Federation Properties Pty Ltd v Tzioras [2001] VSC 125

Supreme Court of Victoria|2001-05-01|Before: Byrne J

SALE OF LAND - whether concluded agreement to sell agency - authority of agent - agent not authorised in writing - Instruments Act - part performance - estoppel - secret commission - misleading and deceptive conduct - breach of warranty of authority.

For Federation Properties Pty Ltd and Yinyang Holdings Pty Ltd

In June 1997 Anestis Tzioras became the owner of a commercial property at 1557 Dandenong Road, Oakleigh, being the land more particularly described in Certificate of Title Volume 9559 Folio 475. In September 2000 Mr Tzioras engaged a firm of real estate agents, Crabtrees Real Estate Pty Ltd ("Crabtrees"), to let the premises and for this purpose executed an exclusive leasing authority dated 19 September 2000. As things turned out, Crabtrees did find a prospective tenant but this course was not pursued by Mr Tzioras. At the same time, Crabtrees negotiated with one Harry Lew, the director of Federation Properties Pty Ltd ("Federation"), for the sale of the property. These negotiations culminated in an exchange of faxes between Crabtrees and Federation on 29 November 2000 which gives rise to this litigation. These faxes are short and I will set them out in full. The first was sent by Crabtrees at 3.58 pm on that day to Federation for the attention of Mr Lew in the following terms:

"Re 1557 Dandenong Road Oakleigh We write in response to your offer of today's date to purchase the above property. Our vendors have instructed us to make their position quite clear as they will be making a decision today whether to sell or lease the property. Their final counter offer is as follows: Price: $2.45 million Terms: 10% Deposit Balance: 60 Days This offer is open until 5.00 pm today. We look forward to your response."

The response, on Federation letterhead signed by Mr Lew as managing director, sent by fax at 4.55 pm on that day, contained the following message:

"We refer to your fax received at 1556 this afternoon and accept your Vendor's final counter-offer contained in your fax. Please arrange for preparation of Contracts and note the purchaser will be Yinyang Holdings Pty Ltd (ACN 093 881 540)."

"Please call when you wish to collect the initial deposit."

On the following day the solicitors for Mr Tzioras received an offer from one William Geoffrey Shelton a consultant employed by another estate agent, Allard & Shelton Pty Ltd. This offer, made on behalf of an unidentified client, was to purchase the property for $2.5M. On 1 December 2000 Mr Tzioras and Mr Shelton executed a contract of sale of the property for that price, naming as purchaser Mr Shelton and/or nominee. In due course, on 22 December 2000, Mr Shelton nominated as purchaser Stamward Investments Pty Ltd ("Stamward"). Meantime, on 5 December 2000 Yinyang Holdings Pty Ltd ("Yinyang") lodged a caveat on the title to the property asserting an interest in fee simple as "Purchaser under a Contract of Sale from Anestis Tzioras dated 29 November 2000".

There are in fact two proceedings before the court. The first in time was commenced by writ (proceeding no. 8016 of 2000) filed on 13 December 2000 in which Federation and Yinyang as plaintiffs seek against Mr Tzioras, as firstnamed defendant, specific performance of the 29 November agreement or damages in lieu, or damages for misleading and deceptive conduct. The quantum of these damages was not the subject of this trial. They also sue Crabtrees, as the secondnamed defendant, seeking damages for breach of warranty of authority and for misleading and deceptive conduct and Stamward, as thirdnamed defendant, seeking declarations as to the priority of their interest in the property.

In this proceeding, too, Crabtrees sues Mr Tzioras under his leasing authority for expenses incurred in letting the property and for damages for repudiation of the authority and for damages for repudiation of a general authority to represent him regarding the property as to its purchase or leasing. He also alleges against Mr Tzioras that he is guilty of fraud in equity by selling the property to Stamward as he did and guilty of misleading and deceptive conduct. Again, I am not at this trial concerned with the quantum of any damages claim that may be made out. Finally, in the event that Crabtrees should be found liable to Federation or Yinyang, it seeks indemnity against Mr Tzioras under contract and contribution under the Wrongs Act 1958.

Stamward, too, seeks damages against Mr Tzioras in the event that Federation or Yinyang succeed in their claims to a priority interest in the property. Again, the determination of the quantum of such damages has been deferred.

The second proceeding (no. 8195 of 2000) was commenced by originating motion filed on 27 December 2000. In this proceeding, Mr Tzioras as plaintiff seeks an order against Yinyang for the removal of the caveat lodged by it on 5 December 2000.

Although the principal events with which I am concerned occurred on 29 November it is necessary that I set out the background to these events.

Mr Tzioras on 6 November 1997 became registered as proprietor of the property which had previously been used as a service station. In the three years that he owned it, Mr Tzioras was, as he told me, approached from time to time by agents interested in purchasing the land. It would seem that, in mid 1999 at least, he seriously entertained the possibility of sale, for at that time he had prepared a vendor's statement pursuant to section 32 of the Sale of Land Act 1962 and an environmental assessment. This assessment was necessary because its prior use may have caused contamination. Nothing came of this and, by September 2000, he told Christopher Gerard McKenzie, a director of Crabtrees, that he was tired of receiving low offers from agents. One such agent was Mr Shelton who had expressed interest

On or about 19 September 2000 Mr Tzioras executed an exclusive leasing authority in favour of Crabtrees. This authority was expressed to be for 70 days, expiring therefore on 27 November, but it continued thereafter until determined by either party. On this occasion Mr Tzioras and Mr McKenzie discussed the interest shown on behalf of the purchasers and Mr Tzioras said that he might be willing to sell at about $2.7M. Mr McKenzie told me that his principal gave him a number of letters containing enquiries regarding the property, saying that he wanted Crabtrees to handle all future enquiries. He said that a fee of 2 percent of the sale price was discussed in the event of sale and was agreed to by Mr Tzioras. Nevertheless, he declined to sign an authority in favour of Crabtrees to act as selling agent. I accept Mr McKenzie's account of this conversation.

One of the letters provided by Mr Tzioras to Mr McKenzie was from Allard & Shelton dated 22 June 2000 in which Mr Shelton confirmed an offer to purchase the property for $2.2M. Soon after the September meeting Mr McKenzie telephoned Mr Shelton and told him that he had been appointed leasing agent and that any further expressions of interest should be directed to Mr Tzioras through him.

The agent then set about advertising the property. On the property itself there was erected a large board announcing that it was for lease and suggesting various uses which it might be put, including redevelopment. Mr McKenzie said that Mr Tzioras approved the wording of this advertisement. Over the period September and October 2000 Crabtrees received many enquiries from persons interested in leasing or buying the property. These enquiries were communicated to Mr Tzioras.

In mid-October 2000 the agent received an enquiry to purchase from Mr Lew of Federation. Mr McKenzie told Mr Lew that Mr Tzioras had received an offer of $2.4M but that he wanted $2.7M. He suggested to Mr Lew on 20 October that he should contact Richard Uechtritz of JB Hi Fi who was interested in taking a lease of the retail area if the property were redeveloped He presented to Mr Lew the prospect that JB Hi Fi, as a substantial high profile retailer, might be a valuable anchor tenant for the project and that it was prepared to pay $250,000 per annum rent for part of the development. It would seem that Mr Lew was very interested in the project because he made immediate contact with Louis Bialkower, an investor with whom he had undertaken other commercial developments. On the same day Mr Bialkower, as director of Yinyang, authorised Federation by letter dated 20 October 2000 to act as agent for Yinyang to negotiate with the vendor or the vendor's agent for the acquisition of the property and to enter into a contract of sale to purchase it. Mr Lew and Federation thereafter acted as agent for Yinyang pursuant to this authority, although the fact of the agency and the identity of the principal was not disclosed to Mr Tzioras or his agent.

