Ma v Adams [2015] NSWSC 1452 | Case summary

Supreme Court of NSW|2015-09-03|Before: Robb J, David J

Solicitors: Machiao Lawyers (plaintiffs) David J H Hooper (defendant) File Number(s): 2015/84441 Publication restriction: None

The uncontested facts

The contract of sale provided for the sale of the Property from Ms Adams to Mr Ma and Ms Deng for the sum of $1,050,000. The deposit was $105,000.
Clause 1 contained a definition of "cheque" as being "a cheque that is not postdated or stale". It provided that the "deposit holder" was the vendor's agent. "Terminate" was defined as "terminate this contract for breach".
Relevantly, cl 2 contained the following provisions in relation to the deposit: 2 Deposit and other payments before completion 2.1 The purchaser must pay the deposit to the depositholder as stakeholder. 2.2 Normally, the purchaser must pay the deposit on the making of this contract, and this time is essential… 2.4 The purchaser can pay any of the deposit only by unconditionally giving cash (up to $2000) or a cheque to the depositholder or to the vendor, vendor's agent or vendor's solicitor for sending to the depositholder. 2.5 If any of the deposit is not paid on time or a cheque for any of the deposit is not honoured on presentation, the vendor can terminate. This right to terminate is lost as soon as the deposit is paid in full…
Clause 12 obliges the vendor to allow the purchaser to have the property inspected for various purposes in the following relevant terms: 12 Certificates and inspections The vendor must do everything reasonable to enable the purchaser, subject to the rights of any tenant - 12.1 to have the property inspected to obtain any certificate or report reasonably required…
Mr Ma drew a personal cheque following the auction on the bank account of M & D Accessories (which was a business conducted by Mr Ma and Ms Deng) at the Commonwealth Bank of Australia in favour of Ray White Baulkham Hills (Ray White), which was Ms Adams' agent, for $105,000. Mr Darren Dowd was the estate agent who personally acted for Ms Adams, as the representative of Ray White.
The cheque was not dated 6 December 2014, but was dated the following Monday, 8 December 2014. Mr Ma gave evidence, which was not challenged, that his writing of the wrong date on the cheque was entirely inadvertent. He suggested it was caused by his excitement at winning the bidding for the Property. He said that later that day he filled out the cheque butt and inserted the correct date on the butt.
Mr Ma did not suggest that the date 8 December 2014 was placed on the cheque because of anything said or done by or on behalf of Ms Adams.
The fact that the cheque was post-dated was only discovered shortly before the commencement of the hearing in this matter.
After he received the cheque, Mr Dowd issued a receipt for the cheque dated 6 December 2014 on behalf of Ray White.
It was common ground that Mr Dowd did not notice that the cheque that he was given by Mr Ma in payment of the deposit was post-dated. Equally, there was no suggestion that Ms Adams was made aware that the cheque was not dated 6 December 2014, and it was accepted that she did not authorise Mr Dowd to accept a post-dated cheque.
At 8:58 AM on Monday 8 December 2014, Mr Craig Adams, Ms Adams' son, sent a text message to Mr Dowd on her behalf that said: "Do not go any further with the sale of 2c hilda rd we are not happy at all".
On 8 December 2014, Ms Adams' solicitor, Mr David Hooper, sent a letter to the plaintiffs' then solicitors, which contained the following: The purchaser at the auction on Saturday handed over a cheque for the deposit with instructions not to bank it as there was insufficient money in the account to cover the cheque. Non-payment of the deposit is a breach of an essential term of the Contract. Purported payment of a cheque which the deposit holder or agent is instructed not to present immediately is either a breach of an essential term or a repudiation of the Contract. Your clients were unable to comply with an essential term of the Contract. The agent has been instructed not to accept a replacement cheque from the purchaser. Take notice that the vendor hereby terminates the Contract.
Mr Hooper sent a copy of this letter to Mr Dowd, and Mr Dowd delivered it to Mr Ma on the morning of 8 December 2014.
On 6 December 2014, there was only a credit of $3569.77 in the plaintiffs' business' cheque account. $20,000 in cash was paid in on 8 December 2014, and Mr Ma also caused $83,000 to be transferred into the account on 8 December 2014 from ING Direct. Following those transactions the balance of the account was $106,255.60.
Mr Dowd arranged for the administrative staff at Ray White to deposit the cheque in the company's bank account late in the day on 8 December 2014, and it was honoured in due course.
On 16 December 2014, Mr Hooper sent a letter to the new solicitors for the plaintiffs in which he explained why Ms Adams had validly terminated the contract of sale. He repeated: "The Agent was instructed by the purchaser at the auction not to bank the purchaser's cheque provided at the Auction. He said that there was insufficient money in the account to cover the cheque".
On 12 January 2015, the plaintiffs' new solicitor replied to Mr Hooper's letter, and said, among other things: On the day of the auction (6 December 2014), our client did mention to the agent, Mr Darren Dowd that he might not have sufficient funds in the account to cover the personal cheque for 10% deposit, but there should be enough on Monday (8 December 2014) as our client would transfer the balance to the account if needed by Monday. Alternatively, our client suggested that he is happy to swap the personal cheque with a bank cheque on Monday morning. Mr Darren Dowd immediately sought the vendor's instruction and the vendor had no objection to accept the personal cheque. Later, it turned out that there are actually sufficient funds in the account.
On 27 January 2015, ING Direct sent to a company called Finance and Systems Technology Pty Ltd a document called "confirmation of receipt". It referred to a new application received on 22 January 2015 on account of the plaintiffs for a fixed rate loan for a term of 3 years interest only to purchase an investment property. The loan amount was $840,000.
Also on 27 January 2015, ING Direct sent to Finance and Systems Technology Pty Ltd a document called "indicative approval advice" in which ING Direct indicated that it had approved in principle the credit facility referred to in the confirmation of receipt, subject to a number of conditions, including relevantly, a condition expressed as: "Valuation Report satisfactory to ING for a minimum value of $1,050,000".
On 4 February 2015, ING Direct provided a notice that it was unable to continue assessment of the application because its valuer had advised that the agent had confirmed that there was no access available to the property whatsoever.
On 2 February 2015, the plaintiffs' then solicitors wrote a letter to Mr Hooper in which they advised him that the plaintiffs' incoming mortgagee required access to the property for the purpose of valuing it. The solicitors asked Mr Hooper to arrange for Ms Adams to contact Mr Dowd to arrange a time so that the valuation could be carried out as soon as possible.
The plaintiffs then changed their solicitors to the solicitors that are now on the record in these proceedings. On 16 February 2015, the new solicitors referred in a letter to Mr Hooper to the fact that settlement of the contract was due to occur on that date. They reminded Mr Hooper that Ms Adams had rejected the plaintiffs' numerous requests for access pursuant to cl 12.1 of the contract for their mortgagee's valuer to undertake a valuation of the property. They said that the plaintiffs had given instructions to seek relief from the Supreme Court for orders to compel access and specific performance.
Mr Hooper replied on 3 March 2015, to reiterate the earlier claim that he had made on behalf of Ms Adams, that she had terminated the contract. He referred to the plaintiffs' demand for access for the mortgagee's valuer, and asserted that the plaintiffs were not ready, willing and able to complete the contract, because they did not have finance, because the mortgagee had not received the required valuation. He said that even if the contract were otherwise on foot, the plaintiffs were not entitled to the benefit of the contract because they were not in a position to complete.

