Winter v Nemeth

[2018] NSWSC 644

Supreme Court

New South Wales

Medium Neutral Citation:	Winter v Nemeth [2018] NSWSC 644
Hearing dates:	3, 4 and 5 April 2018
Date of orders:	16 May 2018
Decision date:	16 May 2018
Jurisdiction:	Common Law
Before:	Campbell J
Decision:	(1) Judgment for the defendant; (2) The plaintiff to pay the defendant’s costs
Catchwords:	CONTRACTS – Formation - written contract - oral contract - intention to create legal relations – promises made - performance of work - clerical assistance presumptions - Family Court proceedings - nature of friendship - reasonable person - damages
Legislation Cited:	Civil Procedure Act 2005 (NSW) s 100; Evidence Act 1995 (NSW) s 48
Cases Cited:	Ashton v Pratt (2014) 88 NSWLR 281; [2015] NSWCA 12; Australian Woollen Mills Pty Ltd v the Commonwealth (1954) 92 CLR 425; Ermogenous v Greek Orthodox Community (2002) 209 CLR 95; [2002] HCA 8 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52; Virginia Nemeth (by her tutor) v Australian Litigation Funders Pty Ltd [2013] NSWSC 529 Watson v Foxman (1995) 49 NSWLR 315
Texts Cited:	Nil
Category:	Principal judgment
Parties:	Janet Sarah Winter (Plaintiff) Virginia Diroy Nemeth (Defendant)
Representation:	Counsel: RG Hanrahan (Plaintiff) R White (Defendant)   Solicitors: Hal Lawyers (Plaintiff) Hudson Law (Defendant)
File Number(s):	2016/230995

Judgment

1. The plaintiff sues the defendant for damages for breach of contract said to have been made in January 2010. The substance of the plaintiff’s case is that in return for the performance by her of clerical services assisting the defendant in Family Court proceedings, the defendant promised to purchase, or provide her with the funds to purchase, a small house in the Sydney suburb of Double Bay as the plaintiff’s home.

2. The defendant denies the existence of the contract, and in the alternative, says that if there was such an arrangement between them it arose out of their close personal friendship and was made in circumstances in which the Court would not impute to the parties an intention to enter into contractual relations.

Pleadings

3. In the particular circumstances of the case it is apposite to set out salient aspects of the plaintiff’s claim as formulated in her amended statement of claim filed in Court without objection on the first day of the hearing. Leave had apparently been given to amend by order made on 26 October 2017 but had not previously been acted upon. The amended statement of claim (and its predecessor) is a somewhat discursive document bearing upon matters not directly material to the cause of action relied upon. The salient and pertinent matters for present purposes are as follows:

1.   These Proceedings concern a claim by the Plaintiff in respect of an Agreement in which the Defendant agreed with the Plaintiff to provide her the money to buy a house, (being a small cottage), in the Sydney suburb of Double Bay.

2.   The Plaintiff provided services under the agreement.

3.   The Defendant has not performed the agreement.

…

10.   The Defendant had provided the Plaintiff with assistance both emotionally and in the practical sense in the family law proceedings, on and from the time she had become re-acquainted with her.

…

23.   [In early 2010] the Defendant entered into an agreement with Mr Byrnes and his companies, and in which Mr Byrnes and his related entities assumed the role of litigation funder in relation to the family law proceedings.

…         

24.   At about this time the Plaintiff entered into a separate agreement with the Defendant.

E.   The Separate Agreement between the Plaintiff and the Defendant

25.   The terms of the separate Agreement were and included that:-

(i)   the Plaintiff would make herself available to assist the Defendant by giving instructions to Mr Byrnes and in instructing a “Mr Beasley” as her solicitor to act, to appear in the family law Proceedings;

(ii)   the work to be undertaken by the Plaintiff was to be undertaken by her continuously until the conclusion of the agreement that had been entered into between the Defendant, and Mr Byrnes;

(iii)   the services that the Plaintiff was to provide to Mr Byrnes, the Defendant and to Mr Beasley, were to be the same services as the kind of services that the Plaintiff was providing to the Defendant at the time at which the Defendant had instructed [her previous solicitor].

