Cahill v Kiversun Pty Ltd; Molonglo Group

Supreme Court of Victoria|2017-11-29|Before: Kennedy J

CONTRACT - Vendor and purchaser - Whether binding agreement for the sale of land - validity of execution - Whether a conditional offer - Whether intention to be bound - Consideration - Construction of terms

CONTRACT - Whether vendor disentitled from relying on non-compliance with condition by reason of prevention principle

TRADE AND COMMERCE - Australian Consumer Law - Whether representations made and/or whether misleading or deceptive - Whether reliance in any event

1 These two proceedings concern a dispute regarding the purported sale of commercial land at 112 - 118 Rokeby Street in Collingwood (Rokeby Street Property) by a vendor, Kiversun Pty Ltd (Kiversun) to two separate purchasers: first to Mr Peter Cahill on 15 July 2016; and second to Molonglo Group (Australia) Pty Ltd (Molonglo) on 4 August 2016.

2 The two prospective purchasers claim that Kiversun is bound to sell the Rokeby Street Property to them in circumstances where Kiversun has purported to terminate the alleged contract with Mr Cahill. Both purchasers have also lodged caveats over the Rokeby Street Property.

3 In proceeding S ECI 2016 01231 relating to Mr Cahill's claim (Cahill Proceeding), Mr Cahill seeks an order for specific performance of his agreement against Kiversun primarily relying on an 'Agreement to Purchase' document dated 15 July 2016 (Agreement to Purchase); alternatively, he seeks damages for alleged misrepresentations pursuant to Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law) (alleging contraventions of ss 18 and 30) and/or specific performance of the Agreement to Purchase_._

4 In proceeding S ECI 2016 01256 (Molonglo Proceeding), Molonglo seeks an order for the removal of Mr Cahill's caveat,[1] while Mr Cahill in turn seeks an order (by Counterclaim) for the removal of the Molonglo caveat.[2]

5 A crucial issue in both proceedings was therefore whether or not Mr Cahill had established that Kiversun had entered into a binding and specifically enforceable contract for the sale of the Rokeby Street Property. By reason of this common issue, both proceedings were heard together pursuant to orders made on 10 March 2017.

6 In fact, Counsel for Molonglo fairly conceded that, if Mr Cahill could show an immediately binding contract for the sale of property which was specifically enforceable, it would follow that the Molonglo caveat ought be removed.[3]

7 Both Kiversun and Molonglo allege that the Agreement to Purchase is not a binding contract for the sale of property for various reasons. In particular, the issues which arise are whether:

• an objective intent to create legal relations is in existence; and

• it is a binding contract to negotiate only.[4]

8 Kiversun also alleged that, even if the Agreement to Purchase was binding, that it was under no further obligation to deal with Mr Cahill by reason of the failure of Mr Cahill to comply with a condition (to return a proffered contract of sale not more than 5 business days after receipt). However, Mr Cahill alleges that Kiversun is not entitled to rely on the non-compliance with the condition in circumstances where Kiversun effectively disabled compliance with that condition.

9 Accordingly, a further issue arose as to whether Kiversun disabled compliance with the said condition. In order to determine this issue, it was also necessary to first determine what the terms of any alleged binding contract were.

10 Finally (in relation to the contract claim), two further issues arose in terms of remedy as follows:

• whether specific performance ought to be refused given, in particular, that Mr Cahill had not demonstrated that he was ready, willing and able to perform the alleged contract even if it existed; and

11 In terms of the misrepresentation claim, the Court had ordered that the matter be set down for trial on all issues, save for the quantification of any damages to be awarded under ss 236 and 237 of the Australian Consumer Law.[5] Accordingly, the major issues to be determined was whether any of the alleged representations were made; whether they were false; and /or whether there was reliance.[6]

12 The following witnesses were called on behalf of Mr Cahill:

(b) Mr Brett Simpson, formerly an estate agent of Vision Real Estate;

(d) Mr Pasquale Franzese, expert witness on the issue of 'ready willing and able'; and

13 Mr Cahill presented as an impressive, straightforward witness who was ready to make concessions appropriately. Although some criticism was made about his evidence on the topic of a meeting of 4 August 2016, I did not find this to be justified.

14 Mr Simpson and Mr Bindley were subpoenaed witnesses who had engaged separate lawyers. Although there was some criticism as to whether they acted at all times on behalf of the vendor, no general challenge was made to their credit. Mr Simpson was a straightforward witness. Mr Bindley also presented as generally reliable, save for some emotion at times which was apparently caused by his views that the solicitors for Kiversun and Molonglo had wrongfully sought to engineer their way out of a contract. I have generally accepted their evidence.

15 The evidence of Mr Franzese will be referred to in more detail below.

16 The evidence of Mr O'Grady was sought to be adduced on the application of the prevention principle. It was to the effect that the value of the Rokeby Street Property was substantially reduced from $10 million to $6.2 million under the form of contract proffered by the vendor (which included a 5-year lease at a rent nominated by the vendor). His evidence was adduced subject to an objection on relevance grounds. It was also criticised, inter alia, on the basis that he did not provide adequate data to support the comparable sales he relied upon. In the result, as will be seen below, I have not found it necessary to have regard to his evidence.

17 Kiversun provided outlines of evidence for a number of witnesses and opened on the basis that they would be called. These were the following:

(b) Mrs Bruna Paraskevakis, director of Kiversun; and

18 However, on the fifth day of the trial, Counsel announced that they would not be called. No explanation was provided for this position.

19 In the result, the only other witness called was Mr Nicholas Kalogeropoulos, a director of Molonglo. He claimed to be unable to recollect relevant matters and was at times unresponsive. This may be partly explicable on the basis that he claimed that Mr Phillip Rushby, a former director of sales for Molonglo, was primarily responsible for dealings in this matter (who was not called). However, I have generally not relied on the evidence of Mr Kalogeropoulos unless it was supported by objective evidence.

20 In terms of the evidence generally, the parties consented to a large volume of documentation being tendered. The chronology below is based on this documentation, bearing in mind (as was properly emphasised by Counsel) that different parts of the evidence would only be admissible on some issues only. I have therefore sought to identify which evidence has been relied upon in analysing each particular issue.

21 Mr Cahill is an experienced property developer and managing director of Domain Hill Property Group Pty Ltd with some 30 years' experience in property development. He is a valuer by profession, holds an estate agent's licence, and is an Associate of the Property Institute of Australia and the Real Estate Institute of Victoria. He is also a graduate of the Australian Institute of Company Directors and is a guest lecturer at RMIT University to students undertaking degrees in Property, Valuation and Construction.

22 Mr Simpson and Mr Bindley were both real estate agents. Both had worked as estate agents for some 30 years, including a period together at Vision Real Estate. Mr Simpson had recently left Vision Real Estate to work as a director of Gray Johnson. Mr Cahill had had regular dealings with both Mr Simpson and Mr Bindley over the years, including by way of buying and selling properties, as well as the management of properties.