Some additional background facts

Ms Adams initially fixed the reserve price for the auction of the Property at $1,200,000. The bidding stalled at $1,050,000. After a discussion with Mr Dowd during a halt in the bidding, Ms Adams gave an instruction to the auctioneer to put the Property on the market at $1,050,000. There were no further bids, and the Property was knocked down to the plaintiffs. A review of the evidence filed by Ms Adams and the witnesses in her case might suggest that Ms Adams contested that the circumstances in which she was persuaded to reduce the reserve were binding on her, or had been carried out by Mr Dowd in an improper way in accordance with his duties to her as the representative of her agent. However, Ms Adams ultimately did not rely upon these matters in defence of the plaintiffs' claim.
The evidence established, however, as was admitted by Ms Adams and her son, Mr Craig Adams, and her daughter in law, Ms Martha Adams, that the family was bitterly disappointed with the result of the auction. There is no need for me to go into the matter in detail; but apparently the family, in their planning to acquire a new property, had relied upon the Property selling for $1,200,000. Mr Adams and his wife and daughters were living with Ms Adams at the Property, and they all intended to live together at the new property. The consequence of the shortfall in the sale price achieved manifested itself on the following day, when the family inspected a property at Kurrajong that they hoped to purchase; only to find that they could not afford to make an offer because the vendor would not agree to reduce the price to cover the reduction in the price that Ms Adams had achieved on the auction of the Property.
There was also a background issue concerning whether or not Mr Ma asked Mr Dowd, immediately after the Property was knocked down to him, whether he could pay the deposit by instalments. Mr Craig Adams gave evidence that he heard Mr Dowd yelling at Mr Ma. There is no need for the court to record the strong language that Mr Adams said he heard used. It is sufficient to say that Mr Adams said he heard Mr Ma say: "I have the money. It is in China. Can I pay it at $20,000 a day so I do not have to pay tax?" Mr Dowd forcefully rejected that suggestion.
Mr Ma denied in cross-examination that he made this request of Mr Dowd.
However, while Mr Dowd in his evidence denied that he used strong or intemperate language in his response to Mr Ma's request, Mr Dowd readily agreed in cross-examination that the first thing that Mr Ma said about the deposit before he provided the back-dated cheque was to ask whether he could pay the deposit in amounts of $20,000 a day commencing on the following Monday and finishing on the Friday.
The resolution of this factual dispute is ultimately not critical to the determination of the issues that require decision. It is a matter that probably only goes to the credit of Mr Ma. The background evidence did not show why in fact it would be to the plaintiffs' advantage for them to pay the deposit in daily instalments out of money received from China; or even that they had money in China available to pay the deposit. As I have said above, the plaintiffs had ready financial resources that permitted them to ensure that the deposit cheque was paid on presentation on Monday 8 December 2014.
On the balance of probabilities, the court should find that Mr Ma did make the request that Ms Adams and her witnesses claim that he made. I can see no reason not to accept Mr Dowd's evidence on this issue. As I propose; as will be seen below, to accept Mr Dowd's evidence in relation to a number of important factual matters favourable to the plaintiffs' case, consistency requires me also to accept Mr Dowd's evidence concerning Mr Ma's request.
The significance of this finding, if only in a practical sense, is that the effect of Mr Craig Adams' overhearing Mr Ma's request was to incense him, as it appeared that, after Ms Adams had been persuaded to reduce the reserve in a manner that led to a shortfall in the anticipated sale price of at least $150,000, the purchaser did not have the cash immediately available to permit the deposit to be paid in the manner required by the contract. That gave rise to the risk that Ms Adams would lose the sale completely. Indeed, Mr Adams went out onto the street to see whether the under-bidder was in the vicinity; but he was disappointed. This disappointment spread throughout the family and exacerbated their collective anguish. It is a matter which will have some bearing on my consideration of the credibility of the family's evidence on another issue, which I will consider below. That issue is whether, when Mr Ma handed the cheque for the deposit to Mr Dowd, he expressly stipulated that Mr Dowd should not present the cheque for payment until after, on the following Monday, Mr Ma had deposited sufficient money in the relevant account to cover payment of the cheque by the bank.
It is sufficient, for the present, to note that Ms Adams made the decision to terminate the contract if she could, which led to Mr Craig Adams' text message to Mr Dowd that is referred to above. Ms Adams subsequently purported to terminate the contract on the ground that the cheque was not delivered by Mr Ma on an unconditional basis.

The issues

The case raises three issues for determination by the court.
The first is whether or not Ms Adams' purported termination of the contract on 8 December 2014 was valid because, at the time of termination, the plaintiffs were in fundamental breach of the contract because they had not paid the deposit on the making of the contract within the meaning of cl 2.2; for this purpose time being essential. The reason upon which Ms Adams relies is that the delivery of the post-dated cheque by Mr Ma did not constitute the payment of the deposit under cl 2.4 by the giving of a cheque to the deposit holder, because a post-dated cheque is excluded from the definition of "cheque" in cl 1 of the contract.
The plaintiffs quite properly did not assert that Ms Adams could not rely upon this ground to terminate the contract because she was entirely unaware at the time of termination that the cheque had been post-dated. It is well established that, if a party purports to terminate a contract on the ground of one fundamental breach by the other party, the party terminating may rely upon a different fundamental breach that justified termination, even if unaware at the time that the breach had occurred: see Downer EDI Ltd v Gillies [2012] NSWCA 333; (2012) 92 ACSR 373 at [131]; Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11 at [26]; (1988) 166 CLR 245 at 262; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 611; Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 377-378.
The second issue in the case is whether or not Ms Adams' purported termination of the contract was valid because the plaintiffs were in fundamental breach of cl 2.2, because Mr Ma did not give the cheque for the deposit to Mr Dowd unconditionally.
The third issue is whether or not, assuming the termination of the contract was ineffective, the plaintiffs are not entitled to an order for specific performance, because they have not established that they are ready, willing and able to complete the contract themselves. This issue distils into the question whether Ms Adams is entitled to assert that the plaintiffs do not have the finance to complete the contract in circumstances where the plaintiffs have not been able to complete their arrangements to obtain the necessary finance from ING Finance, because Ms Adams has refused to allow the lender's valuer to enter the Property in order to provide a valuation to the lender; the provision of a satisfactory evaluation being a pre-condition to the lender agreeing to confirm its provisional offer to provide finance to the plaintiffs.

Did the plaintiffs fail to pay the deposit before termination?

