Grant v Hall (No 2)
[2014] QDC 307
•15 October 2014
DISTRICT COURT OF QUEENSLAND
CITATION:
Grant v Hall (No 2) [2014] QDC 307 (delivered ex tempore)
PARTIES:
Gae Elaine Grant
(plaintiff)
v
Amber Louise Hall
(defendant)
FILE NO:
2126/13
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
15 October 2014
DELIVERED AT:
Brisbane
HEARING DATE:
7 - 9 October 2014
JUDGE:
Kingham DCJ
ORDER:
(1) Ms Hall’s counterclaim is dismissed.
(2) Within 14 days of settlement of sale of the property, the trustees are requested to file and provide to each party a concise report of the price achieved on sale, and the net proceeds available for distribution, accounting for all expenses of sale and liabilities that have been met from sale proceeds.
(3) Unless the parties agree within one month of receiving the report on final orders to give effect to these reasons, either party, after consulting with my Associate and the Registrar, and the other party, may list the matter before me for further hearing, on giving the other five clear days’ notice of a hearing date.
(4) If any party wishes to rely on a statement by an accountant in relation to the capital gains tax issue, they must file and serve it on the other at least two clear days before the hearing.
(5) Unless either party contends for a different order at a resumed hearing, or they file a consent order about costs, with or before final orders are taken out, Ms Hall must pay Ms Grant’s legal costs and disbursements for the proceedings, including all interim applications for which no order as to costs was made, those costs to be assessed, if they are not otherwise agreed.
CATCHWORDS:
REAL PROPERTY – CO-OWNERSHIP – JOINT TENANTS - DISTRIBUTION – where dispute over financial arrangements in relation to a property bought during a relationship that had since broken down – where order to appoint statutory trustee for sale – where both parties agreed the distribution of net proceeds should be determined with a starting point at 50/50, subject to adjustments – where dispute over adjustments to be made – where adjustments relate to pre-separation contributions and post-separation contributions, benefits, expenses, and liabilities – where court stated findings on how those items should be accounted for on distribution – where final orders to be perfected once trustees report on the sale of the property and the net proceeds available for distribution
REAL PROPETY – CO-OWNERSHIP – JOINT TENANTS – COUNTERCLAIM - CONTRACT – BREACH OF AGREEMENT – where defendant argued she accepted an offer from the plaintiff that the plaintiff transfer her interest in the property to the defendant for the sum of $45000 – where the plaintiff argued no enforceable agreement was reached – where found that agreement was not reached on an essential term, or alternatively that the plaintiff accepted the defendant’s repudiation of the agreement – where the counter claim dismissed.
COUNSEL:
Mr W Hodges (direct brief) for the plaintiff
The defendant appeared in person
HER HONOUR: This is a dispute about financial arrangements between Ms Grant and Ms Hall in relation to a property they purchased together and lived in for a period. When their relationship broke down, Ms Grant moved out, Ms Hall remained and various attempts were made to settle the arrangements between them. I made orders in August of this year to appoint trustees on a statutory trust to sell the property. Ms Hall no longer lives in the property and the sale process is underway; although, at the time of hearing, the property had not been sold.
Ms Grant has asked the court to make orders to distribute the net proceeds of sale of the property, making adjustments to the parties’ entitlement according to their relative contributions to and experiences of the benefits of ownership of the property. She asks the court to start from the proposition that they are equal owners with equal responsibility for associated liabilities and expenses and an equal right to enjoy the benefits of ownership. Ms Hall agrees with that proposition as a starting point; although, she differs from Ms Grant in what adjustments might be made.
Their agreement on the starting point for distribution effectively disposes of the respective claims for declarations that the other holds the interest on some form of trust for the other, before considering how the net proceeds might be distributed. However, it is necessary to deal with a counterclaim by Ms Hall that, if it is made out, would mean the court should award damages to Ms Hall, an outcome that would affect the basis for the distribution of those net proceeds, if there were any. I will now turn to that counterclaim.
It rests in contract. Ms Hall claims an array of damages which she says she suffered as a result of Ms Grant breaching a contract between them. Although the pleadings made other allegations about unconscionable conduct and related claims, Ms Hall confirmed at the hearing that her counterclaim was in damages for breach of an agreement that Ms Grant would transfer her interest in the property to Ms Hall for $45,000. Ms Grant does not deny agreeing to transfer her interest in the property to Ms Hall for $45,000.
However, she denies Ms Hall is entitled to damages for a number of reasons. Firstly, she says the agreement was subject to a precondition that it be formalised in a written agreement, which was not fulfilled. Secondly, if there was an enforceable agreement, she says it was subject to two conditions – not fulfilled – that it be subsequently reduced to writing and that Ms Hall transfer, what I will describe as the “surplus funds” in advance of settlement. Thirdly, she argues that Ms Hall evinced her intention not to be bound by the agreement by any of the following: providing her with a deed that would have her transfer her interest for no consideration; not responding to repeated requests to return a signed transfer that Ms Grant had provided for the purposes of stamping only; and attempting to alter the amount that Ms Grant was to receive at settlement.
