Fricker v Parton [2004] ACTSC 94 (24 September 2004)

Last Updated: 24 September 2004

CATHERINE MARY FRICKER v NEVILLE WILLIAM PARTON

[2004] ACTSC 94 (24 September 2004)

REAL PROPERTY - sale of land - vendor and purchaser - whether contracts exchanged - whether purchaser entitled to specific performance

AGENCY - real estate agent - authority of agent - whether authorised to exchange contracts with purchaser

Supreme Court Rules, Order 61A rule 1

Evidence Act 1995, s 144

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

No. SC 822 of 2001

Judge: Master Harper

Supreme Court of the ACT

Date: 24 September 2004

IN THE SUPREME COURT OF THE )

) No. SC 822 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: CATHERIE MARY FRICKER

Plaintiff

AND: NEVILLE WILLIAM PARTON

Defendant

AND MARGARET REYNOLDS PTY LIMITED

Third Party

ORDER

Judge: Master Harper

Date: 24 September 2004

Place: Canberra

THE COURT ORDERS THAT:

1. The plaintiff have leave to bring in draft minutes to give effect to these reasons.

2. Judgment be entered for the third party against the defendant.

3. Each party have liberty to apply in relation to costs.

1. This is a claim for specific performance of a contract for the sale of a residential property sold following an auction. The defendant denies the contract. In the event that the plaintiff's claim succeeds, the defendant seeks indemnity from the third party, a firm of real estate agents. By agreement, the evidence in chief is in affidavit form.

2. The defendant is the registered proprietor as Crown lessee of the property in question, a house at Narrabundah. He had once lived in the house, but by the time of the auction had moved to Mermaid Waters in Queensland. He engaged the third party, trading as L J Hooker Woden, to sell the property.

Jurisdiction

3. This action was originally listed for hearing before the Chief Justice, who disqualified himself by reason of a social acquaintance with one of the parties. In the normal course the Master does not have authority to exercise the jurisdiction of the Court in trials of suits in which equitable relief is sought. Order 61A rule 1 provides, however, that the Master may exercise the jurisdiction of the Court in any matter in respect of which, with leave of the Court, all the parties to a matter consent to that exercise (paragraph (g)). Leave having been granted by the Chief Justice, the parties consented to my hearing the action.

Events leading up to the auction

4. On 18 September 2001, the defendant signed a form authorising the third party to submit the property to auction on Wednesday 17 October 2001 at the Hyatt Hotel in Canberra. The auction authority was in the standard form published by the Real Estate Institute of the ACT. In the form, Mr Geoff Capon of Capon and Hubert was nominated as solicitor and authorised to prepare an agreement for sale in advance of the auction.

5. Mr Capon prepared a contract in draft form and sent it to the agent. The contract followed the standard form published by the Law Society of the Australian Capital Territory, with some minor amendments to the standard clauses, and some relatively common special conditions, including a sheet setting out the terms upon which the auction was to be conducted.

6. The third party duly advertised the sale, and opened the house for inspection on the four Saturdays leading up to the auction. Some twenty-five couples or groups were shown through the house, though the third party assessed few of them as likely bidders.

7. The defendant decided not to attend the auction. He arranged to be available by telephone in Queensland. On 15 October Ms Diane Guest, a sales consultant employed by the third party, sent him by fax a reserve price authority form, and, later the same day, a copy of the contract. She asked him to sign them and fax the signed copies back. Also on the same day, the agent sent the defendant the original contract by express post, asking him to sign it and return it by the same process. The frontsheet of the contract left blank the spaces for date of contract, name and address of buyer, purchase price and buyer's solicitor.

8. The defendant completed the authority, setting the reserve price at $350,000.00. He signed the form and faxed a copy to the agent later the same day, sending the original by post. The agent did not receive the original in time for the auction, but the fax was adequate for its intended purpose.

9. The defendant also signed the faxed contract as requested, and faxed it back later on the same day. He received the original contract on the following day, 16 October. He signed it, and had his signature witnessed by his secretary or personal assistant, Caroline Bell, and, I find, returned it by express post to the agent's post office box address. The agent received it on 19 October.

The Auction

10. The auction was scheduled to take place in the Centenary Ballroom at the Hyatt Hotel Canberra on 6.30 pm on Wednesday 17 October 2001. It was to be a combined auction of eight properties for a number of LJ Hooker franchise agencies. The defendant's property was the third to be offered for sale. The third party had two other properties lower down on the list. In attendance at the auction on behalf of the third party were the principal, Mrs Margaret Reynolds, Ms Guest, the sales representative who had been most closely involved with the advertising and inspection of the property, Mr Stephen Sainsbury, another sales representative, and Mr Greg Dalla, a manager who worked generally in the area of commercial rather than residential property. The defendant had been asked to remain close to his telephone at his home in Queensland in case a decision or instruction from him became necessary. There is a conflict of evidence between the defendant and the witnesses associated with the agent as to some of the events during and immediately after the auction, though there is a substantial measure of agreement.

11. Mrs Reynolds' role was to oversee the sale of the three properties and to coordinate the activities of the individual sales representatives. Mr Dalla had the task of maintaining telephone contact with the defendant.

