Williams v Harrison
[2023] TASSC 47
•30 November 2023
[2023] TASSC 47
| COURT: | SUPREME COURT OF TASMANIA |
| CITATION: | Williams v Harrison [2023] TASSC 47 |
| PARTIES: | WILLIAMS, Howard Robert as Executor of the Estate of Joyce Evans |
| v | |
| HARRISON, Elwin | |
| HARRISON, Angela | |
| FILE NO: | 246/2021 |
| DELIVERED ON: | 30 November 2023 |
| DELIVERED AT: | Launceston |
| HEARING DATE/S: | 16, 17,19 October 2023 |
| JUDGMENT OF: | Pearce J |
| CATCHWORDS: |
Contracts – General contractual principles – Formation of contractual relations – Agreements contemplating
execution of formal document – Whether concluded contract.
Aust Dig Contracts [37]
Contracts – General contractual principles – Parties – Effect of death of party– No intention to contract with
executor.
Aust Dig Contracts [40]
REPRESENTATION:
Counsel:
Plaintiff: F C Brimfield, N Edmondson Defendants: N Terracall
Solicitors:
Plaintiff: Bleyer Lawyers Pty Ltd Defendants: Terracall and Associates
| Judgment Number: | [2023] TASSC 47 |
| Number of paragraphs: | 63 |
Serial No 47/2023 File No 246/2021
HOWARD ROBERT WILLIAMS AS EXECUTOR OF ESTATE OF JOYCE EVANS
v ELWIN HARRISON and ANGELA HARRISON
| REASONS FOR JUDGMENT | PEARCE J November 2023 |
1 The plaintiff, Howard Williams, is executor of the estate of the late Joyce Evans. Mrs Evans died on 6 March 2020. Prior to her death, Mrs Evans was engaged in a financial dispute with the defendants, Elwin and Angela Harrison. Mrs Evans claimed that Mr and Mrs Harrison had wrongly applied her money to their own benefit. Mr Williams seeks an order for specific performance of what he contends is a contract to settle the dispute entered into in or about June 2020 between him, in his capacity as executor, and Mr and Mrs Harrison. The putative agreement concerns the property at Unit 4, 369A Hobart Road, Youngtown, a suburb of Launceston. Mr Williams claims that the terms of the agreement require Mr and Mrs Harrison to transfer the property to the estate with the costs of the transfer to be met equally, in return for which Mr and Mrs Harrison would be released from any causes of action which had accrued to Mrs Evans during her life and which survived for the benefit of the estate.
2 The central question in the action is whether the parties entered into an agreement which they intended to be a legally binding contract between them: Masters v Cameron (1954) 91 CLR 353. Mr and Mrs Harrison claim that the bargain depended on the execution of a formal agreement, but, in any event, they never intended to contract with Mr Williams as opposed to Mrs Evans. The evidence of the relevant communications between the parties consists almost entirely of written correspondence and accounts of conversations between the respective solicitors. All of the communications between the parties were through solicitors. For the most part the evidence of the witnesses took the form of witness statements which were tendered as exhibits and on which the witnesses were cross-examined. Documents were tendered by agreement.
3 Whether an agreement was reached, and if so whether it was an agreement by which the parties intended to be bound, are issues which are to be determined objectively, from the documents and exchanges between solicitors, construed in the context of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629. The case was conducted on the basis that the instructions given by Mrs Evans, Mr Williams and Mr and Mrs Harrison to their respective solicitors, were confidential communications subject to legal client privilege which had not been waived, but in any event were not relevant to the objective determination of contractual intention. As a result, both Mr Williams and Mr and Mrs Harrison gave evidence of facts relevant to the surrounding circumstances, but little or no evidence was adduced of their actual intention about the formation or content of an agreement.
4 There is a small counterclaim for recovery by the defendants of rental paid by a tenant to the plaintiff following Mrs Evans' death.
The background to the action
5 Much of the evidence concerning the background to the dispute is not contentious. Mrs Evans was born in Scotland in 1943. She lived much of her early life in Africa where she married and had one child, a daughter. Following the death of her first husband she remarried, but was long estranged from her second husband. She was also estranged from her daughter.
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6 Mrs Evans first came into contact with Mr Harrison in about 1999. Mrs Evans lived alone in England and Mr Harrison and his wife lived in Australia. Mrs Evans and Mr Harrison became acquainted through a mutual interest in online gaming. From around 2005 they became friends although still communicating only online. Mrs Evans was in increasingly poor health and disliked the cold of England. By 2017 she was aged 74. On 24 January 2018 Mrs Evans made a will, through solicitors in Buckinghamshire, in which she appointed Mr and Mrs Harrison as executors and trustees, and gifted her entire estate to them in equal shares, or, if they did not survive her, to their children. A note also dated 24 January 2018 was left with the will. In the note Mrs Evans recorded why she had made no provision for her estranged husband or daughter. The note stated that she had had no contact with her husband since 1974 and "no relationship with her daughter" whom she had not seen for 30 years.
7 In the first part of 2018 Mrs Evans sold her house in Buckinghamshire for about £215,000. Not long afterwards she flew to Australia. Immediately following her arrival Mrs Evans lived in Queensland close to where Mr and Mrs Harrison then lived. On 14 and 15 May 2018 five separate transfers totalling £215,000 (about $370,000) were made from Mrs Evans' bank account to an account in Mrs Harrison's name. In mid-2018 they moved to Tasmania together. By contract dated 23 July 2018 Mr and Mrs Harrison purchased Unit 4, 369A Hobart Road for $210,000. The purchase was entirely funded from the money which originated from the proceeds of sale of Mrs Evans' home in England and which had been deposited into Mrs Harrison's account. However, following completion of the purchase, the title to the property was registered in the name of Mr and Mrs Harrison. Mrs Evans lived in the unit until, apart from some later periods of hospitalisation, her death in March 2020. After coming to Tasmania Mr and Mrs Harrison lived in a house they already owned in Mowbray, another suburb of Launceston.