26.   The Agreement between the Plaintiff and the Defendant provided for the Defendant to be remunerated in relation to the services she was providing to the Defendant.

27.   The Defendant agreed, and the Plaintiff accepted, that the Defendant upon completion of the family law proceedings would provide the Plaintiff the funds for the Plaintiff to purchase a house upon the conclusion of her having provided the services that were required to be provided by her under the Agreement. The property was to be a small cottage. It was to be a house in the Sydney suburb of Double Bay.

28.   The agreement was reduced to writing and was set out on a handwritten document provided by the Defendant, to the Plaintiff.

29.   The plaintiff provided the handwritten document to HWL Ebsworths when those solicitors requested it in subsequent litigation between the Defendant and Mr Byrnes, and in which HWL Ebsworths had acted for Mr Byrnes. (The document has not been returned to the Plaintiff.)

29A.   Alternatively, the agreement was oral and was the subject of discussions between the Plaintiff and the Defendant as to its terms.

Particulars

(a)   Refer affidavit of the Plaintiff at paragraphs 100 and 101 of the Plaintiff’s affidavit sworn 6 March 2017.

30.   The Plaintiff continued to provide the services under the Agreement that she had entered into with the Defendant, from the date that the Defendant entered into the agreement with Mr Byrnes (and his Companies), until the date when the Defendant determined her agreement with Mr Byrnes.

…

32.   The Defendant determined her agreement with Mr Byrnes and his companies by email sometime between the 20th August 2010 and the 9th September 2010. The agreement with Mr Byrnes was determined before the conclusion of the family law proceedings.

…

34.   On the 17th August 2010, the Defendant determined her Agreement with the Plaintiff by informing her she did not wish the Plaintiff to do anything further under the Agreement, that she did not wish her to have any further dealings with Mr Byrnes or Mr Rogerson, or to have anything further to do with him or with her family law Proceedings.

35.   The Plaintiff had carried out the tasks referred to in this statement of claim and that were the subject of her Agreement with the Defendant as pleaded, because of the assurances that the Defendant had provided to her, and the promises that she had given to the Plaintiff that she would be remunerated in the manner provided for in the Agreement.

…

37.   The Family Law Proceedings were finalised by terms of settlement entered into following the death of [the husband], by agreement between [the husband’s estate] and the Defendant.

38.   On and since the determination of the Family Law Proceedings, the Defendant has failed to pay the Plaintiff the monies promised to the Plaintiff so that she could purchase a house (small cottage) in the suburb of Sydney known as Double Bay.

(Underlining in the original of the amended statement of claim.)

4. An alternative claim for damages for misleading and deceptive conduct under the provisions of the Australian Consumer Law pleaded in paragraphs 41 - 44 of the amended statement of claim was “not pressed” (7.40 – 7.45T)

Issues

5. The plaintiff was represented by Mr RG Hanrahan of counsel and the defendant by Mr R White, also of counsel. After Mr Hanrahan’s short oral opening supplementing his written opening, Mr White identified three issues relating to the remaining contract claim. They are as follows:

1. the defendant’s contention is that she had never entered into a written agreement with the plaintiff; nor given her a handwritten document containing any promise;

2. the defendant also contended that there was no oral agreement reached between the parties; and

3. in the alternative, if contrary to the denial of any contract, whether orally or in writing, promises had been made to the plaintiff, whether there was an intention to create legally enforceable obligations.

Preliminary ruling

6. As the amended statement of claim avers, the plaintiff’s case is that she no longer has in her possession the handwritten document allegedly given to her by the defendant. This is dealt with at paragraphs 103 - 105 of her affidavit sworn on 6 March 2017. She parted with possession by providing the document to solicitors acting for Mr Jim Byrnes in previous litigation to which he and the defendant were parties: Virginia Nemeth (by her tutor) v Australian Litigation Funders Pty Ltd [2013] NSWSC 529. The defendant’s lawyers had subpoenaed the solicitors to produce the document and the solicitors said they had no such document in their possession. Over Mr White’s objection, I ruled that if the plaintiff’s evidence is accepted, secondary oral evidence of the contents of the document would be admissible under s 48(4)(b) of the Evidence Act 1995 (NSW) (“Evidence Act”) (24.40 - 24.44T).

