Megic, J. v The Public Trustee for the Australian Capital Territory
[1995] FCA 606
•11 AUGUST 1995
CATCHWORDS
CONTRACT - agreement to leave property by will - revocation of earlier will leaving property as agreed by subsequent will, of which probate was granted - whether appellant entitled to specific performance - whether appellant entitled to damages for breach of contract - whether appellant entitled to succeed in a claim in the nature of a quantum meruit.
CONTRACT - meaning and effect of deed - whether deed unenforceable as a contract to provide personal services as consideration for promise not to revoke will devising property to appellant - effect of deceased's refusal of personal services offered.
Schaefer v Schuhmann [1972] AC 572
Palmer v Bank of New South Wales [1973] 2 NSWLR 244
Maiden v Maiden (1908) 7 CLR 727
Segur v Franklin (1934) 34 SR (NSW) 67
Lopes v Taylor (1970) 44 ALJR 412
Cole v Evans (Unreported - C/A NSW, 2 May 1975)
Theobald on Wills, 15 edn. (1993)
Certoma, The Law of Succession in New South Wales,
2 edn. (1992)
JOVAN MEGIC v
THE PUBLIC TRUSTEE FOR THE AUSTRALIAN CAPITAL TERRITORY
No AG 21 of 1995
Gallop, Tamberlin & Kiefel JJ
Canberra
11 August 1995
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY )
DISTRICT REGISTRY ) No. AG 21 of 1995
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF
THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN: JOVAN MEGIC
Appellant
AND: PUBLIC TRUSTEE FOR THE
AUSTRALIAN CAPITAL TERRITORY.
Respondent
CORAM: GALLOP, TAMBERLIN & KIEFEL JJ
PLACE: CANBERRA
DATED: 11 AUGUST 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The appeal be allowed.
The orders made by the ACT Supreme Court be vacated and in lieu thereof, order:
(a)The defendant is entitled to damages in consequence to the testator's breach of covenant in failing to devise the property at 26 Carstenz Street, Griffith in the Australian Capital Territory ("the property") to the defendant.
(b)Caveat No 831353 on the title to the property be removed.
(c)Defendant be at liberty to lodge a caveat over the property to claim an interest as equitable mortgagee under the unregistered mortgage bearing date 20 October 1986.
Costs of the appellant in this appeal be paid out of the estate of the deceased on a common fund basis.
Costs of the respondent in this appeal be paid out of the estate on a trustee basis.
The proceeding be remitted to the ACT Supreme Court for determination of the amount of damages and the making of appropriate orders as to costs in the proceedings before that Court.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
AUSTRALIAN CAPITAL TERRITORY )
) No. ACT G21 of 1995
DISTRICT REGISTRY )
)
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:JOVAN MEGIC
Appellant
AND:PUBLIC TRUSTEE FOR THE AUSTRALIAN CAPITAL TERRITORY
Respondent
Coram: Gallop, Tamberlin and Kiefel JJ.
Date: 11 August 1995
Canberra.
REASONS FOR JUDGMENT
GALLOP J.:
I have read the judgment of Tamberlin J. in draft form. I agree with his Honour's reasons and the conclusion reached, and have nothing to add.
I certify that this is a true copy of the Reasons for Judgment herein of his Honour Mr Justice Gallop.
Dated: 11 August 1995
Associate
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY ) No. AG 21 of 1995
DISTRICT REGISTRY )
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF
THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN: JOVAN MEGIC
Appellant
AND: PUBLIC TRUSTEE FOR THE
AUSTRALIAN CAPITAL TERRITORY
Respondent
CORAM: GALLOP, TAMBERLIN and KIEFEL JJ
PLACE: CANBERRA
DATED: 11 AUGUST 1995
REASONS FOR JUDGMENT
TAMBERLIN J:
This is an appeal from a judgment of the Supreme Court of the Australian Capital Territory ("ACT Supreme Court") relating to a covenant not to revoke a devise in a will. There is also a Notice of Contention filed by the respondent in relation to the admissibility of, and weight to be attributed to, an out-of-court written statement tendered by the appellant.