23 Kiversun had two directors: Mr George Paraskevakis and his wife, Mrs Bruna Paraskevakis. There was little evidence as to what precise business Kiversun was conducting, other than that it had a 'manufacturing department' which was located at the Rokeby Street Property. It also appeared that Mr Paraskevakis wanted to retire, which led to the decision to sell the Rokeby Street Property.

24 Molonglo was a family business established in the 1960s, which was active in Australia as well as in Athens and London. A Molonglo entity owned a property which was adjacent to the Rokeby Street Property at 77-89 Rupert Street, Collingwood.

25 The Rokeby Street Property is approximately 3,000 square metres located in a 'Commercial 2' Zone. According to Mr Simpson, there is a very old tin shed on the site (which was a 'pull down'), as well as three older-style brick warehouses (dated from the 1960s or 1970s). His evidence was that the 'highest and best use' was development, stating that, although you could keep part of it 'for the moment' to lease out, it was 'not going to stack' as a rental investment. This appeared to be the subject of some challenge from Mr Kalogeropoulos, who claimed that Molonglo 'would have contemplated' a 5-year lease. However, he also generally accepted that the 'best and highest use' was for commercial development. In the result, the contract actually signed by Molonglo with Kiversun (Molonglo Contract) also provided for month-to-month tenancies only post-settlement.

26 The evidence of Mr Simpson was that he had approached Mr Paraskevakis after he sold a neighbouring property some 15 years earlier, and that he continued to have contact leading up to the events of 2016.

27 Mr Simpson and Mr Paraskevakis had a conversation in early 2016 wherein Mr Paraskevakis said that he was now considering selling the Rokeby Street Property as he was going to retire and had someone in the family to take over the business. He was looking for around $10 million. Consistent with his evidence about the state of the Rokeby Street Property, the evidence of Mr Simpson was that the property should be proposed to potential purchasers as a 'development site'.

28 They also had a conversation about the tenancies as follows:

We did have some discussions in regards to that. The tenancies were monthly tenancies. George had explained to me that the buildings were all on monthly tenancies and I think he was leasing the building back to himself, one company to another, which is normal. One of the other buildings he had leased to a family member but again, that was a monthly tenancy.

29 Mr Simpson then telephoned Mr Cahill. According to Mr Cahill, Mr Simpson described the Rokeby Street Property as being about 3,000 square metres in a Commercial 2 Zone. Further, that there were some existing short-term leases in place as it was occupied by an associated party of the owner (Steptoe & Son), as well as a family member, such that the property could be bought on a 'going concern' basis.

30 As explained by Counsel for Mr Cahill (and generally accepted by the parties[7]), the purchase of a property on a 'going concern' basis required that there be a lease in place so that there would be no liability for GST. The lease did need to be for any particular length of time.

31 Mr Simpson also said that there could be a long term settlement of up to two years so that the owner could relocate and that the owner was looking for something in the order of $10 million.

32 By correspondence dated 5 February 2016, Mr Cahill made an offer to purchase the Rokeby Street Property at $7.55 million (on a 'going concern basis') and 'subject to existing tenancies'.

33 Mr Simpson took the offer to Mr Paraskevakis who said that the price was not enough.

34 Subsequent to this, another interested party, Camlen Pty Ltd (Camlen), made offers of $9.05 million and $9.25 million.

35 The evidence of Mr Simpson was that these offers were also rejected. However, in the course of rejecting them, Mr Paraskevakis told Mr Simpson that if he was going to sell, he would sell at $9.65 million. Mr Simpson said that he believed both his purchasers would pay this price and in order to get a better price, it was appropriate to take it to the 'highest best bid process' (where both buyers would be given the opportunity of putting their highest and best offer) which Mr Paraskevakis said was a good idea.

36 On Monday, 11 July 2016, Mr Simpson called Mr Cahill and advised him that the property was 'live'; and that someone else had made an offer, so Mr Cahill should make a further offer. Mr Cahill's evidence was that he asked if there would be a 'highest and best bid process' and was told this would probably be the case, though Mr Simpson had to go back to Mr Paraskevakis.

37 Consistent with a diary note of Mr Simpson, on 14 July 2016 at 10.00 am, he inspected the Rokeby Street Property with a representative of Camlen.

38 The evidence of Mr Simpson is that, after this inspection, he asked Mr Paraskevakis to sign an exclusive sale authority in favour of Vision Real Estate (Authority), which he had prepared in advance. He claimed that Mr Paraskevakis told him that it was only required to be signed by him. This evidence was criticised by Kiversun, who suggested that it was improbable that Mr Simpson would question who needed to sign the Authority, given that he already believed Mr Paraskevakis to be the owner. However, I did not find Mr Simpson's actions to be improbable in circumstances where it was very important for him to clarify Mr Paraskevakis' authority in order to secure his commission.

39 The Authority is dated 14 July 2016 and signed by Mr Paraskevakis and Mr Simpson. It denotes the agent as Vision Real Estate Pty Ltd with the identity of the vendor's name given as 'to be advised' over the Rokeby Street Property address. The evidence of Mr Simpson was that he inserted this detail as the form could not be printed off otherwise. The vendor's price was said to be $9.65 million with an exclusive authority period of 14 days and a continuing authority of 7 days.

40 Kiversun suggested that the Authority was not really executed on 14 July 2016, but rather at the meeting of 15 July 2016, described below. Further, that the diary entry of 14 July 2016 was consistent with this, given it related to the events of 15 July 2016. However, the handwritten notes contained in the diary were not recorded contemporaneously, nor did they clearly identify which date they related to. Rather, as Mr Simpson explained, the notes inserted on the 14 July 2016 page of his diary were recorded later when problems starting arising in this matter on 5 August 2016. He therefore, not having much experience of diary notes, simply opened his diary to a page with a Rokeby Street reference and just 'blurted out' what was on his mind.

41 The evidence of Mr Simpson as to the date of the Authority was otherwise consistent with the date on the document and also to some evidence of Mr Cahill. Thus, the evidence of Mr Cahill was that Mr Simpson rang him on 14 July 2016 and said 'we are good to go'. He had a 'commitment' from Mr Paraskevakis to sell and that he had 'authority' to 'do the deal' and the highest and best bid would be successful.

42 There is also no contrary evidence from Mr Paraskevakis to the effect that the Authority was executed on 15 July 2016. Rather, I am able to, and do, infer that his evidence would not have assisted Kiversun.[8]

43 It follows that, to the extent it is material, I accept that the Authority was executed on 14 July 2016.

44 The challenge made by Kiversun is in any event of no consequence. Thus, even if the agent's authority was not effectively given on 14 July 2016, it was uncontested that, by 15 July 2016, the directors of Kiversun had effectively armed Mr Simpson with a signed Agreement to Purchase in the name of Kiversun 'c/ Vision Real Estate' as well as the Authority dated 14 July 2016. Such actions suggest that the Authority (of Vision Real Estate) was clearly adopted by Kiversun,[9] such that Kiversun effectively ratified Mr Simpson's authority as from 14 July 2016.[10]

45 The evidence of Mr Simpson was that the 'highest and best' bid process initially expired at 12.00 pm, but that it was extended to 2.00 pm.

