Selen & Selen
[2013] FamCAFC 39
FAMILY COURT OF AUSTRALIA
| SELEN & SELEN AND ANOR | [2013] FamCAFC 39 |
| FAMILY LAW ─ APPEAL ─ JURISDICTION ─ Whether the trial Judge could entertain an application for rectification of a Deed in the exercise of the Court’s accrued jurisdiction ─ Whether there was, in the circumstances, a single justiciable controversy ─ Discussion of the authorities ─ Where the Court was satisfied that the trial Judge could entertain the application in the exercise of the Court’s accrued jurisdiction ─ Where the Court did not accept that accrued jurisdiction was not enlivened ─ Where the Court was of the view that the issues in the proceedings determined by the trial Judge were a “subset” of the issues underlying the matrimonial cause ─ Challenge unsuccessful. FAMILY ─ APPEAL ─ POINT OF LAW ─ EQUITY ─ Whether the Deed was supported by consideration, or an imperfect gift which equity would not perfect ─ Whether the trial Judge erred in making orders compelling the wife to perfect the gifts provided for by the Deed ─ Whether the respondent provided consideration for the promises of the wife, the husband, and the corporation, and if he did, was that at the time those promises were made ─ Where it was submitted by the respondent that the agreement contained a variety of terms which were interdependent ─ Where following Milroy v Lord and subsequent authorities, particularly Corin v Patton, the Court concluded that the gifts were never completed, and that the son provided no consideration for the gifts themselves, he was a volunteer who required equity’s assistance to complete the gifts, which they cannot do ─ Where the Court concluded that the son could only provide consideration upon acquiring title to the lands which he was promised in the Deed, or obtaining the executed Memoranda of Transfer and Certificates of Title enabling him to become the registered proprietor of the lands ─ Where the Court concluded that the son did not, and could not provide consideration on the date the Deed was executed and that only by obtaining equity’s assistance to complete the imperfect gift could the son have provided consideration for the donor’s promises ─ Challenge successful ─ Appeal allowed. FAMILY LAW ─ APPEAL ─ Challenge to the trial Judge’s finding that the parties to the Deed had intended the agreement to create legal relations ─ Where the Court was not persuaded that the trial Judge erred, in fact, or in law, in relation to the evidence before him of “post-contractual conduct” ─ Where the Court was not persuaded that any inference drawn by the trial Judge was not reasonably open to him ─ Challenge unsuccessful. FAMILY LAW ─ APPEAL ─ Whether the Deed was frustrated ─ Discussion of the authorities with respect to the doctrine of frustration ─ Nothing the Court was referred to established that the trial Judge erred in fact, or that his conclusion was other than reasonably open to him ─ Challenge unsuccessful. |
| Family Law Act 1975 (Cth) Part VIII, ss 79(1), 85A Conveyancing Act 1919 (NSW) s 38 |
| Bishop and Bishop (2003) FLC 93-144 Seddon, N & Bigwood R.A & Ellinghaus, M.P, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) Meagher, R.P & Heydon, J.D & Leeming, M.J, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 4th ed, 2002) |
| APPELLANT: | Ms Y Selen |
| FIRST RESPONDENT: | Mr C Selen |
| SECOND RESPONDENT: | Estate of the late Mr D Selen |
| FILE NUMBER: | NCC | 2454 | of | 2007 |
| APPEAL NUMBER: | EA | 64 | of | 2011 |
| DATE DELIVERED: | 22 March 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Ainslie-Wallace and Rees JJ |
| HEARING DATE: | 9 October 2012 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 May 2011 |
| LOWER COURT MNC: | [2011] FamCA 310 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Grieve QC with Ms Gormly |
| SOLICITOR FOR THE APPELLANT: | McCabe Partners Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Ireland QC with Mr Hickey |
SOLICITOR FOR THE FIRST RESPONDENT: | Everingham Solomons |
Orders
The appeal be allowed.
The orders made by Austin J on 6 May 2011 be set aside.
The first respondent pay the appellant’s costs of and incidental to the appeal as agreed or assessed on a party and party basis.
The Court certifies the appearance of Senior Counsel for the appellant and the first respondent in the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Selen & Selen and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 64 of 2011
File Number: NCC 2454 of 2007
| Ms Y Selen |
Appellant
And
| Mr C Selen |
First Respondent
And
| Estate of the late Mr D Selen |
Second Respondent
REASONS FOR JUDGMENT
introduction
By Notice of Appeal filed on 25 May 2011 Ms Y Selen (hereinafter referred to as “the wife”) appealed against orders made by Austin J on 6 May 2011 in proceedings between herself, and her by then deceased husband Mr D Selen (for clarity, and with no disrespect, hereinafter referred to as “the husband”), and P Pty Ltd, a corporation (hereinafter referred to as “the corporation”) beneficially owned and controlled by the husband and wife, and two children of the marriage of the husband and wife, Mr C Selen (hereinafter referred to with no disrespect intended as “C”) and Mr N Selen (hereinafter referred to as “N”).
The protagonists at trial, and before this Court, were the wife and C. None of the other entities who were parties to the proceedings has, to the extent that they might have been able, participated in, or been represented before this Court.
The orders of the trial Judge which give rise to the appeal provided that an Agreement & Deed of Family Arrangement (“the Deed”) dated 2 May 2005 be rectified in numerous respects which do not assume significance for present purposes.
The trial Judge made orders for the execution of documents and instruments necessary to specifically perform the Deed as rectified pursuant to his orders.
The wife sought the discharge of the trial Judge’s orders. The practical effect of so doing would be that, for the purpose of pending proceedings for settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) between the husband and wife, the various parcels of rural property referred to in the Deed would be the “property” of the husband, or the corporation and amenable to orders pursuant to s 79 of the Act, including orders in favour of the wife, the husband (pursuant to s 79(8)), C and N (pursuant to s 79(1)) of the Act, or on such other basis as N may agitate in the exercise of the Court’s accrued jurisdiction.
C resisted his mother’s appeal and sought to maintain the trial Judge’s orders. It is not in doubt that, if unsuccessful, the trial Judge’s orders will impact materially upon the determination of the pending proceedings for settlement of property pursuant to Part VIII of the Act, by substantially reducing, or possibly eliminating the “property” of the parties to the marriage.
At the commencement of the hearing of the appeal, Senior Counsel for the wife sought leave to agitate a number of additional grounds of appeal in accordance with a draft Amended Notice of Appeal, notice of which had been given to the legal representatives of C on 4 or 5 October 2012.
Whilst not consenting to leave to amend being granted in the terms sought, Senior Counsel for C, properly in our view, engaged with the further grounds of appeal on the basis that, if he considered it necessary to do so, supplementary written submissions would be filed within a short time after the conclusion of the hearing with respect to those grounds. As it transpired, Senior Counsel for C ultimately did not seek to make further written submissions with respect to the additional grounds.
background
Some matters of background, which are not controversial for present purposes, assist in a better understanding of the wife’s appeal.
In November 2004 the husband and the wife attended upon Mr M, a solicitor, with respect to the preparation of their wills and the possible intergenerational transfer of property held by them or the corporation.
By letter dated 11 November 2004 Mr M tendered advice to the husband and wife in relation to the proposed intergenerational transfer, including a transfer to C of the property owned by the corporation together with other parcels of land held in the husband’s name, and the husband and wife’s retention of life interests in certain parcels of land.
In March 2005 a document titled “(Draft) Agreement & Deed of Family Arrangement” was prepared by Mr M, and sent to the parties. In his covering letter to the husband and wife dated 11 March 2005, Mr M advised as follows:
Further to my conference with [Mr D Selen] on the 8th March, 2005 I enclose a copy of my recent letter to McCabe Partners together with a copy of the draft Deed of Family Arrangement as per our discussions.
You should all discuss the contents of the proposed arrangement and if necessary obtain independent legal advice about it.
If you agree on any alterations or variations please let me know so that it can be tidied up.
If you are, however, happy with it you should all sign it by signing the foot of each page and on the last pages where marked with crosses.
Alternatively, should you wish to see me to discuss what is involved in the transfers and life interest arrangements I look forward to hearing from you.
Shortly thereafter the “(Draft) Agreement & Deed of Family Arrangement” was signed by the husband, the wife, N, C, and sealed on behalf of the corporation in the presence of witnesses. The document was then forwarded to Mr M. Mr M then wrote to the husband and the wife on 6 May 2005 advising:
I acknowledge receipt of Agreement & Deed of Family Arrangement signed by yourselves, [N] and [C] and also on behalf of the Company.
I have taken the liberty of dating the Agreement 2nd May and deleted reference to it being a draft as you have all signed it as an original.
I enclose copies of my recent letter to [N] and [C] enclosing copies of the Agreement for their information plus enclose a copy for your information.
I request that you kindly contact me to confirm my instructions to proceed to prepare the necessary property transfer and associated stamping and registration. ...
A dispute almost immediately arose in relation to the implementation of the terms of the Deed, the relevant details of which will shortly be referred to.
On 11 May 2005, the husband and the wife attended upon Mr M to execute fresh wills. The husband and the 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”.
On 11 May 2005 the husband and the wife also signed a document titled “Revocation of Agreement and Deed of Family Arrangement” which was prepared by Mr M. The husband and the wife “executed the Revocation Agreement both on behalf of themselves and [P Pty Ltd].” The Revocation Agreement expressed “that revocation of the Deed was conditional upon the consent of [C] and [N] to such revocation”.
On 24 May 2005 Mr M sent similar Revocation Agreements to C and N. N signed the Revocation Agreement. C refused to do so “because he did not wish to abandon his rights under the Deed”.
The husband and the wife separated in February 2007. In August 2007 the husband commenced proceedings against the wife seeking an adjustment of their property interests pursuant to s 79 of the Act. In April 2008 the husband amended his claim, and proposed orders that would transfer to C some of the parcels of property which were referred to in the Deed (par 46). The wife resisted those claims, and sought orders for settlement of property in her favour.
C commenced equity proceedings against the other parties to the Deed in the Supreme Court of NSW on 2 July 2009, seeking relief in substantially the same terms as the trial Judge’s orders. On 20 August 2009 the Supreme Court made an order transferring the equity proceedings to the Family Court for determination pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
The husband died in July 2010. There has been no grant of administration of the husband’s estate.
The “Deed”
Pivotal to the proceedings at trial, and relevant to the appeal to this Court, are the terms of the Deed between the husband, the wife, C, N, and the corporation dated 2 May 2005. The recitals to the Deed concluded by recording that:
(k)The parties are desirous of documenting the agreement and family arrangement in relation to the transfer of the various blocks to [N] and [C], however, [N] and [C] still wish to ensure that their parents’ interests are protected and to that end, propose to grant a life interest evidenced by registration of a caveat against all the titles subject to the transfers referred to in the operative part of this agreement.