Mr McKenzie had previously obtained from Mr Tzioras a copy of the title to the property and site plans and on 23 October he forwarded them to Mr Lew. From that time Mr Lew proceeded to develop the project in consultation with Mr Bialkower. He retained an architect to prepare preliminary designs and on 2 November obtained a budget estimate for the building from a contractor. On 3 November Mr McKenzie provided Mr Lew with a number of documents which he obtained on that day from Mr Tzioras including the vendor's section 32 statement and the environmental assessment which Mr Tzioras had had prepared in 1999. When these documents were handed by Mr Tzioras to Mr McKenzie, the former knew that the agent was negotiating with a prospective purchaser but he again refused the agent's request that he execute an authority to sell. He told Mr McKenzie that he preferred to lease the premises rather than sell although he acknowledged that he would consider an offer to purchase if the price was right.

Be that as it may, Mr Tzioras was at that time, the first week of November, also treating directly with Mr Shelton, for on 8 November Mr Shelton on behalf of unidentified clients wrote to him confirming an offer to purchase the property for $2.4M.

Mr Lew continued putting together the various aspects of his project to develop the property. He investigated the planning aspects of the proposed development and conducted negotiations direct with JB Hi Fi, as the anchor tenant. On 16 November he had a meeting with Mr McKenzie and Mr Uechtritz in which he discussed his intentions. Mr McKenzie told Mr Lew that he thought that Mr Tzioras had received an offer from Mr Shelton in the sum of $2.4M. He told me that this was information which he had obtained from Mr Tzioras.

On the following day, 17 November, Mr Lew submitted to Crabtrees an offer to purchase the property for $2.2M, the offer being expressed to be open for written acceptance by 5.00 pm on 22 November. Notwithstanding Mr Tzioras' evidence to the contrary, I find that Mr McKenzie referred this to him with a recommendation that it should not be accepted. On 20 November Mr McKenzie telephoned Mr Lew saying that the vendor wanted $2.7M.

On the same day, 20 November, Mr Shelton wrote to Mr Tzioras direct, confirming the previous offer of $2.4M which he had made on 8 November. In this letter he refers by way of introduction to discussions which he had had with John Norman Isaac, a member of the firm of solicitors, Middletons Moore & Bevins. Mr Isaac, thereafter, became the go-between for Mr Tzioras in his dealings with Mr Shelton. Mr Isaac told me that he was a close friend of Mr Shelton and this may have been the reason why Mr Tzioras asked him to deal with Mr Shelton on his behalf.

Mr Isaac at no time had an authority in writing to bind his client. At no time, at least until 30 November 2000, did Mr Tzioras disclose to Mr McKenzie that he had Mr Isaac negotiating with another party.

Although Crabtrees were at this time still negotiating with Pacific Car & Truck Rentals Pty Ltd as a prospective tenant of the property, it seems clear that by 21 November Mr Tzioras was increasingly inclined to sell and on that day he told Mr Isaac as much.

By fax sent on 22 November to Crabtrees, Mr Lew increased his offer to $2.4M. Mr McKenzie reported this offer to Mr Tzioras at a meeting at 9.45 am on 23 November and received the response that the sum was inadequate. Mr McKenzie said that this meeting took place at Mr Tzioras' principal place of business and on a walk from there to the property in the presence of Mr Tzioras' accountant, Gary Gordon Busby. He said that at this meeting Mr Tzioras indicated a preference to sell. Mr Tzioras, on the other hand, said that the communication was by telephone. Mr Busby told me of a meeting at Mr Tzioras' place of business but said there was no discussion about the sale of the property. It is not necessary that I resolve this conflict for it is common ground between Mr McKenzie and Mr Tzioras that the offer was reported and rejected out of hand.

Later on that day Mr McKenzie was told by Mr Tzioras that he would sell for $2.55M or $2.6M. Mr McKenzie told me that he had no idea that Mr Tzioras had in effect instructed Mr Isaac to treat with a competing purchaser. This second conversation on this day was disputed by Mr Tzioras but, for reasons which I shall mention, I accept Mr McKenzie's evidence. Mr McKenzie then contacted Mr Lew who said that he would reconsider his position and provide a response by Wednesday 29 November. Mr McKenzie then telephoned Pacific Car & Truck Rentals warning them that it was likely that Mr Tzioras would sell the property rather than lease it but that the position would be known by 29 November. Pacific requested Crabtrees to return its deposit cheque and this was done.

So far as Mr Lew is concerned, on 23 November, he received from Mr McKenzie another environmental site assessment dated 1997 and told his contractor that he must have a revised budget estimate by 28 November as there was a deadline set by the vendor.

On 27 November Mr Isaac spoke to Mr Tzioras by telephone. Mr Isaac's note of this conversation records his client's instruction to make an offer to sell the property to Mr Shelton for $2.5M. I pause to record that it is this fact, apart from my general impressions as to credibility, which causes me to accept that, on the preceding Thursday Mr Tzioras told Mr McKenzie that he would sell for $2.55M or $2.6M. It is clear that he had now moved away from his long-maintained $2.7M asking price. Mr Isaac's note also records that Mr Lew had been given a deadline of 28 November to produce an acceptable offer and that he, Isaac, was instructed to write to Mr Shelton to offer to sell for $2.5M with a deadline for acceptance. Mr Isaac complied with his instruction, first submitting the letter of offer to his client for approval. This was duly given and the letter was sent to Mr Shelton by fax on the same day. The offer contained certain conditions and was expressed to be open only until 4.00 pm on the following day, 28 November. These events were not disclosed to Crabtrees.

On Tuesday 28 November, Mr Lew pursued his work on the development. He received updated building costs and reworked the financial aspects of the project. At 10.45 am Mr McKenzie sent to him a copy of the Pacific Car & Truck Rentals offer to lease which had been received on 22 November. He said he did this to impress upon Mr Lew the fact that there was serious demand for the property and to give him "some confidence".

At 3.00 pm on this day Federation faxed to Crabtrees what is described as their final offer to purchase the property for $2.425M payable by a deposit of 10 percent payable as to $20,000 on written acceptance, the balance of $222,500 on exchange of contracts, and the residue 90 days after exchange of contracts. This offer was subject to a condition that the vendor obtain an irrevocable offer with respect to a signage contract. This third Federation offer also contained a deadline for acceptance - 5.00 pm on the following day, 29 November. Mr McKenzie telephoned this offer to Mr Tzioras who told him it was not acceptable because the price was too low and because he would not accept the condition. Mr Tzioras said that this conversation was received by him on his mobile phone and that it was brief. He simply rejected the offer and that was all that was discussed. Mr McKenzie said that they discussed other matters including his fee if a sale were achieved and the price which Mr Tzioras might accept. He said, too, that he suggested to Mr Tzioras that he have his solicitors prepare a section 32 statement immediately. Mr Tzioras acknowledged that his price and commission were discussed but said this was on the following day.

I interrupt myself to record a remarkable feature of this trial. The principal affidavit of Mr Tzioras was sworn on 22 December 2000, that of Mr McKenzie on 19 January 2001, that of Mr Lew on 21 February 2001 and of Mr Shelton on the same day. The trial started a few days later on 26 February. Early in the trial, on 28 February there came to light telephone logs maintained by Middletons Moore & Bevins which recorded the time, duration and recipient of outward telephone calls to mobile phones. Similar records maintained by Crabtrees had been discovered shortly before the trial commenced. In this way, it was possible to know with some precision these details in respect of calls made by Mr Isaacs and Mr McKenzie to Mr Tzioras' mobile phone.

Returning to the narrative, the phone logs show that following receipt by Mr McKenzie of the Federation offer at 3.00 pm, he telephoned Mr Tzioras at 4.18 pm for four and a half minutes, at about 5.00 pm for over five and a half minutes, at 5.25 pm for one minute 23 seconds and at 5.50 pm for three and a half minutes. These calls and their duration suggest that Mr McKenzie's account of his conversation with Mr Tzioras is more likely to be correct. Mr Isaac's time recording sheet and his diary notes made on this day show that he had one telephone conversation with Mr Shelton and that he telephoned Mr Tzioras once and that he received a telephone call from Mr Tzioras once. The times of these calls are not recorded. One of the telephone calls with Mr Tzioras was relatively lengthy, over six minutes, for he recorded two six minute time units for it. His note of the shorter telephone conversation records that he was instructed to prepare a section 32 statement and that "other party coming up in price". This is a reference to Mr Lew's increased offer. Mr Isaac was cross-examined as to these notes and about these conversations.