Parties

7. The plaintiff is a single retired person now aged 77 years. At the material time she was pursuing a calling as a “para-psychologist”. A para-psychologist apparently provides life advice counselling to persons who seek it. The plaintiff also read tarot cards at the request of persons who sought that service. No fee was charged for the provision of these services but donations were appreciated.

8. The defendant at the material time was a married woman in her mid-50s. She held a Bachelor’s degree in Business Administration obtained in her native Philippines. After graduating she worked mainly in hospitality. She initially came to Australia in 1980 to care for an elderly friend who had more or less adopted her. She then obtained work with an accounting firm prior to returning to a position she held with a hotel chain in Hong Kong in 1983. She returned to Australia in 1984 again to care for her elderly friend. Australia is now her home. After returning to Australia in 1984 she again obtained work with another accounting firm through which she met her late husband who was a client of the firm. They married in 1989. The defendant’s husband was in business. His principal interest was in a boutique hotel of 165 rooms at Kings Cross. Given her previous hospitality experience the defendant became involved in the business, investing the substantial sum of money she inherited under the Will of her elderly friend.

9. By 2007 the defendant’s husband, who was then aged 82, had largely put the conduct of his business affairs in the hands of his son from a previous marriage. Although the defendant felt she had a close relationship with the son as his stepmother, she was worried about his inexperience in business matters and concerned about her financial security. While still living in the matrimonial home at Darling Point with her husband she commenced proceedings in the Family Court of Australia in 2007 seeking a division of the marital property.

10. There was some dispute between the plaintiff and the defendant as to when they first met. The plaintiff says she first met the defendant in 1998 and had some contact with her on a social basis in subsequent years. The defendant’s recollection is that they did not meet until 2008.

11. It is the plaintiff’s evidence that the defendant was never her “client” but that from the renewal of their acquaintance in early 2008 the defendant confided in her all aspects of her life, personal and financial (Affidavit, Sarah Winter, 6 March 2017 at par 12).

12. It is the defendant’s account that she first met the plaintiff in early 2008. At that time she felt in a difficult situation because of acrimony at home due to the property proceedings and the control that her stepson was exercising over his father’s financial matters, to her exclusion. She felt her stepson was influencing his father against her for his own financial advantage.

13. A friend of the defendant recommended she see a “psychic and tarot card reader with the name ‘Rivkah’” (Affidavit, Virginia Diroy Nemeth, 21 July 2017 at par 57).             

14. In what may have been a case of mistaken identity (it is not necessary to decide) the defendant’s recollection is that the plaintiff was Rivkah, which the plaintiff denies. The plaintiff says Rivkah was an acquaintance of hers and she had never gone by that name. However that might be, comparing paragraphs 61 - 66 of the defendant’s affidavit with paragraphs 12 - 14 of the plaintiff’s affidavit, it is apparent that they are relaying substantially the same facts. It is also obvious that they struck up an easy rapport and were comfortable sharing confidences with each other.

15. It arose in their conversations that the defendant was not happy with her then legal representation. The plaintiff herself was involved in litigation and was working for her solicitor in a “voluntary” clerical capacity (which she did for approximately 16 months, working off her debt to her solicitor). She was happy to recommend the solicitor to the defendant who acted on that recommendation. After this there was little or no contact between the plaintiff and the defendant until early 2009.

The defendant’s Family Law proceedings

16. After the defendant instructed the new solicitors, they briefed one of Sydney’s leading Family Law silks to appear for the defendant and the matter progressed to mediation on 12 December 2008. The mediator was a retired Family Court judge. Heads of Agreement were signed under which the plaintiff would be entitled to the whole of the Darling Point home and $8 million in cash. The settlement received the strong recommendation of the silk and the solicitors. However, it is common ground in these proceedings that the defendant was not happy. She was unhappy because the solicitor did not attend the mediation but delegated the responsibility of instructing senior counsel to his wife who was employed as his law clerk. More significantly, I am satisfied, the defendant was strongly of the view that the provisions made for her were inadequate. The defendant was convinced that both the Darling Point home and the boutique hotel, which were the substantial tangible assets of the marriage, had been significantly undervalued for the purpose of the settlement. It mattered not that an undervaluation of the home may have worked to her advantage. Her own view was that the real value of each lay in their potential for substantial redevelopment. She thought this primarily of the Kings Cross hotel which she regarded as being particularly well-sited. I formed the strong impression that she regarded the cash component of the settlement as a significant under-estimation of the true value of her entitlements.