The proceedings began when the respondent trustee ("the trustee") filed an originating summons dated 11 August 1993 in the ACT Supreme Court seeking removal of a caveat over
property of Cira Nikolic at 26 Carstenz Street, Griffith, in the ACT ("the premises").
The trustee is the executor and trustee of the estate of the late Cira Nikolic ("the deceased") pursuant to a will made by him on 20 November 1987. The deceased died on 30 August 1992 and probate of that will was granted to the trustee on 17 September 1993.
At all relevant times, prior to and after 27 October 1986, until his death, the deceased was the registered proprietor of the premises.
The primary issue in the proceeding is the meaning and effect of a Deed made on 27 October 1986, between the deceased and Jovan Megic ("Megic").
By that Deed Megic agreed to carry out repairs and renovations to the premises in return for a covenant by the deceased that his last will and testament would always provide that he devise the premises to Megic. The Deed is set out more fully below.
Also, on 27 October 1986, the deceased executed a will devising and bequeathing all his real and personal estate to Megic absolutely. On that date the deceased also executed a memorandum of mortgage of Crown lease in favour of Megic over the premises for the sum of $35,000.
The caveat which was sought to be removed by the trustee was dated 8 February 1993. The caveator was Megic. The estate or interest being claimed was as beneficial owner pursuant to the Deed dated 27 October 1986.
By his will, executed on 20 November 1987, the deceased revoked his former will of 27 October 1986 and devised and bequeathed his estate to the Serbian Orthodox Church and the Canonical Serbian Orthodox Church.
Proceedings Before Trial Judge
The main issue raised at first instance was whether the present appellant was entitled to specific performance of the covenant in the Deed by which the deceased promised to devise the premises to Megic. In the alternative, there was an issue whether Megic should be awarded damages for breach of contract consequent upon the deceased's breach of covenant. A third issue raised, but not determined by his Honour, was whether Megic was entitled to succeed in a claim in the nature of a quantum meruit.
Factual Background
From 1958, until his death on 30 August 1992, the deceased had title to the premises which were held by way of lease from the Commonwealth for a period of 99 years commencing 1 July 1964. For several years before his death he was barely able to look after himself and to attend to his personal needs. During those years the house was full of rubbish. It had been severely damaged in a fire such that ceilings had collapsed. The deceased and Megic both belonged to the Serbian Orthodox Church at Farrer in the ACT. The first occasion on which they spoke was after church one Sunday in 1986, when Megic, concerned about the deceased's appearance and apparent loneliness, asked him why he did not look after his clothes. The deceased replied that he had no-one to look after him and that any friends he had only wanted to take his land and sell it and "kick" him out. The deceased asked Megic if he would be prepared to look after him. The proposal was discussed further on the following day at the home of Megic. Megic suggested that the deceased could make a will, leaving the premises to Megic and that he would look after the deceased for the rest of his life. They agreed to see a solicitor. Megic arranged an appointment with his solicitor, Mr Baker, who practised in Queanbeyan. Megic went to the deceased's home in order to inform him of the arrangement. There was no evidence that Megic had been to the premises previously. They attended upon Mr Baker together on two occasions.
Mr Baker gave evidence which was entirely accepted by his Honour. According to this evidence, on the first occasion Megic, in the presence of the deceased, recounted in English what he wanted done. It is not clear whether it was on that occasion or the following occasion that Mr Baker produced the Deed and also a will prepared by him in accordance with what he had been told. Mr Baker explained to the two men the contents and the effect of the documents. From time to time at this meeting Megic spoke to the deceased in Serbian and his Honour found that he was translating at least some of what Mr Baker was saying. His Honour also found that Megic translated everything necessary for the deceased to understand the effect of what Mr Baker was saying. Mr Baker himself, on his Honour's finding, was as satisfied as could reasonably be expected, that both Megic and the deceased understood the nature and content of the documents. His Honour also found that Mr Baker had no reason to doubt the capacity of the deceased to execute the documents.
