Clarke v Paterson [2003] NSWCA 160

New South Wales Court of Appeal

CITATION : Clarke v Paterson [2003] NSWCA 160 HEARING DATE(S) : 17 June 2003 JUDGMENT DATE : 17 June 2003

JUDGMENT OF : at 1, 24 & 26; Ipp JA at 25; Davies AJA at 2 DECISION : Appeal dismissed with costs.

CATCHWORDS : Contract - sale of land - whether parties entered into a contract - whether real estate agent had authority to participate in exchange of parts of contract - objective test LEGISLATION CITED : Property, Stock and Business Agents Act 1941, s 84AB CASES CITED : Taylor v Johnson (1983) 151 CLR 422 David John Clarke (Appellant) PARTIES : Fraser Laurie Paterson (Respondent) Tracey Lea Paterson (Respondent) FILE NUMBER(S) : CA 41212/02 COUNSEL : T North SC / RW Evans (Appellant) TJ Morahan (Respondents) SOLICITORS : Fitzpatrick Teale (Appellant) Hozack Clisdell Lawyers (Respondents)

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT 3424/02 FILE NUMBER(S) : LOWER COURT Young CJ in Eq JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41212 of 2002

MEAGHER ACJ IPP JA DAVIES AJA

Tuesday, 17 JUNE 2003 DAVID JOHN CLARKE v FRASER LAURIE PATERSON & ANOR JUDGMENT 1 MEAGHER ACJ: The Court is now in a position to give judgment and I ask Davies AJA to give the first judgment. 2 DAVIES AJA: This is an appeal from a judgment of Young CJ in Eq. His Honour declared that there was a valid and binding contract for the respondents to purchase and for the appellant to sell a property at 92-94 Yugura Street, Malua Bay. His Honour ordered that the contract be specifically performed. 3 The appeal has been brought on the ground that the appellant's real estate agents, who participated in the exchange of the parts of the contract, did not have authority to do so. 4 The principle to be applied is that expressed in Chitty on Contracts, General Principles, 25th edition, para 41, where this is stated:- "The normal test for determining whether the parties have reached agreement is to ask whether an offer has been made by one party and accepted by the other. In answering this question, the courts apply an objective test: if the parties have to all outward appearances agreed in the same terms upon the same subject-matter neither can generally deny that he intended to agree. An unexpressed qualification or reservation on the part of one party to an apparent agreement does not normally prevent the formation of a contract. The theory, popular in England in the nineteenth century, that there can be no contract without a meeting of the minds of the parties, has been largely discredited as it would tend to produce commercially inconvenient results." 5 The point made in Chitty was discussed by the High Court of Australia in Taylor v Johnson (1983) 151 CLR 422 where Mason ACJ, Murphy and Deane JJ at pages 427 to 430 examined the approach to be taken. Their Honours mentioned the past conflict between the subjective and the objective approaches to contract and stated, at 429, that the clear trend in decided cases and academic writings has been to leave the objective theory in command of the field. 6 The objective facts which are relevant in the present case are, first, that the respondents made an offer which the appellant accepted. Secondly, the appellant signed one part of the contract, which had been drawn up by the appellant's solicitor and slightly amended, and the respondents signed the other part. Both parts as signed were identical. Thirdly, on 24 January 2002, the respondents paid the agreed deposit of $95,000. Fourthly, on the same day, the appellant's real estate agents exchanged parts with the respondents' solicitor. Fifthly, thereafter, the respective solicitors held the exchanged parts of the contract, the respondents' solicitor holding the part signed by the appellant and the appellant's solicitor holding the part signed by the respondents. Neither solicitor made any complaint about that. 7 The matter proceeded between the solicitors as if a contract was on foot. The respondents' solicitor wrote in February to say the contract was unconditional. Subsequently, the respondents' solicitor made requisitions on title and the appellant's solicitor replied to those requisitions. Even the appellant, himself, proceeded as if the contract was on foot. As appears from a letter from the real estate agents, the appellant requested the postponement to a later date of the date for settlement. 8 In setting out these facts, I have said that the parts as signed were identical. That is because an exchange took place and there has been no matter raised which suggests that the parts were not identical. The mere fact that there was an exchange suggests that the two parties who were exchanging acted properly in the exchange and that there was identity between the parts. No dispute was raised before his Honour on that point. That is not to say that the point was admitted but, had there been any significance in the point, the other part of the contract, which is not in evidence, could have been called for and could have been put in evidence. 9 I have said that the real estate agents exchanged parts with the respondents' solicitor. That finding of his Honour has been challenged but there is in evidence a letter from the respondents' solicitor. It was put in the appellant's case and it stated: "The Contract was exchanged on 24 January 2002, the date it bears. The Vendor was represented by their Agents and the Contract was exchanged at our office with the writer's secretary, Diane Field."