Selen and Selen & Ors
[2011] FamCA 310
•6 May 2011
FAMILY COURT OF AUSTRALIA
| SELEN & SELEN AND ORS | [2011] FamCA 310 |
| FAMILY LAW - EQUITY PROCEEDINGS – transferred from the Supreme Court of New South Wales FAMILY LAW - PROPERTY – farming property – Agreement and Deed of Family Arrangement drafted – Deed provided that parts of the farming property would be transferred to the spouses’ sons – whether Deed is binding on the parties – intention to create legal relations – objective assessment indicates that parties intended to create legal creations – whether Deed rendered unenforceable because of uncertainty and incompleteness of the terms of the Deed FAMILY LAW - EQUITABLE RELIEF – Plaintiff seeks rectification of the Deed and specific performance – laches – plaintiff’s delay – wife is not unconscionably prejudiced by delay – wife did not suffer hardship – finding that plaintiff is willing and ready to perform his obligations under the Deed – where there was common intention to include a term omitted by common mistake – rectification of the Deed permitted – order made for specific performance of rectified Deed – equitable estoppel – plaintiff did not act or abstain from acting in reliance upon the second defendant’s representation – estoppel does not apply |
| Civil Procedure Act 2005 (NSW), s 94 Corporations Act 2001 (Cth), ss 127, 128(1) and 129(6) Family Law Act 1975 (Cth), s 106A Judiciary Act 1903 (Cth), s 79 Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 5(1) |
| ABC v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540 Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (Butterworths Lexis Nexis Australia 2002, 4th ed, 2002) |
| PLAINTIFF: | Mr C Selen |
| 1st DEFENDANT: | Mr D Selen (Deceased) |
| 2nd DEFENDANT: | Ms Y Selen |
| 3rd DEFENDANT: | P Pty Ltd |
| 4th DEFENDANT: | Mr N Selen |
| FILE NUMBER: | NCC | 2454 | of | 2007 |
| DATE DELIVERED: | 6 May 2011 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 21 & 22 March 2011 |
REPRESENTATION
| COUNSEL FOR THE PLAINTIFF: | Mr Hickey |
| SOLICITOR FOR THE PLAINTIFF: | Everingham Solomons Solicitors |
| COUNSEL FOR THE 1ST DEFENDANT: | Not Applicable |
| SOLICITOR FOR THE 1ST DEFENDANT: | Not Applicable |
| COUNSEL FOR THE 2ND DEFENDANT: | Mr Charles |
| SOLICITOR FOR THE 2ND DEFENDANT: | McCabe Partners Lawyers |
| COUNSEL FOR THE 3RD DEFENDANT: | Not Applicable |
| SOLICITOR FOR THE 3RD DEFENDANT: | Not Applicable |
| COUNSEL FOR THE 4TH DEFENDANT: | Not Applicable |
| SOLICITOR FOR THE 4TH DEFENDANT: | Not Applicable |
Orders
Order that the “Agreement & Deed of Family Arrangement” (“the Deed”) dated 2 May 2005 (a copy of which is annexed to these orders) is rectified as follows:
(a) In respect of Clause 2.1:
(i)By omitting the words “Lots 3, 4, 9, 2, 1, 27”, and
(ii)By substituting therefore the words “Lot 3/DP […], Lot 4/DP […], Lot 9/DP […], Lot 2/DP […], Lot 1/DP […], Lot 27/DP […]”, and
(iii)By adding the words “within a reasonable time” between the words “[Mr C Selen]” and “AND”.
(b) In respect of Clause 2.2:
(i)By omitting the words “the lots numbered 26, 25, 15, 49, 18, 19, 29, 16, 53, 50, 31, 52”, and
(ii)By substituting therefore the words “Lot 26/DP […], Lot 25/DP […], Lot 15/DP […], Lot 49/DP […], Lot 18/DP […], Lot 19/DP […], Lot 16/DP […], Lot 53/DP […], Lot 50/DP […], Lot 31/DP […], Lot 52/DP […], Lot 29/DP […]”, and
(iii)By adding the words “within a reasonable time” between the words “[Mr C Selen]” and “AND”.
Order that these Orders be endorsed upon or annexed to the original Deed.
Declaration that the plaintiff is entitled to have the Deed, as rectified pursuant to Order 1 hereof, specifically performed.
Order that the defendants execute all such documents and instruments and do all such things as are necessary in order to specifically perform the Deed, as rectified pursuant to Order 1 hereof.
Order that, in default of compliance with Order 4 hereof by the defendants, or any of them, the Registrar of the Family Court of Australia at Newcastle and the Registrar in Equity of the Supreme Court of NSW are empowered to execute all such documents and instruments and do all such things in the name and on behalf of the defendants as may be necessary in order to specifically perform and carry into execution the Deed, as rectified pursuant to Order 1 hereof.
IT IS NOTED that publication of this judgment under the pseudonym Selen & Selen and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 2454 of 2007
| Mr C Selen |
Plaintiff
And
| Mr D Selen (Deceased) |
First Defendant
And
| Ms Y Selen |
Second Defendant
And
| P Pty Ltd |
Third Defendant
And
| Mr N Selen |
Fourth Defendant
REASONS FOR JUDGMENT
Introduction
A farm is the focal point of a rancorous family dispute in this case.
Spouses set out in 2005 to arrange an intergenerational transfer of the farm to their two sons. An Agreement & Deed of Family Arrangement (“the Deed”) was signed in May 2005 but disagreement soon arose about the enforceability of the Deed and implementation of the transfer of land under its provisions.
The spouses separated in early 2007 and some months later the now deceased husband (“the deceased”) commenced property adjustment proceedings against the wife in this Court under the Family Law Act 1975 (Cth) (“the Act”). Mindful of the former proposed intergenerational transfer of the farm, the deceased later amended his claim in this Court to join one son to the proceedings and petition the Court to make orders in that son’s favour.
In July 2009 that son commenced proceedings himself in the Supreme Court of NSW seeking equitable relief in respect of the Deed. The equity proceedings were brought by the plaintiff against both spouses, a corporation they controlled, and his brother. Soon afterwards the Supreme Court proceedings were transferred to this Court for determination along with the pending matrimonial proceedings.
The outcome of the matrimonial property adjustment proceedings between the spouses will be substantially influenced by the outcome of the equity proceedings. That is because the plaintiff seeks orders which would have the effect of transferring to him tranches of the farm, but in the absence of such orders the farm will constitute matrimonial property and be amenable to division between the spouses. For that reason it was decided the equity proceedings would be heard and determined first, whereupon all parties other than the spouses will be released from further involvement in the matrimonial proceedings. These reasons relate to the adjudication of the plaintiff’s equitable claims.
The trial of the proceedings was delayed because of several interlocutory complications, including the deceased’s loss of cognitive capacity, the appointment of a case guardian for him, his subsequent death, and the absence of any personal representative of the deceased estate.
Parties, pleadings and primary evidence
The plaintiff is Mr C Selen. His equity suit is pleaded in the Amended Statement of Claim filed with the Supreme Court on 20 August 2009.
In support of his claim the plaintiff relied upon:
a)His affidavit, filed in this Court on 27 January 2010, and
b)The affidavit of his wife, Ms L Selen, filed in this Court on 27 January 2010.
The wife, who is the plaintiff’s mother and the second defendant in these proceedings, relied upon her Defence filed in this Court on 29 September 2009 and her affidavit filed in this Court on 18 February 2010.
