In Hazelwood v Mercurio & Ors [2021] VSC 362 (22 June 2021) Daly AsJ –

• primarily deals with an agent lacking authority to conclude a binding contract on behalf of a vendor (similar to the lack of authority of a solicitor: Leahy v Javni [2020] VSC 680 at [122]);
• notes that, if a document existed whereby the vendor expressly authorised the agent to execute the contract on her behalf, it would be a breach of the Civil Procedure Act not to disclose it;
• distinguishes English authority on whether an exchange of emails can comply with the Statute of Frauds;
• held that if the caveators had established a binding contract the balance of convenience would have favoured them;
• stayed the removal of caveat for 7 days to enable the caveators to apply for an injunction restraining completion of a further sale based on an alleged estoppel.

The facts were –

• The plaintiff vendor gave an Exclusive Sale Authority to an agent (whose employee was Campbell) to market an apartment and two separately titled car parking spaces in the Melbourne CBD.  The Authority provided that the agent would advertise, market and sell the property and that “sold” meant (in normal circumstances) “the result of obtaining a binding offer”.  Clause 13 also authorised the agent to –
  • instruct a legal practitioner or conveyancer to prepare a section 32 statement, contract of sale, agree the content of either document and advise and agree on other amendments or additions to either document;
  • fill-up a standard form contract or contract to record the sale as permitted by statute;
  • negotiate and, with the vendor’s approval, agree and record, or have the legal practitioner or conveyancer record, the final terms of, and obtain signatures to, the contract;
  • attend to contract exchange; receive the price and certain advice or notices; and make public certain information.
• The caveators deposed that on about 11 February they made an unconditional offer to purchase the apartment and one car space for $750,000, with settlement within seven days. Campbell deposed that caveators imposed a very short deadline on the offer and that he conveyed it to the vendor.

• The caveators deposed that on 16 February Campbell said that he had found a purchaser for the other space and that the vendor had accepted their offer.  Campbell disputed this, deposing that although he could not remember his exact words he had no intention of conveying that a sale had been completed until signing of a written agreement. 

• The vendor deposed that Campbell told her that he had located a potential purchaser of the apartment and one car space and another purchaser of the second space, and that she instructed him to amend the documents accordingly.    

• On 18 February Campbell emailed the caveators: stating that if they could “confirm the below points for me” he would start the paperwork.  The points were: whether they had a conveyancer; their full names and address; price $750,000 with a 10% deposit; as to time for settlement; solicitors’ details.  The email concluded: “New paperwork is getting drawn up at our end so nothing for you to do at this stage”.

• The caveators provided full names, address, lawyer’s details, and stated that settlement would be on 12 March.  
• On 24 February Campbell emailed an unsigned section 32 statement and contract.  His email stated that he had just received these documents and not yet reviewed them “so let me know any questions you have and I’ll work through them”.   The unsigned contract named the vendor, referred to the apartment and to particulars of title of one space, but omitted purchasers’ names, price and settlement date.  When a caveator queried this Campbell replied that he had “just hit send as soon as I received and so you could have your people quickly review it before signing”.

• On being informed by Campbell that someone else had purchased the apartment and both spaces the defendants on 2 March caveated on the grounds of a “part performed oral agreement” with the plaintiff.   On 4 March this contract was executed.  The vendor issued a notice under s. 89A of the Transfer of Land Act (TLA), leading to the caveators issuing a Proceeding with a Statement of Claim.  The vendor issued this proceeding under s. 90(3).  Campbell deposed that on average more than ten apartments in the building would be marketed and sold in any year.

The Victorian Statute of Frauds provision, contained in the Instruments Act s. 126, provides that –

“An action must not be brought to charge a person … upon a contract for the sale … of an interest in land unless the agreement on which the action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note”.

In their Statement of Claim the caveators alleged, in the alternative to breach of contract, that the vendor represented that she would sell the apartment to them, such that she was estopped from resiling from that representation. 

Daly AsJ held –

1. Accepting, for present purposes at least, that –

• • to comply with s. 126 a contract of sale need not be contained in a single, self-contained document; [33]
  • a sender of an email, by identifying themselves as the sender, can be considered to have “signed” the email; [33]
  • section 126 should be construed as to accommodate “accepted contemporary business practices”; [34]

nonetheless, the vendor had not signed anything.  The only signatory was Campbell, who was authorised to market the apartment but not to enter a contract on behalf of the vendor.  In the Authority there was a material difference between the definition of “sell” and the phrase “endeavour to sell”.  More importantly, cl. 13 did not authorise the agent to sign any contract on behalf of the vendor, but contemplated personal execution by the vendor and purchaser. [35]-[39]

2. What was stated in the foregoing holding was based on the non-existence of a document in which the vendor not only confirmed her acceptance of the caveators’ offer but also expressly authorised the agent to execute the contract on her behalf. If such a document existed, it should have been disclosed by the vendor in accordance with s. 26 of the Civil Procedure Act headed “Overarching obligation to disclose existence of documents”. [46]
3. The English decision in Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltdas to whether an exchange of emails between parties to a negotiation can constitute an agreement in writing for the purpose of the Statute of Frauds, was distinguishable.  There was a material difference between English and Victorian legislation. [40]-[44]
4. If it had been necessary to consider the balance of convenience, this would have favoured the caveators because:

• • notwithstanding Campbell’s evidence that the sale of properties equivalent to the apartment was not rare, this apartment was particularly suitable to the caveators’ needs;
  • while the vendor not unreasonably considered that, absent an executed contract, she was free to deal with the apartment, and was now exposed to claims by the new purchaser, she entered this contract knowing that the caveators asserted that they had a contract with her and so she assumed the risk of this being established. [47]

5. The caveators had not argued that their estoppel claim created an immediate equitable interest supporting a caveat. However this estoppel claim might found injunctive relief.  Accordingly the order for removal of the caveat would be stayed for 7 days to enable the caveators to apply for an injunction as they may be advised. [24], [48] – [50]

Philip H. Barton

Owen Dixon Chambers West

Friday, September 17, 2021