46 Camlen put in a letter of offer at $9.81 million.

47 Mr Cahill also provided a letter of offer at $9.9 million (on a going concern basis) by handing it to Mr Bindley (prior to 2.00 pm). The offer was a typed document, which included a deposit of 10% of which 5% was payable on exchange of contracts and a further 5% payable in 12 months with the balance of the purchase price to be paid in 24 months from the date of the contract. The offer was also said to be subject to a number of conditions, including that the purchaser buys 'subject to existing tenancies'. The correspondence finished: 'I look forward to your response and to receipt of contracts and/or sale agreement signed by the Vendor'.

48 Mr Cahill also handed Mr Bindley a copy of a draft 'agreement' with his handwritten annotations. This was based on a standard Vision Real Estate pro forma 'Agreement to Purchase' document, which Mr Bindley had earlier provided to Mr Cahill. The evidence suggested that Mr Cahill included a change which included specific reference to 'existing tenancies' (at cl 6). It also appeared that Mr Simpson subsequently made some other alterations to make the document consistent with the terms of the offer.

49 Later on 14 July 2016, Mr Simpson telephoned Mr Paraskevakis who was away in the country and unable to meet with him. Mr Simpson told Mr Paraskevakis about the content of the two offers and highlighted that they were $250,000 over his price. Mr Paraskevakis said that this was terrific.

50 The unchallenged evidence of Mr Simpson was that he told Mr Paraskevakis that once you go through the highest and best bid process and obtain a final offer, that people expect for the contract to be signed and documented that day. It was therefore important to be able to tell the highest bidder that he was the 'successful purchaser.' He then asked if it was okay to tell Mr Cahill that he has 'got it' to which Mr Paraskevakis said: 'Yes, absolutely. Tell him that it's his and that my word is my bond.'

51 Mr Simpson then telephoned Mr Cahill and said 'congratulations you have bought the property. The vendor has accepted your offer'. Mr Cahill said this was terrific but asked if the vendor had signed off. Mr Simpson said that he had not, but that he was meeting Mr Paraskevakis next morning and that there would be no problem. He had been given the 'all clear' from Mr Paraskevakis to tell Mr Cahill that he had bought the Rokeby Street Property and that Mr Paraskevakis had said to him 'his word is his bond'.

52 Under cross-examination, Mr Cahill fairly conceded that he still wanted Mr Paraskevakis to sign because verbal agreements in the real estate business 'don't count very much'.

53 On 15 July 2016 at 10.30 am, Mr Simpson met with Mr Paraskevakis at the Rokeby Street Property. His wife/co-director (Mrs Paraskevakis) and accountant (Mr Vlahopoulos) were also there.

54 The evidence of Mr Simpson was that he had the (revised) Agreement to Purchase with him and that he read through all the details to George [Paraskevakis] and John [Vlahopoulos] and George's wife and explained 'each of the points'. In particular, he pointed out to them that the Agreement to Purchase was 'binding on the vendor'. He also asked for copies of the leases and was told by Mr Vlahopoulos that he was 'not sure where those leases are but if we can find them we will include them. If we can't find them, then we will perhaps prepare it so that we can add it to the section 32 when it arrives'.

55 After that discussion, Mr Vlahopoulos said that he had a query regarding capital gains tax (CGT) and that he wanted to seek some advice. He then took a photograph of the Agreement to Purchase with his mobile phone and sent it away for advice (consistent with a copy of a text message to Mr Harry Giannakidis at Mills Oakley (MO) of the same date). Mr Vlahopoulos then told them that he was unable to get hold of the person and they waited for a while. He then said, given he was unsure when the person would call back, that it would be 'ok to sign the contracts' as long as Mr Simpson held them and did not get the purchaser to sign them until Mr Simpson had confirmation from Mr Vlahopoulos' office. Mr Paraskevakis also said that this sounded 'okay'.

56 Mr Paraskevakis then said that he wanted to change the time for payment of the deposit balance (to 3 months, instead of 12 months) in order to have funds earlier to buy another property. Mr Simpson also asked about the name that the ownership was in. Mr Paraskevakis told him that it was Kiversun and also said that 'he was the only one that was required to sign'.

57 Handwritten alterations were then made by Mr Simpson (to record the alteration in the deposit and the names of the vendor/purchaser).

58 Mr Paraskevakis then initialled the deposit change and also signed the Agreement to Purchase. Present in the room at the time of signing were Mr Simpson, Mr Paraskevakis, Mrs Paraskevakis, and Mr Vlahopoulos.

59 Later that day, Mr Simpson got a call from Mr Vlahopoulos' office advising that everything was 'clear and we were good to sign'.

60 In the late afternoon, Mr Simpson then met with Mr Cahill. Mr Cahill initialled one amendment and signed the Agreement to Purchase.

61 According to Mr Cahill, he asked what was the 'big idea' of the vendor changing the deposit terms. Mr Simpson said that he was sorry about that, but that the 'accountant got involved' and they wanted additional money for another acquisition. Mr Cahill said that he would not let the deal fall over because of this.

62 There was also a discussion prior to execution about tenancy arrangements. The evidence of Mr Cahill was that in the Agreement to Purchase, it just said 'subject to existing tenancies' and that he asked Mr Simpson what the nature of the 'existing tenancies' were. Mr Simpson's response was:

... that he had spoken to the accountant at length. The accountant had told him unequivocally, I think was the word he used, that the leases were all monthly tenancies and that the leases, they needed to find the documentation to verify the leases and if they couldn't find the documentation to verify the monthly leases they would construct monthly leases for the section 32, or words to that effect.

63 The evidence of Mr Cahill was also that he asked about whether they had any information on the rental and was told that they did not have any information yet on the rental, but they would be able to find it out quickly. He also said to Mr Simpson that the rental figure was largely academic if they were buying a property on a monthly tenancy.

64 Mr Cahill then countersigned the Agreement to Purchase.

65 Turning to the terms of the document executed, it was entitled 'Agreement to Purchase Rokeby St, Collingwood' (in bold capitalisation) and was between Kiversun as Vendor 'c/- Vision Real Estate' and Mr Cahill and/or Nominee as purchaser. The property was identified as '112-118 Rokeby Street Collingwood Vic 3066' with the purchase price expressed as $9,900,000 (on a going concern basis, i.e. on the basis that GST was not payable). The deposit was provided to be 10% of the purchase price of which 5% was payable on the exchange of contracts and a further 5% payable in 3 months (with the reference to 12 months struck out and initialled by both parties). Settlement was 24 months from the signing of the Contracts.