A friendship rekindled

17. On the defendant’s account she had not seen the plaintiff since the early part of 2008 but chanced to meet her while out walking one day. The plaintiff agrees that having met a few times in 2008 she and the defendant did not meet again until about December 2008 and after the mediation. She does not agree that they chanced to meet while out walking (46.10 – 46.40T). Her version is not entirely clear but it may be implicit in paragraph 26 of her affidavit that the defendant contacted her after the mediation. Again, the difference between them is not material and need not be resolved. I accept the plaintiff’s account that the defendant expressed unhappiness with the proposed settlement and the former offered to speak to the solicitor on the defendant’s behalf. By this I mean that I prefer the plaintiff’s account set out at paragraphs 26 - 28 of her affidavit to that of the defendant set out at paragraphs 77 - 83 of her affidavit.

18. The differences between the parties on this aspect of the facts were not closely cross-examined on indicating, I think, that counsel correctly did not see the differences about the circumstances in which the relationship was resumed as significant. My preference for the plaintiff’s account is simply based upon the consideration that it better accords with the apparent logic of events. The defendant presented herself in court as taking a somewhat laissez-faire attitude to her unhappiness with the settlement. This seems improbable. It seems unlikely in the extreme that it should be the plaintiff rather than the defendant who would then be suggesting that the defendant had lost $30 million in a poor settlement. The defendant is much more likely to have known what was at stake than the plaintiff. It seems much more likely that the defendant would be bemoaning that the settlement undersold her by some tens of millions, than the plaintiff. This is especially so as at this fairly early stage of their friendship the plaintiff would not know the detail of the Family Law dispute.

19. I might also add that it was the defendant who decided to change solicitors yet again and not for the last time. When she did so she did not rely upon any recommendation of the plaintiff this time. Rather she consulted another friend. She did, however, ask the plaintiff to accompany her to the first and subsequent appointments with her new solicitor.

20. Drawing these preliminary conclusions I bear in mind that the written evidence was prepared almost 10 years after the events it recounts. Since then the relationship between the parties completely broke down; in August and September 2010. Both became involved in acrimonious and, in the event, costly litigation brought by the defendant in an attempt to set aside the defendant’s “litigation funding” contract with Mr Byrnes: obviously, the defendant as plaintiff; and the plaintiff as a significant witness for Mr Byrnes’ side of the record. The lapse of time and this bitter history are bound to have affected the perceptions of both of them.

21. Mr White reminded me of Watson v Foxman (1995) 49 NSWLR 315 at 319 where McLelland CJ in Eq said:

“… [H]uman memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

It will be necessary for me to bear in mind this wise observation when dealing with more contentious disputes.

The nature of the friendship

22. It is the defendant’s case that the bonds of close personal friendship provide a complete explanation of the relationship between the parties at least until the friendship broke down in August 2010. While not denying the friendship, the plaintiff’s case was that their relationship had dimensions which took it beyond the normal scope of friendship. For instance, when the friendship was explored in cross-examination of the plaintiff, she accepted the parties trusted each other as friends (52.5T). The defendant drove the plaintiff to medical and other appointments on occasions and, as I have said, although the plaintiff did not recommend the new solicitor instructed in 2009 she attended the defendant’s appointments with him and went to court for the dissolution of marriage application to support her friend. They went shopping together and socialised at restaurants. They went to Thailand together on holiday in March 2009, substantially at the defendant’s expense. Initially the plaintiff denied that the defendant paid for her airfares and accommodation (53.20T) but she said in re-examination that her Bangkok airfares were paid by the defendant using frequent flyer points. She said the defendant said “I have lots of Flybuys and it will not cost me anything” (128.5 - 128.10T). It seems to me that if the defendant used her frequent flyer points to buy airfares then she paid and the plaintiff’s denial in cross-examination was not the whole truth.

