Deligiannidou v Sundarjee

Judgment

1. On 1 February 2020 the plaintiffs ("the Purchasers") exchanged contracts ("the Contract") with the first and second defendants ("the Vendors") to purchase a property at Sans Souci for $560,000.
2. On 19 March 2020 the Vendors purported to terminate the Contract on the basis that the deposit called for by the Contract had not been paid by the time specified in the Contract.
3. On 22 April 2020 I refused to grant the Purchasers interim relief restraining the Vendors from dealing with the property.
4. These are my reasons for refusing the Purchasers that relief.
5. It was a term of the Contract that a 10% deposit ($56,000) be paid. The deposit was to be paid as to an initial holding deposit of $1,400 by 1 February 2020 and as to the balance of $54,600 by 12 February 2020.
6. The Contract required that the deposit be paid by either cash (up to $2,000) or by cheque. The Contract did not permit payment of the deposit by electronic funds transfer ("EFT").
7. The agent on the sale ("the Agent") was the third defendant, Sans Souci Developments Pty Ltd, trading as Caruana Real Estate.
8. On 31 January 2020, Ms Kathy Caruana, a representative of the Agent, sent the first plaintiff, Ms Deligiannidou an email suggesting that if she wished to secure "the property on a five day cooling off period so no other offers can be taken" she pay the initial holding deposit of $1,400 deposit into Agent's trust account ("the Trust Account"). Ms Casuara provided the BSB and account numbers for the Trust Account. Ms Deligiannidou caused $1,400 to be paid by EFT to the Trust Account.
9. On 7 February 2020, and despite the fact that the Contract did not provide for the payment of the deposit by EFT, Ms Caruana sent an email to Ms Deligiannidou:- "On Wednesday [12 February 2020] you will have to put in the remainder of 10% deposit which is $54,600 into our sales trust account, that is to be done before 5pm on Wednesday."
10. Ms Caruana then set out the BSB and account number of the Trust Account, being the same details she had earlier provided in her 31 January 2020 email.
11. On 9 February 2020 Ms Deligiannidou received what appeared to be a further email from Ms Caruana.
12. This email read:- "Please find attached the invoice pertaining to the remainder of the 10% deposit due. I will be happy if you make this payment as soon as possible. For reference purposes please add the reference number correctly as shown on the invoice."
13. The email was then set out what purported to be the BSB and account number of the Agent's Trust Account. They were not. They were the BSB and account number of a different account. The parties refer to this as "the Fraud Account".
14. That email was sent to Ms Deligiannidou as part of an email chain which purported to include the 7 February 2020 email from Ms Caruana referred to at [9] and [10] above. However, the Trust Account BSB and account details on that email had been changed so that they too were the BSB and account numbers of the Fraud Account.
15. There is no suggestion that Ms Caruana had any involvement in sending the 9 February 2020 email.
16. Evidently, in circumstances unknown to the parties, a fraudster gained access to the Agent's computer system and caused the 9 February 2020 email to be sent to Ms Deligiannidou.
17. Mr Flaherty, who appeared for the Purchasers, in these circumstances accepted that the act of sending of the 9 February 2020 email was not an act of the Agent.
18. Ms Deligiannidou arranged for the second plaintiff to pay the $54,600 by EFT to the Fraud Account. She did not notice the change in BSB and account numbers.
19. On 12 February 2020 Ms Deligiannidou sent to Ms Caruana a screenshot showing that transfer.
20. Neither Ms Deligiannidou, nor Ms Caruana, noticed that the screen shot showed that the account to which the $54,600 had been sent was not the Trust Account.
21. On 14 February 2020 the Agent notified the Purchasers that the deposit had not been received into its Trust Account.
22. The matter has been referred to the police.
23. On 19 March 2020 the Vendors, who had had no direct dealings with the Purchaser, served a Notice of Termination of the Contract on the basis that the $54,600 deposit balance had not been received by them or by the Agent.
24. On 8 April 2020 the Purchasers commenced these proceedings against the Vendors and the Agent.
25. The Purchasers seek a declaration that the Contract remains valid and enforceable, an order that the Vendors specifically perform the Contract and damages from the Agent by reason of its allegedly misleading or deceptive conduct.
26. The Purchasers also sought interim relief restraining the Vendors from dealing with the Property except under the direction of the Purchasers.
27. As I have said, I refused to grant that relief.
28. It was common ground that: 1. appointment by a vendor of a real estate agent authorises the agent to find a purchaser but does not authorise the agent to bind the vendor to terms with the purchaser and, indeed, does not authorise the agent to bind the vendor to anything; and 2. the fact that a contract for sale of land authorises an agent to receive the deposit and directs the purchaser to pay the deposit to the agent does not authorise the agent to bind the vendor in dealings with respect to the deposit, but only authorises the agent to receive the deposit in accordance with the contract. See Markson v Cutler [2007] NSWSC 1515 per Brereton J at [7] and the authorities cited therein.
29. As the Contract did not provide for payment of the deposit by EFT, Ms Caruana had no authority under the Contract to direct the Purchasers to pay the deposit by EFT, whether to the Trust Account, or at all.
30. Nonetheless, the Purchasers allege that the Vendors gave the Agent authority to direct the Purchasers to pay the deposit by EFT, although, obviously not by payment into the Fraud Account.
