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Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd[2021] QSC 344

Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd[2021] QSC 344

SUPREME COURT OF QUEENSLAND

CITATION:

Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd [2021] QSC 344

PARTIES:

MARBRYDE PTY LTD ACN 054 304 273

(Plaintiff)

v

MAINLAND PROPERTY HOLDINGS NO 8 PTY LTD ACN 636 594 208 (RECEIVERS AND MANAGERS APPOINTED)

(Defendant)

FILE NO:

BS 10748 of 2021

DIVISION:

Trial Division

PROCEEDING:

Trial

DELIVERED ON:

15 December 2021

DELIVERED AT:

Brisbane

HEARING DATE:

9 and 10 December 2021

JUDGE:

Bowskill SJA

ORDERS:

1. The court declares that no binding contract for the sale of the property was entered into between the plaintiff and the defendant on 24 or 26 August 2021.

2. The plaintiff’s claim is dismissed.

3. Pursuant to s 127(2) of the Land Title Act 1994, caveat no. 721058707 lodged by the plaintiff over the property be removed forthwith.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT – WHETHER CONCLUDED CONTRACT – where the defendant, by its receivers, offered property for sale – where the plaintiff, as a prospective purchaser, signed an expression of interest form which included an acknowledgment that no agreement on the terms of a contract for sale will be binding on the vendor unless and until the contract of sale is duly executed by the parties, the deposit is paid and formal exchange is effected – where the plaintiff offered to purchase the property by providing to the defendant, by its receivers, a formal contract of sale, executed by the plaintiff by its sole director – where the real estate agent for the defendant, on instructions from the receivers, sent an email to the plaintiff’s director, stating that the receivers are “in a position to transact” on the property at the current offer and will execute a contract once the deposit is received, “whilst reserving the right to transact with a third party in the meantime” – where the contract was not executed by the defendant or its receivers, and a contract for sale of the land to a third party was subsequently executed – whether, on an objective assessment of the factual circumstances, the plaintiff and the defendant intended to create a concluded agreement at the time the email was sent, or upon payment of the deposit – whether the requirement under s 59 of the Property Law Act 1974 for some memorandum or note of the contract, in writing and signed by the party to be charged, was met by the email sent by the real estate agent, having regard to s 14 of the Electronic Transactions (Queensland) Act 2001.

Electronic Transactions (Queensland) Act 2001 (Qld), s 14

Property Law Act 1974 (Qld), s 59

Land Title Act 1994 (Qld), s 127

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521

Moffatt Property Development Group P/L v Hebron Park P/L [2009] QCA 60

Stellard Pty Ltd v Anor v North Queensland Fuel Pty Ltd [2015] QSC 119

COUNSEL:

J Faulkner, for the plaintiff

M Martin QC, for the defendant

SOLICITORS:

Frigo Adamson Legal Group, for the plaintiff

Dentons Australia Limited, for the defendant

  1. [1]
    The plaintiff made an offer to purchase property owned by the defendant, which was offered for sale by receivers appointed by a secured creditor of the defendant.  It says the defendant accepted that offer and a binding contract came into existence, either on 24 August 2021 (when an email was sent by the real estate agent appointed by the receivers) or 26 August 2021 (when the deposit was paid).  The defendant denies this.  On 1 September 2021, the receivers executed a contract for sale of the property to a third party for a higher amount.   When the prospect of this was flagged to the plaintiff, it caused a caveat to be lodged.   By its claim, the plaintiff seeks a declaration that the plaintiff has a binding and enforceable contract with the defendant for the sale of the property and an order for specific performance of that contract.  By its counterclaim, the defendant seeks a declaration that no such contract was entered into and an order for removal of the caveat.  By its amended counterclaim, the defendant also seeks damages under s 130 of the Land Title Act 1994.  As the contract with the third party is due to settle (following extension) on 31 January 2021, the plaintiff’s claim, and the defendant’s counterclaim for removal of the caveat, have proceeded to trial quickly.  The defendant’s counterclaim for damages was not before me for determination and has been adjourned to a date to be fixed.
  2. [2]
    For the following reasons, I have concluded that no contract for the sale of the property from the defendant to the plaintiff was formed, on 24 or 26 August 2021, and accordingly that it is appropriate that an order be made for the removal of the caveat.
  3. [3]
    The defendant is the owner of, among others, a property at Wongaling Beach,[1] near Mission Beach, in North Queensland, which is the site of the Bali Hai Van Park.  The property is subject of a mortgage and a charge given by the defendant to Naplend Pty Ltd.  On 19 August 2020, Naplend exercised its power under the mortgage and the charge to appoint receivers and managers of the property.  One of the receivers is Mr Kogan.
  4. [4]
    On 4 December 2020, the defendant appointed Resort Brokers Asia Pacific Pty Ltd as its real estate agent for the sale of the property.  The initial period of the appointment was from 26 November 2020 to 26 April 2021 and this was subsequently extended to 26 August 2021.  The terms of the appointment included that the instructions were to “market property, inspections, manage sales from offer through to settlement”.   Mr Croghan was an employee of Resort Brokers who worked on the sale of the property.
  5. [5]
    The receivers prepared an expression of interest form to be completed by prospective purchasers of the property.  On 9 August 2021, the plaintiff, by its sole director, Mr Sinclair, expressed its interest in purchasing the property using this form.  Relevantly, the expression of interest form, signed by Mr Sinclair, included the following:
    1. (a)
      acknowledgments by the proposed buyer (the plaintiff), that:
      1. “[n]o negotiations in relation to the Contract of Sale or agreement on the terms of the Contract for Sale will be binding on the Vendor unless and until the Contract of Sale is duly executed by the parties, the deposit is paid and formal exchange is effected” (para 1(e)); and
      2. “if the Vendor accepts the Expression of Interest, no binding agreement will exist between the Vendor and the Proposed Buyer until a Contract of Sale is formally agreed between the parties, duly executed by the parties and formally exchanged” (para 1(f)(v)); and
    2. (b)
      a statement, in relation to the “Vendor’s rights”, that “[n]o negotiations in relation to the Contract of Sale or agreement on the terms of the Contract for Sale will be binding on the Vendor unless and until the Contract of Sale is duly executed by the parties, the deposit is paid and formal exchange is effected” (para 2(l)).[2]
  6. [6]
    On the same day, 9 August 2021, Mr Sinclair, on behalf of the plaintiff, made an offer to purchase the property for $2,000,000 including GST. The offer was in the form of an REIQ contract for commercial land and buildings, signed by Mr Sinclair.[3]
  7. [7]
    On 10 August 2021, following a conversation between Mr Sinclair and Mr Croghan, Mr Sinclair, on behalf of the plaintiff, made a further offer, again in the form of a signed REIQ contract, this time for $2,000,000 plus GST.[4] 
  8. [8]
    On 19 August 2021, Mr Croghan sent a text message to Mr Sinclair, saying “good news.  Your offer has been accepted and contract will be executed this afternoon”.  This was followed, later on 19 August 2021, by an email from Mr Croghan to Mr Sinclair, saying:

“Have tried to phone you a couple of times today, but obviously you’ve been busy.

Congratulations. Your offer on the former Bali Hai Van Park in Mission Beach has been accepted.

As per the terms of the contract, can you please organise the 10% deposit of $200k into the following Trust account please?  Please use ‘Bali Hai’ as the reference.

I look forward to speaking with you soon…”.[5]