The Deed was as follows:
"BY THIS DEED made the 27 day of October, 1986 BETWEEN CIRA NIKOLIC of 26 Carstenz Street, Griffith in the Australian Capital Territory, Pensioner of the one part (hereinafter referred to as "Nikolic") AND JOVAN MEGIC of 6 Jacoby Place, Stirling in the Australian Capital Territory, Contractor (hereinafter referred to as "Megic") of the second part WHEREAS Nikolic is the lessee from the Crown of a Crown Lease and the improvements erected thereon situate at 26 Carstenz Street, Griffith in the Australian Capital Territory (hereinafter referred to as "the premises").
A.Megic has agreed to carry out certain repairs and renovations to the premises and to contribute to the upkeep of the premises and to provide ongoing care for Nikolic NOW THIS DEED WITNESSETH as follows:
1.In consideration of the repairs and renovations that Megic will carry out to the premises Nikolic hereby covenants that his last will and testament will always provide that he devise to the said Megic the said premises.
IN WITNESS WHEREOF the parties hereto have set their hands and affixed their seals the day and year first hereinbefore written.
SIGNED in my presence by the )
) Sgnd: Cira Nikolic
said CIRA NIKOLIC )
Sgnd: (Signature) Solicitor
SIGNED in my presence by the )
) Sgnd: Jovan Megic
said JOVAN MEGIC )
Sgnd: (Signature) Solicitor"
His Honour also found that the deceased at the same meeting, either immediately before or immediately after the execution of the Deed, executed a will revoking all previous wills and appointed Megic his executor and left the whole of his estate to Megic.
There was no submission on this appeal that the Deed was void for uncertainty or that it was executed as a result of undue influence.
About a week later Mr Baker formed the view that Megic's interests might not be sufficiently protected by the documents which had been executed. He spoke to Megic in order to ascertain how much money Megic expected to spend on carrying out the repairs and renovations to the premises. Megic gave him a figure of $35,000. Mr Baker then prepared a mortgage by the deceased to Megic of the deceased's interest in the premises. A standard form of Memorandum of Mortgage of Crown Lease was used. The mortgage acknowledged the receipt by the
deceased of $35,000 by way of loan to the deceased by Megic. It contained a covenant by the deceased to pay that sum to Megic upon demand. A standard clause relating to interest was struck out with the result that there was no provision for interest at all. Although the mortgage is dated 20 October 1986, that was a typographical error and the parties in fact executed the mortgage, on his Honour's finding, at Mr Baker's office on 27 October 1986 after explanations and translations.
Mr Baker remembered sighting the Certificate of Title which he needed in order to complete the schedule as to the description of the land. He said, and his Honour accepted, that he would have required the production of a Certificate of Title when arranging the will and mortgage and that he was "unlikely to have parted with the original Certificate of Title and mortgage".
At a later stage the mortgage, together with other documents, was sent to the present solicitors for Megic. Mr Baker said that the Certificate of Title possibly remained in his strongroom. Neither party sought production of it. The mortgage has never been registered.
Although Megic swore in his affidavit that when the mortgage was executed Mr Baker referred to there being interest on the money at 21½%, his Honour found that this particular part of the conversation as deposed to by Megic did not occur.
Approximately one week after the will of 27 October 1986 was made, Megic asked the deceased if he could come and clean the deceased's driveway, but the deceased said he would do it himself. The following Sunday the deceased did not go to church. When Megic arrived home he found the deceased there. The deceased said that he had "troubles" with the police over the driveway but it had now been cleaned up. At the request of the deceased Megic went to the house a day or two later. A health official was present who issued instructions to clean the place up. Megic, a hospital cook by occupation, spent some days over the next week or so removing rubbish. He also arranged to have the electricity restored and other electrical work done. Over a period of time, probably some months on his Honour's view, Megic arranged for damaged windows and ceilings to be replaced, for plumbing equipment to be installed as well as new doors, cupboards and other kitchen fixtures. Some work was done by Megic himself.
