Ryan and Joyce
[2011] FMCAfam 225
•18 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RYAN & JOYCE | [2011] FMCAfam 225 |
| FAMILY LAW – Property – Application to set aside binding financial agreement – estoppel – objective intention of parties to enter agreement – equitable fraud – misrepresentation – appropriate remedies. |
| Family Law Act 1975, ss.71A, 79, 79A, 90B, 90C, 90DA, 90G(1), 90G(1A), 90G(1B), 90G(1C), 90G(2), 90KA |
| Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 K.R. Handley, Estoppel by Conduct and Representation, (London: Thomson/ Sweet & Maxwell, 2006) |
| Applicant: | MR RYAN |
| Respondent: | MS JOYCE |
| File Number: | CAC 573 of 2010 |
| Judgment of: | Neville FM |
| Hearing date: | 1 December 2010 |
| Date of Last Submission: | 1 December 2010 |
| Delivered at: | Canberra |
| Delivered on: | 18 March 2011 |
REPRESENTATION
| Solicitor/Advocate for the Applicant: | Mr D Lardner |
| Solicitors for the Applicant: | David Lardner Lawyers |
| Solicitor/Advocate for the Respondent: | Mr R Routh |
| Solicitors for the Respondent: | Consensus Family Lawyers |
ORDERS
IT IS DECLARED THAT:
The agreement before the Court dated 5th October 2004 be declared a valid and enforceable financial agreement.
IT IS ORDERED THAT:
The Application filed on 19th July 2010 be dismissed.
The agreement be rectified by substituting the correct section of the Family Law Act 1975 (“the Act”) being section 90C.
The Applicant Husband be restrained from continuing proceedings pursuant to section 79 of the Act.
Pursuant to section 90KA(c) of the Act, the Applicant Husband be prevented from claiming an interest in the Wife’s property, known as Property G, ACT.
The Applicant Husband pay the Respondent Wife’s costs, either as agreed or taxed.
IT IS NOTED that publication of this judgment under the pseudonym Ryan & Joyce is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 573 of 2010
| MR RYAN |
Applicant
And
| MS JOYCE |
Respondent
REASONS FOR JUDGMENT
Introduction
There is both factual and legal dissonance in this application to set aside a financial agreement (“the agreement”) that was signed by the parties and which bears a date of 5th October 2004.[1]
[1] Curiously, the Applicant Husband’s documents did not attach the relevant agreement to any of his material. Fortunately, a copy of the agreement was annexed, among other places, to the Respondent Wife’s affidavit, filed on 20th August 2010 (Annexure A).
There was no cross-examination of either of the parties. The case was, accordingly, conducted only on the documents filed, and via submissions from the experienced solicitors for each of the parties.
By Application filed on 19th July 2010, Mr Ryan sought a declaration that the agreement ‘is of no force or effect and that it be set aside.’ He also sought that the Court make orders pursuant to s.79 of the Family Law Act 1975 (“the Act”) ‘as may be just and equitable.’
By her Response filed on 20th August, Ms Joyce sought orders to dismiss the Application, and for costs to be awarded in her favour on an indemnity basis. She also sought ancillary relief, among other things, to restrain Mr Ryan from lodging a caveat on a named property.[2]
[2] Following a brief hearing on 14th September 2010, I made orders by which Mr Ryan was required to provide security for costs in the sum of $7000 by a specified date – Ms Joyce having sought security of $15,000 as a pre-condition of a hearing of the initiating application.
There is no issue that the agreement was executed by both parties, and that it bears the date of 5th October 2004. The issue is whether it is binding on the parties and therefore enforceable, or whether, in the circumstances outlined in these reasons, it should be set aside.
Background
The parties were married [in] 2004. They had co-habited since April of that year (there was some dispute as to whether it was mid or late April). Save for there being no dispute about (a) the respective ages of the parties,[3] (b) that Ms Joyce has four children from a previous relationship (the youngest of whom, [X] (aged 17), has Down Syndrome) and Mr Ryan likewise has four [adult] children from a previous relationship, and (c) that there exists a document, dated 5th October 2004, signed by both parties and which is styled “Financial Agreement for the Purposes of s.90B of the Family Law Act 1975”, for current purposes, this is the sum total of factual agreement.
[3] Mr Ryan is 59 years old, and Ms Joyce is 49.
The Applicant Husband’s account of relevant events may otherwise be summarised as follows.