The dispute
8 By late 2018 or early 2019, Mrs Evans' feelings towards Mr and Mrs Harrison had changed. Mr Williams lived in a village some distance from Launceston, but owned a unit in the same unit complex in which Mrs Evans lived. Mr Williams and his wife were very often there. They met Mrs Evans in about September 2018 and, over time, became friends with her. Mr Williams gave evidence of representations made to him by Mrs Evans in late 2018, complaining to him about her situation and the actions of Mr and Mrs Harrison. The things Mrs Evans told him prompted him to first take her to the police. When eventually told by the police that it was a "civil matter" Mr Williams assisted Mrs Evans, during the course of 2019, to speak to a lawyer at Legal Aid and then another legal practitioner in Hobart.
9 In May 2019 Mrs Evans consulted a solicitor at the firm Clarke and Gee to make a new will. Mr Williams accompanied her to the appointment. The will she made is dated 31 May 2019. In the will she revoked her previous wills, appointed Mr Williams as executor and trustee and bequeathed her estate to two charitable organisations in equal shares. When giving instructions for the new will, Mrs Evans also gave instructions to the solicitor to write to Mr and Mrs Harrison to complain about what had happened to her money. The letter which was sent, dated 21 May 2019, includes the following:
"We are instructed our client provided you with loan fund in the amount of £215,000
at or around 15 May 2018.We are instructed the funds were provided pursuant to a verbal agreement that you would purchase a property with the expectation our client would have a legal interest in the property.
The property you purchased with the funds was Unit 4/369A Hobart Road, Youngtown. It has come to our client's attention that the registered owners of the
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property are the both of you (sic) and she has no legal interest in this property. This is
in violation of your verbal agreement with our client.Our client demand (sic) repayment of the £215,000 within seven days of this letter as a result of your breach of the agreement.
If you fail to formally agree to this request we will seek instructions to commence legal proceedings against you without further notice."
10 After receiving the letter from Clarke and Gee, Mr and Mrs Harrison instructed a solicitor, Claire White, from the firm Douglas and Collins. Ms White replied by letter dated 14 June 2019. In substance, she asserted on behalf of Mr and Mrs Harrison, that the funds from the sale of Mrs Evans' property in England were "a gift to Mr and Mrs Harrison in recognition of them supporting Mrs Evans to enjoy her continuing independence." Ms White's letter also asserted that her clients had instructed her "that they attempted to discuss how the title to the property would be held with Mrs Evans at the time of purchase, however she insisted that the money was a gift" and "that there was never any agreement, nor any discussion, that Mrs Evans would have a legal interest in the property."
11 The next correspondence on behalf of Mrs Evans to Douglas and Collins was not until 2 December 2019. By then Mrs Evans had engaged a different legal practitioner, Vanessa Bleyer, of Bleyer Lawyers. Ms Bleyer wrote a detailed letter to Douglas and Collins setting out the basis of the claim Mrs Evans made against Mr and Mrs Harrison. In short summary it claimed that:
• Mr and Mrs Harrison enticed Mrs Evans to Australia with false promises that they would care for her; • the withdrawals from Mrs Evans' bank account were made without her authority; • the unit in Youngtown was registered in the names of Mr and Mrs Harrison without Mrs Evans' authority; • the balance of the proceeds from the sale of Mrs Evans' property in England had been improperly applied by Mr and Mrs Harrison to their own benefit.
12 Ms Bleyer's letter demanded that, within seven days, Mr and Mrs Harrison agree to do two things within 14 days: firstly to "do all things and sign all documents" necessary to transfer the title to the Youngtown property to Mrs Evans, and secondly to repay the difference between the total amount deposited into Mrs Harrison's account and the amount paid for the Youngtown property.
13 Ms White replied by letter dated 11 December 2019. It is a long and detailed letter but, again at risk of over simplification, it asserted that:
•
Mr Harrison and Mrs Evans had, for many years, been friends. He had become increasingly concerned about her failing health, her ability to care for herself, the absence of other support for her and her unhappiness about the cold weather in England;
•
Mrs Evans eagerly took up the suggestion that she move to be near Mr and Mrs Harrison in Australia;
•
Mrs Evans took it upon herself to sell her home and deposit the proceeds in Mrs Harrison's account with the suggestion that they could use the funds as their own;
•
it was agreed that the funds be used to purchase the unit at Youngtown and that the property be registered in the names of Mr and Mrs Harrison in the expectation that they would inherit her estate following her death in any event;
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•
the steps taken by Mr and Mrs Harrison were to assist in Mrs Evans' care, to address her isolation and poor health and to enable her to maintain her independence;
•
Mr and Mrs Harrison categorically denied all allegations of manipulation, influence and dishonesty, did not understand why the relationship of friendship had broken down, and wished to meet with Mrs Evans to discuss her claims.
