Pipikos v Trayans

Case [2018] HCA 39

HIGH COURT OF AUSTRALIA

KIEFEL CJ,
BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ

LEON PIPIKOS  APPELLANT

AND

VELIKA TRAYANS  RESPONDENT

Pipikos v Trayans

[2018] HCA 39

12 September 2018

A30/2017

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of South Australia

Representation

G O'L Reynolds SC with M J O'Meara and P A R Scragg for the appellant (instructed by Peter Scragg & Associates)

D M J Bennett QC, A L Tokley SC and S J White for the respondent (instructed by Aujard Lawyers)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Pipikos v Trayans

Equity – Doctrine of part performance – Where respondent sole registered proprietor of property purchased by respondent and her husband – Where respondent and her husband made improvements to property – Where appellant claimed agreement between appellant and respondent entitled appellant to half‑interest in unimproved land – Where alleged agreement did not meet formality requirements of s 26(1) of Law of Property Act 1936 (SA) – Where s 26(2) of Law of Property Act provides that s 26 does not affect law relating to part performance – Whether acts of part performance entitled appellant to specific performance of alleged agreement – Whether acts of part performance must be unequivocally, and in their own nature, referable to agreement of kind alleged – Whether sufficient for purposes of doctrine of part performance to establish that contracting party has knowingly been induced or allowed by counterparty to alter his or her position on faith of contract.

Words and phrases – "enforcement of equities", "equitable estoppel", "equitable fraud", "equity of the statute", "fraud", "parol contract", "part performance", "specific performance", "Statute of Frauds", "unequivocally referable".

Law of Property Act 1936 (SA), s 26.

  1. KIEFEL CJ, BELL, GAGELER AND KEANE JJ.   South Australia, in common with the other States and the Territories[1], requires that contracts for the sale of land meet certain formal requirements if they are to be enforceable. Section 26(1) of the Law of Property Act 1936 (SA) ("the Act"), the modern iteration of s 4 of the Statute of Frauds 1677[2], relevantly provides that:

    "No action shall be brought upon any contract for the sale or other disposition of land or of any interest in land, unless an agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged".

    [1]Conveyancing Act 1919 (NSW), s 54A; Property Law Act 1974 (Q), s 59; Conveyancing and Law of Property Act 1884 (Tas), s 36; Instruments Act 1958 (Vic), s 126; Law Reform (Statute of Frauds) Act 1962 (WA), s 2; Civil Law (Property) Act 2006 (ACT), s 204; Law of Property Act (NT), s 62.

    [2]29 Car II c 3.

  2. Section 26(2) of the Act provides relevantly that the section does not "affect the law relating to part performance".

  3. In Cooney v Burns[3], Isaacs J summarised…

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AGLC
Pipikos v Trayans [2018] HCA 39
Case
[2018] HCA 39
Decision Date

CaseChat Overview and Summary

The appeal concerned the application of the doctrine of part performance in South Australia. The appellant, Pipikos, claimed an entitlement to a half-interest in a property at Clark Road, Virginia, based on an alleged agreement with the respondent, Trayans. The property was registered solely in the respondent's name, although it had been purchased by the respondent and her then-husband, who was the appellant's brother. The appellant argued that certain actions taken in relation to the property constituted part performance of the alleged agreement, thereby entitling him to specific performance, despite the agreement not meeting the formal requirements of s 26(1) of the *Law of Property Act 1936* (SA).

The High Court of Australia was required to determine whether the acts relied upon by the appellant were sufficient to engage the doctrine of part performance. Specifically, the Court considered whether these acts were unequivocally and in their own nature referable to an agreement of the kind alleged by the appellant, or whether it was sufficient to establish that the contracting party had been induced by the counterparty to alter their position on the faith of the contract. The Court also examined the historical rationale and substantive basis of the doctrine of part performance.

