Roberts v Roberts

Case [2021] SASC 72

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

ROBERTS v ROBERTS

[2021] SASC 72

Judgment of the Honourable Justice Blue  

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - MATTERS NOT GIVING RISE TO BINDING CONTRACT - AGREEMENTS NOT INTENDED TO CREATE LEGAL RELATIONS - DOMESTIC, SOCIAL AND OTHER AGREEMENTS

ESTOPPEL - ESTOPPEL BY CONDUCT - PROPRIETARY ESTOPPEL

EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS - ACTING TO DETRIMENT

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - GENERAL PRINCIPLES

The applicant seeks specific performance of an alleged oral contract with his father, the first respondent, for the purchase of Jack’s station “Pulgamurtie” for $2.6 million. The first respondent denies any agreement on or discussion about the sale of Pulgamurtie.

In the alternative, the applicant claims that he improved, maintained and worked on Pulgamurtie and purchased plant and livestock and otherwise acted to his detriment in reliance on the first respondent’s representations and encouragement that he was to purchase it, relying on causes of action of proprietary estoppel and constructive trust.

In the further alternative, the applicant claims that the first respondent holds Pulgamurtie subject to an equitable lien due to improvements to, maintenance of and operations on Pulgamurtie by the applicant.

In the further alternative, the applicant claims that, by terminating a Heads of Agreement entered into in 2018 for the sale of Pulgamurtie on different terms for alleged repudiation, the first and second respondents repudiated the Heads of Agreement, he validly terminated it for that repudiation, and he claims damages for breach of contract.

Held:

1.The applicant and the first respondent entered into an agreement (in the colloquial sense) in February or March 2012 for the sale of Pulgamurtie to the applicant for $14 per acre and $2,604,000 in total, with completion to occur after the applicant had paid in full for livestock purchased from the respondent (at [458]-[499]).

2.The parties agreed on the three essential terms for a contract for the sale of land (at [523]-[527]) but, objectively assessed, did not intend to enter into a legally binding contract (at [536]-[541]).

3.If the parties had intended to enter into a legally binding contract, there were sufficient acts of part performance to enable an order for specific performance notwithstanding that the contract was not evidenced by writing (at [562]) and otherwise the applicant would have been entitled to an order for specific performance (at [567]).

4.The applicant has established the elements of a cause of action in proprietary estoppel (at [577], [579], [581], [595]-[596], [605]-[616], [617]).

5.The appropriate relief for the proprietary estoppel cause of action is to order that the first respondent transfer title to Pulgamurtie to the applicant for $3,808,350 based on the agreed purchase price adjusted for the change in the value of money over the nine and a half years since the agreement was made and the applicant took possession of Pulgamurtie pursuant to it (at [640]).

6.If…

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Roberts v Roberts [2021] SASC 72
Case
[2021] SASC 72
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CaseChat Overview and Summary

In the case of Roberts v Roberts, the dispute centres around the sale of Pulgamurtie, a large rural property in New South Wales. The parties involved are Grant Roberts, the plaintiff, and Jack Roberts, the defendant, along with Nola Roberts, Jack's wife. Grant seeks damages for breach of contract and proprietary estoppel, while Jack and Nola dispute the validity of the alleged contract and the proprietary estoppel claim. The case was heard in the Supreme Court of New South Wales, Equity Division.

The primary legal issues the court had to address were whether the parties intended to enter into a legally binding contract for the sale of Pulgamurtie, and if not, whether Grant's claim in proprietary estoppel was valid. Additionally, the court needed to determine if Grant's claim for breach of the Heads of Agreement was valid, and if so, whether it entitled him to damages beyond nominal compensation.

The court found that while the parties agreed on the essential terms of the sale, they did not intend to enter into a legally binding contract. However, Grant's claim in proprietary estoppel was successful, as he had relied on representations by Jack and Nola to his detriment. The court held that Jack should convey title to Pulgamurtie to Grant in exchange for $3,808,350, adjusted for inflation and the time elapsed since the agreement was made. The court also found that Grant did not repudiate the Heads of Agreement, but rather that Jack and Nola repudiated it by attempting to terminate it. However, since Grant failed to prove that the breach caused substantive damages, he was only entitled to nominal damages.