Mr Ryan’s Evidence: The parties first separated in September 2007. Prior to that separation, Mr Ryan said that the parties had extensive discussions “about our combined assets and [Ms Joyce] proposed a new method for managing our assets as a condition prior to my return [to the marital residence] on [sic] October 2007.”[4]
[4] Mr Ryan’s affidavit, filed 19th July 2010, para.6. For ease of reference I will refer to this affidavit as his ‘primary affidavit.’
Mr Ryan confirmed that the parties experienced further disruption in their relationship in early 2009, and that they separated, under the one roof, on 30th March 2009. Mr Ryan said that he moved out of the residence on 20th April 2009. Thus, the Court has before it a relationship of five years’ duration.
The bulk of Mr Ryan’s primary affidavit in fact relates more to what might more generally be considered “contributions” to the modest-length marriage. It is only paragraphs 22-26 that deal specifically with the agreement.[5]
[5] Mr Ryan filed a second affidavit on 26th October 2010. I deal with that affidavit later in these reasons.
Mr Ryan said that shortly prior to the marriage, Ms Joyce said to him “I want us to sign a pre-nup.” Mr Ryan said that this had never been raised previously and that his reaction to this statement indicated that he thought Ms Joyce was joking. He confirmed however that he recognised that she was serious.
Mr Ryan also confirmed that in the weeks leading up to the wedding Ms Joyce talked regularly of the agreement. He asked her why she wanted a ‘pre-nuptial agreement’ and what she wanted in it. To these questions she replied that she wanted to provide for her son, [X]’s, security. She also confirmed that she wanted to protect some of her assets.
Mr Ryan said that he did not see the need for such an agreement.
Mr Ryan was provided with a draft of the agreement in early August, prior to the wedding. He said he recalled reading it and objecting to it. He did not specify what his objections were. He went on to affirm that he did not see it again until, perhaps, mid to late September 2004.
He also said that Ms Joyce kept insisting that he sign the agreement. He did not wish to do so, but said that his [then] wife became agitated in the absence of his signature on the agreement.
Finally, Mr Ryan confirmed that he sought legal advice in relation to the agreement. He deposed as follows, at [26] of his primary affidavit:
I subsequently obtained advice from Helen Small, solicitor. Helen gave me certain advice as to it being a pre-nuptial agreement as opposed as one entered into during the course of the marriage. Based on that advice I signed the document and gave it back to Ms Joyce.
On 26th October 2010, Mr Ryan filed a further affidavit.[6] The relevant evidence from this affidavit are as follows.
[6] Again for ease of reference, I will refer to this document as the ‘second affidavit.’
At [3] of Mr Ryan’s second affidavit, he deposed that “… I would not have signed the document but for the advice I was given by Ms Helen Small. The advice was to the effect that the document was of no force and effect as it did not comply with the legislation in force at that time.”
Then, at [7] of the same affidavit, Mr Ryan affirmed that he “signed the document knowing that it was of no force or effect.” Having signed it, he said he took it home and gave it to Ms Joyce.
Next of relevance he said that during the parties’ separation in 2007
Mr Ryan advised Ms Joyce that the agreement was of “no effect”. He said that Ms Joyce did not reply to this statement but averred, at [9], that her “facial features did not show any look of surprise or concern.”
Mr Ryan further said that, on an unspecified date during their time of separation, Ms Joyce said to him words to the effect that she was refinancing and that she would give him a nominated sum of money. He also confirmed that, at no time during the period of separation in 2007, did Ms Joyce advise him that the agreement was valid or that she intended to rely on it.
I pause here simply to observe that, as a matter of evidence, in my view, Mr Ryan is entitled to state (as recorded in [20] above from his affidavit) that Ms Joyce did not reply to his comment about his assertion regarding the alleged invalidity of the agreement. It is, however, quite another thing to comment on what her facial expression did or did not mean, or what she intended – if anything – to convey by it. In my view, the Court cannot, and will not, have any regard to a person’s facial expression – of any kind, particularly in the context of a case of this kind and the limited (and untested) evidence available to the Court.
Similarly problematic, in my view, is to seek to rely upon any [adverse] inference that might be drawn against a party (here Ms Joyce) not saying or confirming that a previously executed document is or remains valid. One might ask: why would or should someone confirm the validity of an agreement simply on the basis of one’s separated partner stating that the agreement is not valid. A statement or assertion of the kind alleged, in the circumstances outlined in this case, and again given the limited evidence before the Court, does not assist the Court. Indeed, if the Court sought to rely upon such a statement, it would be tantamount to allowing silence to acknowledge assent to whatever is being alleged – thus in accordance with the old maxim qui tacet consentire videtur, “he who is silent is deemed to consent.” Such a principle has no application in these proceedings.