The plaintiff’s claim is essentially that:
a)Declarations be made to the effect that it was the common intention of the parties to transfer certain identified parcels of real property to the plaintiff under the Deed executed in May 2005 and to implement the transfers of those parcels within a reasonable time.
b)The Deed be rectified to, among other things, properly indentify the parcels of real property to be transferred to the plaintiff and to require implementation of the transfers within a reasonable time.
c)The Deed be specifically performed in the terms declared and rectified.
d)Alternatively, declarations be made that the defendants are estopped from refusing to transfer the parcels of real property to the plaintiff, and that the parcels are held by the defendants upon constructive trust for the plaintiff, together with orders that the defendants forthwith effect transfers of the parcels to the plaintiff.
The wife joined issue with the plaintiff, asserting that:
a)For various reasons, the parties did not ever reach a concluded agreement about the intergenerational transfer of the parcels of land by way of the Deed.
b)Alternatively, even if there was a concluded agreement, it is not capable of being specifically performed by reason of laches, the hardship that would be occasioned to her, and the unreadiness of the plaintiff.
c)She made no oral representations to the plaintiff about the transfer of parcels of real property to him which would support either an estoppel or the creation of a constructive trust.
The first defendant is the deceased husband. It is an agreed fact that he died in July 2010. As yet, no executor or administrator has been appointed to administer his estate. As a consequence, the deceased was unrepresented in the proceedings. An earlier trial date was vacated by reason of his death,[1] but continued delay in the filing of any application for probate or administration by those interested in the administration of the deceased estate does not justify indefinite delay in adjudication of the plaintiff’s claim.[2] Even whilst alive, the deceased failed to comply with procedural orders designed to ensure readiness of the equity proceedings for trial.[3] The tardiness of the deceased’s potential representatives ought not be permitted to exacerbate the situation.
[1] Orders made on 22 July 2010 and 27 July 2010
[2] See Orders made on 27 July 2010 and 25 October 2010
[3] Orders 3-4 made 7 September 2009; Orders 6-7 made 27 October 2009; Order 7 made 10
The third defendant is P Pty Ltd. It is a corporation of which the spouses were the two directors, at least until the deceased’s death. The spouses have equal shareholdings in P Pty Ltd. There are no other officers or shareholders with an interest in the corporation. P Pty Ltd has never participated independently in these proceedings.
The fourth defendant is Mr N Selen. He is the other son of the spouses. He formerly filed a Defence and Cross Claim in the proceedings but discontinued his reliance upon both of those documents by filing Notices of Discontinuance on 2 February and 16 March 2011. Consequently, he took no part in the trial as a party. Nor was he called as a witness by any other party.
Background
The farming property in which the parties are interested comprises many separate parcels of realty, titles in which are registered under the Real Property Act 1900 (NSW). Relevantly, those parcels are registered in the legal proprietorship of either the deceased or P Pty Ltd.
The deceased was, and his estate remains, the legal proprietor of the following parcels,[4] which are collectively described as “[Farm 1]”:[5]
a)Deposited Plan […], Folio Identifier numbers 15, 16, 18, 19, 25, 26, 31, 49, 50, 52, and 53
b)Deposited Plan […], Folio Identifier 29
c)Deposited Plan […], Folio Identifier 1
[4] Amended Statement of Claim, Pleadings and Particulars, par 2
[5] Plaintiff’s affidavit, par 85
P Pty Ltd is the legal proprietor of the following parcels,[6] which are collectively described as “[Farm 2]”:[7]
a)Deposited Plan […], Folio Identifier numbers 1, 2, 3, 4, 9, and 27
b)Deposited Plan […], Folio Identifier 1
[6] Amended Statement of Claim, Pleadings and Particulars, par 3
[7] Plaintiff’s affidavit, par 85
The spouses conducted a farming enterprise upon the farm in partnership with one another. From time to time the sons also worked upon the property.
In November 2004 the spouses instructed their solicitor, Mr M, with respect to the preparation of their wills and the possible intergenerational transfer of the farm to their sons.[8] Mr M subsequently advised the spouses in writing about the proposed intergenerational transfer, including transfer to the plaintiff of “[Farm 2]” land together with other parcels held in the name of the deceased, and the spouses’ retention of life interests in the farm.[9]
[8] Wife’s affidavit, par 60, Annexures Q, FF
[9] Wife’s affidavit, Annexure Q
In the following months, the deceased gave further instructions to Mr M in respect of the proposed intergenerational transfer, pursuant to which Mr M produced to the spouses in March 2005 a document entitled “(Draft) Agreement & Deed of Family Arrangement”. As the title suggested, the document was prepared in draft format. In his covering letter, Mr M invited the parties to discuss between themselves the proposed agreement, to consider taking independent legal advice about the draft document, and to instruct him whether any amendments were necessary, but to otherwise execute the document where indicated with pencilled crosses on the various pages.[10]
[10] Wife’s affidavit, par 62, Annexure R
Sending out the document marked with pencilled crosses indicating the places for execution of the document by the various parties implied Mr M’s expectation that the document would be adopted as drafted. Such expectation would likely have arisen because he had been instructed to prepare the document consistently with the advice he had furnished to the parties some months earlier, which he duly did.
Relevantly, the draft Deed essentially made provision for:
a)The spouses, as directors and shareholders, to cause P Pty Ltd to transfer to the plaintiff “[Farm 2]” land (Clause 2.1);
b)The deceased to transfer to the plaintiff the land called “[Farm 1]” (Clause 2.2);
c)The grant by the plaintiff to the spouses, jointly and severally, of life interests in the parcels of realty transferred to him, which interests could be protected by caveat (Clause 2.3); and
d)The conditional right of the spouses, individually and collectively, to occupy the main homestead situated upon the farm (Clause 3.1).
The draft Deed also made similar provisions for the transfer of other parcels of realty to the fourth defendant (Clauses 1.1 and 1.2).
The draft Deed also recorded that, without creating a binding agreement, the parties intended that the plaintiff and fourth defendant would make financial provision for the spouses’ alternate accommodation in the event that the spouses later abandoned their life interests and rights to occupy the farm homestead (Clause 4).
In or about late April 2005 the plaintiff was invited to attend the spouses’ home to read the draft Deed which had been prepared by the solicitor.[11] The deceased and wife were both present and participated with the plaintiff in conversation about the draft Deed, during which conversation the plaintiff indicated his satisfaction with its terms.[12] The plaintiff was not challenged about that evidence and the wife professed no recollection enabling her to refute it.
[11] Plaintiff’s affidavit, par 88
[12] Plaintiff’s affidavit, pars 89-90
Not long afterwards, the deceased took the draft Deed to the plaintiff and fourth defendant for their signature in the presence of a witness.[13] It was an agreed fact between the plaintiff and wife that the execution of the draft Deed by the plaintiff and fourth defendant occurred in the presence of that witness, obviating the need for the witness to give corroborative evidence of those events. The draft Deed was signed by the plaintiff and fourth defendant before it was signed by the spouses and executed on behalf of P Pty Ltd.
[13] Plaintiff’s affidavit, pars 93-98
At some point in or about early May 2005 the spouses also signed the draft Deed without amendment.[14] The endorsement of their signatures upon the draft Deed purports to have been witnessed by a person named as Ms J. Although the wife gave no evidence in her affidavit of her execution of the draft Deed in the presence of that witness, she acknowledged in cross examination that the endorsement of her signature upon the document was witnessed by that person.
[14] Wife’s affidavit, par 64
Nor did the wife explain in her affidavit how the Deed came to be signed by P Pty Ltd, but it is evident from the affixation of P Pty Ltd’s corporate seal on the Deed, in proximity to the spouses’ signatures as director and secretary, that it was intended the draft Deed be independently ratified by P Pty Ltd as a party.