The claimed agreement
14 This case does not concern the meaning of a contractual document but, rather, is about whether a contract was formed at all. Consideration of that question begins with a passage which appeared in Ms White's letter of 11 December 2019 in which she conveyed her clients' rejection all of the claims made by Mrs Evans. However, the letter continued:
"It is proposed that, before significant legal fees are expended, the parties meet with solicitors present to discuss what has happened and how this situation can be resolved. My clients are agreeable to transferring the unit at Youngtown into your client's name, but have limited ability to meet the stamp duty costs that that will attract. They suggest the parties meet those costs equally. Alternatively the property can be sold and the settlement proceeds paid to your client. In relation to the remainder of the funds, they instruct that these were a clear gift to our client."
15 Counsel for the plaintiff contended that this passage in the letter constitutes an offer to compromise Mrs Evan's claims. An offer is a clear statement of the terms, promissory in intent, by which the person making the offer is prepared to be bound if the other accepts: Cheshire and Fifoot, The Law of Contract, 11th Australian Edition at 3.13. There seems to me to be considerable doubt about whether the passage relied on discloses a willingness to be bound to an agreement without further negotiation. However that question need not be determined because the offer, if it was an offer, was impliedly, if not expressly, rejected by the written reply sent by Ms Bleyer on 29 January 2020. The letter said, using the original numbering:
"1 We refer to your letter dated 11 December 2019. 2 We are instructed that our client will accept the transfer of the Youngtown
property into her name and agrees to pay any stamp duty and land titles office fees for
the transfer.
3 Our client does not accept the transfer of the Youngtown property as full and final settlement of the dispute between our respective clients.
4 Once the original signed transfer and original certificate of title are delivered to our office, we are instructed to write to you further as to the balance of the dispute.
5 Our client's health is deteriorating. As a result, we are instructed to demand that
the documents referred to at paragraph 4 above be delivered to our Launceston (sic)
by midday on Friday 31 January 2020.
6 To that end, please email us proposed transfer of land before that time and before
it is signed following which we will review it and let you know our client is happy
with it.
7 We are working towards finalising this matter whilst our client is still able to
give us instructions and to avoid her Estate taking over this action if her current health
issues lead to her passing."
16 The terms of that letter made clear that the proposed compromise suggested by Ms White was not acceptable to Mrs Evans, and that Mrs Evans wished to not only receive a transfer of the unit but also to recover the balance of the money transferred from her bank account. There was no written
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reply from Douglas and Collins to that letter. On 5 February 2020 Ms White phoned and spoke to Ms Bleyer. Both practitioners made notes of the conversation. Both record that Ms White advised Ms Bleyer that no signed transfer would be provided by Mr and Mrs Harrison unless it was in "final settlement". The evidence of both Ms White and Ms Bleyer was also that Ms White, in that conversation, conveyed Mr Harrison's request that he be permitted to speak to Mrs Evans.
17 Ms Bleyer wrote a further letter to Douglas and Collins dated 28 February 2020. It relevantly states, using the original numbering:
"1 We refer to your letter dated 11 December 2019. 2 We confirm that in our previous letter dated 29 January 2020, we referred only to your clients' offer in your 11 December letter to transfer the Youngtown property into our client's name. Your clients refused to do so unless this dispute is finalised in full.
3 Our client will not accept the Youngtown property in full and final
settlement.
…
19 In relation to your clients' proposal that both parties meet, our client instructs that she is against this proposal and instead is content with the lawyers communicating to resolve the matter. Our client rejects the alternative proposal that the property be sold and settlement proceeds paid to our client.
20 As a last attempt to resolve the dispute, the Youngtown property is to be transferred to our client's name and your clients can pay our client the remainder of the total amount unlawfully taken from our client's account (being 215,000 pounds sterling, converted to AUD with the exchange rate being the date of each transfer of funds totalling the 215,000).
21 This offer is open for 7 days from the date of this letter."
18 Joyce Evans died a week later on 6 March 2020. The plaintiff does not assert that there was any agreement between Mr and Mrs Harrison and Mrs Evans prior to her death. The allegation pleaded in the statement of claim that an agreement was concluded by Ms Bleyer's letter to Douglas and Collins, dated 29 January 2020 was abandoned at the commencement of the trial. With respect, that was a proper course. At that stage there was no meeting of the minds about the terms of any proposed compromise of Mrs Evans' claims against the defendants.
19 One issue which arises in this action is whether, despite its rejection and the making of a counter offer, an offer contained in the letter of 11 December 2019 remained open such that it was capable of later acceptance. I am satisfied it did not. An offer terminates on rejection by the offeree: Stevenson Jacques & Co v McLean (1880) 5 QBD 346. A counter offer is an implied rejection of an offer: Hyde v Wrench (1840) 3 Beav, 334, 49 ER 132. There are cases in which some greater flexibility in approach is warranted. In Brambles Holdings v Bathurst City Council [2001] NSWCA 61, 53 NSWLR 153, Heydon JA (as his Honour then was) stated at [71] that, "[w]hile the process by which many contracts are arrived at is reducible to an analysis turning on the making of an offer, the rejection of the offer by a counteroffer and so on until the last counteroffer is accepted, that analysis is neither sufficient to explain all cases nor necessary to explain all cases". Thus, his Honour observed, at [80]:
"80 If offer and acceptance analysis is not always necessary or sufficient, principles such as the general principle that a rejection of an offer brings it to an end cannot be universal. A rejected offer could remain operative if it were repeated, or otherwise revived, or if in the circumstances it should for some other reason be
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treated, despite its rejection, as remaining on foot, available for acceptance, or for
adoption as the basis of mutual assent manifested by conduct." [Emphasis added.]
