Tony Khoa Tran v Michael Chau Trung Hoang (Who Is Sued in His Capacity as Executor of the Estate of Khiem Tran, Deceased)

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0070

TONY KHOA TRAN	Applicant
v
MICHAEL CHAU TRUNG HOANG (WHO IS SUED IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF KHIEM TRAN, DECEASED)	Respondent

---

JUDGES:	KYROU, SIFRIS and MACAULAY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	6 June 2022
DATE OF JUDGMENT:	13 September 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 194	First Revision: 14 September 2022
JUDGMENT APPEALED FROM:	[2021] VSC 318 (McMillan J)

---

CONTRACT – Deed made between family members – Term that father ‘shall expressly and irrevocably gift’ a specified amount of money to a son – Father died without effecting payment – Judge dismissed son’s claim against father’s executor for recovery of the money − Whether Deed created an actionable debt – Alternatively, whether Deed contained a promise to make a gift at a future time or a promise to pay money that was immediately binding – Whether breach of a contract to pay a fixed, ascertained sum of money required further findings of fact before damages could be awarded for breach − Appeal allowed.

Young v Queensland Trustee Ltd (1956) 99 CLR 560; Alexander v Ajax Insurance Co Ltd [1956] VLR 436; Netglory Pty Ltd v Caratti [2013] WASC 354 considered.

---

Counsel
Applicant:		Mr CE Shaw KC with Mr S Clement
Respondent:		Mr ID Martindale KC with Mr AP Dickenson
Solicitors
Applicant:	Macpherson Kelley
Respondent:	Willocks Lawyers

KYROU JA
SIFRIS JA
MACAULAY JA:

Introduction

Khiem Tran (Khiem or ‘the father’) and two of his sons, Tony Khoa Tran and Anthony Khang Tran, entered into a deed on 6 June 2017 (‘the Deed’). Under the Deed’s terms, the father agreed to give Tony $300,000, Anthony agreed to vacate a house owned by the father, and Tony agreed to repay $300,000 to the father if Anthony did not vacate the house by a specified date. The father died about a year after making the Deed without paying Tony $300,000 despite Anthony having vacated the house.
Tony (the plaintiff at trial; in this Court, the applicant) failed in an action against his father’s executor (the defendant at trial; in this Court, the respondent) to recover the $300,000, the trial judge also ordering that Tony pay the executor’s costs on ‘the trustee basis’. In his application for leave to appeal, Tony proposes four grounds of appeal: the first three relate to the dismissal of his claim for $300,000 and the fourth relates to the basis of assessing costs should he remain unsuccessful on his claim.[1]
[1]The respondent filed a notice of contention but, in oral argument, abandoned it.
Although the full terms of the grounds of appeal are set out below,[2] it is sufficient at this stage to summarise grounds 1–3 as follows: that the judge erred by (implicitly) treating the Deed as effecting an incomplete gift that was unenforceable in equity, rather than having created an enforceable debt for $300,000, or a binding contractual promise to pay that amount, breach of which sounded in damages (namely the sum of $300,000).
[2]See [31] below.
For reasons which are set out below, we will grant leave to appeal on grounds 1–3 and uphold the appeal. In the circumstances, it is unnecessary to deal with the fourth proposed ground.

Background facts

As we have already stated, the Deed was made between the father, Anthony and Tony. By the terms of the Deed, the parties acknowledged that the father was the sole registered proprietor of 162 Gipps Street, Abbotsford (‘the Property’), the father was the biological father of Anthony, and that Anthony resided at the Property ‘due to promises and agreements made with the [father]’.
The operative section of the Deed contained seven clauses, the most important of which appeared under the heading ‘Transfer of Monies’ in these terms:[3]
[3]The struck through words and the dates appearing in square brackets reflect hand-written amendments made on the document.
1. Transfer of Monies
(a)The [father] shall expressly and irrevocably gift [Tony] … an amount of $300,000 (Payment) by ~~Wednesday, 26~~ [Friday 28] July 2017.
(b)Tony must immediately provide a written receipt to the [father] and [Anthony] once the Payment has been received and cleared in his bank account.
(c)[Anthony], upon notification of receipt of Payment from Tony must do all acts and things necessary to vacate the [Property] by ~~Monday, 31~~ [Friday 28] July 2017.
(d)The [father] agrees [Anthony] may reside at the [Property] indefinitely if the Payment is not received by Tony by Wednesday, 26 July 2017.
(e)Tony must return the Payment to the [father] should [Anthony] not vacate the [Property] by Monday, 31 July 2017.
(f)The [father] and [Anthony] agree the Payment is an irrevocable gift to Tony for use at his discretion.
(g)The [father] and [Anthony] agree to [sic] that Tony shall not be liable for any costs or damages arising from non-performance of obligations by the [father] or [Anthony] under this Deed.
Some other ‘boilerplate’ clauses concerned the interpretation of the Deed, provision for counterparts and the safe-keeping of the document. Clause 3 provided that each of the father, Anthony and Tony warranted that they had been provided the opportunity to obtain independent legal advice about the effect of the Deed and their rights, but acknowledged that they each waived their right to do so. Finally, by cl 7 each party acknowledged that the Deed would bind their heirs, executors, administrators and assigns. Each party executed the document as a deed in the presence of a witness.
Viewed very simply, and subject to more detailed analysis as to the meaning of its provisions and their relation to one another, the Deed imposed the following obligations:
•the father was to pay Tony $300,000;
•Anthony was to vacate the Property once Tony received the money; and
•Tony was to repay the $300,000 to the father if Anthony did not vacate the Property.
In construing the Deed, the judge made findings of relevant contextual facts known to the three parties. To understand them, it is necessary to know that Khiem: had three sons, Tony (the oldest), Anthony and John; owned several properties including the Property; and became ill with leukaemia in about 2007, making some sort of recovery for several years, but becoming ill again so that he was in and out of hospital from 2016 onwards.
The contextual facts found by the judge were:[4]
[4]Re Tran; Tran v Hoang [2021] VSC 318, [127] (‘Reasons’).
(a)Tony had provided emotional and financial support to both Anthony and John in their youth, in part due to such support not being directly provided by Khiem;
(b)Anthony and Tony were both under the impression that they were financially ‘owed’ by Khiem, and this impression related to the ownership of the Property;
(c)Tony and Khiem had a significant falling out in January 2017, purportedly relating to what Tony understood was his interest in the Property;
(d)in Facebook messages, Anthony referred to obtaining funds from Khiem as protecting ‘our money’ and ‘our future’;
(e)in the Facebook messages, Anthony and Tony appeared on good terms, with Tony offering to assist Anthony and forwarding a job opportunity to him;
(f)Anthony had demanded payment (from Kheim) of funds in order for him to vacate the Property and, inferentially, was damaging property, which formed at least part of the reason why Khiem wanted him to leave the Property;
(g)a proceeding in the Victorian Civil and Administrative Tribunal (‘VCAT’), brought by Khiem, had not resulted in Anthony vacating the Property;
(h)Anthony had attempted suicide in the period after the VCAT proceeding;
(i)Tony and Khiem ‘made peace’ after the disagreement in January 2017, resulting in Khiem offering to give Tony $300,000; and
(j)Khiem sold another of his properties in May 2017 for $791,000.
After discussing the facts, the judge found that the Deed was designed to resolve two overlapping issues that were contentious between the parties. First, it provided for a gift to Tony that had been the subject of a dispute and, secondly, it addressed Anthony’s occupation of the Property.[5]