Before giving detailed reasons, I will state my primary findings which lead me to reject Ms Hall’s counterclaim. Firstly, I find the parties did not reach agreement about an essential term, either the amount to be paid to Ms Grant at settlement or the method by which that amount would be determined. If I am wrong in that conclusion, and there was an enforceable agreement, then it was that Ms Hall would pay Ms Grant $45,000 at settlement in return for Ms Grant transferring her interest to Ms Hall. In May 2013, Ms Hall evinced her intention not to be bound by that agreement when she asserted an implied term in that agreement and proposed Ms Grant receive less than $45,000 at settlement. Ms Grant accepted that as repudiation of the agreement and was, therefore, not in breach when she refused to transfer in either May or June of 2013.
The effect of those findings in either alternative is that I dismiss Ms Hall’s claims for damages for breach of contract. I want to look now at some of the arguments that were raised on the counterclaim.
Firstly, was there a precondition that the arrangement had to be documented before it was a binding agreement? For the purposes of considering this question, I will act on the assumption that the parties did reach agreement at some point of their protracted informal negotiations. However, I will return to that topic later and state my findings on that issue; that is, did they reach agreement?
While Ms Grant repeatedly requested documentation, the form this was to take reflected advice she and Ms Hall were (separately) getting about how to proceed. Initially, it seems that both were under the misapprehension that their relationship was a de facto relationship for the purposes of the property adjustment provisions under the Property Law Act 1974 (Qld). The correspondence reveals that Ms Grant had been advised by an accountant that Ms Hall would not have to pay the same level of stamp duty if the property was transferred pursuant to a property consent order of the court, and that was an advantage to Ms Hall, rather than Ms Grant, given it is the purchaser, not the vendor, who pays the duty. It is not clear to me why neither party’s solicitors identified earlier that the relationship was too short to qualify for the Property Law Act process.
Regardless, Ms Grant maintained her demand for documentation and Ms Hall was just as consistent in her reluctance to assume responsibility and cost for documenting their agreement. She suggested an exchange by text or email should suffice. At some points Ms Grant agreed to secure a draft but did not; largely, it seems to me, because of her own reluctance to incur further legal costs, and at other times, because of her apparent uncertainty about what would actually be recorded in the deed.
Assuming they did reach agreement about all other essential matters, I am not satisfied it was a precondition to the formation of contractual relations that the agreement was reduced to written form, whether by consent orders or a deed signed by the parties. That is, I find it is not a contract of the third type as classified by the High Court in Masters v Cameron (1954) 91 CLR 353; I find instead, that if an agreement was reached, it was of the first kind; one where parties intended to be bound immediately, even though they expressed a desire to draw up their agreement in a more formal document at a later stage.
The failure to document their apparent agreement, however, had the practical effect that a disagreement about an essential issue between them was not exposed until Ms Hall sought to settle final figures for payment to Ms Grant on settlement.
I now turn to my reasons for finding that an agreement was not reached on all essential terms. There were extensive direct and assisted negotiations between the parties which started in late September 2013 when the relationship had broken down and Ms Grant had moved out of the property. These continued until the proceedings commenced in June 2013; although, there were later “without prejudice” attempts to settle. While the parties each prepared a chronology of what they say are the significant communications, in order to develop a complete picture of their dealings, it has been necessary for me to read, in full, the hundreds of texts and emails between them, and the letters written at times by solicitors acting on their behalf.
That was not an easy task given so much was said by text messages produced to the court in faint photocopies of exchanges in which the identity of the author and the recipient is not always obvious, and the date and time of the message is not always displayed. Sometimes an email was responded to or prompted by a vigorous exchange of numerous text messages. Many offers and counteroffers flew around, especially in January and February of 2013, and it seems to me that none explicitly referred to all aspects relevant to settling their financial relationships. In such circumstances, discerning a discrete offer, and acceptance of all essential terms is not possible. It falls to the court then to take a global approach and consider whether, having regard to the totality of their dealings, they should be considered to have entered into a contractual relationship.[1]
[1]Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424, 457.
In the circumstances of this case, it is impossible to rely upon a single communication or exchange without looking at it in the context of what came before and after. The confusion that emerges from their communications and miscommunications is demonstrated by the way in which Ms Hall has pleaded the contract. She has asked the court to act on an agreement that she alleges was reached with Ms Grant in either February 2013 or March 2013 or on any other earlier or later, (but unspecified) date on which she says Ms Grant affirmed her willingness to accept $45,000 in order to transfer her interest in the property to Ms Hall. The difficulty with Ms Hall’s case is that, on an objected consideration of their communications, they did not reach agreement on an essential term – the amount to be paid to Ms Grant or how that amount was to be determined.