22. The defendant also “shouted” the plaintiff lunch and dinner on different occasions at restaurants and in August 2009 hosted the plaintiff’s 69th birthday party at her Darling Point home (55.40T). The defendant paid for the food and drinks. She and her sister-in-law served the guests (Affidavit, Virginia Diroy Nemeth, 21 July 2017 at par 120).

23. When the defendant travelled overseas in March 2009 to attend a significant birthday celebration for her elder sister she entrusted the plaintiff with, and the plaintiff accepted, her power of attorney. She also gave the plaintiff a key in case it was necessary for her to access the Darling Point home.

24. When the defendant changed solicitors at the beginning of 2009 the plaintiff arranged for the legal file to be delivered by the former solicitor, for whom she had performed the voluntary work, to her home. The papers consisted of five or six boxes (59.20T). The plaintiff kept the boxes because the defendant asked her to look after them (60.30 - 60.34T). She regarded that matter as a significant sign of the defendant’s trust.

25. According to the defendant, in February 2010 the plaintiff told her that she required a total knee replacement. I infer that the plaintiff did not have private health insurance. She had been told that the public hospital waiting list could be as long as two years. When she spoke to the defendant about it she told the defendant that she could not wait that long (Affidavit, Virginia Diroy Nemeth, 21 July 2017 at par 184). The defendant made enquiries about the cost of surgery in the Philippines where her sister was a surgeon. The defendant, at her own cost, flew the plaintiff business class to Manila and paid for all surgical and hospital costs. She also paid for rehabilitation treatment and the defendant’s sister, Dr Perlita Diroy Castro, (Affidavit, Perlita Diroy Castro, 2 August 2017 at pars 8 - 9) took the plaintiff into her home, putting the plaintiff and the defendant up pending surgery and after the plaintiff’s discharge from hospital. Dr Diroy Castro and her children visited the plaintiff while she was in hospital. The defendant also bought clothes for the plaintiff whilst they were in the Philippines (Affidavit, Perlita Diroy Castro, 2 August 2017 at par 14).

26. The plaintiff’s version of these events is a little different. First, she insisted that the defendant was obliged to pay for the surgery because she was legally liable for the injury to the plaintiff’s knee which was caused by the plaintiff tripping and falling on an area of raised parquetry in the lounge room of the Darling Point home (122.50 - 123.14T), a matter which the defendant denied (158.30 - 158.31T). Secondly, the plaintiff was of the understanding that Mr Byrnes was to pay, at least for the airfare (128.15 - 128.20T; Annexure “B” of Affidavit, Sarah Winter, 6 March 2017).

27. I accept the defendant’s version of this and that this was a very significant act of kindness on the part of the defendant bespeaking the closeness of their friendship then. Even if, and again it is unnecessary for me to decide this, the plaintiff’s version that she tripped in the defendant’s home is correct, legal liability would not have followed automatically. Moreover, it is a rare thing indeed for a defendant, other perhaps than a large trading corporation, to which public relations may be important, to voluntarily pay extensive medical bills including the cost of surgery before liability is ascertained. In my experience, such a circumstance would be extremely rare in the case of ordinary householders, even affluent householders, whose legal duty is likely to be limited. More often, the matter would be referred to insurers for their consideration.

28. I should record that apparently, at one stage, Mr Byrne’s offered to defray some of the expenses, including the cost of travel, but I accept the defendant’s evidence that he never made good on that “promise” (158.50 -159.5T; Annexure “B” of Affidavit, Sarah Winter, 6 March 2017).

29. It may be said that the friendship between the plaintiff and the defendant in many respects was a very close one. This shown by the lengths that they were each prepared to go to help the other. That is not to say close friends will not do all they can for each other.

30. The plaintiff thought there was more to their relationship than friendship. In re-examination (128.40T) the plaintiff was asked the following:

“Q:   Did you see yourself in a role as anything other than a friend?