The covenants to the Deed provided for the husband and wife to cause the corporation to transfer the whole of its right title and interest in a number of identified parcels of property to N (par 1.1 of the Deed), who:
1.2... hereby grants to his parents jointly and severally a life interest in respect of those lots and covenants that [Mr D Selen] and [Ms Y Selen] shall be entitled to lodge a caveat over the titles referred to in order to protect their interest as life tenants.
It was further provided by the covenants that the husband and wife cause the corporation to transfer the whole of its right, title and interest in a series of identified parcels of land to C (par 2.1 of the Deed), and for the husband to transfer the whole of his right, title and interest in other identified parcels of land to C (par 2.2 of the Deed), who:
1.2... hereby grants to his parents jointly and severally a life interest in respect of those lots and covenants that [Mr D Selen] and [Ms Y Selen] shall be entitled to lodge a caveat over the titles referred to in order to protect their interests as life tenants.
Finally, it was covenanted that:
3.The parties agree that whilst ever they shall live:-
3.1[Mr D Selen] and [Ms Y Selen] or either of them, shall have a right to live in and occupy the main homestead cottage to the North of the [P/T] Road, subject to their maintaining and insuring the cottage. In the event, however, that both [Mr D Selen] and [Ms Y Selen] cease to occupy the cottage for a continuous period of (9) months or more, their right of occupation and life interest shall thereupon be at an end.
3.2[N] shall have a right to live in and occupy the cottage located to the South of the [P/T] Road situated in [...], subject to his maintaining and insuring the cottage. [N] is to have a caveatable interest in that regard. In the event, however, that he ceases to occupy the cottage for a continuous period of (9) months or more, his right of occupation and life interest shall thereupon be at an end.
Notwithstanding that it did not purport to be binding upon any of the parties to the Deed, for completeness we record the contents of paragraph 4 of the Deed, which stated:
4.Without creating a binding agreement, it is intended by the parties that in the event [Mr D Selen] and [Ms Y Selen] felt unable to continue with occupation of their cottage or their various life interests in respect of the lands described herein, they may wish to revoke their life interests and move to town where they can be closer to medical and other facilities. In that event [N] and [C] are mindful of the needs of their parents in their advancing years and in consideration of possible revocation of the life interests referred to herein, would be prepared to each go halves in the costs of either leasing or buying suitable alternative accommodation so that [Mr D Selen] and [Ms Y Selen] may have a suitable and comfortable cottage in which to reside together with an income stream to assist them to be able to live comfortably.
As outlined earlier, on 6 May 2005, Mr M wrote to the husband and wife, who were at that time cohabiting, seeking “instructions to proceed to prepare the necessary property transfers and associated stamping and registration.” Mr M also requested that the husband and wife provide details of encumbrances to W so that he could “request consent to the transfer from them” of the lots affected by such encumbrances.
As mentioned earlier, on 11 May 2005 by deed of revocation, which was executed by N not by C, the husband, the wife, and the corporation purported to revoke the Deed of Family Arrangement dated 2 May 2005.
It is common ground that at no time subsequent to the Deed of 2 May 2005 has an executed Memorandum of Transfer been provided by the corporation with respect to any parcel of land registered in its name or by the husband or his personal representative with respect to any parcel of land registered in the husband’s name. Nor has a Certificate of Title with respect to any of the parcels of land referred to in the Deed of 2 May 2005, been produced to enable registration of any Memorandum of Transfer provided for by the Deed of 2 May 2005. No mortgagee holding the Certificate(s) of Title to any parcel(s) of land referred in the Deed has been requested to produce such Certificate(s) to enable registration of any dealing relating to such land.
the trial judge’s reasons for judgment
The trial Judge provided extensive reasons for concluding, as he did, that, in the exercise of the Court’s accrued jurisdiction, C’s application for rectification of the Deed of 2 May 2005, should be granted. As the issues which determine the fate of the wife’s appeal engage to only a limited extent with the trial Judge’s Reasons for Judgment, and, in relation to jurisdictional challenges, and asserted errors of law, proceed by reference to a limited number of factual matters which are not controversial, it is unnecessary and unproductive to refer in detail in isolation to the trial Judge’s Reasons for Judgment. To the extent that reference to his Honour’s comprehensive Reasons for Judgment is necessary, that is more meaningfully undertaken in the context of considering the challenges to his decision.
the grounds of appeal
By a number of Grounds of Appeal, the wife asserted that the trial Judge lacked jurisdiction to hear and determine the claim for equitable relief made by C. As is not in doubt, before the trial Judge, no relief was sought by C in the Family Court pursuant to either s 79(1)(d) or s 85A of the Act, or any broader equitable basis than rectification pursuant to the Court’s accrued jurisdiction.
Did the trial Judge have jurisdiction to entertain C’s claim?
Ground 1 of the wife’s Amended Notice of Appeal, which articulated her challenge to the availability of the Court’s accrued jurisdiction provided:
1.That his Honour erred in determining the proceedings and making orders after having ordered that the subject proceedings be “severed from the matrimonial proceedings” on 7 September 2009, when he was without jurisdiction (accrued or otherwise) to do so.
We do not perceive there to have been any suggestion before the trial Judge that C’s claim could not be entertained in the exercise of the accrued jurisdiction of the Court, the existence of which was conceded on behalf of the wife. However, consistent with authority (see Ridley v Whipp (1916) 22 CLR 381 at 386 and Warby and Warby (2002) FLC 93-901 (“Warby”)), Senior Counsel for both parties accepted that the Court below could not acquire, by consent, jurisdiction which it otherwise lacked.
It was, fairly in our view, not asserted by Senior Counsel for C that, having not been raised in the court below, the jurisdictional challenge raised before this Court ought not be entertained. Having regard to the decisions of the High Court in Metwally (No 2) v University of Wollongong (1985) 60 ALR 68, Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 and Coulton v Holcombe (1986) 162 CLR 1, such stance was sensible. The issue is accordingly whether the trial Judge could entertain C’s application for rectification of the Deed of 2 May 2005 in the exercise of the Court’s accrued jurisdiction.
As the written submissions of Senior Counsel for the wife, and oral submissions of Mr Grieve QC on her behalf confirm, the thrust of the jurisdictional challenge related to the existence or absence of a “single justiciable controversy”. It was submitted in that regard:
25.In Re Wakim; ex parte McNally Gummow and Hayne JJ observed (at 583-584) that the question is whether there is, in the circumstances, a single justiciable controversy. Further, that the identification of the single justiciable controversy is not to be determined only by consideration of there being separate proceedings and different parties in the one court. The identification of the single justiciable controversy ordinarily requires close attention to the pleadings and the factual basis of each claim.
In the passages of the judgment in Re Wakim; ex part McNally (1999) 198 CLR 511 to which Senior Counsel for the wife referred, Gummow and Hayne JJ said:
135.It must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the Parliament is not ‘‘restricted to the determination of the federal claim or cause of action in the proceeding, but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part’’. In Stack v Coast Securities (No 9) Pty Ltd the majority said:
‘‘In this, as in other cases, the recurrent problem is to identify what it is that falls within the Federal Court’s accrued jurisdiction. The majority judgment in Fencott v Muller provides this assistance in reaching an answer: ‘What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.’ ’’
136.The decisions in this Court concerning what has been called the ‘‘accrued jurisdiction’’ of the Federal Court have arisen in cases where the claims have been made in the one proceeding. In the present case there are three separate proceedings — against the Official Trustee, against the solicitors and against Mr Darvall. The pleadings in the three proceedings do not allege that any of the claims is dependent on another, at least not in the sense of any being a claim in which success is alleged to depend upon the result in another of the claims. (In this respect, the claims differ from the common case of a party to a proceeding making a third party claim for damages, contribution or indemnity against a person not a party to the principal proceeding where that claim is predicated on the claimant being held to be liable in the principal proceeding.) It is said, however, that the claims all arise out of a single set of transactions (that set being defined to include all aspects of the conduct of the claim against Mrs Nader). Is there, in these circumstances, a single justiciable controversy? If there is, then the Federal Court has jurisdiction in the whole matter.
137.The bringing of three separate proceedings and the joining of different parties in each of those proceedings would ordinarily suggest (and perhaps suggest very strongly) that there is more than one matter. ... (Footnotes omitted)
Senior Counsel for the wife also relied upon the decision of this Court in Warby in which it was said:
95.... Relevant to whether the Family Court of Australia will exercise the court’s accrued jurisdiction in the circumstances posited in question 1 are:
1. what the parties have done;
2. the relationships between or among them;
3. the laws which attach rights or liabilities to their conduct and relationships;
4. whether the claims are part of single justiciable controversy and in determining that question whether the claims are “attached” and not “severable” or “disparate”;
5. whether the claims are non-severable from the matrimonial cause and arise out of a common sub-stratum of facts; and
6. whether the Court has the power to grant appropriate remedies in respect of the “attached” claims.
It was further submitted on behalf of the wife, correctly in our view:
28.... that it is not sufficient to establish jurisdiction that the exercise of the jurisdiction will avoid two sets of proceedings and two sets of costs in two separate courts; Re Wakim; ex parte McNally per Gummow and Hayne JJ. Such matters may be relevant to whether the jurisdiction should be exercised, and the transfer of proceedings from one court to another, but not whether there is jurisdiction.
The “essential question” was thus submitted by Senior Counsel for the wife to be “whether there was, in the circumstances, a single justiciable controversy” which “in turn required consideration of the relevant applications and evidence with a view to ascertaining if, in the circumstances, there was a common substratum of facts”.
With respect to Senior Counsel who drafted the submissions, given that no issue was taken before the trial Judge with respect to jurisdiction, it is unsurprising that his Honour did not, in his Reasons for Judgment, reveal the reasoning process which led him to conclude that C’s claim could be entertained in reliance upon the Court’s accrued jurisdiction. In the absence of any suggestion in the Court below, and we are unaware of any, that jurisdiction was lacking or problematic in the circumstances of this case, we see no reason why the trial Judge would have engaged with that topic.
As Senior Counsel for C reminded the Court, C’s application had been transferred to the Family Court by the Equity Division of the Supreme Court of New South Wales. The order so doing was never challenged by the wife. However, the existence of jurisdiction having now been challenged, it is necessary for us to examine the issue. The absence of exposition of the reasons why the trial Judge assumed jurisdiction does not hinder us in that task, as the submissions of Senior Counsel for both parties confirm.