66 There then followed a range of Special Conditions (SC). Given the significance of this document, they are extracted in full as follows:

This offer is conditional upon the purchaser's solicitor's approval of the final contract of sale and Section 32 Vendor Statement documentation. The contract documentation providing it is complete must be returned to the agent signed by the purchaser along with the balance of the deposit no more than 5 business days after the purchaser receives the contract of sale documentation from the vendor. The vendor may withdraw from the sale and all monies will be refunded to the purchaser in full if not returned within this 5 business day period.
DEVELOPMENT ACTIVITIES

The Vendor agrees to grant the Purchaser and associated consultants reasonable access to the Property to complete any Town Planning process inclusive of surveying the site and buildings, environmental studies and testing and any other associated activities (Development Activities).

The Purchaser agrees to ensure that the Development Activities do not interfere with the tenant's quiet enjoyment of the Property.

The Vendor agrees to permit any Town Planning process or application by way of consent or signing any application made by the Purchaser.

The Vendor agrees to permit any council or planning development advertising required to achieve a Town Planning Permit.

The Purchaser agrees all Development Activities costs will be at the expense of the Purchaser.

3. CONFIDENTIALITY

The terms and conditions contained herein will remain confidential to the parties and their agents.

4. NOMINATION

The Purchaser may nominate a substitute or additional purchaser but the named Purchaser remains personally liable for the due performance of all the Purchaser's obligations under this Agreement.

5. SIGNATURE AUTHORISATION

The person executing this Agreement of Purchase acknowledges and agrees that in accordance with the Corporations Act 2001 they are entitled to enter this Agreement on behalf of the party they sign for.

The Purchaser buys subject to existing tenancies. All tenancies are to be on a net rental basis with the Lessee paying all outgoings.

67 The document is said to be executed 'on behalf of the Purchaser' by Mr Cahill and 'on behalf of the Vendor' by Mr Paraskevakis both on 15 July 2016.

68 The evidence was that Mr Simpson also requested some deposit at the beginning of the meeting on 15 July 2016. When Mr Cahill asked how much was wanted, he was told '$10,000 or $20,000'. Mr Cahill said that this was fine, but then forgot to provide it. He did however, provide $10,000 later on 20 July 2016, as well as a further amount of $485,000 on 5 August 2016, which was deposited into the Vision Real Estate trust account.

69 Save for the reference of the Agreement to Purchase to Mr Giannakidis for CGT advice on 15 July 2016, there was no involvement of solicitors in the negotiations for, and settling of, the terms of the Agreement to Purchase. In fact, the first contact made by Mr Cahill with solicitors was in his correspondence of 1 August 2016, below. MO was also not formally engaged until after 22 July 2016 (the date of a formal letter of engagement).

70 Meanwhile, (unknown to Mr Cahill at the time) at some point from about mid-July 2016, it appears that Mr Paraskevakis was also conducting negotiations with Molonglo through Mr Adrian Boutsakis of Teska & Carson Real Estate (Teska & Carson). According to Mr Kalogeropoulos, they were working towards creating heads of agreement by around 20 July 2016. Thus he provided a draft agreement to Mr Boutsakis by email of 21 July 2016 (with a price of $10 million) though he was 'not sure' if it was ever provided to Mr Paraskevakis.

71 The evidence of Mr Kalogeropoulos was that he in fact met with Mr Paraskevakis at the Rokeby Street Property on Monday, 25 July 2016. He knew that Mr Paraskevakis was 'the person to speak to in relation to the sale of this site'. He also 'expressed his disappointment' as it had become apparent that Mr Paraskevakis had entered into 'some other arrangement'.

72 In any event, on 27 July 2016 at 11.31 am, MO emailed King & Wood Mallesons (KWM) (solicitors for Molonglo) a contract of sale with a price of $10.15 million (on a going concern basis) inserted (Molonglo Draft Contract), together with a s 32 vendor's statement (s 32 statement).

73 The evidence of Mr Kalogeropoulos was that this price came 'unannounced' and they had been waiting to see what price Mr Paraskevakis would put in. However, he was happy with this price and thereafter gave instructions to his lawyers that '[y]ou are getting paid a lot of money. You need to finalise this. There are other things to do'.

74 The Molonglo Draft Contract included a clause which the parties agreed was a standard MO clause regarding termination (at cl 6.1). This provided for an option for the vendor to terminate at any time without paying any damages in the event it was restrained from completing by injunction, caveat or otherwise (the relevant termination clause).

75 The Molonglo Draft Contract also included a clause regarding leases (Molonglo lease clause) which read:

12.2 Vendor to prepare lease of the Property

(a) The Vendor will at its own cost and prior to the Settlement Date, prepare and submit a Lease for the approval of the Purchaser whereby the Vendor grants a Lease of the whole of the Property to a third party (which is a Related Body Corporate of the Vendor).

(b) The Lease must be:

(i) at an agreed market rent;

(ii) a monthly tenancy; and

(iii) must provide for 'warehouse/factory' use.

(c) The Vendor must arrange for two original Leases to be properly executed by the Tenant and the Vendor and provide one executed Lease to the Purchaser at Settlement.

76 On 29 July 2016, Molonglo officers attended KWM's offices and signed the execution page of the contract of sale between Kiversun and Molonglo on behalf of Molonglo. They asked for it to be held in escrow pending final agreement being reached.

77 On 28 July 2016, MO forwarded a copy of the Agreement to Purchase executed by Mr Cahill to Ms Simone Menz of KWM (with his name and price deleted).

78 On Saturday, 30 July 2016 at 2.00 pm, Ms Menz emailed Ms Catherine Marino and copied in Mr Anthony Brearley (both of MO), stating:

Anthony, Catherine

Just a heads up that our client would like to proceed with the proposal that Anthony and I discussed yesterday. Please let me know if you have had any further thoughts on this.

I am working on the form of contract that can be used for this purpose (in mark-up against the first version of the contract that you issued to me).

Do you have contact details for the purchaser, so that the contract documentation could be issued to the purchaser on Sunday night? (I don't need them - just needed to check that you have them or, if not, that you will be able to get them from the agent before Sunday night)

I have also prepared some amendments to the contract that we had agreed, to reflect the proposal (so that essentially your client would sign a conditional contract with our client, and that contract becomes unconditional if and when the other purchaser does not comply with the requirements of the Agreement to Purchase).

79 At 4.04 pm that day, Mr Brearley emailed Ms Menz and confirmed that Kiversun 'has agreed ... to proceed as we discussed'.

80 On 31 July 2016 at 11.20 am, Ms Menz emailed to Mr Brearley a contract of sale (both a clean version and a version in track changes) for the purpose of Mr Brearley providing that contract of sale to Mr Cahill.

81 The first two paragraphs of that email read as follows:

As foreshadowed, attached is the form of contract which we request be sent to the purchaser named in the Agreement to Purchase tonight (so that the 5 business day period can run its course during this coming week).

It is provided in mark-up, so that you can see the changes to the form of contract you initially sent to us. A clean version is also attached so that it can be completed and forwarded to that purchaser.