At various times, the two were in dispute about the following matters which could affect the amount that Ms Grant would actually receive on settlement of a transfer of her interest:
· Bills associated with the use of the property during the periods that both and, later, just one was in occupation;
· How expenses incurred by Ms Hall in renovating the property would be accounted for upon the transfer;
· Who would be liable for legal costs and stamp duty associated with the transfer;
· How payments made by either on the two loans associated with the property would be accounted for upon the transfer given their differing payments on the loans at different times; and
· Ms Hall’s occupation of the property without any rent being paid to Ms Grant.
The most significant issue that was still not resolved between them at the time Ms Hall sought to effect transfer was who would bear responsibility for mortgage payments from the date of separation.
All of these disputes had the potential to impact on what Ms Grant would be paid. This explains the apparent contradiction of Ms Grant both accepting that she had agreed to transfer her interest for $45,000 and her insistence that despite $45,000 being repeatedly affirmed by them both, the figure she would get seemed to keep changing. That is because Ms Grant was looking at the effect on the amount she would receive, depending on her liability for any of those other items I had just enumerated.
From as early as 5th of February 2013, [2] Ms Grant clarified her offer to accept $45,000 was based on a small discount from an earlier figure of $48,000 which distributed existing liabilities between them. However, the offer of $45,000 was on the basis that she would have no more to pay. She never waivered from that assertion and she reiterated it on numerous occasions. [3] It is clear, however, Ms Hall never accepted that the amount Ms Grant should receive would be $45,000, regardless of when settlement occurred and what happened in relation to expenses of the property in the interim. She demonstrated at each stage of their negotiations that $45,000 was her starting point for discussion of the final figure that Ms Grant would receive.[4]
[2] Exhibit P to affidavit of Gae Grant sworn 5 February 2014 (email from Gae Grant to Amber Hall dated 5 February); Exhibit 17 to affidavit of Amber Hall sworn 12 February 2014.
[3] Exhibits 17, 24, and 32 to affidavit of Amber Hall sworn 12 February 2014.
[4] Exhibits 13, 17, 32, 36 to affidavit of Amber Hall sworn 12 February 2014.
Reading their communications as a whole, I was unable to settle upon one point in time where it could be said that they had reached agreement on all the matters that would need to be agreed in order to determine what amount Ms Grant would receive upon transfer of her interest to Ms Hall. There are email and text exchanges between the two around 19 February 2013 and 21 March 2013[5] in which Ms Grant asked Ms Hall to confirm the terms of the agreement. In between, on 26 February, [6] Ms Hall’s solicitor sent Ms Grant a transfer to sign. It did not provide for any consideration to be paid to Ms Grant on transfer. This appeared to me to set off a series of emails about who would pay what expenses.[7]
[5] Trial exhibit 13.
[6] Exhibit H to the affidavit of Gae Grant sworn 5 February 2014.
[7] Trial exhibit 11.
Although they had agreed in February 2013 on a figure of $45,000 for her interest, they had not settled whether that figure would be adjusted at settlement to account for their contributions, in the interim, to the liabilities incurred in purchasing a property. Ms Grant alleged that in February 2013, she said she would accept $45,000 to transfer her interest on the basis that she would walk away from the property, and that’s what appears in her email. [8] That is, she said, the figure of $45,000 assumed all outstanding debts were accounted for in that figure, even those arising from their purchase and cohabitation and that she would have no responsibility for any further expenses of the property.
[8] Exhibit P to affidavit of Gae Grant sworn 5 February 2014 (email from Gae Grant to Amber Hall dated 1 February 2013).
Ms Hall disputed that was the offer she made and that Ms Grant accepted. Although Ms Hall seemed to accept that some of their prior expenses were wrapped up in the figure of $45,000, within days of their so called agreement, the parties were in dispute about whether Ms Grant had to contribute to a past water rates bill.[9] That issue was dealt with when Ms Grant, I would say, reluctantly paid the disputed bill.[10]
[9] Exhibit P to affidavit of Gae Grant sworn 5 February 2014 (email from Amber Hall to Gae Grant dated 5 February 2013).
[10] Exhibit P to the affidavit of Gae Grant, sworn 5 February 2014 (screenshot of paid water bill).
From February 2013, Ms Grant acted consistently with her position that she had no further liability for mortgage payments. Her last mortgage payment was made in late February 2013. She reasserted her position that she would accept nothing less than $45,000 and would not pay for anything more in a text to Ms Hall on the 12th of March 2013.[11] From separation, Ms Grant also assumed full liability for the equity loan which had funded the deposit and purchase costs, even though Ms Hall had control of the surplus funds from that loan. [12] Ms Grant was not in occupation of the property and Ms Hall was not paying her any rent to reflect Ms Grant’s interest in the property.