In substance, although expressed in rather more, and at times, colourful detail, the complaint of Senior Counsel for the wife was that, the issues in the matrimonial proceedings for settlement of property between the husband and wife raised issues unrelated to C’s claim, and as C’s claim did not involve any asserted entitlement in reliance upon contributions made by him, the trial Judge could not, had the issue been raised, have been satisfied that there was a single justiciable controversy. In the circumstances, it was submitted that the Court’s accrued jurisdiction could not be enlivened.
To the extent that it was complained that the trial Judge erred by determining C’s claim before determining the matrimonial cause, we do not understand it to have ultimately been asserted that his Honour was in error. Provided that jurisdiction existed, exercising it in a series of steps would have been logical in the circumstances of this case, and not have constituted appealable error. The issue is whether the trial Judge could properly entertain C’s claim in the exercise of the Court’s accrued jurisdiction.
Senior Counsel for C referred the Court to the judgment of Brereton J of the Equity Division of the New South Wales Supreme Court in Valceski v Valceski (2007) 70 NSWLR 36 (“Valceski”). In the course of his judgment, Brereton J said:
60.The equity suit and the matrimonial proceedings share a common substratum of facts, notwithstanding that the underlying facts of each do not wholly coincide -- in that while the matrimonial proceedings involve wider and additional issues, the facts that underlie the equity suit are a subset of those that underlie the matrimonial proceedings. The issues of the validity of the February 2004 deed and transfer, and the beneficial interests in McArthur Parade as between Bobby on the one hand and Mick (and possibly Angelina) on the other, are common to both proceedings. Those issues would arise in the s 79 proceedings even if they were not directly raised by order 3 sought in the wife’s amended application: their resolution is an essential step in the first stage of the s 79 exercise. Re C and C, Wade-Ferrell, Warby and Bishop show that where it is necessary in the exercise of its s 79 jurisdiction for the Family Court to decide whether property is that of a party to the marriage or of a third party, the Court may in its accrued jurisdiction determine that issue so as to bind that third party. In this case the position is all the stronger, because Betty’s claim in the matrimonial proceedings for a declaration under s 78 is the mirror image of the relief claimed by Mick and Angelina in the equity suit. It is obvious on the face of the declaration sought in par 3 of her amended application that it is the antithesis of what Mick and Angelina seek in the Supreme Court. Betty’s s 78 claim in the Family Court shares an identical substratum with Mick and Angelina’s claim in the equity suit.
61.Further, the two proceedings are also related in the sense that the determination of one is essential to the determination of the other: the ascertainment of the beneficial interests in McArthur Parade as between Bobby on the one hand and Mick (and possibly Angelina) on the other is the ultimate issue in the equity suit; and it is also an essential aspect of determining the pool of divisible property, and thus the resolution of the matrimonial proceedings, and has to be determined before the matrimonial proceedings can be resolved. The Family Court cannot identify and value the property available for division without first establishing the extent of Bobby’s beneficial interest in McArthur Parade, and the factual and legal considerations relevant to that issue are those which Mick and Angelina seek to agitate in the equity suit. The fact that the extent of Bobby’s beneficial interest in McArthur Parade is common to both proceedings is more than the coincidence of one factual element. It is the ultimate issue in the Supreme Court proceedings; and it is a fundamental element of the first step in the Family Court proceedings. Determination of the extent of Bobby’s beneficial interest in McArthur Parade is fundamental to the determination of the Betty’s claim for property adjustment against Bobby, because it is essential to the identification and valuation of the property of the matrimonial parties for division.
62.If the two proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings: the Supreme Court could find (as Mick and Angelina, and presumably Bobby, contend in the equity suit) that the February 2004 deed and transfer are void and that Bobby has no more than a 50 per cent beneficial interest in McArthur Parade, whereas the Family Court could find (as Betty contends in the matrimonial proceedings) that the deed and Transfer are valid and that Bobby is beneficially entitled to the whole of McArthur Parade. While the risk of inconsistent findings is reduced in the present case -- because, with Betty and Bobby being parties in both proceedings, its determination in one proceeding would probably result in an issue estoppel in the other -- that does not deny that the same issues arise in both proceedings.
63.Thus, while the proceedings in the Family Court involve far more extensive issues (including, for example, parenting issues, as well as contributions other than financial and to property other than McArthur Parade), the issues in the equity suit are a subset of those in the matrimonial proceedings; they are substantially identical to one element of the matrimonial proceedings (the claim for a s 78 declaration); Mick and Angelina’s claim in respect of McArthur Parade must be resolved in order to ascertain the pool of property available for division between the matrimonial parties; and if the proceedings were in two separate courts there could be inconsistent findings, but for the potential operation of issue estoppels.
64.In Warby, the Full Family Court said (at 357 [93]):
“[93] In the present case there is a single property that is central to the Parties’ controversy. The Family Court cannot determine and settle the property of the parties without determining the relative beneficial interests of the parties to the marriage and the wife’s father in the property. It is not to the point that a State court could make orders as to the dispute between the parties to the marriage and the wife’s father, and that the Family Court of Australia could then determine the Family Law dispute between the parties to the marriage. It is enough to say that even taking the narrow view of accrued jurisdiction represented by Wilson J’s judgment in Philip Morris, in this case ‘the Federal question could not be resolved without the determination of the non-Federal question’. The Family Court of Australia must ascertain as a first step the property pool of the parties available for distribution.”
65.That statement is equally apposite here. The claim in the equity suit forms part of the justiciable controversy in respect of which the matrimonial proceedings have been brought. Accordingly, there is but one justiciable controversy; and the Family Court has accrued jurisdiction in respect of so much of that controversy as does not fall within its ordinary jurisdiction.
It was submitted by Senior Counsel for C that:
10.... The process of the identification of the applicable Federal Law, a process governed by ss.79 and 80 Judiciary Act 1903, should not be permitted to lead to confusion about the federal nature of the jurisdiction that the Court is exercising: John Pfeiffer Pty Ltd. v. Rogerson (2000) 203 CLR 503.
Senior Counsel for C further submitted that:
12.Once it is recognised that the accrued jurisdiction (in the sense of authority to decide) is federal jurisdiction no difficulty arises from making a distinction, as the reasoning in leading cases does, between federal and non-federal aspects of the judiciable controversy for the purpose of determining, to the extent to which the question is discretionary or evaluative, whether it is appropriate to exercise jurisdiction, to the limited extent to which a court seized of jurisdiction may ever decline to exercise it.
13.The present case is the very type of case which falls within the accrued jurisdiction. The dictum of Gummow and Hayne JJ from Re. Wakim; ex parte McNally (1999) 198 CLR 511 at 585 [140] has been consistently applied:
There is but a single matter if different claims arise out of “common transactions in fact” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as for example in the case of third party proceedings or where there are alternative claims to the same damage in the determination of one will either render the other otiose or necessitate its determination. (Emphasis added).
14.In each of Warby, Bishop and Valceski the determination of competing claims, including a claim by a third party to the marriage, to the same parcel of property was the very type of matter, not only attracting the accrued jurisdiction, but also making it appropriate to exercise it. The present case is no different. Whilst care must be taken in applying the factual conclusion from one case to another, the decision of the unanimous Court in Bishop is instructive.
Given the intermingling of the affairs of the parties, given the lack of opposition to the joinder of the parties, and given the necessity to determine issues between all of the parties in order for the Court to exercise its principal jurisdiction in property proceedings, we are of the view that this was a case in which it is proper to have allowed the joinder of the parties as sought by the wife. (Emphasis added.)
(Original emphasis)
With respect to the ingenuity of the contentions of Senior Counsel for the wife, we are comfortably satisfied, largely for the reasons advanced by Senior Counsel for C, that the trial Judge could entertain C’s claim in the exercise of the Court’s accrued jurisdiction.
The authorities to which Senior Counsel for C has referred us, the High Court’s decision in Re Wakim, and particularly the observations of Gummow and Hayne JJ (at par 140) which are set out above, establish that, properly understood, the existence of a single justiciable controversy does not require that the issues in the proceedings which are entertained in the exercise of accrued jurisdiction are identical with those which the Court is entertaining in the Federal proceedings of which it is seized.
The factual similarities between Valceski and the present case are striking, and significant. We find the logic of Brereton J’s reasoning in Valceski compelling in relation to the present challenge. Essentially for the reasons so clearly enunciated by his Honour in Valceski, we cannot accept that accrued jurisdiction was not enlivened in this case. The issues in the proceedings determined by the trial Judge were, in our view, a “subset” of the issues underlying the matrimonial cause.
As was the case in Valceski, if not determinative of the matrimonial cause, the outcome of C’s application clearly would have had a major impact upon its outcome. Unless and until C’s application was determined, the property to which it referred was, and would remain “property” of the parties to the marriage, albeit in some instances by virtue of their shareholding in the corporation which owned that property.
For the foregoing reasons, we are not persuaded that this challenge has merit. It is convenient to then deal with a series of challenges to the trial Judge’s determination of C’s claim in the exercise of the Court’s accrued jurisdiction.
As the transcript of the hearing of the appeal would confirm, by comparison with the wife’s jurisdictional challenge, and the challenges articulated in her additional Grounds of Appeal, challenges to the trial Judge’s determination of issues of fact sensibly assumed little significance. Senior Counsel for both parties were largely content to rely upon their comprehensive written submissions in relation to them. For reasons which will become apparent, we shall consider those challenges after determining what is really the major issue in the appeal.
As will be seen, the major issue for determination relates to whether, as Senior Counsel for the wife submitted, C’s claim could not succeed as he was a “volunteer” whose “gift” had not been completed who thus required, but was not entitled to equity’s assistance to perfect such imperfect gift or, whether, as Senior Counsel for C submitted, the Deed of 2 May 2005 represented an agreement containing “a variety of terms which are interdependent” for which there was adequate consideration.
Was the Deed supported by consideration, or an imperfect gift which equity would not perfect?
Ground 2 of the Amended Notice of Appeal embodied the wife’s major challenge before this Court, and provided:
2.That his Honour erred in principle in regarding the granting of life interests and rights of occupation as consideration moving from the plaintiff (para. 136) when to the contrary, the transaction was to be properly understood as one without consideration from the plaintiff where the appellant and the first defendant were retaining those interests from the interests in property purportedly assigned to the plaintiff.
The challenges articulated in ground 2 of the wife’s Amended Notice of Appeal were further articulated in additional grounds 10, 11 and 12. As is apparent from their terms, the grounds fall within two topics. The first concerns whether there was an imperfect, or incomplete gift, and the second whether there was hardship. It is convenient to deal with the second of those topics before considering the more vexed issues raised by the first.
