law in his conclusion that only an unenforceable oral contract would have resulted if the property had been “knocked down” to Mr Turner at his initial bid of $270,000.
In Chaney v Maclow Lawrence LJ observed:[3]
The cases on which Mr Bennett has founded his argument are Emmerson v Heelis and White v Proctor in which the question to be decided was whether there was a sufficient memorandum to satisfy the Statute of Frauds, the only memorandum in each case being the entry by the auctioneer of the name of the purchaser in his sale bill or book. It was decided that this entry was a sufficient memorandum to satisfy the Statute of Frauds. Those decisions involved the proposition that the auctioneer was the duly appointed agent of the purchaser to sign a memorandum of the sale so as to bind the purchaser, and for that reason no doubt these cases are cited as the foundation of the rule stated by Romer J in Sims v Landray. Until I heard Mr Bennett’s argument, I had never known it suggested that the auctioneer’s authority was limited to making an entry in his particulars of sale and did not extend to making out a proper memorandum of the sale sufficient to satisfy the Statute of Frauds, and signing such a memorandum on behalf of the vendor and the purchaser. If I rightly understand these cases, they do not attempt to limit the authority of the auctioneer to merely writing down the name of each purchaser and his bid, but are to the effect that the auctioneer has authority to record the bargain, so that it can be enforced against the purchaser. No doubt the law on this subject is somewhat peculiar, but the rule is due to the exigencies of a sale by auction and of an auctioneer’s business in conducting such a sale.
[3] [1929] 1 Ch D 461 at 476 - 477
This view was approved in Phillips v Butler by Romer J who observed:[4]
At a sale by auction a contract comes into being when the hammer falls, but neither party can enforce it unless “….some memorandum or note thereof is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorized,” as s. 40 sub-s. I, requires. The only function of the memorandum is to provide evidence, which does not affect the terms of the contract but simply makes it enforceable. I cannot see any logical ground for suggesting that an auctioneer’s authority to sign a memorandum on his vendor’s behalf arises, not as soon as the contract subsists, but only when it has been partly performed by the purchaser’s paying a deposit as part of the purchase price. On the decided cases, the auctioneer’s authority to sign on the purchaser’s - and, if necessary, the vendor’s - behalf, arises as soon as the contract is concluded, and is an irrevocable authority.
[4] [1945] 1 Ch D 358 at 361 - 362
An auctioneer has authority to sign a contract as a seller’s agent. This authority may be conferred by the agency agreement. Even without an express authority from the seller the authority arises by virtue of the auctioneer’s employment to sell the property by auction on the fall of the hammer. The authority is not revocable by the seller after the conclusion of the bidding.
An auctioneer also has implied authority to sign the contract on behalf of the buyer. This authority arises immediately on the fall of the hammer and is irrevocable by the buyer. The authority is personal to the auctioneer. The authority is not unlimited in time. It subsists from the time of the fall of the hammer while it can fairly be held to be part of the sale.
These general principles may be subject to modification by statute in various jurisdictions. They have not been modified in this jurisdiction.
Had Mr Turner’s bid been accepted the auctioneer had authority to sign the contract on Mr Turner’s behalf. This authority was irrevocable and Mr Toop would in the ordinary course have been bound to exercise it. The judge was wrong to conclude:
If the bid had been accepted, the offer from Mr Turner would have converted into an oral contract only.
This issue does not of itself lead to a grant of leave to appeal. Counsel for the Venutis accepted that the issue of authority was only relevant to the consequences of any breach of duty that might otherwise be established. The Venutis’ application should be dismissed for the reasons earlier discussed.
This application for leave should be dismissed.