[11] Exhibit 20 to affidavit of Amber Hall, sworn 12 February 2014.
[12] Trial Exhibit 8.
However, while Ms Hall did not offer to contribute to, and did not accept that she had any ongoing liability in relation to the equity loan – at least at that stage – her position with respect to the mortgage shifted at different points of their negotiations. At some point after separation, Ms Hall, with the consent of the mortgagee, ceased mortgage payments or went on a mortgage relief period. She relied on the equity that she and Ms Grant had accumulated by payments made in excess of the mortgage requirements. The relevant period is not clear to me, but it’s somewhere from around mid-December 2012 or early January 2013 until sometime in, I think, February of 2013. [13] Ms Hall did not inform Ms Grant of this.
[13] Exhibit M to affidavit of Gae Grant sworn 5 February 2014.
Later, Ms Grant became aware of this. Her last payment on the mortgage seems to have been in late February 2013. Ms Hall learnt that Ms Grant was not contributing to the mortgage in April 2013. In her affidavit of February 2014, Ms Hall deposed to a conversation she said she had with Ms Grant in April of 2013 when she said Ms Grant was displaying reluctance to provide a signed transfer in advance of settlement. When Ms Hall asked why she would want to delay when it was costing her monthly mortgage payments, Ms Grant told her she had stopped making mortgage payments months earlier. Ms Hall said that she told Ms Grant that she would have to wait until settlement for the full $45,000. She said, “I said words to the effect of “If you aren’t going to pay the mortgage then I will have to pay it all. I’m not going to do that and pay you money before settlement.’” [14]
[14]Affidavit of Amber Hall sworn 12 February 2014 at [130].
On one view, this evidence suggests that, at least at that point, Ms Hall accepted Ms Grant was entitled to $45,000 regardless of whether she made any further mortgage payments, because her complaint was about bearing the burden of part-payment of $45,000 at the same time as having to fully service the mortgage. She did not suggest any adjustment would need to be made for that at settlement.
However, either her position shifted or was clarified in late May. On 20 May 2013, Ms Hall sent Ms Grant an email saying her solicitor had asked that, “We discuss final amounts.” [15] She asserted there was an implied term to their agreement that the status quo would prevail pending settlement. By this she meant that Ms Grant would continue to pay $210 on the mortgage even though she was bearing the full load on the equity loan. On that basis, she asserted that Ms Grant had to account for 12 payments of $210 at settlement and that should be reflected in the final figure to be paid to Ms Grant.
[15] Exhibit 32 to affidavit of Amber Hall, sworn 12 February 2014.
The implication of such a term is inconsistent with the unresolved argument about Ms Grant’s decision to cease payments on the mortgage. Further, by the hearing Ms Hall had abandoned any argument about an implied term and said she only sought to adjust the figures on the solicitor’s advice. I do not accept Ms Hall’s evidence at trial that she agreed the amount to be paid to Ms Grant at settlement was $45,000. Ms Hall’s conduct demonstrated that she considered that figure was subject to further negotiations to adjust for, amongst other things, Ms Grant’s failure to continue mortgage payments.
When Ms Grant rejected Ms Hall’s suggestion of adjusting the amount she should receive, she treated it, not unreasonably, as a counter offer and proposed a higher payment which accounted for rent from Ms Hall for the period she was in sole occupation and for the contributions that Ms Grant had been making throughout on the equity loan. [16] Ms Hall’s response to that counter offer was most telling for me, rather than revert to what she now says was always the agreement, that she pay $45,000 upon settlement of the transfer; instead, on the same day, she put a further offer to Ms Grant by email which assumed Ms Grant was liable to contribute $210 per month to the date that Ms Grant had provided the signed transfer to Ms Hall’s solicitors.[17]
[16] Exhibit P to affidavit of Gae Grant sworn 5 February 2014 (email from Gae Grant to Amber Hall dated 20 May 2013).
[17] Exhibit P to affidavit of Gae Grant sworn 5 February 2014 (email from Amber Hall to Gae Grant dated 20 May 2013).
This email exchange on 20 May 2013, in the context of earlier disagreements without resolution, about the approach each had taken to mortgage contributions post-separation, leads me to conclude that they had not reached agreement about an essential term - the amount that Ms Grant would receive on transfer or the method by which that amount would be calculated.
If, however, I’m wrong in that conclusion, I will go onto explain my reasons for concluding that Ms Grant did not breach an agreement, assuming one had been reached.
By 20 May 2013, both Ms Grant, in April of 2013,[18] and her lawyers, on the first occasion, 11 May 2013, [19] had separately demanded Ms Hall’s solicitors return the signed transfer that Ms Grant had signed and provided to Ms Hall’s solicitors for stamping in preparation for settlement. Ms Grant was evidently alarmed by the lack of communication from Ms Hall’s solicitor – either to her or to her solicitor – and the lack of documentation.