Shortly after the draft Deed was executed by the parties it was returned to Mr M who plainly believed that, in the absence of instructions about the need for any amendment, and with the affixation of the parties’ signatures and seal in the presence of witnesses, the provisions of the draft Deed had been adopted as valid and binding by all of the parties. Much later he confirmed that belief in writing.[15]
[15] Wife’s affidavit, Annexure CC
As a consequence of those developments and that belief, Mr M wrote to the parties on 6 May 2005 advising them he had accordingly deleted the word “(Draft)” from the title of the Deed and also dated the document “2 May 2005”.[16] The original of the document was tendered in evidence.[17]
[16] Plaintiff’s affidavit, par 103; Wife’s affidavit, par 65
[17] Exhibit P2
A dispute then swiftly arose about implementation of the terms of the Deed. The deceased indicated to the plaintiff that he did not want to be rushed to effect the transfers of land,[18] and the fourth defendant told the spouses of his dissatisfaction with the manner of division of the farm.[19]
[18] Plaintiff’s affidavit, par 99
[19] Plaintiff’s affidavit, pars 101, 104
The wife deposed in her affidavit that she was dismayed by Mr M’s alterations to the Deed, because she perceived the need for further negotiation with their sons about the transfers of land and therefore did not consider the Deed binding.[20] However she did not thereafter act entirely consistently.
[20] Wife’s affidavit, pars 64-67
Several days later, on 11 May 2005, the spouses attended the office of Mr M to execute their fresh wills.[21] The deceased and wife both executed mutual wills, each giving the whole of their respective estate to the other, but in the event of the spouse beneficiary predeceasing the testator, making identical alternate bequests to their children.
[21] Wife’s affidavit, par 68, Annexure FF
The wife’s will[22] expressly recited the wife’s acknowledgement of her entry into the Deed dated 2 May 2005, and the existence of a dispute about the Deed, but stated in clause 8 that:
“It is my intention that as far as possible the Agreement and Deed of Family Arrangement [the Deed] be effective and operate according to its terms and the provisions hereof, and it is my intention that if any dispute arises, this Will shall have priority.”
[22] Plaintiff’s affidavit, Annexure K1
In so far as it affected the plaintiff, evidenced by the provisions of their wills,[23] it was the spouses’ intention for two things to occur upon the death of the last surviving of them – firstly, the devise of “[Farm 1]” to the plaintiff on similar conditions to those set out in the Deed (clause 5), and secondly, the devise to the plaintiff and fourth defendant of the shareholding in P Pty Ltd on condition that, as trustees, they procure the transfer to the plaintiff of the “[Farm 2]” land (clause 6).
[23] Plaintiff’s affidavit, Annexure K1
In effect, the spouses’ joint intention reflected in their wills was the same as reflected in the provisions of the Deed. They intended to benefit the plaintiff by the transfer to him of the parcels of land described as “[Farm 2]” and “[Farm 1]”.
There were however differences between the terms of the Deed and the terms of the wills. Clearly, the transfer of realty pursuant to the wills could only occur upon the death of the surviving spouse, whereas the intention to transfer realty expressed within the Deed was to be acted upon much earlier. The wills also made more refined provisions about the conditional transfer to the plaintiff of “[Farm 1]”, for the protection of the plaintiff’s brother (clauses 5(i), 5(ii), 5(iii)), than by comparison with the Deed (clause 3.2).
Notwithstanding the disaffection of some with the Deed, from May 2005 the parties acted as though the Deed was binding upon them.
On instructions from the spouses, or at least the deceased, Mr M prepared another document entitled “Revocation of Agreement and Deed of Family Arrangement”, which was signed by the spouses on 11 May 2005 – the same day they signed their wills. They executed the Revocation Agreement both on behalf of themselves and P Pty Ltd.[24] The Revocation Agreement expressly noted that revocation of the Deed was conditional upon the consent of the plaintiff and fourth defendant to such revocation.
[24] Wife’s affidavit, par 70, Annexure Y
Mr M sent similar Revocation Agreements to the plaintiff and fourth defendant on 24 May 2005 for their consideration and signature, if they were so disposed.[25] The fourth defendant signed the Revocation Agreement,[26] but the plaintiff refused because he did not wish to abandon his rights under the Deed.[27]
[25] Plaintiff’s affidavit, par 107, Annexure J; Wife’s affidavit, par 69, Annexures V, W
[26] Wife’s affidavit, par 70, Annexure X
[27] Plaintiff’s affidavit, pars 109-110; Wife’s affidavit, par 71
Self-evidently, the only logical reason for the preparation and proposed mutual execution of the Revocation Agreement was that the parties believed they were bound by the Deed, or at least there was a very real chance they were. If they were not, then the Deed was nugatory and a Revocation Agreement was unnecessary.
On 8 July 2005, Mr M prepared and sent to the plaintiff for his execution and return an “Amended Agreement and Deed of Family Arrangement”.[28] He apparently did so on instructions of the deceased in an attempt to avert an impasse. The plaintiff also refused to execute that document.[29]
[28] Plaintiff’s affidavit, par 111, Annexure K
[29] Plaintiff’s affidavit, par 113
Notably, the Amended Deed proposed that exactly the same land be transferred to the plaintiff and fourth defendant as provided for by the Deed. The only material change was the inclusion of an express provision for the fourth defendant’s continued use of improvements situated upon one of the parcels transferred to the plaintiff (clauses 3.3, 3.4).
In the absence of consent by the plaintiff to revocation of the Deed and/or adoption of the Amended Deed, the parties remained locked in dispute and the spouses and P Pty Ltd refrained from implementation of the terms of the Deed. Consequently, the relationship between the plaintiff and spouses became increasingly fractious.[30]
[30] Plaintiff’s affidavit, pars 122-127; Wife’s affidavit, par 76
In December 2006 the deceased informed the plaintiff that he intended to lease the farm and the plaintiff would need to vacate the property.[31] In response to that notification the plaintiff registered caveats over those parcels of real property to which he asserted equitable interest pursuant to the Deed.[32] Later, in July 2007, the plaintiff agreed to withdraw the caveats.[33]
[31] Plaintiff’s affidavit, par 128
[32] Plaintiff’s affidavit, par 130; Wife’s affidavit, par 77, Annexures DD, EE
[33] Plaintiff’s affidavit, pars 133-134; Wife’s affidavit, par 80, Annexures GG, HH
Following upon their marital separation in February 2007,[34] the deceased commenced proceedings against the wife seeking an adjustment of their property interests under s 79 of the Act in August 2007.[35] The deceased later amended his claim in April 2008, proposing orders that would transfer to the plaintiff some of the parcels of property comprising the farm.[36]
[34] Wife’s affidavit, par 75
[35] Wife’s affidavit, par 82
[36] Wife’s affidavit, pars 84-85
The plaintiff commenced his equity proceedings against the other parties in the Supreme Court of NSW on 2 July 2009. He filed his Amended Statement of Claim on 20 August 2009, and on that same date the Supreme Court made an order transferring the equity proceedings to this Court for determination pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
The alleged deed
Intention to create legal relations
The wife contended that the Deed was unenforceable because the parties, or at least she, did not intend to create binding legal relations with the other parties.
It is established by a long line of authority that, ordinarily, agreements made in a domestic or family context are not legally enforceable because the parties did not intend to create legal relations with one another (see Balfour v Balfour [1919] 2 KB 571; Cohen v Cohen (1929) 42 CLR 91 at 96; Jones v Padavatton [1969] 2 All ER 616 at 620-621; Henderson v Miles [2005] NSWSC 710 at 19 - 24]; Magill v Magill (2006) 226 CLR 551 at 614; Atco Controls Pty Ltd (in liq.) v Newtronics Pty Ltd (recs and mgrs appt)(in liq) [2009] VSCA 238 at [60]).
