Lee & Ors v Ross & Ors

[2003] NSWSC 289

Supreme Court of NSW|2003-04-11|Before: Palmer J

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Court

Supreme Court of NSW

Decision date

2003-04-11

Before

Palmer J

Source

Original judgment source is linked above.

Judgment (57 paragraphs)

[1]

CITATION : Lee & Ors v Ross & Ors [2003] NSWSC 289 revised - 14/04/2003 HEARING DATE(S) : 17 to 19 February, 2003 JUDGMENT DATE : 11 April 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Judgment for Defendants on Plaintiffs' Amended Statement of Claim; declaration in accordance with Cross Claim.

[2]

CATCHWORDS : REAL PROPERTY - CONTRACT FOR SALE OF LAND - EXCHANGE OF CONTRACTS - OFFER AND ACCEPTANCE - ACCEPTANCE BY CONDUCT - Vendors acting without solicitor - vendors send to purchasers' solicitor counterpart contract executed by vendors - purchasers' solicitor makes material alteration to photocopy of contract and returns photocopy to real estate agent with cheque for deposit - vendors do not agree to amendment but believe real estate agent's assurance that purchasers will abide by prior oral agreement - vendors do not sign amended counterpart - vendors believe contract on foot which includes prior oral and inconsistent agreement - vendors reply to requisitions on title - whether parties manifested intention to be bound only upon exchange of identical counterparts - whether purchasers' altered counterpart was counter-offer accepted by vendors' conduct in replying to requisitions - principles discussed. - HELD: Parties evinced common intention to be contractually bound only upon exchange of contracts in accordance with usual conveyancing practice - intention miscarried because parties had not agreed on material term and counterparts exchanged were not identical as to material term - parties did not intend to proceed by offer and counter-offer - if purchasers' amended counterpart contract constituted counter-offer it was not accepted by vendors' replies to requisitions because replies contain term inconsistent with purchasers' counter-offer. - CONTRACT - WRONGFUL REPUDIATION - Purchasers' solicitor retained copy of counter-part which was incomplete in that it did not include page containing material term - purchasers insist on performance of contract in manner inconsistent with material term on missing page - vendors purport to terminate - whether purchasers' conduct constituted wrongful repudiation - whether vendors validly terminated. - HELD: If contract existed, vendors had validly terminated it for purchasers' wrongful repudiation. LEGISLATION CITED : Conveyancing Act 1919 (NSW) - s.54A Real Property Act 1900 (NSW) - s.126, s.127 - Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 - Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 CASES CITED : - Harvey v Edwards, Dunlop and Company Ltd (1927) 39 CLR 302 - Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 - Sindel v Georgiou (1984) 154 CLR 661 - Cheshire & Fifoot's Law of Contract (8th Australian Ed., 2002) Andrew Kwang Lee - First-named Plaintiff Catherine Bok Lee - Second-named Plaintiff Ju Hyung Lee - Third-named Plaintiff Na Young Lee - Fourth-named Plaintiff PARTIES : Raymond Ross - First Defendant Bernadine Ross - Second Defendant Karen Ross - Third Defendant Cheryl Ann Thomas - Fourth Defendant Registrar General of New South Wales - Fifth Defendant FILE NUMBER(S) : SC 2787/97 D.H. Murr SC, R.P. Freeman - Plaintiffs COUNSEL : R. Sofroniou - First Defendant P.B. Walsh - Fifth Defendant Daniel Svir - Plaintiffs SOLICITORS : Horowitz & Bilinsky - First Defendant Solicitor for the Registrar General - Fifth Defendant

[4]

