BREMNER v SINCLAIR & ORS

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40615/95

MASON P MEAGHER JA POWELL JA

Brian Sefton BREMNER v Sondra Jean SINCLAIR & Ors (No 3)

JUDGMENT 1 MASON P: The Court turns to this matter, for the third time. The original judgment was given on 3 November 1998 (Bremner (No 1)). Judgment in Bremner v Sinclair (No 2) [1999] NSWCA 407 (Bremner (No 2)) was given on 29 October 1999. 2 In Bremner (No 2) I set out (at par 60) proposed orders designed to place the parties in the position in which they would have been had the orders been made at trial which, in my view, should have been made in the light of the alternative basis for actual authority argument which found favour with the majority of the Court in Bremner (No 1). I discussed costs and suggested appropriate orders as to costs in pars 62-64. Meagher JA agreed with my judgment. Powell JA did not and his Honour set out reasons why the appeal to this Court should be dismissed with costs. Those reasons related both to the powers of the Court of Appeal and to the merits. 3 The formal order of the Court in Bremner (No 2) was that the parties were directed to bring in Short Minutes to give effect to the reasons of the majority. 4 The majority of the Court in Bremner (No 1) (Mason P and Meagher JA) decided that the facts found at trial established Mr Bremner's actual authority, albeit on an alternative basis to that addressed by the learned trial judge. The proceedings in Bremner (No 2) contested the propriety of the Court in Bremner (No 1) having entertained or perceived the ultimately determinative argument as to an alternative basis for actual authority. No party in Bremner (No 2) disputed the merits of that alternative argument at that stage. 5 Faced with Short Minutes drawn to give effect to the majority reasons in Bremner (No 2), Mr Hudson and Mrs Clissold (formerly Hudson) and belatedly Mr and Mrs Sinclair now advance submissions against the merits of the finding of an alternative basis of authority that was made by Meagher JA and myself in Bremner (No 1). The reason for the parties not having done so earlier (at least as regards Mr Hudson and Mrs Clissold) is that they perceived that all that was at issue in the hearing leading up to Bremner (No 2) was the reopening of the orders in Bremner (No 1) as distinct from the orders that should flow in the event of such reopening. In light of the orders sought in the formal process that triggered the hearing in Bremner (No 2) I can understand how Mr Hudson and Mrs Clissold came to this view. But I cannot refrain from criticism that they - a fortiori the Sinclairs - said not a word about their intention (should reopening be permitted) to challenge on its merits the reasoning of the Court in Bremner (No 1). The hearing of Bremner (No 2) should have been the time when any challenge to the findings in Bremner (No 1) as to an alternative basis of actual authority should have been foreshadowed and developed. The merits of such challenge were obviously relevant to the formal application. 6 This said, I would afford those parties the opportunity which they now seek, given what actually happened during the hearing in Bremner (No 1) and the fact that those parties were under a genuine misapprehension as to what was at stake in the hearing of Bremner (No 2). If orders are made as proposed by the majority in Bremner (No 2), then Mr Hudson and Mrs Clissold will be affected adversely. They should not be sent away from this Court with a sense of grievance based upon a perception that they have not been heard. 7 What is presently at issue is whether the facts established at trial support the inference that the ultimate bid of $960,000 was actually authorised by Mr and Mrs Hudson. 8 The onus rested upon the vendors to establish authority against Mr and Mrs Hudson and absence of authority against the auctioneers. It was possible for the vendors as plaintiffs to have failed against all defendants because they had the onus of proof. 9 My reasons for concluding that the vendors established actual authority against Mr Hudson and Mrs Clissold are set out at pp15-18 of Bremner (No 1). 10 In overview, Mr Hudson and Mrs Clissold submit that this finding is based upon conjecture and not inference. The line between speculation and inference is clear in principle though at times hard to discern in practice (see generally Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 162, 168). 11 As Mrs Clissold points out in her further submission, my conclusion is based upon the cumulative effect of seven primary facts, being (a) the failure of Mrs Murphy to suggest that she anticipated problems in meeting Mr Bremner's request that the 10% deposit of $96,000 should be urgently transferred telegraphically ( Bremner (No 1) p16.3);

(b) the only authority given to Mr McAllister was to bid at the auction ( Bremner (No 1) p16.6);

(c) Mrs Hudson was privy to the fact that the reserve price was $960,000 or at least that this was the price at which the vendors would be likely to sell ( Bremner (No 1) p16.7);

