Cirillo v Manieri

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2010 03980

RITA CIRILLO	Plaintiff/Defendant by counterclaim
v
FRANK MANIERI and GELSOMINA COMANDE	Defendants/Plaintiffs by counterclaim

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JUDGE:	RANDALL AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23-25, 27 January 2012
DATE OF JUDGMENT:	7 August 2013
CASE MAY BE CITED AS:	Cirillo v Manieri & Anor
MEDIUM NEUTRAL CITATION:	[2013] VSC 399

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr J. S. Glover	Clayton Utz
For the Defendant	Mr P. L. Ehrlich	MAE Lawyers

HIS HONOUR:

Introduction

In this case, the plaintiff claims that a property owned by the defendants is held on a constructive trust for her benefit to the extent of her contribution to the repayment of the mortgage secured by the property.

Claim and defence

The plaintiff (“Mrs Cirillo”) is an elderly widow and the mother of the first defendant (“Frank”). The second defendant (“Gelsomina”) is Frank’s domestic partner.

Mrs Cirillo claims that she, on the one part, and Frank and Gelsomina, on the other part, entered into an agreement between September 2007 and August 2008, whereby Mrs Cirillo agreed to sell her housing unit at 2/32 David Street, Lalor (“Lalor unit”) and contribute $240,000 from the proceeds towards reduction of the moneys owing by the defendants on the mortgage secured over their house at 34 Budds Street, Coburg (“Budds Street”) in return for the defendants undertaking to accommodate the her at Budds Street and take care of her for life (“the Agreement”).[1]
[1]Paragraph 6 of the statement of claim filed 15 November 2010.

The Agreement alleged by Mrs Cirillo was said to be partly oral, partly written and partly to be implied. In so far as it was oral, it was said to be constituted by discussion between the parties at the Lalor unit in September 2007, December 2007 and May 2008. In so far as it was in writing, it was said to be constituted by a document executed by the parties on 20 August 2008 (“the August Document”). In so far as it was to be implied, the implication arose from the payment which Mrs Cirillo had promised and the relationship between the parties.[2] An implied term was not pressed with any alacrity on behalf of Mrs Cirillo.
[2]Particulars to paragraph 6 of the statement of claim.

The August Document is in the following terms:

THIS AGREEMENT is made the 20^th day of August 2008.
BETWEEN RITA CIRILLO of 2/32 David Street, Lalor in the State of Victoria (“the Donor”) of the first part
AND
FRANK MANIERI and GELSOMINA COMANDE of 34 Budds Street, Coburg in the State of Victoria (“the Donees”) of the second part

WHEREAS The Donor is desirous of making a gift of $240,000 to the Donees and the Donees are prepared to accept such gift.
NOW THIS AGREEMENT WITNESSES
A.In consideration of the gift of $240,000 by the Donor to the Donees the Donees hereby agree to look after and take care of the Donor for the rest of her lifetime in a manner that is just and appropriate in all the circumstances.
B.The Donees agree to allow the Donor to reside in their home at 34 Budds Street, Coburg in the State of Victoria or any other principal place of residence they may own free of rental or any other charges.

IN WITNESS WHEREOF the parties have set their hands and seals this 20^th day of August 2008.[3]

[3]Exhibit P-1.

The August Document is then appropriately executed and witnessed.

The defendants say in response, that the written document is the sole repository of the Agreement between the parties in respect of its subject matter.

It is critical to Mrs Cirillo’s case that she did not merely gift the sum of $240,000 without any restriction on how it should be applied as referred to in paragraph A of the August Document; that she demonstrate that the Agreement was partly oral; and that she be permitted to adduce evidence of the oral part of the Agreement, namely that the sum of $240,000 was to be applied in reduction of the mortgage loan.

The facts

Frank and his first wife divorced some time in the 1990s. After the divorce, Frank returned to live with his mother and his father, Dino Manieri, in the family home at Reservoir. Dino Manieri and Mrs Cirillo had another son, Robert.

Dino Manieri died in 1997. Mrs Cirillo sold the family home in 2000 and purchased a unit in Thomastown. Frank moved in with his mother at the Thomastown unit.

At some time in 2000, Frank brought Gelsomina to live at the Thomastown unit with Mrs Cirillo and himself, together with Gelsomina’s son from an earlier relationship.

In 2001, Mrs Cirillo’s circumstances changed. She met Dominic Cirillo (“Mr Cirillo”) and married him in 2002. Mrs Cirillo moved in to Mr Cirillo’s home unit in Dandenong. The Thomastown unit was subsequently given to Frank and his brother, Robert, equally. The percentages were adjusted to take into account a previous advance to Robert by his parents of about $10,000 to assist Robert to start his business. Frank and Robert came to an arrangement whereby Frank would pay his brother out. The brothers used a value of $120,000 as the basis for the adjustment. Frank provided $43,000 to Robert and the transaction was imperfectly documented by Mrs Cirillo and Frank executing a transfer of land dated 4 June 2001 pursuant to which Frank became the sole registered proprietor. The consideration set out in the transfer was $43,000.[4]
[4]Exhibit P-11.

Frank sold the Thomastown unit in December of 2002 for the sum of $168,000.

At about the time of the sale of the Thomastown unit, Frank and Gelsomina purchased the Budds Street property for the sum of $380,000. The purchase was partly funded by a mortgage of $304,000.

In 2003, Mr Cirillo became ill and was required to enter aged care accommodation from which he never returned.

In about 2005, Mrs Cirillo came to an arrangement with Mr Cirillo’s family as to what might happen if he died. Pursuant to that arrangement, Mrs Cirillo was given the Dandenong unit and the sum of $150,000. Subsequently, Mrs Cirillo and Mr Cirillo were divorced on 7 December 2005. The divorce application was instigated at the suit of one of Mr Cirillo’s children who had been appointed his guardian.

Mrs Cirillo spent some funds to present the Dandenong unit for sale, sold the same and applied the sales proceeds to purchase the Lalor unit. Mrs Cirillo renovated the Lalor unit, leaving about $80,000 which was placed in a term deposit. She also made a gift of $50,000 to her son Robert.

There had been a falling out between Mrs Cirillo and Frank some time after Mr Cirillo entered the aged care accommodation. On or about 27 May 2007, Mrs Cirillo re‑established contact with Frank. Subsequently, Frank and Gelsomina attended at the Lalor unit. Mrs Cirillo said that they brought some papers with them and said that, “They told me they had lots of debts, apart from the debt on the house… He said he had a car that was somewhat broken down, he couldn’t have it fixed.” Mrs Cirillo said that she would give the money for the repair of the car.[5]
[5]Transcript of proceedings, page (‘T’)92.

In August 2007, Frank and Gelsomina, together with Gelsomina’s child, requested whether they could move in with Mrs Cirillo at the Lalor unit. The Lalor unit was a two-bedroom unit. Mrs Cirillo gave up her room for Frank and Gelsomina, she moved into the second bedroom and the child slept on the couch.

In opening, Dr Glover set out that evidence would be given that in 2007 Mrs Cirillo’s resources were of great use to Frank and Gelsomina. However, that was not explored in evidence‑in‑chief. Despite that, at the time that Frank, Gelsomina and Gelsomina’s son resided in the two-bedroom Lalor unit, the Budds Street property was leased out by Frank and Gelsomina. Budds Street was a comfortable, modern or renovated property. The obvious and natural inference is that by August 2007, Frank and Gelsomina were under financial pressure. The mortgage loan had increased to in the vicinity of $400,000, and as at 4 August 2008, the mortgage debt was $436,994.06.[6]
[6]Exhibit P-9.

Not long after Frank and Gelsomina and Gelsomina’s son moved into the Lalor unit, Gelsomina proposed to Mrs Cirillo that the Lalor unit be sold and a larger house purchased where they could all live together.

The Lalor unit was put onto the market in October 2007. In December 2007 it still had not sold. Mrs Cirillo said that in December 2007 Frank and Gelsomina changed their minds and Gelsomina said to her:

Instead of buying a bigger house, why don’t we all go and live in Coburg and we’ll use that money to put into our mortgage.
…
He (Frank) sustained her suggestion by saying: “Look, Mum, you’re going to get old and we’ll look after you, this is the best. We’ll look after you for the rest of your life.”

Mrs Cirillo said that Gelsomina’s words were:

Mum, we’re not going to buy this larger house any more. Mum, let’s take the money and put that straight in our mortgage and we promise you that we will look after you for the rest of your life.

Mrs Cirillo said that Gelsomina also said:

We’re not going to ask you to pay any rent and if you get sick we’ll use our money to pay for any medical expenses you have – or for a nursing home.[7]
[7]T114.

Mrs Cirillo, with respect to the December 2007 conversations, said that:

… They also said that if I were to become gravely ill and I needed to go to a nursing home they would raise a mortgage on their property, on their house in order to pay for the nursing home or any medical expenses I should incur.

Mrs Cirillo replied:

I’ll give you the money, I’ll come to your house and you should look after me for the rest of my life.[8]

[8]T115.

The Lalor unit was on the market from October 2007 to June 2008. In May 2008, Mrs Cirillo had thought about taking it off the market. However, she said that the defendants: “Implored me, they beseeched me, they said ‘Look Mum, if you don’t sell the unit the bank will take our house’. I felt very bad about that, and so in June I did sell the unit.”[9]
[9]T116.

None of the witnesses gave any evidence about searching for a new premises, what range of purchase prices might be considered or how such purchase price would be funded. I am satisfied that the September 2007 conversation did not take place or if it did, it was nothing more than the germination of an idea which was dismissed. That leads to the conclusion that the conversation with respect to moving into the Budds Street property probably occurred prior to October or in October of 2007.

Gelsomina said that in 2007, in a month that she could not remember, Mrs Cirillo said to her that, “She wanted to sell it and get out of Lalor and that she wanted to come and live with us… at Budds Street”.[10] Gelsomina’s version of the conversation included that Mrs Cirillo wanted to gift the money to Frank like she did to the other son.[11] During the course of cross‑examination, Gelsomina said that the Lalor unit was placed on the market because “that’s what Mrs Cirillo wanted to do… She wanted to sell the unit and come live with us at Budds Street but I had tenants in there and I couldn’t get the tenants out…”.[12]
[10]T171.
[11]T172.
[12]T194.

Gelsomina was insistent that Mrs Cirillo was giving the money as that was what she had done with respect to her other son, Robert. Gelsomina, notwithstanding that she, Frank and her son were imposing upon Mrs Cirillo by residing at the Lalor unit so that Budds Street could be leased, insisted that she had been taking care of Mrs Cirillo. Although on her version Mrs Cirillo was making a gift, Gelsomina said it was only Mrs Cirillo who insisted that she see a solicitor to draw up a document which imposed a restriction on her that she would accommodate Mrs Cirillo in a fit manner for her life time.

Frank gave evidence that Mrs Cirillo was fed up and wanted to move out of Lalor and move in with Frank and Gelsomina at the 34 Budds Street property. He said:

All she said to me, she wanted to sell, she wanted to give a share – she wanted to give me my share because she had given a share to my brother of $250,000 and she wanted to give me the same amount of share.[13]

[13]T243.

He replied:

Mum, it’s up to you, it’s your choice. You do what you think you want to do.[14]

[14]T243.

He denied that there was any discussion about whether or not the money should be paid into the mortgage. He denied that there was any initial discussion about moving into a bigger house before the discussion about moving back into Budds Street. However, when pressed in cross‑examination, he conceded that his mother had suggested buying a larger place initially. That larger place would have been in his mother’s name.[15]
[15]T271.

Notwithstanding each of Frank and Gelsomina had moved into the Lalor unit to care for Mrs Cirillo, each sought to suggest that while they lived at the Lalor unit Mrs Cirillo was hardly there and had been residing with a new boyfriend. That proposition was not put to Mrs Cirillo and I reject the same. Particularly, as Frank insisted that he moved into the Lalor unit because his mother wanted them closer to her, that renting out Budds Street merely paid the mortgage and that by being with her ,“[Gelsomina] was there for her. If she needed to go to the doctor’s, [Gelsomina] will take her in the mornings, walk her up to the doctor’s or if she had to go to the specialist appointment because she was scared to drive.”[16] That evidence is contradictory to the suggestion that Mrs Cirillo was not residing at the Lalor unit. Further, each of the conversations that the defendants wish to rely upon were said to have taken place at the Lalor unit.
[16]T270.

In support of the defendants’ version of the conversations, a will of February 2008 was put to Mrs Cirillo.[17] That will, in effect, left everything to Frank, subject to survival provisions, and subject to survival, down the line, to Gelsomina, then Gelsomina’s son who is described as Mrs Cirillo’s grandson, as to three-quarters, and as to the remaining one share to the children of her son Robert. Apart from merely providing for the succession with respect to the estate to be held on trust, the will contains the following clause:

5.I DECLARE that I have made no provision under this my will for my son ROBERT MANIERI as I have provided sufficiently for him during his lifetime having given him the sum of $250,000 and also due to the lack of affection and respect shown by him towards me during my life.

[17]Exhibit D-1.

Mr Bertoli, an Italian speaking solicitor, was one of the witnesses and forwarded a copy of the will purportedly to Mrs Cirillo at a post office box number in Coburg and not to her Lalor unit home address.

The defendants expressed desire to look after Mrs Cirillo is inconsistent with their alienation up until 2007. Mrs Cirillo further maintained that she never had $250,000 to give to Robert. She was not cross-examined with respect to her finances in general, nor was she asked about when she might have provided that sum. Dr Glover had opened Mrs Cirillo’s case by referring to what finances had been available to her after she sold the Dandenong unit and purchased the home unit in Lalor. After the purchase, she invested $80,000 in a term deposit and made a $50,000 advance to her son, Robert. It was not explored whether or not the sum of $200,000 was provided before or after that advance to Robert. Further, Frank explained how he came to the amount to pay out his brother with respect to the Thomastown property which took into account an advance of $10,000 previously having been made to his brother. The notion that Mrs Cirillo advanced a further $250,000 to Robert, in her circumstances, borders upon the incredible.

Further, Mrs Cirillo maintained that she was pushed to make the February 2008 will.

Mrs Cirillo produced her term deposit notices and statements from 31 May 2005, together with savings bank ledger transactions from 22 December 2006.[18] They were produced to demonstrate contributions to the defendants at their request. However, more poignantly, they demonstrate that she did not have the capacity to make any advance to her son Robert, at least from May 2005.
[18]Exhibit P-12.

I am satisfied that it is more probable than not that Mrs Cirillo was requested by the defendants to sell her unit and inject funds into the Budds Street mortgage. I find that the defendants’ version of events is contrived and inconsistent with the circumstances. It was inconceivable that Frank, Gelsomina and her son did not move into the cramped conditions in the Lalor unit except for their desire to lease the Budds Street property to defray the mortgage costs with respect to the Budds Street property, and it is inconsistent with maintaining that the defendants were comfortable at the Lalor property because the defendants maintained that Mrs Cirillo did not reside there. Further, I would have expected that if Mrs Cirillo had of her own volition volunteered to make a gift which substantially depleted her own resources, there would have been discussion about the consequences of making such a gift and, in particular, discussions about the mechanics given that the Budds Street property was leased. If the defendants were not under financial pressure and if there was any great desire to care for Mrs Cirillo, Mrs Cirillo could have easily moved into the Budds Street property at any time. This would have enabled her to lease the Lalor unit or dispose of the same at her leisure. It is telling that the defendants did not return to the Budds Street property with Mrs Cirillo until the day of settlement of the Lalor unit and the day the sum was applied to the Budds Street mortgage. Again, this is illustrative of the defendants being motivated by financial stress. Neither defendant gave any evidence as to what arrangements were made for the tenants to vacate the property.

That the defendants were under financial pressure in 2008 and, I extrapolate back to late 2007, is demonstrated by the pay slips produced by Frank.[19] The pay slip for the period 24 September 2008 to 30 September 2008 sets out that his gross weekly income was $1,057.91. His net income was $710.91. In addition, he had child support deductions of $130 weekly to meet the amount he owed with respect to child support. On 17 March 2008 the arrears were in the sum of $12,347.89. By letter dated 17 March 2008, Frank’s solicitor, Rosetta Traficante, sought to negotiate the payment of arrears by weekly payments of $130 and sought that the late payment interest amount of $3,506 be waived.[20]
[19]Exhibit D-10.
[20]Part of Exhibit D-10.

The bank statements with respect to the defendants’ Bendigo account, addressed to the defendants at their post office box in Coburg, demonstrate that from April 2004 through to January 2005, the debit balance increased from $316,260 to $350,067. It was clear that the defendants could not maintain their lifestyle over that period without recourse to further funds. The bank statements[21] also demonstrate that the approved overdraft limit was $360,000. Although further bank statements were not produced, Gelsomina agreed that as at 4 August 2008 the sum of $436,994 was owing pursuant to the mortgage.
[21]Exhibit P-10.

Dr Glover sought to put it to each of Frank and Gelsomina that they had an extravagant lifestyle. It was sought to be illustrated by reference to the maintenance of two BMW cars which were, to put it colloquially, “ancient” and bank debits at gambling venues for the period May 2004 to June 2004 in the sum of $2,609.90. I reject the conclusion which Dr Glover seeks that I draw. However, the trend in the mortgage balance is sufficient to demonstrate financial stress.

I found the evidence of all three parties to be unsatisfactory. Frank’s evidence was callous and contrived. He expected me to accept that, knowing that the Lalor unit was Mrs Cirillo’s only substantial asset, he was quite prepared to accept a gift of $240,000. He was not concerned to enquire as to his mother’s financial position generally, was not concerned about considering how a nursing home would be paid for if required, or the mechanics of how a gift would be given. His stance was, “She gave it to me as a gift. She gave me the 240. I didn’t ask for it, I never asked for a cent.”[22]
[22]T267.

I found Gelsomina’s evidence to be equally contrived with respect to what was said in late 2007. However, that is more understandable given that she would support Frank. I have come to that conclusion by reason of the attendant circumstances of moving in to the Lalor unit and what she sought to convey by maintaining that Mrs Cirillo was not in attendance, and by virtue of the skeletal evidence given as to what was actually said. Dr Glover sought to make mileage out of the charges laid against Gelsomina by Centrelink with respect to the period April 2002 through to March 2007, and with respect to the rejection of the claim for a Carer’s Allowance Gelsomina made in 2009. The letter from Centrelink is dated 7 January 2009, which is prior to Mrs Cirillo leaving the Budds Street property and it may have some relevance to conduct after Mrs Cirillo commenced to reside at the Budds Street property, but I do not need to and do not draw any inference that Gelsomina was dishonest to reject her version of the discussions.

Mrs Cirillo was also a difficult witness. However, I am willing to accept that such difficulty and, at times confusion, arose or was manifested predominantly because of her age, social background, lack of a full command of English and the formality of a court. Her response with respect to the contents of the August 2007 agreement appeared contrived but no doubt arose from having discussed this matter with her legal practitioners in preparation for trial. However, her version of the arrangement to sell her only property and provide funds to Frank and Gelsomina to pay down the mortgage was the only version which fitted the attendant circumstances.

The Lalor property did not sell straight away. Mrs Cirillo had contemplated removing the property from the market but I accept that Frank and Gelsomina implored her to continue to market the same for sale. If the defendants’ version of events were to be accepted there was no reason why they could not have moved back to Budds Street at any time and should not have been concerned in any way whether or not the funds were advanced to them.

Frank accepted that he had used Mr Bertoli as a solicitor from time to time. Both Frank and Gelsomina sought to suggest that Mrs Cirillo wanted to see a solicitor and they had nothing to do with the arrangements. Whilst I readily accept that Mrs Cirillo wanted the arrangement documented,[23] there was no need to document the same if, as the defendants contended, she was merely making an unsolicited gift.
[23]T225.

In June 2008 the property sold. Settlement was arranged for 28 August 2008. The sale price was $255,000. Mrs Cirillo had not visited Mr Bertoli or any other solicitor in relation to the sale. Mrs Cirillo was not cross-examined in relation to that. Further, Frank said that he was the one who gave instructions to Mr Bertoli to pay the sum of $240,000 into the Budds Street mortgage out of the settlement proceeds. I am not certain how Mr Bertoli could have done that, having regard to the trust account rules, but assume that he did so pursuant to a power of attorney dated 27 February 2008 (completed at the same time that Mrs Cirillo was taken to see Mr Bertoli to sign the will). Mr Bertoli witnessed Mrs Cirillo’s signature to the appropriate documents.[24]
[24]Exhibit D-2.

There was no suggestion that Mrs Cirillo was mentally infirm in February 2008. The inescapable conclusion is that the execution of the power of attorney enabled Frank to control the sale and to control how the sale proceeds would be applied.

Mrs Cirillo gave evidence that Frank took her to see Mr Bertoli. She could not remember whether Gelsomina also attended. She said that she did not speak to Mr Bertoli about the Agreement. She further said that Frank or Frank and Gelsomina talked to Mr Bertoli and she just signed the papers. Mr Bertoli prepared an agreement which had been organised by Frank or Frank and Gelsomina. Although Mrs Cirillo was cross-examined about whose idea it was to seek out Mr Bertoli to draw up a document, Mrs Cirillo was not challenged as to what happened at Mr Bertoli’s office, nor did either Frank or Gelsomina put forward a version of events at the office which contradicted Mrs Cirillo’s evidence.

The Agreement was posted back to Mrs Cirillo under cover of a letter from Mr Bertoli dated 12 August 2008.[25] That letter included:

We also confirm our advices that future circumstances may change which would make this Agreement unenforceable.
We also confirm the above advice was given to you by Mr Bertoli in conference on 6^th August, 2008 and you specifically instructed him to prepare the Agreement and to pay Mr Manieri and Ms Comande the sum of $240,000 from the proceeds of your property at 2/32 David Street, Lalor.

[25]Exhibit D-4.

The Agreement was subsequently signed by Mrs Cirillo and dated 20 August 2008. It was urged upon me that I should draw an inference arising from Mrs Cirillo’s failure to call Mr Bertoli with respect to what was discussed on 6 August 2008. However, given that I accept Mrs Cirillo’s version of events at that conference, I decline to draw any inference as Frank could have easily given evidence about what was said or occurred, if such evidence might have assisted him.

The sale of the Lalor unit occurred on 29 August 2008 and, pursuant to the direction given by Frank, out of the sale proceeds the sum of $240,000 was paid directly into the mortgage account with respect to the Budds Street property. Mrs Cirillo, Frank and Gelsomina immediately commenced residing at the Budds Street property.

Until about late November 2008 Mrs Cirillo, Frank and Gelsomina lived together at the Budds Street property in harmony. Thereafter, the Mrs Cirillo contends the defendants “engaged in conduct which demeaned and humiliated [her] and caused her justifiable apprehension for her health and wellbeing”.[26] On 16 April 2009, Mrs Cirillo moved out of the Budds Street property and she contended that she was unable to live there.[27]
[26]Paragraph 9 of statement of claim.
[27]Paragraph 10 of the statement of claim.

Mrs Cirillo has, since June 2009, resided at an Italian speaking aged care facility.

The particulars set out in paragraph 9 of the statement of claim were put to each of Frank and Gelsomina. The substance of what occurred set out in each particular was denied by each of them.

On behalf of Mrs Cirillo, it was submitted that the post-November 2008 conduct on behalf of the defendants constituted repudiatory conduct which was accepted by leaving Budds Street.

I find that there is no utility in analysing each of the facets of the conduct said to constitute the repudiatory conduct. I make that observation as it is clear that the intervention by Ms Tamburrino, an electorate officer, led to the circumstances where Mrs Cirillo leaving the Budds Street property was inevitable rather than working towards a conciliatory process.

Accordingly, putting aside the majority of the matters set out in the particulars subjoined to paragraph 9, it is apparent that matters came to a head in April 2009. On 11 April 2009, Mrs Cirillo telephoned seeking an ambulance. The transcript of the tape played to me is exhibit P-4. Although it was urged upon me that the tape demonstrated abuse by yelling in the background, in the main, the tape and transcript demonstrated that the defendants had dealt with the situation in a logical manner given the circumstances. Further, it was not put that the failure of the ambulance led to any complication or the need to immediately seek medical assistance.

Mrs Cirillo’s redacted medical records[28] demonstrate that she was a regular attendee at the Lalor Clinic. Certainly from in or about May 2008, her attendances seemed to be virtually weekly. The records demonstrate that there were consultations recorded on 8 April 2009 and 16 April 2009. There is nothing in the medical records and certainly the evidence does not enable me to determine that there was refusal to take Mrs Cirillo to the doctor on 14 April or even on 16 April.
[28]Exhibit D-3.

On 14 April 2009, Mrs Cirillo attended at the Electoral Office for the Member for Wills. She met with Ms Tamburrino and as a result of discussions, Ms Tamburrino contacted the Aged Care Assessment Team to seek their assistance. She sought an assessment so that they might find Mrs Cirillo emergency accommodation.[29] She also arranged an appointment for Mrs Cirillo to see her medical practitioner. After prompting, it appears as though that appointment date might have been 24 April 2009. By that time, Mrs Cirillo had been placed in care at the Brunswick Manor. After placement at the Brunswick Manor, Mrs Cirillo telephoned Ms Tamburrino frequently and, in the end, she volunteered to collect Mrs Cirillo from Brunswick Manor and drive her to the appointment.
[29]T 151.

On Thursday, 16 April 2009, Mrs Cirillo attended the Electoral Office in the evening. That is consistent with the observations of Gelsomina that Mrs Cirillo told her she was going for a walk at about 4.30pm. Ms Tamburrino remained at the Electoral Office until a representative from the Aged Care Assessment Team arrived to take Mrs Cirillo to Brunswick Manor. Ms Tamburrino made a number of observations about Mrs Cirillo’s state when she met with her. However, it became clear that Ms Tamburrino accepted what was put to her by Mrs Cirillo without making any enquiries seeking to verify what was said or with respect to the overall circumstances. I accept that Ms Tamburrino was well‑meaning and acted as she thought appropriate in the circumstances. However, her actions put in train a process whereby it became inevitable that Mrs Cirillo leave the Budds Street premises without any consideration of what might be done to resolve the disharmony between Mrs Cirillo and Frank and Gelsomina. I can only conclude that although there was evident disharmony in the household, I cannot determine that there was any attributable blame on the part of Frank and Gelsomina which would constitute a repudiation of the Agreement. I reiterate that the circumstances of the leaving of Budds Street were dictated by Ms Tamburrino without any real consideration of whether or not it was appropriate.

What was the Agreement?
The plaintiff’s contentions

Mrs Cirillo’s case is that she paid $240,000 into the mortgage secured by Budds Street as part of a transaction whereby the defendants promised to accommodate and look after her for life.

Dr Glover submitted:

21[Mrs Cirillo] asserts that she is entitled to have a constructive trust over the Budds Street house declared in her favour because of the informal property agreement she had with her son and his de facto spouse in respect of that house. In return for [Mrs Cirillo’s] payment of $240,000 in reduction of the Budds Street house mortgage, the defendants promised that they would “look after and take care” of her “for the rest of her lifetime in a manner that was appropriate in all the circumstances”.
22The informal property arrangement dates from a time in 2007 when [Mrs Cirillo] was living at the Lalor unit with the defendants. [Mrs Cirillo’s] evidence is that this was approximately October 2007.
23 (a) The Lalor unit was eventually sold pursuant to the arrangement      (or joint endeavour) in June 2008.
(b) [The] plaintiff had substantially changed her position in reliance      on the joint endeavour by June 2008. Her residence and largest         asset had been sold.
(c) [The] deposit paid on the sale of the Lalor unit was with Mr Bertoli [the solicitor acting on the sale and the solicitor who drew the           August Document] or under his control after June 2008.
(d) [There are] ambiguities as to who was instructing Mr Bertoli. He      was acting for both sides. Frank eventually instructed Mr Bertoli      as to the payment of the $240,000.
24[Mrs Cirillo] asserts an analogy between the present circumstances involving the return of property dedicated by the plaintiff to an abortive domestic relationship between herself and the defendants and the return of a partnership premium where a partnership terminates otherwise than through the contributor’s fault. No fault on [Mrs Cirillo’s] part has been alleged. [Mrs Cirillo] denies any attributable blame for what occurred.
…
27On the Cirillo facts the plaintiff alleges a “joint relationship or endeavour” arose from the coupling of the plaintiff’s payment of $240,000 in reduction of the Budds Street mortgage with the defendants’ promise to accommodate the plaintiff in the Budds Street (or replacement) house and care for her for life.   Even if it is not found to be a term of a contract between the parties, a joint relationship or endeavour including the mortgage payment is relied upon for inference of a constructive trust. However, the constructive trust argument fails if evidence of [Mrs Cirillo’s] payment of $240,000 in reduction of the Budds Street mortgage is disbelieved (emphasis added).[30]

[30]The plaintiff’s submissions dated 27 January 2012.

It is not controverted that the sum of $240,000 provided by Mrs Cirillo was appropriated to the Budds Street mortgage at the direction of Frank. If evidence of conversations prior to the execution of the August Document was admissible, I would have little difficulty in arriving at the conclusion that it had been Mrs Cirillo’s initial intention to provide the sum of $240,000 to reduce the Budds Street mortgage and that such provision was at the (oral) request of the defendants. However, this is not the issue to be determined in isolation. In addition to accepting Mrs Cirillo’s evidence with respect to the application of the $240,000, it must be determined whether or not that evidence relied upon by her is admissible.

Dr Glover also submitted that a remedial alternative to the imposition of constructive trust would be the imposition of an equitable lien to secure indebtedness which is factually linked to the property over which the lien is to be impressed.[31]
[31]Paragraph 28 of the plaintiff’s submissions.

As a further alternative, it is Mrs Cirillo’s contention that “ … on the Cirillo facts, … the defendants are indebted to her in the sum of $240,000 for breach of the Agreement to look after and take care of her for the rest of her life in the Budds Street property in return for her earlier contribution of $240,000 in reduction of their Budds Street mortgage liability.”[32] Although there was evident disharmony, I cannot conclude that the defendants’ conduct was such as to constitute a repudiation of any agreement.
[32]Paragraph 30 of the plaintiff’s submissions.

The argument based upon the joint relationship or endeavour is primarily founded upon discussions and conduct leading up to the execution of the August Document, in the absence of the August Document or, in combination with the August Document.

Dr Glover, in seeking to draw a parallel with domestic arrangement cases, said:

Even if it is not found to be a term of a contract between the parties, the fact that [Mrs Cirillo’s] $240,000 payment was, at the defendants’ request, applied in the reduction of the defendants’ mortgage is relied upon as an “unjust factor” for the purposes of impressing a lien over the Budds Street house. In the event that the mortgage reduction evidence is rejected entirely, [Mrs Cirillo] asserts that the defendants’ promise of ongoing accommodation and care at the Budds Street premises is a sufficient “unjust factor” for the same purpose.[33]

[33]Paragraph 34 of the plaintiff’s submissions.

As to the construction of the August Document, it was submitted on behalf of Mrs Cirillo that:

7Chesire and Fifoot at [10.1] includes a passage about “[I]ssues of constructions [which] arise in some form in the majority of contract disputes.”
As the rules of construction are so frequently engaged, it is particularly important to preserve them from dogmatism and excessive refinement. No narrow or pedantic approach is warranted in determining what obligations are included in a particular contract. Modern Australian courts have retreated from a literalism characteristic of an earlier stage in the development of contract doctrine. Nevertheless, they have adhered to an explicitly objective approach to the construction of contracts, particularly of written contracts signed by the parties. Both in determining what terms have been incorporated in a contract, and in interpreting those terms, the task of construction is not to ascertain the subjective intention of the parties, but to determine what a reasonable person in their situation would have intended or assumed. This fundamental premise emerges in the law of many points …

8There is social and legal value in enforcing “benevolent gift-promises” which people make in social and familial contexts. Reciprocity of this sort has been enforced by the common law since early times. In his article “Enforcing Benevolent Promises” … Samual Stoljar describes “benevolent gift-promises” which are made where people change their positions with the potential to incur significant loss. This was the position which [Mrs Cirillo] was in on 29 August 2008 [that date being significant as it was the date of settlement of the sale of the Lalor property]. After she had sold her unit and transferred almost all her remaining assets to the defendants’ solicitor she had a right to expect that the law would require them to honour promises that they made to her.
9The construction exercise, following Chesire and Fifoot, is to determine, in the light of the evidence, what reasonable people in the positions of [Mrs Cirillo] and the defendants would have intended. The focus of the exercise must be on the Agreement’s context. [The] plaintiff was an elderly widow with limited command of the English language. She was bargaining for security, among other things. The arrangement expressed in the 20 August 2008 contract is tersely worded. [Mrs Cirillo] has given a plausible account of the transaction’s wider reciprocity – her payment was to reduce the Budds Street mortgage, which was the largest liability which the defendants then had. She has given positive evidence that payment into the mortgage was her intention. A part‑oral, part-written agreement is the obvious way that the arrangement can be effectuated.[34]

[34]Plaintiff’s submissions.

Given how the case is formulated on behalf of Mrs Cirillo , it is vital that evidence of the oral part of the undertaking and agreement is admissible.

The objection and the defendants’ contentions

The following exchange occurred during evidence‑in‑chief being conducted by Dr Glover:

Was it discussed between yourself and Gelsomina where the proceeds of your unit were going?---Yes, on their mortgage, on the mortgage of their house.
What do you mean by that?---In order to pay the mortgage on the house that they had because they were in arrears with the payments.

MR ERLICH: …” I object to this evidence for reasons I have previously elicited. I can take Your Honour to the case law in relation to this evidence, Your Honour.”[35]

[35]T98

I proposed to deal with the objection there and then. Mr Erlicht proceeded with his submission which was that the evidence referring to payment towards the Budds Street mortgage was “inadmissible in support of the claim because the evidence is being led to contradict the written agreement.”[36]
[36]T99.

Mr Erlicht made his submissions based upon Equuscorp Pty Ltd v Glengallan Investments Pty Ltd,[37] the parol evidence rule and the prohibition against the admission of parol evidence to vary or contradict the terms of the written document.
[37][2004] HCA 55.

I distilled that Dr Glover was not prepared to meet the objection raised by Mr Erlicht notwithstanding that the defence pleaded that the August Document was the sole repository of the agreements between the parties. In those circumstances, I informed counsel that I would defer ruling upon admissibility and that evidence would be admitted but under the cover that is objected to by the defendants. The admissibility would be determined in the reasons for judgment.

On behalf of the defendants it was conceded that if I were to determine that evidence with respect to the oral part of the Agreement was admissible, a proprietary interest would be established. It follows I would be entitled to make orders with respect to the imposition of a remedial constructive trust. The crux of the defendants’ resistance is that the Agreement was encapsulated in the August Document which is inconsistent with the circumstances which would entitle me to impose the trust.

In relying upon the submissions that the August Document contains the entire agreement between the parties and in circumstances where there is no equitable claim for rectification, the defendants submitted as follows:

The authors of Halsbury’s Laws of Australia say the following at [185-80]:
Equity looks to intent rather than form. This maxim underlies the equitable doctrine of rectification and can also be seen in other areas where equity will look at the substance of some contract or other document rather than at its strict wording. However, equity will not construe contracts or other documents if it is clear that the parties agreed on the form of the contract.

That is also made clear in the analogous circumstance of fiduciary relationship. As Mason J made clear in Hospital Products v United States Surgical Corp[38] the scope of the fiduciary duties owed by the agent will be regulated by the contract:
That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all-important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.[39]

[38](1984) 156 CLR 41 at 97.

[39]Paragraph 51-52 of the defendants’ legal submissions on the plaintiff’s pleaded case dated 23 January 2012 (‘the defendants’ submissions).

That principle was not controverted on behalf of Mrs Cirillo. Dr Glover took me to Young’s book on equity and referred to p 450 as follows:

The principle [referring to circumstances where a constructive trust would be imposed] does not apply if there is a contract or legislation such as partnership legislation which governs the situation nor will it apply where the legal proprietary right of the parties were specifically intended or provided to apply at the end of the joint endeavour.[40]
[40]T366.

The parol evidence rule

Although Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[41] deals with the implication of an implied term, it is worthwhile considering the discussion about the purpose of the parol evidence rule. Mason J, at 347, said this:

The broad purpose of the parol evidence rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument … Although the traditional expositions of the rule did not in terms deny resort to extrinsic evidence for the purpose of interpreting the written instrument, it has often been regarded as prohibiting the use of extrinsic evidence for this purpose. No doubt this was due to the theory which came to prevail in English legal thinking in the first half of this century that the words of a contractor are ordinarily to be given their plain and ordinary meaning. Recourse to extrinsic evidence is then superfluous. At best it confirms what has been definitely established by other means; at worst it tends to ineffectively to modify what has been so established.

[41](1982) 149 CLR 337.

Mason J then considered English authorities bearing on the issue. At 352, Mason J said:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which are known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of parties which are reflective of their actual intentions and expectations they 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 superceded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

In support of his objection to admissibility and in final submission, Mr Erlicht submitted that the decision in Equuscorp is a complete answer. I refer to paragraphs of the joint judgment of Gleeson CJ, McHugh, Kirby, Hayne and Callanan JJ as follows:

32.It is, and always has been, common ground that each of the respondents executed a written loan agreement on 30 June 1989. The respondents allege that the “operative agreement” was not contained in that writing. It was said that the relevant agreement was reached earlier and was wholly oral. Yet it was not said that the written agreement should be rectified. It was not said that a defence of non est factum was available. It was not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect. (The misrepresentation alleged was as to what had been said in the conversations, not what the document was or provided.)
33.The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the Agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents’ case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreement subsequently executed not only may be ignored, but they must be. That is not so. Having executed the Agreement each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.
34.There are reasons why the law adopts this proposition. First, it accords with the “general test of objectivity [that] is of pervasive influence in the law of contract”. The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.
35.Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time‑consuming, expensive and problematic. Where parties enter into a written agreement, the court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute[42] or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements … this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved accordingly to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.
36. The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement) but it has never been the respondents’ case. In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties’ agreement recorded in the writing they executed.[43]

[42]I venture that in Victoria such statute would relate to unconscionability or misleading and deceptive conduct.

[43]Equuscorp v Glengallan Investments (citations omitted).

Mr Erlicht referred me to a decision of Weinberg J in Computer World (Victoria) Pty Ltd v Internet Centre of Excellence 2000 Pty Ltd,[44] in support of the proposition:

… Nor does the credit facility read as though it contains the terms of contract that is intended to be partly written and partly oral. Even if it did, the supposed oral agreement… would directly contradict the written term in paragraph 1 of the document … In accordance with the principles so clearly enunciated in Equuscorp… contradiction of a written term, absent rectification, cannot be permitted.

[44][2006] FCA 752 at [21] (citations omitted).

Mr Erlicht further submitted:

29… The Agreement does not read as though it contains the terms of contract that is intended to be partly written and partly oral.
30Further, the alleged oral discussions do not add to the written agreement, but vary and contradict it – and in such a significant manner so as to change the very basis upon which the payment was said to be made. It was not said to be made as a payment towards reduction of moneys owing by the defendants under the Coburg mortgage in return for the defendants’ undertaking to accommodate [Mrs Cirillo] at the Coburg property and take care of her for life.
31To the contrary, the payment was made in consideration of [the Agreement by the defendants] to look after and take care of the Donor for the rest of her lifetime in a manner that is just and appropriate … and allow the Donor to reside in their home at 34 Budds Street, Coburg in the State of Victoria or any other principal place of residence they may own free of rental or any other charge.
32There is no mention of any mortgage at all.
33[Mrs Cirillo], cannot by reference to earlier oral discussions (even if had), seek to vary the fundamental promissory obligations imposed on the defendants by the written agreement. On its face, the defendants were free to apply the $240,000 as they saw fit. The written agreement did not require the defendants to apply the payment towards the mortgage and the fact that they did so does not mean that it was a term of the Agreement that they do so or that the payment was made for that purpose.
34On any view, the incorporation of a term as to direction and use of the gift is a variation of the written agreement. And there is no application for rectification.[45]

[45]Paragraphs 29-34 of the defendants’ submissions.

Mr Erlicht further submitted, after referring to Equuscorp:

So they’re trying to take themselves off the Marbury exception. What I am saying … is that the exception cannot apply if it works a variation of the subsequent written agreement, and this works a variation of that agreement by varying the very consideration said to be given in exchange for the promise …
… [the application to the mortgage is] … not a condition … It’s pleaded as the very consideration for the promise and it’s a variation of the written agreement.[46]

[46]T105-106.

In maintaining that the oral part of the contended for agreement would vary the August Document and addressing the question of the meaning of “add to” in the context of a variation, Mr Erlicht submitted:

… In relation to the test of inconsistency it must be the same test in respect of this question as it is in respect of collateral contract, and it’s in other words an application of Hoyt’s case … You put the contract, the written agreement on one side, and you put the Agreement that my learned friend would have it on the other side and you ask whether they can stand together, and they can’t stand together in this case because they’re fundamentally different because they have different considerations. It would be the same as if they had different prices.
…
Can I give you an example of what would be an addition in my respectful submission? If you had a sale of goods question and the written agreement said price $100 per bushel and evidence was led that it was meant to be cash on delivery that would be an addition. The two agreements could stand together. If it was said $100 per bushel plus the following additional services it would be an inconsistency, it would be a change of price of the consideration.[47]

[47]T334.

The August Document had been compiled almost a year after it was first entertained that the Lalor property should be sold and the sale proceeds applied. The August Document is a very rudimentary document: it recites a gift, it set out that there would be a residency but it did not set out the consequences of breaches, nor did it set out any other rights. There had been evidence from all the witnesses that it had been contemplated that Mrs Cirillo might eventually need the care afforded by a nursing home. This was something obviously which had been discussed and prayed upon the parties’ minds. However, the August Document did not address such an eventuality. Mrs Cirillo put the Lalor unit on the market after discussions with Frank and Gelsomina. Mrs Cirillo continued to present the Lalor unit for sale after contemplating withdrawing the same, and after further discussion with Frank and Gelsomina. Mrs Cirillo entered into the contract of sale for the Lalor unit at a time when it is common ground that the purchase of other accommodation was not contemplated. The August Document does not recite these events. It is open to conclude that there was a completed agreement prior to the execution of the August Document. In the circumstances, it is almost inescapable that the parties intended that their agreement encompassed something more than what is set out in the August Document. In any event, for the reasons set out hereafter, I determined that the August Document is ambiguous and the terms of the same do not preclude admission of oral evidence, nor is it inconsistent with the Agreement between the parties being partly oral and partly written.

The August Document uses the word “gift”. Mr Erlicht concedes that the advance of $240,000 could not be characterised as “a gift” as that word is used in the August Document. He makes that concession as it is not a disposition or payment without limitation. He concedes that the advance is in consideration of the Agreement by the defendants to accommodate Mrs Cirillo. Hence his submissions that there has been no repudiation of the Agreement and that Mrs Cirillo rescinded the same without lawful cause thus rescinding the contract and bringing the alleged joint endeavour to an end by Mrs Cirillo’s conduct.

I accept and adopt Dr Glover’s submissions as follows:

(a)The oral agreement does not sit well with the written agreement. Are the terms of the written agreement determinative of the arrangement between the parties, or can some extrinsic evidence be introduced to show that there is no conflict between the oral agreement?
(b)… There is an ambiguity exception to the parol evidence rule.
(c)In context, the 20 August 2008 agreement attaches obligations to an exchange which should be gratuitous. Kirby P at 235[48] draws attention to the possibility of an intention frustrating the object of an agreement. What would a reasonable person in [Mrs Cirillo’s] position have meant? Kirby P at 236 refers to latent ambiguities.
(d)The parties were confused by what was meant by the word ‘gift’.
(e)Evidence of the wider undertaking and agreement should be admitted to confirm that [Mrs Cirillo’s] transfer of $240,000 to the defendants was not gratuitous.[49]
(f)… It’s the reasonable person must explain the word used. The court is trying to interpret the words before it, and it’s a question of what is a reasonable explanation from the perspective of a person situated as [Mrs Cirillo] was. How did she understand the word “gift”? How did she understand the inclusion or exclusion of terms from the Agreement? On its face the 2008 agreement was not a complete record of the transaction. It refers to an unmotivated gift and is extremely brief in view of the size of the amount of money concerned.[50]
(g)If she simply wanted to make a gift then that would be something which needs another agreement. The fact that a promise to accommodate and take care is included is suggestive that there’s more there, and because that has been suggested obviously there’s more to this transaction. So there’s a principle which I refer to in L.G. Thorn v Thomas Borthwick which talks about extrinsic evidence of a collateral agreement. The court reviews the written materials and then looks to their sufficiency and what they suggest. Now these are materials in a social or domestic context, not a business context.[51]

[48]Referring to B & B Constructions (Aust) Pty Ltd v Brian A. Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227.

[49]Paragraphs 16-20 of the plaintiff’s submissions.

[50]T352.

[51]T353.

Dr Glover took me to a decision of Kirby P in B & B Constructions (Aust) Pty Ltd v Brian Chisholm & Associates.[52]

If the surrounding circumstances of the date of the written document show that the parties intended to use a word not in its primary or strict sense but in some secondary meaning, the court may construe it according to those circumstances and intention of the parties. The intention is of course that which is objectively derived and not the unknowable subjective ruminations of those involved. The rule is stated as one of general application. It is clearly provided to prevent the primary rules from becoming a source of injustice. It is designed to deal with the situation which arises when ambiguity does not appear on the face of the instrument but can be otherwise shown by clear evidence.

[52](1994) 35 NSWLR 227 at 236.

Dr Glover submitted:

Now it’s contended here, … that to a degree the ambiguity does appear on the face of the instrument, because the instrument attaches obligations to an exchange which in the ordinary sense is fortuitous. The obligations are … and inexplicable, and similarly unenforceable unless some sense can be given to perhaps, I suggest, the word “gift”. What would a reasonable person, circumstanced as the parties were, have thought by the word “gift”. In particular this appears from the construction on the face of the document.[53]

[53]T361. I should note that if it became relevant I would have rejected the parties’ subjective views of what the word “gift” meant in the August Document.

Dr Glover again referred me to the judgment of Kirby P and continued:

It is contended here that the ambiguity is not on all fours as the ambiguity in that case, but is particularly evident from the face of the document. The parties of course have given different interpretations of what they believed the word “gift” meant and I recognise that that of course is not going to be determinative of this application.[54]

[54]T362

In L.G. Thorn & Co Pty Ltd v Thomas Borthwick & Sons (A/Asia) Ltd[55] the majority of the New South Wales Full Court determined that the contract documents contained the complete agreement and did not fall within exceptions to allow evidence to be given to establish an additional term omitted from the writing. After considering the parol evidence rule, Street CJ said:

There are of course, exceptions to this rule. … Evidence was held to be properly admissible for the purpose of identifying the subject matter of the contract. The object of this evidence was to show the sense which the parties themselves had attached to the name they had used in the description of the goods which were the subject matter of the sale. Another exception exists in cases where it is claimed that the full agreement is not contained in the writing but the document in question only contains part of the contract between the parties. In such cases the contract may be found partly in the written document and partly in the oral or written communications of the parties leading up to the written document. … [56]

[55](1956) Vol 73 N.S.W. Weekly Notes at 9.

[56]At p 14.

Herron J (dissenting), after referring to the rule, said:

But very often the rule is applied somewhat precipitately where there is a writing without proper enquiry being made as to whether the writing is the exclusive or complete record of the parties’ dealings. Often it will be seen, particularly in commercial dealings, that the contract has been partially reduced to writing and it may turn out after proper investigation that the writing is not a complete statement of the sale or purchase or is a mere memoranda or order, as distinct from a written contract. In such cases the reason for applying the parol evidence rule is lacking and extrinsic evidence is admitted.[57]

[57]At p 17, 18.

I am prepared to allow the admission of the conversations on two distinct and independent bases. Firstly, the parties agree (although they disagree on the substance) that conversations occurred from late 2007 with respect to the sale of the Lalor unit and the application of the proceeds. The property was put on the market. A contract of sale was entered into in June 2008. In the absence of that evidence, the terse wording of the August Document has no context and on its face cannot have intended to encompass all the terms and processes discussed by the parties. Nor does it properly reflect the conduct of Mrs Cirillo in acting to her detriment in selling the Lalor unit and subsequently applying the proceeds in reduction of the mortgage. Accordingly, I accept that the Agreement between the parties was partly oral and partly written. The oral part is as contended for by Mrs Cirillo.

Alternatively, I conclude that the use of the word “gift” in the August Document leads to ambiguity in that, as conceded by the defendants, it cannot possibly refer to an intention to provide a gift when the advance is dependent upon the stated consideration. In those circumstances I am entitled to admit evidence of the earlier conversations and conduct to construe the word “gift” used in the context of the August Document. I conclude that the evidence of the prior discussions and conduct is also admissible to conclude that the parties intended that the meaning of the word “gift” used in the August Document was a payment towards the reduction of the mortgage secured on the Budds Street property.

I do not accept that reference to the oral part of the Agreement permits an inconsistency or variation. Reference to the conversations gives meaning to the arrangement between the parties in circumstances where, in isolation, the use of the word “gift” in the August Document is nonsensical. Construing that word consistently with what had been agreed between the parties is consistent with the wider agreement and is, in any event, not inconsistent so as to constitute a variation when the defendants’ concede there could not have been a gift as that word is used in the August Document.

There will be judgment for the plaintiff.

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7 August 2013