20 The principles are also summarised in Nationwide News Pty Ltd v Vass [2018] NSWCA 259,
98 NSWLR 672.
21 Notwithstanding the suggested need for flexibility of approach in some cases, in this case there is no fact or circumstance which could justify the conclusion that the offer made in the letter of 11 December 2019, if it was an offer, remained open after it was rejected. The fact of the rejection by the making of a counter offer in substantially different terms is made even clearer when the terms of the conversation between Ms White and Ms Bleyer, and Ms Bleyer's letter of 28 February 2020 are taken into account. The defendants did not, in any way, conduct themselves in such a manner as to indicate that any offer remained open. It is abundantly clear that the counter offer of 29 January 2020 brought any offer of 11 December 2019 to an end. It no longer remained open for acceptance by Mrs Evans or anyone else and was not repeated or revived.
22 After Mrs Evans' death, Ms Bleyer was engaged to act for Mr Williams, the person appointed as executor in Mrs Evans' last will. The plaintiff's claim is not that a contract came into existence between Mrs Evans and the defendants. Rather, it is that there was a contract between Mr Williams, on behalf of Mrs Evans' estate, and the defendants by reason of the communications between Ms Bleyer and Ms White in and following June 2020. Although Mr Williams continued to engage Ms Bleyer on behalf of Mrs Evans' estate, it was not until 5 November 2020 that probate of her will was granted to him.
23 On Mr Williams' instructions Ms Bleyer wrote to Ms White by email dated 9 June 2020. The terms of the email of 9 June 2020 should be set out in full:
"We refer to your attached letter insofar as it includes an offer to transfer the Youngtown property, with the parties sharing the stamp duty costs equally if applicable, in full and final settlement. That offer is accepted.
Please find transfer attached. Can you please arrange for your clients to sign it and cause the original signed transfer to be delivered to our Launceston office.
We will write to you after that as to duty requirements.
Can you please attend to this within 7 days so we can now finalise this longstanding matter.
We look forward to hearing from you and co-operating with you to give effect to this agreement."
24 The reference in the email to the "attached letter" was to Ms White's letter dated 11 December 2019, a copy of which was, in fact, attached to Ms Bleyer's email of 9 June 2020. The email was also accompanied by a draft transfer in which the transferor was described as Mr and Mrs Harrison and the transferee as Mrs Evans. The consideration described was "$0.00 Entitled in equity".
25 As the plaintiff's claim is pleaded, the first alternative contention is that a concluded agreement was formed on 9 June 2020 by Ms Bleyer's purported acceptance of an "offer." That contention may be immediately rejected because the statement in Ms Bleyer's letter of 9 June 2020 that the 11 December 2019 offer "is accepted" was ineffective. That is so because, as I have already explained, any offer which was made on 11 December 2019 was brought to an end by rejection and was no longer capable of acceptance.
26 The alternative contention pleaded by the plaintiff is that a contract was formed on 24 June 2020 either because on that day, Ms White orally accepted an offer made by the plaintiff in Ms
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Bleyer's letter of 9 June 2020, or because acceptance and mutuality may be inferred from the conduct of the parties on and following that day. The factual basis of those contentions is as follows. There was no response to Ms Bleyer's email of 9 June 2020 and so, on 17 June 2020, Ms Bleyer sent a follow up email to Ms White:
"I refer to my email below which sought a response by yesterday. I confirm I have not yet received a response. Please let me know today when you expect to address my below email."
27 There is no evidence of whether Ms White spoke to her clients about Ms Bleyer's emails of 9 and 17 June, but on 19 June 2020 she phoned Ms Bleyer and they spoke on the telephone. In her witness statement Ms White said that she had "phoned Ms Bleyer to discuss proposed terms which may form part of a deed of settlement." She made a note of the conversation. Her note recorded that she told Ms Bleyer she "Would just want a deed for that". The note recorded also that she had been "looking at how we avoid stamp duty", that she proposed to discuss the issue of stamp duty with others at her firm. Ms Bleyer told her that she was thinking about the same issue and did "not think applicable in equity." Finally, the note recorded that Ms Bleyer told her that she, that is Ms Bleyer, was "happy to start preparing a deed", and that if anything arose about stamp duty then "can add that in."
28 A further phone call was made by Ms White to Ms Bleyer on 24 June 2020. Both legal practitioners made notes of the conversation and Ms Bleyer gave some additional evidence of her recollection of it. Ms Bleyer's contemporaneous note does not make any reference to a "settlement" or "compromise" in express terms. Rather, it records a discussion about the proposed terms of what Ms Bleyer notes as a "very simple deed". Ms White's note of the conversation, like Ms Bleyer's note, makes no mention of a "settlement". Ms White's evidence correctly summarises her note as recording a discussion about whether there were bank records showing the transfer of funds between Mrs Evans and her clients, and the potential implications for stamp duty "should a transfer of property occur" (emphasis added). There could be no doubt that both legal practitioners were contemplating preparation of a deed to finalise the terms of a proposed settlement of a dispute.
29 However, Ms Bleyer's evidence, in the form of her witness statement, does refer to something in the nature of an express agreement. In Ms Bleyer's statement she says that "in that phone call, Ms White indicated to me that the dispute between Ms Evans and her clients "had settled on the basis that the defendants would give a transfer of the property at Unit 4, 369A Hobart Road, Youngtown for nil consideration with both sides sharing in equal parts any stamp duty payable on that transfer." That statement, if made, could only have been a response to the terms of Ms Bleyer's letter dated 9 June 2020, which I am satisfied was a sufficient indication of the terms on which her then client, Mr Williams, intended to bind Mrs Evans' estate to a compromise of the dispute as to amount to an offer.
