De Campo v De Campo
[2018] WASC 351
•16 NOVEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: DE CAMPO -v- DE CAMPO [2018] WASC 351
CORAM: ALLANSON J
HEARD: 5 - 7 SEPTEMBER 2018
DELIVERED : 16 NOVEMBER 2018
FILE NO/S: CIV 2139 of 2015
BETWEEN: ROSANNA DE CAMPO
Plaintiff
AND
GEROLAMO DE CAMPO
First Defendant
MICHAEL COLIN DAWSON as executor of the estate of ROSINA GISELLA DE CAMPO
Second Defendant
Catchwords:
Contract - Where parties the beneficiaries under their mother's will - Whether parties agreed to compromise dispute regarding the distribution of the estate - Whether consideration for agreement - Whether agreement intended to be legally enforceable - Whether agreement contrary to public policy - Whether agreement unenforceable under Property Law Act s 34
Contract - Remedies - Whether order should be made for specific enforcement
Legislation:
Family Provision Act 1972 (WA)
Property Law Act 1969 (WA), s 34, s 36(d)
Result:
Judgment for the plaintiff
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr S Penglis |
| First Defendant | : | Dr P D MacMillan |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Fletcher Law |
| First Defendant | : | Valenti Lawyers |
| Second Defendant | : | No appearance |
Case(s) referred to in decision(s):
Abjornson v Urban Newspapers Pty Ltd [1989] WAR 191
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Barns v Barns [2003] HCA 9, (2003) 196 ALR 65
Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4; (1969) 121 CLR 432
Daebritz v Gandy [2001] WASC 45
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Helton v Allen [1940] HCA 20; (1940) 63 CLR 691
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Lieberman v Morris [1944] HCA 13; (1944) 69 CLR 69
Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69
Pipikos v Trayans [2018] HCA 39
Robins v Robins [2006] WASC 301
Smith v Smith [1986] HCA 36; (1986) 161 CLR 217
South Australia v Commonwealth [1962] HCA 10; (19620 108 CLR 130
Thomas v Hollier [1984] HCA 35; (1984) 156 CLR 152
Thompson v White [2006] NSWCA 350
Turner v Bladin (1951) 82 CLR 463
ALLANSON J:
The central issue in this action is whether the plaintiff and first defendant made an enforceable agreement with regard to the distribution of assets in the estate of their mother.
The parties
The plaintiff, Rosanna, and the first defendant, Gerolamo (Gerry), are the children of the late Rosina Gisella De Campo (the deceased).[1]
[1] To make these reasons more readable, I will refer to the plaintiff and defendant, and others who have the family name De Campo, by their given names. I mean no disrespect by this apparent informality.
The deceased died on 27 September 2013, leaving a will dated 4 April 2008.
The second defendant, Michael Colin Dawson, is a solicitor and is the executor of the deceased's estate. He was called as a witness by Gerry.
The will
By her will the deceased appointed her solicitors, Dawson Davies, to be her executors and trustees. She made the following bequests:
(1)Rosanna was given:
(a)a property at Great Northern Highway, Bindoon, together with the farm machinery and accessories located thereon; and
(b) the residue of the deceased's jewellery (after a specific bequest to Gerry).
(2)Gerry was given:
(a)a property at 35 Cheriton Street, Perth;[2]
(b)the jewellery of the deceased's late husband, her crystal glassware, silverware and other items including furniture and any other motor vehicles.
(3)Rosanna and Gerry were jointly given a vase.
(4)The sum of $100,000 was given on trust to Mr Dawson, as trustee, to hold for the deceased's grandson Byram De Campo Khan, the son of Rosanna, providing he survived and attained the age of 25 years. The deceased's 'antique baroque furniture together with my grandfather clock' were also given to Byram.
(5)The balance of the deceased's estate, after payment of just debts, funeral and testamentary expenses, was given on trust to Mr Dawson for Rosanna and Gerry as tenants in common in equal shares.
[2] Referred to by the witnesses as 'the Bakery' or 'the Bakehouse'. I will refer to it in these reasons as the Bakery.
On or about 5 August 2011, the deceased transferred the Bindoon property to Gerry so that it was no longer part of the estate.
The gifts under the will were substantially in favour of Gerry. In his affidavit in support of the application for probate, Mr Dawson included a statement of assets and liabilities which gave the net value of the estate in Western Australia as about $4.7 million, with approximately $3.75 million of that value attributable to the Bakery.[3]
[3] TB 57.
Rosanna's pleaded case
Rosanna pleads that after the death of the deceased, a dispute arose with Gerry with respect to the bequests under the will.[4] Rosanna foreshadowed that she would make a claim for provision under the Family Provision Act 1972 (WA) if no compromise could be reached.[5]
[4] Statement of claim [9].
[5] Statement of claim [10].