The conclusion I draw from these contemporaneous records which I accept as accurate and the evidence given by the three witnesses concerned, is that Mr McKenzie's account is more reliable that than of Mr Tzioras. I find that after the Federation offer was received at 3.00 pm Mr McKenzie made three lengthy telephone calls to Mr Tzioras in which he discussed more than simply the offer and its rejection. Mr Isaac then had a lengthy telephone conversation with Mr Tzioras in which his client told him of the Federation offer and that a decision was to be made on the following day. Mr Isaac's offer to Mr Shelton had expired at 4.00 pm and Mr Tzioras was becoming impatient. He instructed Mr Isaac to contact Mr Shelton to press him for a speedy response. Mr Isaac then telephoned Mr Shelton and told him that the competing purchaser had increased its offer and that Mr Shelton's principal would have to increase their offer to $2.5M to secure the property. Later that day, following Mr McKenzie's suggestion that he do so, Mr Tzioras telephoned his solicitor to instruct him to prepare a section 32 statement. In this last conversation he told his solicitor that an offer of between $2.46M and $2.7M would purchase the property. I accept Mr McKenzie's evidence that he had been told that Mr Tzioras would accept $2.5M. Mr Tzioras said that he told the agent in a conversation on the following day that he would accept $2.5M clear of commission. Again, I prefer the evidence of Mr McKenzie on this point. Whether Mr Tzioras intended a net figure rather than a gross figure, I find that on 28 November he told the agent, as he had told his solicitor, that he wanted $2.5M for the property.

The significance of the reference to commission arises because Crabtrees had agreed to accept two percent commission on sale whereas a sale through Mr Isaac carried no commission at all. A sale, therefore, at $2.5M gross would return to Mr Tzioras $2.45M if it was achieved through Crabtrees and $2.5M if it was negotiated by Mr Isaac.

It follows from all of this that, at the end of 28 November, there was no offer on foot. The vendor had indicated to each of the competing purchasers that he would sell for $2.5M and that a decision whether to sell would be made the following day, Wednesday, 29 November. Each of the would-be purchasers knew that he had a competitor.

The events of this day are well documented and, for the most part, the times at which they occurred are known from contemporaneous reliable records. Insofar as Mr Isaac played a part in them, his involvement is known to have occurred before 12.15 pm or thereabouts for it was about that time that he left his office to attend a meeting of the RACV board which commenced at 12.30 pm and he did not return to his office that day. Mr Shelton was also a member of that board.

I find that at some time in the course of the morning Mr Shelton telephoned Mr Isaac and told him that he was instructed by his client to purchase the property for $2.5M on the terms of the expired offer of 27 November. Mr Isaac telephoned Mr Tzioras to report this fact and was told that the offer would be acceptable provided it was made in writing. This call was made at 12.21 pm, shortly before Mr Isaac left his office for the board meeting.

At the same time, 12.21 pm, Mr Lew sent by fax to Crabtrees a fourth written offer to purchase the property for $2.425M, the same price and on the same terms as his third offer made at 3.00 pm the preceding day. This fourth offer differed from its predecessor only by the deletion of the condition which Mr Tzioras had found unacceptable. Mr McKenzie immediately telephoned Mr Tzioras and spoke to him at 12.30 pm. It is common ground that the offer was rejected. Mr Tzioras said that he told the agent that he must have $2.5M clear before he would sell. This would make the offer the equivalent of the oral offer of Mr Shelton in terms of price, but he did not tell the agent about Mr Shelton's offer. Mr McKenzie's version of this conversation was that his vendor told him he wanted $2.4M clear. As a matter of arithmetic this would require an offer to purchase of $2.449M. In this conversation Mr Tzioras told Mr McKenzie that he was on the point of deciding whether to sell or whether to lease the property to Pacific Car & Truck Rentals, and that he would advise the agent of his decision on this matter the following day.

Meantime, in mid-morning, Mr Lew and Mr McKenzie spoke by telephone in the course of which the latter pressed Mr Lew for a decision on Crabtrees' commission for introducing JB Hi Fi as a prospective anchor tenant for the proposed development. Mr McKenzie told me that he was asking for a commission for this introduction in the event that JB Hi Fi took the lease following the purchase of the property by Mr Lew. The commission sought was $25,000, namely, 10 percent of the annual rental. According to Mr Lew, the agent, in the course of this telephone conversation, complained about the insufficiency of the sales commission he expected to receive from Mr Tzioras on the basis that the vendor wanted $2.4M clear. Mr Lew's current offer of $2.425M would allow the agent only $25,000 assuming that the vendor's objective was, to be achieved. Mr Lew had earlier told Mr McKenzie that he would make him an ex gratia payment of $14,000 to $15,000 for introducing JB Hi Fi if the sale went ahead and "as a gesture perhaps to supplement" his commission. Mr McKenzie in his evidence agreed that Mr Lew offered him $15,000 if the sale and the lease to JB Hi Fi went ahead but maintained that it was only by way of leasing commission. I find that the conversation was as Mr McKenzie recounted it although an unspoken motive for Mr Lew's generosity may have been the gesture to which he referred. In any event, at this stage, the agent stood to gain, in the event that the sale went ahead, the commission which he had agreed with his principal, Mr Tzioras, and also, in the further event that the JB Hi Fi lease went ahead, the leasing commission from the prospective purchaser, Mr Lew.

At 3.58 pm Mr McKenzie faxed to Mr Lew a counter-offer asking for $2.45M. The terms of this offer are set out at paragraph [ 1] of this judgment. Mr Tzioras maintained that he did not authorise this counter-offer and that he had no knowledge of it. It was put in support of this that it would have been surprising for him to reduce his price to this figure which, after commission, would yield him only $2.401M at a time when he had a prospective purchaser prepared to buy at a price which would yield $99,000 more. Mr McKenzie, however, said that he was authorised to make the offer he sent. His evidence received support from the Crabtrees telephone log which records that at 3.56 pm, two minutes before the fax was sent, he made a two minute telephone call to Mr Tzioras. Mr Tzioras was unable to recall this conversation. When pressed, he recalled that he did speak to Mr McKenzie on that day but he did not recall any mention of the counter-offer. I accept that Mr McKenzie at this time telephoned the vendor, discussed the counter-offer and immediately dispatched the fax to Mr Lew. I find that the counter-offer was authorised by Mr Tzioras.

I must add that I was troubled by the submission put on behalf of Mr Tzioras that it would be contrary to his commercial interests for him to authorise such a counter-offer. Various scenarios to explain this were offered by counsel for the other parties. They suffered from the deficiency that they were essentially speculative or that they involved my rejecting the uncontradicted evidence of Mr Isaac, Mr Tzioras and Mr Busby that the fact of the Shelton offer was known to Mr Tzioras at the time the counter-offer was sent. I do not reject this evidence. I do, however, accept that Mr McKenzie was authorised to send the counter-offer which he did send. I do so because I consider it inconceivable that an agent would make such an unauthorised offer in writing at the same time as he was speaking to his principal without mentioning the fact. I am reinforced in reaching this conclusion by my assessment of Mr Tzioras as a man who is content to let those acting for him know only as much as he thought necessary for his purposes and no more. He did not tell his agent that he had a verbal offer of $2.5M. Indeed, he was less than candid in his dealings with his agent on a number of occasions and, as will be seen, is a man whose word is not his bond if it be convenient and possible for him to escape it. If an explanation for his conduct be required I find it in a readiness on his part to make a deal with Mr Lew in case the expected offer in writing from Mr Shelton did not arrive, and to walk away from that deal if it did.