Pleadings and trial questions

[5]Ibid [128].

Before coming to the judge’s decision and reasons for it, it is necessary to say something about the pleadings. By his amended statement of claim, Tony alleged that:
•under the terms of the Deed, Khiem agreed ‘to pay’ Tony the sum of $300,000;
•it was an implied term of the Deed that Tony would use reasonable endeavours to cause Anthony to vacate the Property by 28 July 2017, and Tony did in fact use such reasonable endeavours;
•Anthony vacated the Property before 28 July 2017;
•in breach of the Deed, Khiem failed to pay the sum of $300,000 owed to Tony;
•Tony demanded from Khiem’s executor (ie, the defendant at trial) payment of ‘the amount owed’ to him, being the sum of $300,000;
•the defendant was liable to pay Tony the sum of $300,000; and
•by the prayer for relief, Tony claimed from the defendant ‘the sum of $300,000’.
By way of defence, the respondent (as defendant at trial) alleged, relevantly, that:
•in preparing the Deed, Tony took unconscientious advantage of Khiem and, therefore, the Court should decline to order ‘specific enforcement’ of the Deed or, alternatively, the Deed should be set aside;
•any funds to be paid to Tony by Khiem were to be held on trust by Tony for Anthony and, so, Tony had no standing to make the claim in his own right; and
•alternatively, the Deed provided that Khiem was to make a gift to Tony, the gift was never completed and so was ineffective in equity, with the result that the defendant, as executor, could not be compelled to complete the gift.
In reply, Tony disputed the allegations that he took unconscientious advantage of Khiem and that any money payable to himself was to be held on trust for Anthony. Further, Tony denied that the Deed provided that Khiem was to make him a gift. Instead, Tony pleaded that the payment of $300,000 was in consideration of him agreeing to use (and in fact using) reasonable endeavours to cause Anthony to vacate the Property by 28 July 2017. But if the Deed did provide for an incomplete gift, Tony pleaded that the defendant was estopped from denying its enforceability due to Tony’s detrimental reliance upon certain representations made to him by his father.
Those pleadings, and the terms of the Deed, explain the questions which the judge identified as requiring her decision. Because the judge determined the claim by reference to these questions, it is necessary to set them out, namely:[6]
(a)is there an implied term that the plaintiff would use reasonable endeavours to try to cause Anthony to vacate [the Property];
(b)does the Deed exhaustively provide what was to happen in the event that the [father] did not transfer the $300,000;
(c)can the plaintiff seek specific performance of cl 1(a) of the Deed;
(d)is the defendant estopped from denying that the Deed is enforceable;
(e)was there unconscionable conduct; and
(f)was the intention of the Deed to establish a trust?
[6]Ibid [109].

Judge’s reasons

The judge discussed and determined each question in turn. We will set out as much as necessary to explain how the judge arrived at her conclusions on each of them, arriving at her ultimate conclusion.

Whether there was an implied term

The judge rejected the contention that the Deed contained an implied term that Tony should use reasonable endeavours to cause Anthony to vacate the Property. Contrary to his submission made on appeal, Tony argued that the father’s promise to pay him $300,000 was supported by a consideration: that is, it was paid in return for Tony trying to remove Anthony from the Property. In that context, the judge rejected Tony’s allied submission the word ‘gift’ in cl 1(a) was to be construed as ‘pay’. Her Honour considered that the characterisation of the money as a gift was more consonant with the contextual purpose she had discerned, namely that the Deed was intended to resolve the overlapping issues of providing a gift to Tony and addressing Anthony’s occupation of the Property. Further, her Honour noted that the Deed did in fact impose some express obligations on Tony (to provide a receipt and to return the money if Anthony did not vacate), and, as such, the Deed was workable without having to imply the term that Tony contended for.

Whether the Deed exhaustively provided for the consequence of non-payment

The second question addressed an alternative submission put by the respondent which was that the parties had expressly provided for the consequence of any failure on the part of the father to pay the $300,000 to Tony (on the assumption that it was an enforceable promise to pay). In that circumstance, the respondent submitted that Anthony would not be obliged to vacate the Property and could continue residing there. In other words, even if the Deed imposed an obligation on the father to pay the money to Tony, his failure to do so did not give rise to any right on Tony’s part to sue for damages for breach of promise because the Deed, on its terms, exhaustively provided for the contractual consequence of that failure.
It was in that context that the judge considered whether, assuming the father had made an enforceable promise to pay the money, Tony retained any right to pursue damages at common law for breach of that promise, or whether the terms of the Deed excluded such common law remedies for breach of contract. On balance, the judge held that, in the absence of ‘clear words’ excluding Tony’s common law right to pursue damages for breach of contract, his ‘common law rights remain’.[7] Nevertheless, the judge also stated that Tony had made no submissions ‘as to how damages should be assessed’[8] and that the parties gave ‘limited attention’ to whether Tony could pursue such rights.[9]
[7]Ibid [146], [175].
[8]Ibid [146(a)].
[9]Ibid [147].
In the result, the judge declined to award any damages for the father’s breach of promise to ‘gift’ Tony the sum of $300,000 if that promise was construed as a simple promise to pay money.