3 The issues upon which the case was fought need to be identified with some care because they are not all clearly reflected in the pleadings. Further, as the trial proceeded, the Purchasers shifted their ground on some issues and abandoned others. However, the issues were sufficiently delineated by the time that the parties came to make their final submissions. No party took the point that an issue, as finally argued, had not been properly pleaded and particularised. All parties had prepared an outline of their final submissions, to which Counsel spoke. 4 The Purchasers' Amended Statement of Claim pleaded the case for specific performance and for damages in lieu thereof very simply. Paragraph 2 of the Amended Statement of Claim alleged that by a contract in writing dated 24 January 1997 the Vendors agreed to sell and the Purchasers agreed to purchase the Property for the sum of $290,000 "upon and subject to the terms in the said contract for sale" . The pleading continued by alleging that the Purchasers gave a notice to complete, that they were at all times ready, willing and able to complete, that the Vendors refused to complete, and that the Purchasers thereby suffered loss and damage. 5 The Vendors' Defence denied paragraph 2 of the Amended Statement of Claim and in paragraph 38 pleaded in answer to the whole of the Amended Statement of Claim that there had been no binding agreement between the parties. The particulars to that paragraph gave as the ground for that conclusion of law that the Purchasers had made alterations to the counterpart contract signed by them prior to exchange of contracts without the consent of the Vendors. A Cross Claim filed by the Vendors sought a declaration that no binding contract had come into existence, upon the same ground. 6 In their Defence to the Cross Claim the Purchasers simply denied the allegation of "no binding contract", and nothing more. Thus far, one would have thought that issue was joined as to whether the counterpart contract signed by the Purchasers had been materially altered prior to exchange, and whether a contract had come into existence by reason of a valid exchange of counterparts in the usual way. 7 However, when Mr Murr SC, who appeared with Mr Freeman for the Purchasers, came to put his final submissions, he conceded (at T100.48ff) that there had been no exchange of identical counterparts of the contract and that a contract between the parties had not come into existence in the usual way, that is, by a formal exchange which marks the point at which the parties have agreed to become bound by the terms contained in the counterpart contract. 8 Rather, said Mr Murr, what had happened in this case was that "the formation of the contract and the negotiation are in truth the same proceeding" : the contract signed by the Vendors and forwarded to the Purchasers' solicitor was an offer; that offer was not accepted in terms because the Purchasers' solicitor made alterations not previously agreed between the parties; the counterpart signed by the Purchasers containing the alterations and returned to the vendors was, in fact, a counter-offer to the Vendors; the counter-offer was accepted by the Vendors, not by any writing, but by conduct on their part so that a contract thereupon came into existence; and, although a formal document containing the terms as amended by the counter-offer was never signed by the Vendors, a memorandum of the contract sufficient for the purposes of s.54A Conveyancing Act 1919 (NSW) was constituted by certain subsequent correspondence between the parties, signed by one of the vendors. 9 As I have noted, neither Ms Sofroniou, who appeared for the Vendors, nor Mr P. Walsh, who appeared for the Registrar General, took objection that the Purchasers' case as finally put had not been pleaded; they met Mr Murr's submissions head on. I will, therefore, treat the issue as formulated by Mr Murr to have been properly raised for determination. 10 Other issues raised by the Purchasers in their Amended Statement of Claim, particularly those alleging fraud, were not pursued. In the end, therefore, the issues may be summarised thus:

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11 The Vendors are Mr Ross and his wife and daughter; Mr Ross has always acted in relation to the sale of the Property with their authority and pursuant to General Powers of Attorney in his favour which they had executed in November 1995. 12 In November 1996 a real estate agent, Mr Cho, who is Korean, approached Mr Ross and told him that he had buyers for the Property if the Vendors were willing to sell. Mr Cho was acting for the Purchasers, Mr and Mrs Lee and their son and daughter-in-law, who are also Korean. Although the Property was not then listed for sale, Mr Ross had procured a subdivision into two lots, a vacant lot and a lot on which was constructed a derelict cottage and garage which Mr Ross had intended to demolish. 13 Mr Ross and the other Vendors were willing to sell and eventually an agreement was negotiated for the sale of the lot upon which the cottage was erected. Mr Ross decided to act for himself and the other Vendors on the conveyance. He is not a lawyer but he has had some experience in real estate dealings. Mr Ross drew up a contract, using the standard Law Society and Real Estate Institute form, 1996 edition. 14 On the front page of the contract, in the space provided for "Completion date" Mr Ross inserted "4 weeks or 28 days after the date of this contract" ; he described the Property by reference to the lot number in the Deposited Plan. Against the item "Improvements" there are a number of boxes to be ticked; Mr Ross put ticks in the boxes marked "HOUSE" and "garage". Against the item "Inclusions" Mr Ross put ticks in the boxes marked "blinds", "curtains", "light fittings" and "stove". Directly under the item "Inclusions" is an item "Exclusions" . Against this item, Mr Ross wrote "SANDSTONE BLOCKS AND AWNING MATERIAL (PART CONSTRUCTED)" . 15 Mr Ross says that the only sandstone blocks on the Property are the substantial sandstone blocks which form the foundations of the cottage and the garage. This evidence has not been contradicted. Mr Ross regarded the sandstone as worth about $40,000 to $50,000. 16 Mr Ross says that he had made it clear to the Purchasers, through Mr Cho at a discussion in Mr Cho's office in December 1996, that it would be a term of the sale that the Purchasers would demolish the cottage and garage, that the Vendors would retain ownership of the sandstone blocks which formed the foundations, and that the Purchasers would place the blocks on the adjacent lot in the subdivision which the Vendors were to retain. 17 I accept Mr Ross's evidence as to what was said at this meeting. Not only was it not contradicted by the Purchasers but Mr Lee (Snr) confirmed that he and his wife attended a meeting with Mr Ross in Mr Cho's office on 13 December 1996. Mr Lee gave the following evidence as to what was said at the meeting about the sandstone blocks: " Q: And at the time you first saw the property, 31 Yeramba St, it had a two bedroom cottage on it; correct? A: Yes, there was.