The Court reasoned that the doctrine of part performance is not concerned with the proof of a contract but with the enforcement of equities arising from partial performance to prevent equitable fraud. It affirmed that the acts of part performance must be unequivocally referable to the alleged agreement. The Court found that the acts relied upon by the appellant in this case, including improvements made to the Clark Road property, were not unequivocally referable to an agreement entitling him to a half-interest. The Court noted that there was no giving or taking of possession of the land, nor any other acts indicative of a change in the parties' respective positions in relation to the land that would suggest such an agreement. The Court rejected the appellant's contention that the requirement of unequivocal referability should be relaxed, upholding the established principles of the doctrine.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

There being no sufficient basis to warrant the grant of special leave to permit the cross‑appeal to proceed, the application for leave to cross‑appeal was dismissed at the conclusion of the argument of the appeal.Background The appellant is the former brother-in-law of the respondent. In 2002, the respondent and her then husband ("George"), who is the appellant's brother, purchased a property at Clark Road, Virginia, South Australia. George and the respondent built a house on, and made other improvements to, the land. The respondent was the sole registered proprietor of the property[6]. The property was subject to a registered mortgage to a financier[7].[6]Pipikos v Trayans [2015] SADC 149 at [24]; Pipikos v Trayans (2016) 126 SASR 436 at 438 [1], 439 [10]‑[11].[7]Pipikos v Trayans [2015] SADC 149 at [25]. In February 2004, George signed a contract to purchase a parcel of land at Taylors Road, Virginia for $299,500. The brothers agreed to purchase the property together. The purchase was largely financed by way of a loan from Suncorp, with the appellant, his wife ("Sophie"), George and the respondent contributing equally to the balance of the purchase price and to the transaction costs. The appellant and Sophie jointly held a half-interest in the property, whereas George held the other half in his name alone[8].[8]Pipikos v Trayans [2015] SADC 149 at [27]‑[28]; Pipikos v Trayans (2016) 126 SASR 436 at 439‑440 [11]. In July 2004, the appellant, Sophie, George and the respondent acquired a parcel of land at Penfield Road, Virginia for $260,000. George signed the contract, which named him or his nominee as purchasers. The memorandum of transfer provided that the property be transferred to the appellant, Sophie, George and the respondent as tenants in common, with each couple holding a half-share as joint tenants. The purchase was financed in part by way of a loan from a financier to the appellant, Sophie, George and the respondent secured by a mortgage. The appellant and Sophie paid the deposit and the balance of the purchase price, which together totalled $74,883.62[9].[9]Pipikos v Trayans [2015] SADC 149 at [29]; Pipikos v Trayans (2016) 126 SASR 436 at 440 [12]‑[13]. George and the respondent continued to live at Clark Road after 2004. They paid the mortgage on the property, as well as all other outgoings. They did not pay any rent or otherwise account to the appellant for their occupation of the property[10].[10]Pipikos v Trayans [2015] SADC 149 at [31]; Pipikos v Trayans (2016) 126 SASR 436 at 440 [15]. In 2008, the mortgagee served default notices in respect of the mortgages on both the Clark Road and the Penfield Road properties. The appellant paid the arrears on each mortgage in late 2009. When the loans fell into arrears again in 2012, the mortgagee instituted proceedings for the possession and sale of the properties. Those proceedings were discontinued when the arrears were discharged[11].[11]Pipikos v Trayans [2015] SADC 149 at [33], [35]‑[37]; Pipikos v Trayans (2016) 126 SASR 436 at 440 [17].

