The receivers of a distressed FNQ beach resort have fended off a desperate bid from a disappointed would-be purchaser – who was gazumped on the finish line by another buyer – to hold them to the sale.

Barry Kogan and Jonathon Henry of McGrath were charged by the mortgagee with the sale of the Bali Hai Beachfront Cabin Holiday Park in tropical Mission Beach and a nearby backpackers resort.

“We’ve got a deal”: email without electronic signature falls short on $2 mil buyBoth Cassowary Coast properties – alongside idyllic beaches and the Great Barrier Reef Marine Park at their doorstep – are prime candidates for further development.

Lindsay Sinclair of Marbryde Pty Ltd put an offer on 10 August 2021 through agent Shane Croghan of Resort Brokers by nominating a buy price of $2.2 mil in a signed expression of interest .

The EOI was expressed to be non-binding – even on acceptance which occurred on 19 August – pending execution of a formal contract.

Sinclair flew North the following week for a site inspection and proposed to the agent a special condition that pre-settlement possession be allowed so that an on-site caretaker could be installed pending settlement.

That was agreed in the course of numerous conversations between Kogan and Sinclair.

On 24 August the agent notified Sinclair by email that “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”.

A formal contract was submitted for execution that day with the name of the buyer left blank so Sinclair could insert the name of his preferred buyer entity.

Sinclair paid the $200k deposit to the receiver’s solicitors’ trust account on 26 August but he deferred signing because of delays on his solicitors’ part in establishing a new buyer entity.

On 31 August he was told by Kogan that “an improved offer” was required given that a higher bid had been received from a third party.

Sinclair – who believed Kogan had given him “his word” and a binding deal had been reached – made no higher offer and lodged a caveat.

In his Supreme Court proceedings, he contended that the terms of the 24 August email from the agent was a sufficient “memorandum of the contract in writing” to satisfy Property Law Act s 59 (Statute of Frauds) and that Kogan’s words later that day “we’ve got a deal” constituted an unqualified acceptance of the plaintiff’s offer.

The receivers on the other hand pointed to the express qualification in the agent’s 24 August email that the seller reserved “the right to transact with a third party” until the formal contract was signed.

Justice Helen Bowskill agreed.

The conduct of the parties was entirely consistent with no final commitment having been reached. This was supported by the fact that even on 1 September, Sinclair sent through a signed contract but with terms different to contained in contract submitted to him on 24 August.

That was enough to sink the would-be buyer’s case but the court went on to explain why the agent’s email was never enough to evidence a concluded contract.

Her Honour concurred with the receivers’ further assertion that the agent in any event had no express authority in that regard.

“Absent some express authority, the law does not imply authority [on the part of an agent] to effect the sale,” she observed.

Further, such email could not satisfy the Property Law Act s 59 that the “memorandum” be “signed by the party to be charged” because – although the parties agreed in standard REIQ condition 37 to signing the contract electronically – the email contained no signature, electronic or otherwise of the receiver or even the agent.

The email from the agent was not of itself an “electronic signature” as it did not meet the contractual definition that required it “identifies the person and indicates their intention to sign the contract”.

Finally, Justice Bowskill noted that the deal was not one that could have been concluded in such fashion because – unlike in other cases – the  negotiations had not occurred substantially by email exchange whereby it could be inferred the parties consented to being bound by statements made in those communications.

Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd [2021] QSC 344 Bowskill SJA 15 December 2021


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