12. Mr Dalla's affidavit evidence was that he contacted the defendant by telephone just prior to the commencement of the auction of the property, to keep him informed of progress and to obtain instructions if required. Due to mobile phone reception problems he had to use a hotel telephone located in the lobby area outside the auction room. He says that he telephoned the defendant and told him that the auction was just commencing. Sales staff came out regularly to keep him informed of progress during the auction, and he conveyed this information to the defendant. He was told that there were two bids. He was then told that the bidding had stalled at $295,000.00. He conveyed this to the defendant, who said "I won't sell for that - I want more". Mr Dalla asked whether he would sell if they could get the bidder up to $300,000.00, and the defendant replied in the affirmative. Mr Dalla passed this on to Mrs Reynolds, who went back into the auction room. Mrs Reynolds, Ms Guest and the plaintiff, Mrs Fricker, emerged from the auction room. The plaintiff said "I bid $295,000.00". The defendant was still on the line, and Mr Dalla told him that he had an offer of $295,000.00. The defendant said "I want $300,000.00." A further conversation took place between Mr Dalla, Mrs Reynolds and the plaintiff, and the plaintiff agreed to come up to $300,000.00. Mr Dalla says that he spoke to the defendant again, saying "We got a deal, she has come up to $300,000.00". He says that the defendant said "Good, sell it". Ms Guest then completed the blank details on the contract, and the plaintiff signed it.

13. Mr Dalla's affidavit was prepared by the plaintiff's solicitors following a conference with him, and sworn on 8 May 2002. The affidavit was witnessed by Mr Lowe, the solicitor having the conduct of the action on behalf of the plaintiff. Mr Dalla made a change to the affidavit, to which counsel for the defendant sought to attribute some significance. He said that he had a conversation with Mrs Reynolds, after his conversation in which the defendant agreed that he would sell if they could get the bidder up to $300,000.00, and before the discussion with the plaintiff. In the affidavit as originally prepared, the words said to have been used by Mr Dalla to Mrs Reynolds were: "Neville said put it on the market he'll take $300,000.00". Mr Dalla altered this at the time of swearing the affidavit to "Neville said he'll take $300,000.00". In cross-examination, Mr Dalla explained this as a misunderstanding between himself and the solicitor who prepared his affidavit.

14. During cross-examination, Mr Dalla was shown one of his cards with a note on the back of a twenty-dollar deposit, the plaintiff's name and the date of the auction. He then recalled that he had taken a twenty-dollar nominal deposit on the evening of the auction because the plaintiff did not have a chequebook and was not in a position to pay a full 10% deposit. He arranged with her to bring a cheque to the third party's office first thing the next morning. He was in the office the next morning when the plaintiff called in and paid the full deposit.

15. His oral evidence was that before the auction started, he rang the defendant on his mobile telephone. The connection was very poor. He told the defendant that he would have to arrange a fixed hotel telephone. He said that once he made contact with the defendant on the hotel telephone, the line stayed connected throughout the conversation. He became aware within a week or so that a dispute had arisen between the defendant and Ms Reynolds about whether or not the property had been sold at $300,000.00, but he did not record any of the events or conversations in writing until about the time he swore his affidavit in May 2002. His evidence that he had no financial interest in the sale was unchallenged. He had had previous contact with the defendant in his capacity as an estate agent in commercial transactions. He knew that the defendant had a background in property development and had extensive experience with real estate transactions, including auctions.

16. Ms Guest swore an affidavit in May 2002 in which she said that she had a prospective buyer for the property present at the auction. The buyer did not make a bid, although there were some bids by others for the property. At one point she went outside the auction room and saw Mr Dalla on the telephone. She joined Mrs Reynolds and Mr Dalla. A woman (the plaintiff) approached and told them that she had been the last bidder. Mr Dalla said that the seller would not take anything less than $300,000.00. Ms Guest went back into the auction room and spoke to her potential buyer, who was not prepared to come up to the seller's figure. After some further conversation, she heard the plaintiff say that she would pay $300,000.00 and no more. She then took it that the property was sold and helped the plaintiff to fill in the front sheet of the contract. Ms Guest gave oral evidence generally in accordance with her affidavit, and was not challenged except as to relatively minor matters of detail.

17. Mrs Reynolds in her affidavit said that at one point she went outside the auction room while bidding was in process. She recalled Mr Dalla saying words to her to the following effect: "Put it on the market, he'll take $300,000.00". She said that she went back into the auction room and called out to the auctioneer words to the effect: "Put it on the market at $300,000.00". The auctioneer replied that he was in the process of passing the property in and that she would have to negotiate with the highest bidder. The plaintiff came forward and identified herself, saying that she had made a bid of $295,000.00. Mrs Reynolds then told Ms Guest and Mr Sainsbury that the defendant had given instructions that the property was on the market at $300,000.00. She said that there was an offer of $295,000.00 and that they were to speak to their buyers to see what they were prepared to pay and whether they would sign contracts that night. After a short while they returned and told her that neither of their buyers was prepared to go to $300,000.00. She told Mr Dalla, and heard him speaking to the defendant on the telephone. She heard him report that the last offer was $295,000.00, and ask whether the defendant would sell if the bidder would go to $300,000.00. Mr Dalla then spoke to her and said words to the effect: "It's on the market for $300,000.00. Can we get her to offer more?": a little later he said: "Yes, sell it for $300,000.00". The plaintiff, who was with Ms Guest, then said that she would go to $300,000.00 but no more. At that point Mrs Reynolds regarded the property as sold and went on with her duties in relation to the other two properties on the auction schedule.