31. Thus the Purchasers plead that:- "At all material times, [the Agent] was acting as agent for the [Vendors] and impliedly warranted that in advising the [Purchasers] as to how and when they should pay the deposit required by the contract impliedly warranted to the [Purchasers] that it (the [Agent]) was authorised by the [Vendors] to make the directions and give the advice that it did."
32. The Purchasers also plead that the Agent thereby engaged in misleading or deceptive conduct contrary to s 18 of the Competition and Consumer Act 2010 (Cth), Schedule 2 - The Australian Consumer Law and that if (as is now accepted to be the case) the $54,600 was not received by the Vendors, this was the "result of action or inaction by the [Agent] as agent for the [Vendors]"
33. Thus, central to the Purchasers' claim against the Vendors is the proposition that, assuming that the Agent's conduct in directing the Purchasers to pay the deposit by EFT to the Trust Account can somehow be linked to the sending by the Vendors of the deposit by EFT to the Fraud Account (not a matter obvious to me), the Agent was acting as the Vendors' agent.
34. The Contract did not provide this authority.
35. In argument, it emerged that the sole basis on which the Purchasers advanced this contention is cl 25(ii) of the Exclusive Agency Agreement between the Vendors and the Agent ("the Agency Agreement").
36. That question involves the proper construction of cl 25(ii).
37. By cl 1 of the Agency Agreement, the Vendors (described in the agreement as "the Principal") gave the Agent "exclusive selling rights" in respect of the Property.
38. Clause 12 of the Agency Agreement provided that where, as here, the Property is residential, the Agent could not act on behalf of the Vendor "unless the Agent has a copy of the proposed contract for sale in respect of the Property available for inspection."
39. The Agent did have a copy of the Contract at all relevant times.
40. Clause 12 thus bespoke the parties' intention that the Agent would perform its functions under the Agency Agreement consistently with the Contract, and not otherwise.
41. Clause 15 of the Agency Agreement is headed "Limit of Agent's Services" provided that the Agent did not undertake to perform any other services (than those specified in the Agency Agreement) in connection with the sale.
42. Clause 25(ii), upon which the Vendors rely, appears as part of cl 25, and together with cl 26 under the heading "Work Health and Safety" as follows. "Work Health and Safety 25. The Principal acknowledges that, at all material times: (i) the Principal has sole management and control of the Property listed for sale, to the exclusion of the Agent; (ii) the Agent acts under the direction, management and control of the Principal to facilitate the real estate transaction between the Principal and the purchaser; and (iii) the Principal is the person conducting a business or undertaking for the purposes of all work, health and safety laws, regulations and other requirements. 26. The Principal acknowledges, so far as reasonably practicable, that the Principal has thoroughly inspected the Property prior to sale and that the Property is: (i) without risk to health and safety [a box was ticked "yes"] OR (ii) subject to the defects and risks outlined in the contract or sale."
43. Mr Flaherty submitted that by that clause the Vendors provided authority to the Agent "to do all things 'to facilitate' the purchase of the Sans Souci unit by the plaintiffs".
44. Thus Mr Flaherty submitted:- "It is submitted that it is, at the very least, arguable that that authority includes authority given by the Vendors to the Agent to allow the Agent to provide advice to the purchasers (the Plaintiffs) as to the method of the payment of the deposit."
45. I do not accept that submission.
46. Although this is an interlocutory application, its result depends upon the proper construction of cl 25(ii). I am in as good a position as the trial judge will be to determine that question. It is therefore not a question of what cl 25(ii) "arguably" means. It is a question of what, on its proper construction, cl 25(ii) does mean.
47. My conclusion is that cl 25(ii) does not confer on the Agent authority to "facilitate" the relevant "real estate transaction" (that is the Contract).
48. Clause 25(ii) appears as part of cl 25 and together with cl 26 under the heading "Work Health and Safety".
49. Read as a whole, cll 25 and 26 are directed to the Vendors' obligations, vis à vis the Agent, to ensure the safety of the Property.
50. Thus, for example, in cl 25(i) the Vendors acknowledged to the Agent that they have "sole management and control" of the Property and, in cl 26 that the Property is "without risk to health and safety".
51. In that context, cl 25(ii) is an acknowledgement by the Vendors, for the benefit of the Agent, that the Agent acts under their direction, management and control. It does not comprise a conferral of authority on the Agent.
52. In any event, the clause speaks of the facilitation of "the real estate transaction" and thus contemplates facility of that transaction in accordance with the Contract.
53. Clause 25(ii) does not have the effect of giving the Agent authority to make directions, inconsistent with the Contract, as to how the deposit is to be paid.
54. This conclusion is, in my opinion, fatal to the Purchasers' application for interim relief. The Vendors did not receive the deposit. It was stolen. Assuming the conduct of the Agent I have described is capable of providing a remedy for the Vendors against the Agent, cl 25(ii) of the Agency Agreement provides no basis to attribute that conduct to the Vendors. No other basis was advanced.
55. I should add that Mr Flaherty pointed to the fact that a document dated 1 February 2020 entitled "Authority to Exchange With a Cooling Off Period" appears to have been signed on behalf of the Vendors by an "agent". However, assuming Ms Caruana, or someone else from the Agent, executed this document on behalf of the Vendors, and assuming that the Vendors authorised her to do so, that does not provide any basis to conclude, even on a prima facie basis, that the Vendors conferred any wider authority on the Agent.
56. For those reasons I have ordered that the Vendor's application for interim relief be dismissed. I have invited submissions as to as to costs.