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Q: Is it something you discussed with Mr Kwon, your solicitor? A: When we went there to sign, Mr Kwon confirmed that, 'Now the sandstone, you are going to give this sandstone to the vendor' and we said, 'Yes'." 19 It will be noted at once that if the Vendors wished to retain ownership of the material comprising the foundations of the cottage and garage on the Property, so that the cottage and garage would have to be demolished in order to effect that intention, it was inappropriate for Mr Ross to have ticked the boxes marked "HOUSE" and "garage" next to the item "Improvements" on the front page of the contract. Such markings would indicate to a conveyancer used to dealing with the standard form contract for sale that the Property was being sold with a house and garage erected upon it and that the house and garage, as erected, would pass on the conveyance. That impression would have been confirmed by the ticks placed in the boxes for "blinds", "curtains", "light fittings" and "stove" against the item "Inclusions". 20 However, there can be no doubt that Mr Ross intended that the house and garage be demolished and that the sandstone foundations would remain the property of the Vendors because he inserted in his own handwriting a Special Condition 45 in the contract, namely: "ALL SANDSTONE ON SITE REMAINS THE PROPERTY OF THE VENDOR." 21 Mr Ross, his wife and daughter signed the contract which he had prepared and Mr Ross gave it to Mr Cho in early January 1997. Mr Cho forwarded it to the Purchasers' solicitor, Mr Kwon, who is also Korean. 22 On 24 January 1997, Mr and Mrs Lee (i.e. the parents) went to Mr Kwon's office for the purpose of signing the contract. As Mr Ross had prepared only one contract rather than two counterparts, it seems clear enough that Mr Kwon photocopied that document to provide a photocopy counterpart which the Purchasers could sign and exchange. 23 Mr Kwon explained the contract in Korean to Mr and Mrs Lee. He suggested a number of changes to which Mr and Mrs Lee agreed. Mr Kwon then made the following alterations on the photocopy counterpart. 24 First, he drew lines through Special Condition 29 to indicate that it was deleted. That Special Condition provided for the release of the deposit in certain circumstances. Next, Mr Kwon drew lines through Special Condition 41, by way of deletion. That Special Condition provided for the payment of interest by the Purchasers if they failed to complete the contract by the stipulated date. Finally, in Special Condition 45, Mr Kwon made an addition in his own handwriting. Probably because Mr Ross's handwriting had not come out clearly on the photocopy, Mr Kwon overwrote what Mr Ross had originally written so that, with his own addition, the Special Condition now read: "ALL SANDSTONE ON SITE REMAINS THE PROPERTY OF THE VENDOR WHO SHALL MAKE SUITABLE ARRANGEMENT FOR REMOVAL." 25 Pausing at this point, it will be seen that the amendment to Special Condition 45 introduced a new term which was capable of causing further misunderstanding and disagreement. Mr Ross may have thought that what he had written in Special Condition 45 sufficiently encapsulated what he says had been agreed orally in his discussion with Mr Cho and Mr and Mrs Lee in Mr Cho's office on 13 December 1996, namely, that the Purchasers would demolish the cottage and garage and would place the sandstone blocks on the Vendors' adjacent lot. But, of course, the form of contract which Mr Ross submitted, particularly Special Condition 45, did not state these terms with any clarity: it said nothing about who had the responsibility of demolishing the cottage and removing the sandstone and when that would be done. Mr Kwon's amendment to Special Condition 45, while saying nothing express about demolition of the cottage, at least made it clear that the Purchasers intended that the Vendors be responsible for removing the sandstone at their cost. 26 There is no direct evidence as to what the cost of removing the sandstone would have been. However, the sandstone comprised the foundations of the cottage and the garage, and the uncontradicted evidence of Mr Ross is that he regarded it as worth between $40,000 and $50,000. From this I infer that the volume of sandstone blocks would be quite considerable and that if Mr Ross had had to make his own arrangements to engage labour and equipment to remove it the cost would not be trifling. 27 To return to the narrative: all amendments to the photocopy counterpart made by Mr Kwon were initialled by Mr and Mrs Lee and, later in the day, by their son and daughter-in-law. Mr Kwon dated the photocopy counterpart "24 January 1997" and sent it back to Mr Cho by way of exchange, together with the Purchasers' cheque for the deposit. Mr Kwon did not send a covering letter to Mr Ross drawing attention to the amendments which he had made nor did he ever request that the counterpart of the contract containing the amendments be executed by the Vendors and returned to him. It is hardly necessary to say that a prudent solicitor should have taken both steps, especially when the other parties to the transaction were not legally represented. 28 Mr Cho delivered the photocopy counterpart to Mr Ross on or about 24 January. Mr Ross said that he did not then notice the amendments which had been made by Mr Kwon; he noticed them a few days later, or perhaps a week, afterwards.