  1. [9]
    The plaintiff pleads in paragraph 9 of the statement of claim that, notwithstanding those matters (the text message and the email) “the plaintiff undertook further investigations”, particularised as including an inspection of the property.   It is clear the plaintiff did not treat this text or email as having created a binding contract for the sale of the property.
  2. [10]
    Consistent with this, on 20 August 2021 Mr Sinclair had a phone conversation with Mr Kogan, one of the receivers, in which Mr Sinclair said words to the effect that he “remained focused on purchasing the property”, “intended to visit Mission Beach on Monday of the following week”, “was considering the purchase of other properties in the vicinity of the property” and “would be in further communication with the receivers on Monday of the following week”.[6]
  3. [11]
    There were further telephone conversations between Mr Sinclair and Mr Croghan on 22 August 2021, in which Mr Sinclair arranged to inspect the property, as he had been told by another real estate agent that there may be some squatters there and some damage to the property.  In that regard, Mr Sinclair discussed with Mr Croghan the potential for an onsite caretaker for the period prior to settlement.  Mr Sinclair asked Mr Croghan whether the plaintiff’s offer to purchase the property “remained acceptable to the receivers” and Mr Croghan said he would confirm with the receivers whether they were happy to proceed.  Mr Sinclair also told Mr Croghan that he was interested in purchasing another property from the receivers, known as 48 Marine Parade.[7] 
  4. [12]
    Then on 24 August 2021, at 5.59 am, Mr Croghan sent an email to Mr Sinclair, in the following terms:

“Hi Lindsay,

Thanks for your time on the phone both Sunday and late yesterday afternoon.

I have spoken with the Receivers re your position in relation to Bali Hai and your interest in 48 Marine Parade, as you indicated to Barry Kogan last Tuesday in your phone correspondence with him.  Please see below (in italics their current position).

  • The Receivers are in a position to transact on Bali Hai at the current offer and will exchange contracts once the deposit is received into the Dentons account but reserve the right to transact with a third party in the meantime;
  • With regard to 48 Marine Pde, the Receivers are in a formal process that has offers due on Friday, 27 August 2021.  Due to the requirements placed on a Receiver by the Corporations Act they are unable to transact on any offers until the campaign has ceased and all offers must be evaluated on their merits.  The Receivers encourage you to submit an offer for the Receivers to consider as part of this process.  Noting your previous history with local agents, the Receivers are happy to receive this directly via an email.

As you will see from above, we are not in a position to be involved in the sale of 48 Marine Parade.  Should you wish to submit an offer on this property, as indicated above, please address it directly to Barry Kogan at [email address].

As also indicated above, the Receivers are in a position to transact on Bali Hai immediately on your current offer and will execute the contract once your deposit has been received, whilst reserving the right to transact with a third party in the meantime.”[8]

  1. [13]
    It was uncontroversial that this email was sent under instructions from the receivers.
  2. [14]
    Later on 24 August 2021, Mr Sinclair had a telephone conversation with Mr Kogan.  They have slightly differing recollections of what was said in this conversation.  Mr Kogan did not keep file notes of his conversations, but did record the effect of most of them in emails he sent to representatives of the secured creditor shortly after the conversation took place.  He presented as both a credible and a reliable witness when giving his evidence in court.  Mr Sinclair appeared to have difficulty clearly recalling some matters, and in one respect his evidence in court was inconsistent with what appeared in his affidavit and with contemporaneous email correspondence.  I did not form an adverse view about Mr Sinclair’s credibility (in terms of honesty) but have some doubts about the reliability of parts of his evidence, given these difficulties.  Accordingly, where the evidence of Mr Kogan and Mr Sinclair differed, in terms of recollecting conversations between them, for the most part I prefer the evidence of Mr Kogan.  Such differences as there are between their versions are mostly a matter of form rather than substance, and did not bear significantly on the issues for determination.
  3. [15]
    I find that in the conversation between Mr Kogan and Mr Sinclair on 24 August 2021:
    1. (a)
      Mr Sinclair said he would go ahead with the purchase of the property independently of any offer for 48 Marine Parade;
    2. (b)
      Mr Sinclair said he was in the process of establishing a new trust structure to be the buyer of the property but intended to have the deposit paid in the next 24 hours;

In cross-examination, Mr Sinclair denied he said this.  But in his affidavit (at [36(c)]) he said that he enquired whether the defendant would consent to the inclusion of a nominee clause because he was considering purchasing through a trust structure with Marbryde as the trustee; and Mr Sinclair’s personal assistant sent an email to his accountant, on the morning of 24 August 2021, saying “Lindsay has asked me to follow up with you regarding the new trust that he would like to set up for the purchase of the former Bali Hai Van Park in Mission Beach” (exhibit 1).  Accordingly, I accept Mr Kogan’s evidence as to this aspect of the conversation.

