(2) The issue of intention to contract
73 I turn to Mr Curtain's submissions that, if there was any representation in the letter of 19 January 2005, it was not one that the solicitors had authority to bind Vanessa Pallister but that they were merely authorised to negotiate a purchase to be completed in due course by her signature. As earlier indicated, in support of this contention, reliance was placed, by way of analogy, upon the decision of the Supreme Court of Victoria (Pape J) in Lee v Irons (supra). In order to deal with the submission, it is necessary that I here set out the particular facts and analysis in that case.
74 Lee v Irons (supra) involved an action by the plaintiff against the first defendant, Mrs Irons, for an order that she, as vendor, specifically perform a contract for the sale of a certain property to the plaintiff. The plaintiff, alternatively, sought, as against the other defendant, (the agent), damages for breach of warranty of authority. The first defendant alleged that the agent was not authorised by her to sell the property upon the terms of the contract in question and, in this respect, relied upon the provisions of s.128 and s.129 of the Instruments Act 1928 (Vic).
75 The question for decision in the case was whether the contract evidenced by a sale note had been proved as required by the statutory provisions. Section 128 of the Instruments Act substantially reproduced the provisions of s.4 of the Statute of Frauds and was a provision which was peculiar to Victoria. The effect of s.128 and s.129 read together was that no action could be brought to charge any person upon any contract or sale of land unless the agreement upon which the action was brought or some memorandum or note thereof was in writing and was signed by the party to be charged or some other person lawful authorised in writing signed by the party so charged.
76 The plaintiff's specific performance action was based upon a written document which, in part, was a receipt of monies paid on account of the deposit. It also provided for the payment of the balance of the deposit at a specified time and the balance of the purchase money on a later date. The document was signed by the purchaser. It was also signed by the agent but not his principal, the defendant/vendor.
77 Pape J stated that the problem posed in the case was one of construction of the sale note and that, when the surrounding circumstances were examined, he was satisfied the document was not one whereby the defendant had entered into any contract with the plaintiff purporting to bind the defendant.
78 Pape J went on, assuming the contrary to his finding in that respect, to examine whether the agent did, in fact, sign a contract on behalf of Mrs Irons. The question was whether he either expressly or by implication warranted that he was authorised to bind her by the contract. Pape J stated:-
"… I think it is clear that he made no express warranty, and the question then is whether he impliedly so warranted. In my view, he cannot be held to have impliedly warranted that he had such written authority."
79 In relation to the question of a warranty by the agent in that case, Pape J added (at 447):-
"The only matter that is relied upon in this case as giving rise to the implication that the agent warranted that he had a written authority is the fact that he signed the sale note. By signing the sale note, if he warrants anything, he either warrants that he had authority from the vendor to make a sale to be completed by the vendor's signature, or that he had the vendor's written authority to bind her. For the reasons given, I think that the agent here made no warranty at all, but if he did, I am of opinion that the only warranty which ought to be implied is a warranty that the agent was authorised to make a sale to be completed by the vendor's signature. The implication of a term depends upon the presumed common intention of both parties to the contract …"
80 Accordingly, it was found that the agent had not represented to the plaintiff that he had the written authority that was required by s.129 of the Instruments Act to sign the contract. (In New South Wales there is no similar requirement for a written authority in respect of an agreement for sale of land. A solicitor, however, is required to have express authority.)
81 As earlier indicated, Mr Curtin relied, by way of analogy upon the decision with Lee v Irons (supra). He argued that, in the present case, the issue as to whether Mr Staunton warranted that he had an express authority to bind Mrs Pallister was much the same, insofar as it raised a question as to whether Mrs Pallister was able to rely upon the Statute of Frauds equivalent otherwise available to her by virtue of the provisions of s.54A and s.23C of the Conveyancing Act 1919.
82 The submissions for the defendants raised the issue as to whether (even assuming there was a "representation") an otherwise enforceable contract between the plaintiffs and Mrs Pallister could have existed (Defendants' Written Submissions, paragraph 17). This, it was emphasised, was an issue of particular importance because the plaintiffs had no cause of action against the defendants' solicitors unless an enforceable contract otherwise arose.
83 In the course of his reasons (with whom Gleeson CJ and Samuels JA generally agreed), Kirby P stated:-
"If the primary contract alleged would, in any event, have been unenforceable, then there is no loss to the plaintiff. He would not be entitled to damages. See Pow v Davies (1861) 1 B & S 220; 121 ER 697; Warr v Jones (1876) 24 WR 695 …"
84 In developing the submission, reference was made to two lines of authority. The first was concerned with the approach to be taken in the search for an intention to create contractual relations in a particular case. Such a search requires an assessment of the state of affairs between the parties based upon the objective circumstances that may properly be taken into account in deciding whether there existed the necessary contractual intention (which include what was conveyed or said and what was done): Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95 per Gaudron, McHugh, Hayne and Callinan JJ at [25].