The “hardship” challenge
The “hardship challenges” agitated on behalf of the wife finds expression in Grounds 10.16 and 12 of the Amended Notice of Appeal which provided:
10. …
16. Alternatively, in further answer to the whole of the statement of claim, if, notwithstanding the matters set out in paragraph 15 above, the instrument referred to in paragraph 5 of the amended statement of claim records an agreement between the parties to it, the court should decline to order that that agreement be specifically performed since such an order would impose undue hardship on the second defendant.
…
12. That the primary judge erred in making an order for specific performance of the Agreement & Deed of Family Arrangement dated 2 May 2005 (“the deed”) since, having regard to the provisions of clauses 3.1 and 4 of the deed, that order will impose undue hardship on the second defendant in the event that she were to surrender her life estate in the lands described in it.
The submissions in support of these challenges were succinct and, rather than offend the rule against repetition, as Senior Counsel for the wife identified it, or, perhaps worse, risk inaccurately paraphrasing them, we reproduce the submissions on behalf of the wife in relation to hardship, which asserted:
3.1 This argument is, of course, advanced in the alternative to the foregoing, on the footing that the court concludes, contrary to the submissions just put, that the deed embodied a contract susceptible to a suit for specific performance. That undue hardship, if demonstrable by the defendant to such a suit, is a defence cannot be doubted: see Meagher, op cit at [20-095] ff. and R D McKinnon Holdings Pty Ltd v Hind [1984] 2 NSWLR 121 at 126 where McLelland J confirmed the existence of such a defence “in exceptional circumstances”.
3.2 Undoubtedly [P Pty Ltd] was the major item of property within the “matrimonial pool”; it was also the sole source of income for the appellant and her husband. The order for specific performance made by the primary judge has the effect that if at any time the appellant finds that it is no longer practicable for her to continue to reside on, and conduct a framing business within, the property she stands to forfeit her life estate under clause 3.1 of the deed. In that event she will be destitute and wholly dependent upon such, if any, charitable disposition her sons may have toward her. In that respect, clause 4 of the deed is of significance in at least two respects; first, its introductory words stipulate that it is of no binding force or effect; secondly; the expression of “moral commitment” to be found in the words “[N] and [C]..... would be prepared each to go halves...” appears to be limited to the provision of accommodation; the words “together with an income stream...” are not prefaced with any verbal directive.
In his supplementary submissions in response to this challenge, Senior Counsel for C submitted that the trial Judge considered the “prejudice and hardship” alleged by the wife at trial, and rejected the wife’s contentions. It was also submitted by Senior Counsel for C, accurately, and at least tacitly acknowledged by Senior Counsel for the wife, that, the case of hardship advanced on behalf of the wife before this Court “focuses on Clause 4” of the Deed of 2 May 2005.
It was further submitted on behalf of C that, quite apart from the fact that the issue was not agitated in evidence at trial, the “hardship does not arise because the appellant remains in residence exercising her rights under the 2005 arrangements”.
In his Reasons for rejecting the wife’s hardship claim, the trial Judge recorded:
123. 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.
124. 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.
125. 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.
Nothing to which his Honour there referred has been shown to have been factually inaccurate. Nor has his Honour’s conclusion been shown to be other than reasonably open to him in reliance upon the undisturbed findings of fact recorded by him.
We are not persuaded that this challenge has substance. Indeed, the reality may be that, pursuant to the provisions of the agreement of 2 May 2005, the wife is in a significantly better financial position than if the provisions of the Deed did not apply, insofar as she has, as Senior Counsel for C submitted, a life estate in the extensive parcels of land identified in the Deed, as rectified, and the ability to continue, whether herself or through employees, agents or contractors, to derive income from the use and enjoyment of those parcels of land for primary production.
We are not persuaded that the hardship challenge agitated on behalf of the wife has substance.
The imperfect or incomplete gift
It remains to consider what is, in our view, the most difficult issue raised in this appeal, that being the issue articulated in Ground 2, and amplified in 10.15 and 11 of the Amended Notice of Appeal which provided:
10. ...
15. In answer to the whole of the statement of claim, the instrument referred to in paragraph 5 of the amended statement of claim purported to provide for the making of gifts by [Mr D Selen] (now deceased) and the third defendant of lands of which they were the registered proprietors to the plaintiff and to the fourth defendant, which gifts were and remain incomplete and ineffectual for want of delivery by the donors to the donees of duly executed transfers of the lands in registrable form together with the certificates of title to those lands.
…
11. That the primary judge erred in failing to conclude that the instrument on which the respondent founded his claim for specific performance did no more than purport to provide for the making of gifts by [Mr D Selen] (now deceased) and [P] Pty Ltd of lands of which they were the registered proprietors to the respondent and his brother [N] which gifts were and remain incomplete and ineffectual for want of delivery by the donors to the donees of duly executed transfers of the lands in registrable form together with the certificates of title to those lands.
A number of submissions were made in support of this Ground in the written outline of argument prepared by Senior Counsel previously representing the wife:
34.The trial Judge dealt with the second essential requirement. His Honour found that there was consideration passing from the Plaintiff to the Husband and the Wife for the transfer of land to the Plaintiff namely “the grant of life interests and rights of occupation to the [Husband and the Wife] and the [Fourth Defendant]” (Vol 1 p 54, pa 136 of Reasons).
35.To sustain an action on a contractual promise the Plaintiff has to demonstrate that it is [sic] was supported by the presence of consideration and the giving of consideration cannot decide the question whether the parties intended to make a binding agreement: Jones v Padavatton [1969] 2 All ER 616 at 624.
36.It is submitted that the trial Judge was in error and there was no consideration moving from the Plaintiff. All that happened was that the Husband and the Wife retained a life interest in respect of the Lots transferred to the Plaintiff (clause 2.3) and a right to occupy the “main homestead cottage” (clause 3.1). There was no consideration passing from the Plaintiff and hence the agreement is not enforceable. The outcome of this complaint is sufficient to dispose of the appeal.
37.Even if the agreement was a Deed, given that they are not accorded any special status in equity, specific performance of a deed will not be granted unless consideration has been given by the Plaintiff. Spry The Principles of Equitable Remedies (6th ed, 2001) pp 57-8.
At the risk of oversimplification, the essential issue raised by these challenges, as indicated earlier in these Reasons, is whether, as Senior Counsel for the wife submitted, the Deed of 2 May 2005 constituted a promise to make gifts from which the purported donors resiled before the gifts were perfected, in circumstances where, it is not in doubt, neither the instruments of transfer necessary to perfect the gifts, or the production of the Certificates of Title necessary for that purpose were provided, or whether, as Senior Counsel for C submitted, the promises of the husband and wife were supported by consideration from C in circumstances entitling C to rectification and specific performance of the Deed. C thus not being a “volunteer”, there was submitted by Mr Ireland QC to be no bar to the granting of the equitable relief he sought.
At the commencement of the hearing of the appeal, controversy surrounded whether or not the wife should be permitted to agitate these challenges. As Senior Counsel for C confirmed at the conclusion of his submissions that he did not wish to provide further or supplementary submissions, in relation to that issue, or the substance of the challenges, the controversy in relation to the wife’s entitlement to agitate these complaints dissolved. Our focus is accordingly on the complaints themselves.
One of a number of the colourful analogies or “hypotheticals” advanced by Senior Counsel for the wife clearly illustrates the underlying basis of these complaints. It was submitted that the Deed of 2 May 2005 could be seen as analogous to a promise by the husband and wife to make a gift of a “crate of apples” to C, on the basis that, once C had received the apples, he would deal with some of them for the benefit of the husband and wife. C’s ability to do so however, was submitted to have been contingent upon the completion of the gift to him of the “crate of apples”.
Furthering the analogy, it was submitted that the “crate of apples” had neither been produced nor delivered to C, and that the promise to do so had been withdrawn in any event. C was thus submitted to be a “volunteer” who could only perfect the gift of the “crate of apples” with the assistance of equity, which the law precluded him from enlisting.
Senior Counsel for the wife relied significantly on the judgment of Turner LJ in Milroy v Lord (1862) 4 De GF & J 264; LJ Ch 798; 8 Jur NS 806; 135 RR 135; 45 ER 1185; [1861-73] All ER Rep 783; 7 LT 178 (“Milroy v Lord”) in which his Lordship, at 274-5, said:
... I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. ..
Reliance was also placed on the following passages from Meagher Gummow & Lehane’s Equity: Doctrines and Remedies. Those paragraphs read:
[6-150]... Deane J expressed a similar view. He concluded (at 582; 30):
In my view, Dixon J’s judgment in Brunker should be accepted not as establishing a new kind of statutory right but as identifying the test for determining whether the stage has been reached when a gift of Real Property Act land under an unregistered memorandum of transfer is complete and effective in equity. That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that state is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title.
[Meagher, R.P & Heydon, J.D & Leeming, M.J, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 4th ed, 2002) at pages 237-238]
Senior Counsel for the wife referred to the judgment of the High Court in Corin v Patton (1990) 169 CLR 540 (“Corin v Patton”) at 556-558, to which Mason CJ and McHugh J said:
The stricter approach of Isaacs J. [in Anning v Anning (1907) 4 CLR 1049] is consistent with the historic attitude of equity in developing rules applicable to intended gifts where no means of effecting a transfer at law were available: see William Brandt’s Sons & Co. v. Dunlop Rubber Co., per Lord Macnaghten. There is also perhaps a conceptual difficulty in accepting, in accordance with the broader view, that a donor has done everything necessary to be done by him to complete a legal transfer in a case where the donor could in fact have procured a legal transfer, for example by seeing to registration personally. And, as we have already noted, Isaacs J.’s view conforms to the notion, underpinned by the two equitable maxims, that equity will not assist a volunteer to perfect a title which is incomplete. Equity’s refusal may be justified on the footing that the donor should be at liberty to recall his gift at any time before it is complete.
Although Griffith C.J. did not expressly advert in Anning v. Anning to the maxim that equity will not assist a volunteer (cf. Isaacs J.), the divergent approaches adopted by Griffith C.J. and Isaacs J. in that case may be taken to imply different understandings of the maxim. Isaacs J. considered that equity would pay no regard at all to voluntary transactions which were insufficient to create proprietary or contractual rights at law. Thus, equity would not heed the volunteer’s plea for recognition of his interest. On the other hand, Griffith C.J. must be taken to have regarded the maxim as an injunction against equity making its remedies available to perfect an imperfect gift. On this footing the recognition of the volunteer’s interest did not amount to the provision of assistance in violation of the maxim.