  1. (c)
    Mr Sinclair said he was concerned about the security of the property in the period up to settlement and wanted to put a caretaker in place at his cost for that period.
  2. (d)
    Mr Kogan said to Mr Sinclair that he agreed to the provision of a caretaker in principle, but would need to obtain approval from Naplend (the secured creditor) and that any caretaker would have to be properly insured and appropriate documentation needed to be in place.

Mr Sinclair denied the latter part of this – that Mr Kogan said any caretaker would have to be properly insured and appropriate documentation would need to be in place.  However, I accept Mr Kogan’s evidence that this was said.  Mr Kogan recorded the effect of his conversation with Mr Sinclair, including this aspect of it, in an email to the representatives of Naplend later on 24 August 2021.[9] And it is unsurprising that receivers exercising a power of sale would require such formality.

  1. [16]
    Mr Sinclair contended that Mr Kogan also said, in this conversation on 24 August 2021, “we’ve got a deal”; confirmed the defendant’s acceptance of the plaintiff’s offer and confirmed the contract was subject only to the plaintiff paying the deposit.  Mr Kogan said he did not recall saying “we’ve got a deal”, and said it would not make sense in the context of the other conversations that had taken place – by which the secured creditor’s approval of the offer had been communicated on 19 August 2021, and then in the following five days the receivers were following up directly with Mr Sinclair, and via Mr Croghan, in relation to the deposit, exchanging contracts and addressing the issues raised by Mr Sinclair.  I accept Mr Kogan’s evidence in this regard.  The other aspects were not specifically put to Mr Kogan in cross-examination (that he confirmed the defendant’s acceptance and confirmed the contract was subject only to the plaintiff paying the deposit).  Mr Kogan did confirm that, as at 24 August 2021, he was happy to proceed with the sale to the plaintiff, consistently with the email sent to Mr Sinclair on that day.  It is clear from the email he sent to the representatives from the secured creditor, on the evening of 24 August 2021, that there was already another party making enquiries about the property, although no formal offer had yet been made.
  2. [17]
    The following day, 25 August 2021, Mr Sinclair and Mr Kogan had another phone conversation.  Mr Kogan advised Mr Sinclair that Naplend had agreed to the provision of a caretaker, subject to appropriate documentation in any contract which would need to address insurance, indemnity and exit rights, among other things.  He told Mr Sinclair words to the effect that “my lawyers will draft an appropriate clause for your consideration as soon as possible”.  Mr Sinclair told Mr Kogan that his accountants had been slow in setting up the new purchasing trust structure, and asked whether Mr Kogan could either give him a few days to set up the new structure or otherwise exchange contracts with him in his name with a nominee clause, so that he could substitute the buyer once the new structure had been established.  Mr Sinclair also said he would pay the deposit that day.  Mr Kogan flagged with Mr Sinclair that he thought there might be an issue with double stamp duty if a nominee clause was included.  Mr Kogan sent an email shortly after this conversation to the representatives of Naplend, outlining the effect of the conversation in these terms.[10]   In relation to the caretaker clause, Mr Sinclair says he told Mr Kogan such a clause was unnecessary and he did not need that in the contract.  That may be so, from the plaintiff’s perspective.  However, it is clear on the evidence that Mr Sinclair had requested that provision be made for early (pre-settlement) possession for a caretaker to be installed, and that the defendant required that to be formally documented by the addition of a further clause in the contract.
  3. [18]
    On 26 August 2021, Mr Sinclair and Mr Kogan had another telephone conversation, in which Mr Kogan conveyed that the receivers’ lawyers had confirmed his understanding that a nominee clause could result in the obligation to pay double stamp duty if a new buyer was nominated.  I accept Mr Sinclair’s evidence that he also said, in this conversation, that a nominee clause was not necessary and it was not required by the plaintiff to proceed.  Later that day, the plaintiff paid the deposit to the defendant’s solicitor’s trust account.   Neither the defendant nor its receivers ever signed the proposed contract submitted by the plaintiff.