The plaintiffs conceded that the post-dated cheque was not a "cheque" for the purposes of cl 2.4 of the contract, so that, on the making of the contract, they did not pay the deposit as required by cl 2.2, and accordingly they were in breach of an essential term. However, they say, the right given to Ms Adams by cl 2.5 to terminate would be lost as soon as the deposit was paid in full. Payment in full did not require receipt by the deposit holder of the amount of the deposit in cleared funds. As cl 2.4 permitted the plaintiffs to pay the deposit by giving a cheque to the deposit holder, the instant that the deposit holder held a cheque that was immediately capable of being banked for payment by the plaintiffs' bank, the deposit holder held a cheque that satisfied the requirements of cl 2.4. At that moment the deposit was paid in full, and the right to terminate was lost. That moment occurred the instant following midnight on 7 December 2014. The termination was ineffective because it was delivered after that time.
Ms Adams challenged the validity of this reasoning, but primarily relied upon the argument that Mr Dowd did not have Ms Adams' authority to receive the post-dated cheque in the first place, so that the physical receipt of the cheque that Mr Ma delivered did not constitute receipt by the deposit holder under cl 2.4 of the contract on behalf of the vendor. It is, therefore, immaterial that the date of the cheque occurred before Ms Adams terminated the contract, because the deposit holder held the cheque for the purchasers and not for the vendor.
I have concluded that the plaintiffs remained in breach of an essential term of the contract at the time Ms Adams terminated the contract, and that the termination was accordingly valid.
The first basis for this conclusion depends upon what I consider to be the proper construction of the contract. I am prepared to accept, without deciding, that the final sentence of cl 2.5 does not have the effect that the right to terminate is not lost unless the deposit holder actually receives payment of the deposit in cleared funds. Ms Adams did not make a submission to the contrary. The wording of cl 2.4, in so far as it permits payment of the deposit by giving a cheque to the deposit holder, should have the effect that, if the deposit holder is given a cheque within the meaning of cl 1 of the contract after the making of the contract, and with the authority of the vendor, that will constitute payment of the deposit in full: see also Josland v Mullaley Properties Pty Ltd (1993) 6 BPR 13,285 at 13,289 where Young J (as his Honour then was) said: "The parties appear to have accepted by cl 2 of the contract - and in any event this may now be the position under the general law: see Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 and George v Cluning (1979) 28 ALR 57; [1979] ANZ ConvR 227 - that a personal cheque is an acceptable method of paying a deposit".
However, the better view is that the definition of "cheque" in cl 1 should be construed literally when applied to the operation of cl 2. Under the definition, a cheque that is post-dated is not a cheque for the purposes of the contract, and a cheque that is post-dated when drawn and delivered, remains a post-dated cheque, and does not lose that character when the date that the cheque bears is reached. Simply, the cheque that Mr Ma gave to Mr Dowd did not become a cheque for the purposes of cl 2.4 before Ms Adams terminated the contract.
The following considerations tend to support this literal construction of the contract.
The standard form of contract for sale has changed since the decision of the High Court in Brien v Dwyer (1978) 141 CLR 378, but a number of observations made by the majority of the Justices in that case support the construction of the present standard form of contract that I prefer. In that case, the contract did not require the deposit to be made "on the making of this contract" as does cl 2.2 in the present case. It is not necessary to consider the High Court's decision as to when the deposit was required to be paid in that case. The deposit was purported to be paid after the stipulated time by a personal cheque that was post-dated, and the purchaser gave an instruction to the deposit holder not to bank the cheque until given an instruction by the purchaser to do so. The vendor knew nothing of this; assumed that the deposit had been paid in accordance with the contract; and did not authorise the deposit holder to accept a cheque that did not comply with the contract. In due course, after the date on the cheque had passed, the purchaser instructed the deposit holder to bank the cheque; it was banked, and paid. On the same day that the cheque was paid, the vendor terminated the contract. The High Court held: Barwick CJ and Gibbs, Stephen and Aickin JJ; Jacobs J dissenting that the termination of the contract by the vendor was valid. It may be noted that one relevant change to the standard contract of sale that has been made is the inclusion of the final sentence in cl 2.5, whereby the right to terminate is lost as soon as the deposit is paid in full.
The following commentary on the significance of the decision in Brien v Dwyer by Doyle CJ in W & R Pty Ltd v Birdseye; [2008] SASC 321; (2008) 102 SASR 477, is helpful for present purposes: [26] In Brien v Dwyer (1978) 141 CLR 378 Barwick CJ described a deposit (in the context of a contract for the sale of land) as an "earnest of performance": at 385 and 386. Gibbs J said that the primary purpose of a deposit was as "a guarantee that the purchaser means business". Stephen J described its purpose in similar terms at 398, as did Jacobs J at 401 and Aickin J at 407. [27] The purpose and character of a deposit were relied on by each member of the Court in Brien to support a conclusion that upon failure by the purchaser to pay the deposit when required by the contract, the vendor was entitled to rescind the contract without prior notice to the purchaser, and without giving to the purchaser a notice that made time for payment of the deposit of the essence of the contract: Barwick CJ at 385, Stephen J at 398, Jacobs J at 401 and Aickin J at 407. As Gibbs J said at 393: It was not necessary for the vendor, before he terminated the contract, to give notice requiring payment of the deposit within a reasonable specified time. The time for payment of the deposit was, as I have held, fixed by the contract, and the condition that the deposit be paid upon the signing of the agreement was an essential term going to the very root of the contract, the breach of which would immediately entitle the vendor to terminate the contract … [28] These aspects of the reasoning of the members of the High Court in Brien were referred to with approval by Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in Romanos v Pentagold Investments Pty Ltd [2003] HCA 58 ; (2003) 217 CLR 367 at [19]-[20]. [29] The status of a contractual term requiring the payment of a deposit, and the consequences of a failure to make payment as required, are matters that depend on the construction of the agreement in question in each particular case. But the purpose of a deposit, and the common understanding that failure to pay a deposit as required entitles a vendor to terminate a contract immediately, are matters to be borne in mind when considering the meaning of the contractual provisions in question in this case.
Although, as Doyle CJ noted, the issue ultimately depends upon the construction of the present contract, in my view, the general considerations espoused by the High Court remain material to the process of construction. At the heart of the decision was the proposition that the primary purpose of a deposit is as an earnest of performance, so that the vendor can be confident that the vendor has a genuine contract. If the purchaser purports to pay the deposit with a post-dated cheque with the knowing agreement of the vendor, no problem will arise because the vendor has accepted the performance offered by the purchaser. The problem will arise where the vendor does not know that a proper deposit has not been paid and whether or not the deposit holder is aware of the breach. In this case, the vendor may proceed as if the vendor has the expected earnest of performance, and act accordingly. It will follow that the vendor will not appreciate that the cheque is post-dated, or know what that date is. As the High Court made clear, this is a fundamental shortcoming in the protection intended to be afforded to the vendor under the contract. The importance of the protection is such as to justify a conclusion that an attempt to pay the deposit by delivery of a post-dated cheque is intended by the contract to be absolutely prohibited; to avoid the possibility that, during the time before the date on the cheque arrives, the vendor in ignorance will not have the protection that the vendor believes he or she has. The vice that is sought to be avoided by prohibiting post-dated cheques is not adequately remedied in the circumstances of a particular case where, also unknown to the vendor, the date written on the cheque arrives.
Professor Butt in The Standard Contract for Sale of Land in New South Wales, (2nd ed 1998, LBC Information Services), appears to accept this reasoning at [2.39], where he says: "It is relevant that, under cheques legislation, a cheque is not invalid merely because it is post-dated. The contract is concerned, not with the validity of post-dated cheques, but with their effectiveness as an earnest of the bargain. The security function of a deposit is only fulfilled by a cheque that is immediately payable".
Of the Justices in the majority in Brien v Dwyer, Barwick CJ and Gibbs J made specific statements that are directly inconsistent with the submission made by the plaintiffs that the post-dated cheque effectively became a cheque for the purposes of the contract as soon as the date on the cheque arrived. Barwick CJ said at 387: The cheque spoken of in cl 1 is a cheque proper, i.e., an order on a bank for immediate payment. A post-dated cheque is a bill of exchange of a different order…
Aickin J said on this subject at 407-408: No doubt a post-dated cheque is a valid instrument - see Bills of Exchange Act 1909-1973 (Cth), s 18(2) (Bills of Exchange Act 1882 (UK), s 13(2)) and this was so before the passing of the latter Act. However, it is not a 'cheque' within the meaning of the Bills of Exchange Act which by s 78 (1) defines a cheque as a 'bill of exchange drawn on a bank payable on demand'. I take that to be the ordinary meaning of the term; hence the need for the adjective 'post-dated'. It is, I think, clear that a post-dated cheque is a bill of exchange payable at a future date. There is no authority for the proposition that it becomes a cheque properly so-called when the date on which it bears arrives…