Of course it would be a mistake to set too much store by the maxim. Like other maxims of equity, it is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles. Its precise scope is necessarily ill-defined and somewhat uncertain. It is subject to certain clearly established exceptions such as the rule in Strong v. Bird and the doctrine of equitable estoppel, where an equity arises in favour of an intended donee from the conduct of the donor after the making of the voluntary promise by the donor: see Olsson v. Dyson. These exceptions have no bearing on the present case except in so far as they demonstrate that the maxim does not enunciate an inflexible or universal rule. What is of importance is that this and the related maxim that equity will not perfect an imperfect gift are primarily associated with the rule that a voluntary covenant is not enforceable in equity, a rule which itself has become the subject of critical scrutiny in some of its applications: see Macnair, “Equity and Volunteers”, Legal Studies, vol. 8 (1988), p. 172. Thus, a volunteer who is the object of an intended trust will only succeed if the trust has been completely constituted. This means, so it is said, that the trust must be constituted by a present declaration of trust or by a transfer by the settlor of the legal title to the intended trustee. And that brings us back to the statement of principle by Turner L.J. in Milroy v. Lord.
But there is a distinction between the enforcement of a voluntary covenant to create a trust and the enforcement of a transfer by way of intended gift when the donor has done all that was within his power to vest title to the property in trustees for the donee or in the donee. In the first case, equity will not compel specific performance of the voluntary covenants, there being no completely constituted trust; in the second case, as the transaction is complete as far as the donor is concerned, no question of withholding specific performance can arise and equity will hold the donor to the completed transaction on the footing that title has been divested: see Ellison v. Ellison; Ex parte Pye (where Lord Eldon L.c. observed “if the act is completed, though voluntary, the Court will act upon it”); Fletcher v. Fletcher (where the covenant being “complete”, the court was “not called upon to do any act to perfect it”, in the words of Wigram V.-c.). The point is, as Page Wood V.-c. noted in Donaldson v. Donaldson, that where there is an imperfect gift “which requires some other act to complete it on the part of the assignor or donor, the Court will not interfere to require anything else to be done by him” (our emphasis). (Footnotes omitted)
On behalf of the wife, reliance was also placed upon the judgment of Deane J in Corin v Patton at 582 -583 where his Honour said:
It is not surprising that, as the judgment of Mason C.J. and McHugh J. demonstrates, the weight of subsequent cases in this Court supports that general approach (see, in particular, Cope v. Keene; Taylor v. Deputy Federal Commissioner of Taxation). Indeed, in the last mentioned cases, Dixon J.’s test for determining when his “right of a new description” would arise was accepted as appropriate for determining when the disposition of Real Property Act land under a voluntary transfer (Cope v. Keene) or under a distribution by executors (Taylor) had become effective in equity. In my view, Dixon J.’s judgment in Brunker should be accepted not as establishing a new kind of statutory right but as identifying the test for determining whether the stage has been reached when a gift of Real Property Act land under an unregistered memorandum of transfer is complete and effective in equity. That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. In that regard, it is not a matter of equity ignoring the provisions of s. 41 of the Act and treating the unregistered transfer as effective of itself to assign the beneficial interest in the land. It is simply that equity, acting upon the “fact or circumstance” that the donor has placed the vesting of the legal title within the control of the donee and beyond the donor's recall or intervention, looks at the substantial effect of what has been done and regards the gift as complete (see Olsson v. Dyson). (Footnotes omitted)
It was thus submitted on behalf of the wife that the trial Judge erred in making orders compelling the wife to perfect the gifts provided for by the Deed of 2 May 2005, and that:
2.3On its proper construction, the deed provided for a gift by the parents (and their company, [P] Pty Ltd) of certain parts of “[P]” to the respondent (and the balance to his brother, [N]) subject to the reservation in their favour of joint and several life estates. With respect, the primary judge erred in construing the deed as a contract under which the sons provided consideration for the parents’ agreement to transfer the property (in the form of the life estates) for the simple reason that the sons had no standing or title to grant such estates; they could only have done so when they obtained title to the property.
In his concluding oral submissions in support of his contention that C was in the position of a “volunteer”, needing equity’s assistance to perfect an imperfect gift, Senior Counsel for the wife distilled the essence of his contentions in the following terms:
(1)The promises made by the husband, and the wife, and the corporation in the Deed of 2 May 2005 were never implemented, in that, at no time was any executed instrument of transfer provided by any of them with respect to any of the parcels of land the subject of the promised gifts.
(2)Nor was the Certificate of Title with respect to any such parcel of land ever made available, or, as in the case of mortgaged lots, sought to be made available by the mortgagee which held them.
(3)Within days of making the promises, and before anything had been done to fulfil them, each of the husband, wife and the corporation had, by the Deed dated 2 May 2005 resiled from the promises.
To the extent that it was submitted that C had provided consideration for the promises of the wife, and the corporation, thereby avoiding his necessity to seek equity’s assistance as a “volunteer”, it was submitted by Mr Grieve QC that C could only provide such consideration after the imperfect gifts he had been promised were perfected. The prerequisite to C providing consideration was thus submitted to require relief which C could not successfully seek. C was thus submitted to have not provided consideration for the promises of the husband, the wife, or the corporation.
Senior Counsel for C submitted that the principle stated by Turner LJ in Milroy v Lord concerned “voluntary equitable assignments of existing legal interests in property”, whereas the Deed in this case was “concerned to constitute a series of interdependent obligations within a family arrangement”. It was thus submitted that the Deed was “not of itself an attempt at assurance of any legal interest in land”.
Senior Counsel for C also relied upon the decision of the High Court in Corin v Patton, and submitted:
6. Corin v Patton (1990) 169 CLR 540 provides an example of a case where a memorandum of transfer of Torrens land was executed before registration and one of the transferors (who was a joint tenant) died. The Court held that the interest of her surviving joint tenant prevailed because the executed transfer was not registered before death.
It was further submitted that a significant difference between the facts of Corin v Patton and the present case is that the agreement contained “a variety of terms which are interdependent”, they being promises by the husband and/or the corporation to transfer land to the sons, rights as between the brothers with respect to use and enjoyment of parcels of land to be transferred to them, as well as a right “on particular terms” for the wife to occupy the main homestead on land which was to be transferred to C. It was submitted that the rights to which Senior Counsel for C referred have been exercised, and continue to be exercised. Whilst it is not in doubt that the wife has continued to enjoy some of the property referred to in the Deed, that is not referrable to, or dependent upon, any circumstance controlled by C.
The crux of Senior Counsel for C’s contentions was encapsulated in the following submission:
8. These rights are contractual and were created eo instanti by the operation of the instrument. Hence, upon execution there arose a series of legally enforceable promises, some in relation to the transfer of title and others in relation to occupation rights and other matters. Such promises which were executory in nature are (as the primary Judge held) classically susceptible of an order for specific performance. Those rights do not involve imperfect attempts to create an immediate transfer of legal interests in land. There is no issue but that s.54A of the Conveyancing Act is satisfied and that insofar as the instrument deals with disposes of or creates equitable interests in land, it supplies the necessary writing.
We find this issue both complex and comparatively novel. We are not alone in this respect. Somewhat reassuringly, the learned authors of Cheshire and Fifoot Law of Contract suggest that the distinction between a gift and an agreement supported by consideration is “not always obvious”. [Seddon, N & Bigwood R.A & Ellinghaus, M.P, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) at page 182]
It is not in doubt, as we have earlier recorded, that the “gifts” promised by the husband, the wife, and the corporation in the Deed of 2 May 2005 have never been perfected. It is not in doubt that the donors have not done all that was within their power to vest title to the promised properties in the donees. Unless those promises were supported by consideration by or on behalf of C, it is clear in those circumstances that C would not be entitled to have the agreement, as rectified by the trial Judge, enforced. The question which then arises is what consideration did C provide for the transfers to him of lands belonging to the husband and/or the corporation?
Although his learned Senior Counsel did not concede that it was so, or if it was, that so concluding was fatal to C’s claim, the only consideration upon which C could seek to rely was the granting of the right to occupy the main homestead upon the lands which were to be transferred to him pursuant to the Deed. Only upon the gifts provided for in the Deed being completed could C provide such consideration. The issue is whether C provided consideration for the promises of the wife, the husband, and the corporation, and if he did, was that at the time those promises were made. The gifts to C have not been completed. In those circumstances, it is difficult to see how C has, or could have provided consideration for the promises of the husband, the wife or the corporation, as the “price” for such promises when they were made, as opposed to a promise to provide consideration when he was able to do so. If C was able to provide consideration at the date of the Deed, it is difficult to see how there has not been a total failure of consideration, in that the transfers to him necessary for C to be able to provide consideration have not been completed.
The facts of Corin v Patton (at 541-542) are instructive for present purposes. In that case:
Ronald John Patton and his wife, Annette Patton, were Joint registered proprietors of land at Belrose in New South Wales. On 12 July 1984 Mrs. Patton, who was terminally ill, executed three documents. By the first, a memorandum of transfer in registrable form, she transferred to her brother John Jeffrey Corin her interest in the land “In consideration of and pursuant to the terms of a Deed of Trust between the Transferor and Transferee of even date”. The transfer was expressed to be subject to a mortgage to a bank which held the certificate of title. The second document was the deed of trust referred to in the transfer. The parties to it were Mrs. Patton and Mr. Corin. Mr. Corin declared that he held an interest in the land as tenant in common with Mr. Patton upon trust for Mrs. Patton. The third document was Mrs. Patton’s will by which she left her estate to her children in equal shares. Mrs. Patton died on 17 July 1984 by which time the transfer had not been registered. Mr. Corin lodged a caveat claiming an interest under the transfer, and Mr. Patton lodged a caveat claiming an interest as surviving joint tenant. Mr. Patton applied by summons in the Supreme Court of New South Wales for a declaration that he was entitled to be Mr. Corin’s caveat. By cross-claim Mr. Corin applied for a declaration that the joint tenancy had been severed and that Mr. Patton held a one half interest in the land as tenant in common on trust, and for the removal of Mr. Patton’s caveat. McLelland J. declared that Mrs. Patton had not effectively alienated her interest in the land, and that Mr. Patton was entitled to the land by survivorship. ... (Footnotes omitted)
It will be immediately apparent that, unlike the promisors in this case, the donor, Mrs Patton, had executed a memorandum of transfer in registrable form.
