Bryant v Bryant

[2010] NSWSC 658

CITATION:	Bryant v Bryant [2010] NSWSC 658
HEARING DATE(S):	17 June 2010
JURISDICTION:	Equity
JUDGMENT OF:	Pembroke J
EX TEMPORE JUDGMENT DATE:	17 June 2010
DECISION:	See Judgment 27 et seq
CATCHWORDS:	CONTRACTS - general contractual principles - subjective intentions of parties - whether defendant without defence - parties bound by the agreement made - REMEDIES - specific performance
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CATEGORY:	Principal judgment
CASES CITED:	Casper v Casper [2009] Fam CA 989 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
PARTIES:	LEAH ANNE BRYANT TIMOTHY REX BRYANT
FILE NUMBER(S):	SC 2008/280519
COUNSEL:	Martin Watts - Plaintiff Timothy Bryant in person - Defendant
SOLICITORS:	Mark Ireland Lawyers - Plaintiff

1 HIS HONOUR: This is an action in contract between the plaintiff and the first defendant who were once married. The second defendant is a company owned and controlled by the first defendant. The evidence was, which I accept, that the second defendant has no real assets and is only a necessary party because it has become the registered proprietor as to 70% of certain land in Queensland.

2 Despite the wide ranging claims of the defendants, the case is one which, in my view, involves the principles of contract law and only the principles of contract law. The plaintiff’s case was documentary. I will explain those documents shortly.

3 The first defendant gave evidence and tendered certain documents. He did so succinctly, and capably, having regard to the fact he is self-represented and has had to master some of the intricacies of the law. The presentation of his case was heart-felt, but misguided. I am not able to accept that he has demonstrated any legal defence to the plaintiff’s claim. Nonetheless he should be complimented on the dignity and restraint that he showed in giving his evidence. His answers to questions were direct. I think they were also honest.

The Facts

4 The facts are as follows. The plaintiff and the first defendant married in 1980 and separated in 1996. On 11 March 1996 in the Local Court at Bathurst orders were made providing that the plaintiff should convey to the first defendant land known as Ecclesbourne in McKanes Falls Road, South Bowenfels and the first defendant should convey to the plaintiff adjoining land known as Lot 3. That was done. Those properties represented separate parcels of what was once a larger aggregated farming property originally owned by the parents of the first defendant.

5 In addition to the orders made by the Local Court at Bathurst, the plaintiff and the first defendant entered into an agreement embodied in a mortgage date 4 September 1996. The mortgagor was the first defendant and the mortgagee was the plaintiff. The first defendant was legally represented by Mr Ronald Freisen, a solicitor from Bathurst. The terms of the mortgage included a provision that the principal sum due under the mortgage shall be paid in circumstances that included, among others, the sale of the property by the mortgagor. The mortgage went on to provide that the principal sum due under the mortgage shall be determined relevantly as follows:

In the event of the sale of the mortgage property by the mortgagor by means of an arms-length sale the principal sum shall be an amount equivalent to 39% of the net sale proceeds received after deduction of all reasonable legal costs, disbursements and agent’s commission, if any, incurred by the mortgagor in respect of such sale.

6 By letter dated 7 March 2002 the first defendant wrote to the plaintiff:

On 4 September 1996 there was a Mortgage given in your favour over “Ecclescourne” to secure debt of around $190,000.00 (based on the valuation at the time) and the agreement which was that you would receive 39% of the nett sale proceeds from the sale of the property (after deduction of all reasonable legal costs, disbursements, agent’s commission and the like).


At this point in time there is no actual purchaser however, I have listed the property for sale and I am encouraged by the interest shown to date.


As indicated to you, I am selling my assets with a view to setting up a new business which will include the purchase of other land.


In the event of the sale of “Ecclesbourne” I am prepared to give you another Mortgage (unregistered) over other land that I intend to purchase to secure the amount that I will owe you as a result of the sale of “Ecclesbourne”.