18. The evidence of the defendant as to what happened during the course of the auction is in important respects different. He swore an affidavit in July 2002 in reply to the affidavits of the plaintiff and of Mrs Reynolds and her staff. He deposed that Mr Dalla had telephoned him at about 6.45 pm to report that the auction of his property was in progress. Mr Dalla said that he was having problems with his mobile phone, which would not work in the auction room. He said that he was outside the room and would keep him informed as to how the bidding was going. The defendant asked what the bidding was up to. Mr Dalla asked him to hold on whilst he went back into the auction room to find out. After about a minute, the line dropped out. Mr Dalla called back at about 6.50 pm and said that the bidding had stalled at $300,000.00. The defendant said that his response was "Could you tell the auctioneer to put it on the market and see if he can bring the bids up to my reserve of $350,000.00?". He then heard Mr Dalla having a conversation with someone else. Mr Dalla then came back to him and said that the property had been passed in at $300,000.00. The defendant says that he then said: "That is not good enough. I need to get more than $300,000.00. Could you see what you can negotiate with the last bidder and call me back". He then terminated the telephone call.

19. At about 7.00 pm Mr Dalla rang again. He said that the bidder who had bid $300,000.00 had disappeared but they had someone else who had bid $295,000.00 and would go to $300,000.00. Mr Dalla asked whether the defendant would take that offer. The defendant says his reply was "$300,000.00 is not enough for the property." Mr Dalla said that the offerer could pay 10% immediately and settle in fourteen days. The defendant says that he responded "My reserve is $350,000.00 which is the price Hookers gave me as their estimate of value. You can sell it for that. See what you can do with them. I will forward the original contracts to my solicitor tomorrow." He says that he then terminated the conversation.

20. I am satisfied from records produced by the Hyatt Hotel Canberra that the only call made to the defendant's Queensland number on the evening in question was made from a fixed line outside the Centenary Ballroom at 7.19 pm and lasted 21 minutes. This is consistent with Mr Dalla's evidence. He said in chief that he conveyed to Mr Parton the fact that there was a difficulty with his mobile phone and that he intended to arrange for a fixed line to be provided by the hotel. I am satisfied that there was a brief introductory telephone conversation between Mr Dalla and the defendant on the mobile phone, when Mr Dalla introduced himself and told the defendant that he would be in effect the contact person during the auction. I think it likely that this conversation took place well before the bidding on the defendant's property commenced, bearing in mind that Mr Dalla would have required some time to arrange with the hotel for the use of the fixed telephone.

21. The Hyatt records show that a second call was made from the same fixed telephone immediately following the call to the defendant. The second call was made to a mobile number. There is no evidence or even suggestion that the call related to the sale of the defendant's house. No other calls were made from that telephone on the evening; nor were any calls made from any other Hyatt telephone to the defendant's number.

22. The defendant was cross-examined about his affidavit evidence that he had told Mr Dalla to tell the auctioneer to put the property on the market. Counsel for the plaintiff put it to him that the effect of an instruction to an auctioneer to put the property on the market, once bidding has commenced, is that the seller is then committed to accepting the highest bid. The defendant denied this. He said that he had previously used the strategy of instructing an auctioneer to put a property on the market on many occasions to encourage more bids, and that the property would still be passed in if the highest bid was under the reserve. He denied that an announcement by an auctioneer in the course of bidding that a property was now on the market would be misleading to buyers if the bidding had not reached the reserve price. At one point he said that his belief was that at most auctions, the auctioneer opened with the words "the property is on the market".

23. I am satisfied that the practice of auctioneers of announcing during the course of bidding that a property is now on the market is a common one, and is generally understood to mean that the reserve price has been passed and thus that the property will be sold to the highest bidder. If the defendant believes that the expression does not have that meaning, then he is wrong. Of course, it may be that he genuinely believes his understanding to be correct. This is a question to which I shall return.

24. The evidence of the plaintiff is that she attended at the Hyatt Hotel at about 6.00 pm on the evening of the auction with two friends. She was familiar with the property, though she had not come with any intention of purchasing it. During the auction, she raised her hand and made a bid of $285,000.00. Someone else bid $295,000.00. There were no further bids. The auctioneer announced that the reserve price had not been reached and that the property was passed in. The plaintiff left the auction room with her friends. She was approached by Mrs Reynolds, who asked whether she was interested in buying the house. She said that she had not been the highest bidder, and that a man in front of her had bid $295,000.00. Mrs Reynolds said "Well, I don't know what happened to him, are you prepared to pay $295,000.00?" The plaintiff considered this and said that she would. Mrs Reynolds took her across to where Mr Dalla was on the telephone. Mr Dalla said that he had the vendor on the line and asked what was her offer. Mrs Reynolds said that it was $295,000.00 and the plaintiff confirmed this. The plaintiff heard Mr Dalla tell the defendant that she had offered $295,000.00. There was some further conversation on the telephone, and Mr Dalla then told her that the vendor would not accept $295,000.00 at that time, and wanted to think about it overnight. The plaintiff asked what he would sell for on the night. Mr Dalla had a further conversation on the telephone. He came back and said that the vendor would take $300,000.00. The plaintiff said that she would go to that figure but no higher. After a further telephone discussion, Mr Dalla came back and confirmed the vendor's agreement to sell at $300,000.00. He said that they could now exchange contracts. The plaintiff explained that she did not have her chequebook with her. One of her friends had a chequebook and offered to pay the deposit. Mr Dalla said that it would be acceptable to exchange immediately with a nominal amount as deposit, as long as the full deposit was paid the next morning. The details were then filled out on the contract by Ms Guest. The plaintiff paid $20.00 towards the deposit. She did not receive a copy of the contract on the night.

Events subsequent to the auction

25. Early on 18 October, the plaintiff attended the office of the third party and saw Mr Dalla. She paid the full deposit of $30,000.00 by cheque. She was given a trust account receipt, and the copy of the contract which Mr Parton had sent to the agent by fax on 15 October, with the blanks filled in as to date of contact (17 October 2001), name of buyer and buyer's solicitors, purchase price and deposit, and completion date. She took this counterpart of the contract to the solicitor she had engaged, Ms Susan Wilson of Gates Lawyers, on the same day.