  4. [19]
    On 31 August 2021, Mr Kogan had another conversation with Mr Sinclair.  Mr Kogan told Mr Sinclair that an offer had been received from a third party which was higher than the plaintiff’s offer and said words to the effect that the receivers “require an improved offer from you to transact”.  Mr Sinclair said to Mr Kogan that Mainland (the defendant) had already accepted Marbryde’s (the plaintiff’s) offer, that there was a contract in place between Marbryde and Mainland, that Mainland could not now sell to a third party, and would be sued by Marbryde if it attempted to do so.[11]  Although the language recorded by Mr Kogan as having been used in this conversation is denied by Mr Sinclair, the substance of what was communicated in this respect is not disputed.  Mr Sinclair also said words to the effect that “you’ve shopped my offer around and that’s gazumping which is illegal in Queensland”.  Mr Sinclair said he would be putting a caveat on the title.  Mr Kogan said to Mr Sinclair words to the effect that there was no binding agreement and that the parties had not yet exchanged contracts.  Mr Sinclair insisted that Mr Kogan had “given me your word” and given it to me in writing.[12]  The parties differ as to whether Mr Sinclair also said, in this conversation, that he would consider improving the terms of his offer.   I accept something along these lines was said, albeit in the context of Mr Sinclair expressing his frustration and protesting that there was already a binding contract in place between the plaintiff and the defendant.
  5. [20]
    Mr Sinclair did in fact cause a caveat to be lodged on 1 September 2021.
  6. [21]
    Also on 1 September 2021, Mr Kogan sent an email to Mr Sinclair, referring to Mr Sinclair’s assertion that the receivers were not entitled to sell to another purchaser because an agreement for the sale of the property was already in place, and setting out the reasons why the receivers rejected that assertion.[13]  Mr Kogan referred to the expression of interest document, in particular clause 1(f)(v), and to the delays which followed the initial communication on 19 August 2021 of the secured creditor’s approval of the plaintiff’s offer, including whilst Mr Sinclair visited Mission Beach to inspect the property; the request for a caretaker pre-settlement; and Mr Sinclair needing a few days to sort out the purchasing entity. Mr Kogan also referred to the email of 24 August 2021, in which the agent informed Mr Sinclair that whilst the receivers were still willing to proceed with a sale to him, they were expressly reserving the right to transact with a third party in the meantime.  There was attached to this email a revised version of the contract for sale, this time including a “caretaker clause”[14] and leaving the name of the buyer blank.  Mr Sinclair was invited to submit any “higher or better offer” by 2 pm  that day.  Mr Sinclair did not respond to this email, and no revised offer was submitted by the deadline. 
  7. [22]
    Later on 1 September 2021, the receivers executed a contract for the sale of the property to a third party, Endale Pty Ltd.  That contract was originally due to settle on 1 October 2021, but as a result of these proceedings, settlement has been extended to 31 January 2022. 
  8. [23]
    The plaintiff’s case is that, by the email of 24 August 2021, the defendant accepted the plaintiff’s offer to purchase the property and a binding, enforceable contract was formed on that day, with performance of the contract conditional upon the plaintiff paying the deposit.  Alternatively, the plaintiff contends that by the email of 24 August 2021, the defendant accepted the plaintiff’s offer, and that upon the deposit being paid the (only) precondition to formation of the contract was met and a binding and enforceable contract between the plaintiff and the defendant was formed on 26 August 2021.  In so far as s 59 of the Property Law Act 1974 requires “some memorandum or note of the contract, [which] is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised”, the plaintiff relies upon s 14 of the Electronic Transactions (Queensland) Act 2001 to contend that the email of 24 August 2021 is sufficient to meet this requirement.
  9. [24]
    The defendant’s case is that no binding contract came into effect on 24 or 26 August 2021, as the words used in the 24 August 2021 email are objectively consistent with the defendant not intending to be immediately bound, and instead requiring formal execution of any contract before being bound.  The defendant also contends that s 59 of the Property Law Act operates to prevent the plaintiff bringing action on the purported contract, and in this regard that s 14 of the Electronic Transactions (Queensland) Act does not apply.