30 Ms Bleyer was cross-examined about the contents of her witness statement but the evidence just quoted was not challenged. In the course of his closing address counsel for the defendants made clear his clients' acceptance that there was "consensus" to the extent that, as a result of the conversation between the respective legal practitioners on 24 June 2020, there was an "informal agreement", although the position of the defendants was that there was "no intention to be legally bound."
31 The question for determination thus becomes whether the parties entered into a contract. One aspect of that question further reduces to whether they intended to bind themselves to the agreement which was reached on 24 June 2020, or whether the result of the communications was only a limited agreement not intended to have legal effect until the terms were finalised and incorporated into a deed.
| 32 | The principles to be applied were stated by the High Court in Masters v Cameron (1954) 91 CLR 353. The Court identified, and explained the effect of, three classes of transactions in which the |
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parties might agree that the terms of the agreement shall be later contained in a formal or more expansive document. In Masters v Cameron, the Court consisting of Dixon CJ, McTiernan and Kitto JJ said, at 360-361:
"Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v Miller (1878) 3 App Cas 1124 when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation."
33 At 361-362, their Honours referred again to Rossiter v Miller and to Lord O'Hagan's words at
1149:
"Undoubtedly, if any prospective contract, involving the possibility of new terms, or the modification of those already discussed, remains to be adopted, matters must be taken to be still in a train of negotiation, and a dissatisfied party may refuse to proceed. But when an agreement embracing all the particulars essential for finality and completeness, even though it may be desired to reduce it to shape by a solicitor, is such that those particulars must remain unchanged, it is not, in my mind, less coercive because of the technical formality which remains to be made."
34 The effect of the decision in Masters v Cameron has been explained many times including very recently by the Victorian Court of Appeal in Patel v Sengun Investment Holdings Pty Ltd [2023] VSCA 238 at [52].
35 In GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, McHugh J, with whom Kirby P and Glass JA agreed, identified a fourth "category" of contracts, being cases in which the parties are content to be bound immediately and exclusively by the terms which they have agreed upon, while expecting to make a further contract in substitution for the first contract which might contain, by consent, additional terms.
36 This is not a case, unlike Masters v Cameron, in which the question is whether a document executed by the parties was intended by the parties to have binding effect. Counsel for the plaintiff submits that a binding contract was formed in this case as a result of a course of written and oral correspondence which identified sufficient terms to constitute it as a binding contract and that the parties intended it to have that effect. The plaintiff contends that the combined result of the correspondence brings the case within the first and fourth and possibly the second category of case referred to in Masters v Cameron and GR Securities. In the first case, the contract would bind the
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parties at once to perform the agreed terms. In the second or fourth case, the contract would bind the parties to join in bringing the formal contract into existence and then to carry it into execution, even if the formal contract may have contained agreed additional terms.
37 Counsel for the defendants submits however that the case falls within the third category noted in Masters v Cameron, that is, that the terms of the agreement were not intended to have, and did not have, any binding effect of their own. The defendants contend that the terms on 24 June 2020 formed part of a continuing negotiation and depended for its legal effect on execution of a formal agreement. The defendants also contend that there was no intention to enter into a binding legal obligation with Mr Williams, as opposed to Mrs Evans.
38 As McHugh JA pointed out in GR Securities at 634, citing Godecke v Kirwan, the "decisive issue" is the intention of the parties which must be objectively determined from the documents when read in light of the surrounding circumstances. In Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95, as to the intention to create legal relations, Gaudron, McHugh, Hayne and Callinan JJ said at [25]:
"Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties." (Footnote citations removed)
39 The parties' pre-contractual conduct is relevant and admissible on the issue of what each party, by their words and conduct, would have led a reasonable person in the position of the other party to believe: The Edge Development Group Pty Ltd v Jack Road Investment Pty Ltd [2019] VSCA 91 at [46]. In the present case, the evidence of the exchanges between the parties was not only of documents but also oral communications.
| Analysis | |
| 40 | In light of all of the foregoing it is hardly necessary to point out, but nevertheless important to do so again, that this is not an action to enforce a cause of action which accrued to Mrs Evans prior to her death and which the plaintiff contends survived to the benefit of her estate. Thus, it is not the function of this court to consider, on the plaintiff's claim, issues of trust and equity or the character of Mr and Mrs Harrison's conduct in their personal and financial dealings with Mrs Evans prior to March 2020. |
| 41 | This is an action claiming enforcement of what the plaintiff contends is a contract. However it is not a contract made by Mrs Evans. No contract came into existence while she was alive. The issue of whether a contract entered into by a natural person may be enforced by or against that person's executor if he or she dies before completion does not arise. Nor is the issue whether an offer made by Mrs Evans remained open for acceptance by Mr Williams as her executor following her death. As I have already found, any offer made by Mrs Evans was terminated by rejection while she was alive. No offer remained open for acceptance for reasons unrelated to Mrs Evans' death. Thus, this case is to be distinguished from cases such as Dickinson v Dodds (1876) 2 Ch D 463 which considered whether an offer ceases following the death of an offeree, and cases such as Reynolds v Atherton (1921) 125 ST 690 which considered whether an offer is capable of acceptance after the death of the offeror. |
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Reynolds v Atherton is authority, in any event, for the proposition that an offer ceases by operation of law on the death of the offeree. At 695-696 Warrington LJ stated:
"I think it would be more accurate to say that, the offer having been made to a living person who ceases to be a living person before the offer is accepted, there is no longer an offer at all. The offer is not intended to be made to a dead person or to his executors, and the offer ceases to be an offer capable of acceptance."