The counter-offer was expressed to be open for acceptance until 5.00 pm, that is for one hour only. A few minutes before the deadline, at 4.55 pm, Mr Lew responded by fax accepting the offer in the terms set out at paragraph [2] above. Mr McKenzie said that he immediately reported this acceptance to the vendor who was happy with the result. Mr Tzioras denied this; he said he did not hear of the counter-offer and its acceptance until the following day. Again, Mr McKenzie's evidence is corroborated by the telephone log which records him calling Mr Tzioras for one minute 48 seconds at 4.57 pm and again for nearly four minutes at 5.30 pm. Mr McKenzie said that he had a second conversation with his principal in the course of which he was authorised to inform Pacific Car & Truck Rentals that the property had been sold. When pressed, Mr Tzioras agreed that he instructed the agent to return the lease deposit to Pacific Car & Truck Rentals but insisted that this was in a different context. I accept the evidence of Mr McKenzie. At about the same time, he telephoned Mr Lew to confirm receipt of the acceptance and he then went to Mr Lew's office at 5.45 pm, according to Mr Lew or at 6.30 pm according to Mr McKenzie and collected $20,000 as a preliminary deposit and a memorandum in these terms:

"Further to our fax late this afternoon accepting the Vendor's counter offer, we attach our cheque for $20,000 being the initial deposit to be held in your trust account as stake holder. Please look forward a receipt in due course. We forward to your further cooperation in this matter. Yours truly Harry Lew"

The two men then had a drink to celebrate the deal which had been struck.

In order to secure the property Mr Lew had been obliged to increase his offer by $25,000. Shortly before his acceptance he spoke by telephone with Mr McKenzie saying that he withdrew his earlier offer to pay the $15,000 leasing commission on the JB Hi Fi introduction, giving as a reason for this the fact that he had been obliged to pay this and more over his budgeted price to obtain the property. Mr Lew told me that Mr McKenzie was disappointed at this and in his memorandum accompanying the $20,000 payment he held out to the agent the prospect that there would be work for Crabtrees in the project, saying that he, Lew, looked forward to further cooperation. The significance of Mr Lew's agreement or ex gratia offer to pay the agent a $15,000 leasing commission is that it was never disclosed to Mr Tzioras. As will appear, it was put on Mr Tzioras' behalf and on behalf of Stamward that this amounted to a secret commission or at least to a breach of fiduciary duty or other duty to avoid conflict owed by an agent to its principal.

It is necessary now to trace briefly the events which followed the exchange of faxes on 29 November. They serve to complete the picture and also to shed some light on the competing versions of the principal events. They also include conduct relied upon in the pleading as raising estoppels.

At 9.10 am on Thursday 30 November Mr Tzioras telephoned Mr Isaac's office and left a message that he had another offer and requesting Mr Isaac to telephone him. This is a reference to the exchange of faxes the preceding day which Mr Tzioras protested before me he did not know about until later on that morning.

At about 9.30 am, Mr McKenzie went to the office of Mr Tzioras and handed him a bundle of documents under cover of a letter which commenced:

"Please find herewith correspondence relating to the agreed sale terms for the above property."

The documents comprised the exchange of faxes with Mr Lew of the preceding afternoon, Mr Lew's memorandum concerning the payment of $20,000 for the initial deposit, the three preceding offers by Mr Lew and an Exclusive Sale Authority in favour of Crabtrees authorising a sale of the property for $2.45M. This had already been signed by Mr McKenzie.

Mr Tzioras said that he received the bundle of documents but looked only at the covering letter and the sale authority which he refused to sign. He said that, as a result of what he had read and what he was told, he thought the agent was presenting yet another offer to him. I reject this evidence. I find that when Mr McKenzie presented the documents to the vendor, he was told by Mr Tzioras that a better offer had been received and that he would not sell to Mr Lew unless he offered more than his competitor. He made the point that he had not signed any document binding him to either purchaser. Mr McKenzie became angry at this, not only because of his lost commission on sale, but also because he was professionally embarrassed by the fact that his principal was reneging on a sale which he as agent had concluded in good faith. What is surprising in the competing accounts of this conversation is that neither witness spoke of Mr Tzioras as being angry with his agent for making an unauthorised offer or for receiving a preliminary deposit upon an unauthorised sale. Rather the contrary, Mr Tzioras offered to pay to Crabtrees the sum of about $18,000 to compensate it for work done in securing Pacific Car & Truck Rentals as a tenant.

After the meeting, Mr Tzioras telephoned Mr Isaac and discussed the purported sale by Crabtrees. The documents which he had received from Mr McKenzie were faxed to Mr Isaac at 11.20 am, following which Mr Isaac advised his client that he was not bound to sell to Mr Lew's company. Mr Isaac's time records show that, in the course of the day, he spoke by telephone with Mr Tzioras on four occasions and with Mr Shelton on three occasions, including one in which he and Mr Shelton discussed "letter required". The times of these conversations are not given in the records. The required letter confirming Mr Shelton's offer to purchase the property for $2.5M duly arrived by fax at Mr Isaac's office at 12.02 pm. Receipt of this written offer was reported to Mr Tzioras who instructed the solicitor to accept it and to prepare contracts. Mr Isaac complied with these directions; his time records show that on this day he devoted three 6 minute units to checking the vendor's statement which he had drawn the previous day and 10 units checking the law and discussing the matter with his partners.

There is little evidence of what Mr McKenzie did following the meeting with Mr Tzioras. He said he telephoned Mr Tzioras suggesting that he obtain legal advice before accepting the Shelton offer. At some time, too, he banked the Federation cheque in the Crabtrees trust account seeking a special clearance which occurred the same day. He caused a receipt for the deposit to be drawn although this was not given to Mr Lew.

For most of the day Mr Lew went about his affairs believing that the sale would go ahead. He telephoned Mr Uechtritz of JB Hi Fi telling him that he had secured the property and agreeing the outstanding matters for the lease which their companies would enter into. This was confirmed by fax sent to Mr Uechtritz the same day. By letter dated 15 December 2000 Mr Uechtritz confirmed his company's continuing readiness to enter into a lease on the terms agreed.

At about 4.00 pm on the same day, 30 November 2000, Mr McKenzie advised Mr Lew of a problem with the sale. He consulted his solicitors, Messrs Kliger Partners, who at 6.33 pm faxed to Mr Isaac an assertion that a contract to purchase had been entered into by Yinyang and demanding that Mr Isaac on behalf of his client confirm his intention to proceed with the sale. Meantime, Yinyang at some time on this day reimbursed Federation for the $20,000 which it had paid to the agent the preceding day. Middletons Moore & Bevins

On Friday 1 December Mr Isaac was at his office only until noon. In the morning he wrote to his client enclosing a copy of the Kliger Partners' letter of the preceding day and confirming his instructions that his client had not signed an authority to sell and that the counter-offer was unauthorised by him. Meantime, Mr Shelton collected a copy of the proposed draft contract of sale and took it to his own solicitor for approval. At about 1.30 pm he attended the office of Middletons Moore & Bevins with the required deposit and an executed copy of the contract of sale, ready for exchange. He was, however, kept in the waiting room for some two hours on the basis that Mr Tzioras was being taken through the documents. In fact, that was only part of the explanation. Mr Tzioras was exploring with a solicitor, Diana Angele, who had been given the task of having the contract executed, the possibility that, notwithstanding his agreement with Mr Shelton, he might persuade Mr Lew to increase his offer to match it. Ms Angele was not called as a witness but her file note was in evidence. It appears from this that she was, not surprisingly, very uncomfortable about the course proposed by her client. Eventually, after discussion with a colleague, John Hogan, and a lengthy telephone call by Mr Hogan to Mr Isaac, she telephoned Mr Kliger with an offer that the property be sold to his client for $2.65M on terms that the offer must be accepted within 10 minutes. This figure, after deduction of two percent agent's commission, would return to Mr Tzioras $2.597M. Mr Kliger referred the matter to his client and, on instructions, did not respond to the offer. Mr Shelton was then brought in and the contracts were exchanged. At 3.51 pm Ms Angele faxed a letter to Crabtrees cancelling the leasing authority and requiring removal of the "For Lease" board from the property.