82 Critically, this version provided by KWM (as compared to the form of contract that MO had originally forwarded to Molonglo, i.e. the Molonglo Draft Contract) included a substantial reworking of the lease clause (at cl 13) so that such a lease was no longer a monthly lease, but rather a 5-year lease with an early surrender right in favour of the tenant only (on five business days' notice) and at a market rent nominated by the vendor.

83 On Sunday, 31 July 2016 at 3.04 pm, Mr Brearley emailed to Mr Cahill a draft contract of sale which was purportedly 'reflecting the Heads of Agreement' (MO Proffered Draft Contract). The s 32 statement was also forwarded later at 5.07 pm.

84 Mr Cahill did not open those emails until Monday, 1 August 2016 (whilst experiencing some difficulties with the download link provided by MO) which meant that his solicitors had until 8 August 2016 to approve the final contract (being five business days after receipt).

85 The MO Proffered Draft Contract appears to be in substantially the same form which had been forwarded by KWM to MO on 31 July 2016. In particular, it provided for a special condition regarding the lease, cl 13 (Cahill lease clause), which included cls 13.1 and 13.2 as follows:

13.2 Vendor to prepare lease of the Property

(a) The sale of the Property is subject to the existing tenancies (which are currently in place but not formally documented), and the Vendor will at its own cost and prior to the Settlement Date, prepare and submit a Lease for the approval of the Purchaser whereby the Purchaser must grant a Lease of the whole of the Property to a third party (which is a Related Body Corporate of the Vendor) immediately following Settlement.

(b) The Lease must:

(i) be at an effective market net rent nominated by the Vendor and included in the instrument of Lease by the Vendor;

(ii) be on a net rental basis, so that the Tenant is responsible for reimbursement to the landlord of Council rates, land tax (on a single holding, non-absentee owner, non-trust basis) and premiums for insurance required to be effected by the landlord under the Lease;

(iii) have a commencing date of the date on which is not later than when Settlement occurs;

(iv) be for a term of 5 years from the Day of Sale, with an early surrender right in favour of the tenant which is exercisable on 5 business days' notice by the tenant to the landlord;

(v) not impose any obligation on the Tenant to carry out any repair and maintenance or capital or structural works to the Property; and

(vi) provide for 'warehouse/factory' use or any other use permitted by Law.

(c) The Vendor will issue two original Leases to the Purchaser 5 Business Days prior to the Due Date, and the Purchaser must arrange for the two original Leases to be properly executed by the Purchaser as prospective landlord and returned to the Vendor at least 2 Business Days prior to the Due Date. The Vendor must procure the two original Leases to be signed by the Tenant and provide one executed Lease to the Purchaser at Settlement.

(emphasis added)

86 'Day of sale' was defined as the day both parties had signed the contract (on the cover page).

87 The draft also included the relevant termination clause (at cl 7), which provided an option for the vendor to terminate at any time without paying any damages in the event it was restrained from completing by injunction, caveat or 'otherwise'.

88 Mr Cahill's evidence about the Cahill lease clause was that:

• cl 13.2(b)(i) which provided for an effective market rent 'nominated by the vendor' was the most commercially absurd thing he had ever seen;

• cl 13.2(b)(iv) meant that not only would he not have access to the Rokeby Street Property for 5 years with an unknown rent, but that the tenant had this highly unusual exit opportunity with five business days' notice;

• cl 13.2(c) was a peculiar clause given it would prohibit a valuer from valuing a property, which needed to be done somewhere between 3 and 6 months prior to settlement.

89 Overall, Mr Cahill claimed that the Cahill lease clause would 'turn the whole deal on its head'. Given that the highest and best use of the Rokeby Street Property was as a development site, it followed that having such a lease in place meant that its value was significantly lower.

90 Mr Cahill's evidence about the termination clause was that it involved a risk that was never discussed and was totally unacceptable. In so saying, he highlighted that (as a developer), he could incur significant costs in designs and planning submissions (up to $400,000) notwithstanding that he would have exposure in case the vendor terminated. He said that it was an extraordinary clause that he had never seen before.

91 Under cross-examination, Mr Cahill agreed that cl 7 was unacceptable. He said that he 'hypothetically' would not have signed the MO Proffered Draft Contract even with monthly leases as he would have sought to negotiate cl 7 down to a more commercially sensible clause.

92 He claimed that he would not have signed the MO Proffered Draft Contract because, not only did it not reflect the deal they did, but it would have been 'commercial suicide' and he did not believe that anyone would have done it.

93 In re-examination, Mr Cahill also explained that the 5-year lease blew the holding costs of the project 'right out' given the attractiveness of the deal was that, soon after settlement, he could get access to the Rokeby Street Property to start development if there were only monthly tenancies in place.

94 After receiving the MO Proffered Draft Contract on 1 August 2016, Mr Cahill forwarded it on to his solicitor at Aitken Partners, as well as to Mr Bindley and Mr Simpson.

95 On 2 August 2016, Mr Bindley met with Mr Cahill and discussed the MO Proffered Draft Contract. Mr Bindley said that he had never seen such a condition like the relevant termination clause (cl 7) before and that no prudent purchaser would sign with that. They also discussed the 5-year lease term in the Cahill lease clause, which was not consistent with the monthly tenancies and also gave a right of termination to the tenant, but not the vendor. They thought that it might be there to support the going concern exemption and discussed that, as long as there was some termination clause that the purchaser could also initiate, that would probably be okay.

96 Meanwhile, on 2 August 2016, the Molonglo Draft Contract was close to finalisation. Thus, on 3 August 2016, an exclusive sale authority was given by Kiversun to Teska & Carson. It was executed by Mr Paraskevakis alone.

97 On 3 August 2016 at 4.35 pm, a MO file note recorded Mr Boutsakis saying:

10 am tomorrow- Adrian to collect from George

Want to pull pin tonight (second purchaser)

98 On 4 August 2016, Molonglo signed a contract for the sale of the Rokeby Street Property with Kiversun (the Molonglo Contract) at a price of $10.15 million (on a going concern basis). Molonglo had instructed its lawyers to affix the execution page already signed to the final agreed version of the contract.

(a) that the contract was conditional on a 'third party' (Mr Cahill) failing to sign contract documentation or pay the deposit within five business days of his receipt of the relevant contract documentation (cl 13). A $50,000 indemnity for legal costs and expenses was provided by Molonglo to Kiversun, if Kiversun failed to so sign with Mr Cahill (cl 13(d)(iii));

(b) a maximum 120-day extension period to enable the vendor to remove any injunction, caveat or other restraints (cl 6). This was a substantially renegotiated form of the relevant termination condition proffered to Mr Cahill in the MO Proffered Draft Contract; and

(c) a cl 12 regarding the lease which was substantially similar to the original Molonglo lease clause, save that the lease was to be 'for a term expiring on the date that is one month after the Settlement Date and thereafter a monthly tenancy' (cl 12.2(b)(ii)).