The remaining matters addressed in Mr Ryan’s second affidavit relate to the reconciliation with his wife, and her recommendation that the parties should prepare their wills. Mr Ryan averred that, perhaps
12 months after their reconciliation in late October 2007, and in the context of preparation of her will, Ms Joyce said that [upon her death and they remained married] he would be able to stay in the house ‘for life as long as you don’t remarry or bring another woman into the house.’
Ms Joyce’s Evidence: Ms Joyce filed three affidavits. She also secured two supporting affidavits from her friends, Ms T and Ms H.
In her first affidavit, filed on 20th August 2010, Ms Joyce stated that prior to the parties’ marriage [in August 2004] she raised with Mr Ryan that they should have a pre-nuptial agreement. Her reason for doing so, she said, was to protect her assets. In her words, at [4]: “I was concerned that when I married [Mr Ryan] and if we separated he would get half my assets.”[7]
[7] Curiously, Ms Joyce said that Mr Ryan has five children from his previous relationships, as opposed to the four to which Mr Ryan deposed.
Ms Joyce said that at the time of the marriage to Mr Ryan, she owned a property in the Canberra suburb of [C], which was subject to a mortgage to the Commonwealth Bank. She also said that part of the reason for wanting a pre-nuptial agreement was for her protection, “particularly for [her son] [X].” And, she said, she was aware of
Mr Ryan having arrears in child support for his children in the sum of $86,000.[8]
[8] Also curiously, this statement of Mr Ryan’s indebtedness in relation to child support arrears was not challenged in his second affidavit, filed on 20th October, nor in submissions.
In response, Ms Joyce said, at [4] of her first affidavit, that Mr Ryan said to her that (a) ‘you do not need to have one [a binding financial agreement],’ (b) he did not want any of her assets anyway, and (c) because she stated why she wanted it (namely, to protect her assets so as to be able to provide for her son [X]) Mr Ryan said: “Well, if you want it then that’s fine but I don’t think it’s necessary at all.”
Ms Joyce said that on 15th August 2004 her solicitor Mr Wilson, provided her with some advice regarding the agreement, and signed the certificate attached to it on that day. She then took the original of the agreement home and handed it to Mr Ryan later that same day. She said she observed him to read the agreement, and in the course of doing so indicated that he thought the provisions in relation to jewellery were important and helpful because he had some rings that he wanted to be sure went to his own children. He said to Ms Joyce words to the effect that he would see a solicitor “this week.”
When she later asked Mr Ryan about the agreement, Ms Joyce said that he assured her that he would get around to it. She said that she was unaware that it made any difference if the agreement was signed before or after the wedding.
She said that on 5th October 2004 she received a copy of the agreement signed by Mr Ryan.
In her third affidavit, filed 18th November 2010, Ms Joyce elaborated, affirming that when handing her the signed copy of the agreement on 5th October 2004, Mr Ryan said: “Here’s the agreement you wanted.” She also said that when handing her the document, Mr Ryan made no mention of it being unenforceable, invalid or otherwise defective.
Ms Joyce also said that at the time of the parties’ first separation in August 2006, Mr Ryan said to her that he wanted $10,000 for a property settlement. Ms Joyce sought legal advice at the time (not from her current solicitors), which was to the effect that the agreement was “good” but that it would be more economical to pay that sum than to litigate.[9] She said that she told Mr Ryan that she would refinance the house to obtain the $10,000. Ultimately, however, as already noted, the parties reconciled.
[9] See Ms Joyce’s third affidavit of November 2010, at [7].
On 9th April 2009, Ms Joyce executed a ‘separation declaration.’ That document was handed to Mr Ryan on 14th April 2009. A copy of the declaration is annexure B to her first affidavit.[10]
[10] S.90DA provides that a financial agreement is of no force or effect unless and until a separation declaration has been made.
On 14th April 2009, Ms Joyce’s solicitors wrote to Mr Ryan’s solicitors, among other things, concerning Mr Ryan vacating the former marital residence. By reply dated 14th May 2009, Mr Ryan’s solicitors said:
… the Agreement purports to be a Section 9OB Agreement and it should have been entered into prior to marriage. The parties were married prior to entering into the Agreement and thus the Agreement should have been made pursuant to Section 90C of the Act.