Although that may be the usual expectation, it is not now appropriate to accord the expectation the status of a rebuttable presumption (see Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 106). Evidence may always be adduced to prove the existence of the relevant intention to create legal relations. The party seeking to prove the contract bears the onus of establishing the relevant intention, and that intention is ascertained objectively from any written contractual document and the surrounding circumstances. As was observed by the High Court in Ermogenous at 105-106:
…the search for the ‘intention to create contractual relations’ requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour)…Although the word ‘intention’ is used in this context, it is used in the same sense as it is used in other contractual contexts. It described what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
It is common ground that the parties began discussing the prospect of an intergenerational transfer of the farm as early as 2000, when they collectively consulted a financial advisor about the issue in Town 1, NSW, but no agreement was then reached.
In November 2004 the idea was broached again, this time with more vigour. The spouses consulted their solicitor seeking specific legal advice about the intergenerational transfer. The advice was proffered in writing for them to consider, which the spouses then did for several more months. The solicitor was then engaged to prepare a draft agreement in accordance with the advice he had given some months before. He did so and provided it to the spouses in March 2005. The wife conceded in cross examination that she read the Deed upon its receipt and understood its terms. She also agreed that the terms of the Deed reflected her understanding of the advice they had earlier received from the solicitor.
The request made of the solicitor by the spouses to reduce the terms of the proposed agreement to writing must logically have been because the spouses intended the agreement to be binding upon the parties to it. There was no other point in having a written and signed record of their agreement. The solicitor’s preparation of the agreement in the form of a Deed, requiring the parties’ execution of it in a formal way, must have served to emphasise to the parties the gravity of the document.
The spouses were invited by their solicitor to discuss the Deed between themselves and with the other parties. The evidence is that they did so. In April 2005 they invited the plaintiff to their home and discussed the Deed with him. The wife told the plaintiff that the deceased and fourth defendant had already discussed the manner of division of the farm and the fourth defendant approved. The plaintiff also approved. The spouses understood that, while parcels of realty would be transferred into the names of the plaintiff and fourth defendant, they would still have use of the land for their own purposes.[37]
[37] Plaintiff’s affidavit, pars 88-90; Affidavit of Ms L Selen, pars 23-24
The wife was asked in cross examination about the meeting with the plaintiff in April 2005. Although she alleged no recollection of the meeting at their home, because it had occurred too long ago, she did concede the fourth defendant had agreed with the spouses about the manner of division of the farm before the Deed was signed, and also that she intended the spouses would still be able to live upon and work the land despite the change of legal ownership in the land.
Shortly following the meeting between the plaintiff and spouses to discuss the Deed, the deceased contacted the plaintiff to make arrangements for both the plaintiff and fourth defendant to sign the Deed in the presence of an independent witness.[38] The deceased would not have made such arrangements unless he was well aware of the need for formal execution of the Deed to ensure its enforceability. The Deed was then executed by the plaintiff and fourth defendant the following morning in the manner envisaged. They were the first two of the five parties to sign the Deed.
[38] Plaintiff’s affidavit, par 93; Affidavit of Ms L Selen, pars 25-27
The Deed was later executed by the deceased and wife as individual parties, and by them both as officers of P Pty Ltd.
The wife must also have been well aware of the gravity of the Deed when it was placed before her for signature. At that point in time she would have seen that the Deed had already been executed by the plaintiff and fourth defendant, both in the presence of an independent witness. She was also invited to sign the Deed in the presence of an independent witness, which she duly did. She was also called upon to sign the Deed in her capacity as an officer of P Pty Ltd, which process entailed affixation of the corporate seal adjacent to the spouses’ signatures.
The wife disavowed any suggestion that she did not exercise free will in matters pertinent to P Pty Ltd, the farming partnership, and the farm. She denied that she was only a nominal director or partner. Her evidence in cross examination, consistent with that in her affidavit,[39] was that she was integrally involved in decisions of significance affecting the farm, and she certainly regarded the intergenerational transfer of the farm to be a decision and transaction of significance. There can be little doubt the wife was fully cognisant of the nature of the transactions, rights, and obligations set out within the Deed.
[39] Wife’s affidavit, par 37
The wife alleged she executed the Deed only because it was styled as a “(Draft)” Deed and she expected that the parties would continue to engage in further negotiations about the terms of the arrangement.[40] I do not accept that evidence. It is inconsistent with the inferences objectively available from the circumstances surrounding the creation and execution of the Deed, which suggest that the parties intended the agreement contained within the Deed to be binding upon them.
[40] Wife’s affidavit, par 64
The wife did not give any explanation in evidence about why she would sign a document purporting to contain an agreement if she maintained that no agreement was intended. That explanation was left to her counsel in submissions, who suggested the wife’s execution of the Deed was merely a demonstration by her to the other parties of her “goodwill” and willingness to engage in further negotiations. I do not find that a persuasive explanation, particularly when unsupported by direct evidence. There was no need for the formality observed in execution of the Deed, by use of independent witnesses and corporate seal, if that was the wife’s simplistic purpose.
Notably, the wife gave no evidence of her informing the plaintiff of the need for further negotiation about the terms of the Deed, from which I impute that she did not. The wife only gave evidence about the issues she perceived were left to negotiate after the Deed was executed, which issues were restricted to how she and the deceased would be able to continue using the farming facilities for their partnership business, and how they would be accommodated should they later decide to vacate the farm homestead.[41]
[41] Wife’s affidavit, pars 64, 66
The right of the spouses to continue living in the farm homestead, standing upon one of the parcels to be transferred to the plaintiff, was expressly addressed by the Deed at clause 3.1. Furthermore, the issue about the spouses’ accommodation following any decision by them to depart the farm was addressed in the Deed at clause 4, which expressly noted the parties did not intend to create any binding agreement about that issue. The parties clearly considered and determined not to reach any concluded agreement about that potentiality. They were content with an expression of mutual intention that the plaintiff and fourth defendant would assist in the provision of alternate accommodation for the spouses if that possibility crystallised.
That inference is all the stronger because the issue was specifically raised with the spouses by Mr M in his written advice to them in November 2004, at which time he advised the spouses:[42]
“Alternatively you could leave that aspect of the matter [their possible future accommodation in town] out [of the agreement] and renegotiate [at a later time] that side of the arrangement in return for vacating the property and ending the life interest early.”
[42] Wife’s affidavit, Annexure Q, numbered par 4
There was no express provision within the Deed about the spouses’ entitlement to continue using the farming facilities upon the parcels transferred to the plaintiff, but that omission does not necessarily connote that the parties expected or intended to reach further agreement on that issue. It just as easily connotes recognition by the parties that no formal agreement on that issue was warranted. It is common ground that the farm supported the separate farming enterprises conducted individually by the spouses’ partnership, the plaintiff, and the fourth defendant. They all used the same facilities, being machinery sheds, shearing sheds, hay sheds, cattle yards, and grain silos. There has never been any formal agreement between the parties in the past about their respective use of those facilities. The more compelling inference is that the parties did not envisage any need for such a formal agreement in the future. Their agreement comprised within the Deed was confined to the process of transferring legal ownership in parts of the farm from the deceased and P Pty Ltd to the plaintiff and fourth defendant, whilst ensuring continued rights of occupation by the spouses.
The wife’s counsel again attempted to supplement the wife’s evidence by explaining what other issues were left to be negotiated between the parties. He referred to the grant of life interests in the farm to the spouses and the grant of rights of pre-emption in the event of sale of the land by the plaintiff.
The grant of life interests to the spouses was expressly addressed by the Deed, at clause 2.3 in respect of the plaintiff and at clause 1.2 in respect of the fourth defendant.
