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IVI Pty Ltd v Baycrown Pty Ltd

 

[2005] QCA 205

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

10 June 2005

DELIVERED AT:

Brisbane

HEARING DATE:

1 June 2005

JUDGES:

McPherson and Keane JJA and Mullins J

Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

Appeal dismissed with costs

CATCHWORDS:

PROFESSIONS AND TRADES - LAWYERS - SOLICITOR AND CLIENT - AUTHORITY - NON-LITIGIOUS BUSINESS - where appellant vendor was negotiating a contract for the sale of land with the respondent purchaser - where draft contract named a firm of solicitors as the "buyer's solicitor" and provided a reference to a lawyer employed by that firm - where the firm of solicitors named in the draft contract was contacted by the appellant's solicitors regarding changes to the draft contract - where there was no other direct contact between the solicitors while negotiations were conducted between the parties - where the parties had agreed on the terms of the contract of sale and that contract had been signed by a representative of the appellant - where appellant later decided to send an email to the solicitors named in the draft contract purporting to revoke the offer to sell - where the respondent had already faxed an acceptance of the offer before it became aware of the contents of the email that had been sent to the solicitor - whether solicitors have the authority to accept a notice of revocation on behalf of a client without express authorization - whether the respondent had ever acted in such a manner as to hold out the solicitors named as the "buyer's solicitor" in the draft contract as having the ostensible authority to accept a notice of revocation on its behalf

Brentwood Properties Pty Ltd v Verduci, unreported, Supreme Court of Victoria, No 4276 of 1995, 7 August  1995, cited

Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd & Anor [1964] 2 QB 480, applied

Midland Bank plc v Serter & Anor [1995] 1 Fam Law R 1034, cited

Nowrani Pty Ltd v Brown [1989] 2 Qd R 582, cited

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35;  (2004) 208 ALR 213, applied

Rossiter v Miller (1878) 3 App Cas 1124, cited

Saffron Walden Second Benefit Building Society v Rayner (1880) 14 Ch D 406, cited

Singer v Trustee of the property of Munro & Anor (bankrupts) [1981] 3 All ER 215, applied

Victoria Park Golf Club Inc v Brisbane City Council [2001] QCA 528;  (2001) 118 LGERA 107, cited

White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164;  CA 40963 of 2000, 19 July 2002, cited

COUNSEL:

D F Jackson QC, with D L K Atkinson, for the appellant

H B Fraser QC, with D M Logan, for the respondent

SOLICITORS:

McLaughlins (Southport) for the appellant

Quinn & Scattini for the respondent

[1]  McPHERSON JA:  An offer may be withdrawn or revoked at any time before it is accepted. To be effective the withdrawal must be communicated to the offeree. On this, the leading texts are at one: see Chitty on Contracts, § 2-087, at 163 (29th ed); Williston on Contracts § 5.9, at 671 (4th ed); Corbin on Contracts §2.19 (rev ed), at 223-225, who says, more precisely, that notice of revocation of the offer must be “received” by the offeree. In this respect, those writers tend to equate the requirements for communicating withdrawal of an offer with those for communication of an acceptance.

[2]  Of course, notice of revocation or withdrawal of an offer will be effective if it is communicated to or received by an agent authorised by the offeree to receive it. The offeree’s solicitor may be constituted the agent of the offeree for the purpose of receiving such notice.  But the mere fact that a solicitor is acting for the offeree does not authorise him or her to receive such notice on behalf of the offeree or make his receipt of it the equivalent of communication of a notice of withdrawal or revocation to the offeree himself. It all depends on what the solicitor has been authorised to do on behalf of the offeree.

[3]  The fact that, if in due course a contract transpires between offeror and offeree, someone has been nominated to be the offeree’s solicitor for the purpose of attending to settlement or completion of the contract is not enough. It does not make him or her in advance the agent of the offeree for the purpose of receiving notice of withdrawal or revocation of the offer before the contract has been formed or concluded. Making a contract on behalf of a client is not something that a solicitor has implied authority to do: Nowrani Pty Ltd v Brown [1989] 2 Qd R 582, 586. On the face of it, the meaning that ordinarily attaches to the designation “purchaser’s solicitor” in a written form of contract not yet concluded is that it will be operative only if and when the contract comes into existence: ibid; and see Brentwood Properties Pty Ltd v Verduci (1995) BC 9503905, at 10 (Sup Ct of Victoria; Batt J).