Their Honours appear to be saying that a post-dated cheque, so-called, is not strictly a cheque, although it is a bill of exchange, and that circumstance does not change when the date that the post-dated cheque bears arrives.
Mr CR Craigie considered this question in an article called "Post-dated cheques' in (1983) Australian Business Law Review 107. At the time he wrote this article, Mr Craigie was a very experienced banking lawyer, who was well versed in Australian banking practice. Mr Craigie was principally concerned with the possibility that, if a post-dated cheque was only a bill of sale, and not a cheque, even after the date that it bore arrived, bankers would be deprived of the various protections contained in the Bills of Exchange Act, that were provided for bankers in respect of their dealings with cheques. A particular basis of Mr Craigie's concern was that, if a post-dated cheque is held by the payee and not put into circulation until its ostensible date, neither the paying bank nor any collecting bank will know that it is dealing with a post-dated cheque, or that the expected protections are not available.
Mr Craigie considered in some detail the history of the law that may have given rise to the statements of principle made by Barwick CJ and Aickin J. It is not necessary, for the purpose of considering the proper construction of the contract in the present case, to consider Mr Craigie's historical analysis in detail.
Mr Craigie noted (at 112) that banks in England established a practice of refusing to pay post-dated cheques, but that it was a matter of some difficulty to establish the true basis on which the banks founded that practice. In the early 19th century cheques were exempted from the stamp duty that was payable on other bills of exchange. The exemption required that the cheque be payable to the bearer on demand, and that it bear a date on or before the date the cheque was issued. The fines imposed where the requisite stamp duty was not paid on instruments that did not satisfy the requirements of the exemption were severe; but more importantly, bankers were prohibited from debiting the amount of the instrument when paid to the customer's account, if the requisite stamp duty was not paid. This state of affairs continued until the repeal of the relevant statute in about 1858. Mr Craigie observed (at 113) that during the subsistence of the statutory prohibition on paying post-dated cheques, there was apparently little reason for any enquiry into the exact legal nature of instruments of that type. A practice developed that bankers in the City of London would not pay post-dated cheques, even after the date on the cheque, if the bank knew that it was post-dated. Some cases were decided on the basis that by custom it was an implied term of the contract between the bank and its customer that the bank was not required to pay cheques that were known to be post-dated.
With respect, it appears likely that these considerations influenced Barwick CJ and Aickin J to make the observations that have been set out above; although it may be that this aspect of the law is one of those areas that is gradually disappearing into the mists of time.
There are a number of more recent developments that may justify doubt as to the current validity of the observations made by their Honours. As Mr Craigie observed (at 117), banking practice has changed "including the more recently adopted banking usage of not paying before, but paying on or after, the date of the instrument".
In Hodgson & Lee Pty Ltd v Mardonius Pty Ltd (1986) 5 NSWLR 496, Samuels JA, with whom Kirby P and Hope JA agreed said at 500-501: The third defendant can derive little comfort from those judgments, but seeks to rely upon dicta in Brien v Dwyer (1978) 141 CLR 378. There, in purported compliance with a provision in a contract for the sale of land which required him to pay a specified sum as deposit, the purchaser delivered a post-dated cheque. The clause permitted payment by cheque and this, according to Barwick CJ (at 387) meant: "… cheque proper, ie an order on a bank for immediate payment. A post-dated cheque is a bill of exchange of a different order and does not, in my opinion, satisfy the description of a cheque in cl 1." It is readily to be accepted that a post-dated cheque might not satisfy what the contract contemplated and Barwick CJ's remarks should not be taken to go further than that. Aickin J dealt with the point in a little more detail (at 407-408) and (at 408) said: "… It is, I think, clear that a post-dated cheque is a bill of exchange payable at a future date. There is no authority for the proposition that it becomes a cheque properly so-called when the date which it bears arrives." And his Honour then goes on to deal with the principle upon which what I have called the stamp objection cases depended. But, with great respect, there is authority for the proposition which Aickin J denies and it is to be found not only in Robinson and Pollock (which Aickin J expressly approved) to which I have explicitly referred, but in Royal Bank of Scotland v Tottenham and, indeed, in the other cases in which the question of sufficiency of stamping arose. In my opinion, the instruments here were available to be sued on as cheques. The evidence establishes that they were drawn by the third defendant and dishonoured; and I can perceive no defence.
The Court of Appeal effectively held that a cheque that is post-dated remains a "cheque" within the meaning of the Bills of Exchange Act 1909 (Cth) s 78, and may be sued upon as a cheque if dishonoured after presentment.
Further, it is to be noted that the effect of s 16 of the Cheques Act 1986 (Cth) is that a cheque is not invalid by reason only that it is post-dated; and that for the purpose of determining whether a post-dated instrument is a cheque, the fact that the instrument is post-dated shall be disregarded.
While it appears that, on the present state of the law, a post-dated cheque is a valid cheque, and the customer's bank is obliged, if it holds sufficient funds of its customer, to pay a post-dated cheque if it is presented for payment on or after the date of the cheque, I do not think this consideration is an adequate reason for construing the contract in the present case as having the effect that, notwithstanding the definition of "cheque" in cl 1, payment of the deposit is made for the purpose of cl 2.4 at the beginning of the day that is the date on a post-dated cheque that has been given to the deposit holder for the purpose of paying the deposit. The definition of "cheque" in the contract is consonant with the views expressed by Barwick CJ and Aickin J in Brien v Dwyer, and there is no appearance in the wording of the contract that its drafters intended to achieve a different result.
In any event, I have concluded that Mr Dowd's acceptance of a post-dated cheque, and his issue of a trust receipt, where the cheque did not comply with the requirements of the contract, and his principal, the vendor, was ignorant of the non-compliance, and did not authorise him to accept the cheque, was unauthorised, and not an acceptance for the purposes of the contract. Mr Dowd held the cheque for the plaintiffs rather than Ms Adams, and the fact that the day of the date that the cheque bore commenced before the time the contract was terminated is immaterial.
I respectfully adopt the following statement concerning the ambit of the usual authority of a real estate agent acting for a vendor on sale, given by Brereton J in Markson v Cutler & Anor [2007] NSWSC 1515; (2007) 13 BPR 25,127: [7] There is no doubt that Mr Finger had the usual authority of a real estate agent acting for a vendor on a sale. However, appointment as a real estate agent does not confer authority to bind the vendor to anything. A real estate agent has authority to find a purchaser, not to bind the vendor to terms with the purchaser. So much is made clear by high authority, such as Brien v Dwyer (1978) 141 CLR 378 at 387 (Barwick CJ), 395 (Gibbs J); Peterson v Maloney (1958) 84 CLR 91 at 94-5; and Sorrell v Finch [1977] AC 728 at 753. Moreover, that an agent is authorised to receive a deposit - and, similarly, that the contract directs payment of the deposit to the agent - does not confer on a real estate agent authority to bind the vendor in dealings in respect of the deposit, but only authority to receive it in accordance with the terms of the contract [Brien v Dwyer (agent's purported acceptance of a post-dated cheque did not bind vendor); New Zealand Tenancy Bonds Ltd v Mooney [1986] 1 NZLR 280; Rossdene Pty Ltd v Carolina Corporate Properties Pty Ltd [1987] ANZ Conv R 401 at 404; Josland v Mullaley Properties (1994) NSW Conv R 55-695; Proton Investments Pty Ltd v Vahekin Pty Ltd (1991) NSW Conv R 55-452].
As Barwick CJ said in Brien v Dwyer at 387, in respect of the agent's acceptance of a post-dated cheque for the deposit, after the time specified for payment of the deposit: Clearly, the estate agents had no authority to accept that document as under the contract… All of the acts of the estate agents to which I have referred were done in the interests of the purchaser. None was for the benefit of the vendors; none was within the vendor's authority to the estate agents. None of these acts, including the receipt of the proceeds of the March document, can be accounted as acts of the vendors, nor, in my opinion, as relevant to their rights or the exercise of their rights.
Accordingly, the acceptance by Mr Dowd of the post-dated cheque, in ignorance of the fact that it was post-dated, and did not comply with the requirements of the contract, was not an acceptance of the cheque for the purposes of cl 2.4 of the contract. As nothing changed vis-a-vis the authority given by Ms Adams to Mr Dowd in respect of accepting the cheque, the plaintiffs did not at any time give to the deposit holder the deposit required by the contract.
It follows that an order must be made dismissing the plaintiffs' application for relief.
If this reasoning is correct, it disposes of the plaintiffs' claim, so that it is not strictly necessary for me to determine the second and third issues that I have set out above.
However, as the issues have been argued by the parties before me, and as this case may go further, it will be appropriate for me to deal with those issues to the extent that I will do so below.

