Bluestone Pty Ltd v Wilispa Pty Ltd [1994] QCA 528

IN THE COURT OF APPEAL [1994] QCA 528 SUPREME COURT OF QUEENSLAND Appeal No. 142 of 1994 Brisbane Before Fitzgerald P. Davies J.A. Lee J. [Bluestone P/L v. Wilispa P/L] BETWEEN: BLUESTONE PTY LTD ACN 055 693 233 (Plaintiff) Appellant AND: WILISPA PTY LTD ACN 919 886 334 (Defendant) Respondent REASONS FOR JUDGMENT - FITZGERALD P. and LEE J. Judgment delivered 07/12/1994 This is an appeal from a judgment delivered in the Trial Division on 11 July 1994. The trial judge dismissed the appellant's action against the respondent, and ordered that the appellant pay the costs of the respondent of and incidental to the action, including reserved costs to be taxed. By its notice of appeal, the appellant seeks that "the judgment below be set aside, that it recover judgment against the [respondent] for specific performance of the agreement made on the 26th day of June 1992 between the [appellant] as purchaser and the [respondent] as vendor ...", and that the respondent be ordered to pay the appellant's taxed costs of and incidental to the action and the appeal, including reserved costs. -- 1 of 20 -- 2 As is apparent from the statement of the relief which the appellant seeks, its claim is based upon the proposition, pleaded in para. 3 of its statement of claim, that "[by] a written contract made on the 26th day of June 1992 the [respondent] sold and the [appellant] purchased for the sum of $3,500,000.00 ... land" which is described in the statement of claim and the notice of appeal. The trial judge found that no such contract had been concluded and, if that is correct, the appeal must fail. As at 26 June 1992, the respondent was the registered proprietor of the land, but it held it, and other land, subject to a joint venture agreement with Elders Finance Limited. The respondent was substantially indebted to Elders, which had terminated the joint venture some time earlier. One basis of the appellant's claim was that the contract upon which it relied had been entered into in the name of the respondent by one of its directors, John Bernard Soderberg, pursuant to express actual authority in the joint venture agreement. Broadly speaking, this argument was based upon the premise that, by cl. 5 of that agreement, the respondent was "charged with the general management" of the joint venture and had delegated "performance of its duties and obligations" to Mr Soderberg, as, by the joint venture agreement, it was entitled to do. Because he was responsible for "general management", it was submitted that he had authority to conclude a contract with the appellant for the sale and purchase of land which, under the joint -- 2 of 20 -- 3 venture, had been intended to be developed, subdivided and sold. Reliance was placed by the appellant upon cl. 2(a) of the joint venture agreement, which provided that Elders and the respondent "hereby constitute themselves joint venturers for the acquisition, management, development and disposal of the land in accordance with the terms hereof", although both the distinction drawn between "management" and "disposal" and the emphasis upon "disposal of the land in accordance with the terms" of the joint venture agreement seem to me unfavourable to the appellant. Clause 13 of the joint venture agreement is strongly against this aspect of the appellant's claim. It provided that, promptly after termination of the joint venture, the market value of the property was to be determined in the method specified, the respective parties had successive options to acquire the land, and, if neither party exercised its option, "then so much of the land that has not been sold shall be sold by public auction on terms to be agreed upon between Elders and [the respondent] ...". No other parts of the joint venture agreement were referred to, and we are satisfied that it did not authorise Mr Soderberg to conclude the sale which the appellant asserts. The appellant also contended that Mr Soderberg had implied actual authority on behalf of the respondent to enter the contract on which it relies. This contention was based upon -- 3 of 20 -- 4 other contracts which Mr Soderberg had signed on behalf of the respondent, and, in particular, the contract to purchase the parcel of land of which the land presently in dispute forms part, and a large number of contracts to sell portions of that land which had been disposed of by the joint venture after development and subdivision. Further, the land now in dispute had been offered for sale by auction in April 1992. Mr Soderberg was present at the auction, although it was not established that he was authorised to conclude a contract for the sale of the land on behalf of the respondent on that occasion. Following the auction, negotiations were commenced between the appellant and the respondent. In