26. Mrs Reynolds deposed to a telephone conversation with the defendant a little later on the same morning, in which he said that he had been hoping to get between $320,000.00 and $330,000.00 but that $300,000.00 was acceptable and that he realised that she would have done her best for him. She replied that there were several bids on the night. All known bidders had been approached but only one was prepared to go to $300,000.00 and to sign a contract on the night.

27. The defendant's version of the conversation, in an affidavit in reply to Mrs Reynolds' affidavit, was that she had said that she thought they would have had more bidders, but that the only person prepared to sign on the night was at $300,000.00. He had responded "The reserve price of $350,000.00 is I think the true value of the property. I was hoping we would have had bids starting at about $330,000.00." He said that during the conversation Mrs Reynolds did not mention that the property had been sold.

28. Both Mrs Reynolds and Mr Parton recalled the conversation for the purposes of their affidavits, sworn some nine months after the event. Neither made any contemporaneous note of the conversation, and this is unsurprising. Neither purports to recall the conversation verbatim.

29. The defendant swore in an affidavit in July 2002 that on 18 October 2001, the day after the auction, he instructed his personal assistant, Caroline Bell, to send the original contract to Capon and Hubert, and that on the same day he telephoned Mr Capon. The defendant said that he told Mr Capon he was sending the original contract to him without the price being completed, and that he instructed him to hold the contract on file pending further instructions, as the agent was negotiating with one of the bidders from the auction the night before. The defendant said that he subsequently discovered that his assistant had forwarded the original contract to the agent and not the solicitors, contrary to his instructions.

30. In cross-examination, the defendant was unable to recall whether he had spoken to Mr Capon personally, or had left a message for him to the effect set out in his affidavit, although he subsequently recalled that he did have a conversation with Mr Capon on that date. He could not recall whether the conversation took place before or after his conversation with Mrs Reynolds.

31. Mr Parton's evidence was that he had used a number of solicitors in Canberra at different times. The evidence of Mrs Reynolds was that she asked Mr Parton which solicitor he would like to use and he said: "whoever can do the job, just get the job done." She had suggested Mr Capon as a solicitor with whom she had had previous experience, and Mr Parton had agreed to this. The contract prepared by Mr Capon identified his firm as solicitors for the seller with telephone and fax numbers and a document exchange address, but no postal address, and it seems to me more likely than not that there had been no direct contact between Mr Parton and Mr Capon prior to the auction, and that Mr Parton was unaware of any postal address for Mr Capon's firm.

32. Late on 18 October, Mrs Reynolds delivered the original contract signed by the plaintiff to the office of Capon and Hubert, the solicitors for the defendant.

33. On Friday 19 October, Mrs Reynolds received by mail the vendor's original contract, signed by the defendant and witnessed by Ms Bell. She completed the blank items in the schedule which constituted the front page of the contract, to accord with the counterpart signed by the plaintiff. She telephoned the plaintiff and asked her to call in. When the plaintiff called to collect the contract, she asked Mrs Reynolds whether she could have access to the house to arrange for it to be painted before settlement.

34. Later on that day, Friday 19 October, Mrs Reynolds deposes to a telephone conversation with the defendant. Her version of the conversation is as follows:

Reynolds: The purchaser wants to paint it prior to settlement but does not want to take up occupation - is that OK?

Parton I don't want her to paint until the contracts have exchanged.

Reynolds Exchanged? Do you mean settled?

Parton No. Exchanged.

Reynolds Neville, it's exchanged on the night, a nominal deposit was paid on the night and the balance of the deposit the next day.

Parton Not according to my solicitor.

Reynolds I'll get Geoff or his secretary to phone you to clarify that.

35. Mrs Reynolds deposes that following that conversation she contacted Mr Capon's office and spoke to his secretary. She asked her to get Mr Capon to ring Mr Parton to tell him that exchange had taken place. The secretary said that she would do so.

36. Mr Parton, responding to the affidavit from Mrs Reynolds, agreed that he had had a conversation with her on Friday 19 October 2001, but said that the conversation was in different terms. His version was:

Reynolds The purchaser would like to paint the house prior to settlement.

Parton What purchaser? We have not exchanged a contract yet. I don't want anyone to paint until contracts are exchanged.

Reynolds We exchanged contracts on the night of the auction for $300.000.00.

Parton Not with my consent. We have not finalised the purchase price as yet. I have forwarded the contract to Geoff Capon without a price in it until a price has been agreed to. I told him not to exchange until he heard from me. I told Greg Dalla on the night of the auction that I wanted the reserve of $350,000.00 for the property. You need to talk to my solicitors.

Reynolds My understanding was that the price was agreed at $300,000.00 and they have signed the contract and paid the deposit. I was going to let you deduct my commission from the loan that I owe you.

Parton Margaret, there has been no agreement on the price. There is no sale.

Mr Parton says that he then terminated the conversation.

37. He deposes that he then telephoned Mr Capon and had a conversation with him as follows:

Parton Why did you give the signed contract to Margaret Reynolds against my instructions?

Capon I remember your instructions. I do not know how Margaret Reynolds got hold of the signed contract. I will make enquiries.

Mr Parton says that he subsequently discovered that his personal assistant had sent the contract to Mrs Reynolds and not to Mr Capon.