It remains only to record that on 5 December 2000 Yinyang lodged the caveat to which I have referred in paragraph [3] above. On 13 December Federation and Yinyang commenced their proceeding seeking specific performance and other relief. On 22 December Mr Shelton nominated Stamward as substitute purchaser. Finally, on 27 December Mr Tzioras applied to the court for removal of the caveat.

Against this factual background I turn now to the issues raised on the pleadings.

In paragraph 5 of the statement of claim it is alleged that the agreement between Mr Tzioras and Federation as agent for Yinyang to sell the property was partly in writing and partly to be implied. The written component comprised, not only the exchange of faxes between Federation and Crabtrees which I have described in paragraphs [1] and [2] above, but also three of the four preceding Federation offers. The implication is said to arise from the terms of these faxes and by acceptance of the $20,000 payment to which I have referred in paragraph [38] above.

Against this it was first contended that the counter-offer contained in the Crabtrees fax of 29 November was in fact merely an offer to treat and not an offer capable of acceptance. There is no substance to this point. The terms of the fax and the circumstances in which it was sent show that it was an offer.

Next, it was submitted that the agent was not authorised to make the offer. I have found that Mr McKenzie was expressly authorised by Mr Tzioras to send the fax in the terms that he did[1 ]

Next, it was put that the Federation fax in response was not an acceptance; it was a counter-offer. It was put that an offer addressed to A cannot be accepted by B or by A as agent for B or even by A as agent for A and B[2]. Accordingly, the Federation fax amounted to a counter-offer by Yinyang. In this case, the Crabtrees' offer was addressed to Federation for the attention of Mr Lew. The response on Federation letterhead signed by Mr Lew as managing director said:

"We... accept your Vendor's final counter-offer contained in your fax."

Then follows a sentence which gives life to the defendants' submission:

"Please arrange for preparation of Contracts and note the purchaser will be [Yinyang]."

The answer of the plaintiffs to this is, first, that the last sentence is simply a request which does not qualify the unconditional acceptance previously made. That may be so. A further submission, one upon which I am content to act, was that Federation was at all times acting for Yinyang as an undisclosed principal pursuant to an express authority, as I have found in paragraph [13] above. As such, each of Federation and Yinyang was bound by the acceptance[3], since this is not a contract for which the identity of the purchaser is significant. I am satisfied that this acceptance would therefore be effective to bind both these companies, a point to which I shall return.

Next, it was put that there was no intention to create legal relations. This submission relied upon the omission of a number of usual terms from the exchange of faxes as well as upon the fact that, if there was an agreement, it was liable to be rescinded by the purchaser for failure to provide a vendor's statement as required by s. 32 of the Sale of Land Act 1962. It was put that, objectively speaking, it would be unlikely that a vendor such as Mr Tzioras would bind himself to a contract which the purchaser might rescind pursuant to s. 32(5). Further support from this is to be gained from the improbability that the vendor would enter into a contract in breach of s. 32, thereby exposing himself to prosecution for an offence under s. 32(6). Associated with this submission, although it was offered as an alternative argument, is the contention that the parties did not intend, objectively speaking, to enter into a binding agreement unless and until a formal contract of sale was executed.

The suggested omission of expected terms was relied upon as a basis for contending, first, that the parties lacked the necessary contractual intent and, second, that, if they had such intent, the bargain was vitiated by uncertainty[4]. Counsel for Stamward offered instances of matters not dealt with in the documents. These were the absence of any guarantees of the obligations of the purchaser, the lack of any provision dealing with the benefit of the GST Margin Scheme or with site decontamination. The answer of counsel for the plaintiffs, at least with respect to the uncertainty submission, is to my mind irresistible. The parties in the two faxes provided the essential terms for an open contract of sale. The resolution of further matters would fall to be determined by law[5]. Moreover, the parties had, in their negotiations prior to 29 November, deleted terms including that with respect to decontamination. There is no reason, as a matter of law or commercial good sense, for such an omission to strike down their bargain.

There is much to be said for the submission based upon the improbability that Mr Tzioras, as an astute businessman, would bind himself to a contract which he could not enforce for non-compliance with s. 32 of the Sale of Land Act 1962. My task, however, is not to make a finding as to his actual intentions or expectations. I seek the intention of the parties as it appears from an objective examination of what they, in this case, did and the terms of letters sent by them or with their authority. For the purposes of this enquiry I have regard to the fact that Mr Tzioras was aware of the requirement for a vendor's statement as one of the factors from which the intention of the parties is to be inferred.

Next, there are the arguments based on the requirement of the parties that a formal contract of sale be entered into. I am satisfied that each of Mr Lew and Mr McKenzie, as a person experienced in buying and selling real estate, would have expected a formal contract of sale to have been entered into. In each of the four previous offers made by Federation the terms for payment, other than that for the preliminary deposit, were calculated by reference to the date of an exchange of contracts. In his acceptance fax of 29 November Mr Lew spoke again of the preparation of contracts. The argument on this point took two forms. First, it was put that the intention of the parties was that no binding contract should be entered into unless and until formal contracts were exchanged and, second, that the parties agreed to enter into a contract for the sale of the property but that this agreement was subject to a condition precedent that a formal contract of sale be executed. Whether, as a matter of legal analysis, there is any difference between these two submissions, is of no moment in this case where no formal contract of sale was executed. I shall deal with them together.

Conventionally, this question resolves itself into this. Whether, on a proper construction of the contractual documents, the transaction falls into the first or the third category of contracts referred to in Masters v Cameron[6], that is, whether the parties intended to be bound immediately by the terms of the two faxes but at the same time proposed to have those terms restated in a formal contract in a form which would be fuller and more precise but not of different effect; or whether they did not intend to make a concluded bargain unless and until a formal contract was executed.

The transaction is a commercial one entered into by two commercial men. It concerns the purchase of real estate of substantial value. In Elgas Ltd v A J Young Industries Pty Ltd[7], McHugh JA in the New South Wales Court of Appeal said that, in the case of a sale of real estate, there is a presumption that no binding agreement is intended until a formal contract is executed. In Encino Plaza Pty Ltd v Wilson International Pty Ltd[8] Ormiston J in this Court referred to a number of cases supporting the broader proposition that

"where the evidence shows that involved in the negotiations is the preparation of an important commercial agreement, then the normal or prima facie inference is that the parties do not intend to be bound before the precise terms of that agreement have been finalised and executed and, if necessary, exchanged".

As his Honour observed, however, this conclusion may depend upon the expectations of the negotiating parties. In the context of a sale of land, it may be that the generality of the proposition enunciated by McHugh JA will depend upon a differing conveyancing practice in New South Wales so that the fact that the transaction is a sale of land may, in Victoria, merely be one factor in determining whether the parties should be taken as intending to defer the creation of a binding contract until formal contracts are executed[9]. I have regard to the parties' expectation that formal contracts would be executed in this light.

The most powerful argument in favour of an immediate contractual intent is the use by the two negotiators as men experienced in buying and selling real property, of the words "offer" and "accept". They must be taken as using them with knowledge of their legal implications.

Reliance was placed upon the use of the word "final" in the expression "final counter offer" as indicating an intention to create an immediate binding agreement upon acceptance, particularly in the light of the tight deadline for acceptance. I am not persuaded that this is correct. The description of an offer as a final offer in this case seems to be no more than a negotiating ploy. The third offer of Federation, its second last, uses the same terminology. Likewise, the assertion of an acceptance deadline appears to have been used in each of the Federation offers as an encouragement to the offeree to focus the mind. The shortness of the time given by Crabtrees for acceptance must be seen in the context of an offer which expresses the need for prompt acceptance to enable the vendor to decide that day whether to accept the Pacific Car & Truck Rentals' lease offer which had been disclosed to Mr Lew on the preceding day. The imposition of the deadline in its ordinary sense means that, if no acceptance is then received, the offeror will see himself as at liberty to deal with the property as he wishes, including withdrawing it from sale or even selling to another. This is, of course, any offeror's right in any event. The question whether this offeror has deprived himself of such a right pending the expiration of the deadline does not arise here. What was contended for was that the imposition of a tight deadline in this case, requiring, as it did, the offeree to make a quick decision whether to spend another $25,000 on the purchase of the property, carried with it the inference that, if the offer were accepted, the vendor would not thereafter withdraw the property from sale or otherwise act inconsistently with the sale to the Lew interests. To my mind, if any sensible meaning is to be given to the deadline term in this offer, it must be just that. It is, therefore, a strong indication of an intent that the parties saw themselves as bound upon an acceptance before the expiry of the deadline.