the course of those negotiations, the appellant made an offer of $3,005,000 in the form of a draft contract executed under its common seal. That offer was not accepted, and the appellant made a second offer, in similar form, of $3,200,000. Mr Soderberg received this offer on behalf of the respondent, inserted additional terms, and amended the purchase price to $3,500,000. That document bears the words "Wilispa Pty Ltd per J.B. Soderberg", immediately above Mr Soderberg's signature. The counter-offer was rejected by the appellant. Then, on Friday, 26 June 1992, the appellant made a further offer to purchase at $3.5 million, again in the form of an executed draft contract. Mr Soderberg subsequently signed -- 4 of 20 -- 5 that document, in circumstances which it will later be necessary to discuss. However, for present purposes the matters already referred to which preceded the appellant's offer of Friday, 26 June 1992 are relied upon by the appellant for the proposition that, by the course of dealings to which reference has been made, Mr Soderberg had acquired implied actual authority to conclude on behalf of the respondent the contract asserted by the appellant. The trial judge refused to draw such an inference. He said: "I am unable to infer from these matters or from their totality that there was any actual authority conferred upon Soderberg to execute this contract on behalf of the [respondent]." There was no error of principle in his Honour's approach, and we agree with his conclusion that the earlier, different transactions do not warrant an inference that Soderberg had implied actual authority to sign the contract on which the appellant relies, which, as the trial judge said, was materially different from the earlier offer, signed by Soderberg, which the appellant had rejected. The appellant also argued that, if Mr Soderberg did not have actual authority, express or implied, he had ostensible authority. Reliance was placed upon the matters to which reference has been made, and the following circumstances, which largely concern events at and about the time when Mr Soderberg signed the document relied on by the appellant. -- 5 of 20 -- 6 Mr Soderberg, his wife, Esterina, and Mr William John Wallace, who lived in Adelaide, were the only directors of the respondent, which was a property developer. Mr Soderberg was "in day to day control" of the respondent's material activities. The dealings between the appellant and the respondent involved Mr Soderberg, a local real estate agent, Phillip James Harvey, and a director of the appellant, Robert John Norman. Mr Norman saw Mr Soderberg at the unsuccessful auction, and saw the auctioneer consulting him. Later, as has been mentioned, there were negotiations between the parties. Mr Norman signed the draft contracts which constituted offers by the appellant and, as was stated, Mr Soderberg signed the respondent's counter-offer which the appellant rejected. Then, again as mentioned above, the appellant made a further offer, signed by Mr Norman. On 26 June, Harvey took the offer which had been signed by Norman to Soderberg at his home, where Mrs Soderberg was also present. Harvey and Soderberg gave different versions of what took place there, and the trial judge preferred the account given by Mr Soderberg, which he considered "generally supported" by the testimony of his wife, whom his Honour considered "generally honest and reliable". According to Soderberg, he telephoned Wallace, particularly -- 6 of 20 -- 7 about the differences between the offer which had been made that day by the appellant and the respondent's previous offer of $3.5 million. Mr Wallace instructed him to sign the document, to write below his signature the words "W. Wallace to sign", and to send both copies of the document to him in Adelaide. This conversation was reported to Harvey, who was expected to tell Norman that Soderberg had signed; there was an ultimatum from Norman requiring acceptance of the appellant's offer by 5 p.m. that day, and it seems to have been thought that Norman would be satisfied if he was told that the contract had been signed by Soderberg although it still required Wallace's signature. Soderberg signed the contract and added Mr Wallace's name on both copies but had not added the additional words when Harvey took the contract from him saying, "Why do you want to write that shit for? You know as well as I do it is not a contract until Bill has signed and perused them." Mrs Soderberg gave evidence that her husband had said to Harvey, "Bill told me to sign and put 'W. Wallace to sign', but he said you realise it is not a contract until Bill signs it and puts the common seal on it", to which Harvey acceded. Mrs Soderberg also said that she and her husband would take the contracts to the airport for forwarding to Wallace in Adelaide, but