I further confirm, as per our conversation, that I would like you to loan me the funds that would otherwise be payable to you in the event of the sale of “Ecclesbourne” upon the following terms:
1. Term: 5 years from the date of the commencement of the advance.
2. Nil interest for the term.
3. In the event of the disposal of the business and/or the land I would repay the amount due to you in full.
4. In any event at the expiration of 5 years I would repay the amount due to you in full or renegotiate an extension of the loan together with an appropriate rate of interest to be agreed upon at that time.
5. Naturally, I need to have your assurance that you would assist me as outlined so that I can proceed with the sale etc.

7 The letter requested the plaintiff to sign a copy of it and to confirm her acceptance of the first defendant’s proposal. It also invited her to discuss the matter further with the first defendant if she wished to do so. It also stated that he would be responsible for all costs, stamp duties, etc applicable to the discharge of the existing arrangements and to the entering into of the documentation as outlined. The plaintiff duly signed, accepted and returned a copy of the letter.

8 The property known as Ecclesbourne was sold by the first defendant in about May 2002 for $825,000. The first defendant incurred legal costs and disbursements including agent’s commission of approximately $10,000 on that sale. In November 2005 he purchased, together with the second defendant, a property in Bundaberg Queensland being Lot 3 Registered Plan 84450 in the County of Cook. The first defendant became the registered proprietor as to 30% of that land and the second defendant became the registered proprietor as to 70%. The purchase price was $210,000. As I said earlier, the second defendant was for all practical purposes equivalent to the first defendant.

9 The first defendant did not pay to the plaintiff 39% of the net proceeds of sale following the sale of Ecclesbourne. The further agreement contained in the letter dated 7 March 2002 provided in substance that the plaintiff would lend to the first defendant the money that would otherwise be payable to her on the sale of Ecclesbourne for a period of five years with no interest payable.

10 At the time the agreement was made in March 2002 there was no dispute by the first defendant as to the entitlement of the plaintiff to 39% of the net sale proceeds from the sale of the property after deduction of reasonable legal costs, disbursements and agent's commission.

11 The first defendant did not pay to the plaintiff the amount due to her after the expiry of five years from the date of the March 2002 agreement. There was some dispute as to whether certain letters of demand were received by the first defendant but it does not matter. I am satisfied that at least one letter of demand was received. The fact remains that the first defendant has not complied with his contractual obligation to pay to the plaintiff 39% of the net sale proceeds from the sale of Ecclesbourne.

12 Another aspect of the agreement made in March 2002 was that the first defendant promised to provide "another mortgage (unregistered) over other land that I intend to purchase" to secure the amount that he would owe the plaintiff as a result of the sale of Ecclesbourne.

13 One of the arguments put forward by him was that the actual language of that promise contained in the letter of 7 March 2002 did not constitute, on its proper construction, a clear and unambiguous promise to provide a mortgage. That is because the letter used the words "I am prepared to give you another mortgage".

14 As a matter of construction I am satisfied that in the context in which it appeared those words should be construed as an agreement to give another mortgage (unregistered) over other land when and if other land was acquired with the proceeds of sale of Ecclesbourne.

15 The first defendant has never given to the plaintiff another mortgage over the Bundaberg land. Although there was some initial suggestion that there may be other land acquired by the first defendant, I am quite satisfied that the only other land acquired is the Bundaberg land. I am also satisfied that the balance of proceeds of sale from the sale of Ecclesbourne has been dissipated by the first defendant or at least substantially so.

Defendant’s Case

16 The defendants' case involved a number of issues and invoked a variety of legal concepts. Underlying almost all of them was the belief on the part of the first defendant that the written agreement embodied in the mortgage and later in the March 2002 letter, was not fair to him. He said that it did not embody the true agreement. He also said that it was not an agreement which ought to be recognised because of a number of factors. I refer to those factors below:

(a) He said that the original basis for the agreement was in error and that the enforcement of it would produce a miscarriage of justice. He said that the original intention, at least on his part, was that the division of assets between himself and the plaintiff should have been on a 50/50 basis. He blames his then solicitor Mr Freisen for the error which has occurred and says that he was negligent;
(b) He also says that if the plaintiff's claim is permitted it would constitute an unjust enrichment to her. That is because she will end up receiving more than what the first defendant perceives to be her fair share of the pool of matrimonial assets that were originally available;
(c) He says that enforcement of the contract which was agreed between them would be unconscionable;
(d) He says that the agreement should be set aside because there was not disclosed to the Local Court at Bathurst the further agreement relating to the provision of an unregistered mortgage. He says that that mortgage was inextricably linked to the property which was the subject of the orders but was kept outside the orders and it has given rise to the likelihood of an inequitable and unjust division of assets;
(e) He says that the percentage which was used as a calculator for the plaintiff's share, namely, 39% of the net sale proceeds of Ecclesbourne gave a bias towards her by reason of the appreciation in value of the property, something which he says was not anticipated;
(f) He also says that because the plaintiff did not like or enjoy the Ecclesbourne property, but is demanding 39% of its proceeds of sale, that her claim is immoral;
(g) One of the more important points in the first defendant's mind was the proposition that the plaintiff took advantage of her superior bargaining power to extract an agreement from him that was overwhelmingly in her favour. He asserts that he was advised that if he did not sign the mortgage over Ecclesbourne giving the plaintiff a percentage of its value, the property would have to be sold and consequently his parents and uncle and aunt would have to be removed from their home;
(h) Related to this point is the proposition that he was subjected to undue influence because the plaintiff took advantage of her possession of power over him and that his freewill to bargain was impaired. He said to me on a number of occasions that he had no free choice;
(i) He also relies on the doctrine of unclean hands because he says that the plaintiff wanted the mortgage unregistered so as to enable receipt by her of Commonwealth Government benefits while studying to be a teacher;
(j) He also relies on the doctrine of estoppel. But this is even more remote on the facts of the case than each of the other doctrines, none of which I regard as having any application;
(k) He points out that there was no cooling off period in relation to the original agreement and that the result has been that the plaintiff received, free of encumbrances, property consisting of 25 acres and a 13 year old brick and tile four-bedroom house as well as a new Toyota Camry sedan and goods and chattels;
(l) The last legal doctrine on which the first defendant relies is the principle of quantum meruit. He contends that she has received as much as she deserves. He says this is demonstrated by the precedent consisting of a decision of the Family Court of Australia in Casper v Casper [2009] Fam CA 989. That was a decision of a single Judge of the Family Court of Australia dealing with a division of matrimonial assets under the Family Law Act and has no application to a contract claim such as the claim in issue in this case.

17 All in all, the first defendant now feels that the agreement he made with the plaintiff is too favourable to her and does not wish to perform it or to comply with any of his obligations under it.

Principle of Contract Law

18 The problem with the first defendant's case is that contracts are often entered into in circumstances that subsequently change, or on the basis of unfulfilled hopes or expectations that a certain result will be achieved. A contract is static, in the sense that it represents the mutual accommodation of competing interests fixed and agreed at a particular time. The accommodation of competing interests agreed when the bargain is made may, or may not, adequately reward each party in the future, as events unfold or expectations change. But the parties are bound by the agreement they made. The meaning and effect of the contract does not depend on their individual subjective intentions held at the time of the bargain, or subsequently. Contract law is objective. The effect of the contract depends, not on what the first defendant may have intended, but on the ordinary and natural meaning of the words agreed by the parties when the contract was made.

19 This feature of contract law was adverted to by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352:

… statements and actions of the parties which are reflective of their actual intentions and expectations … are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself.
…We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding. It would tend to give too much weight to these factors at the expense of the actual language of the written contract.

No Defence

20 In my view the actual language of the contract between the plaintiff and the first defendant is unambiguous. There is no recognisable legal basis for setting aside that agreement on the basis of the facts and evidence which were put before me. Nor is there any recognisable legal basis for concluding that the first defendant was subjected to any undue influence or that the enforcement of the contract by the plaintiff would be unconscionable; or that there would be any unjust enrichment to the plaintiff if the contract were enforced.

21 If the contract results in the plaintiff receiving more than what may have been originally subjectively intended by the first defendant to be her fair share of the matrimonial assets, that is the effect of the contract. That circumstance does not give rise to the invocation of the principles of unjust enrichment. A contract may produce a result which favours one party, the law of contract requires that that result be adhered to and recognised.

22 I see no basis for the allegation of unclean hands, nor any basis for the proposition that the plaintiff took advantage of her superior bargaining power. I do not accept as a matter of fact that she could have been in a position to exercise superior bargaining power.