[4]  That interpretation or interpretive presumption applies to the description of Cleary Hoare as solicitors for the purchaser in the draft form of contract which became the offer in this case. I agree with what has been written on this subject by Keane JA in his reasons. A solicitor has no general authority to make contracts on behalf of a client and derives none simply from being described prospectively as the solicitor for that client if and in the event that a contract ensues. Otherwise a solicitor could sell my property over my head without consulting me about it at all.

[5]  It was submitted by Mr Jackson QC on behalf of the appellant Baycrown Pty Ltd as prospective vendor (which was the offeror in this case) that Cleary Hoare, or Mr Martinez of that firm of solicitors, had ostensible authority on behalf of the respondent purchaser IVI Pty Ltd (the offeree) to receive notice of revocation of the appellant Baycrown’s offer in this case. It was said that Mr Martinez had ostensible authority to do so as a matter of inference from the fact that Mr Martinez had been held out by IVI Pty Ltd as its solicitor or agent for the purpose of negotiating the transaction. But the use in this context of the expression “negotiating the transaction” is a somewhat tendentious description of what took place between Mr Martinez and Mr Johanson, solicitor, who was acting for the appellant Baycrown.

[6]  What happened in fact was that Mr Johanson supplied Mr Martinez with a copy of a series of amendments proposed by Baycrown to the draft contract earlier presented to it by Mr Moss of IVI Pty Ltd. The copy of those proposed amendments accompanied an e-mail from Mr Johanson to which Mr Martinez did not respond, but which it may be inferred was, together with the amendments, passed by Mr Martinez to Mr Moss of IVI Pty Ltd. From this it is sought to infer that IVI Pty Ltd had held out Mr Martinez or the firm of Cleary Hoare as an authorised “channel of communication” for the receipt of Baycrown’s subsequent notification of its revocation or withdrawal of the offer it had made to IVI Pty Ltd.

[7]  For the reasons given by Keane JA, I am unable to accept this submission. It was the parties themselves who proceeded to discuss or “negotiate” the amendments to the draft contract. The sole function, if any, of Mr Martinez was to advise IVI Pty Ltd on the taxation implications, and, it may be, the legal implications of the proposed amendments to the draft. From this, Baycrown was not and cannot have been justified in supposing or in proceeding on the assumption that Cleary Hoare was authorised to receive a withdrawal or revocation of its offer. In the meantime IVI Pty Ltd had communicated its acceptance of that offer, and the formation of the contract was complete.

[8]  I would dismiss the appeal with costs.

[9]  KEANE JA:  At first instance the court declared that a contract in writing dated 23 October 2002 between the appellant, Baycrown Pty Ltd, as vendor, and the respondent IVI Pty Ltd, as purchaser, of land described as "Day's Farm" is a valid contract binding on the appellant.[1]  The appellant contends that the learned trial judge erred in concluding that a binding contract had been made between the appellant and the respondent.  In particular, the appellant contends that the offer to sell the land which it made by presenting a contract document signed by it to the respondent was withdrawn by it before the respondent communicated its acceptance of the offer.

[10]  In order to appreciate the arguments agitated on appeal it is necessary to set out the facts of the case and the conclusions of the learned trial judge, before turning to a consideration of the appellant's attacks upon the judgment.

The facts

[11]  On Monday 21 October 2002, Mr Moss, who was the manager of the respondent, and the directors of the respondent met with Mr Martinez of Cleary Hoare, a firm of Brisbane solicitors, to discuss the possible acquisition by the respondent of Day's Farm from the appellant.  They proceeded, with Mr Martinez, to meet with a proposed joint venturer ("QM") to discuss the possibility of a subdivisional development of Day's Farm.  At this meeting Mr Moss presented for consideration a draft contract to purchase Day's Farm, the draft being held on his laptop computer.  The draft contract named "Cleary & Hoare" as the "buyer's solicitor" and provided a reference of "C. Martinez".  Mr Martinez was advising the respondent on taxation issues and in relation to the structure of the proposed joint venture agreement between the respondent and QM.  There was also discussion at this meeting, between the respondent and QM, about the terms of the draft contract.

