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[2011] NSWCA 139
Court of Appeal (NSW)
2011-05-19
McColl JA, Young JA, Whealy JA, Hall J, Pape J
Original judgment source is linked above.
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:
Resolution 28I have come to the conclusion that the appeal should be dismissed. It is clear, in my opinion, that the appeal does not raise any question of general principle. Consequently, the reasons I will give for my conclusion may be expressed in short form. They are that, firstly, the submissions for the appellants have not raised any doubt as to the correctness of the primary judge's decision. The inconsistencies noted in the letter of 19 th January 2005 correctly suggested, as the primary judge found, that the request in the letter was intended to refer to the amendment of the Transfer, on the basis that Mrs Pallister had been added as a joint transferee, pursuant to section 18(3) of the Duties Act 1997 (" the Act "). This was supported by the fact that the letter enclosed a draft Transfer in which Mrs Pallister had been named as co-transferee. The principal purport of the letter, as the primary judge found, was the action of adding Mrs Pallister's name to the Transfer on the basis outlined in the letter. It was done with the intent and for the purpose of attracting or evoking the exemption available under the provisions of section 18(3) of the Act, on the basis that Mrs Pallister was not a co-purchaser. This view of the central inconsistency represented by the last sentence in the letter, was, in fact, consistent with the earlier suggestion that had been made in the letter of 16 th December 2004, written before exchange of contracts between the appellants and Mr Pallister. The probable future action foreshadowed in that letter was, once again, for the specific purpose of invoking the provisions of section 18(3) of the Duties Act 1997 , prior to completion of the contract. The expression, "please amend the counterpart contract accordingly" in the second letter, cannot be viewed in isolation from the correspondence as a whole, and though perplexing, cannot overwhelm the real basis of the correspondence. 29Secondly, I do not think any sufficient doubt has been raised as to his Honour's finding that the terms of the letter of 19 th January 2005 did not contain an express representation or warranty by Mr Staunton that he had Mrs Pallister's authority to contract on her behalf. Nor do I think sufficient doubt has been raised to his Honour's subsequent finding that, taking the letter of 19 th January 2005 as a whole and in context, including, in particular, the letter of 16 th December 2004, the second letter was neither an express or implied unqualified assertion by Mr Staunton that he was authorised by Mrs Pallister to act as her agent, for the purpose of making her a party to the Contract for Sale. Accordingly, the primary judge was correct to conclude that the letter written by Mr Staunton on 19 th January 2005 did not constitute either an express or implied representation that the solicitor had authority for Mrs Pallister to act on her behalf, so as to bind her as a party to the contract for the sale of the Clontarf property. 30Finally, I am satisfied that the primary judge was correct to conclude, in relation to the further issue relied upon by the appellants, that they have not (apart from the question of Mr Staunton's authority) established that an enforceable contract otherwise arose. His Honour was not satisfied that the parties had, by their words and actions, intended to create contractual relations binding as between the appellants on the one hand, and Mrs Pallister on the other. Given that the Contract for Sale in this case related to a very valuable residential property, his Honour was right to conclude that, if it had been the intention of the parties to make Mrs Pallister a party to the contract, that intention would have likely to have been effected by means by either a fresh exchange of contracts, or by way of a formal agreement to vary the existing contract. Neither course had been adopted, with the consequence that no binding contract arose between the appellants and Mrs Pallister. 31In my opinion, the appeal should be dismissed with costs.
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Hearse
Staunton