(d) Mrs Hudson instructed Mr McAllister on the eve of the auction as to the reserve price and instructed him to bid ( Bremner (No 1) p16.9-17.2);

(e) Mrs Hudson spoke to Mr McAllister on the morning of the auction and confirmed with him that there were sufficient funds in the estate to go as high as $960,000 ( Bremner (No 1) p17.2);

(f) the later statements from Mr and Mrs Hudson that they were satisfied with the $960,000 ( Bremner (No 1) p17.3);

(g) the lack of any indication that the property came onto the market until Mrs Murphy's $960,000 bid ( Bremner (No 1) p17.5). 12 I do not understand Mrs Clissold to dispute the primary facts. She submits that the inference of actual authority cannot be drawn from those facts, taken singly or cumulatively. I disagree, for the reasons set out in Bremner (No 1). 13 Mr Hudson does not accept that the evidence established all of the primary facts apparently accepted by Mrs Clissold in her written submissions. 14 He submits that Mrs Clissold was not shown to have known the auction reserve price. As I stated in Bremner (No 1), the primary fact that I found established was that $960,000 was known by Mrs Clissold to be either the reserve price or the price at which the vendors would be likely to sell. In my view there was evidence of a reserve price (see AB 63F), none the less so because Mrs Sinclair was asked to authorise its public disclosure when the bidding reached $960,000 (AB 47K). There was also credible evidence from Mrs Clissold that she was privy to it at the time she instructed Mr McAllister to bid (see AB 140, 220-1, 207). It was Mrs Clissold's sworn evidence that she told Mr McAllister that the reserve was $960,000 and she instructed him to bid (AB 140N). 15 Mr Hudson also questions my conclusion in Bremner (No1) that Mrs Murphy departed from her phone to speak to Mr McAllister. That is not part of my reasoning as to the alternative basis of actual authority. 16 Also challenged is my inference that it was likely that, when Mrs Murphy accepted Mr Bremner's congratulations for having placed the winning bid, she indicated that she did not anticipate problems in meeting his request that the 10% deposit should be transferred urgently. This is said to be circular reasoning, because it assumes that she would not have spoken as she did without the actual authority of Mr McAllister. I do not agree. In any event, the critical point as regards this link in the chain was the probability that she would have had authority to have said what she did about the deposit moneys. This was not something involving the exercise of discretion. 17 An alternative submission of Mrs Clissold and Mr Hudson is that these primary facts rise no higher than supporting the finding that Mr McAllister was authorised to bid to $960,000. It is submitted that this is not enough to support a finding of authority because there would still be an unauthorised non-ministerial delegation from Mr McAllister to Mrs Murphy. 18 The reason why Mr McAllister had no authority to delegate the general task of bidding at the auction to his secretary Mrs Murphy is set out in my judgment in Bremner (No 1) (p10). Mr Hudson and Mrs Clissold swore that they relied on the expertise of Mr McAllister, whom they understood to be a solicitor, in connection with the making of bids at the auction. This evidence was virtually unchallenged and it is inherently believable. Windeyer J accepted it. As Mr Hudson points out in his written submissions, the conduct of an auction is a dynamic and tactical process. Timing of entry into bidding, the difference between a bid and its predecessor and the manner in which it is conveyed may be significant aspects of that psychological process. 19 The transcript of the auction does not enable one to know where each of the eight bids came from. Some were definitely from the room and some through the telephone, although whether Mrs Murphy was the only telephone bidder is unclear. The penultimate bid was $950,000 and it was not, I infer, from Mrs Murphy. The auctioneer cajoled the person in the room who was speaking to Mrs Murphy ("your man" (sic)) to make an advance on $950,000, adding: If it will help I will accept a rise of ten thousand dollars. 20 The caller (Mrs Murphy) responded with $960,000. The auctioneer announced that he had just been advised that the property was on the market. "We have reached the reserve and we are playing for keeps". There were no further bids and the property was knocked down to the "outside buyer". 21 In Bremner (No 2) I was aware that the successful bid placed by Mrs Murphy (ie the $960,000 bid) had to be shown to be the product of a ministerial task. I thought that it was, for the reasons given at p18 of Bremner (No 1). Relevantly they were (emphasis in original): In my view the authority had been given. Mr McAllister's instructions were to bid (at least) as high as $960,000, if necessary to secure the property. It was necessary. There is nothing to suggest that the property would have sold at the auction for any lower price. The penultimate bid of $950,000 was not accepted. It was below the reserve. The auctioneer announced that "if it will help I will accept a rise of ten thousand dollars". True, the vendors could have dropped or varied the reserve, but they did not do so, and it would be speculative to infer that they would have. Even a ministerial agent could be instructed "if all else fails, you must go as high as $X if necessary to secure the property at auction". I would infer that Mrs Murphy had such instructions if (ex hypothesi) she was not placing individual bids at the behest of Mr McAllister. On this basis the ultimate bid of $960,000 was duly authorised by Mr and Mrs Hudson.

22 In submissions, Mr Armfield representing Mrs Clissold argued that this reasoning overlooked the fact that Mrs Murphy had been party to the earlier processes of the auction (I infer that she had made at least one of the bids lower than $950,000). The consequence was, it was submitted, that her earlier intervention in the auction had contributed to the state of affairs whereby the auctioneer effectively nominated the critical bid. An alternative way of making the same point is to ask what might have happened if the bidding had stalled, say, at $900,000. It is submitted that the vendors might conceivably have put the property on the market at that stage in the hope that this might have prompted spirited bidding in the final stages. If so, Mr and Mrs Hudson might have got it for less than the previously instructed reserve price of $960,000. In various ways, Mr Armfield's submission was that the unauthorised delegation from McAllister to Murphy lost Mr and Mrs Hudson this prospect of securing the property more cheaply. This submission troubles me and has caused my mind to waiver. 23 These possibilities may well be so, but I do not see why they provide an answer to the question whether the successful bid, upon which the purchasers were sued, was authorised. One may speculate whether Mrs Murphy's earlier interventions kept the auction alive or whether a more seasoned tactical campaign by Mr McAllister would have bluffed other bidders out before $950,000. What happened in fact was that the property did not sell at the auction until the reserve was met. It was upon that sale that the auctioneer and the purchasers were sued. 24 Where an agent is not authorised to delegate and does so, non-ministerial acts performed by a purported sub-agent will not be valid, where validity is in question, nor bind or entitle the principal (Bowstead and Reynolds on Agency 16th ed p159). On the facts as I have found them, the purchasers' sub-agent (Mrs Murphy) had actual authority - indeed a duty - to go as high as $960,000 (the actual or anticipated reserve) if that was necessary to get the property. As the auction panned out, it was necessary to go that high. Such a bid was made on the purchasers' behalf and accepted. 25 Had Mrs Murphy secured the property at $900,000 there would have been actual authority for the same reasons. But that observation is ultimately irrelevant to the present case. 26 We are not concerned with the rights in contract or tort as between the purchasers and Mr McAllister stemming from the effect of letting Mrs Murphy do the bidding. The ultimate and only issue is whether or not the $960,000 bid was made with the authority of the purchasers. I am unable to see how it was any less authorised by reason of the fact that the purchasers might possibly have got the property at a cheaper price had things turned out differently or by reason of the fact that they may have rights against Mr McAllister. 27 Accordingly, I would made orders as contemplated by pars 60-64 of my reasons in Bremner (No 2). Those orders have been formulated in Short Minutes proffered by the appellants and they are: (1) Judgment for the plaintiffs against the first defendants for $147,812.42, such judgment to take effect on 1 September 1995.

(2) Judgment for the second and third defendants against the plaintiffs.

(3) Order the first defendants to pay the plaintiffs' costs of the proceedings at first instance.

(4) Order the plaintiffs to pay the second and third defendants' costs of the proceedings at first instance.

(5) Order the first defendants to pay to the plaintiffs the amount of costs recoverable by the second and third defendants from the plaintiffs.

(7) Order the plaintiffs and first defendants to pay the second and third defendants' costs of the appeal down to and including 28 November 1997, with both parties liable to pay the whole of the costs but liable equally as between each other.

(8) Order the plaintiffs to pay the first defendant's costs of the Notice of Motion dated 24 November 1998.

(9) No order as to the second and third defendants' costs of the Notice of Motion dated 24 November 1998. 28 MEAGHER JA: I agree with Mason P. 29 POWELL JA: I have read in draft the judgment which has been prepared by Mason P. 30 As I remain of the views, first, that the appeal should have been dismissed with costs; and, second, that the First Respondents ought not to have been granted leave to file a Notice of Appeal out of time; and as my reasons for such views are set out in the judgments delivered by me in November 1998 and October 1999, there would seem to be no good purpose to be served in repeating them here, and I accordingly refrain from doing so. ************

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.