38. Neither Ms Bell nor Mr Capon was called as a witness, and no explanation was offered in respect of either. Mr Capon's file was produced and various documents from it were tendered, including a note of a telephone call from the defendant at 3.30 pm on 19 October 2001 in which he had left a message for Mr Capon recorded as follows:

He has sent signed contract to us but wants us to HOLD and not send to buyer's solicitor at this stage. He will ring with further instructions early next week (he has a few things to do).

39. On 19 October, Mr Capon sent a letter to Mr Parton by express post, enclosing an authority requesting the mortgagee, the National Australia Bank, to prepare a discharge of mortgage and advise its payout figure. The letter commenced "We note that your above property has been sold at auction on 17 October and that the buyer wishes to complete the purchase on 31 October 2001." I think I can reasonably infer that this letter was signed and sent out prior to Mr Capon receiving the telephone message from Mr Parton timed at 3.30 pm on that day.

40. Mr Capon's file shows that Mr Parton telephoned him on 23 October at about 1.00 pm. Mr Capon returned the call, and his note of the conversation was as follows:

Asks me to consider if there is in fact a contract. He understands ppty was not in fact knocked down to this buyer at auction, but came about as result of negotiations after the auction was completed. Neville says all he signed was an authority to auction ppty and a form to say his reserve was $350,000.00. He was on the phone during the auction and was aware of the $300,000.00 offer. Does not particularly want to sell for that price. He has signed the contract with the price blank and sent it back to me.

41. Next on Mr Capon's file is a handwritten note dated 24 October 2001 as follows:

1. On the basis of what Neville says, there may not be any consensus about a sale for $300,000.00 when buyer signed immediately after the contract.

2. Margaret Reynolds says however that Neville had signed a blank contract as well as the documents that he says he has signed. That was used to exchange based on what agent says was Neville's telephone insts at the time.

3. Neville signed a blue contract form subsequently - Margaret says he sent it to her and it is now in the possession of the buyer.

4. Based on the above, buyer is likely to try to enforce contract. Neville can only defend claim by showing the agent had no authority to act as they did. Then point two above becomes all important (point three above makes Neville's argument difficult to sustain).

Phoned client at 12.15 pm - left message on answer service to call me back.

Phoned client again 25.10.01 at 2.15 left message.

Phoned client again 26.10.01 at 12.10 left message.

Phone call from Neville Parton 29.10.01 at 10.10 am - advised as above - he claims that the blue contract was sent to us but he will speak to his secretary. He has not sent back to me the NAB authority. He will speak to Margaret Reynolds, and is still disputing the sale.

It is apparent that the early part of the note, containing the four paragraphs as to Mr Capon's thoughts, was written on 24 October, and that he made additions to the note on subsequent days.

42. On 25 October Mr Capon prepared, and signed as solicitor for the vendor, an authority to permit the purchaser or someone on her behalf to inspect the file in relation to the property held by the Building Controller. The authority was faxed to Mrs Reynolds on the same date.

43. On 29 October, Ms Wilson of Gates Lawyers, acting for the purchaser, sent a fax to Mr Capon enclosing certificates as to rates and land tax, and asking for cheque directions by the following day, in anticipation of settlement the day after, Wednesday, 31 October.

44. There is a note of another telephone attendance on 31 October. It seems that Mr Capon had earlier telephoned Mr Parton's number and left a message for him to call. Mr Parton had returned Mr Capon's call but had been unable to speak to him. Mr Capon rang back, and may have spoken to Mr Parton, or perhaps to his personal assistant, Ms Bell. The note is to the effect that Mr Capon advised that his firm had no record of receiving the original contract, and that he had spoken to relevant staff members, who had not seen it. Mr Capon suggested that Mr Parton's grievance was with Margaret Reynolds and LJ Hooker Woden rather than with the buyer. Mr Parton asked Mr Capon to send him a copy of the contract signed by the buyer.

45. On 31 October 2001, Ms Wilson prepared a notice to complete, and sent it by fax to Mr Capon. Mr Capon responded by letter, which he sent by fax on 1 November, disputing the validity of the notice to complete and stating that any attempt to enforce it would be strenuously defended. On the same day he wrote to Mr Parton and sent him a copy of the notice to complete and of the response. He advised that the notice was defective but warned that it should be taken as an indication that the buyer was likely to seek to enforce the contract. He sought urgent instructions in relation to the sale, noting that the mortgage discharge authority had not been returned to him. There was no immediate reply from the defendant.

46. On 7 November, Ms Wilson prepared a memorandum of transfer and the plaintiff called and signed it. Ms Wilson also prepared and signed a fresh notice to complete. The plaintiff took the contract and transfer to the ACT Revenue Office and paid stamp duty of $9,015.00, whereupon the contract was stamped and the transfer marked. The plaintiff then took the transfer and the notice to complete to Mr Capon's office. The notice to complete fixed an appointment for settlement at 2.30 pm on 22 November 2001 at the settlements room at the Law Society Building.

47. Mr Capon prepared a letter responding to the notice addressed to the purchaser's solicitors, and a letter to Mr Parton, enclosing copies of the notice and response, and asking for urgent instructions. Before the letters were sent out, Mr Parton telephoned Mr Capon, who noted the following instructions:

1. I should write to Margaret Reynolds and advise her that he sees her as acting without authority and he'll be seeking indemnity from her should buyer proceed. Claims he told them on the phone on the day of the auction that if they got the buyer to sign a contract and pay the deposit, he'd "consider" it.

2. After I told him about the second notice to complete which I considered was also defective, he wants me to delay responding to it for a week or so, so as to gain more time should a third notice then be issued which is not defective.

48. In accordance with these instructions, Mr Capon wrote to the agent on 9 November, to the attention of Mrs Reynolds, and suggested that she might wish to obtain legal advice.