A:   Yes.

Q:   What role was that?

A:   An advisor, a helper, a worker, a confider, an emotional support – many, many cloaks I wore when I was with [the defendant].”

I interpolate such a catalogue may apply to many close friendships.

32. The defendant said that from the time they became friends, the plaintiff was very attentive to her and was very caring. She said: “…I thought that I had a big sister out of [the plaintiff]” (154.13T). She regarded her in that way because the plaintiff showed her “a lot of kindness” (154.20T).

The promises the plaintiff relies on

33. It is important to bear firmly in mind the case as pleaded by the plaintiff. This is, materially, set out at paragraphs 23 - 29A of the Amended Statement of Claim (at [3] above). Essentially, the plaintiff alleges that she had been previously voluntarily assisting the defendant in relation to the Family Law proceedings. A change in the relationship is said to have occurred at about the beginning of 2010 when the defendant entered into the litigation funding agreement with Mr Byrnes to whom she had been introduced by the plaintiff. The plaintiff’s case is that following the entry into the written agreement with Mr Byrnes (or at least related entities controlled by his wife), the defendant also entered into a contract with the plaintiff. The substantive terms of this contract were that if the plaintiff continued to perform the work she had previously been performing in relation to the Family Law proceedings, but now not only for the defendant but also for Mr Byrnes and to the solicitor who was yet to be instructed and only “until the conclusion of the agreement that had been entered into between the defendant and Mr Byrnes” then upon the completion of those proceedings, the defendant “would provide the plaintiff with funds for the plaintiff to purchase a house.” The property to be purchased was a small cottage in Double Bay.

34. It should be pointed that it has never been any part of the plaintiff’s case that those somewhat elaborate and detailed provisions were to be found within the four corners of a written agreement signed by both parties, notwithstanding the averment at paragraph 28 of the amended statement of claim that the agreement was reduced to writing, and is now lost.

35. On the plaintiff’s evidence, the agreement at its highest was partly oral, partly written and otherwise arose by implication.

36. I regard it as a strange feature that the plaintiff’s case is based upon an agreement that what had previously been done voluntarily, apparently out of friendship, was afterwards to be done for reward in the form of a very substantial capital payment. This is not the only curiosity in the plaintiff’s case. According to the plaintiff’s evidence the prospect of the defendant buying her a house was first discussed in about March 2009 when she was given 3 months’ notice of the termination of her then residential tenancy. The plaintiff said that she was distressed about this and told the defendant that she would “not be available to help as much” because she needed to spend time looking for a new residence (Affidavit, Sarah Winter, 6 March 2017 at par 56). The plaintiff said the following discussion occurred (Affidavit, Sarah Winter, 6 March 2017 at par 57):

“[the defendant] asked me “would you like to move in with me?” I said, “I don’t think that this was a good idea”. [the defendant] said to me words to the effect: “you getting thrown out is not going to happen again. I told you if you help me, I was going to look after you financially. So I will give you enough money to buy a house when this is all over so that you will always be secure. I will give you $2 million and this should be more than enough.” I recall that I laughed at the time and I said, “two million dollars.” [The defendant] smiled and said words to me to the effect: “that’s nothing to me. At one time I was worth $100 million.”

This discussion is not said to be contractual in nature. Clearly it falls outside the averments in the pleadings. It was relied upon as providing context to the subsequent discussions.

37. The plaintiff’s affidavit details the efforts she made in conjunction with the defendant to ascertain the true value of the Kings Cross Hotel and other activity undertaken at the request of the defendant. This included offering assistance to a Darling Point neighbour, Mr Tsu in relation to litigation he was embroiled in with the defendant’s husband and step-son over land slippage. The defendant apparently, having formerly been a plaintiff, was also named as a defendant with Mr Tsu, presumably because she declined to be an active plaintiff.

38. In the course of her efforts investigating the value of the hotel, the plaintiff was introduced to Mr Byrnes who, she was told, would apparently assist “in bringing about a settlement of the Family Court proceedings on favourable terms” (Affidavit, Sarah Winter, 6 March 2017 at par 94). Mr Byrnes explained to the plaintiff that he would take 30 per cent of the gross receipt of the settlement, but would pay “all of the legal and other expenses”.