Whether specific performance of the promise would be ordered

With respect to the third question, the respondent had argued that cl 1(a) provided for a voluntary gift ‘at a later date’, which, at the date of suit, was incomplete making it incapable of specific enforcement in equity. The applicant, on the other hand, argued that the clause contained a promise of payment supported by consideration.
The judge accepted that a promisee may pursue common law rights in relation to a gratuitous promise made by Deed because such a promise is binding in the absence of consideration.[10] Her Honour then discussed the question whether the promise to pay was not immediately dispositive but, instead, only bound the parties ‘to future action’.[11] In that context, she considered the equitable maxims that ‘equity will not assist a volunteer’ and ‘equity will not perfect an imperfect gift’. Her Honour also reviewed the two authorities relied upon by the respondent, Milroy v Lord[12] and Corin v Patton.[13]
[10]Ibid [158].
[11]Ibid.
[12](1862) 4 De G F & J 264.
[13](1990) 169 CLR 549; [1990] HCA 12.
Following her analysis, the judge reached a conclusion about the meaning of cl 1(a) and stated her views as to what followed from that conclusion, in these terms:
The [Deed] in the current circumstance is distinct from the dispositive deeds at issue in Milroy v Lord and Corin v Patton. That is, the [father] did not attempt to immediately gift the sum of $300,000. The language of cl 1(a) is that the [father] ‘shall’ gift the sum before a specified date. As such, to speak of a gift that failed, or whether the [father] did everything to give effect to the transfer of funds, appears inapposite. Rather, the issue is whether the promise to gift in the [Deed] can be specifically enforced.[14]
…
In order to seek specific performance of the clause at equity, it must be supported by consideration.[15]
[14]Reasons, [164].
[15]Ibid [165].
In the next step in her reasoning, the judge rejected Tony’s argument that he had provided consideration in support of his father’s promise, whether the consideration was said to be provided directly through his own efforts[16] or, treating him as a joint promisee with Anthony, through Anthony’s act of vacating the Property.[17]
[16]Ibid [166]–[168].
[17]Ibid [169]–[174].
From those findings, the judge ultimately concluded the issue as follows:
As it has not been established that valuable consideration flowed from [Tony], either directly or as a joint promisee, he is considered a volunteer at equity. Consequently he cannot enforce cl 1(a) based upon the equitable remedy of specific performance. [Tony]’s common law rights, however, remain.[18]

Whether the respondent was estopped from denying the Deed was enforceable

[18]Ibid [175] (emphasis added).

Fourthly, the judge considered whether the respondent was estopped from denying that the Deed was enforceable, applying the orthodox principles of promissory estoppel. Rejecting the submission that Tony detrimentally relied upon an assumption that the gift would be binding, the judge declined to uphold the claimed estoppel.[19]

Whether Tony had engaged in unconscionable conduct

[19]Ibid [206].

Fifthly, the judge considered the respondent’s submission that Tony had taken unconscientious advantage of his father’s ill health and financial stress so as to procure his father’s execution to the Deed. The judge did not accept that the father was under any special disability or disadvantage but found, despite being in a ‘difficult’ position, he was not so compromised that he could not act in his own best interests.[20]

Whether the Deed established a trust

[20]Ibid [231].

Finally, the judge considered the respondent’s argument that, under the terms of the Deed, Tony was constituted trustee for Anthony and was to hold any money paid by the father on trust for Anthony. The judge took the view that the text of the Deed precluded any such finding.[21]
[21]Ibid [248].
In conclusion, the judge summarised her views on each of the six issues this way. As to Tony’s claims:
(1)      in cl 1(a) [the father] covenanted to gift [Tony] $300,000 before 28 July 2017. The gift was to be repaid if Anthony did not vacate [the Property]. [Tony] has not established that there was an implied term that he was to use reasonable endeavours to cause Anthony to vacate [the Property]. That is, there was no contractual bargain that he was to provide such services in consideration for payment of $300,000;
(2)      [Tony] cannot seek the equitable remedy of specific performance of cl 1(a) as he did not provide consideration and was not a joint promisee with Anthony;
(3)while [Tony’s] common law rights remain, he did not plead any loss or make submissions in this regard; and
(4)      the claim of promissory estoppel fails, chiefly due to substantial detriment not being established.
and as to the issues raised by the respondent:
(5)      [Tony] did not engage in unconscionable conduct in entering the [Deed] with the [father]; and
(6)      it was not the intention of the parties to establish a trust.[22]
[22]Ibid [249] (emphasis added).
Upon those findings, the judge ordered that Tony’s proceeding be dismissed and later held that he should pay the respondent’s costs of the proceeding assessed on the trustee basis.

