CONTRACTS – intention to create legal relations – where first plaintiff, defendant and defendant’s now deceased life partner signed a Heads of Agreement for sale of a one-third interest in defendant’s property to be “converted to an agreement for the sale of land” containing numerous “additions”, including the grant of an “irrevocable right of survivorship” to the plaintiffs – where no contract for the sale of land incorporating the “additions” in the Heads of Agreement subsequently executed – whether parties intended to create legal relations by signing Heads of Agreement – Held: the parties did not intend to create legal relations
EQUITY – unconscionability – undue influence – where defendant and life partner suffering special disadvantage at the time of signing Heads of Agreement – where plaintiffs had actual or constructive knowledge of that special disadvantage – where defendant and life partner not deprived of free choice by pressure exerted by plaintiffs at time of signing Heads of Agreement, but their signatures were procured by plaintiffs unconscionably taking advantage of their special disadvantage – where terms of Heads of Agreement highly disadvantageous to defendant and life partner and correspondingly advantageous to plaintiffs – Held: if parties had intended to create legal relations by signing Heads of Agreement, it would have been set aside on grounds of unconscionability, but not on the grounds of undue influence
CONTRACTS – Contracts Review Act 1980 (NSW) – Held: if parties had intended to create legal relations by signing Heads of Agreement, the Court would have declined to enforce it on the grounds that it was unjust in the circumstances relating to it at the time it was made
EQUITY – proprietary estoppel by encouragement – where representations made by defendant and life partner that plaintiffs would receive interests in their property – where those representations were made in, and arose out of, Heads of Agreement – where Heads of Agreement not intended to create legal relations and where plaintiffs procured defendant and life partner to sign Heads of Agreement by unconscionable conduct – Held: Equity will not grant relief to avoid detriment that plaintiffs will otherwise suffer as a result of a relying on representations contained in and arising out of Heads of Agreement which plaintiffs procured defendant and life partner to sign by unconscionable conduct
EQUITY – joint endeavour constructive trust – where plaintiffs rely on joint endeavour founded in Heads of Agreement – Held: Equity will not grant relief to plaintiffs on the basis of a joint endeavour constructive trust where the joint endeavour is the product of plaintiffs’ unconscionable conduct
EQUITY – common intention constructive trust – where plaintiffs rely on common intention founded in Heads of Agreement –…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading White v Kohacek
Sign in free to access the full text
Details
AGLC
White v Kohacek [2025] NSWSC 1042
Case
[2025] NSWSC 1042
Decision Date
CaseChat Overview and Summary
In the case before the court, the plaintiffs, Mr White and Mrs White, sought to enforce an agreement that would have granted them an interest in property owned by the defendant, Mr Kohacek. The agreement in question was a Heads of Agreement signed by Mr White, Mr Kohacek, and Mr Kohacek’s deceased life partner. The dispute arose from the interpretation of this document and whether it created a legally binding contract. The matter was heard in the Supreme Court of New South Wales.
The central legal issues before the court were whether the parties intended to create legal relations by signing the Heads of Agreement, and if so, whether the agreement could be enforced due to unconscionability, undue influence, or other equitable considerations. The court also needed to determine whether the plaintiffs could rely on the agreement to claim any equitable relief, such as proprietary estoppel, joint endeavour constructive trust, or common intention constructive trust.
The court found that the parties did not intend to create legal relations by signing the Heads of Agreement. Although the document contained provisions that would have been incorporated into a formal contract for the sale of land, no such contract was executed. The court further determined that even if the parties had intended to create legal relations, the agreement would have been set aside on grounds of unconscionability due to the special disadvantage experienced by Mr Kohacek and his life partner, which the plaintiffs had actual or constructive knowledge of. However, the court found no undue influence was exerted by the plaintiffs. Additionally, the court held that equity would not grant relief to the plaintiffs as the agreement was the product of their unconscionable conduct. Finally, the court concluded that the plaintiffs could not rely on the agreement to claim any form of equitable relief or seek restitution for money had and received.
The court's final orders were that the agreement was not legally binding and could not be enforced. The plaintiffs were not entitled to any equitable relief based on the agreement, and no restitution was ordered.