Megic said in his oral evidence that in order to finance the operation he borrowed $35,000 from the Commonwealth Bank. He also stated that he had repaid the amount due to the bank. His Honour points out that no documents were ever produced to support such a claim.
Megic stated that during the time he was looking after the deceased he "did so very well". He brought meals to the deceased, including breakfast at 6am every morning, and gave the deceased meals at his own home. In addition Megic said that he arranged for "Meals on Wheels" at his own expense. He said that he took the deceased to the doctor on many occasions and gave him a lot of clothing. In oral evidence he said that he showered the deceased. He also said that he would have fed him and looked after him for the rest of his life if the deceased had not stopped him.
Megic swore that, shortly after the above services had been provided, Megic arranged for a padlock to be fitted to the deceased's front gates and then found the gate locked against his entry. The deceased then told Megic that he did not want him to come any more. Shortly after that again, at a church meeting, Megic overheard the deceased agree to a suggestion by a priest that he should give all his property to the church.
Megic said that the priest appointed a committee to see Mr Baker about the matter. Mr Baker was not asked questions about this.
By 11 November 1987, the deceased was concerned as to his position in relation to the premises and his dealings with Megic. He consulted the Legal Aid Office and signed a statement for that purpose dated 29 January 1988. That statement was in evidence, but his Honour thought that its probative weight was questionable. He considered it was admissible to prove any admission against interest on the part of the deceased, but he did not see that it was of much value in that regard. He said that it did indicate concern on the part of the deceased about the mortgage, which could be taken as an admission that the mortgage was enforceable. His Honour did not place any great weight on this statement. In my view, the statement was in evidence for all purposes. However, I do not consider that the statement is of any significant weight.
On 20 November 1987 the deceased executed the later will which left his estate to the church.
The evidence was not clear as to when, and in what circumstances, Megic stopped work on the house and stopped delivering meals and otherwise looking after the deceased. In oral evidence Megic said that he saw the deceased by chance at a supermarket and told him that he should call Megic whenever he felt he needed help. Megic also said that after that incident he saw the name of the deceased on a list at the hospital where he was working. He went to visit the deceased in the ward and made some arrangements for the deceased's comfort whilst in hospital. His Honour accepted this evidence but pointed out that it was not clear when these discussions with the deceased took place.
After the death of the deceased on 30 August 1992, Megic, accompanied by persons from the church took the body to Victoria for burial in accordance with the wishes of the deceased.
Apart from the premises there were virtually no assets in the estate of the deceased and debts owed by the estate amounted to $12,529.61. At the date of death the property had a value of between $175,000 and $190,000.
His Honour did not find Megic to be an impressive witness. He thought this to be a case where the Court should look at a claim brought against the estate with some degree of caution. He considered that where the opportunity for corroboration existed but no corroborative evidence was called, the Court was entitled to be cautious about the claim. He pointed out that the corroborative evidence as to repairs and renovations was meagre. There was no explanation why any corroborative evidence was not made available. He found that Megic exaggerated the amount of work done by him or which he had arranged to be done, and that he exaggerated the amount of care given by him to the deceased. There was no doubt that some work was done. He found that the care was given over a period of no more than several months. He also found it likely that some of the work done on the house was not authorised by the deceased, although it was not possible to tell what was authorised and what was not.
His Honour found that it was likely that the deceased authorised the cleaning up of rubbish, the repair of ceilings and any other damage caused by the fire and anything necessary to meet the requirements of the health authorities. He was not convinced that it went further.