[18] Exhibit J to affidavit of Gae Grant sworn 5 February 2014.
[19] Exhibit S to affidavit of Gae Grant sworn 5 February 2014.
In the context of ongoing disputes about their arrangement and miscommunications, that is not surprising. One example is illustrative of other disputes. In an exchange of text messages and emails between the 21st and 23rd of March 2013,[20] Ms Hall initially said she would not pay the costs of transferring Ms Grant’s interest to her; when Ms Grant asserted this was usually borne by the purchaser, Ms Hall then seemed to change her position and agreed to pay those costs.
[20] Trial exhibit 15.
There were many other examples of intense exchanges between the two where it was apparent that there were misunderstandings, misinterpretations, suspicions about the other’s motives and the attribution of discreditable motives to the other. This is not unusual in a relationship breakdown, but it obscured rather than clarified their positions, as much of their exchanges dealt with their accusations and counteraccusations. But against that conduct, there is a clear course of conduct by Ms Hall and her solicitors acting on her behalf which manifested Ms Hall’s unwillingness to perform what I find to be an essential term of the agreement if it was reached; that at the time of transfer, Ms Grant would receive $45,000.
Ms Hall sought to persuade me that she did in fact intend to hold to that agreement. In particular, she tendered communications with the mortgagee in which she sought sufficient funds on mortgage terms to pay $45,000 on settlement. [21] However, those communications were from 30 May onwards into early June – and they all postdate the following things:
[21] Trial exhibit 21.
· Firstly, provision to Ms Grant for signature of a transfer (that occurred in late February 2013) in terms that did not provide for any consideration to be paid to Ms Grant;
· Secondly, Ms Hall’s solicitor’s failure to respond to correspondence from Ms Grant’s solicitors about the need to document the terms of their agreement (in May of 2013), and also a letter from Ms Grant to that effect (in April).
· Thirdly, the failure by Ms Hall’s solicitor to respond to requests (firstly in April by Ms Grant and then in May by her solicitors) that they return the transfer until the agreement was documented. I pause here to note that Ms Grant gave evidence that she sent a signed transfer to Ms Hall’s solicitors on the understanding that Ms Hall would immediately return the surplus funds and when she had a text message from Ms Hall on 11 April[22] that she would not pay anything until settlement, Ms Grant sent a letter to Ms Hall’s solicitor demanding return of the signed transfer because Ms Hall had breached that agreement. She provided a letter to the court that was dated 12 April. This is the letter she said she sent to Ms Hall’s solicitors. Mr Latham, the solicitor to whom it was addressed, said he did not have this on his file. It was not on the file subpoenaed from his firm. [23] Given he conceded his file was not complete in other respects including in relation to a file note he’d attached to his own affidavit,[24] I accept Ms Grant’s evidence that she did send the letter to him (Exhibit I to her affidavit from February of this year). I also note here that Ms Hall told Ms Grant that her lawyer had a draft consent order which stated the terms of the agreement. However, at that time, as Ms Hall must have known because she had received it, the only draft agreement that had been provided by her solicitors to her showed a transfer to Ms Grant with no consideration payable to Ms Grant. It is not until 27 May after the caveat was lodged by Ms Grant’s solicitors that there is any evidence at all of a document in the possession of either Ms Hall or her solicitors which provided for Ms Grant to receive any money on settlement.
[22] Exhibit I to affidavit of Gae Grant sworn 5 February 2014.
[23] Trial transcript 1-37, line 16 to 1-39, line 46.
[24] Trial transcript 1-40, lines 1 to 13.
· Fourthly, the provision by Ms Hall’s solicitors (on 13 May – after the transfer had been recalled) of a draft deed of agreement that did not provide for any payment to Ms Grant. I should note here, of course, that Ms Hall gave evidence that she did not instruct her solicitor to send Ms Grant the deed and that she had earlier told him it did not conform with her instructions. I note that no solicitor gave advice to that effect, and there’s no communication in writing to confirm it. However, assuming that I did accept that evidence from Ms Hall, Ms Hall did not instruct her solicitor to correct that letter by either a letter to Ms Grant’s solicitors or to send an amended deed of agreement to correct the error.
· Instead – this is the fifth element of this course of conduct – on 20 May, Ms Hall put two different figures to Ms Grant, both less than $45,000, which deducted mortgage payments by reference to different dates.
· Sixthly, Ms Hall’s solicitors made arrangements to settle a transfer of Ms Grant’s interest on the basis of a signed transfer that had been recalled by both Ms Grant and her solicitors. The date set for settlement was the 24th of May. This was not ever communicated to Ms Grant or her solicitors despite numerous attempts made by Ms Grant’s solicitors to obtain information from them.