Unfortunately, the text of both of these letters was not before the Court, thus one must be even more cautious in the treatment of what has been provided. That said, it may be observed that in the reply of 14th May, Mr Ryan’s solicitors did not disavow any intention of their client not otherwise to be bound by the agreement.
On 16th July, Ms Joyce’s solicitors advised Mr Ryan’s solicitors of her intention to sell the [C] property, and to purchase, in its stead, a property in the suburb of [G]. A copy of that letter is annexure C to
Ms Joyce’s first affidavit.
On 30th July 2009, Mr Ryan lodged a caveat over the [C] property.
Following various letters between solicitors the caveat was removed upon certain terms, which are set out in a deed, a copy of which is annexure F to Ms Joyce’s first affidavit. She says that she has not received a copy of it signed by Mr Ryan.
Finally, in her first affidavit, Ms Joyce contended that there was an error on the face of the agreement, in that it refers to s.90B of the Act. Nevertheless, she says that she relied upon the agreement and throughout the relationship with Mr Ryan believed it to be valid. She also says that only after the separation did she realise that Mr Ryan did not regard the agreement as valid.
The gravamen of Ms Joyce’s second affidavit related primarily to her then application for security for costs. Among other things, she deposed to her understanding that Mr Ryan had remarried, and that
Mr Ryan was alleged to have said to her on one occasion that ‘his girlfriend looked good in her [Ms Joyce’s] jewellery and would also look good driving her [Ms Joyce’s] car.’
Other Evidence
: Two other, brief, affidavits were filed on behalf of
Ms Joyce, one by Ms T, and the other by Ms H, both of which were filed on 18th November.
The substance of those affidavits was to confirm conversations between Ms Joyce and each of the deponents in 2006 (presumably at different times) during the time of the parties’ separation. The conversations were to the effect that Ms Joyce confirmed that (a) there was in existence a ‘pre-nuptial agreement’, and (b) Mr Ryan was seeking payment from her in the sum of $10,000.
In Ms H’s affidavit, at para.5, she deposed to witnessing (in 2009 prior to separation) an aggressive conversation between the parties with
Mr Ryan saying the following words to Ms Joyce: “Don’t think that you can just get rid of me, I’ll take the roof from over your head, we’ve been together for a while now so I’m entitled to your money. Don’t think I won’t.”
In Ms Joyce’s material, she confirms or refers to the conversations with Ms H and Ms T,[11] but not to the further [aggressive] conversation to which I have referred, witnessed by Ms H.
[11] See Ms Joyce’s third affidavit of November 2010, para.19.
Certainly, the corroborative evidence of Ms H and Ms T is significant, the more so since there is no ‘third party’ support of Mr Ryan’s evidence. However, in the circumstances, in the absence of the evidence being “tested”, the Court should be especially cautious in placing too much weight on these supporting affidavits. In any event, in my view, for the reasons that follow, it is unnecessary to say anything further about this supporting evidence.
Submissions
Shortly stated, the essential positions of the parties, from a legal perspective, are as follows.
Mr Ryan contended that, while there was an agreement on its face, there was not, in fact, any “mutual understanding.”[12] Indeed, it was submitted that Mr Ryan signed the agreement essentially ‘to keep
Ms Joyce happy.’
[12] See the written submissions of Mr Ryan’s experienced solicitor, filed on 1st December 2010, p.1
Further, it was submitted on behalf of Mr Ryan that he should now not be estopped from being able to pursue his claim for property settlement because, at the time he signed the agreement, he knew that it was not legally enforceable. This was so because, by the time Mr Ryan signed it, the wrong section of the Act was evident on the document and said to govern its operation.[13]
[13] It might be noted that, but for the delay on Mr Ryan’s part in signing the agreement, this argument would not be available to him.
For her part, Ms Joyce contended that (a) the agreement was a binding financial agreement, which (pursuant to s.71A of the Act) now precludes any application under s.79; (b) objectively determined, the facts evince an intention by Mr Ryan to enter and be bound by the agreement; (c) the agreement was concluded when Mr Ryan signed it; (d) the Court has power to rectify the agreement in any event; and (e) in the alternative, Mr Ryan should be estopped from denying that there is a binding financial agreement.