39. A meeting was arranged with Mr Byrnes, the plaintiff and the defendant. Other persons were said to be present. Mr Byrnes outlined a strategy “to get the matter going” (Affidavit, Sarah Winter, 6 March 2017 at par 97).

40. At the meeting, the plaintiff said, Mr Byrnes told the defendant, “I will give you money up front, I will pay all your expenses. I can get a result for you in this matter that you will be happy with”. He also agreed to “drop [his] fee to 25 per cent”. But in cross-examination, the plaintiff was very uncertain about the details of the meeting. It’s apparent to me that she was not present for the whole of it. Although she initially seemed to accept that Mr Byrnes had mentioned that he would achieve a result of $28 to $30 million, working “outside the law” as a trouble-shooter (73.20T) she then denied that she had ever been present when such figures were mentioned (74.25T; 78.25 - 78.35T).

41. When the others had left this meeting, according to her (Affidavit, Sarah Winter, 6 March 2017 at pars 100 – 105), the following occurred:

“100. After everybody left the meeting [the defendant] was over the moon. She said to me words to the effect:

“This matter will end, and we could walk away 30 odd million dollars better off, plus the house. We will win. You need to start to look out for a house for yourself. When this case is over, I will give you the money to buy a house to live in at Double Bay for all the help you are giving me and everything that you have done for me. At the end I will have the money for you to buy a home. That money will be nothing to me.” I said to [the defendant]: “Thank you”.

101. [The defendant] said to me on a number of occasions: “I will give you the money to buy you a house with more than two bedrooms so I can have a room and can stay with you sometimes”. She had made these statements and I believed her. I was not surprised to hear her say this to me now that the matter was to proceeding with Mr Byrnes involvement, as Virginia had made such statements before”.

102. [The defendant] handed me a letter at [the Darling Point home] shortly after the meeting with Mr Byrnes in which she signed in her own hand, “Virginia”.

103. The letter stated to the effect: “I am so grateful to you for what you have done. I can’t wait until this is over and I can give you the money to buy you a house and you won’t have to worry any more. Love Virginia”. When I received the letter I believed what was written on it. The attention that I had provided to [the defendant] and the assistance that I had rendered her since about 2008 had been ongoing, and almost on a daily basis.”

42. It will be recalled that when the litigation between the defendant and Mr Byrnes commenced the plaintiff said she gave the letter to Mr Byrnes’ solicitors. Enquiries have since been made of them and the letter has not been located. I will return to this matter.   

43. The defendant denied that she ever promised the plaintiff a house (Affidavit, Virginia Diroy Nemeth, 21 July 2017 at pars 226; 244; 247; 248; 258; 159.15 - 159.45T; 165.5 - 165.10T; 166.10T; 166.15 - 166.20T; 167.10T; 167.35 - 167.40T; 168.5 - 168.20T; 223 - 224T; 233T; 247T; 248T; 258T).

The work performed by the plaintiff

44. The work the plaintiff said she performed for the defendant is summarised in general terms at paragraph 127 of her affidavit of the 6 March 2017. It falls into 13 categories. The work includes collating and cataloguing documents relevant to the Family Law proceedings; accompanying the defendant for conferences with lawyers and court; taking notes at meetings; contacting former hotel staff; attending meetings with various persons relating to the Family Law proceedings, including for the litigation funding agreement; discussing issues with the defendant and Mr Byrnes; and speaking constantly with the defendant who apparently rang at all hours. To this might be added the interactions with Mr Tsu, this “work” was performed during the period between 2009 and 2010 until the break-down of the relationship in August 2010. The plaintiff said in her affidavit at paragraph 128:

“From the time the agreement was made with Mr Byrnes and with [the defendant] and where Mr Byrnes had been appointed as case manager, I continued on in my involvement because of what she had said to me concerning the purchase of a property.”