His Honour found that the arrangements could not be confined to an examination of the terms of the Deed of 27 October 1986. Conversations which took place at that time; the will which was executed on the same day and the later mortgage signed by the deceased all needed to be taken into consideration in order to spell out the relevant understanding.
His Honour found that what the whole of the circumstances indicated was that the deceased was saying to Megic, words to the effect:
"If you look after me, and contribute to the upkeep of the house from now on and continue to do so for the rest of my life, I promise that I will die leaving you the house."
Later in his judgment he said:
"In my view, the obligation of the defendant to provide care for the testator continued only so long as the testator wanted it. The testator was free to terminate the requirement for care if and when he chose. If he did so the rights of the parties needed to be adjusted and given effect according to the terms of the contract, but not necessarily by specific decree that the title to the property pass to the defendant. Perhaps if the defendant had cared for the testator as agreed and the testator revoked the earlier will on his deathbed, the case for specific performance would be stronger, but that did not happen." (Emphasis added)
His Honour went on to say:
"The effect of the whole of documents and the conversations is that it was mutually agreed that provided that the defendant rendered ongoing care to the testator and paid for the upkeep of the house during the whole of the lifetime of the testator (as well as carrying out the renovations and repairs) then the defendant was entitled to the property upon the death of the testator. However, the condition was not fulfilled. The testator exercised his right to dispense with the care to be provided by the defendant. That left the defendant with his rights under the mortgage, together with a possible claim in quantum meruit for what he did by way of care for the testator and upkeep of the premises." (Emphasis added)
It is apparent that, although the covenant in the present case is in the form of "a promise for a promise", his Honour considered that before Megic could sue for specific performance or damages it was necessary that the agreement should be fully performed by Megic in the sense that all services, expenditure, repairs and renovations contemplated, should have been fully performed or carried out. His view was that the agreement had not been fully performed by Megic in that ongoing care had not been provided during the lifetime of the deceased nor had all the other obligations of Megic been performed. Accordingly, in his Honour's view, Megic, not having fully performed his part of the bargain, was left only with a claim in quantum meruit for the value of services, work and expenditure in fact provided or carried out.
In my opinion, the words of the covenant referring to the requirement that Megic would carry out repairs and renovations to the premises and also would contribute to the upkeep of those premises and provide ongoing care, is expressing an intention that the promise in relation to the devise of the premises is given in exchange for the promise to provide ongoing care, contributions to upkeep and repairs and renovations to the premises.
The effect of his Honour's conclusion is that at any time up to his death the deceased could have refused to accept performance offered by Megic and terminated the agreement, leaving Megic with the remedy of a quantum meruit claim and the security of the unregistered mortgage. It is highly unlikely, in my view, that this was the intention of the parties to the Deed, the will and the mortgage as at October 1986.
His Honour declared that Megic was not entitled to an order for specific performance of the Deed; nor was he entitled to damages. He ordered that the caveat be removed. However he reserved liberty to Megic to lodge a further caveat claiming an interest as equitable mortgagee under the unregistered mortgage and stood over generally further proceedings in respect of Megic's rights under the mortgage and in respect of a quantum meruit claim.
Appeal
The grounds of appeal in substance allege that there was an error in finding that the contract was not simply a promise for a promise and that the deceased's obligation to devise the premises to Megic was conditional on Megic contributing to the upkeep of the house and looking after him throughout the balance of the deceased's life. Megic seeks an order in the appeal that the trustee convey to him the premises or alternatively that he be awarded damages equal to the value of the premises as at the date of death together with interest.
Testamentary Contracts
It is well settled that a person can, by contract, restrict his or her testamentary freedom. This can be done in several ways. A contract may be made to devise property under a will in favour of a particular person, or a covenant can be given not to revoke such a disposition. A person may act or fail to act in such a way that the personal representatives are estopped from denying rights in or over the property asserted by persons claiming as a result of such conduct. A testator may also act in such a way that the executors of the estate have to hold part of the property on trust for persons claiming an interest therein, otherwise than under the will. See Theobald on Wills, 15 edn. (1993) at 96-105; Certoma, The Law of Succession in New South Wales, 2 edn. (1992), at 56-59;
Schaefer v Schuhmann [1972] AC 572; and Palmer v Bank of New South Wales [1973] 2 NSWLR 244 at 254-255, per Hutley JA.