· The seventh aspect of the course of conduct is that Ms Hall’s solicitor signed that transfer on 23 May. [25] It still provided no payment on transfer to Ms Grant, despite a letter from Ms Grant’s solicitors on the 22nd of May which noted the agreement did not record a payment of $45,000, and advised that refinancing was not consented to until a written agreement was finalised. The solicitor gave evidence before me that no consideration was included because the parties were then still negotiating on final figures. I note, again, that at that time there had been repeated requests for the return of the transfer not responded to in any way.
· The next aspect of this course of conduct is that Ms Grant’s solicitors wrote again to Ms Hall’s solicitors on 23 May[26] and noted there had been no response to previous correspondence, there was no concluded agreement, the refinancing was not consented to, the transfer had been recalled, but not yet returned, and that Ms Hall’s solicitors were asked for an undertaking by 9 am the next day that they would not proceed.
· The next aspect of the course of conduct is that Ms Hall’s solicitors did not respond to that letter. They did not give the requested undertaking by the time requested, or respond in any way that was placed before me. And then there is the action taken by Mr Latham on the 24th of May to proceed to stamp the signed transfer at a time when it provided for no consideration to be paid to Ms Grant, there was no written confirmation from Ms Hall’s solicitors that Ms Grant would receive $45,000 and, in fact, the solicitor’s evidence was that that was still under negotiation; the transfer had been recalled on numerous occasions; the solicitors had been informed refinancing had not been consented to; and the requested undertaking had not been given.
[25] Trial transcript 1-53, line 38.
[26] Exhibit S to affidavit of Gae Grant sworn 5 February 2014.
Against that course of conduct, it is hard to avoid the conclusion (even now) that the transfer would have proceeded on 24 May 2013 were it not for Ms Grant’s solicitors prudent action in lodging a caveat to prevent Ms Hall or her solicitor dealing with the property.
At the time, that conclusion was a reasonable conclusion to draw from the conduct overall. That course of conduct by Ms Hall, directly and through her solicitors, is only capable of one interpretation at the time, that she had manifested her intention that she would not be bound by the agreement to pay Ms Grant $45,000 at settlement.
I will also observe that I found the conduct of Ms Hall’s solicitor, who gave evidence at trial, quite extraordinary. I reject any suggestion arising from his evidence that correspondence from Ms Grant’s solicitors had not been received by his firm in accordance with the dates noted on the facsimile transmission sheets. His affidavit did not fully disclose all relevant correspondence. Nor did he explain the circumstances in which he arranged settlement on 24 May in the light of that correspondence, without ever communicating that to Ms Grant’s solicitors.
Ms Hall’s conduct demonstrated her desire to secure a reduced final figure. In the context of ongoing disputes between them about expenses of the property, the value of renovations, the use of the surplus funds and when they would be returned, who would bear the costs of stamping and transfer of the property, and finally, the liability for mortgage payments after separation, Ms Hall’s conduct in May 2013 demonstrated an intention that she would not pay Ms Grant $45,000 upon transfer of the property.
The subsequent correspondence with the Summerland Credit Union about financing $45,000 cannot cure what went before. On one view, the fact that Ms Hall needed to do this on 30 May and 3 June 2013, well after 24 May, the date originally set for settlement, suggests that she had not taken the necessary steps to secure finance to pay $45,000 on transfer had it proceeded on that date.
Whether she had the capacity to pay $45,000 either at 24 May or at a later date, however, does not affect the fact that, objectively considered, her conduct, and that of her lawyers, manifested a clear intention not to be bound by the agreement to pay Ms Grant $45,000 at settlement. I find that course of conduct was an anticipatory breach of their agreement. [27] Anticipatory, because the time for payment had not arrived until the transfer took place. I also find that, because it related to an essential term of the agreement - payment of the agreed sum – it amounted to a repudiation of the agreement. [28]
[28]Foran v Wright (1989) 168 CLR 385, 440.
Ms Grant accepted Ms Hall’s repudiation of the agreement through her solicitor’s letters on 22 and 23 May 2013, [29] and by lodging a caveat. Her subsequent refusal, or failure, to effect a transfer, whether on 24 May, 31 May or a later date, did not constitute a breach by Mr Grant. Accordingly, Ms Hall is not entitled to any damages that she alleges flow from Ms Grant’s failure to transfer the property to her.
[29] Exhibit S to affidavit of Gae Grant sworn 5 February 2014.
I will briefly refer to another contractual argument, which related to the discussions about the surplus funds. Given my reasoning on the other matters addressed, this issue is obviously not determinative, but for the sake of completeness I will briefly state my reasons for finding that, if there was a concluded and binding agreement, it was not a term that the surplus funds must be paid before settlement.