[12]  On Tuesday 22 October 2002, Mr Moss met with a real estate agent, Mr Gahan, who, in turn, approached the appellant's managing director, Mr Van Asperen, with the draft contract.  Mr Van Asperen faxed the draft contract to his solicitor, Mr Johanson of the firm Attwood Marshall.

[13]  The appellant required certain changes to the draft contract.  Mr Johanson telephoned Mr Martinez about the proposed changes.  Mr Martinez said that he would "seek" or "get" instructions in relation to the proposed amendments and get back to Mr Johanson.  Upon Mr Johanson's request for his email address, Mr Martinez provided Mr Johanson with that address so that Mr Johanson might send to him the changes which were sought in writing.  Soon afterwards, Mr Johanson sent to Mr Gahan, Mr Van Asperen and Mr Martinez a lengthy email setting out the changes which the appellant proposed to the draft contract.  That email was relevantly in the following terms:

 

"Tony and Chris,

My client has faxed me a copy of the contract for comment.

I understand certain issues have been discussed between Tony and Tom (of my client), which are 'agreed' by the Buyer.

The purpose of this email is to confirm that this is correct, and if so, request a modified contract be emailed to me, so that my client can sign it today (if that is what is required by the Buyer).  I must say that normally, the Buyer would sign first, and then our client, and I just want to know if you intend for this to be different in this matter.

The modifications that I am aware of are as follows:-

… [The proposed amendments were then set out.  Nothing turns on their content.]

Since commencing to type this email, I am told the Agent is due to visit my client, with his laptop, to make any necessary changes and have my client sign today.  Please confirm, as soon as possible, if any part of this email is inaccurate.  Regards

Rod Johanson"

[14]  Mr Martinez did not revert to Mr Johanson with instructions.  There was no subsequent communication between Mr Martinez or Cleary Hoare and Mr Johanson prior to the receipt by Cleary Hoare of an email from Mr Johanson purporting to withdraw the offer.  That email was sent at 5.30 pm on Wednesday 23 October 2002 to Mr Martinez and to Mr Gahan.

[15]  On the afternoon of Tuesday 22 October 2002, Mr Moss, on behalf of the respondent, Mr Gahan and Ms Scholten, one of the respondent's directors, called upon Mr Van Asperen at the appellant's offices.  The terms of the draft contract were discussed.  Mr Moss had brought along the laptop computer holding the draft contract.  Mr Van Asperen showed to Mr Moss the email from Mr Johanson referred to above.  Mr Moss said at the meeting, as was the case, that he did not use email and had no access to email.  Mr Moss said that facsimile was the safest way of getting him a message.  He did not say that it was the only way of communicating with the respondent.  Mr Van Asperen spoke by telephone to Mr Johanson, as did Mr Moss, and Mr Johanson negotiated the terms of the contract further with Mr Moss.

[16]  Mr Moss spoke by telephone to Mr Martinez and they discussed the form and terms of the contract.  Mr Martinez did not speak to Mr Johanson or anyone else representing the appellant on this occasion.  The draft contract was modified to reflect the matters discussed during a meeting.  Mr Van Asperen then signed the proposed contract document.  Mr Moss said that he was not a director of the respondent and that the respondent could only sign the contract after a meeting of directors.

[17]  On the evening of 22 October 2002, after the contract had been signed by Mr Van Asperen, Mr Moss called Mr Martinez.  Mr Moss and Ms Scholten drove to Brisbane where they met with Mr Martinez.  Mr Martinez was asked whether he could act for the respondent if the deal went through.  He said that he could not act for the respondent in the conveyance, and that QM would have to approve any alterations to the special conditions.  Mr Martinez told Mr Moss that he had told someone at Attwood Marshall that he would get back to them, but Mr Moss said that the appellant had signed the contract and that there was no need for Mr Martinez to revert to Attwood Marshall.

[18]  On the morning of Wednesday 23 October 2002, Mr Moss called both Mr Van Asperen and Mr Gahan and made a number of inquiries concerning the potential for subdivision of Day's Farm.  On the same day, at approximately 5.22 pm, Mr Van Asperen called Mr Johanson and instructed him to withdraw the offer.  As I have mentioned, Mr Johanson sent an email at 5.30 pm to Mr Martinez and to Mr Gahan purporting to withdraw the offer.