In the present case the restraint, in substance, takes the form of a covenant by the deceased not to alter his last will and testament so as to withdraw the devise of the premises to Megic. The agreement is effectively a contract not to revoke the devise of the premises made in the will of the testator on 27 October 1986.
Submissions
The respondent trustee submits that the Deed relied on by Megic is and always was unenforceable. In aid of this submission it is pointed out that part of the consideration to be provided by Megic in return for the promise that the deceased would devise the premises to Megic, was a promise to provide personal services by way of ongoing care for the deceased. To make good this proposition the trustee refers to the points of claim filed on behalf of Megic which allege that Megic had agreed to contribute to the upkeep of the premises and to provide ongoing care for the deceased. In addition, the affidavit of Megic refers to statements by him to the effect that he was going to look after the deceased and do "a lot of things for him". Also in his affidavit Megic refers to conversations with the deceased wherein Megic referred to looking after the deceased.
In my view it is apparent that the promise of ongoing care was part of the consideration in return for which the deceased promised not to alter his will and to devise the premises to Megic.
It is then submitted that because the consideration for the promise to devise the premises to Megic was at least in part comprised of a promise to provide personal services, then the Deed was not capable of specific performance.
The principal authority relied on by the trustee is the decision of the High Court in Maiden v Maiden (1908) 7 CLR 727. That case involved a dispute between mother and son. The son claimed specific performance of a verbal agreement with the mother whereby she undertook to sell land, comprised of a farm, and stock to him. The Court accepted that the agreement was that the son would live on the farm with his family, manage it, and account to the mother for all receipts which were to be applied by her in payment of joint living expenses and of interest and principal on the mortgage. Upon performance of these conditions for eight years, the son was to have half the farm transferred to him and was to be at liberty to buy the other half for £800. In the course of his judgment, Griffith CJ at 737-738 said:
"Upon this state of facts it is clear that the defendant could not succeed upon his counterclaim, even if the learned Judge had accepted his version of the agreement. Such an agreement, involving the rendering of personal services by the defendant as consideration for the sale, was not one of which specific performance could be granted. Nor was there any such part performance as would take the case out of the Statute of Frauds, since the defendant's possession was not referable unequivocally and exclusively to such an agreement as alleged."
His Honour went on to express the view that the rights of the mother must be determined on the footing that from September 1907 the son was a trespasser. In those circumstances he went on to say at 738-739:
"With regard to the inquiry as to the defendant's remuneration, he is entitled to say that it was never intended that his services should be gratuitous. When, therefore, the plaintiff repudiated the agreement by which the mode of his remuneration was to be determined, an implied obligation arose to pay on a quantum meruit. Strictly speaking, this implication would only extend up to the demand of possession, but if a party seeks the intervention of the Court in equity he submits to do equity. The plaintiff indeed offered to admit such a claim. I think that it should be continued (regarded as an element in reduction of damages) for the same period as the account of receipts."
Isaacs J said at 740:
"The plaintiff has successfully contended that the actual agreement she made, and which was found to have been made, affords no defence to the suit on the ground of equitable title because it is one of which specific performance cannot be decreed .... And, further, as it was not in writing, no remedy at law can be had."
As I understand the submission on behalf of the trustee, it is that the decision in Maiden's case is authority for the proposition that specific performance cannot be granted where personal services are part of the consideration, and that also damages cannot be obtained, with the result that the only remedy of Megic in the present case lies in a quantum meruit claim.