The fact that the Deed did not contain any provision affording rights of pre-emption to the spouses or fourth defendant does not of itself signify that an agreement on that issue was yet to be reached and incorporated into the Deed. It may have been intentionally omitted, or perhaps not even considered as a topic for negotiated agreement. Given that the spouses had taken advice from their solicitor about the transaction and its repercussions, and the issue was not addressed in the Deed, the latter two inferences are more attractive than the inference posited by the wife’s counsel that the issue was both contemplated and yet to be negotiated, which is without an evidential foundation.
Those conclusions are consistent with the evidence of the plaintiff, who credibly asserted in cross examination that he understood that the parcels were to be transferred into the names of himself and the fourth defendant, but the farming practices of the parties that existed to that point in time would simply continue as before. His expectation was that “life would continue as normal”. He expressly denied the proposition that “lots of matters still needed to be worked out”. He said the parties had agreed about their accommodation upon the farm and the parties had not discussed the sharing of expenses.
Those conclusions are also consistent with the understanding of the spouses’ own solicitor, who understood his instructions from the spouses to be “a simple request to prepare an intergenerational transfer”.[43]
[43] Wife’s affidavit, Annexure FF
The facts in this case carry a completely different complexion from those in ABC v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540, on which authority the wife placed reliance to support her argument that the Deed was merely a draft on the path to an ultimately unattained final agreement. In that case, although the parties had exchanged a series of draft agreements, none were ever executed, and when the parties’ negotiations finally broke down the plaintiff unsuccessfully argued that the parties were contractually bound by the terms of correspondence they had exchanged. In these proceedings there was but one draft agreement, the terms of which were consistent with the intentions of the parties and required no amendment, and which was formally executed by all the parties. They were no longer refining the essential terms of their bargain, which were already incorporated within the Deed.
Ultimately, the wife’s repeated assertion that the agreement was not intended to be binding distils to the contention that she executed the Deed in draft format only. There is no doubt that when the wife executed the document it was headed “(Draft) Agreement & Deed of Family Arrangement”. The word and parentheses “(Draft)” were deleted by the solicitor when it was returned to him following execution by all parties.
The Deed was unquestionably only a draft when it was initially prepared by the solicitor, conformably with the spouses’ instructions. The existence of parentheses around the word “Draft” differentiated it from the other words in the title of the document and tended to indicate that the Deed may cease to be merely a draft. After the Deed was sent by the solicitor to the spouses, neither informed him of the need for any amendment. Despite the unamended title on the document, it ceased being a mere draft when each of the parties adopted its terms by formally executing the Deed in the circumstances already described. It then became the original document embodying the terms of the parties’ agreement. The word and parentheses “(Draft)” in the title of the document then became superfluous, even misleading, and its deletion was unimportant, regardless of whether the deletion was accomplished by the solicitor after its execution or by one of the parties during the process of its execution. The unamended title of the document would not, of itself, determine the characterisation of the document. Nor does the amended title.
I do not accept the wife’s evidence that the existence of the word and parentheses “(Draft)” in the title to the document, when she executed the Deed for herself and P Pty Ltd, left her believing that the document was not binding. The very circumstances of her lengthy consideration of its terms, her discussion of its terms with the deceased and plaintiff, her knowledge of the discussion between the deceased and fourth defendant about its terms, and the formal manner of her execution of it lead me to conclude, on the balance of probabilities, that at the time she executed the Deed the wife understood and intended the Deed to be binding and enforceable. I am also satisfied that all other parties intended the Deed to be binding and enforceable.
As an officer of P Pty Ltd, the wife was privy to execution of the Deed by P Pty Ltd in such a way that the other parties to the Deed were entitled as a matter of law to assume P Pty Ltd had formally executed the Deed intending it to be binding (see ss 127, 128(1), 129(6) of the Corporations Act 2001 (Cth)). It would be a curiously inconsistent outcome if, by her own voluntary conduct, the wife bound P Pty Ltd to the Deed but not herself.
Parties ought not be able to lightly escape the consequences of an agreement they strike by recording the agreement in writing and signifying their adoption of it by voluntary execution (see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179-181). In cross examination the wife faintly implied her unfamiliarity with the terms of the Deed by saying she signed the Deed hurriedly, but her evidence was unconvincing. She had more than sufficient time to leisurely consider it, which she did in consultation with the other parties. The manner of its subsequent execution in the presence of independent witnesses and the affixation of a corporate seal indicate deliberate adoption of its terms. When pressed in cross examination, the wife conceded she was cognisant of, and happy with, the terms of the Deed.
The protestations by the wife about her belief in the agreement being nothing more than a draft, despite her execution of it, were allegedly communicated to only the deceased – not the plaintiff or her solicitor.[44] The wife momentarily asserted in cross examination she had contacted the solicitor directly with her complaint, but she then recanted and conceded she had not.
[44] Wife’s affidavit, par 64, 66
The wife’s allegation that the deceased communicated her disgruntlement to the solicitor is not corroborated by any evidence from the solicitor.[45] In view of the unavailability of the deceased to give evidence, one might have expected the wife to call available corroborative evidence on such a pivotal issue in the proceedings. She did not call evidence from the solicitor, and offered no explanation for why. I infer that the evidence of Mr M on the point would not have assisted the wife’s case (see Jones v Dunkel (1959) 101 CLR 298).
[45] Wife’s affidavit, par 67
The evidence adduced by the wife about her personal thoughts, which she apparently shared with only the deceased, whose interests at that time coincided with her own, is evocative of the High Court’s admonition in Ermogenous not to search for the “uncommunicated subjective motives or intentions of the parties.”
The wife submitted that post-contractual conduct can cast light upon the meaning of parties’ communications antecedent to the subject agreement as an aid in determining whether the parties intended to be immediately contractually bound (see Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [69]). That may be so, but the antecedent negotiations of the parties in this instance are quite unambiguous. Their meaning is plain without the need to construe them with the aid of consideration of post-contractual conduct. Not only is their meaning plain, the evidence of them is uncontentious. The parties spoke with one another and confirmed their respective satisfaction with the terms of the Deed, which they then formally executed.
The ambivalent manner in which the wife acted after execution of the Deed is more apt to demonstrate that she entertained subsequent doubts about whether she ought have entered into the Deed than it is to demonstrate that she had no intention to enter into the Deed at all.
The wife’s execution of her will, little more than a week after the Deed, manifests her intention for the plaintiff to receive the same land dictated by the Deed, albeit not until her death and on express conditions favourable to the fourth defendant. By that stage, the wife was aware that the fourth defendant had expressed dissatisfaction with the manner of division of the farm, even though the wife agreed in cross examination the fourth defendant had contrarily expressed his satisfaction with the manner of the division of the farm immediately before the Deed was signed by all parties.
The wife’s execution of the Revocation Agreement simultaneously with her new will manifests her acknowledgement that the Deed was, or at least probably was, binding and efficacious.
I conclude that the parties, including the wife, intended to enter into legal relations with one another through the medium of the Deed.
Uncertainty and incompleteness of the Deed
Aside from the issue of the parties’ mutual intention to create legal relations between them, the wife submitted that there were several bases upon which the Deed was unenforceable by reason of either uncertainty or incompleteness, some of which reasons replicated the factual issues raised in respect of the intention to create legal relations.
The wife’s contentions about uncertainty and incompleteness arise from:
a)The alleged failure to annexe to the Deed the plan referred to as an annexure within the text of the Deed;
b)Alternatively, if the plan was annexed, the failure to ensure that the plan was colour-coded as described in the text of the Deed;
c)The deletion of the word “(Draft)” from the title of the document by the solicitor following its execution by the parties;
d)The addition of the date “2 May 2005” to the Deed by the solicitor following its execution by the parties;
e)The omission from the Deed of express terms dealing with the grant of life interests to the spouses, the ability of the spouses to continue using the farming facilities following upon transfer of the parcels to the plaintiff and fourth defendant, and the grant of rights of pre-emption to the spouses and fourth defendant;
f)The omission of any time frame for the transfers of the parcels of realty to the plaintiff pursuant to clauses 2.1 and 2.2 of the Deed; and
g)The absence of definitive agreement in clause 4 of the Deed about the contributions of the plaintiff and fourth defendant towards the provision of alternate accommodation for the spouses if they decide to vacate the farm homestead.