[19]  Cleary Hoare became aware of the email at 8.46 am on Thursday 24 October 2002 when the email co-ordinator, Ms Peters, forwarded the unopened email to Mr Martinez' terminal.  Mr Martinez was not in his office that day.  He had made no arrangements for perusal of his emails while he was out.  He did not read the email until the following day, 25 October 2002.

[20]  At 11.00 am on 24 October 2002, Mr Gahan called Mr Van Asperen.  It seems that Mr Gahan was told by Mr Van Asperen that the appellant's offer had been withdrawn.

[21]  Following this conversation, at approximately 2.00 pm on the same day, Mr Gahan spoke to Mr Moss and told him that the appellant was "wanting to pull out of the contract", that "he thought the vendor wanted to withdraw", and that "the Dutchman is thinking of pulling out of the contract".

[22]  At 3.25 pm on 24 October 2002, Mr Moss faxed a letter to the appellant purporting to accept the appellant's offer, and notifying the appellant that Cleary Hoare were not acting for the respondent in relation to the contract.

[23]  The respondent did not actually learn of the contents of the email sent by Mr Johanson to Mr Martinez on 23 October 2002 until after the letter of 24 October 2002 from Mr Moss had been faxed to the appellant.

The judgment at first instance

[24]  The learned trial judge concluded that Mr Johanson's email revoking the offer was not received by the respondent before the respondent's written acceptance of the offer was communicated to the appellant.  In particular, the learned trial judge held that Cleary Hoare did not have authority, actual or ostensible, to receive communication of the withdrawal of the offer on the respondent's behalf.  It is on this conclusion that the principal attack is made by the appellant on appeal.

[25]  The learned trial judge also held that the conversation between Mr Gahan and Mr Moss was not apt to bring home to Mr Moss "that the offer had been withdrawn or that that was the effect which Mr Gahan's communication should reasonably have had on Mr Moss".  Her Honour explained:

 

"At the time Mr Moss sent the facsimile accepting the offer, he did not know what the email to which Mr Gahan had been referred actually said.  It is possible that Mr Moss suspected Mr Van Asperen was getting cold feet over the offer.  However, that is not sufficient.  It was equally possible, as far as Mr Moss was concerned, that it contain an ultimatum designed to force the issue of the execution of the contract by IVI.  I accept the submissions made on behalf of IVI that it cannot be said that the nature of the communications to Mr Moss by Mr Gahan was not such [sic] that Mr Moss should reasonably have concluded that the offer had in fact been withdrawn."[2]

[26]  In relation to this latter holding, in my respectful opinion, the conclusion which her Honour reached cannot be assailed.  There is no special formula that must be used to successfully communicate the withdrawal of an offer but it is essential that it be made clear to the offeree that the offeror no longer wishes to proceed.[3]  It would have been a simple matter for Mr Gahan to say to Mr Moss that the appellant had withdrawn the offer.  On any view of the evidence of Mr Gahan and Mr Moss as to what passed between them in this regard, it is clear that this simple message was not conveyed.

The authority of Cleary Hoare

[27]  The appellant contends that the learned trial judge erred in failing to conclude that Cleary Hoare had actual authority to receive on behalf of the respondent the appellant's withdrawal of the offer.  In this regard, her Honour concluded:

 

"Given that Cleary Hoare were not engaged by IVI to act on its behalf in the negotiation of the contract, nor otherwise engaged to communicate with Baycrown in the pre-contractual stage, there was no duty on the solicitors to communicate the revocation email to IVI and there could be no imputation of knowledge of the email on the basis that the solicitors were the alter ego of IVI in respect of that communication …

Since the solicitors had no actual authority to represent IVI in the contractual negotiations or to communicate with Baycrown, no implied authority to accept communications withdrawing offers can have existed."[4]

[28]  The learned trial judge had earlier found that Cleary Hoare:

 

"… were engaged to act in the conveyance of the property in the event that a contract was concluded.  Mr Martinez was aware that the draft contract and the unconcluded contract executed by Mr Van Asperen referred to 'Cleary & Hoare' as the buyer's solicitors.  While Mr Martinez indicated that he could not act for IVI in the conveyance, he did not indicate that Cleary Hoare, who had a conveyancing section, could not act.  Nor did he or Mr Moss do anything to have the firm's name removed from the contract at any stage up to or after the execution by Baycrown."[5]

[29]  The appellant contends that, having regard to that finding, the learned trial judge should have gone on to conclude that Mr Martinez had actual authority to receive communications in relation to the contract from the appellant, and that her Honour erred in failing so to conclude.  The appellant points to the "far reaching" role which Mr Martinez played in relation to advising the respondent in relation to the acquisition to the land and the proposed joint venture, as well as in relation to the tax implications of any acquisition.  He also gave advice as to the terms of the contract with the appellant.  The appellant contends that it follows that:

 

" … whilst he was not assigned the specific task of negotiating with, or otherwise approaching, the appellant, he had authority, at the very least, to receive communications."