As I read it, the decision in Maiden's case is distinguishable from the circumstances of the present proceeding. That case involved an oral promise to transfer property and not a formal written contract not to revoke a devise. The agreement did not satisfy the requirements of the Statute of Frauds. The proceeding was brought by the son prior to the expiration of the eight year period after which he was to have half the farm transferred to him and would be entitled to buy the other half. The present case involves a contract not to alter a will. There is no question in the present matter of any outstanding obligation to perform personal services because of the death of the testator. All the services had been provided by the date of death. Furthermore, in Maiden's case there
were special equitable considerations involved arising from the approach taken by the Court that the mother should not obtain relief unless she agreed to act equitably. As Isaacs J said of the mother at 741:
" She is by her conduct seeking equity in respect of an express contract, and refusing to do equity in respect of the self-same contract by repudiating its other stipulations. This, in my opinion, she cannot be allowed to do."
Indeed, in that case the mother offered to remunerate the son on a quantum meruit basis as Griffith CJ noted at p 739.
Because of these special features I do not think that decision has any direct application to the circumstances of the present case in relation to quantum meruit being the appropriate remedy.
As a statement of general principle, however, it cannot be doubted that specific performance will not be granted where an indivisible part of the consideration is that personal services be provided and some such services remain to be performed in the future. The Court will not require specific performance of a contract for services but will enforce an action for damages for breach.
It is important in the present case that the overall arrangement between Megic and the deceased is embodied in three formal documents each of which was explained to the
deceased. These are the Deed and will of 27 October 1986 and the subsequent mortgage.
There is no challenge in this appeal to the validity of any of these documents on the ground of uncertainty, undue influence, or mistake of any kind. Cf Palmer v Bank of New South Wales (supra). At first instance in that case Mahoney J held that a promise to "look after" a testator was too uncertain. This was reversed by the Court of Appeal.
As a result of the actions of the deceased, Megic was no longer able to provide the ongoing care and provide the additional services and obligations which were the subject of the Deed. It was not due to any default by Megic that provision of these services was not continued until the death of the deceased. The deceased clearly repudiated the agreement embodied in the Deed by locking out Megic and effectively preventing him from performing those services. The evidence supports the proposition that Megic was prepared to provide ongoing care and some continuing work on the premises. Indeed, as he was to be the eventual owner of the premises, he no doubt saw it as not being contrary to his interest to carry out improvements to the premises.
I am conscious of the findings of his Honour that the care which was provided only lasted over a period of several months up to the date when the deceased refused to accept any further
services. It also appears from the evidence that the services which were provided were somewhat meagre.
Nevertheless, valuable consideration was provided in the form of repairs, cleaning and expenditure of money in relation to the premises. In addition there were also personal services performed for the deceased.
In my view the Deed of 27 October 1986 was a binding agreement between the deceased and Megic and, having regard to the formality of the three relevant and related documents, the promise by the deceased was intended to create legally binding obligations. It is clear that the consideration for the promise by the deceased to "always provide" in his last will and testament that the premises be devised to Megic, was in return for the carrying out of repairs and renovations; the contribution to the upkeep of the premises, and the provision of ongoing care for the deceased.
Notwithstanding that the precise extent of the ongoing care, contribution to upkeep and carrying out of repairs and renovations was not spelt out in the Deed, it is apparent that substantial work was done to the premises and that care was provided up to the time when the deceased prevented Megic from further performing his obligations under the Deed. At that time the deceased breached the provisions of the Deed and repudiated the agreement. However, this repudiation was not
accepted by Megic and the agreement was not terminated so that it remained in effect up to the death of the deceased.