There was no dispute between the parties about the state of the law with respect to the need for certainty in contracts. They each acknowledged exposition of the law in Thorby v Goldberg (1964) 112 CLR 597 at 607 to the following effect:
It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential and critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention.
That statement of principle was endorsed in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437.
In light of that authority, it is convenient to deal with the wife’s submissions individually, beginning with the issues raised in paragraphs 86(a) and 86(b) above.
The Deed makes specific reference in its terms to the annexure of “Schedules” (at recitals (b), (c), (e), (f) and (g)) and a “plan” (at recital (d) and clauses 1.1 and 2.1). There was no submission that the “Schedules” and “plan” were references to different documents. It was mutually accepted that the differing terms were used as references to the same document. The only document annexed to the Deed executed by the parties was a marked plan of the parcels of land comprising the farm.[46]
[46] Exhibit P2
The wife alleged that she could not remember whether the plan was actually annexed to the Deed at the time she executed it.[47] She repeated that evidence in cross examination. However, the wife deposed that a copy of the Deed in the form she executed it was annexed to her affidavit,[48] and inspection of the relevant annexure reveals incorporation of the plan with the Deed.[49]
[47] Wife’s affidavit, pars 63, 64
[48] Wife’s affidavit, par 64
[49] Wife’s affidavit, Annexure S
By comparison, the evidence of the plaintiff was certain, and he was not challenged about it. The plaintiff deposed that the plan was annexed to the Deed at the time he inspected it in the presence of the spouses in April 2005,[50] and at the time he executed it shortly thereafter.[51]
[50] Plaintiff’s affidavit, par 90
[51] Plaintiff’s affidavit, par 97
The plan annexed to the Deed was not signed by the parties. The plaintiff explained the reason for that was because he was told to sign the document only where marked by the solicitor with pencilled crosses, and there were no pencilled crosses on the plan. Inspection of the plan reveals that there are pencilled crosses marked at points of execution on all pages of the Deed, but not the annexed plan, just as the plaintiff said.
I accept that the Deed had annexed to it, at the time it was signed by each of the parties, the plan which is currently annexed to the original Deed tendered in evidence.[52] It follows that the agreement was not uncertain or incomplete by reason of absence of that document.
[52] Exhibit P2
It is obvious from inspection that the plan annexed to the Deed is photocopied in black and white. It is not colour-coded in the manner described in the text of the Deed. I am not satisfied that the Deed is rendered uncertain or incomplete by reason of the annexed plan not bearing the colour codes referred to within the Deed, for the following reasons.
The plaintiff agreed in cross examination that identification of the parcels being transferred to him and the fourth defendant was more easily facilitated by the availability of a colour-coded plan. He could hardly say otherwise, given that during his examination in chief he colour-coded a black and white plan and tendered it as an exhibit.[53] But that concession does not sustain the wife’s contention. The absence of such an aid to identification did not deprive the wife of certainty about the parcels of realty intended to be transferred to the plaintiff and fourth defendant under the terms of the Deed. There was no confusion about the parcels because they were identified by Folio Identifier numbers in the text of the Deed and the parcels were also numbered and marked on the black and white plan annexed to the Deed. The absence of colour-coding caused no internal inconsistency within the Deed. The wife conceded in cross examination that she read and understood the terms of the Deed. She laboured under no misconception.
[53] Exhibit P1
It is also clear from the evidence that, in advance of the preparation of the Deed, the wife received a colour-coded plan identifying the parcels to be transferred to the plaintiff and fourth defendant. Mr M sent it to the spouses with his letter of advice dated 11 November 2004.[54]
[54] Wife’s affidavit, Annexure Q
An identical marked black and white plan to the one annexed to the Deed was also later annexed to the spouses’ wills[55] and the proposed Amended Deed.[56] Another colour-coded plan was sent by the spouses’ solicitor to the plaintiff’s solicitor in February 2006.[57] Although those documents were prepared or executed after the Deed, the annexure of an identical plan to those documents tends to demonstrate continuity of the wife’s certainty about identification of the subject parcels across the period between November 2004 and February 2006.
[55] Plaintiff’s affidavit, Annexure K1
[56] Plaintiff’s affidavit, Annexure K
[57] Wife’s affidavit, Annexure AA
In respect of the issue raised in paragraph 86(d) above, as previously recounted, the spouses’ solicitor added the date “2 May 2005” to the Deed upon his receipt of the duly executed document. In final submissions the wife’s solicitor conceded that the Deed would not be rendered unenforceable, if otherwise enforceable, had the parties omitted to date the document in the process of its due execution and it had remained undated. Consequently, it was conceded that the subsequent addition of the date to the document had no bearing upon the validity of the Deed. The issue therefore fell away.
The issues referred to in paragraphs 86(c), 86(e), and 86(g) above have already been addressed in the context of the parties’ intention to create legal relations. For reasons already explained, there is no uncertainty or incompleteness of the Deed on account of those issues.
As to the issue identified in paragraph 86(f) above, it is plain that the Deed failed to prescribe the time frame within which the intended transfers of the parcels of realty to the plaintiff and fourth defendant were to take place. The plaintiff acknowledged the lacuna and asserted that it was an implied term that the transfers should take place within a reasonable period of time. The wife refuted that submission, contending the omission of the time stipulation rendered the Deed unenforceable through uncertainty.
An agreement which fails to stipulate the time for completion may be remedied by implication of a contractual term requiring performance of the agreement within a reasonable time. It commonly occurs in relation to contracts pertaining to both goods (see W & J Investments Ltd v Commissioner of Taxation (1987) 76 ALR 293 at 309) and land (see Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17 at 21).
The legal requirements for the implication of a contractual term in formal contracts are well known (see BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-283; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347; Khoury and Anor v GIO (NSW) (1984) 165 CLR 622 at 636; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 255-262; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422, 442). The implied term must be reasonable and equitable, necessary to give efficacy to the contract, obvious, capable of clear expression, and consistent with the express terms of the contract.
An implied term that the transfers of realty under the Deed occur within a reasonable time fulfils all of those criteria.
The plaintiff agitated for implementation of the Deed immediately following its execution. The only reason for prevarication on the part of the deceased was the state of the spouses’ financial capacity to immediately effect the transfers.[58] Mr M, who took his instructions from the spouses, understood that the Deed was to be acted upon without delay. He wrote to the spouses on 6 May 2005, within days of his receipt of the executed Deed, soliciting instructions to “prepare the necessary property transfers and associated stamping and registration.”[59] At that point in time, there can be little doubt the parties all expected the property transfers under the Deed would occur within a reasonably short period of time.
[58] Plaintiff’s affidavit, par 99
[59] Wife’s affidavit, Annexure T
The subsequent contrary intention manifest from the terms of the wife’s will, signed on 11 May 2005, to not effect the transfers until the death of both spouses does not disprove existence of the earlier intention to effect the transfers shortly after execution of the Deed. Rather, it more likely indicates a change of heart. That conclusion is borne out by the wife’s own evidence and submissions. The corollary of her contention throughout the trial was that, had the parties’ further negotiations about the allegedly outstanding issues been successfully concluded, she would have agreed to the transfer of the parcels to the plaintiff and fourth defendant forthwith. The expression of intention in the wife’s will to delay the transfers until after the death of both spouses was therefore also contradictory to her advocated position in respect of the Deed and the allegedly ongoing negotiations, and represented a change of her intention rather than continuity of an earlier intention.