In about November or December 2013, in compromise of the dispute, Rosanna and Gerry entered into an agreement to vary the terms of the will (the compromise agreement). The compromise agreement was wholly oral, alternatively partly oral and partly in writing. The relevant terms of the compromise agreement are pleaded in these terms:
12.1.the first defendant would retain ownership of the Bindoon Property;
12.2.$100,000 would be held on trust for the plaintiff's son until he reaches 25 years of age and the duties of trustee would be passed to the plaintiff;
12.3.$100,000 would be held on trust for the first defendant's son until he reaches 25 years of age and the duties of trustee would be passed to the first defendant;
12.4.the remaining monies in the Estate to be divided equally between the plaintiff and the first defendant;
12.5.the Bakery would be transferred to the plaintiff and to the first defendant to hold as tenants in common in equal shares;
12.6.the farm machinery located on the Bindoon Property, comprising a large truck, a tractor, motorcycles and sundry other items, go to the first defendant;
12.7.the remainder of the Estate, being the personal property of the Deceased, would be divided equally between the plaintiff and the first defendant.[6]
[6] Statement of claim [12].
Rosanna also pleads an intention that the parties would be legally bound by the compromise agreement.[7]
[7] Statement of claim [12A].
During the period December 2013 to April 2014, the compromise agreement was partially carried into effect by the partial distribution of certain assets in this estate. Rosanna pleads:
A.the plaintiff has given the following items, bequeathed to her under the Will, to the first defendant:
i.the farm machinery, comprising a large truck, a tractor, motorcycles and sundry other items, located on the Bindoon Property; and
ii.some of the Deceased's jewellery.
B.the plaintiff has given an antique sideboard/cupboard, bequeathed to the plaintiff's son under the Will, to the first defendant.
C.the first defendant has given the following items, bequeathed to him under the Will, to the plaintiff:
i.the Deceased's 1987 Mercedes sedan;
ii.a large factory scale;
iii.half of the Deceased's crystal glassware and silverware; and
iv.the piano accordion.
D.the plaintiff has also received the majority of the Deceased's library.[8]
[8] Statement of claim, particulars to [13].
Rosanna pleads that to give effect to and implement the compromise agreement, deeds of appointment of trustee and a deed of family arrangement were drafted by Mr Dawson at the expense of the estate.[9]
[9] Statement of claim [13A].
Rosanna and Gerry independently sought legal advice and instructed Mr Dawson to make amendments.
On or about 10 October 2014, Gerry through his solicitors gave notice that he was no longer prepared to comply with the terms of the compromise agreement.[10]
[10] Statement of claim [14D].
Rosanna then commenced proceedings for relief under the Family Provision Act and proceedings claiming relief in reliance upon the doctrine of ademption.[11]
[11] Statement of claim [13E].
Rosanna pleads that she remains ready, willing and able to do all things necessary or desirable to give full effect to the compromise agreement including discontinuing the proceedings she has commenced.[12]
[12] Statement of claim [14].
Gerry has failed and refused to proceed further with the compromise agreement.
Rosanna claims specific performance, alternatively damages for breach of the compromise agreement.
The defence
Gerry pleads that the Bindoon property and associated farm machinery and accessories were gifted to him and do not form part of the deceased's estate.[13]
[13] Defence [2(a)].
Gerry denies that there was a dispute between the parties and denies making the compromise agreement.[14] In the alternative, Gerry denies the compromise agreement was supported by consideration.[15] Alternatively, he pleads that if the parties made the compromise agreement it is an inferred term of the compromise agreement that Rosanna would forebear from pursuing a claim for provision under the Family Provision Act, and the agreement is void.[16]
[14] Defence [8].
[15] Defence [8A].
[16] Defence [8B].
In defence par 13, Gerry also pleads:
1.that the compromise agreement is prior to distribution of the relevant estate assets to him and is unenforceable against him and the proceedings are premature;
2.the compromise agreement is unenforceable by reason of s 34 of the Property Law Act.
Gerry pleads that the parties 'elected to take certain items of personal property forming part of the deceased's estate' but otherwise denies par 13 of the statement of claim[17]. This plea apparently anticipates a plea of part performance.
[17] Defence [10].
Reply
In her reply, Rosanna pleads that the compromise agreement does not create an interest in land by way of conveyance within the meaning of s 34 of the Property Law Act and the section does not apply to it. Alternatively Rosanna pleads there have been sufficient acts of part performance of the compromise agreement.[18]
[18] Property Law Act s 36(d).
The issues
The issues for determination are as follows:
1.was there a dispute regarding the will of the deceased;
2.did the parties conclude a compromise agreement;
3.did Rosanna give consideration for the agreement;
4.is the compromise agreement intended to be legally enforceable;
5.is the compromise agreement void as an agreement to contract out of entitlements under the Family Provision Act;
6.is the compromise agreement unenforceable because Mr Dawson, as executor, is not a party to it;
7.is the compromise agreement unenforceable by reason of s 34 of the Property Law Act; and
8.should the court grant specific performance.
Gerry, in correspondence through his lawyers, asserted that the compromise agreement was conditional upon his receiving legal advice. He did not, however, plead or rely on that contention at trial.
The evidence
Rosanna gave evidence and also called her husband, Farooq Khan.