49. On 13 November, Mr Capon wrote to the solicitors for the buyer, acknowledging receipt of the notice to complete but asserting that it was defective in certain respects, and stating that his instructions were that Mr Parton considered that the agent had acted without authority in completing the contract, and that he did not wish to proceed with "any purported sale".

50. On 13 November, Ms Wilson sent a fax to Mr Capon confirming a telephone conversation on that morning. She asked why the defendant would not settle and said that his action should be against the agent and not the purchaser. She said that the matter was being transferred to Bradley Allen, the solicitors representing the plaintiff in these proceedings. I take it that this was not because the plaintiff had any dissatisfaction with Ms Wilson, but rather that her firm restricted its services to conveyancing and did not accept instructions in litigious matters.

51. On 14 November 2001, Mr Capon wrote to the defendant reporting as to these developments, and confirming earlier telephone advice that what had been said on the telephone on the evening of the auction would be very important.

52. On 19 November, Bradley Allen sent a letter by fax to Mr Capon, confirming that they had received instructions to take over the conduct of the matter on behalf of the plaintiff. They said that the plaintiff was in a position to settle on two days notice, and asked for settlement figures and cheque directions. They conveyed their instructions to commence the present proceedings if the defendant refused to settle. Mr Capon sent a copy of this letter by express post to Mr Parton on the same day, again asking for urgent instructions.

53. The defendant was extensively cross-examined by counsel for the plaintiff and the third party, with particular reference to the documentation from Mr Capon's file. He said that Mr Capon's letter forwarding the authority to inspect the building file, and his response to the first notice to complete, had been prepared and sent without instructions, and that Mr Capon had known since the telephone conversation of 18 October that his position was that he had not sold the property and that there was no contract in place. I found his evidence in cross-examination generally unconvincing. Acceptance of his evidence would require findings that Ms Bell, Mrs Reynolds and Mr Capon had on various occasions acted contrary to his specific instructions. This seems to me inherently unlikely. Ms Bell is undoubtedly a witness in the defendant's camp whose evidence might have been expected to assist him. I have no hesitation in drawing the inference that her evidence, if she had been called, would not have done so: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.

54. It is less clear that Mr Capon was a witness in the same category. The defendant's evidence was that a time came when he lost confidence in Mr Capon, and changed solicitors. Despite this I am confident that Mr Capon would, if required by subpoena and probably simply on request, have attended court and given evidence. Rather than inferring that his evidence would not have assisted the defendant, it seems to me that the inference I should draw is that Mr Capon, if called, would have given evidence consistent with the file notes, correspondence and other documents from his file. Where there is an inconsistency between the defendant's evidence and the contents of Mr Capon's file, I place greater reliance on the latter.

Earlier dealings between the parties

55. The circumstances are made a little more complex by reason of previous dealings between the plaintiff and the defendant, and between the defendant and Mrs Reynolds.

56. The plaintiff had worked as a sales representative in real estate in Canberra in early 2000, with Richard Luton Properties, and had listed the defendant's property. She had suggested a price of $395,000.00. She had been instrumental in having the property advertised for sale at the end of January 2000 for $410,000.00. She had become very familiar with the property at about that time.

57. The plaintiff spent about a year working with Richard Luton Properties. Prior to that, she had worked in real estate in Canberra on a part-time basis with Peter Blackshaw Real Estate. She had met the defendant, discussed prices, and tried to find a buyer for his house in early 2000. Offers had been received in excess of $300,000.00 during her involvement with the property, and rejected by Mr Parton. A colour handout with photographs of the exterior and interior of the house gave the plaintiff's name and mobile telephone number for contact purposes at Richard Luton Properties, as did a newspaper advertisement of 29 January 2000. Counsel for the defendant tendered a letter dated 24 January 2000 on Richard Luton Properties letterhead, addressed to the defendant at the Narrabundah property and signed by the plaintiff. The letter referred to an appraisal by the plaintiff and Mr Luton on that morning. It included a statement that Narrabundah had been showing strong growth in sale prices and said that Mr Luton and the plaintiff "would be hopeful of achieving very close to an asking price of $395,000.00".

58. The plaintiff's evidence was that she left her employment, and left real estate entirely, in about April 2000, when the house was still on the market at, she thought, about $385,000.00 and was still being advertised. She conceded that before she went to the auction, she had realised that the defendant's house was on the list for sale on the evening.

59. There had also been previous dealings between the defendant and Mrs Reynolds. Sometime prior to the defendant entering a sole agency agreement for the property with her firm, Mrs Reynolds had personally bought a unit at Townsville from Mr Parton. He had lent her about $40,000.00, which was secured by a second mortgage over the unit. She offered to offset her commission against that loan, at the time of listing at the end of February 2001.

60. It does not seem to me that the pre-existing relationship between Mrs Reynolds and the defendant has any relevance to the issues to be decided. On reflection, I think the same applies to the previous dealings between the plaintiff and the defendant. I have some reservations as to the propriety of a real estate sales representative buying a property which she had previously marketed and attempted to sell on the vendor's behalf. One could envisage circumstances where such a course of behaviour might be held to be unconscionable. In the present case I am satisfied that the plaintiff did not have available to her any relevant information about the property which was not available to other prospective buyers. The defendant was not a person in need of any special protection by reason of vulnerability through inexperience or incapacity. Most tellingly, the property was adequately advertised and submitted to public auction, and the plaintiff came up with the highest offer on the night of the auction. I do not think that she can fairly be accused of taking advantage of her prior relationship with the defendant, or her knowledge, to achieve a benefit for herself at the expense of the defendant or of anyone else. There is, in summary, nothing in her conduct which should be seen as disentitling her to the equitable relief she claims.