Harvey said, "Don't you trust me?", in response to which it was agreed that Harvey should dispatch the documents. -- 7 of 20 -- 8 Harvey then set out for the airport. On the way, he telephoned Norman from his car and said that he was driving to the airport. He said that Soderberg signed the document and "may have" said that "he was sending a copy of the contract to Adelaide for Mr Wallace to sign". On Norman's instructions, Harvey did not send both copies of the contract to Wallace in Adelaide but delivered one later that day to Norman, who did not open the sealed envelope in which the document was delivered to him until the following Monday, 29 June 1992. That day, he took it to his solicitor, and later that day ascertained that the respondent denied that it was contractually bound. The trial judge found that delivery to Norman of the document signed by Soderberg "was not a representation of authority. The presence of Wallace's name clearly indicated that somebody else was to sign in order that the [appellant] be bound". The appellant accordingly adopted the position that there was a concluded contract when Harvey informed Norman that Soderberg had signed; this theory depends on the following premises: (i) the contract was completed by - (a) Soderberg's signature, and (b) notification by Harvey of Soderberg's signature; and -- 8 of 20 -- 9 (ii) contemporaneous and prior acts and events by or on behalf of the respondent represented to the appellant that - (a) Soderberg had authority to sign a contract binding on the respondent; and (b) Harvey had authority to notify the appellant of Soderberg's signature. A fundamental difficulty which confronts the appellant's argument is that there is nothing to indicate that the parties contemplated a binding contract coming into existence prior to the delivery to the appellant of a copy of the document signed by the respondent: cf. Sindel v. Georgiou (1984) 154 C.L.R. 661, 665-666. This is the usual practice, even if there is ordinarily not a formal exchange as discussed in Bridle Estates Pty Ltd v. Myer Realty Pty Ltd (1977) 51 A.L.J.R. 743. It is unnecessary to decide whether it would have been appropriate to find representations by the respondent that both Soderberg and Harvey had ostensible authority to bind it by their actions if what had occurred previously had been followed by Soderberg's signature on the document, without the addition of the reference to Wallace, and Harvey's delivery of a copy of that document to Norman, apparently in the ordinary course of events. In the circumstances in which Soderberg and Harvey in fact acted, as communicated to Norman or known to him through his relationship with Harvey, -- 9 of 20 -- 10 necessary findings to support the ostensible authority asserted by the appellant are not justified. Further, the appellant failed to establish other matters which it needed; namely, reliance upon representations as to authority by Norman and detriment to the appellant which is appropriately proportional to the relief which the appellant seeks: Northside Developments Pty Ltd v. Registrar-General (1990) 170 C.L.R. 146; Commonwealth of Australia v. Verwayen (1990) 170 C.L.R. 394. Accordingly, in our opinion, the appellant failed to establish the contract on which its claim depends. The appeal should be dismissed, with costs to be taxed. -- 10 of 20 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 142 of 1994 Brisbane Before Fitzgerald P. Davies J.A. Lee J. [Bluestone P/L v. Wilispa P/L] BETWEEN: BLUESTONE PTY LTD ACN 055 693 233 (Plaintiff) Appellant AND: WILISPA PTY LTD ACN 919 886 334 (Defendant) Respondent FITZGERALD P. DAVIES J.A. LEE J. JOINT REASONS FOR JUDGMENT OF FITZGERALD P. AND LEE J., DAVIES J.A. SEPARATELY. ALL CONCURRING AS TO THE ORDER MADE. Judgment delivered 07/12/1994 APPEAL DISMISSED WITH COSTS TO BE TAXED. CATCHWORDS: CONTRACT - Sale of land - authority to contract -respondent company a property developer - appellant negotiated with a director from respondent company to purchase land -contract signed by one director of respondent on behalf of respondent - whether director had authority to enter contract - whether implied authority - whether ostensible authority Counsel: D.B. Fraser Q.C. with him J.D. McKenna for the Appellant P.J. Lyons Q.C. with him R. Traves for the Respondent Solicitors: MacDonnells for the Appellant Miller Harris for the Respondent -- 11 of 20 -- 2 Date/s of Hearing: 10 November 1994 -- 12 of 20 -- 3 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 142 of 1994 Brisbane Before: Fitzgerald P. Davies J.A. Lee J. [Bluestone Pty Ltd v. Wilispa Pty Ltd] BETWEEN: BLUESTONE PTY LTD ACN 055 693 233 (Plaintiff) Appellant AND: WILISPA PTY LTD ACN 919 886 334 (Defendant) Respondent REASONS FOR JUDGMENT - DAVIES J.A. Judgment delivered 7/12/1994 The President