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Q: Again to clarify this, you were prepared to go forward on the basis that you had this written document and you had or believed you had an understanding reached orally by Mr Cho as to what would happen to the sandstone blocks on settlement ? A: Yes, and beyond ." [Emphasis added] 31 It is important to assess correctly the significance of this evidence. It must be kept in mind that although the Vendors pleaded that no contract had come into existence because of alterations to the counterpart made by the Purchasers without their consent, the Purchasers did not plead in response that the Vendors were estopped from denying the existence of a binding contract by reason of some words or conduct on their part upon which the Purchasers had relied. One must be careful, therefore not to use this evidence as to Mr Ross's "failure to protest" as one would do if one were considering whether silence on his part, after he became aware of Mr Kwon's alterations to the counterpart, constituted a representation to the Purchasers that the Vendors agreed to the counter-offer contained in the altered counterpart, so as to estop the Vendors from now asserting that they did not, in fact, agree. Rather, the evidence can go only to the question whether one can infer from Mr Ross's silence that he did, in fact, agree to the counter-offer in the terms in which it was expressed in the counterpart. 32 In my opinion, this evidence shows that Mr Ross did not agree. That Mr Ross said that he regarded the contract as on foot when the signed photocopy counterpart was returned to him must be understood in the context of his evidence, read as a whole. Mr Ross made it clear in this evidence that he regarded the "contract" as comprising not only the written document but also the oral terms about the sandstone which had been agreed in his meeting with Mr and Mrs Lee on 13 December 1996, even though those oral terms were inconsistent with the counterpart as amended in Special Condition 45. Mistakenly, he regarded Mr Cho's assurances as sufficient to bind the Purchasers to the oral terms agreed in Mr Cho's office on 13 December 1996. No one suggests that Mr Cho was the agent of the Purchasers for the purpose of binding them to the terms as to the removal of sandstone insisted upon by Mr Ross. Mr Cho was only the conduit pipe for negotiations between the Vendors and the Purchasers. Mr Ross told Mr Cho that the Vendors did not agree to the addition which the Purchasers' solicitors had made to Special Condition 45. Mr Cho apparently did not pass on to the Purchasers that Mr Ross had rejected the counter-offer comprised in the photocopy counterpart and that sale was, therefore, still in the negotiation stage. Instead, Mr Cho made a representation as to the Purchasers' position which he was not authorised to make. 33 I accept as truthful Mr Ross's evidence that "although these changes [to Special Condition 45] had been made I was very clear what I wanted and what had to happen … it was [my] understanding that [I] had an agreement by, jointly a verbal discussion and a written document … and [I] was prepared to go forward on the basis that [I] had this written document … and on an understanding reached orally by Mr Cho as to what would happen to the sandstone blocks on settlement" . My reasons for accepting this evidence are as follows. 34 First, Mr Ross's evidence as to the discussions in Mr Cho's office on 13 December 1996 was not only unchallenged, it was supported: see paras 17, 18. Second, Mr Ross clearly regarded the sandstone blocks as an important issue right from the start of negotiations with the Purchasers and it is inherently unlikely that he would easily have made the concessions which the Purchasers sought in amended Special Condition 45. Third, because a response which Mr Ross sent to the Purchasers' requisitions on title on 13 February 1997, before any dispute as to the sandstone blocks had arisen, clearly shows that Mr Ross believed that the Vendors were selling "vacant land", not land upon which there was a house or upon which there was material to be demolished and removed by the Vendors. Fourth, Mr Ross's account of the oral terms "included" in the contract as to the sandstone blocks has been consistent from the very beginning: see e.g. his letters to Mr Kwon of 27 February and 3 March 1997, his letters to Mr Cho and Mr Kwon of 5 March and 6 March, and his letter dated 14 March 1997 to Mr Svir, the Purchasers' subsequent solicitor. Fifth, Mr Ross's evidence throughout cross examination on this point remained resolute and unshaken - it had the ring of truth to it.

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But the fact of the matter is that was the term he agreed with and that is the term by which he was bound." 38 As to the second aspect of Mr Ross's conduct, Mr Murr points to the fact that on 30 January 1997 the Purchasers' solicitor, Mr Kwon, wrote to the Vendors enclosing requisitions on title, and on 13 February 1997 Mr Ross replied on the Vendors' behalf answering those requisitions. The heading of Mr Ross's letter refers to "Sale of Property Ross to Lee" . Mr Murr says that this letter clearly implies acceptance of the counter-offer constituted by the Purchasers' signed photocopy counterpart (T105.5, written submissions para 1.3). 39 As to the first point, namely that Mr Ross's silence constituted acceptance of the counter-offer by conduct, the way in which Mr Murr puts this submission comes close to an assertion that the Vendors are estopped from denying that they accepted the counter-offer by keeping silent when they ought to have protested. Yet, as I have noted, estoppel has not been pleaded as part of the Purchasers' case and it has never been raised as an issue in the proceedings. I accept that conduct, not founding an estoppel, can amount to implied acceptance of a contractual offer or counter-offer: see e.g. Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, at 528-31 per Kirby P. Nevertheless, in the circumstances of this case, I am unable to accept that mere silence on the Vendors' part after receipt of the Purchasers' varied counterpart implied acceptance of a counter-offer by conduct. For the reasons given at length below in discussion as to Mr Murr's second point, I am satisfied that the Vendors' silence after receipt of the Purchasers' varied counterpart was the consequence of a mistaken belief, held both by Mr Ross and by the Purchasers, that a contract containing an oral term had come into existence by exchange of counterparts on 24 January 1997. 40 As to Mr Murr's submission on the second point, namely, that Mr Ross's replies to requisitions on title constituted an acceptance of a counter-offer, it will be seen that the submission founds upon "the classical theory of contract formation based upon offer and acceptance" : per Mason P in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, at 155. However, as Heydon JA (as his Honour then was) observed in the same case at 176 (para 71): "While the process by which many contracts are arrived at is reducible to an analysis turning on the making of an offer, the rejection of the offer by a counter-offer and so on until the last counter-offer is accepted, that analysis is neither sufficient to explain all cases nor necessary to explain all cases. Offer and acceptance analysis does not work well in various circumstances.