Statutory Framework
For ease of reference, I set out those sections of Part VIIIA of the Act that are relevant to the current proceedings.
Section 90B, so far as is relevant, is in the following terms:
(1) If:
(a) people who are contemplating entering into a marriage with each other make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa) at the time of the making of the agreement, the people are not the spouse parties to any other binding agreement (whether made under this section or section 90C or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement. The people may make the financial agreement with one or more other people.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time and before divorce, is to be dealt with;
(b) the maintenance of either of the spouse parties:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
Section 90C is, relevantly, in the following terms:
(1) If:
(a) the parties to a marriage make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa) at the time of the making of the agreement, the parties to the marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement. The parties to the marriage may make the financial agreement with one or more other people.
Next, and critically, of relevance, are the provisions of s.90G. Section 90G(1) provides:
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d) the agreement has not been terminated and has not been set aside by a court.
Of special significance in this case are the provisions of s.90G(1A), which were inserted into the Act following the Full Court decision in
B v B.[14] That section provides:
[14] B v B (2008) FLC ¶93-357.
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c) a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
Section 90G(1B), (1C) and 90G(2), are in the following terms:
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
Also of special relevance to the current proceeding is s.90KA, which deals with the validity, enforceability and effect of financial and termination agreements. It provides:
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b) has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c) in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
The Agreement: I have previously noted that the agreement in this case refers to s.90B, although it was not signed by Mr Ryan until after the parties had married. It seems not disputed that at the time the agreement was drawn up, the operative section referred to on the face of the agreement was plainly the relevant section. However, by the time that Mr Ryan signed the agreement, the relevant section referred to should have been s.90C. In my view, the misdescription is simply the result of ‘timing’ (i.e. when Mr Ryan got around to signing it). Such a ‘slip’, in my view, can and should, be rectified.
However, before getting to the consideration of the provisions of the respective sections of the Act previously cited and set out earlier in these reasons, it is important to consider the relevant legal principles. In my view, it is sufficient to refer only to two cases.
Principles of Contract: First, in Equuscorp Pty Ltd v Glengallen Investments Pty Ltd, the High Court said:[15]
[33] The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.
[34] There are reasons why the law adopts this position. First, it accords with the "general test of objectivity [that] is of pervasive influence in the law of contract". The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.
[35] Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here.
[15] (2004) 218 CLR 471 at p.483 [33] – [35] (internal citations omitted).
Secondly, respectfully, a most helpful overview of some key elements in the formation of agreements has been recently set out by the Full Court of the Federal Court, admittedly since the hearing of the current matter. In Australian Securities and Investments Commission v Fortescue Metals Group Ltd, the Court said:[16]
It is well established that the courts strive to uphold bargains: Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER 494. To that end, the courts will construe the terms of an agreement with an inclination to give effect to the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, esp at [6]-[8]. Further, the courts may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the parties being defeated. And where the want of an express provision in an agreement can be supplied by implying a term in order to give efficacy to the bargain, the courts will make the necessary implication: Fletcher Challenge Electricity Corporation of New Zealand [2002] 2 NZLR 433 at [64]-[67]; Moffat Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60.
[16] [2011] FCAFC 19 (18 February 2011) at [122] (Keane CJ).
The Chief Justice of the Federal Court, with whose judgment on the these matters Emmett and Finkelstein JJ agreed,[17] commented further on the principle of contract law that parties’ intention is to be assessed objectively, thus (at [126]; emphasis in the original text):
Usually it will be the parties to a contract who are in dispute as to whether an intention to be contractually bound actually existed. … But whatever may have been the subjective intentions of the parties on either side of the framework agreements, the crucial question is whether they made a contract to build the infrastructure and this question must be answered by taking an objective view of the agreement. As Gleeson CJ said in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549:
Where, as in the present case, the communications which the parties have exchanged are in writing, the question of their “intention” is, prima facie, to be resolved objectively, and as a matter of construction of the relevant documents.
[17] See [2011] FCAFC 19 at [215] (Emmett J), and at [218] (Finkelstein J).
Whatever was, and what was not, said (or now disputed) between the parties, the reality is that an agreement was signed by Mr Ryan. Until now, he has taken no action to set aside or otherwise to challenge the document that bears his signature, which was placed on it on
5th October 2004. In my view, objectively construed, he must be taken to be bound by what he signed. Whatever his internal reservations or intention, his external action was such that he exhibited to all, and particularly to Ms Joyce, that he agreed to the terms of, and to be bound by, the agreement.