Proposed grounds of appeal

Tony, the applicant, proposed four grounds of appeal. They are as follows:
1. The learned trial Judge erred in finding, not expressly, but by necessary implication, that the Deed dated 6 June 2017 effected an incomplete gift of $300,000 to the applicant at common law.
2. The learned trial Judge erred in finding that the applicant required the intervention of equity to complete the gift of $300,000 made by Khiem Tran to the applicant by Deed dated 6 June 2017.
3. The learned trial Judge erred in finding (at par [175] of the reasons) that the applicant could not enforce cl 1(a) of the Deed dated 6 June 2017 based upon the equitable remedy of specific performance in circumstances where the applicant did not seek the remedy of specific performance to enforce the Deed dated 6 June 2017 and required no such relief as the Deed dated 6 June 2017 was able to be enforced in an action for debt at common law, which was the action brought by the [applicant].
4. The learned trial Judge applied a wrong principle further and alternatively allowed extraneous or irrelevant facts to guide her further and alternatively did not take account of some material consideration further and alternatively made a decision which was plainly unjust in ordering that the applicant pay the respondent’s costs on a trustee basis in that the learned trial Judge made the order on the basis that the respondent is the executor and trustee of the estate of the deceased and trustees are ordinarily entitled to a right of indemnity out of the trust for expenses properly incurred, where such an entitlement of trustees does not mean that parties who bring unsuccessful proceedings against trustees are ordinarily required to pay costs on the trustee basis.
Putting aside the fourth ground relating to the basis for awarding costs, the first three grounds, concerning the dismissal of the claim itself, may be understood as making two general complaints. The first (grounds 1 and 2) is that the judge erroneously analysed the claim as one for the specific performance of a gift (failing because of equity’s reluctance to intervene in a transaction requiring further acts of performance). The second (ground 3) is that the judge erroneously failed to analyse and determine the claim as a common law claim for a debt. Together, they add up to a complaint that the judge failed to address the real claim made by the applicant.
None of the grounds or the arguments put by either party on appeal challenged the judge’s findings with respect to an implied term in the Deed as to consideration; the absence of any actual consideration for the promise; estoppel; unconscionable conduct; or the question of a trust.

Grounds 1 and 2

Grounds 1 and 2 effectively make a single point, ground 1 challenging the premise for the conclusion that is challenged by ground 2. That is, they assert that the judge was wrong to find that the Deed effected an incomplete gift at common law so that the intervention of equity was required to complete it. We will deal with the two grounds together.

Applicant’s submissions

The applicant began with the proposition that it is the nature of the property the subject of the gift that determines what is necessary to complete a gift.[23] In determining whether a gift is complete, the relevant questions to ask are whether the donor has done all that is necessary at law to make the gift effectual, and whether the donor can recall the gift.[24] Unlike, say, the transfer of real property[25] or shares,[26] or the assignment of debt,[27] each of which has specific legal requirements to be complete and effective at law, where the subject of the gift is money, there is nothing further a donor needs to do to make the gift complete and effective once the donor has, by deed, stated a present intention to pay the money to the donee.
[23]Anning v Anning (1907) 4 CLR 1049, 1063 (Isaacs J); [1907] HCA 13; Corin v Patton (1990) 169 CLR 540, 564 (Brennan J); [1990] HCA 12.
[24]Corin v Patton (1990) 169 CLR 540, 564 (Brennan J), 582 (Deane J); [1990] HCA 12.
[25]Anning v Anning (1907) 4 CLR 1049; [1907] HCA 13.
[26]Milroy v Lord (1862) 4 De G F & J 264; Corin v Patton (1990) 169 CLR 540; [1990] HCA 12.
[27]Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3.
The applicant argued that the language used in cl 1(a) of the Deed indicated that the father had a present intention to give Tony $300,000. No special meaning should be attached to the word ‘gift’ — in context, it simply means ‘give’ or, because the subject matter is money, ‘pay’. The immediate and absolute nature of the undertaking, the applicant argued, is found in the words, ‘expressly and irrevocably’. Once the date for payment (28 July 2017) passed, according to the applicant, the obligation created by the Deed ‘crystallised as a debt owed by the [father] to [Tony]’. It was unnecessary, said the applicant, for the father to actually pay the money to Tony to make the gift complete: the making of the Deed was sufficient to complete the gift.[28]
[28]Nolan v Nolan (2003) 10 VR 626, [121]–[122] (Dodds-Streeton J); [2003] VSC 121.
Moreover, argued the applicant, because the father’s promise to give the money to Tony was embodied in a deed, no consideration on Tony’s part was required to support the common law action to enforce the debt.[29]
[29]Netglory Pty Ltd v Caratti [2013] WASC 364, [735]–[736] (Edelman J) (‘Netglory’).
The next limb in the applicant’s argument was that the equitable remedy of specific performance is only available (or necessary) when the common law does not provide an adequate remedy.[30] However, in this case, there is a perfectly adequate remedy at common law, namely the action to recover a debt.[31] A common law action to enforce a debt does not involve or engage the remedy of specific performance of the contract creating the debt.[32]
[30]Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460, 503 (Windeyer J); [1967] HCA 3. See also Heydon et al, Meagher, Gummow & Lehane: Equity Doctrines & Remedies (LexisNexis Butterworths, 5^th ed, 2015), [20-030].
[31]Young v Queensland Trustees Ltd (1956) 99 CLR 560, 567–569 (Dixon CJ, McTiernan J and Taylor J); [1956] HCA 51.
[32]Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] (2017) 55 WAR 36, 78 [156] (Buss P, Murphy JA and Beach J); [2017] WASC 76; see also JW Carter, Contract Law in Australia (LexisNexis Butterworths, 6^th ed, 2013) [37-3] (‘Carter’).
It followed from these propositions, argued the applicant, that there was nothing incomplete at common law about the gift made by deed; the Deed created a debt enforceable by action at common law; and the intervention of equity, by the remedy of specific performance, was, in those circumstances, not only unavailable but unnecessary for success in the action.