The court ordered that the parties be heard regarding the terms of the relief and finalising the proceedings, including costs.

Orders

Orders of the court

Held:

1. The applicant and the first respondent entered into an agreement (in the colloquial sense) in February or March 2012 for the sale of Pulgamurtie to the applicant for $14 per acre and $2,604,000 in total, with completion to occur after the applicant had paid in full for livestock purchased from the respondent (at [458]-[499]).

2. The parties agreed on the three essential terms for a contract for the sale of land (at [523]-[527]) but, objectively assessed, did not intend to enter into a legally binding contract (at [536]-[541]).

3. If the parties had intended to enter into a legally binding contract, there were sufficient acts of part performance to enable an order for specific performance notwithstanding that the contract was not evidenced by writing (at [562]) and otherwise the applicant would have been entitled to an order for specific performance (at [567]).

4. The applicant has established the elements of a cause of action in proprietary estoppel (at [577], [579], [581], [595]-[596], [605]-[616], [617]).

5. The appropriate relief for the proprietary estoppel cause of action is to order that the first respondent transfer title to Pulgamurtie to the applicant for $3,808,350 based on the agreed purchase price adjusted for the change in the value of money over the nine and a half years since the agreement was made and the applicant took possession of Pulgamurtie pursuant to it (at [640]).

6. If the applicant had failed on the proprietary estoppel cause of action, he would have been entitled to an equitable lien on account of improvements made to Pulgamurtie since March 2012 (at [683]).

7. The applicant did not repudiate the Heads of Agreement (at [743], [761]) and the respondents repudiated it by purporting to terminate it (at [771]). However, the applicant would only be entitled to nominal damages because he failed to prove that the respondents’ breach caused substantive damages (at [785]).

8. The parties to be heard on the terms of orders to finalise the proceeding (at [790]).

Background

Background to the litigation

In the further alternative, Grant claims that, by terminating a Heads of Agreement entered into in 2018 for the sale of Pulgamurtie on different terms for alleged repudiation, Jack and his wife the second respondent, Nola Roberts (Nola), repudiated the Heads of Agreement, Grant validly terminated it for that repudiation, and Grant claims damages for breach of contract.BackgroundPulgamurtie Pulgamurtie is situated in the rural locality of Packsaddle in New South Wales. Pulgamurtie is approximately 195 kilometres north-east of Broken Hill. It is approximately 74,663 hectares. It is a cattle and sheep station. It is held under Western Land Lease 6260 and is the subject of certificate of title folio 3540/765892. Pulgamurtie is divided by fencing into 13 main paddocks. It has several creeks feeding into lakes which only fill as a result of heavy rain events. It has 14 surface catchment dams and one artesian bore. Water is reticulated from the dams to stock troughs via poly water pipelines. It has dirt roads for vehicular access. Pulgamurtie has a homestead (the Homestead), a workman’s cottage (the Cottage), shearers’ quarters, a shearing shed, a woolshed, equipment and other sheds and smaller paddocks in the vicinity of the main buildings (the home compound). In 1888 Jack’s grandfather acquired one of the paddocks that now comprise Pulgamurtie and registered “Pulgamurtie” the brand. A Western Lands Lease (number WL3540) was issued under the Western Lands Act 1901 (NSW) over land including Pulgamurtie. At some point this lease was held by the Kidman Company but the lease was cancelled in or shortly before 1948. In 1948 the New South Wales government conducted a ballot for Pulgamurtie. Jack’s father Charles Henry Roberts (Harry Sr) won the ballot. In June 1950 Western Lands Lease number 6260 (the Lease) was issued to Harry Sr for an initial period of 20 years commencing on 1 December 1948. The land the subject of the Lease comprised lot 3540 in deposited plan 765892. Jack’s parents and siblings Harry Sr was married to Stella Roberts (Stella). They had six children: Stanley Roberts (Paddy), Henry Roberts (Harry Jr), Betty Roberts (Betty), James Roberts (Jimmy), Rita Roberts (Rita) and Jack. Paddy was born in 1924 and Jack was born in 1936. The family, except Harry Jr and Betty who were married, moved to live on Pulgamurtie in 1949. All of the children who lived at Pulgamurtie did station work. Harry Sr made Paddy and Jimmy stock partners, which means that he gave them a one third interest in his cattle and sheep and they shared the profits from the station enterprise. Jack, who was only 12 years old when the family moved to Pulgamurtie, was paid wages. Later Harry Jr moved to Pulgamurtie and had his own livestock. In 1953 Harry Sr died, leaving Pulgamurtie and his interest in the livestock and equipment on it to Stella. In August 1956 the Public Trustee as administrator of Harry Sr’s estate under his will transferred the lease to Stella. Paddy got married. He sold his share of the livestock and used the proceeds to buy a farming property called “Morapoi” in Western Australia.