  10. [25]
    Accordingly, the first question is, did the email of 24 August 2021 constitute an unqualified acceptance such that a binding contract was formed on that day? 
  11. [26]
    Whether the parties intended to create contractual relations requires an objective assessment of the state of affairs between the parties, which may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances.[15]
  12. [27]
    It has been observed that in the context of a contract for the sale of land, the usual expectation of parties in negotiation is that they will not be taken to have made a concluded bargain unless and until a formal contract is executed.[16]  However, this is not an intractable rule and the decisive issue is always the intention of the parties, which must be objectively ascertained from the factual context.[17]
  13. [28]
    The factual context here includes the expression of interest form, which made it abundantly clear from the start of the negotiation that the defendant’s position was that there would be no binding agreement until a contract was validly executed by both parties and exchanged.  This was reiterated in the email sent by the agent, on the instructions of the receiver, on 24 August 2021.  That such an approach would be adopted by a receiver selling a property on behalf of a secured creditor is unsurprising, given the receivers’ obligations under chapter 5, part 5.2 of the Corporations Act 2001 (Cth).
  14. [29]
    Further, the words used in the email of 24 August 2021 could not be construed as an unqualified acceptance of the plaintiff’s offer, such that it could be said there was a concluded contract at that point in time, or immediately upon payment of the deposit.  The language used in the email – that the receivers “are in a position to transact” – does not bespeak immediate acceptance of an offer resulting in a concluded bargain.  The ordinary meaning of “transact”, used as it is in this context as a verb,  is to carry through, relevantly, negotiations to a conclusion.  What is plain, from the second last paragraph of the email, is that the conclusion – that is, the point at which a binding agreement would come into existence – remained execution of the contract.  Until that time, the receivers reserved the right to “transact” with a third party.   Expressly reserving the right to transact with a third party in the meantime (that is, before execution of the contract by both parties) is, objectively, inconsistent with the proposition that the email of 24 August 2021 was an unqualified acceptance of the plaintiff’s offer resulting in a binding contract being formed.
  15. [30]
    And in any event, given the matters raised by Mr Sinclair on the behalf of the plaintiff, as to the provision of a caretaker and the possibility of a nominee clause, there remained matters to be finally agreed between the parties.  Mr Kogan’s email of 1 September 2021, which attached a revised version of the contract including a substantial pre-possession clause, supports this finding.  Regard may be had to this subsequent correspondence, since the disputed issue is one of formation of the contract, rather than construction of it.[18]
  16. [31]
    Separately, the defendant submits that the agent, Mr Croghan, who sent the email of 24 August 2021, had no authority to accept the plaintiff’s offer such as to bring about a binding agreement by that communication.  There is no dispute that Mr Croghan had authority to send the email, and did so on the instructions of the receivers.  The argument is that the agent could not, by that email, bind the defendant to a contract.  The classical function of a real estate agent is to find a buyer for the property the principal (seller) wishes to sell.  Absent some express authority, the law does not imply authority to effect the sale.[19]  In this case, there was no such express authority.[20] And, for the reasons already given, it was made plain by the defendant, by its receivers, that there would be no binding contract until both parties had executed the contract.  As the form of proposed contract made clear, it was the signature of the party concerned (not an agent on their behalf) that was required.[21]
  17. [32]
    Further, and in any event, in my view s 59 of the Property Law Act 1974 operates to prevent the plaintiff bringing this proceeding.  Section 59 provides that:

59   Contracts for sale etc of land to be in writing

No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.”

  1. [33]
    There is no document signed by the defendant or its receivers.
  2. [34]
    The document relied upon by the plaintiff as meeting this requirement is the email of 24 August 2021, sent by the agent, Mr Croghan.  For this conclusion, the plaintiff calls in aid s 14 of the Electronic Transactions (Queensland) Act 2001, which provides:

14Requirement for signature

  1. (1)
    If, under a State law, a person’s signature is required, the requirement is taken to have been met for an electronic communication[22] if—
  1. (a)
    a method is used to identify the person and to indicate the person’s intention in relation to the information communicated; and
  1. (b)
    the method used was either –
  1. (i)
    as reliable as appropriate for the purposes for which the electronic communication was generated or communicated, having regard to all the circumstances, including any relevant agreement; or
  1. (ii)
    proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence; and
  1. (c)
    the person to whom the signature is required to be given consents to the requirement being met by using the method mentioned in paragraph (a).
  1. (2)
    The reference in subsection (1) to a law that requires a signature includes a reference to a law that provides consequences for the absence of a signature.”
  1. [35]
    The plaintiff pleads that it is to be inferred that the parties have consented to the method referred to in s 14(1)(a) – namely, that the email of 24 August 2021 should suffice as the signature of the defendant as seller – because:
    1. (a)
      the parties engaged in negotiations by electronic communication including email and text message;
    2. (b)
      the plaintiff’s offer was sent by email; and
    3. (c)
      acceptance of the plaintiff’s offer was by email of 24 August 2021; or
    4. (d)
      alternatively, the parties expressly agreed to signing by way of electronic signature, pursuant to clause 37 of the contract.[23]
  2. [36]
    Dealing with the last point first, the email of 24 August 2021 cannot be taken as an “electronic signature” for the purposes of clause 37 of the contract.  As defined in clause 1 of the REIQ standard commercial terms, an “electronic signature” means an electronic method of signing that identifies the person and indicates their intention to sign the contract.   The plaintiff, as buyer, affixed an electronic signature, being an electronic image of the paper signature of its director, Mr Sinclair.[24]   The contract was never signed by the defendant, or its receiver, using any kind of signature, electronic or otherwise.  The email from the real estate agent is not an “electronic method of signing” for the purposes of clause 37.
  3. [37]
    Moreover, the parties cannot be taken to have consented to the email from the real estate agent as a “method” for the purposes of s 14(1)(a), in the face of the express acknowledgements in the expression of interest form, the express wording of the email itself, and the fact that it was a communication from the real estate agent, not the defendant or its receivers. 
  4. [38]
    The mere fact that the plaintiff communicated its offer – in the form of a copy of a formal contract, bearing the electronic signature of Mr Sinclair as the sole director of the plaintiff – by way of an attachment to an email, does not provide a basis to infer, from the factual circumstances of this case, that the defendant consented to the contract being formed by exchange of electronic communications.  In this regard, the present case may be distinguished from Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119, in which the negotiations took place by email (not by attachment of a formal contract, signed by the offering party); the offer was set out in an email; the acceptance was communicated in an email by a person expressly authorised to do so; it was held that the broader context of the two emails and the other expressions used in them strongly suggested that the parties were content to be bound immediately (at [39]); and, further, was held that in circumstances where parties have engaged in negotiation by email and, in particular, where an offer is made by email, then it is open to the court to infer that consent has been given by conduct of the other party (at [68]).
  5. [39]
    In this case, it is not open to draw such an inference.  On the contrary, the fact of the offer being in a formal contract, executed by the plaintiff; against the background of the expression of interest document; taken together with the express words of the 24 August 2021 email, strongly supports the conclusion that the defendant did not agree to such a method, and maintained its insistence that no binding contract would come into existence until the actual contract was executed by both parties.
  6. [40]
    Merely because the offer, in the form of a copy of the contract, signed by the offeror, is sent to the other party attached to an email is not sufficient to support an inference that the other party has agreed to its acceptance, and indeed signature, being presumed from an email in response.  The reality is that nowadays most communications will be by email.  The point made in Stellard is not that any use of email to communicate gives rise to an inference of consent to communication of binding intent by electronic means.  Rather, in that case, it was because the substance of the negotiations had been undertaken by an exchange of emails that the Court considered it could be inferred the parties consented to their intentions being communicated, in a binding way, using that method.  But if, as in this case, the evidence points to the fact that one of the parties insisted, from the outset of the negotiations, that there would be no binding agreement until the contract was actually executed by both parties, it is not open to infer, simply from the use of email as a means of communication, consent to some other method of conveying their intention.
  7. [41]
    In all the circumstances, the plaintiff has not established a basis for the declaration it seeks nor for an order for specific performance.  The plaintiff’s claim will therefore be dismissed.  It is appropriate to declare that no binding contract for the sale of the property was entered into between the plaintiff and the defendant on 24 or 26 August 2021 and to order that the caveat lodged by the plaintiff be removed. 
  8. [42]
    I anticipate that the appropriate order will be that the plaintiff pay the defendant’s costs of the plaintiff’s claim, and that part of the defendant’s counterclaim which has proceeded before me, but will give the parties the opportunity to be heard about this, at the time of delivering judgment.
  9. [43]
    For completeness, I record that I have already ordered that the defendant’s counterclaim for damages pursuant to s 130 of the Land Title Act 1994 (paragraph 5 of the prayer for relief in the amended counterclaim) be adjourned to a date to be fixed.