Evidence

Evidence Before The Court

As to the appellant's contention that Lord Selborne's unequivocal referability requirement has not been the reason for the decision of any case in this Court, it would be difficult, to say the least, to reconcile a decision in the appellant's favour in this case with this Court's decision in Cooney v Burns. In that case, the defendant agreed to sell to the plaintiff the lease of a hotel of which the defendant was the lessee. After the contract was made, the lease of the hotel was handed to the plaintiff's solicitors for the purpose of having an assignment of the lease prepared together with notices of an application for the transfer of the associated liquor licence. The plaintiff's solicitors proceeded to prepare an assignment of the lease and the notices of application. An inventory of the furniture included in the sale was also taken. The plaintiff incurred expense in relation to these steps. These acts on the part of the plaintiff were held to be insufficient as acts of part performance in that they did not alter the relative positions of the parties in relation to the land the subject of the contract in terms of the title to, or possession of, or use of that land[42]. The same may be said of the acts of part performance relied upon in this case by the appellant.[42](1922) 30 CLR 216 at 235, 241‑242, 243, 244‑245.A rule of evidence or a principle of substance? It was common ground between the parties in the present case that the rationale of the doctrine of part performance is not concerned with the proof of the contract but with the enforcement of equities arising from the partial performance of the contract. On the appellant's behalf, it was argued that the requirement of unequivocal referability is a vestige of the tenacious heresy that the doctrine of part performance is concerned with the proof of the parol contract by a process of inference from the acts of part performance. It was said that Lord Selborne had erred by applying rules of Chancery procedure that had, by the time of Maddison v Alderson, been repealed, and that this had led to courts treating the requirement of unequivocal referability as a substantive rule when, in truth, it was an erroneously invoked rule of evidence. It is true that some statements in the cases are far from clear as to the rationale of the doctrine of part performance. In some of the cases, the basal principle is stated in terms of a concern to enforce the equities that have arisen by reason of the performance of obligations under the parol contract in order to prevent the equitable fraud that would occur if the defendant were allowed to resile from a partly completed transaction[43]. On this view, as Pomeroy says[44], the ground of equitable intervention is "a fraud inhering in the consequence of setting up the statute as a defense". [43]Caton v Caton (1866) LR 1 Ch App 137 at 148; Maddison v Alderson (1883) 8 App Cas 467 at 475‑476, 489; Steadman v Steadman [1976] AC 536 at 540, 542‑543, 558, 568; Regent v Millett (1976) 133 CLR 679 at 682.[44]Symons, Pomeroy's Equity Jurisprudence, 5th ed (1941), vol 4, §1409. See also Story, Commentaries on Equity Jurisprudence, as Administered in England and America, 13th ed (1886), vol 2, §§754 and 758.

Decision

Reasons for decision

KIEFEL CJ, BELL, GAGELER AND KEANE JJ NETTLE AND GORDON JJ
Similar observations may be made in the present case. Here, neither party performed any act that was unequivocally referable to the Clark Road property. There was no giving or taking of possession of that land. There were no other acts indicative of a change in the respective positions of the parties in relation to the land. The Full Court was therefore correct to conclude that the acts on which the appellant relied were not sufficient to engage the doctrine of part performance. Conclusion and orders Considerations of authority and principle combine to require that the appellant's contention be rejected. Accordingly, the appeal should be dismissed with costs. We agree with the judgment of Kiefel CJ, Bell, Gageler and Keane JJ, for the reasons their Honours give, that the appeal should be dismissed but we wish to add the following. The essential question which arises in this appeal is whether this Court should now relax the conditions of the doctrine of part performance to allow for application of the doctrine to cases in which the acts of part performance relied upon are not unequivocally referable to the kind of contract alleged. For the reasons which follow, in addition to those stated in the judgment of Kiefel CJ, Bell, Gageler and Keane JJ, the question should be answered, no.Origins of the equitable doctrine of part performance The equitable doctrine of part performance has been described as a mystery[90] and an anomaly[91]. As Stramignoni has written[92], the mystery is twofold: when was the doctrine of part performance first employed and why was it not mentioned in s 4 of the Statute of Frauds 1677[93]? As to the first, legal historians are now largely agreed[94] that the doctrine was first employed by Lord Nottingham in the Court of Chancery during the latter half of the 17th century. Its origins lay in the established equitable precept that part performance on one side required as a matter of conscience, civilis et politica, that performance should be ordered on the other side[95]. Why the doctrine was not mentioned in the Statute remains a mystery, although it may be conjectured that its authors, including Lord Nottingham[96], the so-called "Father of Equity"[97], did not conceive of the Statute as applying to cases involving part performance.[90]Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit, (1987) at 614.[91]Pound, "The Progress of the Law, 1918-1919: Equity", (1920) 33 Harvard Law Review 929 at 935.[92]Stramignoni, "At the Dawn of Part Performance: A Hypothesis", (1997) 18(2) Journal of Legal History 32 at 32.[93]29 Car II c 3.[94]See for example Viner, A General Abridgment of Law and Equity, 2nd ed (1792), vol 5 at 523; Roberts, A Treatise on the Statute of Frauds, (1807) at 130-131; Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit, (1987) at 614; Stramignoni, "At the Dawn of Part Performance: A Hypothesis", (1997) 18(2) Journal of Legal History 32 at 41; Baker, An Introduction to English Legal History, 4th ed (2002) at 350.[95]Cook v Fountain (1676) 3 Swans 585 at 600 per Lord Nottingham [36 ER 984 at 990]. See also Stramignoni, "At the Dawn of Part Performance: A Hypothesis", (1997) 18(2) Journal of Legal History 32 at 35-36; Baker, An Introduction to English Legal History, 4th ed (2002) at 110.[96]Costigan, "The Date and Authorship of the Statute of Frauds", (1913) 26 Harvard Law Review 329 at 334-336, 339.[97]Story, Commentaries on Equity Jurisprudence, 1st Eng ed (1884) at 34-35 §52.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, BELL, GAGELER AND KEANE JJ, NETTLE AND GORDON JJ