100 On 4 August 2016, Mr Cahill and Mr Simpson met to prepare a contract to forward to MO (First Cahill Draft Contract). It was suggested that Mr Cahill's evidence about this meeting was 'contrived' to match something in the pleading (at paragraph 9) which suggested that Mr Simpson, as agent for Kiversun, presented the relevant contract. It appeared that Mr Simpson did indeed 'present' at least part of the document (including a standard REIV lease) (consistent with the pleading). However both men readily made concessions that this was not done on behalf of the vendor. Thus Mr Simpson accepted that the changes made were generally at Mr Cahill's request. Mr Cahill also fairly accepted that he expected that Mr Simpson would take the newly-created contract back to the vendor's solicitors and that Mr Simpson had never claimed to have authority from the vendor to amend the terms of the contract documentation. In all the circumstances, I do not accept the criticism of Mr Cahill, who in my view was simply seeking to accurately portray what physically occurred.

101 On 4 August 2016 at 11.40 am, Mr Simpson sent Mr Brearley of MO a copy of the First Cahill Draft Contract as amended and also advised that the balance of the deposit was paid.

102 The Cahill lease clause was substantially deleted as described below. Further, other changes were:

• the relevant vendor termination clause (cl 7) was struck out;

• the word 'reasonable' was added to cl 8.2(a)(v) (regarding vendor's costs relating to nomination);

• a clause allowing for marketing signage was added; and

103 In relation to cl 13, a lease with a 5-year term was attached. However, it included a special condition that after 31 August 2018 (i.e. at settlement), the lessor or the lessee had the right to terminate the lease by giving 14 days' written notice.

104 On 4 August 2016 at 3.04 pm, Mr Brearley emailed Mr Simpson and advised that the reference to GST must stay in case GST was payable. Further, that he would review the other amendments and then obtain instructions from his client. He stated that '[t]he contract is now very different as submitted and may not be acceptable to my client'.

105 There is evidence that at 3.05 pm, Mr Brearley phoned Ms Kate George of KWM. The KWM diary note includes the following entry:

tomorrow we reject all.

Hopefully p1 tells us to go away

106 By email on 5 August 2016 at 8.00 am, Mr Brearley wrote to Mr Cahill as follows:

Hi Peter

I am writing to you direct as you have not put your lawyers [sic] details in the amended contract of sale.

Your offer to purchase the property under the terms of the contract of sale as amended are rejected by my client.

The agreement to purchase is now terminated for two reasons:

Your offer is deemed a new offer to purchase (which now replaces the agreement to purchase) and this is not accepted by my client; and
The approval of the contract of sale without amendment has not occurred.

I will direct the agent to refund your deposit.

Please feel free to call me if you would like to discuss.

107 On 5 August 2016, Mr Bindley then rang Mr Brearley querying what was 'going on'. Mr Brearley told him that Mr Paraskevakis 'want[s] to sell it but he doesn't want to sell it to your buyer'. Mr Bindley asked him if he had another offer and was told 'I can't confirm that but you read between the lines'. Mr Simpson then went to speak to Mr Paraskevakis, who eventually said that he had a higher offer, but that his lawyer was trying to get out of the deal.

108 Later on 5 August 2016 at 4.33 pm, Aitken Partners (on behalf of Mr Cahill) wrote to MO rejecting the proposition that their suggestions constituted a 'new offer to purchase' in circumstances where a completely new 5-year lease arrangement had been sought to be introduced, notwithstanding representations made that the Rokeby Street Property was subject to monthly tenancies at a market rent. Further, that five business days had not passed since their client received the proposed contract. In any event, that Mr Cahill was prepared to reinsert the 'plus GST' term and make the contract subject to the existing monthly tenancies. The letter from Aitken Partners enclosed a second signed contract of sale with the 'plus GST' included; cl 7 struck out; and cl 13 simply reading 'subject to existing monthly tenancies' (Second Cahill Draft Contract).

109 On 8 August 2016 at 9.06 am, Mr Brearley emailed Aitken Partners and advised that the amendments by Mr Cahill were not acceptable and that 'unless [Mr Cahill] is willing to accept the contract as supplied by our office [on 31 July 2016] by the close of business today the vendor gives notice that he will withdraw from the sale and will direct the agent to refund the deposit monies'.

110 On that day at 2.42 pm, Aitken Partners wrote to MO requiring that Kiversun execute the Second Cahill Draft Contract and reserving the right to demand specific performance.

111 Later that day, Mr Cahill lodged a caveat over the Rokeby Street Property.

112 On 9 August 2016, Molonglo lodged a caveat over the Rokeby Street Property.

113 On 10 August 2016, Mr Cahill advised Mr Simpson and Mr Bindley that he was meeting with his barrister to commence proceedings against the vendor. The evidence of Mr Bindley was that he told this to Mr Brearley of MO, and that Mr Brearley said to him 'will he take money to get out of the contract', to which Mr Bindley said 'no he won't. It's not going away'.

114 On 16 August 2016, Kiversun prepared and executed a further contract of sale with Mr Cahill for $10 million (without cl 7 and with cl 13 reading 'subject to monthly tenancies') and gave it to Mr Simpson to pass to Mr Cahill. Mr Simpson provided the contract to Mr Cahill. However, Mr Cahill refused to sign this contract on legal advice (the Molonglo caveat having been lodged in the interim).

115 On 3 October 2016, MO wrote to Vision Real Estate advising that the Agreement to Purchase had lapsed and instructing Vision Real Estate to return the deposit to Mr Cahill.

116 On 5 October 2016, MO wrote to Aitken Partners stating that no binding agreement was reached and, to the extent it was, the sale was conditional on execution of a binding document within 5 business days - which had not been done. To the extent it was not done already, MO stated that the Agreement to Purchase was terminated and Mr Cahill's caveat should be removed.

117 The Cahill Proceeding commenced on 12 October 2016, followed by the Molonglo Proceeding which commenced on 3 November 2016.

Whether a binding contract for transfer of property

118 Kiversun and Molonglo submitted that the Agreement to Purchase was a conditional offer. Alternatively, if it was an agreement for the sale of land, it was not intended to be binding immediately.

119 In any event, there was no good consideration, and it was not binding due to its defective execution.

120 Each of these issues are thereby addressed below.

121 Kiversun and Molonglo highlighted that the Agreement to Purchase was executed by only one director. They submitted that the execution did not come within s 127 of the Corporations Act 2001 (Cth) (Corporations Act) and that there was no express authority given to Mr Paraskevakis to execute the Agreement to Purchase; nor was there any evidence of an implied grant of actual authority or ostensible authority which involved a representation by Kiversun.

122 However, Mr Cahill alleged that Mr Paraskevakis had express or implied authority to enter into the Agreement to Purchase under s 126(1) of the Corporations Act; alternatively, that there was ostensible authority.

123 In Junker v Hepburn (Junker), Hammerschlag J helpfully summarised the relevant principles as follows:[11]

actual (either express or implied) where it results from a manifestation of consent that the agent should represent or act for the principal expressly or impliedly made by the principal to himself; or

b apparent, where it results from such a manifestation made by the principal to third parties.