and Lee J., whose reasons I have had the advantage of reading, have stated the relief sought by the appellant and the facts upon which it was sought. I do not propose to repeat what they have said in either of those respects except where it is necessary to do so to explain my reasons. As they have said, the primary question was and is whether there was a written contract made between the parties on 26 June 1992. -- 13 of 20 -- 4 The appellant's claim, which was rejected below, that there was such a contract, was based on the contention that Mr Soderberg, one of the respondent's directors, had the actual or ostensible authority to make such a contract on the respondent's behalf. Actual authority The appellant contented that Mr Soderberg's actual authority derived either from a joint venture agreement between the respondent and Elders or from a course of dealing by the respondent which, it was submitted, conferred authority on Mr Soderberg to execute contracts, which included the subject contract, on the respondent's behalf. Clause 5 of the joint venture agreement, upon which the appellant relied for the first of these contentions, charged the respondent with the general management of the venture involving the subject land and authorised it to delegate performance of its management duties to Mr Soderberg. However it also provided that, in the event of default by the respondent under the joint venture agreement, Elders might terminate the services of the respondent under it; and it did terminate those services prior to the time at which the relevant events here occurred. Consequently on 26 June 1992 Mr Soderberg had no authority pursuant to cl. 5. It was not submitted that he derived any authority pursuant to any other clause of the joint venture agreement. Clause 13, which refers to what must occur with respect to the subject -- 14 of 20 -- 5 land upon such termination, is inconsistent with any continuing authority of Mr Soderberg to act on behalf of the joint venture. In the light of events which occurred therefore the provisions of the joint venture agreement do not assist the appellant. As to the respondent's course of dealing, it is true that, whilst the joint venture agreement was on foot, Mr Soderberg signed on its behalf a number of contracts of sale of subdivided lots. But that was plainly pursuant to the delegation referred to above and, for the reasons I have mentioned, can have no relevance to anything done after termination of the joint venture agreement. Mr Soderberg gave evidence, which his Honour accepted, that he was specifically authorised to sign those contracts. The other conduct of the respondent relied on for this purpose involved the abortive auction of the subject land in April 1992 and its aftermath. In the first place the appellant submitted that Mr Soderberg attended the auction to sign as agent of the respondent any contract which eventuated; and that from this it may be inferred that he had authority to execute any contract for sale of the subject land. The appellant relied on the statement in the judgment of the learned trial judge that "no inference can be drawn from the fact that Soderberg attended at the auction to sign any contract"; from which it argued that there was a finding of fact by the trial judge that Mr -- 15 of 20 -- 6 Soderberg attended with authority to accept any offer which eventuated. I do not think that his Honour intended to make any such finding and there was no evidence to support it. Indeed the only direct evidence on the question was to the contrary; that any offer had to be referred to Mr Wallace in Adelaide and that, in the event that a contract was to be made, Mr Soderberg was not to be the sole signatory. Then there was the evidence that, following the auction, after several written offers by the appellant to purchase the land, Mr Soderberg signed a counter offer by the respondent at $3,500,000 by altering the last of the appellant's written offers and signing it "Wilispa Pty Ltd per J.B. Soderberg". Although that offer was rejected by the appellant it relied on it to prove the authority of Mr Soderberg to execute the subject contract on the respondent's behalf. There are two answers to this contention. The first is that there was evidence, which the trial judge accepted, that Mr Soderberg had express authority to make the former offer on behalf of the respondent; and that he lacked authority to make the alleged contract on 26 June. His Honour's findings in the latter respect were challenged before this Court but they plainly depended on his Honour's acceptance of the evidence of Mr Soderberg and, in particular Mrs Soderberg, and his rejection of the evidence of the real estate agent Mr Harvey to the extent that it was inconsistent with that -- 16 of 20 -- 7 evidence. No satisfactory basis was established