[43]

This approach places less emphasis on the advantage of bringing into existence a document which establishes with certainty the terms of the contract and more emphasis on the intention of the parties in creating a contract by the ceremony of exchange, the terms of the bargain having already been determined." 43 The manner in which, and the time at which, parties intend to become bound by contract are questions of fact. In the present case, I am satisfied on the evidence that the common intention of both parties was to enter into a contract in accordance with the usual practice, that is, by exchange of identical counterparts. In particular, I am satisfied that it was not the common intention of the parties that the sending of a counterpart executed by the Vendors be regarded as an offer, the return by the Purchasers of an executed counterpart containing material alterations be regarded as a counter-offer and that an acceptance of the counter-offer bringing a contract into existence would be manifested by some informal means, such as conduct. My reasons are as follows. 44 First, although Mr Ross was not a lawyer, he believed that he had sufficient experience in real estate dealings to act on the conveyance himself. His responses to the Purchasers' requisitions on title and his subsequent correspondence with the Purchasers' solicitors reveal considerable familiarity with conveyancing procedures. It is a fair inference, therefore, that Mr Ross knew that the usual practice for entering into contracts for the sale of land in New South Wales was by exchange of executed counterparts in identical terms. Mr Kwon, as a solicitor, would certainly know the usual practice and its importance. 45 Where parties go through the ritual of exchange of counterparts in conformity with the usual practice for the sale of land in New South Wales, there must be a strong inference that their common intention is that they will not be contractually bound unless the ritual is properly performed in all substantial respects. Only if the ritual is so performed do the parties know with certainty when they are bound and by what terms they are bound. If parties intend to forego that certainty by contracting in a different, less formal manner, that intention should emerge clearly from all the surrounding circumstances. 46 Second, when Mr Kwon sent the amended counterpart to Mr Cho he did not draw to the attention of Mr Ross or, so far as the evidence reveals, to the attention of Mr Cho, that the amended counterpart in fact constituted a counter-offer; Mr Kwon certainly never sought explicit acceptance of a counter-offer nor did he request a counterpart contract containing the amended Special Condition 45 executed by the Vendors. Simply forwarding the Purchasers' executed counterpart to the real estate agent, with the Purchasers' cheque for a deposit, indicated an intention that that act would constitute a valid exchange, resulting in a binding contract coming into existence with a concomitant immediate obligation on the Purchasers' part to pay the deposit to the agent. 47 Third, whereas the counterpart contract which Mr Ross sent to Mr Kwon was undated, the photocopy counterpart returned by Mr Kwon had been dated by him "24 February 1997" . This indicates that Mr Kwon's intention was that the contract was to come into existence on that day by means of the return of the Purchasers' executed counterpart. If the Purchasers' executed counterpart was intended as a counter-offer, a contract could only have come into existence when that counter-offer was accepted by the Vendors and Mr Kwon had no way of knowing on 24 January whether, or when, the Vendors might accept the counter-offer. 48 Fourth, Mr Kwon sent his requisitions on title to the Vendors on 30 January 1997. Mr Kwon had had no communication from Mr Ross between 24 January and 30 January, let alone any communication suggesting that Mr Ross had accepted a counter-offer contained in the Purchasers' counterpart contract. Yet, clearly enough, Mr Kwon's sending the requisitions assumed that by 30 January there was already a contract in existence. The letter referred to "Lee purchase from Ross" , enclosed requisitions and advised that Mr Kwon would submit a Transfer in due course. Mr Kwon's assumption that a contract existed must be founded upon an intention and a belief that a valid exchange of contracts had taken place on 24 January in accordance with the usual practice. 49 Fifth, Mr Ross's evidence was that once he had received the Purchasers' counterpart contract he "regarded the contract as being made and on foot" , although he believed the contract included an oral term previously agreed. There is no evidence to suggest that Mr Ross regarded the negotiations as still continuing and that he was obliged to accept a counter-offer if a contract was to come into existence. 50 For these reasons, I conclude that the common intention of the parties was that a contract would come into existence only upon exchange of counterparts in accordance with the usual practice, and that that intention miscarried for two reasons: first, because the parties had not in fact agreed prior to exchange upon a material term, namely, Special Condition 45; and second, because a concluded agreement was not brought about by the very process of exchange since the counterparts in relation to Special Condition 45 were not identical. 51 For the same reasons, I am satisfied that it was never the common intention of the parties that Mr Ross's replies to requisitions would be an acceptance of the counter-offer contained in the Purchasers' varied counterpart and that upon those replies being sent a binding contract would thereupon come into existence. Rather, the fact that Mr Kwon sent requisitions on title and Mr Ross replied was the consequence of a mistaken belief held by both parties that a contract had already come into existence by a valid exchange of counterparts on 24 January 1997, and that the normal conveyancing procedures now had to be followed. 52 It follows from the above that, in my opinion, a binding contract for sale of the Property never came into existence between the Vendors and the Purchasers, so that there should be judgment for the Defendants on the Plaintiffs' Amended Statement of Claim. 53 For the sake of completeness, however, I should deal with the other issues raised.