Gerry gave evidence and called his wife, Linda Joanne De Campo.
Gerry also called the second defendant, Michael Colin Dawson.
The parties agreed the documents which were tendered as a trial book.
The parties were giving evidence about events in 2013 in a period following the death of their mother. Much of the evidence was about conversations in that period, just less than five years ago.
Rosanna, in my opinion, professed a much greater accuracy of recollection than was apparent when her evidence was subject to any scrutiny. Her evidence about the number of meetings she had with Gerry, and when those meetings were held, is not consistent between her primary and supplementary witness statements. There were also inconsistencies in what is pleaded in various versions of her statement of claim, in the particulars of her statement of claim, and in her witness statements.
Her testimony was also, at times, inconsistent with other evidence. For example, in her oral evidence she strongly maintained, that when she saw the will she thought it bizarre and believed her mother must have been suffering from dementia at the time she made it.[19] An email sent to Mr Dawson by Mr Khan, however, complained that the deceased was suffering from dementia when she transferred the Bindoon property but 'clearly' was not when she made her will.[20] Rosanna agreed the email was sent with her authority.[21]
[19] ts 69.
[20] TB 26.
[21] ts 65.
Rosanna also gave detailed evidence of a meeting in early November 2013 at the offices of Mr Dawson:
Within the first week of November, where I record Dawson explaining the will, going through each individual bequeath – bequeaths, explaining the situation – the unfortunate situation of my mother deteriorating and her giving me the Bindoon property, giving the Bindoon property in 2011 to Gerry, telling us that this is something that 'you and Gerry should go away and think about'.[22]
[22] ts 99.
Neither defendant gave evidence that there was a meeting then. Rather, the evidence is that there were difficulties in arranging a proposed meeting.[23] Mr Dawson testified that he had not met with Rosanna and Gerry together regarding the estate before 6 December 2013.[24] Mr Dawson's invoice for professional fees does not record any meeting in November.[25] I do not believe it occurred.
[23] Exhibit 8.1 [18].
[24] Exhibit 8.1 [24].
[25] TB 105.
I do not doubt that Rosanna was testifying about what she now believes to be true. But my overall assessment was that Rosanna's recollection has been strongly influenced by her interest in this litigation, her belief that she is entitled to half of her mother's estate, and her belief that her brother is denying her entitlement by reneging on their agreement.
Gerry was also not reliable in his recollection of his meetings and conversations with Rosanna, including the important meeting at the offices of Mr Dawson on 6 December 2013. There were many instances of internal inconsistency in his evidence.
I have no reason to doubt Gerry's honesty in his attempt to remember, but I am not satisfied that he has a good memory of events.
The court is not to judge which of the two versions it prefers. Rosanna bears the onus of proof, and the court must be satisfied that there is sufficient evidence to support a positive finding that the agreement she alleges was made.[26] With respect, I would adopt the observations of Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd:
Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved.[27]
[26] Helton v Allen [1940] HCA 20; (1940) 63 CLR 691, 712.
[27] John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [94].
Rosanna's case is not solely dependent on her testimony. Important parts of her case are supported by other evidence. First, there is writing, not signed by Gerry, but said to be a contemporaneous note of the agreement. Second, there is post contractual conduct, in part by implied admissions of Gerry, in part by the conduct of the parties in dividing up the estate, over the period from 6 December 2013 to about 10 October 2014. Third, on 29 July 2014, solicitors acting for Gerry and on his instructions, confirmed the fact and terms of an agreement. After considering the evidence of the formation of the contract, I will deal with each of those in turn.
Before doing so, I should note my assessment of the other witnesses. I have no reason to doubt that both Farooq Khan and Linda De Campo were honest witnesses. Their evidence was of limited relevance to the issues for decision.
Mr Dawson is a legal practitioner and was the solicitor for the estate. He acted for neither party. He made two witness statements.
Mr Dawson facilitated the meeting between Rosanna and Gerry at his offices on 6 December 2013, and testified about what occurred. In the course of administering the estate, he wrote regularly to both parties and his letters chart the progress of events up to a letter from Valenti Lawyers, acting on behalf of Gerry, on 10 October 2014, denying any agreement.
There are some inconsistencies in Mr Dawson's evidence about the 6 December 2013 meeting, and between his evidence and some of his correspondence. There is also some inconsistency in what he said about that meeting in his two witness statements.
In his first statement, while he gave an account of what was said at the meeting, he also said that he did not recall 'the detail of the discussions that took place'.[28] In his supplementary statement, Mr Dawson referred to that earlier statement and said:
To clarify, I was not in a position to divulge the content of what was discussed at the Meeting until both Gerry and Rosanna had agreed to waive privilege.
The parties have now waived privilege and I disclose further details about my recollection of the discussions that took place at the Meeting.[29]
[28] Exhibit 8.1 [26].
[29] Exhibit 8.1 [6] ‑ [7].
Mr Dawson did not take notes at the meeting, or if he did he no longer has them.
Was there a dispute
On 30 October 2013, Mr Dawson wrote to both parties, enclosing a copy of the will. On 6 November 2013, with Rosanna's authority,[30] her husband sent an email to Mr Dawson in which he foreshadowed a dispute regarding the validity of the transfer of the Bindoon property to Gerry. He said:
As you may be aware, Mrs DeCampo was diagnosed with dementia and it appears that this ailment was present at the time of the transfer of the property to Gerolamo DeCampo.
But for her dementia, it is clear to Rosanna that Mrs DeCampo would otherwise either not have transferred the property or would have amended her will to retain a parity in the distribution of her estate as per the intentions expressed in her will, (which was executed at a point in time where she clearly did not suffer from dementia).[31]
[30] ts 65.
[31] TB 26.
The letter requested that Mr Dawson, as executor, make no distribution of the estate while Rosanna and Gerry met to see if the issues could be mutually resolved.
On 11 November 2013, Mr Dawson responded that he would not be in a position to make any distribution for some time.[32]
[32] TB 27.
On 18 November 2013, Mr Dawson wrote to both parties, in substantially the same terms, and referred to 'the proposed meeting to discuss the terms of your mother's Will [which] has not been able to be arranged'. He offered the use of his meeting room, and to attend (as chair) although not to give legal advice to either party.[33]
[33] TB 28, 36.
On 22 November 2013, Mr Dawson provided each party with an appraisal of the value of the Bakery.[34] The value of the Bakery, compared with the balance of the estate, could only have confirmed Rosanna's view that the distribution under the will was not fair.
[34] TB 47, 50.
I am also satisfied (see below) that Rosanna and Gerry met at least once at the Bakery before their meeting of 6 December 2013. I also accept Rosanna's evidence that they spoke by telephone.
I am satisfied that there was dispute about the dispositions under the will, and extending to Rosanna's contention that her mother may have lacked capacity when the will was made and when the gift of the Bindoon property was made. This does not require a finding about whether Rosanna and Gerry then disagreed, but simply that Rosanna disagreed with the dispositions made under the will and during her mother's lifetime, and was contending for an alternative arrangement for the distribution of the estate.
Was there an agreement
The meetings
Rosanna said, in her first witness statement, that before the meeting at the office of Dawson Davies on 6 December 2013, she and Gerry met at the Bakery. She put in writing what they discussed. Rosanna testified that Gerry agreed with what she recorded in her handwritten note.[35] He did not sign it - she does not say that she asked him to.
[35] Exhibit 1.1 [22]; exhibit 2.1.
In her supplementary statement, Rosanna details three meetings at the Bakery. She says the first meeting was after a meeting at Mr Dawson's offices, about a week after she received his letter of 30 October 2013.[36] I am not satisfied there was a meeting at this time at the offices of Mr Dawson and do not accept Rosanna's recollection about whether or when this meeting occurred.
[36] Exhibit 1.3 [3].
Rosanna testified that, at one meeting, she prepared a note of the position she and Gerry reached as to each item. The note made by Rosanna records:
Farm - Jerry
$100,000 - Jarred Trust $100,000 Byram Trust
Remaining monies - 50% Jerry 50% Rosanna
Bakery - 50% Jerry 50% Rosanna
Trucks - Jerry
Furnishing - divide between us
$729,000
220,000[37]
[37] Exhibit 2.1; TB 402, also at TB 403.
At the bottom of the note, 'Thursday 5th Dec 10am 3pm' is struck through, and 'Friday 6th Dec 1pm - 4 pm' remains. I accept the evidence of Rosanna that those dates and times were proposed times to meet at Mr Dawson's offices. The note also states, 'Go ahead for rental of 35 Cheriton St'.
There was a dispute on the evidence about whether Gerry photographed the note with his phone. The evidence includes a photographed copy of the note, with a tablecloth identified as from the kitchen in the Bakery in the background. There is no evidence regarding from which phone the note was printed. It is not necessary to decide who photographed the note. I am, however, satisfied that the note was made before the meeting on 6 December 2013 and records a proposed division of the estate of the Deceased, as well as the Bindoon farm (not part of the estate). The other evidence, discussed below, satisfied me that it records the essential terms of an agreement between Rosanna and Gerry about the division of property.
While I do not accept all of Rosanna's evidence about the meetings, I do accept that at least one meeting occurred. First, at least one meeting is confirmed by Linda in her evidence. Second, there is a phone text message of 30 November 2013 between Rosanna and Gerry referring to a meeting for the following day. Third, while I do not believe Rosanna to have accurate recall, I do not believe that she was making things up. She says her note records her meeting with Gerry, and I am satisfied that it notes dates for a proposed meeting at Mr Dawson's offices on either 5 or 6 December 2013. Fourth, while Mr Dawson did not recall when he was given a copy of Rosanna's note, he agreed that it was on his correspondence file and, from where it was filed, it appeared to be contemporaneous with his letters to the parties on 17 December 2013.[38]
[38] ts 215.
Mr Dawson's recollection of the meeting of 6 December 2013, while not exactly corresponding with that of Rosanna, is consistent with some of what she says about her discussions with Gerry and her evidence about the meeting in Mr Dawson's office. For example, Mr Dawson recalled discussion of a trust fund for Gerry's son to correspond with the fund for Rosanna's son. Importantly, he testified that the 'main focus was on Cheriton Street' (the Bakery); the need to arrange a tenant; and the need for Rosanna to get independent advice about the costs, stamp duty and other taxation consequences of a transfer of part of the Bakery to her.[39] There was discussion about the form any agreement might take, and he offered to draft a deed of family arrangement.[40] He also told them of the alternative process of an application under the Family Provision Act.[41]
[39] Exhibit 8.1 [32] - [35].
[40] Exhibit 8.1 [36].
[41] Exhibit 8.1 [37].
I do not accept Gerry's evidence that he did not meet Rosanna before the meeting of 6 December 2013. His recollection of the meeting at Dawson Davies is also unreliable. And, fundamentally, his denial that he made any agreement with Rosanna is inconsistent with his later behaviour and, in particular, letters written on his behalf by his lawyers.
Events following the meeting
Following the meeting, on 17 December 2013, Mr Dawson wrote to both parties.[42] The wording of each letter was adapted slightly to properly address the recipient. The letter to Gerry said:
[42] TB 59, 60.
We confirm that there is an agreement between yourself and your sister to the effect that:
a)The Trust for her son remain and the duties of Trustee be passed to your sister;
b)There be a similar Trust set up for the benefit of your son and the duties of Trustee be transferred to yourself;
c)The Cheriton Street property be transferred in a way that is both tax effective and minimises Stamp Duty to yourself and your sister of the property as Tenants in Common in equal shares;
d)The furniture, other than the items specified to go to your sister's son, be divided equally between yourself and your sister; and
e)The remainder of the Estate be divided equally between yourself and your sister.
We confirm that your sister is to obtain independent advice as to the best way of facilitating the transfer of the Cheriton Street property without undue cost and we shall no doubt hear further in this regard in the New Year. We further confirm that if this is to take the form of an Application to the Supreme Court under the Family Provisions Act she will need to instruct independent solicitors for those proceedings.[43]
[43] TB 60.
Gerry received the letter but did not respond to it.
On 11 February 2014, following the grant of probate, Mr Dawson again wrote to both parties.[44] Relevantly, in the letter to Gerry, he referred to the need to discuss the setting up of an appropriate trust for his son, as well as the trust for Rosanna's son. He also said:
We further understand that it has now been agreed that the property is to be sold and the proceeds of the same divided equally between yourself and your sister. Assuming this is the case we shall need to discuss this with both of you so that we can proceed to instruct an agent to conduct the sale.
[44] TB 66, 72.
On 14 February and again on 18 February 2014, Mr Dawson wrote regarding contact by a realty firm in regard to the possible sale of the Bakery.[45] On 26 February 2014, he wrote to Gerry that he awaited further instructions in regard to the proposed agent to conduct the sale of the bakery.[46]
[45] TB 78, 83, 88, 91.
[46] TB 95.
On 7 March 2014, Mr Dawson wrote to both parties, advising that he was now in a position to draw a deed of family arrangement and the trust deeds and asking each of them for their son's full legal name and date of birth.[47]
[47] TB 98, 104.
On 4 April 2014, Mr Dawson wrote to both parties enclosing a draft of the proposed deed of family arrangement and the deed of trust.[48] It is apparent that he had by then been provided with the full name and date of birth of Gerry's son.[49]
[48] TB 171, 182.
[49] TB 190.
In response to the proposed deed, the solicitors acting for Rosanna proposed that the deed should expressly state that Rosanna waived her rights under the will with respect to the Bindoon property.[50]
[50] TB 202.
On 4 July 2014, Mr Dawson wrote to Gerry, advising that he had received the signed deeds from Rosanna and asking Gerry to arrange a mutually convenient time for Gerry to attend and sign.[51]
[51] TB 230.
There is no record of any response by Gerry to any of this correspondence.
On 25 July 2014, Mr Dawson again wrote to Gerry, awaiting his advice regarding the deeds 'once you have received legal advice regarding the same'.[52]
[52] TB 237.
The first written response from Gerry is in a letter from Valenti Lawyers, dated 29 July 2014.[53] Gerry said that it was written on his instructions. The letter referred to the draft deeds which had been provided, and continued:
[53] TB 238.
We are instructed by our clients as follows:
1.Rosina Gisella De Campo (the Deceased) died on 27 September 2013.
2.The Deceased left a valid Will prepared by Dawson Davies dated 4 April 2008.
3.The Deceased's Will appointed Dawson Davies Barristers & Solicitors of 46 Edward Street, Perth, Western Australia as Executor of the Will.
4.Probate of the Will of the Deceased was granted to Michael Colin Dawson on 28 January 2015.
5.The Deceased died leaving two children, namely our client, Gerry and his sister, Rosanna De Campo (Rosanna). The Deceased's other daughter, Adele died in 2007, leaving no children.
6.Gerry and Rosanna have reached a verbal agreement to enter into a Deed of Family Arrangement to vary the terms of the Will of the Deceased.
7.The Agreement is in accordance with Rosanna's hand written note to our client which provides the following:
(a)$100,000 on trust for Byram (Rosanna son) until he attains the age of 25 years of age;
(b)$100,000 on trust that Jarred (Gerry's son) until he attains the age of 25 years of age;
(c)The remaining monies to be split equally between Rosanna and Gerry;
(d)The property situate at 35 Cheriton Street, Perth (Bakery) to be split equally between Rosanna and Gerry;
(e)the Trucks to be retained by Gerry; and
(f)the Furnishings to be divided between the parties.[54]
[54] TB 238, 239.
The agreement set out in the letter does accord with Rosanna's note.
The letter suggested amendments to the draft deeds, as a result of the review by Valenti Lawyers. These included more precisely defining the land on which the Bakery was situated, and that the draft deed of family arrangement did not address the trucks and the furnishings.
On 28 August 2014, Mr Dawson advised the parties regarding taxation advice that he had received from an accountant, and that they may need to obtain an expert opinion or seek a private tax ruling.[55] In his letter to Gerry, Mr Dawson said that he had not yet heard from Rosanna in regard to a marketing proposal for the Bakery and that, while awaiting execution of the Deed of Family Arrangement, there was no reason not to proceed with the sale of the property.[56]
[55] TB 285, 287.
[56] TB 288.
On 3 October 2014, Dawson wrote to Valenti Lawyers asking for a prompt response to a letter of 26 August 2014, so that the matter could progress.[57]
[57] TB 296.
On 10 October 2014, Valenti Lawyers wrote that Gerry had sought their legal advice in relation to the proposed draft deeds and they were instructed he would not agree to vary the terms of the will of the deceased as proposed in the draft deeds. They requested that Dawson Davies promptly attend to transferring the Bakery to Gerry.[58]
[58] TB 297.
Following these letters, Rosanna's solicitors gave notice of their instructions to investigate various matters relating to the estate, including the circumstances surrounding the transfer of the Bindoon property, and gave notice that they may be instructed to apply for leave to file an application pursuant to the Family Provision Act.[59]
[59] TB 303.
On 31 October 2014, Valenti Lawyers wrote to Rosanna's solicitors, Fletcher Law, and said:
Our client denies he has 'walked away from the agreement.' The facts are as follows:
1.Subject to our client obtaining legal advice, our client agreed to your client's initiated proposal, to vary the terms of the will.
2.Dawson Davies was requested to prepare a draft document setting out the proposed arrangement between our respective clients.
3.The arrangement was subject to a condition precedent that our client obtain satisfactory legal advice.
4.Our client sought legal advice and made an informed decision not to vary the terms of the Deceased's Will.[60]
[60] TB 322.
Those instructions are not consistent with Gerry's evidence, in which he consistently denies that he made any agreement. He has not testified that an agreement was made but subject to any condition. And Gerry has not, in these proceedings, either pleaded or sought to prove a condition precedent. The letter of 31 October 2014 does not reflect well on his credibility.
Gerry's conduct following the 6 December 2013 meeting
I am satisfied that Gerry's conduct following the meeting is admissible as evidence that there was an agreement.
Post contractual statements cannot be used to construe the terms of a contract. But it is uncontroversial that post-contractual conduct is admissible to determine whether a contract exists between the parties.[61] Evidence of post contractual conduct may provide evidence of facts, the assertion of which is against the interests of one party, and may be admissible as an admission by that party.
[61] Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 547 ‑ 548.
Evidence that someone has remained silent when speech could have been expected, or has failed to raise a matter in correspondence where the relationship between the parties is such that a particular reply might be expected, may amount to an admission, and is at least relevant evidence. In Thomas v Hollier, Gibbs CJ said:
The failure to answer a letter may amount to an admission if there are circumstances which render it more reasonably probable that a man who denied the assertions made against him in the letter would answer those assertions than that he would not.[62]
[62] Thomas v Hollier[1984] HCA 35; (1984) 156 CLR 152, 157. Citation of authorities omitted.
Over a period of several months, Gerry received correspondence referring to the compromise agreement, and made no response denying any agreement. Gerry said that he told Mr Dawson in about April 2014 that he had not made any agreement. The time when Gerry said that he made these comments to Mr Dawson is about the time he was asked for and provided his son's details for the proposed trust deed.
Gerry also said that he attended a meeting at Dawson Davies in March 2014, at which Rosanna attended by telephone. Mr Dawson's account of the meeting is that Rosanna and Gerry discussed which agent should be used to market Cheriton Street.[63] Mr Dawson also recalled another meeting with Gerry on 20 March 2014, but not what they discussed.[64] I would expect Mr Dawson to have remembered if Gerry denied the agreement that he was then attempting to move forward, including by drafting of the required deeds.
[63] Exhibit 8.1 [50]
[64] Exhibit 8.1 [51] - [52].
The letter from Valenti Lawyers of 29 July 2014 is an express admission not only that an agreement was made, but of what terms had been agreed.
Finally, there is evidence of some conduct consistent with the compromise agreement and, arguably, in furtherance of it, in the division of items such as furniture and the motor vehicles.
This is a distinct issue from the question of part performance for the purposes of s 36 of the Property Law Act.[65] The question is whether the conduct of Rosanna and Gerry is probative of the existence of an agreement between them in the terms alleged. It is not necessary, for that purpose, that the acts be unequivocally, and in their own nature, referable to an agreement for the disposition of an interest in the Bakery.
Conclusion
[65] See Pipikos v Trayans [2018] HCA 39.
On the evidence, I am satisfied that the following findings should be made:
(1)There was at least one meeting at the Bakery before the meeting in Mr Dawson's office on 6 December 2013. At the meeting, Rosanna and Gerry agreed the essential terms of an agreement, which Rosanna recorded in a note.
(2)Rosanna and Gerry then met in Mr Dawson's office on 6 December 2013. Either then, or soon afterwards (having regard to where the note was found in Mr Dawson's files) Rosanna gave Mr Dawson the note recording what had been agreed. Mr Dawson gave some advice to Rosanna and Gerry.
(3)Gerry implicitly acknowledged by his conduct after the meeting, that an agreement had been made. Explicitly, through his lawyers' letter of 29 July 2014, he admitted both the agreement and its terms.
(4)The essential terms of the agreement are to be found in Rosanna's note, given to Mr Dawson, and in the letter of 29 July 2014.
The parties would need to do more, including enter a Deed of Family Arrangement, if the compromise agreement was to be implemented in the most tax effective way. But that was not essential to the formation of the agreement. Having agreed to share the Bakery equally with Rosanna, while keeping the Bindoon property and (subject to the specific bequests and the provision for the two trusts) receiving half of the other property, Gerry changed his mind.
Did Rosanna give consideration
Gerry put in issue whether Rosanna gave consideration for the compromise agreement. There was, as counsel for Rosanna submitted, consideration in the giving of mutual promises. Further, in agreeing to Gerry keeping the Bindoon property, Rosanna implicitly agreed to the compromise of the dispute she had foreshadowed about her mother's capacity at the time of the transfer to Gerry.
The point is without substance.
Was the compromise agreement intended to be enforceable
Gerry also put in issue whether the compromise agreement was intended to be legally enforceable.
An agreement may be made which the parties intend to honour, but which is not legally enforceable.[66] The onus of proving the agreement, including that there was an intention that it be legally enforceable, lies on Rosanna.
[66] South Australia v Commonwealth [1962] HCA 10; (19620 108 CLR 130, 154.
The parties did not expressly state that they intended the compromise agreement to be legally enforceable. Whether it was intended to be enforceable is an inference of fact. Intention in this context 'is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened.[67]
[67] Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95, 105 ‑ 107, [25].
The court must consider what the parties said and wrote, the subject matter of the agreement, and the relationship of the parties to each other.
I take into account that Rosanna and Gerry are siblings. The agreement arose out of a dispute, or potential dispute, over the disposition of the estate of their mother. Rosanna had stated her concerns about the gift of the Bindoon farm to Gerry, and also about her mother's capacity.
The subject matter of the agreement included many items in the deceased's estate but, most significantly, the transfer into joint names of a property which was valued at about $3.75 million. Rosanna said that the bakery had previously been an asset of the De Campo family business, and on the closing down of the business was owned equally by the three children (one of whom has since died). She said that the children gave a share of the assets to the deceased so that she would own her home, the Bakery.[68]
[68] ts 65 ‑ 66.
As I have found, Rosanna and Gerry discussed the distribution of the estate in an informal meeting. But that was followed by a meeting in the office of the estate solicitor, at which Mr Dawson told them that an agreement 'would have to be formalised and put "on the record"', and that each would have to get independent legal advice.[69]
[69] Exhibit 8.1 [23], [25].
The parties' subsequent conduct, in taking steps towards the preparation of a Deed of Family Arrangement and in each instructing lawyers is also consistent with a common intention that the agreement was legally binding.
I am satisfied that the proper inference to be drawn from these circumstances is that the intention of the parties was that their agreement would be legally enforceable.
Is the compromise agreement void for public policy
Gerry advanced, by way of defence, that the agreement had an implied term by which Rosanna contracted out of her entitlements under the Family Provision Act. He submitted that such a contract is contrary to public policy and is void.[70]
[70] Lieberman v Morris [1944] HCA 13; (1944) 69 CLR 69; Barns v Barns [2003] HCA 9, (2003) 196 ALR 65; Daebritz v Gandy [2001] WASC 45.
In Brooks v Burns Philp Trustee Co Ltd, Windeyer J stated the general proposition:
When a statute creates and confers rights and imposes corresponding duties, persons for whose benefit this was done may by contract waive or renounce their rights, unless to do so would be contrary to the statute. It may be seen that it would be so, because of an express prohibition against 'contracting out', or because the provisions of the statute, read as a whole, are inconsistent with a power to forego its benefits: or the policy and purpose of the statute may shew that the rights which it confers on individuals are given not for their benefit alone, but also in the public interest, and are therefore not capable of being renounced.[71]
[71] Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4; (1969) 121 CLR 432, 456.
In Smith v Smith,[72] Mason, Brennan and Deane JJ referred to the statutory policy discovered in the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW) against a person contracting out of the benefits conferred by the legislation.[73] It was not in dispute that a similar policy is found in the Family Provision Act.
[72] Smith v Smith [1986] HCA 36; (1986) 161 CLR 217, 249.
[73] And see Lieberman v Morris [1944] HCA 13; (1944) 69 CLR 69.
The first step must be to determine whether Rosanna did purport to contract out of her entitlements.
The compromise agreement, as pleaded, does not include any term relating to Rosanna's entitlement under the Family Provision Act. Her evidence, in substance, is that she and Gerry readily agreed to a distribution of her mother's estate. The prospect of a family provision claim was raised by Mr Dawson as an alternative to a Deed of Family Arrangement.[74] Rosanna and Gerry proceeded, until the letter from Valenti Lawyers, with Mr Dawson drafting a deed.
[74] Exhibit 8.1 [36] ‑ [37].
Neither Rosanna's notes, nor the letter from Valenti Lawyers, includes any term relating to family provision.
In summary, there was no express term that Rosanna would forgo a claim for benefits under the Act.
As counsel for Rosanna submitted in closing, the court would not imply a clause that was unenforceable.
The effect of the agreement, if enforced, would make substantial provision for Rosanna such that she might not later successfully pursue a claim. That is not contrary to public policy.
Is the agreement unenforceable because Mr Dawson was not a party to it
The agreement binds only the parties to it - Gerry and Rosanna. At the time of the agreement, the estate was vested in Mr Dawson, as executor. Gerry could not then fully perform it.
The fact that Mr Dawson is not a party to the agreement does not, however, prevent it being enforced. If an agreement is of such a kind that it can be specifically enforced, proceedings to enforce it can be commenced as soon as one party threatens to refuse to perform it.
The court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under the decree as may be necessary to carry into effect all the promises of both parties whether they are presently performable or are only performable in the future.[75]
[75] Turner v Bladin (1951) 82 CLR 463, 472.
Is the agreement unenforceable due to s 34 of the Property Law Act
Gerry pleads that the agreement with Rosanna (if made) is an oral agreement with respect to the Bakery and is unenforceable by reason of s 34 of the Property Law Act 1969 (WA).[76] On behalf of Rosanna, it was submitted that s 34 is concerned with the creation or disposal of interests in land by parol, and does not apply.[77]
[76] Defence [10(e)].
[77] Abjornson v Urban Newspapers Pty Ltd [1989] WAR 191, 194, 199 - 200; Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69; Robins v Robins[2006] WASC 301 [20].
I accept the submission on behalf of Rosanna. Section 34 of the Property Law Act does not make the agreement unenforceable. It is concerned with agreements that are intended to have immediate dispositive or creative effect.[78] This agreement did not have that effect.
[78] Thompson v White[2006] NSWCA 350 [119] - [132].
Further, as Gerry correctly pleaded, the agreement was made before the distribution of the estate assets. At that time, Gerry had a right to due administration of the assets - including the Bakery - in the hands of the executor. The agreement between Rosanna and Gerry could not create or dispose of an interest in the Bakery. An agreement having that effect could not be made until the estate has been administered.
It is, accordingly, unnecessary to determine Rosanna's alternative plea of part performance of the agreement. Were it necessary to decide it, my initial view is that the plea would fail. To constitute part performance, the act must be consistent only with partial performance of a transaction of the same nature as that which the plaintiff seeks to have completed by specific performance. The acts of part performance relied on are not referrable in that way to the disposal by Gerry of an interest in land.[79]
[79] Pipikos v Trayans [2018] HCA 39 [54] ‑ [56].
Relief
At the time of the agreement, the application for probate had been filed but probate had not yet been granted. The agreement could not be immediately implemented.
Gerry has refused to perform the agreement. Rosanna pleads that she remains ready, willing and able to do all things necessary or desirable to give full effect to the agreement.
The agreement is of a kind that can be specifically enforced. The court can make an order for specific enforcement and can require those acts to be done that are necessary for a half interest as tenant in common in the property to be transferred to Rosanna when that can be done.
At the end of the hearing, counsel for Gerry informed the court that he had been advised by Mr Dawson, as executor, that there may be a difficulty in the claim for specific performance in that it might lead to the estate being insolvent. No evidence had been led in the trial going to that issue, and it had not been pleaded. I will not, however, make an order that could have that consequence without hearing further from the parties.
There will be judgment for the plaintiff. I will hear from the parties regarding the orders that should be made to give effect to these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ZW
ASSOCIATE TO THE HONOURABLE JUSTICE ALLANSON16 NOVEMBER 2018
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