The rules concerning actual and apparent authority apply where the principal is a company. They are supplemented by provisions of the Act where companies are concerned. The usual starting point in any consideration of a director's actual authority is the constitution of the company, which invariably provides for directors' powers. Express actual authority of a director usually derives from the constitution of the company or from some antecedent act such as a resolution of the board of directors.

Implied actual authority is the authority which the law regards as having been given to an agent because of the interpretation put by the law on the relationship and dealings of the two parties. The Court's inquiry concerns the intention of the principal in conferring authority on the agent.

Ordinarily, where a company has more than one director, a single director does not have authority to bind it. A director's normal power is to bind the company only by joining with other directors in a collective resolution of the board of directors.

An implied grant of actual authority can result from acquiescence in the course of behaviour by persons who have actual authority to delegate. For example, if directors as a board stand by whilst a single director enters into transactions outside his or her authority, the board's acquiescence in that course of dealing can constitute the grant, by implication, of actual authority to enter into those transactions.

In Equiticorp Finance Limited (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 134, Clarke JA and Cripps JA said in relation to implied actual authority:

A recent example of the application of the principle in Australia is to be found in Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] VicRp 68; [1992] 2 VR 279, where (at 360-361) the Appeal Division of the Supreme Court of Victoria applied Hely-Hutchinson v Brayhead Ltd. In the joint judgment there was a finding of implied actual authority in relation to one Goldberg to manage the business and to hold out a person as secretary who was in fact not the secretary. The facts and circumstances there relied upon to justify such a finding included the following: Goldberg had actual control over the group of companies and invariably asserted control over each of the companies in the group; Goldberg was known as the alter ego of group companies; Goldberg made decisions for the group companies; there was no evidence that he found it necessary to refer to any board to seek approval for the course of action he proposed; the boards in question had never previously attempted to interfere with his action; Goldberg had obtained board approval of transactions to which he had already committed Brick and Pipe without first seeking authorisation from the board; and that individual directors in evidence confirmed the acquiescence of board members in the activity of Goldberg which culminated in completed transactions for which the board gave no prior approval. One final and, perhaps, decisive element in the scope of the authority the court was prepared to find vested in Goldberg, was that: '... in most, if not all, cases, the transactions committed assets of Brick and Pipe or its subsidiaries as security for borrowings by other Goldberg companies'.

Whether authority is to be implied and, if so, the scope of the authority implied is, in our view, to be found in a close analysis of the evidence before the court which is relied upon to support the implication of actual authority.

The authors of Company Directors: Principles of Law and Corporate Governance (2005), LexisNexis Butterworths at par 3.41, citing Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 opine that to confer implied actual authority there would have to be not only the acquiescence of the individual board members but evidence of communication by word or conduct of their respective consents to one another and to the agent.

Apparent or ostensible authority is conferred where a principal represents that another has authority. The principal will be bound as against a third party by the acts of that other person within the authority which that person appears to have, though the principal had not in fact given that person such authority or had limited the authority by instructions not made known to the third party.

Ostensible authority often coincides with, but sometimes exceeds, actual authority. For instance, when a board appoints a managing director, they may expressly limit his authority, but his ostensible authority will include all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation.

An ordinary individual director of a company does not have ostensible authority to bind it. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it.

124 Sections 126 and 127 of the Corporations Act further provide:

126 Agent exercising a company's power to make contracts

(1) A company's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company's express or implied authority and on behalf of the company. The power may be exercised without using a common seal.

(2) This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract.

127 Execution of documents (including deeds) by the company itself

(1) A company may execute a document without using a common seal if the document is signed by:

(a) 2 directors of the company; or

(b) a director and a company secretary of the company; or

(c) for a proprietary company that has a sole director who is also the sole company secretary - that director.

(2) A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by:

(a) 2 directors of the company; or

(b) a director and a company secretary of the company; or

(c) for a proprietary company that has a sole director who is also the sole company secretary - that director.

(3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2).

(4) This section does not limit the ways in which a company may execute a document (including a deed).

125 The Agreement to Purchase was not executed by Kiversun in accordance with subss 127(1) or 127(2) of the Corporations Act.

126 However, consistent with Mr Cahill's submissions, a question arises as to whether there was an implied grant of actual authority resulting from acts of acquiescence within the meaning of the principles cited above.

127 In this respect, Kiversun highlighted that in Junker (as quoted above) there is a reference to the opinion of the authors of Company Directors: Principles of Law and Corporate Governance that there might also need to be evidence of 'communication by words or conduct' of the relevant consent - not just acquiescence.[12]

128 This opinion has been cited recently by the Full Court of the Federal Court in Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd,[13] where it is stated that a finding of implied actual authority usually requires more than acquiescence. Nevertheless, Dal Pont has suggested that there is general acceptance in Australia that authority may be implied from acquiescence (alone).[14] In so doing, he cites, inter alia, the decision of the Victorian Court of Appeal in Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (Brick and Pipe)[15] (which is also cited by Hammerschlag J in the passage from Junker above).

129 In Brick and Pipe, an issue arose as to whether a single director had authority on behalf of the company to hold out that a Mr Furst was the secretary of that company, when he had not been validly appointed as such. The issue arose in circumstances wherein Mr Goldberg, the single director, did not disagree with or qualify an assurance given by a financial controller that Mr Furst was in fact a secretary. The Court found that Mr Goldberg did have such actual authority, noting that he had 'assumed the role of managing director with the acquiescence of the members of the board of directors who regarded him as the "owner" of Brick and Pipe'.[16] The Court also found that the finding of the trial judge that the act of 'remaining silent' (when the assurance was given) was to be regarded as 'concurring in the assurance' was justified on the evidence.[17]

130 In the light of the approach in Brick and Pipe, as well as the other authorities cited by Dal Pont, acquiescence would appear to suffice. However, as stated in Equiticorp Finance Limited (in liq) v Bank of New Zealand (Equiticorp), whether authority is to be implied is to be found in a 'close analysis of the evidence',[18] rather than the reciting of any particular formula.

131 Returning to this case, then, there is much evidence that Mr Paraskevakis exercised substantial control over the affairs of Kiversun, with no evidence that he found it necessary to refer to his wife for approval of the actions that he took. Such actions included entry into negotiations to sell the Rokeby Street Property (both with Mr Cahill and Molonglo), as well as the execution of the authorities to act with real estate agents (both with Vision Real Estate and Teska & Carson).

132 Insofar as the execution of the Agreement to Purchase itself is concerned, there is also direct evidence that Mrs Paraskevakis stood by while Mr Paraskevakis signed the document in circumstances where she (and he) had been told that it was binding.