Toohey J, at 592-593, discussed how the transfer lacked consideration and said:
But the point is that the transfer had not been registered at the time of Mrs. Patton’s death, whatever the reason. At the moment of her death Mr. Corin held a transfer. It was not a transfer for valuable consideration, notwithstanding the reference to a deed of trust. As Hope J.A. in the Court of Appeal said of the contrary proposition:
“If it were correct, every transfer of land to a person expressly agreeing to be a trustee would be for valuable consideration, and every agreement to enter into such a transaction would also be for valuable consideration. In my opinion this is not and never has been the law. There would have been no need for the enunciation of the principle in Milroy v. Lord if it were.”
...
The real point is that the transfer to Mr. Corin had not been registered at the time of Mrs. Patton’s death. There was no transaction that equity would enforce; there was a transaction that had not been consummated. There had been no divesting by Mrs. Patton of her interest as joint tenant. Her registered title remained intact. And not only her registered title. The language of Aickin J. in DX.L.R. Holding Co. (No.2) Pty. Ltd. v. Commissioner of Stamp Duties (N.S. W) is apposite here:
“If one person has both the legal estate and the entire beneficial interest in the land he holds an entire and unqualified legal interest and not two separate interests, one legal and the other equitable.” (Footnote omitted)
Mason CJ and McHugh J also discussed, at 548-551, the lack of consideration and said:
This particular case involved a voluntary transaction. In this respect we agree with Hope J.A. that the consent or agreement of Mr. Corin to act as trustee did not constitute valuable consideration, and in any event it was not seriously suggested otherwise. Indeed, in the famous case of Milroy v. Lord, in very similar circumstances, the consent or agreement of the transferee to act as trustee was not regarded as constituting valuable consideration. (Footnote omitted)
Deane J, at 577-578, discussed what amounts to valuable consideration and said:
It is true that the memorandum of transfer stated that the transfer was “in consideration of” the terms of the deed of trust. The execution by Mr. Corin of that deed of trust and the undertaking by him of the duties of a bare trustee did not, however, relevantly constitute valuable consideration for the purposes of equity. In determining whether a party to a transaction has given valuable consideration, equity looks to the substance, not the mere form. The trustee who promises to receive and hold property transferred to him as a bare trustee does not thereby give valuable consideration. The substance of the transaction in such a case is that the only benefit which he receives or is intended to receive, if benefit it can be called, is the bare legal estate and for that he gives no consideration at all (see, e.g., Milroy v. Lord; Toohey’s Ltd. v. Commissioner of Stamp Duties; Golding v. Hands; D.K.L.R. Holding Co. (No.2) Pty. Ltd. v. Commissioner of Stamp Duties (N.S. W).
Although the principles are not in doubt, applying them to the facts of this case is not without complexity. As the submissions of Senior Counsel for both parties confirm, the application of those principles to the facts in Corin v Patton provides considerable support for the contentions of Senior Counsel for the wife, and provide a substantial obstacle to acceptance of the proposition that C’s promise to afford the wife a right to occupy the main homestead for life amounted to consideration which obviated his need to rely upon equity’s assistance as a volunteer.
Although it may be trite to do so, it is perhaps in the circumstances of this case worth briefly reiterating the law in relation to consideration. The learned authors of Cheshire & Fifoot Law of Contract suggest that:
The doctrine of consideration is about what makes a promise legally enforceable. The law necessarily has to separate those promises that do not generate any legal liability from those that do. [Seddon, N & Bigwood R.A & Ellinghaus, M.P, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) at page 171]
Significantly in this case, as Senior Counsel for the wife submitted, in the proceedings before the trial Judge, the only basis upon which C claimed to be entitled to the property sought to be transferred to him was in reliance upon the Deed of 2 May 2005. Senior Counsel for the wife also submitted that C did not assert that he was entitled to the transfers because of contributions he had made to them, representations made to him independent of the Deed, or any asserted reliance upon any express or implied promise to benefit him.
As is not in doubt, consideration need not be adequate, in a commercial sense. The learned authors of Cheshire & Fifoot’s Law of Contract suggest that, to be adequate, a promise “must have been procured by the offer of something in return capable of expression in terms of value, however small”. That is the position asserted on behalf of C by his learned Senior Counsel. The learned authors further suggest that “if there is some sort of exchange, the courts will not balance the one side against the other”. [Seddon, N & Bigwood R.A & Ellinghaus, M.P, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) at 181]
Although we were not referred to them by Senior Counsel for either party to the appeal, two cases which we have discovered are potentially instructive for present purposes.
In The National Trustees Executors and Agency Company Limited v O’Hea (1904) 29 VLR 814 at 821-822 (“O’Hea”) A’Beckett J of the Supreme Court of Victoria, said in relation to the sufficiency of a return promise to create a contract:
I have been referred to American authorities, which decide in effect that, where a promise has been made to give a certain sum for a certain purpose, as an inducement to expenditure for that purpose, and persons are thereby induced to incur liabilities, the promise may be held to be binding as against the promisor’s executors; should he have died without fulfilling it. Conceding that English Courts would give relief upon the same equity, it should certainly be given cautiously, and only in cases which left no doubt of a distinct promise, and of action clearly induced by the promise.
The facts of the case were essentially that the deceased had promised to provide a specific sum to be used to construct additions or improvements to a building in accordance with a particular set of plans and specifications upon the building being completed in accordance with those plans and specifications. The building work was completed as the deceased required it to be. The gift was not completed before the death of the donor. The deceased’s estate was held liable for the payment of the sum promised by him.
Unlike the present case, as it was conducted before the trial Judge, the deceased in O’Hea had “induced” the owner of the building to incur expense in reliance upon his promise of a gift. Other promises of additional sums by way of gift, which did not constitute such “inducements”, were held not to be payable by the deceased’s estate. The decision can be seen as providing some support for the wife’s case, although, more than a century later, it might reasonably be expected that, on the facts of the case, equity would hold the donor to his promise, without finding, or needing to find that the donee had provided consideration.
In Governors of Dalhousie College v Boutilier [1934] 3 DLR 593 (“Boutilier”), a decision of the Supreme Court of Canada, the facts as found were:
The subscription, upon which the claim was founded, was obtained from the deceased on June 4, 1920, in the course of a canvass which was being conducted by a committee, known as the Dalhousie College Campaign Committee, for the raising of a fund to increase the general resources and usefulness of the institution and was in the following terms: ─
“For the purpose of enabling Dalhousie College to maintain and improve the efficiency of its teaching, to construct new buildings and otherwise to keep pace with the growing need of its constituency and in consideration of the subscription of others, I promise to pay to the Treasurer of Dalhousie College the sum of Five Thousand Dollars, payment as follows: Terms of payment as per letter from Mr. Boutilier. A. 399.
“Name Arthur Boutilier.”
So far as the record discloses, the subscription was not accompanied or followed by any letter from the deceased as to the terms of payment. He died on October 29, 1928, without making any payment on account. It appears that some time after he signed the subscription form he met with severe financial reverses which prevented him from honouring his pledge. That he desired and hoped to be able to do so is evidenced by a brief letter addressed by him to the President of the University on April 12, 1926, in reply to a communication from the latter, calling his attention to the subscription and the fact that no payments had been made upon it. The deceased’s letter, acknowledging receipt of the President’s communication, states: ─
“In reply I desire to advise you that I have kept my promise to you in mind. As you are probably aware, since making my promise I suffered some rather severe reverses, but I expect before too long to be able to redeem my pledge.”
Crocket J delivered the judgment of the court, and said at 597, with respect to reciprocal promises and the formation of a contract, that:
So far as I can discover, there is no English or Canadian case in which it has been authoritatively decided that a reciprocal promise on the part of the promisee may be implied from the mere fact of the acceptance by the promisee of such a subscription paper from the hands of the promisor to do the thing for which the subscription is promised. There is no doubt, of course, that an express agreement by the promisee to do certain acts in return for a subscription is a sufficient consideration for the promise of the subscriber. There may, too, be circumstances proved by evidence, outside the subscription paper itself, from which such a reciprocal promise on the part of the promisee may well be implied, but I have not been able to find any English or Canadian case where it has actually been so decided in the absence of proof that the subscriber has himself either expressly requested the promisee to undertake some definite project or personally taken such a part in connection with the projected enterprise that such a request might be inferred therefrom.
The facts of Boutilier suggest that “subscription” can for present purposes be regarded as similar to a “gift”. As is clear from the report of the case, the estate in Boutilier did not seek to avoid liability in reliance upon Milroy v Lord. The claim against the deceased’s estate failed as the promisee had not demonstrated that, unlike the promisee in O’Hea, consideration had been provided as the price of the donor’s promise.
As we were not referred to O’Hea or Boutilier, it is unremarkable that we have not been referred to any Australian or English authorities in which either decision has been followed, or discussed. Although, taken literally, the statement of general principle stated by Crockett J in the passage set out above may seem to provide support for C’s case before us, the “inducement” in that case, and in O’Hea’s case was for the promisee to perform duties, or expend monies, the completion of which did not depend entirely, as it did in this case, upon the perfection of an imperfect gift. The ratio of O’Hea was essentially that the plaintiff acted to its detriment in reliance upon the donor’s promise. Boutilier emphasises the difficulty confronting a plaintiff who relies solely on “reciprocal” promises to establish the provision of consideration. It may be that, if his claim asserted other equitable bases of entitlement, C could establish such “inducement”, but that has not been the basis of his claim to date.
Whatever fate might befall applications made by C on other bases, the only issue before this Court is whether, in reliance upon the Deed of 2 May 2005, C was entitled to have the properties therein referred to, transferred to him. Given that, as is not in doubt, the promises recorded in the Deed have not been honoured, the provision of consideration for them becomes critical.
The strongest argument in favour of the wife is that no memorandum of transfer was ever executed by any of the donors pursuant to the terms of the Deed. The Certificates of Title with respect to the properties the subject of the purported gifts were never produced to enable registration. Approximately nine days after the donors recorded their intention to make the gifts they resiled from that intention. It is strongly arguable, following Milroy v Lord and subsequent authorities, particularly Corin v Patton, that the gifts were never completed, and that C provided no consideration for the gifts themselves, he was a volunteer who required equity’s assistance to complete the gifts, which they cannot do.
The issue is not simple, or clear cut in our view. The weight of authority to which the Court has referred persuade us that the contention of Senior Counsel for the wife that C could only provide consideration upon acquiring title to the lands which he was promised in the Deed, or obtaining the executed Memoranda of Transfer and Certificates of Title enabling him to become the registered proprietor of the lands, should be accepted. We conclude that C did not, and could not provide consideration on the date the Deed was executed. Nor is it in doubt that C has never been able to comply with his obligations under the Deed. Only by obtaining equity’s assistance to complete the imperfect gift could C have provided consideration for the donor’s promises. Largely for the reasons asserted by Senior Counsel for the wife, we cannot accept that C was entitled to that assistance. Nor, with respect to the submissions of Senior Counsel for C can we accept that C could rely upon the “reciprocal” promises of the parties as consideration for the donor’s promises.