When a significant reform is proposed to a controversial doctrine that has existed for around three centuries, it is necessary to understand the rationale for the doctrine in light of its origins and development. Once that is understood, it is possible to consider whether the doctrine should now be placed on a different footing.The various rationales for the doctrineDifferent modes of proof and procedure in Chancery A core part of the appellant's oral submissions was devoted to rejecting a proposed rationale for the doctrine of part performance, namely, that the doctrine was concerned with unique principles of proof and procedure in Chancery. The submissions on this point should be accepted. The essence of this proposed rationale is that the Statute of Frauds did not apply to bills in equity, or applied in a different way, because of the unique features of Chancery proof and procedure. This rationale had strong support. In Litton Strode v Falkland[217], the Lord Chancellor was attributed with saying that a hearing in Chancery "is not like the Case of Evidence to a Jury, who are easily [biased] by it, which this Court is not".Relying upon this obiter dictum, Thayer[218] and Wigmore[219], who were followed by Holdsworth[220], argued that Chancery did not depend upon a jury to find facts, and the parties were able to give evidence.[217](1708) 3 Chan Rep 169 at 177 [21 ER 758 at 760].[218]Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 431.[219]Wigmore, A Treatise on the System of Evidence in Trials at Common Law, (1905), vol 4 at 3421 §2426.[220]Holdsworth, A History of English Law, 2nd ed (1937), vol 6 at 393. The different procedures and proof requirements of Chancery trials may have been the context in which some judges chose not to apply the Statute of Frauds according to its terms, but those different procedures do not provide any rationale for why the Statute ought not apply. If those procedures were somehow the rationale for the doctrine of part performance, the common law should have recognised the doctrine once its procedures also allowed facts to be found by the judge and the parties to give evidence. Further, as Professor Macnair has observed, the content of the Statute of Frauds shows that the concern of the Statute was not merely with jury trials. The Statute addressed problems with proof of wills in the church courts, and required writing in matters of pure equity, such as trusts and the assignment of equitable interests[221]. At the time the Statute was passed, on occasion equity courts would also send issues of fact for determination by a common law jury[222].[221]Macnair, The Law of Proof in Early Modern Equity, (1999) at 153-154.[222]Macnair, The Law of Proof in Early Modern Equity, (1999) at 157-158. The only attempt at a substantive justification for the doctrine based upon unique Chancery procedures was made by A W B Simpson, who observed that the Statute speaks in language redolent only of the common law, referring to "actions" to "charge" defendants. However, as Simpson acknowledged, there is no trace in any of the cases of any reliance upon these verbal distinctions as a means to justify the exclusion of equitable principles from the reach of the Statute[223]. Many of the early cases, not involving part performance, were concerned with whether the requirements of the Statute had been met in equity bills for specific performance[224].[223]Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit, (1975) at 615.[224]Macnair, The Law of Proof in Early Modern Equity, (1999) at 160.Enforcement of the equities, not the contract