133 It is also significant that Mrs Paraskevakis has not given evidence to explain or contradict the evidence of her acquiescence in this way. In such circumstances, it may be inferred that her evidence would not have assisted Kiversun and that very little will be enough to establish acquiescence.[19]

134 In any event, the evidence extends beyond acquiescence. Thus there was more than a mere 'standing by' while the execution took place. Instead, the evidence was that Mrs Paraskevakis failed to say anything (by way of correction or otherwise) when Mr Paraskevakis explicitly stated that 'he was the only one that was required to sign'. In such circumstances, I am satisfied that the failure to correct this explicit statement is akin to a 'concurring' (similar to Brick and Pipe) which constitutes sufficient 'conduct', should 'conduct' be required.

135 It follows that I accept that Mr Paraskevakis had implied authority to execute the Agreement to Purchase so as to bind Kiversun pursuant to s 126 of the Corporations Act.

136 It is unnecessary in such circumstances to consider whether Mr Paraskevakis also had any ostensible authority.

137 Kiversun also submitted that, as a consequence of the 'ineffective execution' of the Agreement to Purchase, the requirements for writing set out in s 126 of the Instruments Act 1958 (Vic) (Instruments Act) were not met. Molonglo submitted that, as previously addressed in its submission (in a section dealing with agency and execution), the Agreement to Purchase was not 'signed by the person to be charged' (Kiversun) or 'by a person lawfully authorised in writing by that person' (i.e. Mr Paraskevakis was not authorised in writing by Kiversun).

138 No authority was advanced in support of these submissions and the matter was not addressed in oral submission.

139 Section 126(1) of the Instruments Act provides as follows:

126 Certain agreements to be in writing

(1) An action must not be brought to charge a person upon a special promise to answer for the debt, default or miscarriage of another person or upon a contract for the sale or other disposition of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note.

140 I consider that the Agreement to Purchase was executed by the 'person to be charged', namely Kiversun, rather than Mr Paraskevakis, for the purposes of this provision in circumstances where Kiversun, as a company, can only manifest its actions and intentions by the actions of human beings.[20]

141 Thus, although a distinction is drawn in the Corporations Act between an 'agent' exercising company's powers (in s 126) and execution by the company itself (in s 127), in each case it is still a contract of the company.

142 This matter was recognised in the decision of the High Court in MYT Engineering Pty Ltd v Mulcon Pty Ltd (MYT),[21] which was a case concerned with whether there had been execution by the relevant company of a deed of company arrangement where the document was not sealed in accordance with the company's articles. In finding that there was execution by the company, the majority (constituted by Gleeson CJ, Gaudron, Gummow and Hayne JJ) made reference to provisions in the relevant Corporations legislation to words such as 'on behalf of' and observed:

But the reference in such provisions to a contract being made 'on behalf of' the company should not be permitted to obscure the fact that the person who signed the contract did so as 'executant of the will' of the company. Thus, although distinction is to be drawn between 'a case where the execution of a document by a company is effected by the subscription of the company's name followed by the signature of a director or directors as such and the case where the document is executed by an agent on behalf of a company', in each case the contract is the company's contract.[22]

143 Support for such a conclusion is also to be found in a decision of the Full Court of the Supreme Court of New South Wales in Richardson v Landecker (Richardson).[23]

144 That case concerned a lease signed by a Mr Hutchinson, who was one of three directors of the registered proprietor and also the manager of the company, with the company's name printed on the document at the place of the signature. It had been submitted that the lease was inoperative because Mr Hutchinson signed as agent only in circumstances where s 23C(1)(a) of the Conveyancing Act 1919 (NSW) provided that no interest in land could be disposed of except by writing signed by the person conveying the same or by his agent thereunto lawfully authorised in writing.

145 Street CJ, who delivered the judgment of the Court, rejected this submission finding that the lease 'was not executed by an agent for the company in the sense indicated by s 23C. It was executed by the company itself'. His Honour also emphasised that the company required some 'human agency' to manifest its intention and stated that Mr Hutchinson's authority was not disputed.[24] The matter was also covered by s 348(1)(b) of the relevant Companies Act 1936 (NSW), which specifically permitted Mr Hutchinson to sign the contract for the company.

146 In the decision of the Supreme Court of Victoria in Maxwell v Moorabool Developments Pty Ltd,[25] Habersberger J rejected a similar submission made under s 126 of the Instruments Act to the effect that a director (Mr Scott) was an agent who was not authorised in writing to execute a document on behalf of his principal. His Honour cited, inter alia, Richardson and MYT and found that written authority was not required under the Instruments Act where a contract was not executed by an individual, but rather by the company (its execution being authenticated by Mr Scott's signature).[26]

147 I am therefore satisfied that the execution by Mr Paraskevakis (acting with the company's implied authority) was an execution by Kiversun as 'the person to be charged' in circumstances where the contract was Kiversun's contract.

148 It follows that the Agreement to Purchase was executed by Kiversun.

Whether only a conditional offer / Whether intention to be bound

149 Mr Cahill submitted that the Agreement to Purchase constituted a binding agreement and that the case was on all fours with Niesmann v Collingridge (Niesmann),[27] which was an example of the 'second class' in Masters v Cameron.[28] Alternatively, that it was in the 'fourth class'.

150 He emphasised references in the Agreement to Purchase which supported this construction, including references to 'agreement', 'buys', 'withdraw' and 'obligations'. He also highlighted that there were several express obligations immediately created under SC 2, SC 3 and SC 4.

151 Finally, he highlighted a number of other surrounding circumstances, which allegedly supported his construction.

152 Kiversun submitted that the Agreement to Purchase only constituted a conditional offer.

153 Kiversun also submitted that there was no intention to be immediately bound, citing a range of authorities for this proposition. In particular, Kiversun highlighted that the 'agreement' involved the sale of real estate, noting that there were many statements of caution in the cases concerning real estate. The absence of a s 32 statement was also a strong indicator that the parties did not intend to be bound. It also submitted that the involvement of lawyers was significant, particularly where, as here, they were doing more than merely formalising a set of agreed terms.

154 Finally, it was significant that Mr Cahill was only committed to part with his money once contracts were exchanged.

155 Molonglo also submitted that only an offer was made.

156 In terms of an 'intention to be bound', Molonglo relied on similar matters highlighting that the context was a real estate transaction of high value, placing particular weight on a number of authorities - including, in particular, Seventh Shar Nominees Pty Ltd v Hortico Pty Ltd (Seventh Shar Nominees)[29] and Al Azhari v 27 Scott Street Pty Ltd (Al Azhari).[30]

157 Molonglo suggested that the Agreement to Purchase fell within the third class of Masters v Cameron. Alternatively, it was a binding contract to negotiate a formal contract (which, as conceded, was not part of Mr Cahill's pleaded case and did not entitle him to the specific performance he sought).

158 In Masters v Cameron, the parties signed a document by which the respondent agreed to sell certain farming property to the appellants 'subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors on the above terms and conditions'.[31]

159 The High Court, consisting of Dixon CJ, McTiernan and Kitto JJ, held that the document did not constitute a binding contract. In reaching that conclusion, the Court identified three classes of 'agreements' which may arise when parties agree that the matter shall in future be dealt with by way of a formal contract:

At a glance

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Before

Source

Judgment (458 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (22)