42 Counsel for the plaintiff directed the Court to the decision of Parker J in Fussell v Deigan [2018] NSWSC 1419. Factually that case was quite different. In 2012, a Mr Lockrey contracted to sell land to the plaintiff for $1.7m. The completion date, 10 May 2017, passed without settlement and two days later Mr Lockrey died. The defendant was his executor. Before probate was granted she purported to exercise what she claimed was a contractual entitlement to rescind the contract in the event of Mr Lockrey's death. The plaintiff sought completion of the contract. Thus, the issue was whether the contract was enforceable notwithstanding the death of Mr Lockrey, who was the contracting party. The trial judge, as part of his reasoning, undertook a detailed examination of the authorities, such as Carter v Hyde (1923) 33 CLR 115 but also a great many others, concerning whether an option may be exercised following the death of the grantor or grantee. I do not find the case to be of much assistance. Nevertheless, the principle which may be distilled from all of the authorities to which I have been directed, and those which were considered in Fussell v Deigan, is that such contractual questions are to be determined by examination of the intention of the parties about whether the benefit of an agreement, or option, or (in this case) negotiations leading to agreed terms, are personal to the contracting party. Cases involving options involve different issues because the grant of an option vests a contractual right in the offeree which may more readily be recognised as valuable property surviving for the benefit of the offeree's estate. Even in such a case, the nature of the agreement remains an important consideration, a proposition demonstrated by the following passage from the reasons of Knox CJ in Carter v Hyde at 120:
"It is what is generally described as an option, that is, an offer made for valuable consideration. In effect it amounts to an agreement by the appellant to sell the lease, &c., for £1500 to Hyde, if within three months the latter signifies his assent to purchase. The benefit of such an offer may be personal to the offeree, or may be assignable by him in equity. Whether it is the one or the other must depend on the subject-matter of the offer, on the terms in which it is expressed, and on the circumstances."
43 In this case, the issue of whether it was the intention of the parties, the defendants in particular, to immediately be bound by an agreement between the plaintiff and the defendants arising from the communications between Ms White and Ms Bleyer culminating on 24 June 2020, is inextricably entwined with the question of the identity of the person to whom they intended to be bound. Assuming, contrary to the fact, that Mrs Evans was alive at the relevant time, I would have found an agreement which falls, at least, within the so called fourth category of cases described by McHugh J in GR Securities Pty Ltd. I find that Mr and Mrs Harrison were content to be bound immediately and exclusively to Mrs Evans by the terms which had been agreed between the respective legal representatives, while expecting to make a further contract in substitution for the first contract which might contain, by consent, additional terms. I am satisfied that the parties communicated their respective assents to be legally bound by terms capable of having contractual effect. There had been mutual assent as to all essential matters. The legal practitioners for each party had ostensible authority to bind their respective clients to an agreement. Nothing in the communications which followed that agreement gives any real indication of a different intention. Some of the language used by Ms Bleyer in her correspondence might be viewed as equivocal. For example, on 14 July 2020 Ms Bleyer sent a further email to Ms White:
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"I refer to our telephone conversation on 24 June 2020 and confirm we agreed a deed would be necessary to give effect to the agreement to transfer the property for the reason that:
a It is necessary to evidence the equitable nature of the transaction and submit it
to the State Revenue Office in support of duty exemption; andb Your clients seek releases.
Please find attached draft deed."
44 According to the language used in that email, it had been agreed that "a deed would be necessary to give effect to the agreement to transfer the property" for the reasons set out. However, the draft deed sent by Ms Bleyer reflected, albeit in more formal terms, what I am satisfied had already been agreed in the discussions between solicitors. It provided, in substance, for a declaration by Mr and Mrs Harrison that they held the property on trust for Mrs Evans, that they would transfer the property to Mrs Evans, that the parties share equally any stamp duty payable on the deed or the transfer except that Mrs Evans would pay any additional duty payable because she was a "foreign investor" and that, on the transfer "to Joyce", Mr and Mrs Harrison would be released from any claims she may have had against them. The "reasons" why Ms Bleyer, in her email of 14 July 2020, suggested the deed was "necessary" did not, in my view, undermine the fact of agreement. The first reason was an external one, related to stamp duty. The parties had agreed to share the stamp duty, whatever it was, on the terms reflected in the draft deed and the purpose of the deed was to attempt to keep the amount of duty to a minimum. As to the second reason, there had already been agreement about the terms, in substance, of the releases and the purpose of the deed was simply to state the release in more formal terms. Compromise of a bona fide claim is sufficient consideration to support such contract: Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 per Handley JA at 698.
45 In July and August 2020 various amended drafts of the deed were exchanged, but no changes were made to the substance of the mutual obligations which had been agreed in June. Nothing in the communications indicated that the defendants considered that they were not bound to Mrs Evans by those obligations, even though there were additional terms in the formal agreement which were to be added by consent. Counsel for the defendant placed reliance on the Conveyancing and Law of Property Act 1884, s 60(1), which relevantly provides that, subject to exceptions which do not apply here, all conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed. The defendants do not submit that s 60 has direct operation on the force of the agreement. Rather, they contend that "the parties could not be intending to be immediately bound because there was a requirement their agreement be put into a deed or otherwise be void." I do not accept the submission. There is no evidence that either defendant was aware of the terms of s 60, or any other formal requirement for a deed or for writing, or that the legislation played any part in the formation of their intention at the relevant time. In my view, s 60 is not an impediment to the finding of an intention to create binding legal relations.
46 When cross-examined Mr Harrison did not accept the proposition included in the draft deeds that he and his wife held the property on trust for Mrs Evans, but admitted that the drafts reflected the deal he was willing to do with Mrs Evans "if she were alive."