Respondent’s submissions

The respondent supported the judge’s statement that it was inapposite to speak of a gift that had failed or was incomplete.[33] A gift involves a transfer of property, but the Deed did not take legal effect as the transfer of the sum of $300,000 and, so, it did not take effect as a gift of that sum. In part that was because, the respondent submitted, ‘it is not possible to transfer property in a sum of corporeal money that has not been earmarked as money to be given’. Further, there was no identification of any specific fund of money to be transferred or any act of transfer that would effect the gift. According to the respondent, the father did not make any gift of money by executing the Deed because ‘no dispositive words have been used and no property has been transferred to or vested in [Tony] by the [Deed]’.
[33]Above [23].
To illustrate his point, the respondent referred to a passage from Seddon on Deeds,[34] in which the author envisaged a donor making a gift by deed of a painting to a gallery, then refusing to deliver the painting. On the premise that the making of the deed had the immediate legal effect of vesting title to the painting in the gallery, the author suggested that the appropriate common law action to enforce the gift would be in detinue, not some remedy to enforce the promise, because property in the chattel had already passed. Contrasting that transaction with the present transaction, the respondent argued that, unlike the case of the painting, property in the money did not pass from the father to Tony merely upon the entry into the Deed, thus no gift was actually made.
[34]N Seddon, Seddon on Deeds (Federation Press, 2015) (‘Seddon’).
Although not expressly mentioned by the respondent, Seddon goes on to say, in the passage referred to, ‘If a deed is contractual, rather than dispositive, it can be enforced by a common law action.’[35] The author’s footnote to that sentence refers to an article by D Everett, ‘The Role of Deeds in Property Transactions — Contractual and Dispositive Acts’,[36] which the author describes as ‘an important article’.[37] Both Seddon and the article are referred to in the judge’s reasons.[38]
[35]Ibid 216 (citations omitted).
[36](1989) 1 Bond Law Review 94 (‘Everett’).
[37]Seddon, [1.9].
[38]Reasons, [117] fn 14, [158] fn 60.
In the article, Ms Everett states:
Where the deed relating to the transfer of property is voluntary and is contractual only (ie executory) and not effectual as a dispositive instrument, no interest in the property will arise in the donee.
It is not disputed that the common law courts will recognise… specialty debts as recoverable without proof of consideration… Further, it is not disputed that the common law will allow recovery of damages for breach of a covenant in a voluntary deed by a party to the deed who is a direct covenantee.[39] However, the point of crucial importance in a property transaction, as opposed to transactions which, for example, merely involve payment of fixed sums or annuities, where the common law remedy of damages for breach of covenant is adequate, is that a deed will not supply consideration in order to enable specific performance of a gratuitous promise to dispose of an interest in property.[40]
[39]The author cites Cannon v Hartley [1949] Ch 213, 217 per Romer J where he distinguishes the right to recover damages at common law from the right to specific performance in equity.
[40]Everett, 94–95 (some citations omitted).
As examples of transactions involving the payment of fixed sums or annuities, Ms Everett refers to voluntary bonds executed under seal. She says:[41]
Bonds, of course, simply involve the obligor binding himself to another for the payment of a fixed sum of money payable immediately or at a fixed time in the future and are to be distinguished from deeds generally. … The courts of common law allow an ascertained sum due under a deed to be recovered as a specialty debt and where this is possible lack of valuable consideration in the deed is immaterial.[42]
[41]Everett, 102 (emphasis in original).
[42]Here, the author was arguing that the reason that a voluntary promise was enforceable by deed was not because the deed ‘imported’ valuable consideration, but because a deed signified such a solemn promise that it was enforceable whether or not there was consideration for it.
Despite contending that the Deed did not effect a gift, in the sense of the dispositive vesting in Tony of property in the money, the respondent nonetheless accepted that the deed could be enforced at common law, presumably because of the principles referred to in the preceding three paragraphs. Even so, the respondent argued that acceptance that the Deed could be enforced at common law did not lead to the conclusion that the Deed created a debt or that the applicant’s remedy was for the recovery of a debt.
That brings us to ground 3.

Ground 3

Applicant’s submissions

In brief, having neither asked for nor requiring specific performance to enforce the promise in cl 1(a) of the Deed, the applicant argued that, instead, he had pursued a common law claim in debt. That is the claim that the judge should have addressed but wrongfully failed to address. The applicant pointed out that in the pleaded claim (see above [12]) he alleged the term of the Deed that the father agreed to ‘pay’ him $300,000; that in breach of the Deed, the father failed to do so; that he demanded the amount ‘owed’ to him making the respondent liable to pay him that sum; and that the prayer for relief claimed ‘the sum of $300,000’.
He therefore characterised his pleaded claim as one for debt. He drew particular attention to a passage from the judgment of Sholl J in Alexander v Ajax Insurance Co Ltd,[43] cited by Edelman J in Netglory.[44] The passage was relied upon for the proposition that, by the middle of the nineteenth century, the common law action for debt had come to cover numerous claims for money due, including upon simple contracts and contracts under seal ‘whenever a demand is for a sum certain or is capable of being readily reduced to a certainty.’ Further, the applicant drew attention to the judge’s acknowledgement on several occasions that his ‘common law rights remained’ but took issue with the judge’s statement that he neither pleaded that case nor advanced it in submissions.
[43][1956] VLR 436, 445 (‘Alexander’).
[44][2013] WASC 364, [735].
In the result, he argued that he should have succeeded on a simple action in debt and there was no impediment to doing so.
In oral argument, the applicant put his case, in the alternative, on the following basis: the father made a contractual promise to pay him $300,000 by a particular date; the promise was made by deed and was enforceable at common law without consideration; the father did not perform his promise by the relevant date; he was entitled to damages for breach of the promise; and the orthodox measure of damages was the sum required to place him in the same position, so far as money could do it, as he would have been in had the promise been performed. Because the promise was to pay a fixed, ascertained sum of money, the assessment of damages was straightforward: it was $300,000. On the pleadings, the applicant argued, that case was also advanced.