Did the Deed intend to create legal intentions?
A number of the wife’s Grounds of Appeal challenged the trial Judge’s finding that the parties to the Deed had intended the agreement of 2 May 2005 to create legal relations. Those complaints were identified by Senior Counsel for the wife as being grounds 3, 5, 6, 7, 8 & 9 which provided:
3. That the fact finding process undertaken by his Honour, in relation to what he described as a “pivotal issue” miscarried as a consequence of his Honour wrongly drawing an inference against the appellant (para. 78) arising from her failure to call corroborative evidence from Mr. [M], the solicitor, purportedly in application of Jones v Dunkel and in doing so failed to recognise that the evidence, which would have comprised significant admissions against interest by the solicitor, provided by its nature, explanation for absence as explained in Fabre v Arenales & Anor. (1992) 27 NSWLR 437.
...
5. That his Honour erred in finding that the terms of the will made by the appellant were corroborative of the agreement and an intention to be bound by the agreement when he ought have found that the creation of a will subsequent to the agreement that purported to deal with interests in the property, which his Honour would have found already disposed of by the agreement, was entirely contrary to any belief by the appellant that she had already disposed of the interests as a consequence of the agreement.
6. That his Honour erred in failing to find that the agreement signed by the parties was not intended to be binding and was not other than a “draft” as it was clearly expressed to be at the time of execution by every party.
7. That his Honour erred in failing to find that the solicitor Mr [M] acted without necessary authority from all parties in deleting the word “draft” from the agreement and further erred in those circumstances in taking into account that action (which occurred subsequent to execution) in making findings as to the intention of the parties at the time of execution (necessarily prior to that action).
8. That his Honour erred in finding that the evidence would support only one (para. 41) logical reason for execution of the revocation instrument and failed to take into account that it was logical that such a confirmatory instrument be executed to avoid doubt or ambiguity arising as a consequence of the solicitor’s unauthorised alteration which wrongly gave an appearance of a binding instrument to that which had been signed as a draft.
9. That his Honour erred in finding that the evidence supported a conclusion of fact that the parties had (para. 38) acted as though the deed was binding upon them.
As is not in doubt, being challenges to findings of fact, in order to succeed, it is necessary to establish that the trial Judge’s findings were not reasonably open to him. The fact that other findings might also have been reasonably open is insufficient.
In reality, the crux of the challenge is articulated in the following submission:
45. The trial Judge found that the Wife did have the intention to create legal relations. This finding was in the face of the Wife’s unqualified and persistent evidence: (Vol 3 pp 588 to 652, XX/W). The finding was also made in circumstances where his Honour did not make a finding as to the Wife’s credit. For example, his Honour did not make a finding that the Wife had given false and misleading evidence and sought to mislead the Court. In any event, his Honour would have had no basis to make such a finding.
46. The question that arises is why did his Honour find that the Wife had the intention to create legal relations?
In support of the submissions that the trial Judge erroneously rejected the wife’s evidence reference was made to the “wife’s unqualified and persistent evidence” in cross-examination. Some of the exchanges which ensued between the wife and Counsel for C at trial revealed:
MR HICKEY: ... Your understanding was that the advice received from Mr [M] was incorporated, essentially, in the deed you signed?
MS [Y SELEN]: Would you please repeat that.
MR HICKEY: Certainly. Your understanding was, when you signed the deed, that it incorporated the advice you had got from Mr [M] in November 2004, didn’t it?
MS [Y SELEN]: You will have to repeat that again.
MR HICKEY: That’s all right. I’m suggesting to you, when you signed the deed in May 2005, it was your understanding the deed reflected the advice you received in November 2004?
MS [Y SELEN]: But it wasn’t binding; it was a draft.
MR HICKEY: I beg your pardon?
MS [Y SELEN]: This is a draft.
MR HICKEY: Okay. Do you agree with me that, whether it’s a draft or not, the deed still reflected – it was your understanding that the deed reflected the advice given to you by Mr [M] in November 2004. Do you agree with that?
MS [Y SELEN]: You didn’t really ask a question.
MR HICKEY: I will try again. It’s my fault, I’m sorry. When you signed the deed, whether it’s a draft of not, do you agree it was your understanding, when you signed it, the deed reflected the advice given to you by Mr [M] in November 2004?
MS [Y SELEN]: It’s a draft and it wasn’t binding.
MR HICKEY: Do you understand the question?
MS [Y SELEN]: Well, you’ve asked me a question that I have to answer it in that way.
MR HICKEY: I will try another way, and thank you for telling me you didn’t understand it. I’m asking you, do you agree that when you signed the deed, your understanding was there was no difference between what was contained in the deed and the advice that was given to you by Mr [M] in November 2004?
MS [Y SELEN]: I’m sorry, I can’t differentiate with what you’re saying.
HIS HONOUR: In what ways do you think the deed departed from the earlier advice you had received from Mr [M]?
MS [Y SELEN]: What we signed wasn’t binding. We signed it. I haven’t – didn’t take – think there was – more things had to be discussed. So the question you’re asking me, I can’t really answer it because there’s more to it than what you’re asking.
The following exchange which ensued further revealed:
MR HICKEY: ... And when you signed that deed, I suggest to you you intended it to be binding upon you in respect of what you undertook to do, didn’t you?
MS [Y SELEN]: Would you please repeat that.
MR HICKEY: Yes. When you signed that deed, you intended it to be binding on you in respect of what you signed up to?
MS [Y SELEN]: No.
MR HICKEY: Didn’t you? Did you ever, at any stage, consider it to be binding on you?
MS [Y SELEN]: No.
MR HICKEY: Your capacity in entering into the deed was as a director of the company, wasn’t it?
MS [Y SELEN]: Yes.
MR HICKEY: And, see, I suggest to you that you were so concerned about this deed being binding on you after you had signed it and you wanted to change it in some way, that you purported to revoke the deed, didn’t you?
MS [Y SELEN]: Could you please repeat the question.
MR HICKEY: You were so concerned that the deed was binding on you that, after you signed it and you wanted to change it, you purported to revoke the deed, that is, say, “I don’t want to be part of this any more.” Do you agree with that?
MS [Y SELEN]: Would you please rephrase the question.
MR HICKEY: Rephrase the question. Okay. I might just take it step by step. I suggest to you that, after you signed the deed, you considered it binding on you. I also suggest to you that, after you signed the deed, you wanted to change it in some way. Do you agree with those two propositions?
MS [Y SELEN]: I agree it was changed and wanted – did not agree it was not binding.
MR HICKEY: Perhaps you may - - - ?
MS [Y SELEN]: It was a draft. It was a draft.
MR HICKEY: What I’m suggesting to you is this, that you were so concerned that the deed was binding on you, you went along to your solicitor and said, “I want to revoke this deed,” didn’t you?
MS [Y SELEN]: He – we did not agree because it was a draft.
MR HICKEY: No, no, I’m not asking you about what you agreed about. I’m asking you to focus on the question, namely, that you were so concerned that this deed was binding on you you went to your solicitor that said to him, “I want to revoke it. Nothing to do with it.” Didn’t you do that?
MR CHARLES: Well, I object to that. I don’t think my friend has laid the groundwork for one part of this question, and that is the concern. The witness’s evidence so far as been that she did not regard it as binding. I don’t think he has established that she was concerned.
HIS HONOUR: I think that’s right, Mr Hickey. You’ve got a clear answer that she didn’t believe it was binding.
MR HICKEY: All right. I will go at it another way, your Honour.
The trial Judge was submitted to have impermissibly relied upon the absence of evidence from Mr M the solicitor who prepared the Deed of 2 May 2005, and witnessed its execution by the husband and wife, Senior Counsel for the wife asserting that:
47. The trial Judge made a finding that given the unavailability of the Husband it might have been expected that the Wife would call evidence from Mr [M] to corroborate her contention that she communicated to Mr [M] her disaffection with what happened. Further, that given this failure to call Mr [M], and lack of an explanation as to why he was not called, his Honour inferred that the evidence of Mr [M] would not have assisted the Wife (AB Vol 1 pa 44, pa 78 of Reasons).
To the extent that the trial Judge relied, in support of his conclusion with respect to the intention of the parties as at 2 May 2005, to the actions of the husband and wife subsequent to that date, it was submitted on behalf of the wife that:
55. The trial Judge made a finding that “[n]otwithstanding the disaffection of some of the Deed, from May 2005 the parties acted as though the Deed was binding upon them” (AB Vol 1 p 36, pa 38 of Reasons). His Honour gave no or no adequate explanation to support this finding. With the exception of the reference to the Revocation Agreement of 11 May 2005 there is no other evidentiary matter referred to by his Honour to support this finding. In fact the evidence supports a conclusion that the Husband and the Wife and the Fourth Respondent “acted as though the Deed was [not] binding upon them”. Without repeating what has already been said, it is sufficient to observe that a Deed of Conveyance was never prepared. However, the relevant evidence goes well beyond this fact. For example, at one point the Plaintiff agreed to remove caveats he had caused be put on the relevant titles.
Whilst, as Senior Counsel for the wife submitted (par 56), the circumstances in which a court may refuse to accept the evidence of a witness in the absence of contradictory evidence is not in doubt, we cannot accept that the absence of any contradictory evidence of the wife’s state of mind precluded the trial Judge from making the findings he did. As is obvious, only one person truly knew the wife’s state of mind when she executed the Deed, in rather different circumstances, six years prior to giving her evidence before the trial Judge. At the time she gave her evidence, with respect to her, the wife had a substantial incentive to recall that she had a particular state of mind when she executed the Deed in 2005. The trial Judge explained why he did not accept that the wife’s state of mind was as she asserted. His Honour’s explanation was logical and comprehensive.