Factual findings

61. The major area of contention is what took place between Mr Dalla and the defendant by telephone on the evening of the auction. There were witnesses who heard some of what was said by Mr Dalla, though not everything he said. These witnesses could not hear anything said by the defendant at the other end of the telephone.

62. I accept the evidence of the plaintiff. She had a good recollection of the relevant events, and I found her oral evidence convincing. On the basis of her evidence, I accept that after telephone discussions with the defendant, Mr Dalla told her that the defendant was prepared to sell for $300,000.00, and that contracts could be exchanged immediately.

63. Mr Dalla was not quite as definite in his evidence as the plaintiff, but this is probably to be expected. The events of the evening were of much greater significance to the plaintiff than to Mr Dalla. It was not one of Mr Dalla's sales and he did not stand to gain any financial benefit. His role was simply to tell the defendant what was happening and to pass on the instructions he received. With the benefit of hindsight, it might have been more satisfactory for Mrs Reynolds to have spoken to the defendant and confirmed his instructions, but the fact that she did not does not make Mr Dalla's version any less likely. His evidence is that he told the defendant that the plaintiff had increased her offer to $300,000.00, and that the defendant instructed him to accept the offer. No reason has been put forward as to why Mr Dalla should give false evidence about this part of the conversation, nor is it submitted that the defendant used words which were ambiguous or for some other reason might have been misunderstood.

64. The defendant's evidence as to what was said is very different. It is clear and unambiguous. If the evidence is true, Mr Dalla would have to have heard and understood what was said. The defendant said that he told Mr Dalla that $300,000.00 was not acceptable, and that his price was $350,000.00. If the defendant is to be believed, Mr Dalla deliberately ignored his instructions and took it upon himself to sell the defendant's property at a figure well below the defendant's stated minimum. Whilst it might be argued that the plaintiff and Mrs Reynolds had a financial incentive to see a sale effected on the night at $300,000.00, no similar incentive in respect of Mr Dalla has been suggested.

65. As well as the plaintiff, Mrs Reynolds and Ms Guest were within earshot of Mr Dalla, and their recollection of what was said at the crucial point in the telephone call is consistent with the plaintiff's evidence. If the defendant were to be accepted, it would have to follow that Mr Dalla either misheard or misunderstood what the defendant said to him, or that he deliberately misrepresented what the defendant said. The former is inconsistent with the evidence of both Mr Dalla and the defendant. The latter is inherently unlikely.

66. There were minor inconsistencies in the evidence of Mr Dalla and Mrs Reynolds, but this is to be expected in relation to events taking place in the course of an auction, where things happen quickly and witnesses are relying on memory rather than on contemporaneous notes. The inconsistencies do not detract from the credibility of Mr Dalla's evidence about the conversation.

67. The plaintiff's friends, Ms Loftus and Ms Shakespeare, were in the vicinity of the plaintiff and Mr Dalla at the time of the crucial conversation. They were not close enough to hear what Mr Dalla said on the telephone, but they confirmed that he spoke to the plaintiff immediately after the telephone conversation and confirmed that the vendor had agreed to sell the property for $300,000.00.

68. I found the defendant's evidence less persuasive. His evidence about the times and duration of the calls was inconsistent with the hotel telephone records. He suggested in cross-examination that there was static or interference on the line, affecting the quality of reception. He gave the impression on some issues of prevaricating and tailoring his answers to suit his case.

69. In relation to the telephone call, I prefer the evidence of Mr Dalla to that of the defendant. It seems to me probable that the defendant decided on the night of the auction to take the best available offer of $300,000.00, but that after reflecting upon it over the next day or two he changed his mind and decided not to proceed with the sale if that option was still open to him.

Exchange of contracts

70. There is an issue as to when, if at all, a contract came into existence for the sale of the property. The formal documentation provided by the third party and signed by the defendant authorised Mrs Reynolds to sign the contract on behalf of the vendor. If she had done so, contracts could have been exchanged on the night of the auction. Mrs Reynolds appears not to have appreciated that this course was available to her.

71. Both the defendant and Mrs Reynolds seem to have been of the view that an original contract with the defendant's signature on it was necessary for an exchange to create a binding contract. My provisional view is that they were probably both incorrect about this, and that a binding exchange could have been effected using the faxed copy of the contract which the defendant had signed in Queensland. It is unnecessary to come to any conclusion about this because all of the parties acted on the assumption that the original contract was needed. The plaintiff signed the original purchaser counterpart at the hotel on the night of the auction and left it with the agent. She called the next morning at the agent's office with a cheque for the deposit. In exchange she was given the faxed copy of the vendor counterpart signed by Mr Parton. The following day, 19 October, Mrs Reynolds received the original vendor counterpart, on which she completed the blank items to correspond with the purchaser counterpart. She contacted the plaintiff who called and collected it.

72. When she did so, the plaintiff raised the question of access to the house for painting before settlement. It was after this that Mrs Reynolds spoke to the defendant by telephone and the defendant put his view that contracts had not been exchanged. There was an inconsistency in the evidence of Mrs Reynolds and Mr Parton as to what was said during that conversation. Both were relying on memory without the benefit of any contemporaneous note, but I prefer the version of Mrs Reynolds to that of Mr Parton which I think has been consciously or unconsciously reconstructed so as to be consistent with, and to assist, his case.