Did the plaintiffs deliver the cheque for the deposit conditionally?

Until it was realised on behalf of Ms Adams that the cheque that Mr Ma had given to Mr Dowd was post-dated, the basis of Ms Adams' resistance to the relief claimed by the plaintiffs was that she was entitled to terminate the contract when she did, because the plaintiffs were in breach of an essential term. This was because Mr Ma gave the cheque to Mr Dowd with an instruction that it was not to be banked until the plaintiffs had an opportunity on the following Monday, 8 December 2014, to put money in the account upon which the cheque was drawn to cover the amount of the cheque. Ms Adams maintained this defence in addition to her reliance on the consequences of the cheque being post-dated.
This defence is based upon the terms of cl 2.4 of the contract, which permits the purchaser to "pay any of the deposit only by unconditionally giving… a cheque to the deposit holder…"
The position adopted by the plaintiffs was that Mr Ma did not in fact give the cheque to Mr Dowd subject to the condition alleged by Ms Adams. Rather, he simply advised Mr Dowd that the bank account did not, on that day, contain sufficient funds to meet the cheque; and asked if it was acceptable if the plaintiffs took steps to transfer the necessary funds into the account to enable the cheque to be paid upon presentation in the ordinary course on the following Monday. The plaintiffs say that Mr Ma offered, if Ms Adams preferred, to provide a bank cheque on the Monday in substitution for the personal cheque, but Mr Ma did not make it a condition of the delivery of the personal cheque that the plaintiffs have the right to substitute a bank cheque for that cheque. They say that Mr Dowd sought Ms Adams' instructions that she was happy for him to accept the cheque that was proffered on that basis, and Mr Dowd conveyed her agreement to Mr Ma.
The issue is thus a question of fact to be determined upon the basis of all of the relevant, and often inconsistent, evidence.
I have concluded on the balance of probabilities that the plaintiffs are entitled to succeed in their claim that Mr Ma did not impose a condition on his delivery of the cheque within the meaning of the term "unconditionally" in cl 2.3, so that the circumstances of his delivery of the cheque did not have the legal effect that the plaintiffs were in breach of an essential term of the contract by reason of their failure to pay the deposit on the making of the contract.
The evidence given by the various witnesses was, in many respects, inconsistent. Aspects of the events in question, however, had the effect, in my view, of increasing the likelihood that individual witnesses would not clearly or accurately recall significant events. So far as the plaintiffs were concerned, they acted under the influence of the high levels of excitement that would ordinarily be experienced by persons who have just succeeded at an auction for a valuable property. For Mr Dowd, on the other hand, the auction was part of his ordinary business; albeit the culmination of a significant marketing campaign. Mr Dowd had to go to another auction as soon as the business of auctioning the Property had been completed. Ms Adams and her family, on the other hand, were bitterly disappointed with the result of the auction, and this disappointment was inflamed by their understanding that the plaintiffs did not have in their bank account enough money to meet the cheque for the deposit. Furthermore, Ms Adams and her witnesses accepted that they all discussed over the weekend at some length the events that had happened during and immediately after the auction; which has the consequence of naturally tending to cause those witnesses to develop a consistent recollection of the events. Finally, the duration of the auction process was short, and the time that would have been required for the signing of the contracts and the payment of the deposit was also not lengthy. Circumstances such as these are inherently likely to give rise to differing recollections of what occurred; and that is what I am satisfied happened in the present case.

Mr Ma's credibility

Mr Ma prepared his affidavit in English, and was cross-examined in English. He is a native Mandarin speaker, and I was told by his counsel he studied English in high school in China. Mr Ma came to Australia on 10 March 1990; he was granted Australian permanent residency in March 1995, and became an Australian citizen on 31 March 1998. He clearly has a substantial amount of experience conversing in English. He still has a pronounced accent, and on occasions struggled with English syntax in the answers that he gave in evidence. With a few exceptions, however, he made himself understood clearly enough. It appeared to me that Mr Ma could understand questions that were put to him clearly in English, better than he could usually express his own answers. He gave relatively immediate answers to questions that were short and simple, and went to the heart of the issues. I am satisfied that Mr Ma was generally able to do justice to his responses.
I formed the view that Mr Ma was generally a credible witness. He appeared to be frank and direct in his answers, and he was consistent in the position he adopted in relation to all significant matters.
As I have noted above, however, I do not feel able to accept Mr Ma's denial that he made a request to Mr Dowd about whether he could pay the deposit in five instalments per day over the coming week.

Ms Deng's credibility

Ms Deng has little command of English; she speaks Mandarin in her home; and she gave her evidence in that language through an interpreter. Ms Deng migrated to Australia in about September 2003, and became an Australian citizen on 25 June 2007.
Ms Deng said that her husband interpreted for her from English to Mandarin what was being said by the various people after the end of the auction, although she "understood some of it".
She supported Mr Ma's evidence that he did not say anything about bringing money from China to Australia to pay the deposit, or paying the deposit in instalments, or paying the deposit later. Ms Deng claimed that, even though she could not understand most of what was said in English, and relied upon the interpretation of her husband, she understood the words "China" and "money" and would have understood if Mr Ma had made a request to Mr Dowd that included those words.
Although Ms Deng's testimony generally supported the evidence given by her husband, I did not ultimately consider it to be very significant. I accept that Ms Deng generally appeared to do her best to answer the questions that were asked of her in cross-examination, although that process was, as is often the case, significantly impeded by the need for interpretation.
I have not accepted Mr Ma's claim that he did not say anything about paying the deposit in instalments, or arranging for money to be transmitted from China, so ultimately the question whether or not Ms Deng heard the words "China" or "money" is not of great significance.