47 But the matter does not end there. A different light is shed on those communications when Mrs Evans' death in March 2020 is taken into account. I am satisfied that Mr and Mrs Harrison did not learn of Mrs Evans' death until shortly before 8 September 2020. Both gave evidence to that effect, and their evidence is confirmed by the objective circumstances. They were no longer in touch with Mrs Evans and she had, since the previous year, conveyed an unwillingness to meet with them. It was not suggested that there was any attempt to conceal Mrs Evans' death, but, with one exception, all of
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the correspondence exchanged between Ms White and Ms Bleyer was expressed in terms which suggested, to those who did not know otherwise, that Mrs Evans was alive. According to the first page of the draft deed prepared by Ms Bleyer, the parties to it were named as Mr and Mrs Harrison and Mrs Evans and was expressed in terms that those persons were parties to it. The only exception is that, on the final page, the document provided that it was to be "signed, sealed and delivered by Executor of the Estate of Joyce Evans…". The inference that Mrs Evans had died, arising from reference to Mr Williams as executor in the drafts, is one which I am satisfied was missed by both Ms White and Mr and Mrs Harrison.
48 Realisation on the part of the defendants that Mrs Evans had died arose in the following way. By email dated 28 July 2020 Ms White sent Ms Bleyer an amended deed which, she said, had not been checked by her clients. It contained no amendments to the names of the parties, which still included Mrs Evans, or to the signing clause referring to Mr Williams as executor. On 31 July 2020 Ms Bleyer sent back the amended deed signed by Mr Williams. On 3 August 2020 Ms White wrote again to Ms Bleyer to indicate that she had picked up a minor error in her earlier draft, but raised another issue:
"I also just noticed that Mr Williams' signature is as executor, not power of attorney.
Is this an error or has Mrs Evans passed away?"
49 More than three weeks later Ms Bleyer replied suggesting some further amendments but also
advising:
"Yes, Ms Evans has passed, which is why the signing clause is what it has always
been. However for completeness we have amended top page 1 as well.
We look forward to receiving signed deed and finalising this matter."
50 Ms White replied on 29 August 2020 advising:
"The Deed will need some changes to reflect that Joyce has died and the transfer is being made to her estate and her personal representative will be responsible for giving effect to its terms. I will make those changes and send to you for checking.
In the meantime, before the Deed is signed we will need a copy of the grant of probate confirming that Mr Williams is the executor of Joyce's estate."
51 On 8 September 2020 Mr and Mrs Harrison sent an email to Ms White indicating that they had "found out that Joyce died 6th March this year – more than 6 months ago. Why are we finding this out now?" It was suggested by the plaintiff that Mr and Mrs Harrison must have inferred that Mrs Evans may have died from earlier references in the correspondence to her ill health. That contention must be rejected. I am satisfied that Mr and Mrs Harrison would not have communicated in the terms they did if they had already known that Mrs Evans had died. Because probate of Mrs Evans' will made on 31 May 2019 had not yet been granted, a copy of the will was sent by Ms Bleyer to Ms White on 24 September 2020. On 9 October 2020 Ms White wrote to Ms Bleyer indicting her instructions that while Mr and Mrs Harrison were willing to enter into an agreement with Mrs Evans personally, they were not willing to enter into an agreement with Mr Williams in his capacity as executor. Her letter included the following:
"I refer to previous correspondence in this matter.
You purported to accept an offer previously made by my clients to Joyce Evans on 9 June this year. You did not indicate at that time that Mrs Evans had in fact died on 6 March 2020, a fact my clients and I were not aware of. Given that your client had died some three months previously it does not appear that you had the requisite authority to in fact accept that offer.
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My clients were willing to enter into an agreement with Mrs Evans personally, however Mrs Evans' death has altered their position. For the avoidance of any doubt, all previous offers made by my clients are now withdrawn and we do not consider that there is any agreement in relation to the Youngtown unit."
52 By then, Ms Bleyer had advised, and Mr and Mrs Harrison had become aware, that Mr Williams had leased the unit to a tenant.
53 There is no doubt that Mr Williams intended to enter into a binding agreement with Mr and Mrs Harrison. He gave evidence during the trial. He is a person of obvious intelligence and integrity and I found him to be a truthful and reliable witness. He was asked by counsel for the defendants whether Ms Bleyer was authorised to send her email of 14 July 2020. He confirmed that she had his authority and that he had seen the email before it was sent. His answer included:
"I authorised the lawyers to do whatever was necessary to bring about the sale of that
property."
54 However, in light of all of the foregoing, the determinative question in this action is whether, viewed objectively in the surrounding circumstances, the words and conduct of Mr and Mrs Harrison would have led a reasonable person in the position of Mr Williams to believe that they intended to contract with him, as executor, in place of Mrs Evans personally: Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52, 219 CLR 165 at [40]. In my view the answer to the question must be in the negative.
55 Although the communications which occurred prior to Mrs Evans' death gave context, agreed terms were not reached until months after her death, when Mr and Mrs Harrison did not know that Mrs Evans was no longer alive. Mr and Mrs Harrison did not say or do anything, either by themselves or through Ms White which would have led a reasonable person in the position of Mr Williams to believe that they were contracting with him as executor and not Mrs Evans personally. Because Mrs Evans was deceased, no question of trust or agency could have arisen.