I am satisfied that, in the words used in Thorby v Goldberg, the parties at least agreed on the “essential and critical terms” of their bargain and that the terms set out within the Deed are not “so obscure and incapable of any precise or definite meaning” that the Court is deprived of the ability to attribute mutual contractual intention to the parties.
Other objections to rectification and enforcement of the Deed
In view of the mutual intention to create legal relations and the certainty about the terms of their contract, the plaintiff sought rectification and specific performance of the Deed.
The wife opposed rectification and specific performance of the Deed on the various grounds of laches, the hardship that would be occasioned to her by such remedies, and the unreadiness of the plaintiff to perform his own obligations under the Deed.
Laches is a recognised defence to an equitable claim. The elements of the defence are that the plaintiff had knowledge of the subject wrong, delayed in pursuing it, and thereby caused the defendant unconscionable prejudice. In considering the defence, all three elements must be taken together and the ultimate question asked as to “whether, in all the circumstances, the plaintiff has impliedly, in equity, released the defendant from his or her claim or has so acted as to make it unfair that the claim should now succeed.” (see Crawley v Short [2009] NSWCA 410 at [163-164, 175]).
The facts germane to the issue are as follows.
By December 2005 negotiations between the parties about their differences over the Deed had seemingly been exhausted. Mr M wrote to the plaintiff on behalf of the spouses making that point.[60]
[60] Plaintiff’s affidavit, Annexure L
In early 2006 the plaintiff retained solicitors to advise him about the problem, and those solicitors then exchanged correspondence with Mr M.[61]
[61] Plaintiff’s affidavit, Annexures M, N, O
On 13 March 2006, Mr M wrote on behalf of the spouses to the plaintiff’s solicitors advising that, as from that point, the spouses proposed to treat the Deed as though it was not binding.[62]
[62] Plaintiff’s affidavit, Annexure P, numbered par 1.
The plaintiff was advised that he would need to institute proceedings to enforce the Deed. He declined to do so at that point because he did not have the financial capacity to fund such proceedings. He also hoped to still negotiate a satisfactory resolution, given that all of the relevant parties were family members living upon the same farm.
In December 2006 the deceased informed the plaintiff that he would need to vacate the farm because he intended to lease it,[63] as a consequence of which the plaintiff instructed his solicitors to register caveats over the parcels in which he asserted a proprietary interest.[64]
[63] Plaintiff’s affidavit, par 128
[64] Plaintiff’s affidavit, par 130
The situation must have been intolerably stressful for the parties. The plaintiff was so distressed he was unable to work,[65] and the spouses suffered marital separation only two months later in February 2007.[66]
[65] Plaintiff’s affidavit, par 129
[66] Wife’s affidavit, par 75; Plaintiff’s affidavit, par 131
The plaintiff agreed to withdrawal of his caveats in July 2007 when threatened with legal action over them.[67]
[67] Plaintiff’s affidavit, par 133; Wife’s affidavit, Annexure HH
The matrimonial proceedings were commenced between the spouses in August 2007 and the plaintiff was named as a party to those proceedings in April 2008.
The plaintiff eventually commenced proceedings to assert his equitable rights in July 2009.
Whilst litigation has been pending over the last few years, the parties have continued to occupy and work upon the farm. The plaintiff and his family still use their cottage, although they now apparently primarily live in the township of Town 2. The fourth defendant constructed, and now lives in, a home he built upon a parcel of property he purchased from the spouses, which is not a parcel identified within the Deed as one to be transferred to either him or the plaintiff. The wife continues to reside in the farm homestead and operate the partnership business upon the land. The deceased, from whom she separated, died in July 2010. In the event of performance of the Deed, the wife will retain the right to live in the farm homestead if she chooses.
The plaintiff certainly delayed in seeking remedial enforcement of the Deed, but his delay is rationally explained by his lack of funds to prosecute expensive litigation and his emotional turmoil over such a wretched dispute with his family.
The wife has not been prejudiced by the plaintiff’s delay, let alone unconscionably prejudiced. Her position now is no different to that which has prevailed over the intervening years since the Deed was executed. She is only called upon to defend the plaintiff’s claim now in the same way she always would have done. She has not suffered any procedural disadvantage through loss of material evidence. The deceased died in the intervening period, but the wife still adduced evidence of material conversations she asserted having with him. The wife has not suffered any financial disadvantage. She still lives upon the farm in the same homestead she occupied immediately before the Deed was executed in May 2005. She still works the farm, exercising sole control over the spouses’ former farming partnership pursuant to interim orders made in the matrimonial proceedings. There is no evidence that the wife or any of the defendants improved, at their expense, any of the parcels intended to be transferred to the plaintiff after the Deed was executed in expectation of not having to perform the Deed.
When pressed to identify the alleged prejudice from which she suffered, the wife’s counsel cited only the matrimonial separation of the spouses and the wife’s continued payment of expenses related to conduct of the farm. Firstly, I can identify no prejudice suffered by the wife in either her defence of the plaintiff’s belated claim, or through performance of the Deed, merely by reason of her matrimonial separation from the deceased in February 2007. The submission was not elaborated in any meaningful way. Secondly, the wife’s position in this litigation is that she should continue to exercise dominion over the farm, allowing her to live and work upon it. Bearing the expenses related to the conduct of the farm is an incident of her control of it. If that be her goal, she has not suffered through temporary fulfilment of it in the interim period of years.
For the same reasons, the wife is unable to sustain her contention of hardship, and so fails to persuade the Court against exercise of the general discretion in favour of the plaintiff.
The wife asserted the plaintiff was unready to perform his obligations under the Deed, which militated against orders for specific performance of the Deed. It was however a bare assertion. The wife did not contend for the existence of evidence positively proving the plaintiff was not ready to perform the Deed, but rather, it was an assertion the plaintiff had failed to discharge his onus of proving that he was ready and willing to perform.
I reject that submission. I infer the plaintiff’s readiness and willingness from the entirety of the evidence. The plaintiff gave unchallenged evidence that he approached the deceased shortly after execution of the Deed agitating for its implementation without delay.[68] The pursuit of his rights over a long period of years vindicates his continuing readiness and willingness to implement the Deed. The plaintiff desires to accept transfer of the parcels of realty under clauses 2.1 and 2.2 of the Deed and he is willing to abide by the rights created for the other parties under clauses 2.3 and 3 of the Deed. Clause 4 is merely a statement of intention, which the parties expressly avoided incorporating as a binding term of their agreement.
[68] Plaintiff’s affidavit, par 99
Rectification and performance
The parties submitted that the principles about rectification are not in dispute. For a contract to be rectified “there must be an intention common to the parties at the time of contract to include in their bargain a term which by mutual mistake was omitted therefrom”. The plaintiff is required to advance “convincing proof” that the written contract does not embody the final intention of the parties and the omitted ingredient must be capable of such proof in clear and precise terms (see Pukallus v Cameron (1982) 180 CLR 447 at 452, 456).
It will be apparent from the foregoing reasons that the Deed ought be rectified. The rectification of the Deed will address:
a)Incorporation of the implied term that the transfers of realty to the plaintiff occur within a reasonable time, and
b)More precise identification of the parcels of realty to be transferred to the plaintiff.
In both those respects, the rectified Deed will conform to the true agreement of the parties where the writing, by common mistake, failed to express that agreement accurately (see Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350).