Although the matter is not free of difficulty, I am persuaded in the light of these competing considerations that the proper inference to be drawn from the exchange of faxes and the circumstances in which they took place is that there was a concluded agreement reached by the accepting fax on 29 November.

I mention now a further argument put on behalf of Stamward that the exchange of faxes on 29 November achieved an agreement, but one subject to two conditions precedent which were not satisfied. The first of these conditions is that the sale is subject to contract. I have already given my reasons for rejecting such a condition precedent. The second is that the contract was subject to payment of the 10% deposit. As to this, in the agent's counter-offer of 29 November no time for payment of the deposit is specified. It may, therefore, be taken that it might be paid on demand or within a reasonable time or, perhaps, on exchange of contracts. In each of its offers, Federation had specified payment of $20,000 on acceptance with the balance of the deposit on exchange of contracts. The deposit in question was a substantial sum - $245,000. It is unlikely that the parties would be taken as requiring payment of such a sum upon acceptance, that is, within one hour. Given the terminology of the preceding correspondence, I infer that the parties intended the deposit to be payable as Federation had previously proposed. I accept, of course, that payment of the deposit was a term of the contract and an important one, but it was not a condition precedent to its existence. Furthermore, there has been no non-compliance because the time for payment of the deposit had not arrived when Mr Tzioras entered into the second contract. I reject the submissions based on non-fulfilment of a condition precedent.

Next I mention, in order to reject it, an unpleaded argument advanced on behalf of Stamward. This was that the requirement for payment of the deposit was a condition subsequent whose breach entitled Mr Tzioras to terminate the contract. I have found that the time for payment of the deposit had not arrived when he entered into the contract to sell to Stamward. In any event, Mr Tzioras took no step to terminate the contract for non-payment of the deposit.

Finally, it is convenient to dispose of an argument which was presented on behalf of the defendants that there could be no agreement because the agent's authority was limited to finding a buyer but not to selling the property[10]. Mr McKenzie conceded that he understood this to be the case. In this case, however, little assistance is to be derived from this. The relevant authority here is the express authority given by Mr Tzioras to Mr McKenzie to send the counter-offer in the terms that he did. Whether upon receipt of acceptance a binding contract is entered into depends upon the legal consequences of this.

I conclude, therefore, that Federation and Yinyang did enter into a concluded agreement with Mr Tzioras to buy and sell the property for $2.45M at 4.55 pm on 29 November 2000.

The defendants rely upon the Instruments Act s. 126 asserting, correctly, that Crabtrees was not authorised in writing to act as agent for Mr Tzioras in entering into the contract of sale with Federation or Yinyang. The consequence of this is that the contract is not enforceable. The plaintiffs seek to meet this defence by relying upon the doctrines of part performance in support of their equitable claim for specific performance and on an estoppel in support of their claims to enforce the contract of sale generally.

The acts of part performance relied upon are, first, the payment of the initial deposit of $20,000 to the agent and, second, the completion of the negotiations for the lease from Yinyang to JB Hi Fi.

The payment was made as a preliminary deposit on account of the purchase price. This of itself is not a sufficient part performance[11]. The memorandum describes the payment as one to be held in trust by Crabtrees as stakeholder but there is nothing remarkable about this[12]. It was contended on behalf of Mr Tzioras that the payment was, in the circumstances, not unequivocally referable to a contract such as here alleged[13]. I agree.

The terms of the JB Hi Fi lease had, some time previously, been agreed in broad terms, leaving much of the detail to be worked out. In his discussions with Mr Uechtritz the day after the exchange of faxes, Mr Lew settled most of the remaining items but without concluding any final agreement. This conduct, of itself, or in conjunction with the payment of the preliminary deposit, does not have the required features of an act of part performance.

As pleaded, the estoppel alleged goes well beyond a reply to the Statute of Frauds defence. The representations and assumptions to which the plaintiffs would bind Mr Tzioras by estoppel are set out in paragraph 27 of the statement of claim as follows:

"(a) upon acceptance of the vendor's offer Tzioras would not offer the property for sale to any third party; (b) upon acceptance of the vendor's offer Tzioras would not enter into a contract for sale of the property to a third party; (c) upon acceptance of the vendor's offer Tzioras would do all things reasonable and necessary to complete the sale of the property in accordance with the vendor's offer as accepted; (d) Tzioras as vendor and Yinyang alternatively Federation alternatively Federation and Yinyang as purchaser had entered into a concluded, binding and enforceable agreement to sell and purchase the property in accordance with the terms set out in paragraph 6 hereof; (e) Tzioras would complete the sale of the property to Yinyang alternatively Federation alternatively Federation and Yinyang; (f) Crabtrees have a legally binding written authority, signed by Tzioras, as agent of Tzioras to make the vendor's offer and enter into a legally binding and enforceable agreement for the sale of the property; (g) Crabtrees had sufficient authority from Tzioras to enter into an enforceable agreement for sale and purchase of the property to Yinyang alternatively Federation alternatively Federation and Yinyang on behalf of Tzioras."

These facts are said to have been impliedly asserted by Mr Tzioras by the conduct of his agent, Crabtrees, in sending by fax the counter-offer of 29 November upon his instructions. Reliance is placed upon the statement in the fax that the vendor would be "making a decision today whether to sell or lease the property", and the very short time given for acceptance. It was put that these facts, especially the last, amounted to a representation or an inducement to the recipient to assume or to expect that, if the offer was accepted by this deadline, Mr Tzioras would in effect stand by the agreement and perform it. I refer in this respect to representations (a), (b), (c) and (e) set out above. Stated baldly in this way, I doubt very much whether this adds anything to any offer made in any contractual negotiations. By this I mean that, if A offers to B to perform a service for a price, this and the operation of the law of contract means that, if B accepts, A is bound to perform the service. I have concluded that a contract was in fact entered into by the exchange of faxes on 29 November. No estoppel is required to improve this result.

The assumption in part (d) is of a different character, for it speaks of an existing state of affairs - the existence of a concluded, binding and enforceable agreement to sell. It should be noted immediately that no such assumption could arise from the mere sending of the counter-offer. I take it that the plea is to be taken to mean that the assumption is to be derived from this and the accepting fax. So understood, the assumption is warranted inasmuch as it asserts that a concluded and binding agreement had been entered into. The sting of the estoppel, however, is said to lie in the word "enforceable". In this respect the representation resembles those suggested in parts (f) and (g) to which I now turn.

These representations (f) and (g) involve the fact that the agent was authorised to make the counter-offer, which I have found to be correct, and, further, that its authority to do so was in writing in compliance with the requirements of the Statute of Frauds so as to bind the principal to a contract of sale which is enforceable against him as an unwilling vendor. The question whether these representations are to be drawn arise in this proceeding, not only in the context of the present estoppel argument, but also in the claims based on misleading and deceptive conduct and, perhaps, also those based on breach of warranty of authority. In paragraph 27 of the statement of claim the plaintiffs do not particularise the facts and matters from which the suggested representations are to be drawn but the case was presented on the basis that these were the facts and matters relied on as giving rise to the implied representations which are said to constitute misleading and deceptive conduct in paragraph 15 of the statement of claim. These particulars, which relate to all of the representations, not only to those presently under consideration, include the two faxes of 29 November and also the circumstances leading to them.

