McIntosh & Anor v ARAF Capital Funding [2003] NSWSC 843 | Case summary | Zoe

NSWNSWSC

McIntosh & Anor v ARAF Capital Funding

[2003] NSWSC 843

Supreme Court of NSW|2003-09-09

At a glance

AI case summary

Result

respondent. The Summons is dismissed. The plaintiffs are to pay the costs of the Summons. The Exhibits may be returned (para 27).

Key principles

Where parties negotiate and reach agreement on all essential terms yet intend the agreement to be restated in a formal document but nonetheless intend to be immediately bound,...
Evidence of immediate performance or reliance (including prompt payment) is potent corroboration that the parties intended to be immediately bound rather than awaiting a formal...
An attorney validly appointed under a Power of Attorney, who is authorised to do on the principal's behalf anything lawfully authorisable to an attorney, can bind the principal...

Issues before the court

Whether the parties reached a concluded, immediately binding oral agreement on 16 August 2000, notwithstanding an intention to prepare a subsequent...
Whether Timothy (the attorney) had actual or ostensible authority to bind Rex (the principal) to the agreement, creating joint and several liability.
Whether the Supreme Court may disturb the Magistrate's findings absent an identifiable error of law.

Plain English Summary

In McIntosh & Anor v ARAF Capital Funding [2003] NSWSC 843 the Supreme Court (Master Malpass) dismissed an appeal from a Local Court judgment. The Local Court had found that an oral settlement agreement reached on 16 August 2000, providing for $20,000 in five instalments with an initial $10,000 paid the next day, was a binding agreement despite an intention to prepare a formal deed. The Supreme Court held the Magistrate applied the correct legal test (following the Masters v Cameron classification), that the finding of immediate intention to be bound was reasonably open on the evidence (reinforced by the prompt $10,000 payment), and that Timothy, as attorney under a Power of Attorney disclosed to the defendant, had authority to bind his father Rex. The Summons was dismissed and costs were awarded against the plaintiffs (paras 16–18, 24, 26–27).

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Deep Dive

1,688 words · generated 17/09/2026

What happened

This case concerns an appeal to the Supreme Court of New South Wales from a Local Court decision about whether an oral settlement agreement reached between the plaintiffs (Rex and Tim McIntosh) and the defendant (ARAF Capital Funding Pty Ltd) was a binding contract, and whether Tim (the son) had authority to bind Rex (the father).

Key factual steps:

Rex owned a property called "Lurline"; Tim began managing it in 1995 (para 1).
On 16 November 1999 Rex executed a written Power of Attorney appointing Tim as his attorney with broad authority (para 2).
Tim, acting as attorney, signed a "Mandate To Act" on 10 April 2000 authorising the defendant to arrange refinancing (para 4).
The defendant claimed brokerage fees and obtained default judgment for $30,000 in the Local Court against both Rex and Tim (para 6).
Negotiations to resolve that judgment occurred in mid-August 2000. On 16 August 2000 Mr Ross (of ARAF) and Tim had a telephone discussion. Ross gave evidence of a proposal that Tim agreed to: $10,000 now and four instalments of $2,500 over two years (paras 8, 16).
Tim paid $10,000 on 17 August 2000 (para 9).
The Local Court trial (before Emmett LCM) heard the defendant's claim in the alternative; the Magistrate accepted the oral agreement alternative and entered judgment for $10,000 plus interest and costs (para 10).
The plaintiffs filed a Summons in the Supreme Court to appeal the Local Court decision. The appeal argued, principally, that the Magistrate erred in law in finding there was an immediately binding oral agreement and that Tim had authority to bind Rex (paras 11–12, 20–21).
Master Malpass dismissed the Summons on 12 September 2003 (paras 23–27). The plaintiffs were ordered to pay costs and exhibits could be returned (para 27).

Why the court decided this way

Two central legal questions drove the decision:

Did the parties form a binding, immediately effective oral contract on 16 August 2000, notwithstanding an intention to have a written deed prepared afterwards?
Did Tim, as attorney under a Power of Attorney, have authority to bind Rex for the settlement?