[30]  The learned trial judge accepted that Cleary Hoare were acting for the respondent and providing advice in relation to the contract, including its terms, and that they had been retained to act in the event of a concluded contract.  Her Honour went on to say:

 

"… I do not consider that they had actual authority to represent IVI in any pre-contract negotiations.  Cleary & Hoare were not authorized to communicate with Baycrown in respect of the contractual negotiations.  It does not follow that, simply because the solicitors were 'acting' in advising IVI in relation to contractual terms, that they were also authorised to represent IVI in negotiating the contractual terms with Baycrown or its solicitors.  Nor does it follow from the fact that the solicitors had been retained to act in the event of a contract being concluded, that they were retained to act on behalf of IVI in the contractual negotiations."[6]

[31]  In my opinion, her Honour's conclusions accurately state the legal incidents of the role of Cleary Hoare.

[32]  Cleary Hoare had no role as a go-between in the negotiation of the contract between the respondent and the appellant.  That they might have later had authority to receive communications from the appellant in the event that a contract was concluded is of no assistance at all to the appellant when seeking to show that this authority existed before the contract was concluded.  The later authority would only have derived from the terms of the contract to that effect once the contract had been concluded.[7]

[33]  There is no basis in principle or authority for the proposition that one party may successfully revoke an offer to another party by giving notice of that revocation to the solicitor for the other party in the absence of an express conferral of authority on the solicitor to receive such communication.  In this regard, in Singer v Trustee of the property of Munro & Anor (bankrupts)[8] Walton J said:

 

"It is, of course, a common fallacy to think that solicitors have an implied authority on behalf of their clients to receive notices.  They may have express authority so to receive them, but in general a solicitor does not have any authority to accept a notice on behalf of his client."

[34]  Reference may also be made to the statement of James LJ in Saffron Walden Second Benefit Building Society v Rayner:[9]

 

"I have had occasion several times to express my opinion about the fallacy of supposing that there is such a thing as the office of solicitor, that is to say, that a man has got a solicitor not as a person whom he is employing to do some particular business for him, either conveyancing, scrivening, or conducting an action, but as an official solicitor, and that because the solicitor has been in the habit of acting for him, or been employed to do something for him, that solicitor is his agent to bind him by anything he says, or to bind him by receiving notices or information.  There is no such officer known to the law.  A man has no more a solicitor in that sense than he has an accountant, or a baker, or butcher.  A person is a man's accountant, or baker, or butcher, when the man chooses to employ him or deal with him, and the solicitor is his solicitor when he chooses to employ him and in the matter in which he is so employed."

 

Similar views were also expressed in that case by Baggallay and Bramwell LJJ.[10]

[35]  A solicitor is a professional person capable of performing a range of services on behalf of a client, but he or she need not necessarily perform across that entire range with respect to any one transaction.  That position is to be distinguished from, to use the example given by McPherson JA in Victoria Park Golf Club Inc v Brisbane City Council,[11] "an office like that of managing director of a trading company in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, of which the incidents and powers are well known".  The managing director takes his or her powers or authority from the position that he or she holds under the corporate constitution.  The distinction is supported by the observation of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Pacific Carriers Ltd v BNP Paribas[12] that:

 

"The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have.  In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole."

[36]  The decision in Saffron Walden has recently been applied by Powell JA, in a judgment with which Hodgson JA and Hamilton J agreed, in White v Illawarra Mutual Building Society Ltd,[13] where his Honour said that:

 

"The fact that a client might be accustomed to retain the services of a particular solicitor or firm of solicitors in matters of a particular type does not constitute that solicitor or that firm of solicitors the client's standing agent to receive notice of material facts (Saffron Walden Second Benefit Building Society v Rayner (1880) LR 14 Ch D 406)."