73. Mrs Reynolds had spoken to the defendant on the morning after the auction. This was on her evidence in the nature of a courtesy call to confirm the events of the previous evening. The defendant does not suggest that he raised during that conversation any issue about the sale. He explains this on the basis that during the conversation Mrs Reynolds did not mention that the property had been sold the night before. I accept that she may well not have done so, assuming the fact of the sale as common background between them, the defendant on her understanding having approved the sale on the telephone the night before.

74. It would have been open to the defendant to tell Mrs Reynolds that he had changed his mind about the sale, and to have instructed her not to proceed with the change of contracts if it was not too late. Mrs Reynolds gave evidence that she thought that contracts had been exchanged on the night of the auction. Despite her twenty years of experience in real estate, I formed the impression that Mrs Reynolds did not have an informed understanding of the legal aspects of buying and selling property. She had a good understating of the usual steps taken by a real estate agent, but her evidence was that this was the only sale in her career which had given rise to a dispute of this kind, and it did not seem to me that she had much of an understanding of the requirements for, or the legal effects of, an exchange of contracts, and I would place little reliance on her opinion as to when a legally binding agreement came into effect.

75. There is no doubt that there had been an exchange of contracts after the plaintiff called at Mrs Reynolds' office, collected the signed original vendor counterpart of the contract, and took it away. It may be that as a matter of law, contracts had been exchanged the previous day, when the plaintiff collected the faxed vendor counterpart, but it is unnecessary to decide this question. I am satisfied that until after the plaintiff collected the original vendor counterpart contract on 19 October, the defendant had said nothing to Mrs Reynolds which could be regarded as countermanding her authority in relation to the exchange of contracts.

76. Counsel for the defendant sought to argue, from the fact that the contract included a set of special conditions relating to sale by auction, that the contract was not in a form which could give rise to a sale by private treaty. I do not accept this submission. The special conditions in relation to sale by auction were applicable only to a sale during the auction process. The conditions had no application to a sale outside the auction process, such as the sale which I find took place.

77. I find that by 19 October 2001, a binding agreement for sale had come into effect between the plaintiff and the defendant. The agreement for sale having being subsequently stamped and a transfer delivered to the vendor's solicitors, I find that the defendant is in breach of the agreement. I accept that the plaintiff has been in a position to complete the purchase since at least 22 November 2001. She has made out her case for an order for specific performance of the agreement.

The third party claim

78. The defendant claims indemnity from the third party in respect of any judgment against him, on the basis of breaches of the auction authority. The alleged breaches are the acceptance of an offer less than the reserve price; exchanging contracts at a price less than the reserve price without the defendant's written authority; the completion of blank items in the contract after it had been signed by the defendant; and the acceptance of a deposit of $20.00 rather than ten percent of the purchase price.

79. The third party's contention is that it received express oral instructions and authorisation from the defendant by telephone on the evening of the auction. I have already explained that I have resolved the issue of the telephone conversation in Mr Dalla's favour and against the defendant. I must accordingly find that the defendant expressly instructed and authorised the third party to sell the property to the plaintiff for $300,000.00, notwithstanding his earlier written reserve price instruction.

80. The defendant, by signing and faxing a copy of the contract to the agent, and by signing and posting the original vendor counterpart to the agent, by implication authorised the agent to complete the blanks in the schedule to the contract. The defendant also by implication authorised the agent to exchange contracts. The defendant, I find, expressly authorised the agent to accept the plaintiff's offer, notwithstanding that it was less than the reserve price. Although the plaintiff paid only $20.00 on the night she had paid the full ten percent deposit by the time of exchange.

81. The defendant has accordingly failed to establish any breach by the third party of its agreement with him, and must fail in the third party claim.

Relief sought

82. The plaintiff seeks the following relief:

a) an order for specific performance of the contract.

b) an order that the defendant sign all instruments and documents and do all things necessary to perform the contract and transfer unencumbered title in the property to the plaintiff.

c) an order that the defendant pay to the plaintiff any sum the plaintiff is required to pay in excess of the purchase price in order to secure unencumbered title to the property.

83. In the alternative, the plaintiff seeks liquidated damages pursuant to the contract, damages for loss of bargain and damages for loss of opportunity; a refund of the deposit or damages by way of restitution; and compensation for wasted expenditure (stamp duty, legal costs, disbursements and other related expenses).

84. The auction took place at a low point in the cycle of the Canberra property market. The market has risen significantly since then. It is thought to have peaked late in 2003, and to have cooled a little in the months since. There are matters of common knowledge in Canberra which I am permitted to take into account despite the fact that they have not been the subject of specific evidence: s 144, Evidence Act 1995. Provided that the defendant complies with an order for specific performance of the contract, the alternative relief sought is not likely to be relevant, although there may be some minor expenditure which will have to be duplicated in completing the conveyancing process and should thus be recoverable. It seems to me that the most satisfactory course is to order specific performance, and to grant liberty to apply in relation to any alternative or additional relief which may prove to be necessary or justified.

85. It is appropriate that the plaintiff's representatives have the opportunity to bring in a draft order for specific performance, and that the defendant's representatives be afforded the opportunity to make submissions as to its terms.

86. I am provisionally minded to order that the defendant pay the plaintiff's costs and the third party's costs, but I shall provide an opportunity for the parties to be heard before making any formal order about costs in case there are other considerations which should be taken into account.

I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 24 September 2004

Counsel for the plaintiff: Mr N J Adams

Solicitor for the plaintiff: Bradley Allen

Counsel for the defendant: Mr B J Salmon QC

Solicitor for the defendant: Collaery & Colquhoun

Council for the third party Mr C Whitelaw

Solicitor for the third party Elrington Boardman Allport

Date of hearing: 17, 18, 19, 20 November 2003

Date of judgment: 24 September 2004