On the first question the court applied the familiar threefold classification from Masters v Cameron (quoted in full at para 18). That classification asks whether negotiations that contemplate a formal contract fall into:

(1) cases where parties intend to be immediately bound and later formalise terms in a document that does not change effect,
(2) cases where all terms are agreed but performance is conditional upon execution of a document,
(3) cases where there is no concluded bargain until a formal contract is executed.

The Magistrate found the case fell into the first category: the parties reached final agreement and intended to be immediately bound, with a later deed to restate terms. Master Malpass upheld that conclusion for two principal reasons:

Objective language and agreed facts supported a concluded bargain. The court had before it Mr Ross's contemporaneous account of the telephone negotiation (reported at para 16) and an Agreed Statement of Facts that stated the settlement terms and the $10,000 payment (para 17). These factual materials supplied an objective basis for the Magistrate's conclusion.
The payment of $10,000 on the following day was powerful corroborative evidence of an intention to be immediately bound. The Master said that the decision was "powerfully reinforced by admissions made by Tim (including the payment in the sum of $10,000 made on the following day)" (para 24). That payment was treated as conduct consistent with immediate binding agreement rather than mere preparatory conduct.

On the second question the court examined authority. There was a written Power of Attorney executed on 16 November 1999 and a Mandate to Act signed by Tim on 10 April 2000; a copy of the Power of Attorney had been given to the defendant (paras 2, 4). The court accepted Tim's evidence that he acted for both himself and his father and concluded the plaintiffs' challenge to Tim's authority was "without substance" (para 25–26). The combination of the Power of Attorney, the Mandate, and the defendant's knowledge supported the Magistrate's finding that Rex was bound.

Procedural law governed the appellate review: an appeal lay only where there was an error of law, and the appellant bore the onus of establishing such an error (para 13). Master Malpass concluded that no such legal error was shown in the Magistrate's reasoning or conclusion (paras 23–24). Even if some aspects could be read differently, the outcome was reasonably open on the evidence.

Before and after state of the law

Before this decision, the controlling principle for deals struck subject to later formality obligations was the Masters v Cameron classification, which the court expressly quoted and applied (para 18). The decision does not alter that doctrine. Rather, it demonstrates practical application:

It confirms that objective evidence, including corroboratory conduct (notably prompt payment), is decisive in placing a bargain into the Masters v Cameron (1) category.
It affirms that where an attorney acts within the scope of a disclosed Power of Attorney and the other party knows of that authority, the principal can be bound without further formalities.

After this decision, practitioners can take this as an example that:

Courts will treat immediate payments and admissions as strong evidence of intention to be bound; and
The presence of a Power of Attorney, communicated to the counterparty, supports binding the principal where the attorney acts in the scope of authority.

The judgment does not purport to change or refine Masters v Cameron but applies its framework to the facts.

Key passages with plain-English translation

Para 18 (Masters v Cameron quotation): The court sets the legal lens. Plain-English: When parties say they will later formalise a deal, three possibilities remain: (1) they are already bound and will later restate the same deal in writing; (2) they are bound only if a formal document is signed; or (3) they are not bound unless a formal document is signed.
Para 16 (Ross's evidence): This is the factual account of the negotiation: Mr Ross reported proposing $10,000 now and $2,500 every six months. Plain-English: an immediate present bargain was offered and accepted over the phone.
Para 17 (Agreed Statement of Facts): Parties agreed a factual summary that the settlement was $20,000 in five instalments and $10,000 was paid. Plain-English: both sides accepted this summary of what happened.
Para 24 (court's assessment): The court says the Magistrate's conclusion was open on the evidence and reinforced by Tim's payment. Plain-English: the judge thought the lower court's decision was reasonable and supported by actions the parties actually took.
Para 26 (authority): The court notes the valid Power of Attorney and that the defendant was given a copy. Plain-English: Tim had proper legal authority, and the defendant knew it, so Rex could be bound by Tim's agreement.