[37]  In Midland Bank plc v Serter & Anor,[14] Glidewell LJ, with whom Pill and Aldous LJJ agreed, commented that:

 

"Mr Salter reminds us of the general principle of law that a solicitor, like any other agent, may be instructed specifically to act for a party for one particular purpose in relation to a transaction, but not to act for him generally for other purposes.  Thus it is only knowledge which he acquires when carrying out that part of the transaction in which he is instructed to act as agent which is to be imputed to the party who for that purpose is his principal ... "

[38]  The appellant sought to avoid the heavy weight of authority by submitting that, while "it is not contended for the appellant that Mr Martinez had authority to bind the respondent, or indeed to do any other juristic act, … [nevertheless] that was an authorized means of communication".  This submission seems to be founded upon the notion that, while an act which brings a contract into existence is a "juristic act", an act which is apt to prevent a contract coming into existence is not, even though were it not for that act a contract would exist.

[39]  In my opinion, the appellant's submission takes too narrow a view of what may be a "juristic act".  It fails to appreciate that the mere passive receipt of a notice of withdrawal of an offer is apt to affect a party "juristically", in the sense that it will have an effect upon a party's legal position vis-à-vis others.  Each person involved in the negotiation of a contract operates within a framework of legal rules which affect that party before a contract is concluded in relation to whether a contract is concluded.  Thus, in Rossiter v Miller,[15] Lord Blackburn spoke of the "right" of a party involved in negotiations towards a contract "to retire from the contract" before a bargain is finally concluded.  So, pace Hohfeld, one may also sensibly speak of the respondent's "right" to accept the appellant's offer before it is withdrawn.

[40]  In any event, the submission of the appellant on this point confounds itself.  It is the essence of the appellant's argument that the mere passive and, unlooked for, receipt of the notice by Cleary Hoare was apt legally to liberate the appellant from the consequences of the respondent's acceptance of the appellant's written offer to the respondent.  The appellant thus implicitly accepts that the withdrawal of an offer amounts to a "juristic act", because it has consequences for legal rights, and thereby undermines the very basis of its submission.

Ostensible authority

[41]  The appellant also argues that Cleary Hoare had ostensible authority to accept communications directed to the respondent.  In this regard, the appellant's submission once again focussed upon the fact that the draft contract prepared by the respondent and presented to the appellant identified "Cleary & Hoare" as the "buyer's solicitor" while also providing a reference of "C. Martinez".  The appellant emphasized that the transaction was for a large amount of money and involved important and complex planning issues, so that one would expect that solicitors would be acting.  That submission does not advance, in any way, the proposition which must be established as the first step in a case of ostensible authority, namely, that the respondent had held Cleary Hoare out as its agent to receive documents apt to affect the respondent's rights.

[42]  As a matter of legal principle, the boundaries of the ostensible authority of an agent are drawn according to what the principal represents, whether implicitly or explicitly, about the authority of the agent and the extent to which these representations have been relied upon by the third party.

[43]  In Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd & Anor[16] Diplock LJ said:

 

"An 'apparent' or 'ostensible' authority … is a legal relationship between the principal and the contractor created by the representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract."

[44]  Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said recently in Pacific Carriers Ltd v BNP Paribas:[17]

 

"In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd, and in Northside Developments Pty Ltd v Registrar-General, this court followed and applied Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd as to the general principles concerning the apparent or ostensible authority of an officer of a company dealing with a third party.  Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority.  'The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.'  It is not enough that the representation should come from the officer alone.  Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company.  That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation."

[45]  The appellant's attempt to make out a case of ostensible authority fails to show that there was a relevant holding out of the agent by the principal, or reliance by the third party on that holding out.

[46]  At its highest, the most that was represented by the respondent to the appellant in relation to the authority of Cleary Hoare was that Cleary Hoare were retained to provide advice in relation to the contract and that Cleary Hoare had been nominated by the respondent to act on its behalf "as the buyer's solicitor" in the event that a contract was actually concluded.[18]  The appellant is unable to point to any words or conduct on the part of the respondent by which it represented to the appellant, or anyone acting on the appellant's behalf, that Cleary Hoare represented the respondent in relation to the receipt of communications concerning the conclusion of negotiation.  As the learned trial judge accurately pointed out, all substantive matters in relation to the contract were settled in discussions between Mr Moss and Mr Johanson.[19]

[47]  Further, there is no evidence that the email of withdrawal from Mr Johanson was sent by him to Cleary Hoare in reliance on any representation by the respondent that Cleary Hoare was its agent to receive the appellant's communications in relation to the conclusion of negotiations.  Absent such evidence, a case of ostensible authority cannot be made out.  It does not advance the appellant's case in this regard at all to say that Mr Johanson acted reasonably in treating Cleary Hoare as a medium of communication with the respondent.