[46]

59 The further one gets from the first and essential issue - was there a concluded agreement and a binding contract - the more artificial the other issues raised for determination become and the more their attempted resolution demonstrates that no concluded agreement came into existence between the parties in the first place. 60 Ms Sofroniou submits that even if the Purchasers' varied counterpart contract constituted a counter-offer which the Vendors accepted by conduct, there is no sufficient memorandum in writing of the contract signed by the Vendors or their lawfully authorised agent, so that under s.54A of the Conveyancing Act the contract is unenforceable. 61 Mr Murr responds by saying that Mr Ross's letter dated 13 February 1997 answering requisitions on title constitutes a sufficient memorandum for the purpose of s.54A because it is signed by Mr Ross, who holds general powers of attorney for the other Vendors, and because the letter refers to "sale of property Ross to Lee" . Mr Murr says that the letter therefore refers to a "transaction", i.e. a sale, and he relies on the following passage from the majority judgment in Harvey v Edwards, Dunlop and Company Ltd (1927) 39 CLR 302, at 307: "It is also well settled that the memorandum 'need not be contained in one document; it may be made out from several documents if they can be connected together.' They may be connected by reference one to the other; but further, 'if you can spell out of the document a reference in it to some other transaction, you are at liberty to give evidence as to what that other transaction is, and, if that other transaction contains all the terms in writing, then you get a sufficient memorandum within the statute by reading the two together'." 62 In that case the Court immediately went on to note (at 308) that an oral agreement had been established between the appellant, the respondent and a third party as to the compromise of certain proceedings between the respondent and the third party. The terms of that agreement had subsequently been set out in a letter from the appellant's solicitors to the respondent's solicitors. The respondent's solicitors wrote back referring to the proceedings between the respondent and the third party, and the terms of their letter were consistent with the terms of the oral agreement as summarised in the letter from the appellant's solicitors. The Court held (at 309-310) that the respondent's solicitor's letter expressly referred to the proceedings between the respondent and the third party so that the correspondence between the parties' solicitors connected up together and, taken together, recognised that an agreement had been made between the parties in the terms set out in the appellant's solicitor's letter. Accordingly, the Court concluded that the letter signed by the respondent's solicitors was a sufficient memorandum for the purpose of the Statute of Frauds . 63 In the present case, for the reasons I have given, I am satisfied that no agreement had been concluded between the parties prior to 13 February 1997 as to the terms upon which the cottage and the garage on the Property would be demolished and the sandstone blocks made available to the Vendors. Accordingly, unlike the situation in Harvey v Edwards, Dunlop & Co , the only "transaction" to which Mr Ross's letter could refer was not a concluded sale agreement but, rather, a sale agreement which was still in the course of negotiation, even though the parties mistakenly believed otherwise. 64 In short, in my opinion, the facts of this case are very different from those in Harvey v Edwards, Dunlop & Co and the principle enunciated in that case has no application here.