The parties agree that the amount was in the order of nineteen or twenty thousand dollars. Ms Grant was willing to accept it was the lower of the two figures. [30] They were described as surplus funds as this was the amount left after the expenses of purchase and the deposit were deducted from an equity loan of $50,000. The parties agree their initial intention was to use these funds for joint purposes. They also agree that Ms Hall used some of the funds to purchase a vehicle, with Ms Grant’s consent. Although they were in dispute about the amount Ms Grant consented to Ms Hall using, and the time by which it would be repaid, it seems they agreed that it was to be repaid by Ms Hall in a reasonable time, but disagreed about when that was. From at least December 2013, Ms Grant was demanding its return, and in an email on 18 December that year, [31] told Ms Hall that was critical. At various times Ms Hall had offered to, or agreed to repay it. By the time the matter came on for hearing, Ms Hall had repaid $10,000. [32]
[30] Trial transcript 2-45 line 33 to 2-46 line 29.
[31] Exhibit O to affidavit of Gae Grant sworn 5 February 2014.
[32] Trial Exhibit 8.
The return of that money was clearly a point of anxiety for Ms Grant. That is understandable. However, it is common ground that it formed part of the figure of $45,000. Further, on my reading of the correspondence between the two, and Ms Hall’s evidence about their telephone conversation in April 2013,[33] I find that the parties did not reach agreement that the surplus funds should be paid in advance as a part payment of the $45,000. Accordingly, I do not accept that Ms Hall’s failure to pay it prior to settlement is either a breach of an agreement between them, or evidenced her intention not to be bound by the agreement.
[33] Affidavit of Amber Hall sworn 12 February 2014 at [125]-[126].
So this is my conclusion on Ms Hall’s counterclaim. Her counterclaims rest on her assertion of a binding agreement. I repeat my primary conclusion is that the parties did not reach agreement on an essential term; the amount that Ms Grant would be paid at settlement, or the means by which that amount would be calculated. Even if agreement was reached on that, in May 2013 Ms Hall evinced an intention not to be bound by an agreement to pay Ms Grant $45,000 on settlement. Ms Grant accepted Ms Hall’s repudiation of that agreement, and she did not, therefore, breach it by failing or refusing to settle. Accordingly, I dismiss Ms Hall’s counterclaim.
Turning to the issue of distribution, the property has not been settled, and it is not appropriate to attempt to finalise orders until the trustees are in a position to report to the Court on the sale and the net proceeds available for distribution. As indicated during the hearing, I consider the appropriate approach is to announce the attitude I take to the submissions of the parties about distribution, and to adjourn the matter until the trustees have advised the Court, and the parties have had the opportunity to discuss and, if possible, agree upon, orders that might give effect to my reasons. That might not be possible. If agreement can not be reached, then the matter can be listed before me for further argument. If, however, they do agree on who should receive what of the net proceeds, they can simply file consent orders and inform me through my Associate, and it will not be necessary for me to deal further with it. I can perfect the orders without further appearance.
I have looked at Ms Grant’s summary as a guide to these brief reasons. As I understood the parties’ submissions, there is no dispute that adjustments should be made to account for the respective contributions of each to the two loans, and the fixed costs associated with ownership of the property, including rates, fixed water charges, body corporate fees, and insurance, since the date of separation. The adjustment must account for any payments made by either in excess of their 50 per cent interest in this property. For this purpose I accept the accuracy of the updated schedules about these matters prepared by Ms Grant.
What is in dispute is four items, three said to favour Ms Grant, and one said to favour Ms Hall. Starting with claims that favour Ms Grant, they are occupation rent, interest on the surplus funds, and capital gains tax implications of transfer. Looking at occupation rent first, just as Ms Hall will benefit by adjustment for any payments in excess of her 50 per cent interest during the period of sole occupation, it is appropriate that there is an adjustment to reflect that throughout that period, Ms Grant received no benefit from the property. If she is to bear 50 per cent of the liabilities for that period, she should also be credited with 50 per cent of the benefits of ownership. The evidence of rental value is uncontested. Ms Grant claims only half the rental value for the relevant period, consistent with her 50 per cent interest. I will allow her claim. The accuracy of the calculation based on the evidence of rental value was not disputed, and I allow that.
Interest on $19,000. Although the claim is quite small, I am not satisfied this should be allowed. Ms Hall initially controlled those funds with Ms Grant’s consent. Although it is common ground that it was to be repaid in a reasonable time, there is no evidence that the parties agreed it was to be treated as a loan, subject to interest. Both parties will equally bear the increased interest burden due to the surplus funds not being paid onto the equity loan at an earlier time.