There is in any of the contractual documents no mention of the nature of the agent's authority to make the counter-offer, or any suggestion that it was or was not in writing. It was made by a licensed real estate agent who was, and was known to Mr Lew to be, experienced in the sale of real estate. It may be assumed that each of them was aware of the requirements of the Estate Agents Act 1980 s. 49A which provides a powerful inducement to an agent to have a written authority. They were well aware of the provisions of the Instruments Act s. 126. It was put on behalf of the plaintiffs that the very short time for acceptance would not unreasonably give, and did, in fact, give to the offeree the impression that acceptance would create, not only a binding contract as I have found, but also an enforceable one in the sense which I have mentioned. The terms of the counter-offer do, however, offer a reason why the time for acceptance was short. It was that Mr Tzioras wanted to make a decision that day whether to sell or lease. This decision would, of course, be affected by the knowledge that a purchaser was prepared to buy the property at the price sought by him. It may be significant, too, that, unlike the offers previously made by Mr Lew, this counter-offer did not require a written response.

In Grummitt v Natalisio,[14] Gillard J refused to order specific performance of a sale of land made in terms of settlement of a court proceeding and signed by counsel on behalf of the vendor. Counsel was authorised to enter into the settlement agreement but the authority was not in writing signed by the client. His Honour, in rejecting an argument that the non-compliance with the requirements of the Instruments Act might be overcome by resort to the doctrine of estoppel, made the following observation[15] relevant to the present issue:

"As to the answer based on estoppel, it seems to me that the difficulty facing the plaintiff here is that although the defendant by his conduct has undoubtedly represented to the plaintiff that he authorised his counsel to enter into the compromise, the representation amounted only to an implication that he had authorised counsel to make the compromise and nothing more."

Twenty-one years later, the same point came before Tadgell J in Collin v Holden[16]. This too was a case where a compromise agreement reduced to writing signed by counsel including the disposition of an interest in land was sought to be enforced notwithstanding that counsel was not authorised in writing to sign the terms of settlement. His Honour, referring to Grummitt v Natalisio as bearing "some superficial resemblance to this case", nevertheless distinguished it on the basis that the document signed by counsel in the earlier case was essentially only a draft of an agreement which was to be further engrossed and signed by the vendor personally.[17] In the case before Tadgell J, counsel for each of the parties had settled the case by oral agreement and later signed formal terms of settlement. The conduct of the parties and of their counsel amounted, as his Honour found, to a representation that the defendant "would not insist on his statutory right to require, as a prerequisite to the enforceability of the terms of settlement to be drawn up, either that they should be signed by him or that his counsel should be authorised in writing by him to sign them on his behalf".[18] Gillard J in the earlier case found that the terms of settlement amounted to a concluded agreement upon which the plaintiff relied to his detriment. His analysis of the representation as going no further than that counsel was authorised to enter into the compromise is consistent with the breach of warranty cases to which I shall refer. It may be that the true point of distinction between Grummitt v Natalisio and Collin v Holden lies in the fact that, in 1968 when the former was decided, the modern concept of equitable estoppel predicated on a statement as to future conduct had not yet been identified by the High Court. Indeed, Collin v Holden has been cited as an example of the modern application of the law of estoppel by Mason CJ in Commonwealth v Verwayen[19]. It has been followed in this Court by Chernov J in Hicks v Brown.[20]

Returning to the facts of the present case, the parties made their contract by exchange of faxes which contemplated the execution of formal contracts to be signed by the principals. This would not, according to the analysis in Collin v Holden, support the inference suggested by Tadgell J, let alone the representations suggested in parts (d), (f) and (g) above. Moreover, none of these representations is supportable if the conduct relied on is taken to bear the inference suggested by Tadgell J. On this basis, estoppel will not provide the plaintiffs with an answer to the Statute of Frauds defence.

In any event, the suggested representations cannot assist the plaintiffs because there is no reliance to detriment. It is put that, the sending of the acceptance within the hour was such, but this cannot be correct[21]. Other conduct said to amount to reliance to detriment is the payment of the $20,000, the celebratory drink at Mr Lew's office late on 29 November and the completion of the JB Hi Fi lease negotiations. I am satisfied that these acts were performed in the belief that a contract had been made, a belief that was well-founded. The fact that each party might lawfully withdraw from it, the purchaser for non-provision of a vendor's statement and the vendor for a want of written authority, is entirely another matter.

It follows from all of this that the contract entered into on 29 November between Mr Tzioras and Federation and Yinyang for the sale of the land is unenforceable for want of an authority signed by the vendor.

This point is raised in paragraph 43 of the defence of Mr Tzioras and in his counterclaim. What is alleged is that Federation and/or Yinyang by its agent Mr Lew promised to pay to Crabtrees a secret commission or commissions. The promise referred to is the offer which occurred on the morning of 29 November to make an ex-gratia payment of $14,000 which I have referred to in paragraph [35] above. Further, it is put that Mr Lew corruptly offered or agreed to offer to Mr McKenzie commissions as letting agent for parts of the development, if it went ahead, other than that to be leased to JB Hi Fi, and as selling agent in the event of an on-sale of the development. As to this further offer, I am satisfied that Mr Lew did discuss with Mr McKenzie the prospect that Crabtrees might have the letting or any on-sale of the development in the event that the sale went ahead. Mr Lew said that he wanted Crabtrees as experts in the area to assist in these matters and that this was the normal way he conducted developments of this kind. Mr McKenzie agreed that these matters were discussed and that he was hopeful of obtaining this business but, he maintained that the prospect of so doing was a separate transaction; that he was not offered money by Mr Lew for concluding a sale to him or to his company.

The legal consequences of these offers or prospects held out to Crabtrees which were suggested by counsel for Mr Tzioras and Stamward were numerous. First, they were put forward as a motive for Mr McKenzie to make a counter-offer on 29 November which was unauthorised by his principal and contrary to the interests of his principal. I have had regard to this in weighing up and rejecting the submission that this counter-offer was unauthorised[22]

. Second, it was put that the receipt of these proposals by Mr McKenzie without disclosing to his principal was a breach of fiduciary duty and that it put Crabtrees in a position of conflict vis-à-vis its principal. This entitled Mr Tzioras as principal to rescind the sale to Federation or Yinyang, if sale there be, and he has done so. Next, it was said that Mr Tzioras was, as a result, entitled to damages. Finally, insofar as Yinyang sought the equitable relief of specific performance of the contract of sale, its involvement in this unconscionable conduct disentitled it from obtaining such relief.

I am not satisfied that there is substance in any of these contentions. Although the prospect of obtaining any of these commissions was dependent upon the purchase by Mr Lew's company of the property, none of them was in any direct sense put forward as an inducement to the agent to prefer Mr Lew's interests to those of its principal, nor did they tend to have that effect. It will be recalled that, at this time, the agent had only one prospective purchaser and Mr Tzioras knew this. This is not, therefore, a case where the agent had to recommend to the principal one of two or more bidders. It was the vendor himself who was dealing with the two competing bidders through his two agents. He was well aware that Mr McKenzie was keen to have Mr Lew's bid accepted for it was in this way that Crabtrees would earn a commission. It was Mr Tzioras who was deciding which of the bidders to prefer and, it would seem, he was well able to do so. This means that the agent had not placed himself in a position of conflicting allegiance by seeking and obtaining an agreement from Mr Lew for a leasing commission with respect to the JB Hi Fi tenancy. The suggestion of conflict with respect to the prospect of other work is even more remote.

I am not satisfied that Mr McKenzie or Crabtrees was in breach of any fiduciary or other duty by entertaining the prospect of earning commission from Mr Lew's company in the event that a purchase of the property was achieved. Mr Lew and his companies did not act in this respect corruptly or unconscionably.