for interfering with those findings, based as they were, at least in part, on the demeanour of the relevant witnesses. Secondly, notwithstanding that the counter offer and the alleged contract were at the same price and between the same parties, there were important differences between them. In the earlier offer there was a term which gave the respondent the option of withdrawing from the contract in the event that, before completion, it managed to obtain finance from a foreign source that would enable it effectively to pay out Elders. And the earlier offer was of a contract unconditional as to finance by the purchaser whereas the alleged contract was subject to finance. It could not therefore be inferred, from authority to make the first, that Mr Soderberg had authority to make the second. Ostensible authority The appellant also relied on the fact that Mr Soderberg apparently managed the real estate affairs of the respondent, on his conduct at the auction and on the execution by him of the counter offer of the subject land at $3,500,000 as together amounting to a representation that he was authorised to execute the document now relied on. As to the first of these there is, in my view, an obvious difference in kind between apparent authority to manage a business of subdivision and sale of land, including signing -- 17 of 20 -- 8 contracts of sale of subdivided land, and authority to dispose of the unsubdivided land, the only substantial asset of the business. The former does not ordinarily encompass the latter. The second depends on how Mr Soderberg's conduct at the auction was represented to the appellant. Mr Norman was aware of Mr Soderberg's presence. But he also knew that Mrs Soderberg was there and, although he did not know whether or not she was a director, it would not have surprised him, he said, if she were. He knew Mr Wallace to be a director but did not know whether or not he was present. He saw the auctioneer consulting Mr Soderberg during the course of the auction. This could not, without more, have amounted to a representation on behalf of the respondent that Mr Soderberg had authority to execute a contract of sale of the subject land if it sold at the auction. As to the third, the fact that one person represents that another has authority to bind him or her to a specific contract does not, without more, amount to a representation that the person so authorised has authority to bind the other at some later date to another contract between the same parties at the same price but otherwise on materially different and, as appears from what I have said above, less favourable terms. The question is not, of course, whether any of those facts, -- 18 of 20 -- 9 taken in isolation, amounted to such a representation but whether together they did so. But it would be artificial to attempt to answer that question without referring to the way in which Mr Soderberg signed the document on 26 June for the parties plainly did not intend to be bound except upon due execution and issue of the contract by the respondent: cf. Bridle Estates Pty Ltd v. Myer Realty Pty Ltd (1977) 51 A.L.J.R. 743. When Mr Soderberg signed the document it will be recalled that, underneath his own signature, he wrote "W. Wallace". This was plainly enough an indication that Mr Wallace was intended also to sign. There is no capacity in which he could have done so except as a necessary signatory on behalf of the respondent. The document received by Mr Norman in that form was inconsistent with a representation that Mr Soderberg was the only necessary signatory on the respondent's behalf. -- 19 of 20 -- Moreover there is no evidence of reliance by Mr Norman on any of the above alleged representations. Before he received a copy of the document signed by Mr Soderberg, which he did on the afternoon of 26 June, he may have been told by Mr Harvey the agent, he said in evidence, that Mr Harvey was sending a copy of the contract to Adelaide for signature by Mr Wallace. As the respondent submitted on appeal it is unlikely that Mr Norman would concede in evidence, as he did, that Mr Harvey might have told him that if he believed that Soderberg's signature alone was sufficient to create a binding contract. The 26th was a Friday. The document remained in a sealed envelope in Mr Norman's car over the weekend. On the Monday he took it to his solicitor and on that day he learned that the respondent disputed that a contract had been made. It is difficult to see how, accepting all else in the appellant's favour, it could have suffered detriment before he learned that. None was proved. It is unnecessary, in that event, to consider whether any detriment suffered by the appellant was proportional to the relief which it seeks. For those reasons I agree that the appeal should be dismissed with costs. -- 20 of 20 --