Capital gains tax. In principle, I accept there is a basis for arguing the distribution should be adjusted to reflect the different tax position Ms Grant is in as a non-resident owner at the time of sale. Although Ms Hall is no longer in occupation, she has vacated because of a Court order and I understand she does not have that same burden. It is not possible on the limited information before the Court to assess Ms Grant’s potential tax liability. I will allow Ms Grant to file a statement by her accountant as to her tax liability once the sale has concluded. Ms Hall will have the opportunity to file a statement about her own tax position and also to be heard on Ms Grant’s claim, if it is not agreed.
Turning to the claim for an adjustment in Ms Hall’s favour, this is the issue of renovations. I should note that, on Ms Grant’s figures, to account for the various contributions to expenses, there was an adjustment to Ms Hall – in Ms Hall’s favour, so the renovation amount would not be the only adjustment in her favour. However, it is the only one that is in dispute. This depends on the extent of contribution of renovations to increased value.
Firstly, I find that the appropriate method to adopt is to determine the likely contribution to the value achieved at sale, not to adjust for the costs incurred or labour costs claimed by Ms Hall. Secondly, although some renovations were done without Ms Grant’s explicit consent, and after it was clear that they would not settle in the middle of last year, if those renovations have improved the value of the property, I accept that Ms Hall should get the benefit of that.
Although Ms Hall questioned the reasoning of Mr Lackey of Herron Todd White, the valuer appointed by the Court to advise on market value and the contribution to value of Ms Hall’s renovations, she did not lead contrary expert evidence. Both parties had been informed that it was open for them to do so. Mr Lackey and his firm were excused from further assistance at his request, for reasons he deposed to in an affidavit he provided to the Court. I won’t go into them in detail, other than to note that they related to his concerns about Ms Hall’s conduct towards him. I explained to both parties during an earlier hearing, that they could rely on the report; but if they chose to contest it, it would be unchallenged unless they called contrary evidence. [34]
[34] Transcript of hearing of 30 July 2014, 1-3 lines 29 – 39.
I have looked at the information included in Ms Hall’s affidavit, but not considered any assertions that Mr Lackey’s methodology is flawed. Although Ms Hall claims 10 years’ research experience, she has not established any basis for being accepted as having any relevant expertise that would assist the Court if she expressed an opinion on valuation methodology. I therefore disregard any expression of opinion of that sort. I have looked at the objective material put forward by Ms Hall. Its purpose is to challenge Mr Lackey’s methodology, and therefore his conclusions. In the absence of contrary expert opinion, I accept Mr Lackey’s opinion.
How the renovations should be reflected in the final distribution will have to be determined when the sale price is known. However the reasoning adopted by Mr Lackey about movements in the market will form the basis upon which the final figure will be determined. There is no other evidence before me that would allow me to assess the value of the renovations in any other way. As the hearing has concluded, I will not allow further evidence on this point, although the parties will have the opportunity to argue how I should make the distribution, taking into account the price achieved at sale, and Mr Lackey’s report.
Once adjustments are made in accordance with these reasons, it is possible that there will be inadequate funds to fully meet the distributions based on these figures. If that does occur, I will distribute the funds in proportions that reflect the dollar figures that give effect to these reasons. Given my conclusion that I cannot deal with the issue of capital gains tax or contribution of the renovations without further evidence, unless the parties agree on an adjustment on those issues, it will be necessary to have a further brief hearing about that. These are my orders:
(1) Ms Hall’s counterclaim is dismissed.
(2) Within 14 days of settlement of sale of the property, the trustees are requested to file and provide to each party a concise report of the price achieved on sale, and the net proceeds available for distribution, accounting for all expenses of sale and liabilities that have been met from sale proceeds.
(3) Unless the parties agree within one month of receiving the report on final orders to give effect to these reasons, either party, after consulting with my Associate and the Registrar, and the other party, may list the matter before me for further hearing, on giving the other five clear days’ notice of a hearing date.
(4) If any party wishes to rely on a statement by an accountant in relation to the capital gains tax issue, they must file and serve it on the other at least two clear days before the hearing.
(5) Unless either party contends for a different order at a resumed hearing, or they file a consent order about costs, with or before final orders are taken out, Ms Hall must pay Ms Grant’s legal costs and disbursements for the proceedings, including all interim applications for which no order as to costs was made, those costs to be assessed, if they are not otherwise agreed. I stress here, that neither party is able to claim their own costs, for example, missed income from work in order to attend Court or to attend to their documents. It must be costs incurred in engaging lawyers to represent them in these proceedings, or disbursements properly incurred for the proceedings.
I reserve the right to revise the transcript of this judgment. I will, of course, not do anything to alter either the outcome or the effect of the reasoning, but I will, if it is required by the parties for any other further – any further stage of proceedings, reserve the right to revise the transcript to include things such as, references to particular exhibits upon which I have relied to make various findings, and authorities to support the propositions of law upon which I’ve acted in drawing my conclusions on Ms Hall’s counterclaim.
All right. At this stage I don’t think there’s anything further.
0