What fact patterns trigger this precedent

This decision is instructive where:

A negotiated settlement is reached orally, with parties discussing that a written deed or contract will later be prepared, but where one party performs immediately (for example, by making a significant payment) or otherwise manifests acceptance in a way consistent with immediate binding intent (paras 16–17, 24).
An agent/attorney (appointed by Power of Attorney or similar instrument) negotiates and signs deals on behalf of a principal, and the counterparty has knowledge of the agency instrument (paras 2, 4, 26).
Appeals challenge lower-court findings of intention to be bound; the appellate court will intervene only for error of law, not simply because it might have reached a different factual conclusion (paras 13, 20–24).

Practitioners should therefore treat immediate performance after a negotiated settlement as strong evidence of a concluded bargain, and ensure agency documentation is disclosed if they wish to rely on an agent's authority.

How later courts have treated it

The judgment itself does not discuss subsequent appellate treatment or later authority applying or distinguishing it. The decision applies established doctrine (Masters v Cameron) rather than creating novel legal principle, so its immediate persuasive value is as an application of established law to a fact-rich scenario (see para 18). For authoritative statements about later treatment, one would need to search subsequent reported decisions citing McIntosh v ARAF (not provided within this judgment).

Still-open questions

Grounded in the judgment, several practical and doctrinal questions remain open or are not fully explored here:

The boundary between Masters v Cameron categories (1) and (2) often depends on fine factual distinctions. While this case emphasises payment as corroboration of immediate binding intent, the judgment does not set a quantitative threshold for what sort of conduct will suffice in different contexts (paras 24, 16–17).
The judgment treats the Power of Attorney and the earlier Mandate to Act as sufficient to establish authority, but it does not analyse the limits of the attorney's authority in detail (for example, whether certain acts require express authorisation or notices to third parties). Those issues may need fuller engagement where the authority instrument is narrower or where the counterparty lacks clear notice (paras 2, 4, 26).
The court accepted the Agreed Statement of Facts as corroborative; how courts will weigh conflicting contemporaneous documents or where there is no agreed statement remains factual and context-specific (paras 16–17).
The decision reaffirms appellate restraint: it identifies that an alternative reading of evidence will not suffice to overturn a factual finding unless a legal error is shown. Yet the precise contours of what constitutes an "error of law" in this context (misdirection on principles; failure to apply Masters v Cameron; or misapprehension of material evidence) are not exhaustively detailed (paras 13, 20–24).

These are areas where further authoritative treatment in other cases or fuller appellate reasoning would be useful.

Disclaimer: This is information about the judgment McIntosh & Anor v ARAF Capital Funding [2003] NSWSC 843 and not legal advice. I can make mistakes. Before you rely on this analysis, take it to a qualified Australian lawyer for checking.

Judgment (8 paragraphs)

[1]

CITATION : McIntosh & Anor v ARAF Capital Funding [2003] NSWSC 843 HEARING DATE(S) : 9 September 2003 JUDGMENT DATE : 12 September 2003 JURISDICTION: Common Law Division JUDGMENT OF : Master Malpass DECISION : The Summons is dismissed. The plaintiffs are to pay the costs of the Summons. The Exhibits may be returned.

[2]

CATCHWORDS : Appeal - intention to create immediate binding agreement - authority - no error of law. LEGISLATION CITED : N/A CASES CITED : Masters v Cameron (1954) 91 CLR 353. Rex Bernard McIntosh (First Plaintiff) PARTIES : Timothy William McIntosh (Second Plaintiff) v ARAF Capital Funding Pty Ltd (formerly Australian Rural and Agricultural Finance Pty Ltd) (Defendant) FILE NUMBER(S) : SC 10381 of 2003 COUNSEL : Ms D Hogan-Doran (Plaintiffs) Mr D Pritchard (Defendant) SOLICITORS : Kemp Strang (Plaintiffs) Garland Hawthorn Brahe (Defendant)

[3]

LOWER COURT Local Court JURISDICTION : LOWER COURT 923 of 2002 Local Court Downing Centre Sydney FILE NUMBER(S) : LOWER COURT S Emmett (LCM) JUDICIAL OFFICER :

[4]

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

[5]

10381 of 2003 Rex Bernard McIntosh & Anor v ARAF Capital Funding Pty Ltd (formerly Australian Rural and Agricultural Finance Pty Ltd)

