Hearse v Staunton

Judgment 1McCOLL JA: I agree with Whealy JA and his reasons and the orders his Honour proposes. I also agree with the remarks of Young JA. 2YOUNG JA: I agree with Whealy JA and with his reasons, but I wish to add a couple of observations. 3I am concerned that conveyancing solicitors would so easily agree with another solicitor's suggestion that a contract should be amended by simply writing in the name of a second purchaser. 4I am not sure what is meant by the simple request to "amend" the contract. Normally once a contract is made, it can only be "amended" formally by variation, rescission and replacement with a new contract or novation. Assuming that the solicitors intended a variation, complications arise when the variation is adding a party. What probably happens is that a new contract is made to replace the former contract. 5However, the argument proceeded on the basis that this was not the appropriate analysis. If that is correct, then the appellants' case runs foul of what Pape J said in Lee v Irons [1958] VR 436, 447 that a party seeking to rely on the cause of action of wrongful warranty of authority must show that he or she entered into the contract relying on the warranty of authority. 6On the other hand, if my analysis is correct, both solicitors must be taken to have known the law that solicitors, save in exceptional cases, have no authority to make a contract on behalf of a client (let alone a non-client). Pianta v National Finance & Trustees Ltd [1964] HCA 61; 180 CLR 146 reinforces this view taken both by the primary judge and Whealy JA. 7The reference to s 18(3) of the Duties Act 1997 is a red herring. That section has nothing to say about varying contracts. Before the section, if there was a transfer by direction or the like, a second lot of ad valorem duty may have been payable. The subsection operates so that, in cases within it, that duty is reduced to a nominal amount. The section does not alter the effect in the law of conveyancing of either contracts or transfers. 8I am not criticising the solicitors in the present case as I do not have enough material to make a fair assessment. However, I must state the general proposition that the Court expects that conveyancers will not take short cuts in conveyancing transactions without a full appreciation of what they are doing, ensuring that what they do will not cause loss to the client. 9WHEALY JA: This an appeal from the decision of Hall J (the primary judge) given on 1 st September 2010. The decision is expressed as follows:- In light of the conclusions, namely: (1) that the defendant solicitors did not warrant or represent as alleged that they had the authority of Mrs Pallister to act for her as purchaser of the property; (2) that they did not warrant or represent that they had Mrs Pallister's authority to make a binding contract on her behalf for the purpose of making her a co-purchaser of the property; (3) that the evidence does not establish that the parties had an intention to create contractual relations for the purchase of the property by Mrs Pallister; there should be judgment in favour of the third, fourth and fifth defendants and I so order. 10The plaintiffs were the owners of a property at 83 Culter Road, Clontarf. The dispute arose out of a conveyancing transaction, in which the plaintiffs sold the property to a man named Mark Pallister. There was a Contract for Sale executed and exchanged between the plaintiffs on the one hand, and Mr Pallister on the other. The first respondent, Dennis Staunton, was a member of the firm, Staunton & Thompson Lawyers. He was Mr Pallister's solicitor. Lander & Lander were (and are) the solicitors for the plaintiffs. 11The sale was not completed and the plaintiffs thereupon terminated the contract and sued both Mr and Mrs Pallister for the deficiency on resale. There were complications in the proceedings, but the end result was that the plaintiffs maintained an action against the firm of solicitors (Staunton and Thomson) alleging breach of warranty of authority. In the original proceedings, Mr Pallister himself had become a worthless defendant by virtue of his bankruptcy. Mrs Pallister had achieved the setting aside of a judgment obtained against her on the basis that there had been no contact between the plaintiffs and herself. It was in those circumstances, as I have said, that the plaintiffs proceeded against the partners of Staunton & Thompson as defendants, alleging against them a breach of warranty of authority to act for Mrs Pallister. 12The circumstances in which this claim was alleged to have arisen may be very briefly stated. The Contract for Sale of the Clontarf property had initially been prepared showing Mrs Pallister as the purchaser. Her name was subsequently deleted prior to exchange. The name of Mark Pallister was added as the purchaser of the property. The contract was thereupon exchanged, and Mr Pallister was stated to be the sole purchaser of the property. 13There were two pieces of correspondence that became central to the issues in the present proceedings. They consisted of two letters, written by Staunton & Thompson to Mr Lander, the solicitor for the plaintiffs. The author of each of the letters was the first respondent, Mr Staunton. 14The first letter (relevantly) was in the following terms:- Letter dated 16 December 2004:- "... We are ready to exchange subject to the following: