Feeney v Feeney

[2008] NSWSC 890

CITATION:	Feeney v Feeney [2008] NSWSC 890
HEARING DATE(S):	11-13 August 2008
JUDGMENT DATE :	13 August 2008
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	13 August 2008
DECISION:	1. Amended summons dismissed; 2. amended cross-summons dismissed; 3. exhibits may be returned after 28 days; 4. make no order as to the costs of the summons or cross-summons with the intent that each party bear his or her own costs.
CATCHWORDS:	TRUSTS – termination of trust – rule in Saunders v Vautier – property vested in interest but not in possession – interest was divested if beneficiary pre-deceased the resident for life – contingent beneficiaries not party to the deed – deed not effective to terminate trust - WILLS – construction and effect – acceleration of interests – surrender of right of residence – whether interests of beneficiaries accelerated - REMEDIES – equitable remedies – rectification – common intention and/or antecedent oral agreement – plaintiff and defendants had different intentions when executing deed – no clear and convincing proof - REMEDIES – equitable remedies – discretionary defences – mistake and hardship – plaintiff did not contribute to the mistake – any hardship would not amount to injustice
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Trustee Act 1925 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98 Sir Moses Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2 NSWLR 406 In Re Horsnaill [1909] 1 Ch 631 at 635; In re Tweedie and Miles (1884) 27 Ch D 315 Perpetual Trustee Company (Canberra) Limited v Rasker (1986) 84 FLR 268 Re Keenan; Ford v Keenan (1913) 30 WN (NSW) 214 Re Syme [1980] VR 109 Meadows v Stogdale (Supreme Court of Victoria, Campbell J, 12 July 1988, unreported) Collins v Equity Trustees Executors and Agency Co Ltd [1997] 2 VR 166 Bassett v Bassett [2003] NSWSC 691; (2003) 58 NSWLR 258 Western Australian Real Estate Custodian Limited v WJ Green & Co (1984) Pty Ltd [2006] WASC 278 Tompkins v Simmons (1931) 44 CLR 546 Re Taylor (deceased) [1957] 1 WLR 1043 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Pukallus v Cameron (1982) 180 CLR 447 Fowler v Fowler (1859) 4 De G & J 250; 45 ER 97 Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54 Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 Joscelyne v Nissen [1970] 2 QB 86 The Olympic Pride [1980] 2 Lloyd’s Rep 67 Taylor v Johnson (1983) 151 CLR 422 Bush v National Australia Bank Ltd (1992) 35 NSWLR 390 Winks v W H Heck & Sons Pty Ltd [1986] 1 Qd R 226 Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 Public Trustees v Smith [2008] NSWSC 397 Slee v Warke (1949) 86 CLR 271 Feeney v Feeney [2008] NSWSC 298
TEXTS CITED:	G Thomas, Thomas on Powers (1998) Sweet & Maxwell J D Heydon and M J Leeming, Jacobs’ Law on Trusts in Australia, 7th ed (2006) LexisNexis Butterworths P Butt, Land Law, 5th ed (2006) Lawbook Co
PARTIES:	Peter Stuart Feeney v Christopher Colin Feeney & 5 Ors
FILE NUMBER(S):	SC 6397/06
COUNSEL:	Plaintiff: In person Defendants: F Kalyk
SOLICITORS:	Plaintiff: N/A Defendants: KQ Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 13 August 2008

6397/06 Peter Stuart Feeney v Christopher Colin Feeney & 5 Ors

JUDGMENT

1 HIS HONOUR: The plaintiff, Mr Peter Feeney, seeks an order for specific performance of a deed dated 18 January 2005 by which the parties sought to adjust their entitlements under the will of the late Daniel Aloysius Feeney ("the testator") to a property at 74 Mountain Road, Austinmer ("the property") or its proceeds of sale.

2 The first and second defendants seek an order for rectification of the deed, failing which they contend the plaintiff is estopped from enforcing it.

3 The testator died on 25 September 1994 having left a will dated 5 March 1982 by which he appointed the first and second defendants, Mr Christopher Feeney and Mr Ian Ross Carpenter, his executors and trustees if his wife predeceased him. His wife did die before him. The testator dealt with the property by the following clause:

“ 3(b) I GIVE DEVISE AND BEQUEATH my home 74 Mountain Road Austinmer together with all items of household or domestic use therein unto my Trustees to permit my son CHRISTOPHER COLIN FEENEY to reside therein during his lifetime he to pay all rates and taxes and insurance and other outgoings and to maintain the property and after his death UPON TRUST to sell the same and to divide the proceeds of sale between such of them PETER STUART FEENEY MARGARET CATHERINE SMALLMAN SUSAN ELVA CARPENTER IAN WILLIAM FEENEY and MICHAEL HERBERT FEENEY as shall then be living and if more than one as tenants in common in equal shares AND I DECLARE that should any of my said children predecease the said Christopher Colin Feeney leaving a child or children him her or them surviving then such child or children shall take and if more than one as tenants in common in equal shares the share which his her or their parent would have taken had he or she survived me. ”

4 The six named beneficiaries are the testator's children. Mr Carpenter is a trustee but not a beneficiary. He is married to Susanne Carpenter. By clause 3(c) the testator left:

" ... the rest residue and remainder of my estate both real and personal of whatsoever nature and wheresoever situate unto my Trustees UPON TRUST to sell call in and convert into money such part or parts thereof as do not consist of ready monies and to stand possessed of the proceeds of such sale calling in and conversion as aforesaid and of all ready monies forming part of my estate UPON TRUST to pay thereout all my just debts funeral and testamentary expenses and to stand possessed of the balance then remaining UPON TRUST for my children as tenants in common in equal shares. ”

5 I will, from time to time, refer to the parties by their Christian names. In doing so, I intend no disrespect.

6 Peter Feeney is the eldest child, having been born in March 1940; Margaret Feeney (now Margaret Heyes) was born in July 1941; Christopher Feeney in July 1943; Susanne Carpenter in October 1945; Ian Feeney in October 1948; and Michael Feeney in July 1954. Thus they were aged between 27 and 42 when the will was made and aged between 40 and 54 when the testator died.

7 Peter, Margaret, Susanne, Ian and Michael all have children, all of whom were born before the testator's death.

8 The property is on the escarpment above Wollongong and commands extensive views.

9 Peter Feeney and Ian Feeney were keen to pursue a rezoning and subdivision of the land and maximise its value.

10 The deed dated 18 January 2005 was made by all six of the beneficiaries under the will and by Mr Ross Carpenter. It included the following relevant recitals and provisions:

“ WHEREAS
...
C. By his Will the Testator gave to his son Christopher Colin Feeney (‘Christopher’) a right of residence in the property known as 74 Mountain Road, Austinmer (‘the property’) and after the death of Christopher the property was directed to be sold and the proceeds divided between the Testator’s remaining children, namely Peter Stuart Feeney, Margaret Catherine Heyes (in the Will called Margaret Catherine Smallman), Susanne Elva Carpenter (in the Will called Susan Elva Carpenter), Ian William Feeney and Michael Herbert Feeney (‘beneficiaries’) as tenants in common in equal shares.
D. Christopher no longer wishes to live in the property and the beneficiaries wish to deal with their entitlements under the Testator’s Will.
E. Christopher and the beneficiaries have agreed to deal with their entitlements under the Testator’s Will in the manner set out in this Deed and have agreed to release and indemnify each other and the Executors from all actions which may otherwise result from the implementation of the terms of this Deed.
...
NOW THIS DEED WITNESSES
...
2. The Executors are hereby authorised and directed by Christopher and the beneficiaries to offer the property for sale by public auction and if not sold by public auction then by private treaty at a proper market price.
3. In the event of dispute between the parties as to what constitutes a ‘proper market price’ the parties (or any of them) may request the President for the time being of the Real Estate Institute of New South Wales to nominate a person to make such determination on their behalf. Any costs incurred in such determination shall be borne by the party or parties seeking the determination.
4. Upon completion of the sale of the property and payment of the costs and expenses associated therewith, the Executors shall pay to each of Christopher and the beneficiaries one sixth of the net proceeds of sale. ”

11 The defendants contend the deed fails to reflect the parties' common intention and antecedent agreement that the property should only be sold if a price of at least $2,400,000 was achieved, which would give Christopher Feeney at least $400,000.

12 By their cross-claim, the first and second defendants seek orders that the deed be rectified as follows:

“ (a) by amending Recital D to read, ‘Christopher is prepared to forgo his right to live in the property if it can be sold with reasonable expedition at a price not less than $2,400,000.00’;
(b) by deleting from Clause 2 the words, ‘and directed’;
(c) by deleting the words following the words ‘for sale’ in the second line of Clause 2 and by inserting in their place the words, ‘with reasonable expedition at a price of not less than $2,400,000.00’; and
(c) by deleting clause 3. ”

13 If the deed is otherwise effective, but were rectified in this way, then the plaintiff could not succeed because there has been no offer to buy the property for $2,400,000 or more.

14 The principal issues are: first, assuming that the deed takes effect in accordance with its terms, whether it is effective to alter the trusts of the will. Secondly, whether the deed should be rectified. Thirdly, whether the plaintiff is estopped from seeking to enforce the deed in accordance with its terms. Fourthly, whether the Court, in its discretion, should decline to enforce the deed by an order of specific performance by reason of mistake on the part of the defendants and hardship to Christopher Feeney.

Efficacy of the Deed

15 I will deal first with the question of whether the deed is effective to extinguish the trusts of the will. It purports to do so and to substitute new trusts whereby Christopher Feeney and Ross Carpenter are directed to sell and to hold the proceeds of sale on trust for the six children in equal shares. The question is, on what principle can that be done?

16 The statement of the rule in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282; affirmed (1841) Cr & Ph 240; 41 ER 482 in G Thomas, Thomas on Powers (1998) Sweet & Maxwell at 176 approved by the High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98 at 119 [47], is that:

" Under the rule in Saunders v Vautier , an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation. "

17 It is of particular significance that the beneficiaries must between them have not only vested and absolute interests but those interests must be indefeasible. (See also Sir Moses Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2 NSWLR 406 at 410.)

18 On no view do Peter, Margaret, Susanne, Ian or Michael have an indefeasible interest in the trust property.

19 Mr Kalyk, for the defendants, argued they also do not have a vested interest in the trust property. He submitted that the only property in which those beneficiaries were interested was future property, being the proceeds of sale of the Austinmer property, and they were only contingently entitled to that future property. He submitted they had no vested interest in the land itself.

20 I do not consider that the rule in Saunders v Vautier is inapplicable because of the existence of the trust for sale and the fact that under the trusts, the beneficiaries are entitled only to the proceeds of sale.

21 It is well settled that provided all beneficiaries who are sui juris and absolutely entitled consent, then they may terminate a trust and call for the transfer of the trust property, notwithstanding that the trust provides for sale of the property. They are entitled to a transfer of the property in its unconverted state in lieu of sale if all beneficiaries absolutely entitled so direct (In Re Horsnaill [1909] 1 Ch 631 at 635; In re Tweedie and Miles (1884) 27 Ch D 315 at 317; and see also J D Heydon and M J Leeming, Jacobs’ Law on Trusts in Australia, 7th ed (2006) LexisNexis Butterworths at [2309]).

22 I accept that the five children, other than Christopher, have vested interests in remainder in the property. They do not have absolute interests. Their interests are liable to be defeated if they fail to survive Christopher. That is to say, if one or more of those beneficiaries fails to survive Christopher then his or her interest would not form part of his or her estate but would pass to his or her children.

23 Accordingly, they are not entitled, even with the concurrence of Christopher, to terminate the trusts of the will.

24 The testator's grandchildren have contingent interests in the property. Their interests are contingent on their surviving Christopher and their parent predeceasing him.

25 In Perpetual Trustee Company (Canberra) Limited v Rasker (1986) 84 FLR 268, property was left by a will to the testator's son at the expiration of ten years after the testator's death, provided he was then living, with a gift over in the event of the son not surviving the period of ten years. Miles CJ (at 271) held that the son was not entitled to a transfer of the trust property prior to the expiry of the ten years, because of the contingency that the son may not survive that period and that the gift over would take effect.

26 Another possibility to be considered is whether the deed operates as a surrender by Christopher of his right of residence. If so, one must consider whether the effect of the surrender is to accelerate the interests of the other five children and to close the class of persons entitled to the property. This would enable the five children to terminate the trust, and with the concurrence of Christopher and the trustees to resettle the proceeds on trust for the six children in equal shares.

27 Christopher does not have a life estate under the will. The will gives him a right to reside on the property during his lifetime. A right of residence is a personal right because it must be exercised personally (Re Keenan; Ford v Keenan (1913) 30 WN (NSW) 214; P Butt, Land Law, 5th ed (2006) Lawbook Co at [1006] and cases there cited).

28 If the gift of the property had been to Christopher for life and, after his death, to such of the other children as survived him, then it is probable that the will would be construed as saying that the remainder interests were vested in possession on the determination of the life estate, not only if that came about by death, but if it came about for any other reason, such as by the gift of the life estate being revoked by the testator prior to his death, or its failing for invalidity, or its being disclaimed, or forfeited, or surrendered. It is also probable that if the will so provided the persons entitled to the property on the termination of the life estate would be ascertained at that time, even though the interests of contingent beneficiaries would thereby be defeated (Re Syme [1980] VR 109; Meadows v Stogdale (Supreme Court of Victoria, Campbell J, 12 July 1988, unreported); Collins v Equity Trustees Executors and Agency Co Ltd [1997] 2 VR 166; Bassett v Bassett [2003] NSWSC 691; (2003) 58 NSWLR 258; Western Australian Real Estate Custodian Limited v WJ Green & Co (1984) Pty Ltd [2006] WASC 278).

29 The reason for such a construction is that where the testator creates a life estate and makes gifts in remainder after the death of the life tenant, in the absence of countervailing indications in the instrument, the reference to the death of the life tenant is presumed to be a description of the limitation of the gift to the life tenant. In Tompkins v Simmons (1931) 44 CLR 546, Dixon J said (at 558-559):

" In a limitation to a donee for life and after his death upon trust for his children, or some other donee, the reference to his death whether expressed by the words ‘upon’ or ‘after his death,’ or ‘from and after his decease,’ or otherwise, may have one of two imports. It may mean that the second donee shall take nothing until the death of the first, or it may merely show the order of the limitations through which the estate or interest is to pass. It is well established that, prima facie, these words are to be understood as denoting the order of succession of limitations ."

30 In Re Taylor (deceased) [1957] 1 WLR 1043, Upjohn J said (at 1046-1047):

" The question then is whether it is possible to accelerate the gift, and, if so, in what manner. The principle of acceleration is well established and well known, and I need read only one authority, namely the recent case of In re Flower's Settlement Trusts [1957] 1 WLR 401 at 405. In delivering the judgment of the court, Jenkins L.J. said:
'The principle, I think, is well settled, at all events in relation to wills, that where there is a gift to some person for life, and a vested gift in remainder expressed to take effect on the death of the first taker, the gift in remainder is construed as a gift taking effect on the death of the first taker or on any earlier failure or determination of his interest, with the result that if the gift to the first taker fails - as, for example, because he witnessed the will - or if the gift to the first taker does not take effect because it is disclaimed, then the person entitled in remainder will take immediately upon the failure or determination of the prior interest, and will not be kept waiting until the death of the first taker'.
Applying that, and, as been said in a number of the earlier authorities, treating the words 'after the death' as mere words of limitation and as equivalent to 'subject to the foregoing trust,' we reach this conclusion, that the gift takes effect immediately on the operation of the disclaimer. "

31 I think it is seriously arguable that the same principle applies to the construction of the will in this case.

32 However, I am mindful that the right conferred on Christopher under the will is not a life estate and it is therefore harder to read the words "and after his death upon trust to sell the same and to divide the proceeds of sale between such of [the other beneficiaries] as shall then be living" as mere words of limitation. However, the right of residence is a right given to Christopher during his life and I do not think that the difference in the nature of the rights he enjoys necessarily requires a different approach to construction. It is true that the testator contemplated that his grandchildren will become entitled to a share of the property if they survived Christopher but their parent did not. However, in all such cases of acceleration of a remainder interest where there is a gift over, and where the life interest terminates through the actions of the life tenant, it can be said that the testator's intention of providing contingently for those entitled under the gift over would be defeated. That has not prevented the courts from finding that such acceleration has occurred, at least in this country.

33 I have concluded that I do not need to decide this question and therefore I think it better not to do so. It would not avail the plaintiff if the interests of the remaindermen could be accelerated by a surrender of Christopher Feeney's right of residence. The deed does not provide for the immediate surrender of that right. The deed makes no express reference to the surrender of Christopher's right of residence. It is implied that he would surrender his right of residence to enable a sale of the property to be competed.

34 Nonetheless, the earliest time at which it would be implied that such a surrender would take effect is on the completion of such a sale. If between the date of the deed and completion of the sale one of the remaindermen, that is one of the five beneficiaries under clause 3(b), were to die, then that person's child, or children, would inherit his or her share of the estate.

35 That is so even assuming that the principles in the above cases concerning the acceleration of remainder interests on the death of a life tenant were applicable to the construction of this will.

36 Accordingly, on any view, at the date of the deed, and indeed at the present time, there are persons contingently entitled to the trust property. Their consent would be required to the extinguishment of the trust of the will. It follows that the deed was ineffective to achieve its intended purpose.

37 It also follows that the question of rectification, estoppel and discretionary defences are moot. However, in case I am wrong in this conclusion, and in case the matter goes further, I will deal with the other issues.

Rectification

38 The defendants contend that it was agreed in May 2004 that the property would only be sold if the sale amounted to at least $2,400,000, so that Christopher Feeney's share would be at least $400,000.

39 The defendants contend that the deed failed to reflect the parties’ common intention and prior agreement to that effect and should be rectified.

40 The defendants must establish by clear and convincing evidence that there was such a prior agreement or common intention, continuing up to the time of entry into the deed. The first and second defendants must also show that the deed was intended to record the earlier oral agreement or common intention and by mistake failed to do so (Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350-351; Pukallus v Cameron (1982) 180 CLR 447 at 452-456).

41 The alleged common intention or antecedent agreement must be established "in the clearest and most satisfactory manner" (Fowler v Fowler (1859) 4 De G & J 250 at 265; 45 ER 97 at 103; Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 65; Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 at 669; Joscelyne v Nissen [1970] 2 QB 86 at 98; and The Olympic Pride [1980] 2 Lloyd’s Rep 67 at 73).

42 The defendants put their claim for rectification on the basis of common intention and/or antecedent oral agreement. They did not contend, nor would there have been a basis for them to have contended, that the deed should be rectified on the ground of unilateral mistake. (See Taylor v Johnson (1983) 151 CLR 422 at 432.)

43 The antecedent oral agreement was said to have been made at a meeting of all of the family members at Ian Feeney's house in May 2004. Christopher Feeney and Michael Feeney gave evidence to the effect that, after discussion about the possible sale of the property and the price that should be asked, Susanne Carpenter proposed that the property be put up for sale for $2,400,000 so that each of the children would get $400,000. Christopher Feeney deposed that he said that unless he got $400,000 he would not be moving anywhere.

44 Michael Feeney, likewise, said that unless the property was sold for $2,400,000 he would not be signing anything.

45 There are some slight differences in the evidence of the defendants on this topic. Ross Carpenter and Ian Feeney said that there was an agreement reached by all six of the children that the property would be offered for sale for a price of $2,400,000, that on the basis of that price, each child would take $400,000, and unless that price could be achieved the property would not be sold and Christopher's rights under the will would be unaffected.

46 That put the matter slightly more highly than did Christopher Feeney. His evidence was to the effect that he would not move unless a price of $2,400,000 was achieved. But it would probably be implied from his version of the events that he was agreeable to the property being offered for sale at that price.

47 Peter Feeney's evidence as to that meeting was different. The effect of his evidence was that most of the discussion concerned progress in negotiations for the rezoning and development of the property. He does not give evidence of an agreement being reached that the property would be offered for sale at $2,400,000. Nonetheless, he deposed that, at the meeting, Christopher said that he would not get out for anything less than $500,000.

48 No offer of $2,400,000 was received.

49 Ian Feeney suffered a second heart attack in July 2004. In October or November 2004, Peter Feeney spoke to his sisters, Margaret and Susanne, and to his brothers, Ian and Michael.

50 In substance, Peter said that having regard to health problems of Ian and of Margaret and of his wife, and having regard to the fact that he had just retired, the family could do with an injection of cash and that something should be done with the land. Peter did not speak to Christopher because their relations were frosty. Peter had been the primary protagonist contending that the property should be redeveloped and the proceeds distributed between all of the children. Christopher had expressed no confidence in his plans.

51 Each of the persons to whom Peter Feeney spoke at this time said, in substance, that it was up to Christopher whether he was prepared to sell. They were noncommittal.

52 Notwithstanding that no offer of $2,400,000, or, it appears, for any other specific amount, was made by any prospective purchaser, in December 2004, Christopher, Susanne and Ross Carpenter attended a firm of solicitors, Champion Legal, and gave instructions for the preparation of a deed to facilitate the sale of the property. Champion Legal had acted for the testator.

53 They met a Mr Michael Thomas who was employed by that firm. Christopher Feeney deposed saying to Mr Thomas, "We’re thinking of selling our property if we can get $2.4 million for it". Ross Carpenter deposed that Susanne Carpenter told Mr Thomas, "The beneficiaries have reached an agreement that if we can get a purchase price of $2.4 million we will sell the property and split the price 6 ways. If we can't get that price Chris can stay in the property for as long as he wants".

54 Susanne Carpenter also gave evidence of instructing Mr Thomas that they would be prepared to sell the property if they could each achieve $400,000, and that $2,400,000 was the minimum price for which they were prepared to sell.

55 Mr Thomas was not called, but the failure of the defendants to call Mr Thomas was explained by the fact that they had been unable to locate him.

56 In any event, it is by no means clear to me that any inference should be drawn against the defendants for not calling Mr Thomas even if there were no such explanation, given the evidence of Christopher Feeney and Ross and Susanne Carpenter. If anything, one would expect the plaintiff to call Mr Thomas to meet that evidence, but I draw no inference either way in relation to his not giving evidence.

57 A file note produced by Champion Legal on subpoena is not inconsistent with those persons' version of the instructions given to Mr Thomas.

58 On 10 December 2004, Champion Legal wrote to Christopher Feeney and Ross Carpenter enclosing a draft deed called a "Deed of Family Arrangement". The deed was sent for their approval and amendment, if necessary. Champion Legal said:

" Please let us have your instructions as to whether the Deed is in accordance with your wishes and if so, we will prepare final copies for signature by each of the parties ."

59 The draft deed is, in substance, in the same terms as the final deed. The only changes suggested by Christopher Feeney and Ross Carpenter were Margaret’s surname, and the spelling of Susanne's name.

60 Ross Carpenter gave evidence that he went through the draft deed "with everybody" at a meeting attended by himself, Christopher, Ian, Margaret and Michael. None of them gave evidence of attending such a meeting and some denied it, or at least did not recall it. But in light of the request from Champion Legal, it is quite likely that some such meeting was held. It is difficult to see that instructions could have been given for preparation of the final document unless those instructing Champion Legal had gone through the terms of the draft and consulted the parties to the deed.

61 Peter Feeney contended that at a Christmas party in December 2004, Christopher announced that he had decided to sell. That evidence was adduced late. It was not contained in any of Peter Feeney’s affidavits. There was some support for it from Michael Feeney but Christopher Feeney denied that any such statements were made at that time. The position in relation to that meeting remained unclear at the end of the evidence, and I am not satisfied that such a statement was made by Christopher Feeney at that time.

62 On 4 January 2005, Champion Legal sent nine copies of the deed to Christopher Feeney and Ross Carpenter noting that they had made the amendments in the deed as requested by Mr Carpenter, and gave advice as to how the deed should be signed. It was signed by Margaret Heyes and Susanne Carpenter on 8 January 2005; by Peter Feeney on 13 January 2005; by Ian Feeney on 16 January 2005; and Michael and Christopher Feeney and Ross Carpenter on 18 January 2005.

63 There was no conversation between Peter Feeney and Christopher Feeney prior to signing the deed, whereby Christopher reiterated his intention that the property should only be sold if it could be sold for at least $2,400,000. Nor did Margaret, Susanne, Ian, Michael or Ross tell Peter Feeney that that remained Christopher's position.

64 Ross and Susanne Carpenter attended Peter Feeney's house when he signed the deed. In cross-examination, Susanne Carpenter accepted that at that time, Peter Feeney indicated he thought it was a great idea to have the provision for a third party referee to sort out any arguments or disagreements there may be in relation to any offers being made for the sale of the property. This was a reference to clause 3 which provides that, in the event of a dispute between the parties as to what constitutes a proper market price, the parties may request the president, for the time being, of the Real Estate Institute to nominate a person to make such a determination on their behalf.

65 Peter Feeney gave evidence that at the time he signed the document, it was explained by Ross Carpenter by his saying:

" We are selling the property. This deed takes the place of Daniel's will. Chris and I remain as executors to the new arrangement and Chris now also shares, so when the property’s sold the money will be split 6 ways ."

In his affidavit in reply of 29 April 2008, Ross Carpenter did not take issue with that part of Mr Peter Feeney's affidavit.

66 Peter Feeney read the deed. He deposed it appeared to him to express exactly what Ross had told him and so he signed it and gave it back to Ross. Peter Feeney was not mistaken as to the purported effect of the deed. He did not have the intention in January 2005 that the property would only be sold if it reached a price of at least $2,400,000.

67 By this time, it was six months since discussions in May. Peter Feeney had proposed to his brothers and sisters, other than Christopher, that the family get together and do something about the land. He was not told that Christopher was maintaining his insistence on receiving at least $400,000 and there is no reason not to accept his evidence as to his understanding of the deed and his intentions.

68 It was primarily submitted for the defendants that I should conclude that Peter Feeney also believed that the property would only be sold if it fetched at least $2,400,000, because it was not until February or March 2006 that he asserted that the property should be sold pursuant to the deed. I do not accept that submission.

69 The delay largely arose because Peter Feeney continued to pursue plans for development of the property, including a proposal which he put in writing in November 2005 for the purchase from his brothers and sisters of their interest in the property.

70 It is unnecessary to go into the details of that proposal. It suffices to say that he put to his siblings that the alternative to his offer was that the land be sold through the normal channels, and he said if that were done the land would be likely to fetch about $1,000,000.

71 That statement would be inconsistent with Peter Feeney’s understanding that there was any binding arrangement, or even any arrangement, which all of the siblings then expected to be honoured, that the land would be sold only if it could fetch at least $2,400,000.

72 His delay in reliance on the deed is explicable by his seeking to negotiate alternatives which might command support and realise more money.

73 In any event, the deed specifies no time for sale. One would imply a reasonable time, but when that would be is uncertain.

74 Peter Feeney raised the necessity for sale following a conversation he had with Champion Legal in about February 2006 where he asked to be advised what he needed to do to enable his share of the property to be purchased by another family member and was told that the property should have been sold 15 months previously.

75 The fact that it was Champion Legal who raised that matter, and that that prompted Peter Feeney to press his siblings to proceed with the sale, does not indicate that he had the same intentions at the time he signed the deed as the defendants deposed they had.

76 That conclusion would be a sufficient basis for rejecting the rectification claim. But I should add that even on the defendants' evidence there is not clear and convincing proof that by mistake the deed failed to record their intentions, and the May 2004 agreement or arrangement.

77 Christopher Feeney deposed that he understood the deed gave legal effect to the agreement he had reached with his siblings in May 2004 that he would give up his "life estate" if, and only if, the property was sold for a minimum price of $2,400,000. However, in his first affidavit he deposed that when Ross Carpenter called on him and presented the document for signing he said to Mr Carpenter words to the effect, "Item D on the first page, should include a proviso that we will sell the property, if and when I give up my entitlement to live in the property. I don't want to give up my entitlement unless we get the sale price of $2.4 million we are expecting". He deposed that Mr Carpenter told him not to worry, and that "your benefits under the Will won't be affected. It's only if we sell for $2.4 million we agreed."

78 Mr Carpenter denied that Christopher Feeney said these words to him. I think I should accept Christopher Feeney's own evidence on that matter. It is evident from that evidence that Christopher Feeney noticed that the document did not include the provision he wanted at the time it was presented to him for signature.

79 I do not accept that Christopher Feeney was mistaken about the contents of the deed. Rather, I consider that he thought the deed would not affect the prior arrangement that the parties had come to, that the property would not be sold for less than $2,400,000.

80 The other defendants, apart from Ian Feeney, are in a like position. Ross Carpenter read the deed and made changes to the names in recital C. He deposed that he took the deed at face value. When asked specifically about recital D he said he took it at face value.

81 Taking the recital at face value, it would be impossible not to realise that it expressed Christopher Feeney's current willingness to sell and that it contained no condition that the sale be for not less than $2,400,000. Rather the deed contained an authority and direction to the trustees to sell.

82 I conclude that Ross Carpenter was not mistaken as to the contents of the deed, although he was mistaken in thinking that the antecedent oral arrangement would either be binding or continue to be honoured.

83 Margaret Heyes deposed that when she signed the deed she was not aware that it contained provision for the property to be offered for sale by public auction, or if not sold by auction then by private treaty at a proper market price. Nor was she aware it contained a provision that in the event of a dispute between the parties as to what constitutes a proper market price, the price would be determined by a person nominated by the president of the Real Estate Institute.

84 She deposed that when she signed the deed she did not intend it to require that the property be sold at less than $2,400,000 but intended that its effect should be to allow the property to be sold at $2,400,000 if a buyer could be found at that price. Her belief for this was said to be based on conversations at Ian's house in May 2004. Given the length of time that had passed since that meeting, and the fact that no such offer was made, and given also the fact that the deed plainly contains no such term, I do not accept that she was mistaken as to the contents of the deed. She said that she read the deed thoroughly, and I accept that evidence. However, I would accept that she also was mistaken in thinking that the arrangements discussed in May would continue to be operative either as a binding arrangement or binding the family members in honour.

85 Susanne Carpenter also read the deed. She gave similar evidence as to her understanding of the document. However, I have already referred to her conversation with Peter Feeney, when he signed the deed, when he raised the provisions of clause 3 providing for a third party arbiter, which could well be inconsistent with her understanding that the property would not be sold unless it reached a price of $2,400,000.

86 Again, I do not accept she was mistaken as to the deed’s contents.

87 In the case of Michael Feeney, I would be prepared to accept that he did not read the whole of the document. He said that he read through the first few paragraphs, did not fully understand what it meant, and asked Ross Carpenter what it said. He deposed that Ross Carpenter told him that it did not affect Christopher's rights under the will and said that the house could be sold at $2,400,000 if an offer in that amount were received.

88 Ross Carpenter did not give evidence to corroborate that conversation. It would be a surprising conversation to have taken place. However, I do not need to decide that question.

89 In his oral evidence, Michael Feeney was asked what provision he expected the deed to make with respect to the sale of the property. He said:

“ A. Well I expected the deed to be required so as to substitute Chris' life tenancy because under the will there was no, no monetary gain for Chris but there was the roof over his head as long as he kept the responsibility as to pay the bills, to keep the wolf from the door so to speak.

Q. Anything else you expected to be in the deed so far as it concerned the sale of the property?
A. The deed, as far as I've seen the deed it was a document that was required to give Chris an equal share in any monetary gain that we all agreed upon and Chris', my brother Chris being the only one in the family that never married ... " [The rest of the answer was not responsive.]

90 He did not say that he expected the deed to provide for the property to be sold only if it could be sold for at least $2,400,000.

91 In my view, he did not intend the deed to record the antecedent oral arrangement reached in May 2004.

92 Ian Feeney is in a different position. At the time he signed the deed he was under medication following his heart attack, albeit he had returned to work. In any event, he did not read the deed before signing it and has not read it since.

93 In my view, Ian Feeney's predominant intention was to be bound by the document which he had signed and he trusted others to incorporate appropriate provisions in the agreement.

94 In Bush v National Australia Bank Ltd (1992) 35 NSWLR 390, Hodgson J (as his Honour then was) dealt with the position where a party both intends to give effect to the document as worded but also intends to enter into a transaction which has a different effect from that which the document provides. His Honour said (at 407) that in such a case:

“... one needs to be able to say that, although in a sense the parties intended to be bound by a document which included certain words, nevertheless their intention to achieve a legal effect which was not the true legal effect of those words was somehow predominant over that other
intention, and clearly predominant. "

95 That was not the case with Mr Ian Feeney. His predominant intention was that the document should give effect according to its words and relied on others to ensure that those words were appropriate.

96 The defendants' mistake as to the continued efficacy of the arrangement of May 2004 is not a ground for rectification.

97 In this respect the case is on all fours with Maralinga Pty Ltd v Major Enterprises Pty Ltd. There, a purchaser entered into a contract for sale of land knowing that the contract required payment of cash on completion but believing he could rely on the auctioneer's statement that vendor finance could be provided. The purchaser failed in his claim to rectify the written contract because he did not intend it to give effect to the whole of the antecedent oral arrangement (at 250-251). (See also Winks v W H Heck & Sons Pty Ltd [1986] 1 Qd R 226 at 237.) For these reasons the claim for rectification fails.

Estoppel

98 The defendants submitted that if the deed were effective and not liable to be rectified, nonetheless, the plaintiff is estopped from seeking to enforce it. The estoppel alleged is a conventional estoppel. It was submitted that all of the parties to the deed adopted the assumption that the property would not be sold unless a price of at least $2,400,000 was obtained.

99 In Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713, Brereton J said (at 24,722 [32]):

" In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff. "

This was cited with approval in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 at [200].

100 My finding that Peter Feeney did not adopt that assumption is fatal to the claim for conventional estoppel. In any event, the plea of conventional estoppel would fail for other reasons. In particular, in this case, Peter Feeney did not know or intend that the defendants would act on the basis of that assumption. Nor did he, by his words or actions or inactions cause the defendants to hold the belief on which they acted to their detriment by entering into the deed.

101 For the reasons I gave in Public Trustees v Smith [2008] NSWSC 397 at [86]-[94], for such an estoppel be made out it would be necessary to show at least that the plaintiff caused the defendants to adopt the assumption on which they acted in entering into the deed. In the light of my other conclusions it is unnecessary to develop that point further.

Discretionary Defences

102 Finally, I turn to the discretionary defence of mistake and hardship.

103 The fact that the contract is not liable to be rectified for mistake, and it is not sought to rescind the deed for mistake, is not necessarily a bar to the refusal of a decree of specific performance on the basis that the defendants did labour under a mistake when they entered into the deed. That mistake was not contributed to by the plaintiff.

104 In Slee v Warke (1949) 86 CLR 271 at 278, the High Court said that in such a case:

“ Where there is a unilateral mistake on the part of the defendant not contributed to by the plaintiff, the question whether the Court should in the exercise of its discretion make a decree for specific performance or leave the plaintiff to sue for damages must, we think, depend on the circumstances of the particular case. But the general rule governing the exercise of the discretion is, we think, that laid down by James LJ in Tamplin v James (1879) 15 Ch D p 221, where he said:

for the most part the cases where a Defendant has escaped on the ground of a mistake not contributed to by the Plaintiff, have been cases where a hardship amounting to injustice would have been inflicted upon him by holding him to his bargain, and it was unreasonable to hold him to it."

105 The hardship contended for here is based upon the assumption that if the deed were carried into effect and the property were sold, it would fetch substantially less than $2,400,000, possibly less than $1,000,000 or $800,000.

106 There was no evidence of the current value of the property, although there were references to opinions expressed over the previous few years by Ian Feeney and Peter Feeney, in particular, as to the value of the property and opinions obtained over that time from real estate agents in relation to it. Nonetheless, assuming that if the property were sold now, it would fetch only prices in that order, nonetheless, I do not consider that would be a sufficient ground to refuse specific performance if it were otherwise appropriate to make that decree.

107 The defence only arises on the assumption, which I have held not to be the case, that the deed is effective according to its terms and also on the assumption, which would be the case, that it contains binding obligations on both sides.

108 The hardship to Christopher Feeney of having to leave his property would be matched by hardship to others the inability to realise a benefit from the property, which, by the contract contained in the deed, Christopher Feeney had agreed to.

109 In any event, any such hardship would not be a hardship amounting to an injustice.

110 In considering the justice of the matter, the position of all of the parties must be taken into account, coupled with the fact that the present position only arises because the defendant signed the deed knowing, as I have found, that it did not contain the provision which he now says he assumed it did.

111 Accordingly, had the issue arisen, I would not have refused an order for specific performance on this ground.

112 For these reasons, I order that the amended summons be dismissed and that the amended cross-summons also be dismissed.

113 The exhibits may be returned after 28 days.

[Parties address on costs.]

Costs

114 The first and second defendants seek an order that the plaintiff pay their costs and that such costs be paid on the indemnity basis from 7 February 2007. The plaintiff submits there should be no order as to costs.

115 On 7 February 2007, the solicitors for the first and second defendants wrote to the solicitors then acting for the plaintiff. They advised that they were acting for Christopher Feeney and Ross Carpenter, Sue Carpenter, Margaret Heyes, Ian Feeney, and Michael Feeney, and that all of those persons said that:

“ 1. The said Deed of Family Arrangement was never explained to them.

2. The said Deed of Family Arrangement does not reflect the agreement between the signatories to the Deed, as it pertained to sale of the Mountain Road property.

3. They did not understand the intent and effect of the Deed and they all clearly did not appreciate that the Deed operated in the manner alleged by your client in his Affidavit. ”

116 They said that the evidence would throw serious doubts on the validity of the deed and noted its terms were inconsistent with the will of Daniel Feeney which granted Christopher Feeney a life estate in the subject property. They said that all of their clients were adamant that any agreement to sell the property reached by the beneficiaries was always made in deference to a life estate of Christopher Feeney. They invited the plaintiff to discontinue the proceedings and said that if that were done their clients would not seek costs. Otherwise they foreshadowed seeking costs on an indemnity basis. Such an offer did not create a prima facie entitlement to indemnity costs.

117 If the defendants are otherwise entitled to costs, then the letter would provide a proper basis for an order for indemnity costs if I concluded that it was unreasonable for the plaintiff not to have accepted the proposal.

118 I do not consider that it was unreasonable for the plaintiff not to have accepted the proposal.

119 The matters contended for in the letter were not made out, unless the statement that the terms of the deed were inconsistent with the will was intended to encompass the ground upon which I have found the deed was ineffective. It is not at all clear to me that that was what was intended to be conveyed, and nothing was stated that would provide the plaintiff with any understanding of an argument along the lines of that which has ultimately succeeded.

120 The first and second defendants also rely on a letter of 7 May 2008 in which those defendants invited the plaintiff to agree to an order for the summons to be dismissed with each party to pay its own costs.

121 Part of the basis for that proposal was an assertion that the plaintiff had advised the first and second defendants that he was unconcerned as to what his prospects of success were, because costs would be ordered to be paid from the estate resulting in a sale, and thereby he would achieve his objective.

122 I am not prepared to act on the basis of that untested assertion. The statement is, of course, hearsay.

123 I am told, and I accept, there was no response to the letter of 7 May 2008. But on the other hand I am told from the bar table by Mr Peter Feeney that he had not previously seen the letter.

124 Again, the relevance of the letter on costs is that it might provide a basis for ordering indemnity costs if the plaintiff had acted unreasonably in not accepting the proposal. It might also affect the general discretion as to costs under s 98 of the Civil Procedure Act 2005 (NSW).

125 Prima facie, costs follow the event. That would mean that orders would be made for the summons to be dismissed with costs and the cross-summons to be dismissed with costs.

126 However, there would be a real difficulty in assessing what costs should properly be assessed referable to the cross-summons and what costs should be assessed referable to the summons.

127 Essentially, the defendants have failed on the facts but they have succeeded on an argument of law which, in my view, it was open to them to have raised even before the proceedings were commenced as to whether the deed was effective to alter the trusts of the will.

128 Essentially, the same or similar questions were raised in the hearing before Hammerschlag J (Feeney v Feeney [2008] NSWSC 298). It appears from his Honour's judgment that the parties had negotiated an attempted compromise of Peter Feeney's claim. Christopher Feeney was prepared to pay $100,000 to acquire Peter Feeney's interest under the will and to acquire any interest any child of Peter Feeney would have but for a proposed new deed of release.

129 The first and second defendants sought an order for variation of a trust deed pursuant to s 81 of the Trustee Act 1925 (NSW). The principal reason Hammerschlag J refused the relief then sought was because persons whose interests might be affected, in particular the progeny of Peter Feeney, were not present before the Court and there was no contradictor to advocate their position.

130 That reflects concerns about the same matters as have lead me to conclude that the deed was not effective to vary the trusts of the will.

131 It appears that both parties acted reasonably in their attempt to compromise the proceedings. They reached an agreement for the compromise of the proceedings. But because the agreement affected the interests of others it could not be given effect.

132 The issue of law on which the defendants succeeded, and the issues of fact on which they failed, are severable and distinct. Although the issues of fact were properly raised in an attempted answer to the plaintiff's claim, because the defendants failed on those issues of fact and because the issues are severable, it would not be appropriate, in my view, to order that the costs follow the event by ordering the plaintiff to pay the costs of the summons.

133 On the other hand, it would not be appropriate to order costs of the issues of fact on which the defendants failed to be paid to the plaintiff. Mr Feeney did not seek such an order. The reason such an order would not be appropriate is that it would not be necessary for the defendant to have raised those issues had the plaintiff not brought the proceedings.

134 On the other hand, it was not unreasonable for the parties to assume that a deed prepared by a firm of solicitors would be effective to do what it purported to do. It cannot be said that the plaintiff was acting unreasonably in acting on the assumption it would be effective.

135 In all of those circumstances, I think that I should not order that costs follow the event. In my view, costs should lie where they fall. I make no order as to the costs of the summons or cross-summons with the intent that each party bear his or her own costs.

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