Probate has now been granted of the later will devising the premises to the church. In my opinion, since the covenant has been breached I consider that Megic is entitled to succeed in his alternative claim for damages. He is not limited to a claim on a quantum meruit for the fair value of his services and expenditure, because the contract is still on foot and there has been a breach which entitles him to damages. Quantum meruit would be an appropriate remedy for recovery if the contract had been rescinded and was no longer in force as was the case for example in Segur v Franklin (1934) 34 SR(NSW) 67 at 72 per Jordan CJ where it was said:
"Where a wrongful repudiation has the effect of preventing the other party from becoming entitled to receive remuneration for services already rendered, which remuneration, according to the terms of the contract, he is entitled to receive only if the contract is wholly carried into effect, the innocent party, who has elected to treat the contract as at an end may, instead of suing for damages, maintain an action to recover a quantum meruit for the services which he has rendered under the contract before it came to an end." (Emphasis added)
In the circumstances of this case specific performance is not an appropriate remedy. The breach of the covenant occurred when the deceased prevented further performance of the covenant to provide ongoing care, renovations and repairs in late 1986, early 1987. Yet Megic took no action to assert his rights until 1993.
As to the amount of damages the appropriate measure is the loss which Megic has sustained as a result of repudiation by the deceased of the covenant contained in the Deed. This, in my opinion, is the loss of the value of the premises which would otherwise have been transferred to him, assessed as at the date of death.
In relation to the Notice of Contention, I agree with the submission of the respondent that the statement of the deceased to the Legal Aid Office of 29 January 1988, was in evidence for all purposes including self-serving statements but that the Court can give different weight to different parts of the statement. Cf Lopes v Taylor (1970) 44 ALJR 412 at 421-2 per Gibbs J; Cole v Evans (Unreported - C/A NSW, 2 May 1975 at pp 3 and 4, per Glass JA). However, having regard to the contents of that statement, I do not consider that there is anything in it which affects the conclusion which I have reached.
Conclusions
The Deed of 27 October 1986 was valid and binding. Its terms have been breached and Megic is entitled to sue for damages for such breach. He is not entitled to specific performance. The matter should be remitted to the ACT Supreme Court with these reasons for judgment in order that a finding as to the quantum of damages can be made together with appropriate costs orders in relation to the proceedings before the ACT Supreme Court.
ORDERS
Appeal allowed.
Orders made by the ACT Supreme Court be vacated and in lieu thereof, order:
(a)The defendant is entitled to damages in consequence to the testator's breach of covenant in failing to devise the property at 26 Carstenz Street, Griffith in the Australian Capital Territory ("the property") to the defendant.
(b)Caveat No 831353 on the title to the property be removed.
(c)Defendant be at liberty to lodge a caveat over the property to claim an interest as equitable mortgagee under the unregistered mortgage bearing date 20 October 1986.
Costs of the appellant in this appeal be paid out of the estate of the deceased on a common fund basis.
Costs of the respondent in this appeal be paid out of the estate on a trustee basis.
The proceeding be remitted to the ACT Supreme Court for determination of the amount of damages and the making of appropriate orders as to costs in the proceedings before that Court.
I certify that this and
the preceding twenty-five (25)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 11 August 1995
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIA CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION No. AG 21 of 1995
On appeal from the Supreme Court of
The Australian Capital Territory
BETWEEN:JOVAN MEGIC
Appellant
AND: PUBLIC TRUSTEE FOR THE AUSTRALIAN CAPITAL TERRITORY
Respondent
BEFORE:Gallop, Tamberlin and Kiefel JJ.
PLACE: Canberra
DATE:11 August 1995
REASONS FOR JUDGMENT
KIEFEL J:
I agree with the Orders proposed by Tamberlin J. and with the Reasons given by his Honour.
I certify that this page is a true copy of the reasons for judgment of her Honour Justice Kiefel.
Associate
Date:11 August 1995
Counsel for Appellant: Mr K J Crispin QC
Solicitors for Appellant: Scott Sheils & Glover
Counsel for Respondent: Mr B J Salmon QC
Ms J Godtschalk
Solicitors for Respondent: Higgins Solicitors
Date of Hearing: 26 June 1995 (Canberra)
Date Judgment Delivered: 11 August 1995 (Sydney)
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