85 The reference to authority in relation to this submission included the judgments of the Court of Appeal in Abadeen Group Pty Limited & Anor v Bluestone Property Services Pty Limited & Ors [2009] NSWCA 386 at [110]-[117] and Australian Broadcasting Corporation v XIVth Commonwealth Games Pty Limited (1988) 18 NSWLR 540 per Gleeson CJ at 549A and 549E.
86 The second line of cases were those that established the importance of an exchange of contracts for the sale of land and whether there was an intention to contract in the absence of an exchange of counterpart contracts. Relevant authorities included Baulkham Hills Private Hospital Pty Limited v GR Securities Pty Limited (1986) 40 NSWLR 631 per McHugh J at 634C to F; Headon & Ors v Clancy (Supreme Court of New South Wales, Windeyer J, unreported 26 June 1997 at 5); Lee & Ors v Ross & Ors [2003] NSWSC 289 (Palmer J at [40]-[41]) and Peter Warren (Properties) Pty Limited & Ors v Jalvoran Pty Limited [2004] NSWSC 1149 (White J at [25]-[31]).
87 In the present case, the defendants, in particular, relied on the fact that there was no exchange of counterpart contracts with Mrs Pallister's name having been added as a co-purchaser. The contention, in this respect, was that it could not have been the intention of the parties to have entered into a binding contract on Mrs Pallister's behalf in circumstances where no exchange of counterpart contracts occurred.
88 In support of this contention, the defendants relied upon the fact that conveyancing practice in New South Wales is such that it is presumed that there is no binding contract without an exchange of written contracts. A court will not lightly attribute an intention to the parties to forego the protection afforded by an exchange of contracts.
89 Accordingly, it was argued that, in circumstances in which the presumption applies in conjunction with the relevant objective circumstances, there could not be said to have come into existence a binding and enforceable agreement between the plaintiffs as vendors and Mrs Pallister.
90 In accordance with authority, there was no intention to contract and no cause of action for breach of warranty of authority could lie. In this respect, reference was made to the judgment of the Court of Appeal in Boulas (supra). I will briefly summarise the facts in that case.
91 The appellant had been the highest bidder at an auction for the sale of land. The land was knocked down to him. He believed that he had thereby secured an enforceable contract with the vendor of the land. However, the land was knocked down for a price less than the reserve price which the vendor had reserved and believed was in force. The auctioneer had knocked it down in the mistaken belief that the vendor had agreed to withdraw his reserve price. The first issue was whether an enforceable contract had been secured in circumstances by the appellant under the law of auctions. The second issue, in the event that there was no enforceable contract, was whether the appellant could recover damages against the auctioneer who conducted the auction in a claim for damages for breach of warranty of authority. At first instance, both claims were reflected.
92 I have earlier set out the observations of Kirby P to the effect that the absence of an enforceable primary contract would mean that a plaintiff, in an action for breach of warranty of authority by an agent, would be unable to prove loss and, accordingly, no entitlement to damages. On the facts in Boulas (supra), Kirby P observed at 33:-
"It was, no doubt, with the difficulty of proving actual loss in mind, that the appellant argue that the auctioneer had warranted that there would be a contract with the highest bidder or that he had authority to sign the contract. I cannot accept these submissions. The relevant cause of action is based on the implied promise that the agent had authority to enter the relevant transaction, not that the transaction will be enforceable. Nor do I see anything in the evidence to suggest that either Mr Kelly (the auctioneer) or the estate agency warranted that they would sign the contract."
93 It was submitted for the defendants that the presumption had not been rebutted in this case. Accordingly, the contention was that, even if the defendants had had the requisite authority to contract, no binding contract between the plaintiffs and Mrs Pallister came into existence.
94 In reply, Mr Tregenza contended that the letter of 19 January 2005 was itself a statement to the contrary of the presumption, that is to say, was evidence that a formal exchange of contracts was not required. He argued that the "representation" by Mr Staunton that Mrs Pallister was to be added as a co-purchaser and to amend the contract accordingly, carried the inference that he would amend his counterpart contract and that would then operate as the sole contract. Mr Tregenza also submitted that the letter of 19 January 2005 was sufficient to satisfy the requirements of s.54A of the Conveyancing Act when read with the contract.