It was submitted on behalf of C with respect to this issue that:
22. Ermogenous [26] explodes the idea that there is any presumption against an intention to create legal relations in the present case. Moreover, [25] of the same case, in particular the emphasis upon the absence of any prescriptive rules, and the statement that the word “intention” is used in this context ... in the same sense as it is used in other contractual contexts establishes that where it is in issue, the element of an intention to create legal relations is to be determined in accordance with the usual objective principle, set out above and by reference to the normal rules of interpretation established in Codelfa (Western Export Services Inc. v. Jireh International Pty Ltd [2011] HCA 45 at [3] – [5]). (Original emphasis)
It was further submitted:
26. At AB 44 [89] the learned Trial Judge properly recognised that post contractual conduct may be relevant in a limited way. The correct principle is that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed: Brambles Holdings Limited v. Bathurst City Council (2001) 53 NSW LR 153 [26]. The Trial Judge weighed the wife’s execution of a new will, and of a revocation agreement simultaneously, as an important post contractual circumstance consistent with the existence of a binding contract in accordance with the signed deed. No error has been shown, with respect, in the correctness of this approach. (Original emphasis)
In response to the submissions of Senior Counsel for the wife that, in the circumstances revealed by the trial Judge’s Reasons, his Honour was obliged to accept the wife’s evidence, it was submitted on behalf of C, in summary, that the case did not turn upon the credibility of the wife, that there was no rule of law obliging the trial Judge to accept the “so called uncontradicted evidence” of the wife, which was extensively challenged in cross-examination in any event, and that the trial Judge had cogently explained why he did not accept the wife’s assertions with respect to her state of mind as at 2 May 2005.
Senior Counsel for C also relied upon the judgment of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 in which it was said:
31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. (Footnote omitted)
The wife’s execution of the deed of revocation on 11 May 2005 was supportive of his Honour’s finding that the Deed which the parties had executed nine days earlier was intended to create legal relations, and was so regarded by the wife at the time she executed it. Were that not so, the execution of the 11 May 2005 deed would have been unnecessary. We have not been referred to any evidence given by the wife which explained the anomaly inherent in her assertions with respect to this issue.
With respect to Senior Counsel for the wife’s submissions, we are not persuaded that the trial Judge erred, in fact, or in law, in relation to the evidence before him of “post-contractual conduct”. Whether such conduct would have relevance, and if so what its relevance would be, in the matrimonial cause, or proceedings involving other equitable claims is not relevant for present purposes. We are not persuaded that the trial Judge impermissibly relied upon “post-contractual conduct” in relation to this issue. Nor was any inference drawn by his Honour which was not reasonably open to him.
Nothing to which we have been referred establishes that the trial Judge erred, in law or fact, in finding as he did. We thus cannot accept that these challenges have merit.
Was the Deed frustrated?
Ground 4 of the wife’s Amended Notice of Appeal articulated a complaint in reliance upon the doctrine of frustration of contract, and provided:
4. That his Honour erred in failing to take into account the existence of mortgages over interests of the deceased first defendant which were not addressed by the agreement and operate to frustrate the agreement.
In the written submissions in support of this challenge, considerable emphasis was placed upon the fact that the Deed of 2 May 2005 was silent as to how the mortgages referred to in the Deed were to be borne as between the parties to the Deed. Reliance was also placed upon the absence of reference to the occupation of cottages on certain parcels of the land referred to in the Deed.
The necessity for the consent of the ANZ Bank and W to the transfers provided for by the Deed of 2 May 2005 was a further matter relied upon by Senior Counsel for the wife in support of this complaint.
Senior Counsel for C submitted by way of general response to this challenge:
29. The appellant does not identify any error of law or misdirection in the approach taken by the learned Trial Judge at AB 46.87 – .88 in identifying the issue and dealing with it. It may be taken that the appellant accepts that his Honour directed himself correctly in point of law. Leaving the mortgage point to one side, with great respect, the appellant’s argument does no more than rehearse matters put below, which were rejected by the Trial Judge for the cogent reasons he gave at [89] – [107], AB 46 – 49. Even if it could be said that minds may reasonably differ about the inferences that may be drawn from the primary facts, the Trial Judge has not been shown to be wrong about the inferences he drew.
In relation to the mortgages, it was submitted by Senior Counsel for C that, although the issue had not been taken at trial, it could be inferred from the trial Judge’s Reasons that:
30. ... it was an implied term of the agreement that the respondent and his brother took the real property subject to the existing mortgages for which, as proprietors, they would be responsible. It could hardly be otherwise given the priority which the mortgagees would enjoy.
It was further submitted on behalf of C:
31. But in any event, the need to obtain the consent of a third party does not render a contract void, which is the affect of uncertainty of a contract. Rather, the inability of either party to obtain the necessary consent renders the contract voidable at the instance of either of them upon non-fulfilment of the condition. The contract is not thereby avoided: Gange v. Sutherland (1966) 116 CLR 418; Suttor v. Gundowda Pty Ltd (1950) 81 CLR 418. It was not established by the appellant that any condition requiring the mortgagees’ consent was unfulfilled.
Under the heading “Uncertainty and incompleteness of the Deed”, the trial Judge identified the bases upon which the wife asserted that the Deed of 2 May 2005 had been uncertain and/or incomplete, as follows:
86. 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.
It has not been suggested on behalf of the wife that his Honour failed to record, in the paragraph set out above, any aspect of the asserted uncertainty or incompleteness of the Deed, or that his Honour misdescribed or misunderstood any of the matters which the wife raised.
As is clear from the trial Judge’s Reasons, the payment of mortgages was not referred to by his Honour. We have not been referred by Senior Counsel for the wife to any document, or passage in the transcript of the trial suggesting that his Honour erred in failing to refer to that topic.
The trial Judge dealt, in detail, with each of the matters which the wife relied upon in support of her contentions with respect to the certainty or completeness of the Deed of 2 May 2005.
In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 338 the High Court by a majority held:
... that in the events that happened, the performance of the contract was radically different from performance in the circumstances which it contemplated, and accordingly the contract had been frustrated by the grant of the injunctions.
The judgment of Mason J referred to the authorities with respect to the doctrine of frustration, and at 356-357, recorded:
In Brisbane City Council v. Group Projects Pty. Ltd., Stephen J. discussed the authorities. The more recent authorities, National Carriers Ltd. v. Panalpina (Northern) Ltd. and Pioneer Shipping v. B. T.P. Tioxide, do not call for any revision of that discussion. I agree with Stephen J.’s acceptance of the approach adopted by Lord Reid and Lord Radcliffe in Davis Contractors. Lord Reid said that the task of the court is to determine “on the true construction of the terms which are in the contract read in light of the nature of the contract and of the relevant surrounding circumstances”, “whether the contract which they did make is ... wide enough to apply to the new situation: if it is not, then it is at an end”. Later he described frustration as “the termination of the contract by operation of law on the emergence of a fundamentally different situation”.
Lord Radcliffe said:
“... frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. ... It was not this that I promised to do.”
His Lordship, noting that special importance attaches to an unexpected event, observed “There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a different thing from that contracted for”. (Footnotes omitted)
Mason J concluded (at 360) that:
The critical issue then is whether the situation resulting from the grant of the injunction is fundamentally different from the situation contemplated by the contract on its true construction in the light of the surrounding circumstances.
Nothing to which we have been referred establishes that the trial Judge erred in fact in relation to any issue relating to this topic, or that the conclusion he ultimately reached in relation to it was other than reasonably open to him. As Senior Counsel for C submitted, it may be that the Deed could be avoided on the ground(s) relied upon by Senior Counsel for the wife in support of this challenge, but we cannot accept that the trial Judge erred by declining to find that the Deed had been “frustrated” by reason of the omissions to which we have been referred.
Accordingly, this challenge fails.
further submissions
After the appeal had been heard, the Court invited further submissions from Senior Counsel for the parties in relation to the relevance and impact, of the parties’ agreement having been contained in a deed (see s 38 of the Conveyancing Act 1919 (NSW)).
On the 11 December 2012 Senior Counsel for the wife, for reasons which were briefly articulated, submitted that, in equity, the reality that the agreement between the parties was contained within a deed did not change anything asserted on behalf of the wife by her Senior Counsel at the hearing of the appeal, or otherwise disentitle the wife to the relief to which her learned Senior Counsel submitted that she was entitled.
Subsequently, C sought to rely upon supplementary written submissions by his Senior Counsel. Those submissions were dated 28 February 2013. A robust exchange of correspondence in relation to the entitlement of C to rely upon the supplementary submissions of his Senior Counsel ensued.
The Court has considered the supplementary submissions of Senior Counsel for C. Given our conclusion, to have declined to do so may well have constituted a denial of natural justice to C. Conversely, the expense and delay which would have resulted from re-listing the matter to argue whether or not the supplementary submissions of Senior Counsel for C should be received would have been unnecessary and unjustified.
Importantly, in his supplementary submissions, Senior Counsel for C frankly accepted the essential principle asserted by Senior Counsel for the wife in his supplementary submissions, and acknowledged that “equity will not specifically enforce a contract for which there is no consideration. In equity, a seal does not make good want of consideration.”
Senior Counsel for C then reiterated briefly the thrust of the submissions advanced by him at the hearing of the appeal. Consistent with such earlier submissions, it was submitted that the “reciprocal promises” contained in the relevant deed constituted a “perfectly orthodox form of consideration”. It was further submitted:
5. The doctrine of consideration is about what makes a promise legally enforceable. The plaintiff has to show that the defendant’s promise is part of a bargain to which he or she (the plaintiff) has contributed. The notion of “mutuality” or “exchange” is the essence of enforceability – see Cheshire & Fifoot’s ‘Law of Contract’ 9th Australian Ed para 4.2 [p 168].
6. The doctrine of consideration also requires that only the person who has paid the price of a promise can sue upon it, hence the maxim that “consideration must move from the promisee”. A particular promise made by the plaintiff or an act performed by the plaintiff as promisee is recognised as good consideration.
It was thus ultimately submitted, consistently with the submissions of Senior Counsel for C on the hearing of the appeal that the wife’s challenge to the validity of the agreement should fail.
With great respect to Senior Counsel for C, and without suggesting that the issue is without uncertainty, the supplementary submissions of Senior Counsel do not persuade us that we should deviate from the preliminary view expressed earlier in these reasons.
conclusion
For the reasons we have articulated, which involve no criticism of the trial Judge, the wife’s appeal will be allowed. The matrimonial cause remains on foot. C will remain a party to those proceedings. Given our conclusion in relation to the critical issue in the appeal, little purpose is served by remitting C’s current application for re-hearing. It remains open to C to amend his claim to seek such relief as he is advised in the pending Part VIII proceedings, whether that be pursuant to s 79 of the Family Law Act, or in reliance upon equitable principles pursuant to the Court’s accrued jurisdiction.
costs
Senior Counsel for both parties agreed that costs would “follow the event”, and we shall so order.
I certify that the preceding one hundred and forty-two (142) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, Ainslie-Wallace and Rees JJ) delivered on 22 March 2013.
Associate:
Date: 22.03.2013
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