23 The fact that the first defendant was in a situation where it was necessary to give his former wife a percentage of the value of Ecclesbourne because it would otherwise have to be sold and his relatives would have to find a new home, is regrettably a common enough situation in family law disputes. It does not, in my view, lead to the result that the first defendant entered into the agreement without free choice.

24 I have to say that the first defendant impresses me as a person who is able to stand up for himself and agree to a bargain that he regards as appropriate to serve his interests. He was, in addition, of course, assisted and advised by a qualified legal practitioner. If the first defendant finds himself in the situation where he regards the outcome to be the result of negligent legal advice given to him at the time, then that is not something which should be visited on the plaintiff. The first defendant can take his own course in relation to that legal advice.

Other Submissions

25 I have to say that I was not impressed by the additional submissions made by the first defendant. They bore no relation to the legal issue to be determined but did reveal, on his part, a wrong headed approach to the hearing of this case. He complained about efforts to settle, or the lack of efforts to settle on the part of the plaintiff. He complained about the alleged maliciousness of the plaintiff and her legal representatives in conducting the case against him. And he said foolishly that he was prepared to go to gaol rather than to pay any costs to the plaintiff. Unfortunately, I will in due course make a costs order and the first defendant will have to make up his mind about that.

Amount Payable

26 There was evidence before me of the interest which has accrued on the plaintiff’s 39% share of the net proceeds of sale of Ecclesbourne since 23 May 2007. That interest is calculated in accordance with Schedule 5 under the Uniform Civil Procedure rules. The calculation has been set out in writing and I will place the document containing the calculations on the court file. Total interest payable to 17 June 2010 is $93,608.77. When that sum is added to the 39% share of the net proceeds of sale, being $317,850, the judgment sum amounts to $411,468.77.

Orders

27 I will make the following orders:

(1) I declare that the plaintiff was on 23 May 2007 entitled to receive payment from the first defendant of a sum equal to 39% of the net proceeds of sale of the land in folio identifier 1/998469 in the Parish of Lowther, County of Westmorland in New South Wales.
(2) I give judgment for the plaintiff against the first defendant in the
sum of $411,468.77.
(3) I order that the first defendant specifically perform his agreement with the plaintiff by providing to the plaintiff, and procuring the second defendant to provide to the plaintiff, first registered mortgages over the land in Queensland being Lot 3, RP84450 in the County of Cook in the Parish of Otoo.
(4) I order the second defendant to provide to the plaintiff a mortgage over its share of the said Queensland land.
(5) I order that the mortgages to be given by the first and second defendants secure to the plaintiff payment of the judgment sum of $411,468.77, to the intent that if the judgment is not satisfied within the time permitted by the rules of Court, the plaintiff will be at liberty to enforce the mortgages and exercise her power of sale under them in respect of the Queensland land.
(6) I order that in the event that the first defendant has not paid the judgment sum within the time permitted by the rules of Court and the first and second defendants have not provided to the plaintiff the said mortgages, a Registrar of this Court be empowered to execute such mortgages by that time, on behalf of the first and second defendants.

(7) I order the first and second defendants to pay the plaintiff’s costs.
(8) I order that a copy of these orders be served on the Queensland Registrar-General.

Indemnity Costs

28 The plaintiff asks for indemnity costs on the basis of a letter of offer sent on 22 October 2009. The letter was sent to the first defendant at his post office box address in Bundaberg. This is an address at which he said in evidence he received mail. A second copy of the letter was sent to the proper officer of the second defendant at its address recorded in the records kept by ASIC.

29 Both letters conveyed an offer on the part of the plaintiff that she would accept $350,000 in full satisfaction of her claim in these proceedings. The defendants did not respond to these letters. The case has subsequently proceeded and been heard. The outcome for the defendants is worse than they would have achieved if they had accepted the offer.

30 The offer remained open from 22 October 2009 until 2 November 2009. There is no evidence or suggestion that the time during which the offer remained open was impractical or too short to enable reasonable consideration and acceptance.

31 In those circumstances, it seems to be inevitable that I should also order that the defendants pay the plaintiff’s costs from 2 November 2009 on an indemnity basis. The first defendant acknowledged that he could say nothing in opposition to such an order.

oOo