Respondent’s submissions

The respondent argued that the characterisation of the enforcement of cl 1(a) as the pursuit of debt is simply wrong. By reference to the historical understanding of indebitatus assumpsit, the respondent argued that the action of debt is not one for mere breach of a contract. Rather, the action presupposes the existence of an indebtedness (indebitatus), for example, for the sale of goods, the loan of money or the performance of work, antecedent to any undertaking (assumpsit) to pay the money. The action for debt presupposes executed consideration before or coincident with the (implied) undertaking to pay. An action on a contract to pay a debt (a ‘contract debt’) is no different. It is to be contrasted with a contract containing an executory promise to pay money.
Writing of the standard of performance of an obligation to pay money found in any sort of contract, JW Carter explained that such an obligation ‘more than any other promise, is inherently an undertaking that a result — payment to the payee — will occur, rather than a promise to use care in relation to the result.’[45] In that context, Professor Carter gave examples of such an obligation as one to repay a loan, or to pay the price of goods, land or services, and then continued:[46]
Of course, the accrued obligation to pay a liquidated sum in the nature of a contract debt enjoys a special position. Failure to pay is not a ‘mere breach of contract: it is rather the detention of a sum of money’ (Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567 per the Full High Court).
[45]Carter, [2–36].
[46]Ibid 216
Proceeding from Professor Carter’s statement and picking up what was said in Young v Queensland Trustees Ltd, the respondent drew special attention to the High Court’s emphasis on executed consideration in the following passage:[47]
The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit.
[47](1956) 99 CLR 560, 567; [1956] HCA 51 (‘Young’).
Applying these principles to the present case, the respondent argued that, prior to the promise (if it was a promise) made in cl 1(a) of the Deed there was no antecedent transaction from which any indebitatus arose. Or, put another way, there was no executed consideration for which money became due. The action for debt could not be brought for recovery on a deed or specialty ‘unless the debt could be established — for executed consideration — independently of the deed’. Because, in the present case, there was no obligation to pay money in existence prior to the father executing the Deed containing cl 1(a), the action for breach of that promise could not be an action for debt.
If the correct analysis of cl 1(a) is that it is neither a dispositive gift (ie vesting) of the money, nor a debt, the respondent next turned attention to whether the clause gave rise to an enforceable contractual promise.
The respondent distinguished between a promise to pay money, on the one hand, and a promise to make a gift of money, on the other. Here, the respondent argued, the proper construction of cl 1(a) is that the father promised to make a gift of money to Tony at a future date. Although having the appearance of a promise to pay money to Tony, the promise was in fact of a different nature: it was a promise to perform a future act, namely to make a gift of money by a specified date. The failure to do so was (if anything) the breach of a promise to perform an act attracting the common law remedy of damages for failure to perform.
Having reached that point, and on the assumption that the correct construction of the promise is that it was a promise to make a gift of money at a future date, the respondent supported the judge’s conclusion that ‘[Tony] did not plead any loss or make any submissions in this regard’.[48]
[48]Reasons, [249(c)]. See [29] above.
More specifically, the respondent appealed to an article published by Professor Stoljar (when a Senior Fellow in Law at the Australian National University) in the Modern Law Review in 1956.[49] The author suggested that a donee of a gift made by deed would have difficulty proving that damages equalled the total value of the promised gift. His reasoning appears to be that although ‘the main damage is, of course, the promisor’s refusal to hand over the gift … this he is ex hypothesi entitled to do if equity denies specific execution’.[50] According to such reasoning, the promisee is only entitled to reliance damages and is also subject to a duty to mitigate loss. With no loss proven, argued the respondent, the judge correctly dismissed the claim.
[49]SJ Stoljar, ‘A Rationale of Gifts and Favours’, (1956) 19 Modern Law Review 237.
[50]Ibid 250 and fn 10.
All that said, the respondent appeared to concede that if, contrary to his submission, the promise is to be construed as a promise to pay money, the $300,000 was recoverable by an action for debt.

Decision on grounds 1–3

In the result, after all the changing contentions in pleadings, submissions at trial, grounds of appeal, and even in some of the written and oral submissions before this Court, the final point of difference between the parties seems to be this:
(a)the applicant contended that his claim was for the enforcement of a debt created by a promise made by deed for the payment of a fixed sum of money, alternatively damages for breach of a contract to pay that sum; and
(b)while accepting that the applicant does not require the equitable remedy of specific performance of the contract, the respondent denied that the deed created a debt or that it contains a promise to pay money; rather, he argued that the deed contains a covenant to make a gift of money at a future date, breach of which could be remedied by damages at common law, however no such damages were sought, proven or assessed.

The best approach to considering and resolving these differences is to address the following four questions:
(1)What is the proper construction of cl 1(a) of the Deed?
(2)Does the Deed create a debt for which judgment should have been given in favour of Tony?
(3)If not, did Tony have an available claim for damages for breach of any and if so what contract?
(4)If so, was there any impediment to the judge awarding damages in favour of Tony?

What is the proper construction of cl 1(a) of the Deed?