The credibility of Ms Adams and her son and daughter in law

It is convenient to consider the evidence given by these three witnesses together.
Ms Adams is an elderly woman. She is physically frail. However, I am satisfied that she is mentally capable. She appeared to answer the questions that were put to her in cross-examination candidly.
After the auction, Mr Dowd sat with the plaintiffs in the dining room of the Property at the dining table in order to complete the execution of the contract. Ms Adams was in the lounge room which adjoins the dining room. As I understand the evidence, there was an opening between the two rooms. Ms Adams claims that she could hear what was said by the people in the dining room, although I am not sure of the distance between the dining table and the place where Ms Adams was sitting on a seat on her walker leaning on the pool table for support; or how easy it was for Ms Adams to hear clearly what was said.
Relevantly, Ms Adams said that she heard Mr Ma say: "I have a cheque but don't bank it until Wednesday or until I tell you".
Mr Craig Adams told the court that he had extreme difficulty in reading, because he suffers significantly from dyslexia. That would not affect his ability to hear and remember what was said after the end of the auction. It is clear that Mr Adams came and went from the dining room on one or more occasions, and after he heard Mr Ma making a request that caused Mr Adams to think that the plaintiffs did not have the money to pay the deposit, he left the room to go to the front of the house to see whether any bidders were still around, and he had a cigarette with his wife, Martha, on the veranda of the Property.
Mr Adams also said that he heard Mr Ma say to Mr Dowd: "I can give you a cheque but you can't bank it until Wednesday". He added that Mr Ma said: "You have to hold it. You cannot bank it until I say. If you bank it, it won't work". After Mr Dowd insisted upon payment of the 10% deposit, Mr Ma said: "you have to wait. You have to wait, there's no money in there". Mr Adams said that it was these statements that caused him to think that the plaintiffs did not have the money to pay the deposit, and it was only after these statements that he left the dining room to go out to the front of the house.
Mr Adams also appeared to make a genuine attempt to give truthful answers to the questions that were asked of him in cross-examination.
Most of Ms Martha Adams' evidence concerned the auction itself and the events that led to the Property being knocked down to the plaintiffs for $1,050,000. Ms Adams was extremely disappointed by the auction process and the result, and became agitated, and left to sit on the front veranda. Ms Adams gave evidence concerning Mr Ma's request to pay the deposit at $20,000 per day from money in China, but she did not claim to overhear any statement by Mr Ma concerning when the deposit cheque should be presented for payment. Ms Adams said that she formed the view that the plaintiffs did not have the money to pay the deposit. She said that just before Mr Dowd left to go to another auction: "I wanted to punch him I was so angry". Ms Adams said in cross-examination that this was only a figure of speech.
Although I accept that it is most probable that Ms Adams and her son and daughter in law genuinely believe that Mr Ma made statements when he delivered the cheque to Mr Dowd that made that delivery conditional, I am not prepared to rely upon their evidence to find that Mr Ma made the statements that they claim he made.
The absolute statements that Mr Ma is said to have made concerning the non-presentation of the cheque for payment for some time are ultimately not all that different from the statements that Mr Ma says he made; the difference being primarily one of definiteness and degree.
As I have already said, as Ms Adams and her witnesses readily conceded, they were all extremely disappointed, angry and agitated. I do not regard these circumstances as being conducive to their clear hearing, understanding and recollection of the precise words used by Mr Ma.
Furthermore, it is clear that the three witnesses revisited and discussed the events during and following the auction over the course of the weekend, and in my view it is inevitable that they gradually formed a common recollection of what was said, and they reinforced to each other that recollection. That process has had the inevitable result that the reliability of their evidence is diminished; as it is the less likely to reflect each witness' independent and genuine recollection.

Mr Hooper's evidence

Mr Hooper did not become involved until early on the morning of Monday, 8 December 2014, when he received instructions from Ms Adams that she wished to terminate the contract.
Mr Hooper's evidence is primarily relevant in respect of his communications with Mr Dowd on the Monday. It is most conveniently dealt with in the context of Mr Dowd's evidence.
Mr Hooper substantially based his evidence on the notes that he took at the time and the correspondence, as well as his recollection.
Mr Hooper gave his evidence as would be expected of a solicitor of this court, and I accept it as being honestly and carefully given.

Mr Dowd's evidence

Mr Darren Edward Dowd affirmed an affidavit on 16 May 2015 that was read in the plaintiffs' case.
Mr Dowd is a real estate agent who is employed by Ray White Baulkham Hills. As I have said, he was Ms Adams' agent for the purpose of selling the Property.
Ms Adams entered into an auction agency agreement with Ray White on 2 September 2014.
Mr Dowd gave evidence in his affidavit concerning the advice that he gave to Ms Adams concerning how her property should be put to market; how the auction was conducted; and the circumstances in which, according to Mr Dowd, Ms Adams gave an instruction to reduce the reserve price. The reduction in the reserve led to the auctioneer knocking the property down to Mr Ma. As I have also said, at one stage it appeared that there may have been an issue in these proceedings as to whether the property was sold to the plaintiffs without the authority of Ms Adams. A considerable body of evidence in the case went to that incipient issue. However, it became clear from the outline submissions that were provided by Ms Adams before the hearing began that this issue would not be pursued. Accordingly, it is not necessary to explore the evidence that Mr Dowd gave concerning the period up to the time when the property was knocked down to Mr Ma.
Mr Dowd gave the following evidence concerning the events after the auction itself had been completed: 20. I returned to the interior of the house and informed [Ms Adams] that the property had been sold. Thereafter perhaps after 10 minutes or so, I invited [Mr Ma] and his wife [Ms Deng] into the house. We sat at a dining room table in the dining room. I sat at the head. [Mr Ma] sat on my left and [Ms Deng] sat on his left. To the best of my recollection, [Mr Adams] was on my right. 21. I ask (sic) Mr and Mrs Ma to produce their Drivers' Licenses even though one of my staff had already inspected Mr Ma's licence and I completed the hand written particulars in the box on the first page of the contract. [Evidence not pressed] I altered the contract on the front page by changing the completion date. 22. Mr Ma produced his cheque-book and to the best of my recollection said to me words to the effect of "There are insufficient funds in my account today and I will either put funds into my account over the weekend to cover the cheque or replace the cheque with another form of payment. I will come and see you on Monday morning". I said to [Mr Adams] words to the effect "Is that OK with you" and [Mr Adams] said "yes". Thereafter Mr Ma gave me a deposit personal cheque for $105,000. 23. After I completed the contract, I spoke to [Ms Adams]. She had been waiting in the living room adjacent to the dining room and probably able to overhear the conversation in the dining room. However, I took her through the front page of the contract and pointed out the alteration to the completion date and the particulars relating to the purchasers and the purchase price and the deposit. I said to [Ms Adams] words to the effect "The purchasers had said that there are insufficient monies in the cheque account to cover the cheque but they will put more monies in over the weekend or replace it with a bank cheque on Monday, is it OK"? To which [Ms Adams] said "yes". Thereafter [Ms Adams] initialled the completion date alterations and signed the contract as the vendor. 24. The atmosphere in [Ms Adams'] house was very happy and there were smiles all round and both [Ms Adams] and [Mr Adams] congratulated me for the good result.
There is an additional sentence at the end of par 24, being: "Prior to [Mr Ma] attending we received a phone call from the vendor's solicitor". It seems from the context that this sentence has been placed out of order in the affidavit, and it was intended to refer to something that happened on the following Monday, 8 December 2014.
Mr Dowd gave the following evidence in his affidavit concerning relevant events that occurred on the Monday after the auction, 8 December 2014: 25. On Monday, 8 December 2014, I was in my office at Ray White Baulkham Hills when Mr Ma attended at approximately 10:30 AM. He informed me to the effect that he had transferred sufficient funds into his account to cover the cheque. To the best of my recollection, he offered to provide me with a bank cheque in lieu of the cheque for $105,000 given to me two days before. I said to him "We are required to bank the cheque you provided to us and have been instructed not to accept a replacement cheque. I also said to him we have received a letter from the vendor's solicitor. You need to obtain some legal advice. I also provided to Mr Ma a copy of a letter from David Hooper dated 8 December 2014. 26. After Mr Ma left, I telephoned Paul Wright [the auctioneer] and had discussions with him and I then made a file note of which is annexed and marked "C". In the note, I wrote "the purchaser confirmed in [Mr Adams'] and [Ms Adams'] presence that there were insufficient funds in their account, but the cheque (personal cheque) would be replaced on Monday morning with another form of payment and that he (the purchasers) would go directly to ING Direct in the city to sort it out." The first reference to "would be replaced" was intended to be a reference to Mr Ma attending to payment of the deposit by other means. The note does not refer to Mr Ma saying he will produce a bank cheque on Monday as an alternative. However that is my recollection. 27. The file note also refers to Mr Ma arriving at our office at approximately 10:30 AM 8 December 2014 with a replacement cheque. However, I did not sight a replacement cheque. Mr Ma did not show me a replacement cheque on 8 December 2014 or any other day. I believe he offered me one but I refused stating words to the effect of "we must bank the cheque you provided to us". Mr Ma at that time (sic) words to the effect "that is okay as funds are available". 28. It is our normal procedure to bank a deposit cheque on the Monday after receiving them on Saturday prior and in this case, the cheque provided to us on Saturday by Mr Ma was banked on Monday.
Annexure C to Mr Dowd's affidavit (referred to in par 26) contained the following file note dated 8 December 2014 at 10:09 AM in Mr Dowd's handwriting: Spoke to Paul Wright (the auctioneer) and I briefed Paul as to the issue. Paul confirmed a discussion with [Ms Adams] of the point of adjusting the reserve and quote "I cannot promise any more money out there, but we will do our very best". I Darren Dowd had also had a similar discussion with [Ms Adams] and [Mr Adams] they both [Ms Adams and Mr Adams] confirmed just "sell it". The reserve later was adjusted by [Ms Adams] and initialled accordingly. The purchasers confirmed in [Mr Adams and Ms Adams'] presence that there were insufficient funds in the account, but would be replaced (personal cheque) would be replaced (sic) on Monday morning with another form of payment and that he (the purchaser) would go directly to ING Direct in the city to sort out. Note: I informed the purchaser [Mr Ma] that we will be banking the cheque on Monday. [Mr Ma] said "that is okay as funds will be available". Numerous times the vendor understood and agreed that this was going to be the case. [Mr Ma] arrived at our office at approximately 10:30 AM with a replacement cheque.