[48]  In my respectful opinion, the nomination of Cleary Hoare as the solicitors engaged by the respondent to have the carriage of the conveyance in the event that a contract was concluded is not a relevant holding out by the respondent that the respondent's offer might be effectively withdrawn by a communication to Cleary Hoare.  That is so even if it is considered in combination with the other matters to which the appellant referred.  And there is no evidence that Mr Johanson relied on any other holding out by the respondent in sending his email of withdrawal to Cleary Hoare.

Conclusion

[49]  In my opinion, the appeal should be dismissed.  The appellant should be ordered to pay the respondent's costs to be assessed on the standard basis.

[50]  MULLINS J:  I agree with the respective reasons for judgment of McPherson and Keane JJA and that the appeal should be dismissed with costs.

Footnotes

[1]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004.

[2]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004 at [61].

[3]Dickinson v Dodds (1876) 2 Ch D 463 at 472 and 473; Macquarie Generation v CAN Resources Ltd [2001] NSWSC 1040; No 50057 of 2001, 15 November 2001 at [53].

[4]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004 at [48] - [49].

[5]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004 at [44].

[6]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004 at [45].

[7]Nowrani Ltd v Brown [1989] 2 Qd R 582 at 586. See also Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 649, 658 - 659.

[8][1981] 3 All ER 215 at 218. Cf Magripilis & Anor v Baird & Anor [1926] St R Qd 89 at 91 and 96; Kent v Hogarth [1995] QCA 472; Appeal No 22 of 1995, 24 October 1995 at [9] - [10] per Pincus JA; Wright v Somerton [2004] QSC 231; SC No 6038 of 2004, 12 August 2004 at [5]. In those cases there had been a chain of correspondence passing between the solicitors acting upon instructions for each party. In such a case there can be no doubt of the authority of the solicitor who has actually been instructed to conduct the negotiations.

[9](1880) 14 Ch D 406 at 409.

[10]Saffron Walden Second Benefit Building Society v Rayner (1880) 14 Ch D 406 at 413 and 415.

[11][2001] QCA 528 at [17]; (2001) 118 LGERA 107 at 114 - 115.

[12][2004] HCA 35 at [36]; (2004) 208 ALR 213 at 225 (footnotes omitted).

[13][2002] NSWCA 164; CA No 40963 of 2000, 19 July 2002 at [128].

[14][1995] 1 Fam Law R 1034 at 1046 - 1047.

[15](1878) 3 App Cas 1124 at 1152. See also Griffith University v Tang [2005] HCA 7 at [91]; (2005) 213 ALJ 724 at 746.

[16][1964] 2 QB 480 at 503.

[17][2004] HCA 35 at [36]; (2004) 208 ALR 213 at 224 - 225 (footnotes omitted).

[18]Brentwood Properties Pty Ltd v Verduci, unreported, Supreme Court of Victoria, No 4276 of 1995, 7 August 1995.

[19]IVI Pty Ltd v Baycrown Pty Ltd [2004] QSC 430; SC No 9907 of 2002, 3 December 2004 at [54] - [55].

Close

Editorial Notes

  • Published Case Name:

    IVI P/L v Baycrown Pty Ltd

  • Shortened Case Name:

    IVI Pty Ltd v Baycrown Pty Ltd

  • MNC:

    [2005] QCA 205

  • Court:

    QCA

  • Judge(s):

    McPherson JA, Keane JA, Mullins J

  • Date:

    10 Jun 2005

  • White Star Case:

    Yes

Litigation History

Event Citation or File Date Notes
Appeal Determined (QCA) [2005] QCA 205 10 Jun 2005 -
Special Leave Refused [2005] HCATrans 1031 16 Dec 2005 -

Appeal Status

{solid} Appeal Determined - {hollow-slash} Special Leave Refused (HCA)