56 There was no element of personality in the performance of the obligations under the agreement, which required transfer of real estate in return for release from the risk of an action to recover the property and other money. However, I think the conclusion I have reached must follow inevitably from my finding that, at the time that the contract is said to have arisen, Mr and Mrs Harrison thought they were dealing with Mrs Evans when they were not. She had died some months earlier. Other facts point to the same conclusion. Mr and Mrs Harrison, Mr Harrison in particular, had a long personal relationship with Mrs Evans. There were considerations which were relevant to their preparedness to contract with Mrs Evans which did not apply to her executor. A reasonable objective observer would conclude from the terms of the correspondence and its context, beginning with Ms White's very first letter, that a wish to preserve or resume that relationship, or to give comfort to Mrs Evans by compromise of the dispute, were factors which were influential in the formation of their intention to bind themselves to an agreement with her. Those considerations no longer had any force following her death. The legal jeopardy to which Mr and Mrs Harrison were exposed if they did not agree to compromise was of a different character following Mrs Evans' death. A cause of action in trust or equity or otherwise founded on the conduct of Mr and Mrs Harrison depended strongly on evidence of the words, conduct and intention of Mrs Evans and her evidence about what was said to her. The chances of success of such an action were very much reduced by her death. Counsel for the plaintiff suggested that the defendants sought to avoid a binding agreement for an even less honourable reason. By 9 October 2020, when Ms White advised Ms Bleyer that Mr and Mrs Harrison were not willing to bind themselves to an agreement with Mr Williams, they had become aware that Mrs Evans had changed her will and removed them as beneficiaries. It was suggested that it was the realisation that they would no longer benefit from her estate which led to the change in their position. Mr and Mrs Harrison did not accept that this was so, but the argument does not assist the plaintiff in
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any event. To the contrary, if true, it serves to underline another factor pointing to the conclusion that it was the intention of Mr and Mrs Harrison to contract with Mrs Evans personally, and not her executor.
57 For those reasons I am not satisfied that a binding agreement was entered into between the plaintiff and the defendants. The plaintiff's claim to enforce such an agreement must fail.
The counterclaim
58 Following Mrs Evans' death, Mr Williams leased the unit in which she had lived to a tenant. I am perfectly satisfied that he did so in good faith, purporting to act as her personal representative. The rental income was deposited into the trust account of Ms Bleyer's firm. The defendants counterclaim a declaration that the rental income is held on trust for them. It is to be recalled that the unit was purchased by them and registered in their names, but using money which derived from the sale of Mrs Evans' house in Buckinghamshire. It was the legal and equitable consequences of that state of affairs which were the subject of the dispute and the negotiations between Mrs Evans, and then Mr Williams, and Mr and Mrs Harrison detailed in these reasons. Mr and Mrs Harrison's claim to the benefit of the rent is one matter, but the counterclaim extends beyond that. They also claim a declaration that the plaintiff "holds no interest" in Unit 4, 369A Hobart Road, Youngtown.
59 The pleading of facts in the counterclaim is very limited. The defendants plead that they purchased the property, which is admitted by the plaintiff. The counterclaim pleads that between the time of purchase and Mrs Evans' death, Mr and Mrs Harrison granted her the "right to occupy" the property, but that they paid the rates, body corporate fees, insurance and maintained the property. The plaintiff admits that Mrs Evans occupied the property and that the defendants paid some fees but otherwise does not admit those allegations. The counterclaim pleads that from 6 March 2020, the date of Mrs Evans' death, the defendants "as the registered proprietors and legal owners of the property became entitled to the reversionary interest in the property." I confess to not understanding what that pleading is intended to convey, but in any event, it is denied.
60 The defence to the counterclaim does not plead facts seeking to establish that the plaintiff, as executor of Mrs Evan's estate, has a beneficial interest in the property. The closest the pleading comes to that is an assertion that the "positive allegations" in the amended statement of claim are "repeated". However, the pleading in the amended statement of claim is confined to assertions that, prior to her death, Mrs Evans alleged that she had causes of action based on misrepresentation, promissory or common law estoppel, and the existence of constructive or resulting trust. That pleading was in the context that it was relevant to the contract claim. There is no pleading of facts sufficient to found those causes of action in the claim or in the defence to the counterclaim. The trial was conducted on the basis that the principal issue for determination was the claimed existence or otherwise of a contract. No submission was made by either party that this Court should determine the issues of misrepresentation, estoppel or trust. The evidence, like the pleading, was referred to only in the context that it was relevant to the objective determination of the contractual intention of the parties.
61 There is no doubt that the defendants have a sufficient interest to claim a declaration. I accept the submission of counsel of the defendants that it is not necessary to demonstrate a cause of action per se: Hobart International Airport Pty Ltd v Clarence City Council and Ors [2022] HCA 5, 399 ALR 214 at [224]. The defendants likely have a cause of action in any event. However, whether a declaration is made is a matter of discretion. In Bass v Permanent Trustee Co Ltd (Homefund Case) [1999] HCA 9, 198 CLR 334, the High Court made clear the need for a sufficient factual basis for a declaration. The majority regarded it as "contrary to the judicial process and no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case".
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62 I am concerned, according to the present state of the pleadings and the evidence, that the facts sufficient to justify the making of the declarations claimed by the defendants are neither agreed nor determined by reference to the evidence in the case. That conclusion may be affected by the absence of a pleading on the part of the plaintiff seeking to establish facts undermining the defendants' claim to legal and beneficial ownership of the unit. However, it would be unfair to reach a final conclusion without giving the parties a further opportunity to be heard about the orders to be made on the counterclaim.
Conclusion and orders
63 The plaintiff's claim does not succeed and there will be judgment for the defendants on the claim. I will hear the parties further before making orders on the counterclaim and any other consequential orders.
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