In addition to the matters raised thus far, there is another curiosity in relation to the agreement itself. It is this: if, as Mr Ryan asserts, he was advised by his [then] solicitor that the agreement was invalid or unenforceable (for whatever reason), why did not only he sign it, but also his [then] solicitor? It might be argued that, in such circumstances, the solicitor knowingly committed some fraud or at least assisted in the perpetration (or perpetuation) of some misrepresentation upon or to Ms Joyce. Put another way: why would a solicitor sign a document attesting to advice having been given, but which advice was to the effect that the agreement was invalid or unenforceable, but also knowing that it had already been signed by
Ms Joyce, and that it was clearly her intention to give effect to the agreement? If Mr Ryan’s submission is correct, it is tantamount to saying that not only did he sign it [allegedly] knowing that the agreement was invalid and or unenforceable, but so too did the solicitor. Yet, both the solicitor and Mr Ryan signed the agreement, admittedly and clearly attesting to different but nonetheless related matters. This so-called ‘curiosity’ of the solicitor’s signature on the agreement is also relevant to matters of estoppel, shortly to be considered. Put even more simply: why would a solicitor execute a certificate to an agreement, which that solicitor – allegedly – considered to be invalid or otherwise ineffectual?
In any event, on the basis of the contractual principles to which I have referred, in my view, the agreement was and remains valid, and this is so notwithstanding the error in the reference to s.90B rather than to s.90C. In such circumstances, it seems to me that Ms Joyce is entitled to a declaration under s.90G(1B) to the effect that the financial agreement, dated 5th October 2004, is binding on the parties whose signatures appear on it.
Estoppel: Ms Joyce argued that, on the principles of proprietary estoppel, Mr Ryan cannot and should not now be permitted to resile from the agreement.[18] In support, Ms Joyce relied upon, among other cases, the High Court decision in Walton Stores (Interstate) Ltd v Maher, and the judgment of Brennan J in particular.[19]
[18] According to Handley JA in his detailed study Estoppel by Conduct and Representation (London: Thomson/ Sweet & Maxwell, 2006) (at pp.1-2), there are, in fact, three kinds of proprietary estoppel, but which are exclusively equitable: proprietary estoppel by standing by; proprietary estoppel by encouragement; and promissory estoppel. Which of these three forms of proprietary estoppel was not specifically identified in the submissions on behalf of Ms Joyce. However, it seemed that the focus of her submissions referred more to proprietary estoppel by standing by. From what follows, it seems to me that the more accurate description is estoppel by encouragement.
[19] Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. The judgment of Brennan J is at pp.408-433. Ms Joyce relies, in particular, on the passage of his Honour’s judgment at pp.428-429.
This case (of Walton Stores) has been criticised strongly by Heydon J, writing extra-curially, and critiqued strongly (also extra-curially) by Handley JA, of the New South Wales Court of Appeal.[20] In my view, a more straight-forward and expeditious route by which the issue of estoppel can and should be considered in this case is via Dixon J’s judgment in Grundt v Great Boulder Proprietary Gold Mines Ltd, which was referred to in the course of Brennan J’s lengthy and detailed judgment in Walton Stores.[21] The facility and utility of the decision in Grundt is that it rests more particularly on (a) ‘mutual relations’, (b) a certain assumption, and (c) whether the departure from that assumption would be unfair or unjust in the circumstances. As described by Handley JA, based on the discussion by Dixon J in Grundt, these elements are constitutive of estoppel by representation.[22] All of those features are patently present in the case before the Court.
[20] See Heydon J’s Foreword to, and Handley JA’s text of, Estoppel by Conduct and Representation, (London: Thomson/Sweet & Maxwell, 2006).
[21] Grundt v Great Boulder Proprietary Gold Mines Ltd (1938) 59 CLR 641. In Walton Stores Brennan J refers to Dixon J’s important statements of principle in 164 CLR at p.414.
[22] Estoppel by Conduct and Representation, op. cit., p.3 ff.
In Grundt, Dixon J said (emphasis added):[23]
The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice.
[23] Grundt 59 CLR at pp.674-675.