Mr Dowd's credibility

The relevant events occurred primarily on 6 and 8 December 2014, about 5 months before Mr Dowd prepared his affidavit. He was cross-examined on 24 August 2015, a further 3 months after the events occurred.
Mr Dowd is a witness who was independent of the parties to these proceedings. It was put to him by counsel for the defendant that he had an interest in preserving the validity of the contract of sale (presumably, so that he could protect his employer's entitlement to receive the commission). He accepted that when Mr Ma asked him to give evidence in the plaintiffs' case, he agreed to do so. He also acknowledged that he had been asked by the solicitor for the defendant to give evidence for the defendant. He did not do so, and the evidence does not establish why that was so.
I formed the strong view that Mr Dowd was a careful and honest witness, who did his best to give truthful answers to the questions that he was asked. That is reflected in the fact that he found it necessary to respond to many questions by saying that he could not remember, or that his memory was vague. The events that happened at the auction on 6 December 2014 happened on a day that was a very busy work day for a real estate agent (as is a matter of common knowledge). The events that occurred at the auction were in the ordinary course of Mr Dowd's employment. Immediately after the formalities were completed following the auction, Mr Dowd had to go to another auction. Mr Dowd also said that Mondays, as was 8 December 2015, were also very busy days, as it was necessary to process all of the documentation that arose out of the previous Saturday's business. I am satisfied that Mr Dowd's frequent responses that he could not remember, or that his memory was vague, were genuine. The responses arose out of what I believe to be Mr Dowd's belief that it was necessary for him to give precise and truthful answers to questions, so that he should not give positive answers if his recollection was inadequate.

Mr Hooper's communications with Mr Dowd

Mr Hooper gave evidence that he had the following conversation with Mr Dowd at about 9:30 AM on the Monday morning: I said, I want to know what happened at the auction. Daphne Adams says the property was sold but the purchaser did not pay a deposit. He said, The buyer is on his way to my office to swap the deposit cheque he gave me at the auction with a bank cheque. He said, On the day the purchaser wanted to pay $20,000 a day from Monday until the 10% deposit was paid but I said "No. Too messy." I said I need a cheque for $105,000 now. He then wrote a cheque. … He said, He said there was no money in that account and that I couldn't bank it and said he'd swap it over on Monday. He said he would swap it over for a bank cheque. Craig was OK with it. I said, Was the vendor Daphne Adams asked if she agreed to the deposit being paid later? He said, No. She was not asked. … He said, I have heard from the purchaser just now at 9:30 and he says he is getting money from ING Head Office in the city and would bring a bank cheque and be at my office at 10:30 or 11 o'clock.
Mr Hooper prepared a file note of his conversation, which was annexed to his affidavit. It is hand written, and there is no typed transcription. It indicates that the conversation lasted for five minutes. Mr Hooper's hand written notes appear to be a relatively full outline of what Mr Hooper recorded in his affidavit.
At Mr Hooper's request, Mr Dowd faxed a copy of the front page of the contract to Mr Hooper that was received at 9:58 AM.
Mr Hooper sent to Mr Dowd an email at 10:18 AM on Monday, 8 December 2014, which relevantly said: I note you agree the purchaser at the auction on Saturday handed over a cheque for the deposit with instructions not to bank it as there was insufficient money in the account to cover the cheque. You are instructed herein not to accept to accept (sic) a replacement cheque from the purchaser. The vendor is terminating the Contract forthwith as there was a breach of an essential term of the Contract. Confirmatory letter attached.
The attached confirmatory letter was addressed to Ray White, attention Mr Dowd. It repeated the first three paragraphs of the email (without the bold underlining in the second paragraph).
Mr Dowd also received a copy of Mr Hooper's 8 December 2014 letter to the plaintiffs' then solicitors, by which Ms Adams purported to terminate the contract. Mr Dowd handed a copy of the letter to Mr Ma on the morning of 8 December 2014. It contained the statement: The purchaser at the auction on Saturday handed over a cheque for the deposit with instructions not to bank it as there was insufficient money in the account to cover the cheque.

What did Mr Ma say when he handed over the cheque?