Footnotes

[1]Comprising lot 15 on RP 710648, lot 14 on RP 710648 and lot 6 on RP 907229.

[2]Mr Sinclair’s affidavit (CFI 22), exhibit LJS-13 (in particular at pp 105-106). 

[3]Mr Sinclair’s affidavit, exhibit LJS-12 (in particular at pp 82-84 and 96).

[4]Mr Sinclair’s affidavit, exhibit LJS-14.

[5]Mr Sinclair’s affidavit, at pp 182 and 184.

[6]See paragraph 9(a) of the defence admitted in paragraph 9(a) of the reply.  See also Mr Kogan’s affidavit at [13]-[15] and the email at p 69 of the exhibits.

[7]Mr Sinclair’s affidavit at [34]; T 1-22.

[8]Mr Sinclair’s affidavit, at p 186.

[9]Mr Kogan’s affidavit at pp 76-77.

[10]Mr Kogan’s affidavit at p 75.

[11]Mr Sinclair’s affidavit at [41]; Mr Kogan’s affidavit at [21].

[12]T 1-36.

[13]Mr Kogan’s affidavit, at pp 86-87.

[14]Clause 75, added to the special conditions in annexure A (Mr Kogan’s affidavit, at pp 134-136).

[15]Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25], referring to Masters v Cameron (1954) 91 CLR 353 at 362; see also G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634-5.

[16]Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521 at 527-528.

[17]Moffatt Property Development Group P/L v Hebron Park P/L [2009] QCA 60 at [22]-[25].

[18]Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521 at 529, referring to The Commercial Bank of Australia Ltd v G H Dean & Co Pty Ltd and Dean [1983] 2 Qd R 204 at 209.

[19]Peterson v Moloney (1951) 84 CLR 91 at 94-95; Kedcorp Pty Ltd v Jenkins [1999] QCA 452 at [16].

[20]Cf the instructions in the appointment of the agent (referred to in paragraph [4] above) and also cl 30 of the REIQ standard commercial terms of contract, which provides that “[i]n the absence of any specific appointment the Seller by executing this Contract confirms the appointment of the Seller’s Agent … as the agent of the Seller to introduce a buyer”.

[21]Mr Sinclair’s affidavit, at p 179.

[22]An “electronic communication” is defined, in schedule 2, to mean: (a) a communication of information in the form of data, text or images by guided or unguided electromagnetic energy; or (b) a communication of information in the form of sound by guided or unguided electromagnetic energy, if the sound is processed at its destination by an automated voice recognition system.”

[23]Paragraph 18(c) and (d) of the statement of claim.

[24]Ms Buckingham’s affidavit (CFI 31).

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Editorial Notes

  • Published Case Name:

    Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd

  • Shortened Case Name:

    Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd

  • MNC:

    [2021] QSC 344

  • Court:

    QSC

  • Judge(s):

    Bowskill SJA

  • Date:

    15 Dec 2021

Appeal Status

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