As the judge recognised, the principles concerning the construction of contracts apply to the construction of a deed.[51] These principles are well known and can be stated succinctly. The meaning of contractual terms is to be determined by what a reasonable person would have understood them to mean: this normally requires the consideration of the text, the surrounding circumstances known to the parties, and the purpose and object of the transaction.[52]
[51]Prenn v Simmonds [1971] 3 All ER 237, 239 (Lord Wilberforce, Lords Reid, Donovan, Pearson and Diplock concurring); and see Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at [9]–[10] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); [2002] HCA 5.
[52]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); [2004] HCA 52.
The judge made findings of fact and drew inferences about the surrounding facts known to the parties and the object and purposes of the transaction,[53] and no issue was taken on appeal about any of those matters.
[53]See above, [10] and 11].
Turning to the text of the Deed, the first thing to note is that it is a tripartite agreement. The recitals pay particular attention to the fact that Anthony resided at the father’s property due to ‘promises and agreements’ made between them. The operative clause, clause 1,[54] is headed ‘Transfer of Monies’. Focussing on the issue of the transfer of money, the seven paragraphs of that clause refer to a ‘Payment’ in para (a), a return of the ‘Payment’ in para (e) and the nature of the ‘Payment’ in para (f).
[54]See above, [6].
The language chosen in para (a) is particularly important. The phrase ‘expressly and irrevocably’ is emphatic. The word ‘irrevocably’ — also used in para (f) — makes clear that nothing is to stand in the way of the Payment being made. The word ‘expressly’ is a little harder to explain except that it lends a sense of clarity of intention on the part of the father to make the Payment. Together with para (f), para (a) conveys the meaning that the father’s obligation to make the Payment is absolute and, subject to what is said in para (e), irreversible.
It is uncontroversial, now at least, that the money was a gift and not paid in consideration for any service. The money is given unconditionally except as to a time period allowed for performance. What is conveyed by the text, viewed objectively, is an intention to create an immediate and binding obligation on the part of Khiem to give Tony $300,000 by the specified date. In our view, the words ‘shall’ and ‘gift’ are entirely consistent with such an interpretation. ‘Shall’, in context, merely means ‘will’, and ‘gift’, used as a verb, simply means ‘give’, so that para (a) is reasonably to be understood as if it stated ‘the father will give Tony $300,000 by 28 July 2017’.
The provision for the return of the money in para (e) in no way undermines the force of the immediate and binding nature of the intended gift expressed in para (a). Before the money can be returned it has to be given. Once it has been given, Tony is free to use it as his own property (para (f)) subject only to his obligation to return $300,000 if his brother, Anthony, does not vacate the Property within three days of the father paying Tony the money.
The respondent’s construction of para (a) as a statement of intention to make a future gift of the money is not only at odds with the emphatic language we have identified, it also sits uneasily with the remainder of cl 1. From the text alone, it can be inferred that one of the objects of the Deed was to get Anthony to leave the Property. Recourse to the known surrounding facts supports that finding (as, indeed, the judge found). Although the Payment is not made as consideration for Tony endeavouring to get Anthony to leave the Property, the making of the Payment is, implicitly, intended to operate as some sort of incentive or motivation for Anthony to do so. With the Payment, Anthony is to leave; without the Payment he may remain. Construing cl 1(a) as establishing an immediately binding obligation on the part of Khiem to pay $300,000 to Tony is consistent with it being the measure to procure Anthony’s departure from the Property. Construing the clause as merely expressing a future intention to make a gift would appear to be a rather obtuse way of achieving that purpose.
Furthermore, the other object which the judge found the Deed was intended to achieve — consistent with the contextual facts as known to the parties — was for Khiem to fulfil some sort of moral obligation he had to Tony to give him $300,000 and to resolve a tension that had emerged between them about the making of that gift. In light of that object and those known facts, again it would appear to be unnecessary and indeed odd to construe cl 1(a) as if it provided only for the making of some future gift of money rather than an immediately binding obligation to pay it.
In conclusion, having regard to the text, the contextual facts known to the parties and the purpose and objects of the Deed, in our view it is quite plain that cl 1(a) imposes an immediately binding obligation on Khiem to pay Tony $300,000 subject only to an allowance until 28 July 2017 to make that payment. The clause does not express a mere executory promise to ‘make a gift’ of money by that date. The judge’s conclusion (above [23]) that the father did not ‘attempt to immediately gift the sum of $300,000’ is, with respect, wrong.
The respondent nailed his colours to the contention that the proper construction of cl 1(a) was that it contained a promise to make a gift of money at a future date. As we understood his submission,[55] the respondent ultimately conceded that if, instead, the correct construction of cl 1(a) was that it contained a simple promise to pay the $300,000 to Tony, then that sum was recoverable by an action for debt or, at least, what today would be called an action for debt.
[55]See above, [59].
If that concession was correctly made, our conclusion about the proper construction of cl 1(a) effectively resolves the appeal in favour of the applicant. That must follow because, having found that the applicant’s common law rights remained, the judge ought not to have found any impediment to simply giving judgment in favour of Tony for the amount of the debt as claimed. Nevertheless, in case we misunderstood the respondent’s concession, and out of deference to the judge, we will briefly consider the remaining questions.

Does the Deed create a debt?

Much if not all of the heat in the debate whether a promise to pay money (by deed) without executed consideration creates a ‘debt’ or only a simple contract to pay a fixed sum of money, dissipates because of the view we take about the assessment of damages for breach if the latter analysis is correct. For reasons we explain in answer to the next two questions, we think that the judge ought at least to have found that cl 1(a) was a promise to pay a fixed, ascertained sum of money and that the loss suffered from the breach of that promise was the amount of the promised sum.
That being so, the question whether the promise to pay the money amounted to a debt is largely of academic interest only. We do not need to finally resolve it. However, some consideration of the features of debt, on the one hand, and a contractual promise to pay a fixed sum of money, on the other, feeds into our conclusion as to why, in the end, it does not really matter in this case into which category the liability created by this Deed falls.
There is a category of claim that was once enforceable by the action of debt, an action that is older than the law of contract founded, as it is, on the notion of one executory promise being the consideration for another.[56] And so, an entitlement to the price for goods sold and delivered, or the repayment of money lent, did not depend upon the identification or enforcement of a contractual promise to pay the relevant sum. The money became due because of the antecedent supply or performance of something that could be described as executed consideration. In the modern era, the making of a promise to pay such an amount, enforceable as a contract, does not alter that fundamental analysis.
[56]Carter, [1-05].
That was the point made by the High Court in Young in the passage quoted above at [53]. Young was concerned with the onus of proof on parties to a claim for monies lent (a well-established category of debt). More specifically, the question was whether the plaintiff had to prove a ‘breach’ by showing that no money had been repaid in order to establish the claim, or that the defendant had to prove that money had been repaid in order to reduce or defeat the claim. The Court held that the liability to pay a debt of a kind formerly recoverable in debt or indebitatus assumpsit was not the result of a breach of contract that a creditor must affirmatively allege and prove.[57]
[57]Young (1956) 99 CLR 560, 569.
In saying that indebtedness in a sum certain for an executed consideration was never conceived as breach of contract, but was instead enforceable by an action of debt or indebitatus assumpsit, the High Court did not say in terms that only indebtedness of that kind was enforceable by such actions. For example, the High Court’s statement in that passage says nothing, in explicit terms, about the enforcement of a covenant under seal to pay a fixed sum of money. Indeed, in the same discussion the Court expressly considered the question of onus of proof in connection with a ‘special contract to pay a sum of money on a day certain’.[58] Although concluding that a creditor for such a claim may not enjoy the same advantage in terms of onus of proof or disproof as to payments made in reduction of the claim, otherwise there was little said to deny the possibility that such a claim bore the same features as claims typically accepted as debt.
[58]Ibid 568.
Further support for assimilating a liability on a covenant under seal to pay a fixed sum of money with debt is found in Sholl J’s judgment in Alexander. Sholl J affirmed a passage from the 1831 edition of Chitty on Pleadings (5^th ed) in which the learned author stated that, at the time of publication, the action for debt covered claims for money due on
… simple contracts, express or implied, whether verbal or written, and upon contracts under seal… whenever the demand is for a sum certain, or is capable of being readily reduced to a certainty.[59]
[59]Ibid 445, cited in Netglory [2013] WASC 364, [735] (Edelman J) and see the discussion, generally, at [728]–[736]. See also the views of Everett, above at [43] and [44].
Tracing the history of debt from its origins through to modern contracts to pay fixed sums of money, Associate Professor AV Levontin, in an article cited by the respondent, concluded that:
The development of the law would appear to have moved as follows: recovery of stipulated amount (1) by action of debt (whether simple or contained in a covenant); (2) by action for damages for breach of (executory) covenant to pay a sum certain; (3) by action for damages for breach of simple contract (neither debt or covenant) to pay a sum certain.[60]
[60]AV Levontin, ‘Debt and Contract in the Common Law’, [1966] 1 Israel Law Review 60, 85 fn 126 (‘Levontin’).
As we have already foreshadowed, we think that the outcome in this case is the same whether the covenant made by deed to pay the $300,000 to Tony is construed as creating a debt, enforceable independently of breach of contract, or as creating only an executory promise enforceable by an award of damages for breach of contract. Assuming, for the sake of argument, that the Deed did not create a debt in the sense outlined above, we turn to the next stage of the analysis dealing with the final two questions together.