[6]

JUDGMENT 1 MASTER: In 1978, Mr Rex McIntosh (Rex) purchased a property in Queensland ("Lurline"). In 1995, his son, Mr Timothy McIntosh (Tim) commenced to manage "Lurline". 2 On 16 November 1999, a written Power of Attorney was executed. Pursuant to that document, Rex appointed Tim to be his attorney (inter alia to do on my behalf anything that I may lawfully authorise an attorney to do). 3 Upon dispute arising with his bankers, Rex took steps to either refinance the existing bank debt or sell "Lurline". He approached Mr Mettam (a finance broker). His intervention brought about contact with the defendant. 4 On 18 March 2000, Rex paid the sum of $6,000 to Mr Mettam. On 10 April 2000, Tim signed a document which is headed "Mandate To Act" (the Mandate) as attorney for Rex. The defendant has been described as a mortgage broker and financial adviser. The Mandate authorised the defendant to arrange for refinancing for a prescribed brokerage fee. The defendant was given a copy of the Power of Attorney. 5 Refinancing arrangements were made. Rex decided to put the property up for auction. It was then sold. 6 The defendant claimed an entitlement to brokerage fees in the sum of $30,000. Proceedings were commenced in the Local Court and default judgment obtained against both Rex and Tim for the sum of $30,000. 7 It was in this context, that discussions were had to finally resolve the dispute. 8 The plaintiff advised of an intention to apply to have the default judgment set aside. On 16 August 2000, a conference was had between Mr Mettam and Tim. It was followed by telephone conversations between Mr Ross (who is described as a principal of the defendant) and Tim (who was in the presence of Mr Mettam). It is said by the defendant that during this conversation an agreement was reached to resolve the dispute by payment of the sum of $20,000 (being $10,000 now and $2,500 by way of four instalments over two years). The agreement contemplated the subsequent execution of a written contract. 9 On 17 August 2000, Tim paid a sum of $10,000 to the defendant. There was a subsequent confirmatory telephone conversation. Tim informed Mr Mettam that the dispute had been resolved. Steps were taken towards the execution of a deed. In September 2000, Rex advised the defendant that it was his intention to have the judgment set aside, sue for damages and get back the $10,000. On 21 November 2000, the default judgment was set aside by consent. 10 The parties went to a hearing on the defendant's claim. It was heard by Emmett LCM. The trial took about 3½ days. The defendant's case was put in the alternative (there were three alternatives). The learned Magistrate found in favour of the defendant. She made a determination on one only of the defendant's alternative claims (founded on an alleged oral agreement). She did not determine either of the other two alternative claims. She entered judgment in favour of the defendant in the sum of $10,000 plus interest and costs. 11 On 19 February 2003, the plaintiffs filed a Summons in this Court. It propounds an appeal from the decision of the learned Magistrate. On 19 February 2003, the plaintiffs also filed a Statement of Grounds in Support of Summons. It identifies 10 grounds of appeal. 12 The appeal was heard on 9 September 2003. Only grounds 1, 2 and 3 as set forth in the Statement of Grounds were argued (these were said to be related and concerned the findings as to the alleged oral agreement). The other grounds were abandoned. 13 It is common ground that an appeal only lies where there has been error in point of law. The plaintiff bears the onus of satisfying the court that there is such error which justifies the disturbing of the decision of the learned Magistrate. 14 The learned Magistrate found that a binding oral agreement had been made between the defendant and the plaintiffs on 16 August 2000. It is common ground, that if this decision be disturbed, the matter should be remitted to the Local Court for rehearing according to law. 15 She had before her evidence given inter alia by the plaintiffs and Mr Ross. There was no conflict between Tim and Mr Ross. There was some conflict between Tim and Rex. The learned Magistrate found that Tim was a reliable and truthful witness and preferred his evidence to that of Rex. 16 Mr Ross gave evidence of inter alia what passed between him and Tim on 16 August 2000. The evidence was as follows:- " I then spoke with Tim McIntosh Tim said to me; 'I'd like to see if we could settle this matter'. I said to Tim, 'Tim, I'd like to reach agreement with you. The debt is $30,000-00'. Tim said to me: 'Can we negotiate on that?' I said, 'Yes, what do you have in mind?' Tim said ' Would you accept $12,000-00 now and the balance over time?' I said to Tim, ' Tim, what about $10,000-00 now and the balance over the next two years, say $2,5000-00 (sic) each six months. Can you handle that?'