A little later in the same judgment, Dixon J also said (internal citations omitted; emphasis added):[24]
Fulfilment of the condition which so far I have discussed is not enough to make it just to preclude a party from setting up a state of facts. The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it. But the law does not leave such a question of fairness or justice at large. It defines with more or less completeness the kinds of participation in the making or acceptance of the assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied. A brief statement of the recognized grounds of preclusion is contained in the reasons I gave in Thompson v. Palmer, and it is convenient to repeat it:—"Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, as in Yorkshire Insurance Co. v. Craine; cp. Cave v. Mills; Smith v. Baker; Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co.; and Ambu Nair v. Kelu Nair; or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption.”
[24] Grundt 59 CLR at pp.675-676.
Finally, his Honour also said:[25] “It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary.”
[25] 59 CLR at p.676.
In my view, on the facts of this case as they have been presented by both sides, and whatever may have been said by Mr Ryan to Ms Joyce about it (which is contested in any event), by virtue of (a) Mr Ryan signing the agreement, and (b) Mr Ryan’s solicitor likewise signing the certificate attached to the agreement, he satisfied the conditions set out by Dixon J in Grundt v Great Boulder Proprietary Gold Mines Ltd to which I have referred. In doing so, he is estopped, and cannot resile from the agreement he signed on 5th October 2004. Moreover, as I have already indicated, objectively assessed, Mr Ryan should be taken to have entered into the agreement. He should be bound by what he signed. At its highest, Mr Ryan’s evidence of “protest” or concern about the agreement expressed to Ms Joyce (a) is denied, and (b) was, in my view, countered by his action in signing the agreement.
Mr Ryan knew that Ms Joyce relied upon the agreement. His [then] solicitor likewise knew that Ms Joyce relied on the agreement. Whether or not both Mr Ryan and or his solicitor at the time knew or believed the agreement was invalid or unenforceable, Mr Ryan signed it. And, as already stated, why would a solicitor execute a certificate to such an agreement if he or she considered it to be ineffectual, invalid or unenforceable, and do so in the knowledge that the other party relied upon it? Indeed, the other party had initiated it. It might in fact be argued that to have signed it in those circumstances constituted a type of fraud, or at least a misrepresentation as to the agreement and/or the intention of Mr Ryan.
Indeed, as long ago as 1866 in the famous case of Ramsden v Dyson, Lord Cranworth LC said: “… a Court of Equity … considers that when I saw the mistake … it was my duty to be active … and that it would be dishonest of me to remain wholly impassive … to profit by the mistake which I might have prevented.”[26]
[26] Ramsden v Dyson (1866) LR 1 HL 129, at pp.140-141.
In such circumstances, a court will order rectification where one party believes that the document contains a particular term, and the other, who is aware of this belief and that it is mistaken, remains silent in order to profit from the mistake.[27]
[27] See Taylor v Johnson (1983) 151 CLR 422 at pp.432-433 (Mason ACJ, Murphy & Deane JJ)
In my view, it is unnecessary to make any formal finding in relation to the actual knowledge of either Mr Ryan and or his then solicitor. And in any event, it would be unwise and improper to do so in circumstances where there was no testing of the evidence, and the respective solicitors who executed the two certificates attached to the agreement provided no evidence. Certainly, there is no suggestion that either Mr Ryan or his solicitor at the time profited from the execution of the agreement in any of the senses described in either Ramsden v Dyson or by the High Court in Taylor v Johnson.
It is sufficient for current purposes to find, as I have indicated, that the elements of estoppel described by Dixon J in Grundt have, in my view, been sufficiently established in this case to entitle Ms Joyce to the relief she seeks. Indeed, having so found, in my view, pursuant to s.90G(1A)(c), it would be unjust and inequitable for Mr Ryan to avoid the responsibilities that flow from what is set out in the agreement of 5th October 2004.
Conclusion
It remains to deal with matters which might otherwise be considered remedial.
In my view, in the light of the matters addressed in these reasons, the Court should (a) rectify the agreement by substituting the correct section of the Act (s.90C), (b) declare it to be a valid and enforceable financial agreement, and (c) restrain, by injunction, Mr Ryan from continuing proceedings under s.79 of the Act. The Court so orders.
The Wife also sought an order for an injunction pursuant to section 90KA(c) preventing the Husband from claiming an interest in the Wife’s property known as Property G, ACT. In the circumstances of the matter and the findings I have made, and order to that effect also should be made.
In the result, Ms Joyce should also have an order in her favour for costs, not on an indemnity basis, but either as agreed or taxed.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate:
Date: 18 March 2011
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