This allegation is made in paragraphs 12 to 23 of the statement of claim. The conduct relied upon as being misleading and deceptive is the making of five representations which are to be inferred from the circumstances and the terms of the counter-offer made by Mr McKenzie in his fax of 3.58 pm on 29 November[23]

and which are set out in paragraph 15 of the statement of claim. The first four of these representations are the same as those set out in parts (a), (b), (c) and (f) in paragraph [73] above with respect to the estoppel argument. The fifth representation is in terms similar to, but not identical with that set out in part (g) in that paragraph:

"(e) Crabtrees had sufficient authority from Tzioras to enter into an enforceable agreement for sale and purchase of the property on behalf of Tzioras."

I have already rejected the suggested inferences with respect to these five representations in the context of the estoppel claim[24]

. The same reasoning leads to the conclusion that these inferences are not available as misleading representations. This claim likewise must fail.

This claim which is made in paragraphs 24-26 of the statement of claim depends upon the existence of two warranties in effect that Crabtrees was not only authorised to make the counter-offer to Mr Lew, but that it had an authority such that its offer, if accepted, would bring into existence an enforceable contract. The terms of the warranties as pleaded in paragraph 24 are identical to the fourth and fifth representations relied on as amounting to misleading and deceptive conduct. It may be convenient, nevertheless, to set them out once more as they appear in paragraph 24 of the statement of claim.

"24. Further, at all material times Crabtrees warranted to Federation and Yinyang that: (a) Crabtrees have a legally binding written authority, signed by Tzioras as agent of Tzioras to make the vendor's offer and enter into a legally binding and enforceable agreement for the sale of the property. (b) Crabtrees had sufficient authority from Tzioras to enter into an enforceable agreement for sale and purchase of the property on behalf of Tzioras."

I have concluded in paragraphs [80] and [88] above that, in the context of the estoppel argument and a misleading and deceptive conduct claim, the terms of the faxes exchanged on 29 November and the circumstances in which they were sent do not support an inferred representation that Crabtrees' authority to send the counter-offer was in writing sufficient to satisfy the Instruments Act or that the ensuing contract was enforceable against an unwilling vendor. This conclusion would suffice to defeat this claim for breach of warranty against the agent if the same analysis is here applicable. In case this may not be correct, I will refer to the principles applicable to breach of warranty claims which were laid down in an environment where equitable estoppel and misleading and deceptive conduct had no place.

In Lee v Irons[25] a purchaser of land who had signed a sale note sought unsuccessfully to enforce it against the vendor whose agent had signed it in accordance with an oral authority given by the vendor. The claim failed essentially because the agent who signed the sale note did so in circumstances which led to a conclusion that he did not do so on behalf of the vendor in confirmation of the sale. Pape J then turned to the breach of warranty of authority claim against the agent and rejected it on the basis that by signing the sale note the agent did not purport to bind his principal so that no contract was entered into. His Honour then considered the case on the basis that this conclusion may not be correct so that the issue became whether an agent signing on behalf of a principal warranted that he held a written authority to do so[26]. This issue, too, was determined adversely to the purchaser. Having concluded, on this alternative basis, that the agent's signature brought into existence a contract of sale his Honour made the following observation:

"In these circumstances, I am unable to see why it is necessary to imply into the transaction an undertaking by the agent that his authority was in writing so as to comply with s. 129. He is the agent of the vendor, not of the purchaser, and in my view his duty to the vendor was to obtain a contract that she could enforce, and he owed no duty to the purchaser to obtain a contract which the purchaser could enforce. To imply a warranty that he had a written authority in these circumstances seems very much the same as the implication of a warranty that the vendor would not rely upon the Statute."[27]

His Honour then concluded that no such implication was warranted. It will be recalled that this resembles the analysis of Gillard J in the passage from Grummitt v Natalisio[28] which I have quoted above in paragraph [78]. It was submitted on behalf of the plaintiffs, correctly, that the observation of Pape J was merely obiter. Even so, I would be reluctant to part from the views of these judges on a point such as this, even if I were uncertain about their correctness, which I am not.

A second line of authority which tends to the same conclusion is exemplified by Boulas v Angelopoulos[29] and the cases referred to in the judgment of Kirby P and Samuels JA in that case.[30] These cases are concerned with damages for breach of warranty authority in circumstances such as the present. They show that where an agent is in breach of a warranty of authority to sell because it has no authority to enter into a contract on behalf of the vendor, the disappointed purchaser suffers no loss because the agent's authority was, a fortiori, not in writing. In such a case, the contract which the agent warranted it was authorised to enter into on behalf of its principal was, nonetheless, unenforceable so that the purchaser's lost bargain was worthless.[31] This would, of course, not be the case if the warranty of authority which the agent breached was not only a warranty that it held the authority to sell but also the warranty here contended for, namely, that the nature of this authority was such that the sale would be enforceable.

The conclusion which I have reached is also consistent with the principle that an agent does not warrant that its principal intends to or will perform the contract[32].

My conclusion is that an agent such as Crabtrees in this case warrants to the purchaser with whom it negotiates a contract of sale no more than that it is authorised to perform the acts which it in fact performs. The plaintiffs' claim for damages for breach of warranty against Crabtrees must therefore fail.

Crabtrees' claims based on the Wrongs Act were not pressed and I say nothing further about these.

Its claims for commission on the sale to the plaintiffs cannot succeed, if only because it held no authority in writing as required by s. 49A of the Estate Agents Act 1980.

Its claim for advertising expenses incurred in the letting of the property was founded on the terms of its written leasing authority given by Mr Tzioras. I do not understand that the agent's entitlement to these expenses was in issue. The amount of the claim was said to be $3,095.16. There was a further claim for damages for repudiation of this leasing authority. I will hear counsel further on this matter.

Its remaining claims depended upon the plaintiffs succeeding against Mr Tzioras. They fall with the plaintiffs' claims against Mr Tzioras.

These, too, depend upon the plaintiffs succeeding in their claims against Mr Tzioras. In the circumstances as I have found them they do not arise.

I conclude, therefore, that the plaintiffs' claims against Mr Tzioras and Crabtrees must fail. I propose the following orders:

1. On the plaintiffs' claim, judgment for the defendants against the plaintiffs with costs including costs reserved.

2. On the counterclaim of the secondnamed defendant, judgment for the secondnamed defendant against the firstnamed defendant for the amount of advertising expenses incurred under the leasing authority. I will here counsel further as to the damages for repudiation of this authority if this claim be pressed. The secondnamed defendant should have its costs of this claim against the plaintiffs.

3. On the claim of the thirdnamed defendant against the firstnamed defendant, judgment for the firstnamed defendant with costs including reserved costs. I am minded in this case to make a Bullock order so that these costs are ultimately to be borne by the plaintiffs. I will hear counsel further on this point.

1. Caveat registered in dealing No. X191513P be removed.

2. The defendant pay the costs of the plaintiff including costs reserved.

2] Lang v James Morrison & Co Ltd [1911] HCA 49; (1911) 13 CLR 1.

[3] Wilson v Winton [1969] Qd R 536.

[4] Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548, per Gleeson CJ.

[5] Hall v Busst [1960] HCA 84; (1960) 104 CLR 206 at 222, per Fullagar J.

[9] Seventh Shar Nominees Pty Ltd v Hortico Pty Ltd [2000] VSC 155 at [29], per Mandie J.

[10] Boyd v O'Connor [1923] VicLawRp 76; [1923] VLR 603 at 606. See also Voumard, The Sale of Land, 4th ed, p. 51.

[11] Cooney v Burns [1922] HCA 8; (1922) 30 CLR 216 at 222-3 per Knox CJ.

[20] Unreported, 12 June 1997, BC9903210.

[21] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 at 406, per Mason CJ and Wilson J.

23] The text of this fax appears in [[] above.

[26] As required by s. 129 of the Instruments Act 1928, the equivalent of s. 126 of the Instruments Act 1958.

[30] (1991) 5 BPR 11,477 at 11,490-91 per Kirby P, Samuels JA and Gleeson CJ concurring.

[31] See, too, Fay v Miller, Wilkins & Co [1941] Ch 360

[32] See Bowstead and Reynolds on Agency, 16th ed, 1996, para 9-062.

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