Even though some of the parcels of realty are not fully identified in the Deed, because of omission of Deposited Plan numbers, there is no controversy about the parcels intended to be transferred to the plaintiff. The wife did not contest that aspect of the plaintiff’s proposal for rectification, nor did she argue that the imprecise description of the parcels of realty disturbed the integrity of the Deed. That is most probably because the wife did not misapprehend the identity of the subject land to be transferred to the plaintiff. Correction of uncontentious literal errors in documents to avoid absurdity or inconsistency is permitted (see Fitzgerald and Anor v Masters (1956) 95 CLR 420 at 426-427; S & E Promotions Pty Ltd v Tobin Bros Pty Ltd (1994) 122 ALR 637 at 647). The comprehensive title details for the parcels of property described in clauses 2.1 and 2.2 of the Deed are endorsed upon the plan annexed to the Deed, and are also set out within the plaintiff’s evidence.[69]
[69] Plaintiff’s affidavit, pars 5, 24, 85
The rectification will not address the obligation cast upon the spouses, as directors of P Pty Ltd, to cause P Pty Ltd’s performance of clause 2.1 of the Deed. The plaintiff sought rectification of the Deed in that respect by re-casting the obligation upon P Pty Ltd itself to transfer the parcels of realty owned by it to the plaintiff, in substitution for the existing obligations falling upon the spouses.[70] That is not a matter for rectification because it was not a mistake affecting their common intention, but rather a mistake in the expression of that common intention in the written contract (see Pukallus at 456). The parties expressed their mutual intention in the Deed that the spouses cause P Pty Ltd to transfer land, rather than impose that obligation directly upon P Pty Ltd, as a party to the Deed. It is not for the Court to assume the task of making the contract for the parties (see Pukallus at 452).
[70] Amended Statement of Claim, Relief Claimed, par 2
The Deed is not remedied by any rectification in connection with the rights and obligations of the fourth defendant, who took no part in the proceedings. He withdrew his Cross Claim and pressed for no other remedy in respect of the Deed, from which I impute that he is satisfied with the status quo.
Following rectification, the Deed should be performed without further undue delay.
It is renowned that agreements concerning the disposition of land are amenable to specific performance because the subject realty is unique, the loss of which is not adequately compensated by damages. Although specific performance is a discretionary remedy and not available as a matter of right, none of the defensive issues raised by the wife merit denial of the remedy. The Court cannot judicially exercise its discretion by refusing the remedy in a case of the appropriate class unless some sound and recognised reason is shown (see Fullers Theatres Ltd v Musgrove (1923) 31 CLR 524 at 549).
According to Meagher, Gummow and Lehane (see Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (Butterworths Lexis Nexis Australia, 4th ed, 2002) at p 654-655), equity will not specifically enforce a contract for which there is no consideration, and in equity, a seal does not make good a want of consideration. That principal does not apply to the Deed which is the subject of these proceedings because the plaintiff’s consideration for the transfer of parcels of realty to him was the grant of life interests and rights of occupation to the spouses and fourth defendant. Although that issue was not raised in defence by the wife, it is as well to address it.
A declaration is made that the plaintiff is entitled to specific performance of the rectified Deed, together with the grant of remedies of rectification and specific performance. The declarations as to the common intention of the parties[71] sought by the plaintiff are superfluous and need not be made.
[71] Amended Statement of Claim, Relief Claimed, pars 1 and 3
The order permitting execution of documents and instruments on behalf of any party in default of the substantive orders is made pursuant to s 94 of the Civil Procedure Act 2005 (NSW), which applies by reason of s 79 of the Judiciary Act 1903 (Cth). It is not possible to make a default order under s 106A of the Family Law Act because that provision only empowers default orders in respect of substantive orders made under the Family Law Act, and the subject orders are not made under that legislation.
Estoppel
In view of the plaintiff’s success with his primary cause of action it is really unnecessary to consider the plaintiff’s alternate grounds for relief, but I do so briefly in deference to the parties’ submissions.
The representations
Following cross examination, the plaintiff abandoned reliance upon the alleged oral representations by the parties, which the plaintiff had earlier pleaded gave rise to an equitable estoppel in his favour.[72]
[72] Amended Statement of Claim, Pleadings and Particulars, pars 12-19
The plaintiff did not abandon reliance upon the alleged written representations made by the deceased and P Pty Ltd within the Deed as a foundation for such an estoppel,[73] but unlike the alleged oral representations, the written representations were not pleaded directly or indirectly against the wife.
[73] Amended Statement of Claim, Pleadings and Particulars, par 20
The only submission made by the wife in respect of the alleged written representations within the Deed is that they did not amount to a representation that the spouses would transfer the parcels of realty to the plaintiff because of uncertainty about, and incompleteness of, the terms of their bargain. I have already explained why I do not accept the submissions about uncertainty and incompleteness.
Equitable relief
The elements necessary to give rise to equitable estoppel are settled (see Commonwealth v Verwayen (1990) 170 CLR 394 at 444-445, 502; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 404, 428-429, 458-459). The plaintiff must assume a particular relationship to exist with the defendant by reason of the defendant’s inducement or acquiescence in the plaintiff’s adoption of the relevant assumption or expectation, the plaintiff must act or abstain from acting in reliance upon the assumption or expectation, the defendant must know or intend the plaintiff to so act, the plaintiff must suffer detriment by reason of the assumption or expectation being unfulfilled, and the defendant must have failed to act in order to avoid the plaintiff’s detriment.
The evidence adduced by the plaintiff is incapable of satisfying all of those criteria. Apart from the written representation by the deceased and P Pty Ltd to transfer parcels of realty to the plaintiff on certain conditions set out in the Deed, there is no evidence that the plaintiff acted, or abstained from acting, in some material way in reliance upon the representation.
The plaintiff continued to live and work upon the farm as he has always done. He has not been deprived of use of the land for work or accommodation. The plaintiff’s work upon the farm since the time of the Deed has been for the benefit of himself and his own family. He has contributed to expenses commensurately with his private endeavours, or at least in a manner found satisfactory by the other parties to the Deed.
Moreover, within days of the execution of the Deed, the plaintiff was aware of disagreement about its implementation. He was informed of it by the deceased. Thereafter, despite his protestations, the Deed was not implemented by the other parties. Even if he did thereafter act to his detriment in honest reliance upon the representations within the Deed it would likely have been unreasonable to have done so as he had already been made aware of the other parties’ disagreement. The other parties would certainly not have intended that the plaintiff act to his detriment in reliance upon the Deed, given their refusals to make good on the representations in the Deed.
Furthermore, it would be unfair for the plaintiff to succeed with an exercise of discretion in his favour in circumstances where he failed to plead his cause of action in reliance upon the written representation against the wife, leading her to believe that she need not consider that aspect of the case.
For those briefly stated reasons I would dismiss the plaintiff’s claim based on equitable estoppel.
Costs
In proceedings conducted before this Court under the provisions of the Family Law Act the orthodox rule is that the parties bear their own costs, which rule is subject to a series of stipulated considerations (s 117).
The equity proceedings were not, however, proceedings conducted under the Family Law Act. The proceedings were conducted in this Court for reasons of perceived convenience, but for which they would have been contested before the Supreme Court, where the orthodox rule is that costs follow the event.
The plaintiff sought costs against the defendants.[74]
[74] Amended Statement of Claim, Relief Claimed, par 18
The wife denied the plaintiff’s entitlement to any relief claimed,[75] and in her written summary of argument filed in advance of the trial, sought an order that the plaintiff pay her costs.
[75] Defence, Pleadings and Particulars, par 14
Neither the plaintiff nor wife made any final submission on the question of costs, and the other parties have not been heard at all on the question of costs. That aspect of the proceedings is therefore reserved, with any costs application to be made in accordance with the Family Law Rules.
I certify that the preceding one hundred and fifty-three (153) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on Friday, 6 May 2011.
Associate:
Date: 6 May 2011
March 2010
25
27
5