Evidence

Evidence Before The Court

Both parties tendered several lever arch folders of documentary evidence. The documentary evidence included business records of Jack and Nola, Grant and his entities, Rural Bank and Westpac. It also included communications between Tatiana/Grant and Mr Hennessey.Evidence received de bene esse Mr Hickey was asked to express an opinion on the market rent payable in respect of the use and occupation of Pulgamurtie from January 2012 to August 2020. He applied what he described as a “rule of thumb” of a lease rate of five per cent of capital value. He assessed the capital value of Pulgamurtie as at February 2012 at $2,985,080 and calculated that an increase from that amount over eight years to $10,453,000 involved an average annual increase of 17 per cent. He assumed that the change in value each year was equally distributed over that period at 17 per cent per annum. He used this assumption to impute capital values each year from February 2013 ($3,492,543) to February 2020 ($10,481,968). He then applied five per cent to the capital value each year to arrive at an annual rent ranging from $149,254 in February 2012 to $524,098 in February 2020. Grant objected to this evidence on the grounds that Mr Hickey did not have any demonstrated expertise in the valuation of rental values of rural properties such as Pulgamurtie; there was no adequate factual foundation for his opinion; and there was no adequate reasoning process disclosed to arrive at his opinion as to market rental. Mr Hickey gave evidence in chief and was cross-examined simultaneously in relation to the admissibility, and the merits, of his opinion. Mr Hickey operates a land agent’s business based in Broken Hill. That business occupies approximately 70 per cent of his time. That business relates exclusively to the sale of residential, commercial and industrial land in or close to Broken Hill and does not encompass the sale of any rural land. Mr Hickey also operates a valuation business. Ninety per cent of the valuations undertaken by Mr Hickey relate to the value of residential, commercial and industrial land in or close to Broken Hill. Ten per cent relate to the value of rural land. Mr Hickey said that he does not get many rural valuations because the banks generally do their own. Mr Hickey was not able to identify any lease transactions as comparable transactions. He said that stations of the size of Pulgamurtie are simply not the subject of leases. Mr Hickey described the basis of the “rule of thumb” of five per cent of value to which he referred in his report in the following terms:The basis is on normal investments in western New South Wales, the whole of western New South Wales virtually, is whether it be commercial, industrial or whatever, you need a minimum of a 5% yield to make it worthwhile. Grazing probably would come under the same thing as I’ve mentioned, you know, however, if you’re an investor and you bought a property for investment, you would want at least a minimum 5% yield.

Decision

Reasons for decision

BLUE J
Grant would only be entitled to nominal damages for breach of contract if he had failed on his proprietary estoppel claim.Conclusion Grant’s cause of action in contract fails because, objectively assessed, the parties did not intend to enter into a legally binding contract. Grant’s cause of action of proprietary estoppel (and constructive trust) succeeds. The appropriate remedy is to order that Jack convey title to Pulgamurtie in return for payment of $3,808,350. I will hear the parties concerning the terms of the relief and whether it should be subject to any conditions. If Grant had failed on his cause of action of proprietary estoppel, his cause of action for an equitable lien would have succeeded to the extent of $508,831. If Grant had failed on his cause of action of proprietary estoppel, he would have succeeded in his claim for breach of the Heads of Agreement but I would have assessed only nominal damages. I will hear the parties concerning orders to be made to finalise the proceeding, including costs.

Ratio Decidendi

Legal Principle Established

Established by: BLUE J

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