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Tim said 'Yes, I can '. I said to Tim ' Tim, I hope this is not from you. This really must be you and Rex. Please talk to him. I am not looking to put any strain on you or your family. I understand Rex has a surplus from the auction - that's where this should be coming from. ' Tim said, 'Dad's a strange person. I haven't seen him for some time however I do have his mobile number '. I said to Tim, 'Tim, we'll hold any further action. There is a caveat over the Yackandandah property and we are proving our debt in Victoria. We will hold this and do nothing further. Tim, I'll ask our Solicitors Garland's (sic) to prepare a contract so that we are both protected. There will be legals on this. ' Tim said to me, 'Who pays those?' I said to Tim, 'You do, but we'll pay the first $1,500-00 to settle this matter. Tim, will you speak to your Solicitors in Rockhampton and make sure they are happy and tell them Garlands' (sic) will send them the Deed'. " 17 Also, the learned Magistrate had before her an Agreed Statement of Facts, which contained inter alia the following:- " 'On about 16 August 2000, Mr Hugh Ross [of ARAF] had a telephone conversation with Mr Tim McIntosh regarding settlement of the debt due. It was agreed that payment would be made to ARAF of $20,000 in 5 instalments - one initial instalment of $10,000 and 4 instalments of $2,500 over 5 years in full and final satisfaction of the judgment debt. On 17 August 2000, a payment of $10,000 was made to ARAF. No further payments have ever been made.' " 18 The issues between the parties had been framed in terms of what was said in Masters v Cameron (1954) 91 CLR 353 at p 360:- "Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract." 19 The case for the defendant was that the subject contract belonged to the first of the three classes. The case for the plaintiffs was that it belonged to the third of the three classes. 20 The issues ultimately argued in the appeal were relatively narrow. The findings of fact made by the learned Magistrate were not disputed. It is said that there was misdirection in the application of the law to those facts. 21 It was said that in determining the question of intention, the learned Magistrate failed to make an objective assessment of the state of affairs between the parties (that is, she did not look to the language used by the parties to determine their intention). It was said that instead she acted on matters such as subjective considerations and subsequent conduct. 22 These were said to be two matters appearing in the evidence given by Mr Ross that pointed to an absence of intention to be immediately bound. One involved the reference to Rex. The other involved the remark about the solicitors in Rockhampton. 23 The learned Magistrate has delivered a lengthy and detailed judgment (it is in the order of 30 pages). She carefully considered the issues litigated before her. 24 I have closely considered the judgment. I do not accept the contention that the learned Magistrate failed to make an objective assessment of the language used by the parties. Be that as it may, even if a different view were taken on that question, it seems to me that she still reached a decision which was reasonably open on the material. Not only was it so open on the basis of objective assessment, it was powerfully reinforced by admissions made by Tim (including the payment in the sum of $10,000 made on the following day). 25 A challenge was also made to the finding that there was an enforceable agreement whereby both Rex and Tim were jointly and severally liable. The plaintiffs had put in issue the actual or ostensible authority of Tim to bind Rex. In my view, this challenge was also without substance. 26 The negotiations took place in a context where default judgment had been entered against both plaintiffs. There is no dispute that Tim was validly appointed as attorney for Rex. There is no dispute that he was empowered to enter into the agreement on behalf of Rex. Rex was a party liable under the Mandate. A copy of the Power of Attorney had been given by Tim to the defendant. Tim gave evidence that he knew he was doing the deal for himself and his father to rid both of them of the debt. In my view, there was no misdirection and the finding was reasonably open on the material. 27 Accordingly, the appeal fails. The Summons is dismissed. The plaintiffs are to pay the costs of the Summons. The Exhibits may be returned.

[8]

Last Modified: 09/15/2003 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.