As I have already stated above, I am not prepared on the evidence to find on the balance of probabilities that, when Mr Ma handed the deposit cheque to Mr Dowd, he expressed any absolute condition that the cheque should not be presented for payment; and in particular I find he did not say that it should not be presented for payment until the following Wednesday, as Ms Adams and her son have claimed.
In evidence, the parties went in considerable detail into Mr Ma's actions over the weekend to ensure that the necessary funds were paid into the bank account upon which the deposit cheque had been drawn; and also the activities of Mr Ma and Mr Dowd on the Monday in relation to the meetings between them, and the steps taken by Mr Ma to cause money to be paid into the cheque account. It is not necessary to attempt to analyse all of that evidence in detail; and in my view the exercise would not be helpful.
It is true that, on the findings that I have made, Mr Ma made some form of request to Mr Dowd that he be permitted to pay the deposit in five equal daily instalments, and that that request was rejected.
Mr Ma then wrote out the deposit cheque and gave it to Mr Dowd. As I have noted above in the statement of facts, there were insufficient funds in the cheque account to cover payment of the cheque. However, it is clear that the plaintiffs had readily available resources to cover the cheque. They had a drawdown facility with ING Direct that, when added to $20,000 in cash that Mr Ma had, was sufficient to fund the payment of the deposit cheque. That is clearly established because that is what happened over the course of the weekend and on the Monday, and the cheque was paid upon presentation.
The evidence does not disclose any objective reason why Mr Ma would have placed an absolute condition on the presentation of the cheque for payment, provided that he was satisfied that he had disclosed to Mr Dowd that he would need to place money in the cheque account over the weekend, and that the vendor accepted that position, so that the cheque could be paid on presentation on the Monday. I accept that Mr Ma and Mr Dowd both acted on the belief, as was the case, that as the auction had taken place on Saturday, Mr Dowd could not present the cheque for payment until the following Monday. I appreciate that an issue potentially arises out of the possibility that Mr Dowd could have presented the cheque for collection before Mr Ma caused the necessary funds to be transferred into the cheque account at the paying bank. However, the timing issue is not the relationship between the banking of the cheque into the Ray White bank account and the timing of the transfer of the funds into the cheque account. The relevant timing is when, after the banking of the cheque, it is presented by the collecting bank to the paying bank; which in the modern world is something that is done electronically at a particular time after the close of business on a banking day. I am satisfied that Mr Ma and Mr Dowd understood that, provided the necessary cleared funds were in the cheque account by the time the payment of the deposit cheque was processed electronically, the deposit cheque would be paid in the ordinary course.
I formed the view that I should accept the evidence given by Mr Ma and Mr Dowd; primarily as Mr Dowd was an independent witness and, notwithstanding that his recollection was vague in many respects, and his evidence was not perfectly clear in cross-examination, upon analysis, he consistently adhered to the position that, to his recollection, he had not accepted the conditional payment of the deposit.
I have no reason to find that Mr Dowd did not understand his duties under the contract; albeit it is clear that he did not notice the day upon which the cheque was dated. I am satisfied that Mr Dowd would not knowingly have accepted the payment of the deposit on a conditional basis, without bringing that circumstance to the attention of the vendor, and obtaining proper instructions, before he accepted a deposit cheque that did not comply with the requirements of the contract.
It follows from the fact that I have accepted that Mr Ma initially asked Mr Dowd if the plaintiffs could pay the deposit in five daily instalments that the issue of the timing of the payment of the deposit was at the forefront of the minds of Mr Ma and Mr Dowd. As Mr Dowd summarily declined to contemplate the payment of the deposit in instalments, it is unlikely that he would immediately have agreed to accept a cheque for the deposit subject to an absolute condition that it not be banked until Mr Ma authorized that to happen. Further, if Mr Ma had made that request, it is likely that Mr Dowd would have remembered it, and probably recorded it in his file note prepared on the following Monday. As the plaintiffs had the funds available to transfer them into the relevant cheque account to cover the deposit cheque, it is unlikely that Mr Ma would only have delivered the cheque if Mr Dowd had agreed that it would not be banked until and unless Mr Ma said that should happen. The steps that Mr Ma took over the weekend to ensure that the $83,000 was transferred by ING Direct into the cheque account, and his actions on Monday morning to attend the bank and pay in $20,000 in cash, before he had spoken further with Mr Dowd, are objectively consistent with Mr Ma acting in the belief that he had to ensure that the deposit cheque was covered by money in the cheque account as early as possible on Monday. In my view, these objective considerations provide a powerful reason for accepting the version of events given by Mr Ma and Mr Dowd on this issue.
There is a clear inconsistency between the terms of Mr Dowd's 8 December 2014 file note, where it says that the purchasers confirmed that there were insufficient funds in the account, but they would be replacing the personal cheque on Monday morning with another form of payment, presumably a bank cheque, and Mr Dowd's recollection that all Mr Ma offered to do was to replace the personal cheque if Ms Adams preferred a bank cheque. The statement in the file note that Mr Ma arrived at Mr Dowd's office on the Monday with a replacement cheque is also inconsistent with the recollection expressed in his affidavit. The file note and the affidavit are also in various significant ways inconsistent with what Mr Hooper recorded he was told by Mr Dowd early on Monday morning.
On the other hand, the only direct evidence that Mr Ma delivered the deposit cheque subject to an absolute condition was that given by Ms Adams and her son. They both said that they heard Mr Ma say that the cheque could not be banked until Wednesday. Their recollection that the word "Wednesday" was used is inconsistent with all of the other evidence. It is also improbable, as no objective reason has been shown as to why the plaintiffs would not have been in a position to cover the cheque until that day.
In my view, these inconsistencies cannot readily be reconciled in any logical way. Further, I do not think that they can be analysed objectively in a way that justifies the court accepting a particular inconsistent proposition in preference to others, save by reference to the objective probabilities. In my view, they are to be explained not by drawing adverse conclusions as to the honesty of the witnesses, but by simply concluding that for various reasons the witnesses' recollections were confused and inexact.
A submission was put on behalf of Ms Adams that the court should conclude that the statements made in Mr Hooper's 10:18 AM email to Mr Dowd on the Monday morning, and the letter to Ray White of the same day, were correct, because Mr Dowd did not immediately respond by correcting them. In all of the circumstances that I have related above, it is more likely that Mr Dowd was simply busy, and distracted, as well as anxious about the events that had happened on the previous Saturday, and he did not attend with sufficient focus to his communications with Mr Hooper.
I prefer the finding, having regard to all of the evidence, that the discussion that took place did not rise as high as placing a condition on Mr Dowd's right to present the cheque for payment, but rather dealt with the fact that the necessary funds were not in the cheque account on the Saturday, and that the plaintiffs would have to take steps over the weekend to ensure that the deposit cheque would be paid on presentation.
For these reasons, I find that the plaintiffs did not deliver the deposit cheque subject to any condition that had the result that the cheque was not delivered to the deposit holder in accordance with cl 2.4 of the contract.

Were the plaintiffs not ready, willing and able to complete?

As I have found that the plaintiffs did not comply with cl 2.2 or cl 2.4 of the contract by reason of the delivery of the post-dated cheque, it follows that the plaintiffs are not entitled to the relief that they seek. It is accordingly unnecessary for the court to deal with Ms Adams' claim that they did not demonstrated that they are ready, willing and able to complete the contract.
However, I should record that, had I found that Ms Adams' purported termination of the contract was invalid, I would have found that it did not lie in the mouth of Ms Adams to resist the claim made by the plaintiffs on the ground that they were not ready, willing and able to complete. It is plain that the plaintiffs were unable to complete their application for finance, notwithstanding that they had provisional approval, because Ms Adams refused to give the lender's valuer access to the Property to prepare a valuation that was a pre-condition to the lender confirming its willingness to lend the balance of the purchase price to the plaintiffs. That would clearly have been a breach by Ms Adams of cl 12.1 of the contract; and the court would not have permitted Ms Adams to take advantage of that breach: see Sharjade Pty Ltd v the Commonwealth of Australia; Raaf (Landings) Ex-Servicemen Charitable Fund Pty Ltd (Formerly Darwinia Estate Pty Ltd) v Sharjade Pty Ltd [2009] NSWCA 373 at [56]; (2009) 15 BPR 28,443; Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 at 34; Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 441.
Furthermore, if Ms Adams had not been entitled to terminate the contract, her act of purporting to do so would itself have been a breach, which would have suspended the plaintiffs' obligations to take the steps that remained necessary for them to secure an unconditional agreement from their lender to lend the balance of the purchase price: see Grieve v Enge [2006] QCA 213; (2006) Q Conv R 54-651 at [20] (de Jersey CJ).
The appropriate course for the court to take in these circumstances would have been to first make the declaration in par 4 and the order in par 4A of the amended summons, and then make consequential orders to ensure that the court would be in a position to make the balance of the orders sought by the plaintiffs, after they were able to demonstrate that they had secured the necessary finance, and were otherwise ready, willing and able to complete. However, that course does not arise in the present case.

Orders

For the reasons given above, the court must make the following orders: 1. The plaintiffs' amended summons is dismissed. 2. The plaintiffs are ordered to pay the defendant's costs of the proceedings. 3. Exhibits and documents produced on subpoena may be returned forthwith in accordance with the Rules.

Amendments 09 October 2015 - Amendment to representation: Machiao Lawyers (plaintiffs) David JH Hooper (defendant) Par [48] Aikin to Aickin Par [53] Aikin to Aickin, "this would so" to "this was so" "check" to "cheque" Pars [56], [58] and [63] Aikin to Aickin DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2015

(UK) Bills of Exchange Act 1909(Cth)

Ma v Adams

At a glance

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Judgment (18 paragraphs)

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Legislation Cited (3)

Cases Cited (21)

Cited By (3)