Did Tony have a claim for damages and, if so, ought they have been assessed?

We have effectively answered the first part of this question. We construe the promise contained in cl 1(a) of the Deed as creating an immediately binding promise to pay $300,000 by 28 July 2017. In breach of that promise, Khiem failed to pay the sum on or before the due date. Because Anthony vacated the Property, no countervailing obligation arose on Tony’s part to return the money, an obligation which presumably could have been pleaded by way of set off to Tony’s claim for the money had that circumstance arisen. As a breach of contract, the father’s non-performance of the promise entitled Tony to damages.
The judge accepted that Tony would have a claim for damages arising from the breach but appeared to think that there was an obstacle to awarding damages for such breach because the applicant ‘did not plead or make any submissions in this regard’. It may be that the applicant did not, in terms, seek damages for breach of the promise to pay the money. Nevertheless, he plainly sought an award of $300,000 because the father breached a contractual term to pay him that sum. That is evident both from the pleadings and the way in which the case was put before the judge.
The question is, what loss had been sustained by the breach of contract, what damages could have been assessed for that loss and was there any impediment to those damages being assessed and awarded?
The general principle when awarding damages for breach of contract is to place the plaintiff, so far as money can do it, in the same situation, with respect to damages, as if the contract had been performed.[61]
[61]Robinson v Harman (1848) 1 Exch 850, 855; 154 ER 363, 365 (Parke B); Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 80 (Mason CJ and Dawson J), 98 (Brennan J), 117 (Deane J), 134, 148 (Toohey J), 161 (McHugh J, dissenting); [1991] HCA 54.
In Alexander, the issue for Sholl J to determine was whether a particular claim for money was one that answered the description of a ‘debt or liquidated demand’ as expressed in rules permitting the administrative entry of judgment upon the failure of the defendant to file an appearance to the writ. It was in that context that Sholl J discussed the meaning of a claim for debt as described above. But, the real conclusion in the case related to the identification of those claims that met the description, at least, of a claim for a liquidated sum. Within that category, Sholl J included any claim for which covenant or special assumpsit would lie (eg a covenant made under seal), provided that the claim was for a specific amount, the calculation of which did not involve ‘elements the selection whereof was dependent on the opinion of a jury’.[62] In other words, it included a claim of that kind for which the computation of the sum owed did not require any findings of fact in order to establish the amount lost by the breach. Although the case before us does not involve determining whether the claim was amenable to administrative entry of judgment, it does involve the question as to when a claim for damages for a monetary sum involves anything more, for proof of the loss, than identifying the sum the subject of the relevant promise.
[62]Alexander [1956] VLR 436, 455.
Had the promise been performed in this case, Tony would have been paid $300,000. But he was not paid that sum and therefore he did not have that sum of money. That fact was established. In a case concerning a simple promise to pay a fixed sum by a due date there could not be any additional facts necessary to establish the loss. Associate Professor Levontin explained it as follows:
Once it became settled that a person contractually entitled to £1,000 and who is not given the money is deemed to suffer a loss of £1,000, such person could be confident of recovering this very sum, rather than only damages for his loss, even though he sued (and, in the circumstances, had to sue) merely in assumpsit. It became possible to sue ‘as if in debt’, ie for specific recovery of the promised payment, where debt proper would not lie, and where therefore, under the older law, a plaintiff could not specifically recover the promised payment.[63]
[63]Levontin, 86 (citation omitted).
In this case, having correctly found that the applicant’s common law rights were engaged, the judge implicitly accepted there had been a breach of a simple contract. On that scenario, at the very least, the question of nominal damages must have arisen. Once a consideration of nominal damages had arisen, we consider it was incumbent on the judge to consider whether, on the evidence, there was a loss for which assessable damages should have been awarded.
Proof of loss required no more than proof that a promise had been made to pay a fixed, ascertained sum of money by a stipulated date; the date had passed; and the payment had not been made. No question of mitigation of loss arose. Nor was there any need to consider whether that loss stemmed from Tony’s reliance upon the promise. The loss was simply the amount not paid. So far as money could do so, the damages required to place Tony in the position he would have been in had the promise been performed was $300,000.
For those reasons, the judge was in error to dismiss Tony’s claim and should have awarded damages of $300,000.

Ground 4

On this finding, there is no need to consider ground 4 concerning the judge’s award of costs in favour of the respondent. Nevertheless, we think it is appropriate to record our opinion that there was simply no occasion to award costs against the applicant on the trustee basis. This claim was not made against the defendant qua trustee: it was simply a claim against the estate for a personal liability incurred by the father whilst alive.

Conclusion

Leave to appeal will be granted and the appeal allowed. The orders of the judge made 1 June 2021 and 29 June 2021 will be set aside and in their place there will be judgment for the applicant on the claim in the sum of $300,000 with interest and (subject to the parties’ submissions) costs.
---

[2022] VSCA 194

13 September 2022