[54]

Sandstone blocks on both left and right hand sides of the house were to be taken by you at your costs and the contract stipulates that the purchaser shall obtain the house and garage including the sandstone foundation." 73 On 6 March, Mr Ross responded, saying (correctly) that the only sandstone blocks on the Property were part of the house and garage and referring at length to the verbal agreement reached between the parties in the presence of Mr Cho on 13 December 1996. 74 On 7 March, Mr Ross sent a Notice of Termination and a lengthy letter to Mr Kwon. In the Notice of Termination the Vendors stated that it was their intention to terminate the contract on the ground of the Purchasers' refusal to comply with the contract conditions. The letter advised that the Vendors intended to "proceed to make alternative arrangements for disposal of property effective immediately" and concluded by stating that the Vendors intended to enforce their rights flowing from termination of the contract. 75 While the terms of the Notice of Termination might possibly be construed as indicating an intention to terminate in the future, there is no doubt that the letter states an intention to act immediately in a manner which is inconsistent with the continuation of the contract. Accordingly, when the two documents are taken together I have no doubt that on 7 March the Vendors evinced an intention to terminate the contract forthwith. 76 I am satisfied that as at 7 March the Purchasers were firmly maintaining the position that the contract provided for the sale of a "complete house" and that the Vendors were not entitled to the sandstone forming part of the foundations. Not only does this position emerge from Mr Kwon's letter of 5 March but it was restated by the Purchasers' subsequent solicitor, Mr Svir, in his letters of 12 and 14 March: see also Mr Svir's evidence at T62.15-.25. Why the Purchasers were maintaining this position in the light of their previous attitude that the Vendors could have the sandstone blocks, expressed at the meeting which took place with Mr Cho on 13 December 1996, has never been explained. 77 I am satisfied that by 7 March 1997 the Purchasers had clearly manifested an intention to perform the contract in a manner substantially inconsistent with their obligations and not in any other way: see Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, at 634. The Purchasers were denying outright the entitlement of the Vendors to retain property in the sandstone blocks forming the foundations of the cottage and garage, which entitlements the contract gave them. This denial constituted a wrongful repudiation of the contract which was accepted by the Vendors, who validly terminated the contract on 7 March. 78 I note finally on this point that Mr Murr's submission was that the Vendors were not entitled to give a Notice to Complete on 4 March and were not entitled to terminate the contract on 7 March for the Purchasers' failure to complete. All I need to say is that the Vendors' right of termination on 7 March did not depend upon their right to issue a Notice to Complete or upon the Purchasers failure to comply with such a Notice; the Vendors' right to terminate arose because of the Purchasers' wrongful repudiation of the contract as a whole.

Lee & Ors v Ross & Ors

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