45. The defendant did not regard the plaintiff as providing services to her (159.40 - 159.45T). She said, “[w]e were helping each other as a friend”. In an email to Mr Byrnes when the defendant repudiated the agreement (Annexure “A” of Affidavit, Sarah Winter, 6 March 2017), the defendant said, inter alia:

“Sarah told me that she is your assistant case manager. She has been a dear friend and spent a huge amount of time with me dealing with my case. Through her the agreement [with Mr Byrnes was made]. She has done a lot of filing work, which has been used by Philip [Beazley, solicitor].”

See also 159.50 - 160.5T.

46. The defendant accepted that the plaintiff went with her to see Mr Tsu to try and help him. However, the defendant insisted that the plaintiff offered to help her as a friend and as she trusted the plaintiff, the defendant let her “just do whatever she thinks…” appropriate (160.30 - 161.5T).

47. Although the plaintiff’s involvement in this general way appears to be common ground it’s difficult to quantify the actual amount of time spent in these activities. So far as the organisation of documents is concerned, the evidence is that, as I have already said, about 6 boxes of documents were delivered to the plaintiff’s home in about January 2009 when the defendant terminated her solicitor’s retainer. Notwithstanding the engagement of a new solicitor in 2009, the documents remained in the possession of the plaintiff and presumably moved with her when she moved home during that year. She kept them because the defendant had asked her to look after them. Later in the year when attempts were being made to obtain evidence about the value of the hotel an acquaintance of the plaintiff, a Mr Scurr, with whom she had worked for a time, suggested to her that she sort them out. The plaintiff said this at 62.15 - 62.25T:

“Q. You say that, "Gordon and I spent time in my home, going through documents."

A. That is correct.

Q. What were you looking for?

A. I was just helping sort them out, they were unduly messy and he was reading them so I don't know what he was looking for.

Q. I see. When you say, helped sort them out what sort of work did that involve?

A. Put them into chronological and date order and also putting them in subject order as I recall.

Q. These were documents that had been left with you by [the former solicitor]?

A. Correct.”

It’s not clear how long that task took.

48. After Mr Byrnes came on the scene, she did further work at his suggestion collating a “book”, which I understand to be a lever-arch file, for the benefit of the new solicitor, Mr Beazley (121.5T). That task took “one month” (134.20T).

49. The position is a little more complicated than this all suggests because it emerged in cross-examination that in March 2015, the plaintiff sued Mr Byrnes in the Local Court for the sum of $100,000 for services rendered to him over the period 1 January 2010 to 14 February 2014 (Ex 1). From the averments it is apparent that the services covered the collating of documents, the preparation of files from dispersed documents, and other matters. It is clear that this claim covered work the plaintiff had done on the defendant’s Family Law case, and work she performed after the termination of the litigation funding agreement in August 2010 on the litigation between the plaintiff and Mr Byrnes in the Equity Division. When cross-examined about this (115 - 121T) the plaintiff was adamant that there was no contemporaneous agreement in early 2010 with Mr Byrnes. But after the collapse of his arrangement with the defendant, she said, “he offered me money” (116.15T). When asked what she understood she was expected to do she said (at 116.35T):

“After I had made the book – I’ve got the documents in order chronologically … probably about six inches deep that was handed to Mr Beazley. That was my job on that particular case finished. What happened then: I was still helping Virginia emotionally and being with her.”

50. When challenged that she had performed work for Mr Byrnes for eight months on the defendant’s case before termination of the agreement she agreed, but said the work was on the defendant’s behalf (119.5T). She said that after the termination of the agreement, because she collated “the book” at Mr Byrnes request, she “felt that it was his responsibility, because he then took out that case against [the defendant]”. She felt he should “pay for the fact [she had] put that book together for him” (121.5 - 121.10T).

Contemporaneous records

51. I have referred above to the difficulty of resolving a case which may boil down to ones person’s word against the other a decade after the salient events occurred and where both parties may be taken to be acutely aware where their interests lie. I also bear in mind what was said in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] about the preference for reasoning to a decision, “as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events”. There is precious little in the present case falling under these three rubrics.

52. So far as contemporary “materials” are concerned, as I have already indicated, there are in evidence printouts of three emails exchanged from 24 August 2010 to late September 2010 between the parties. I have already quoted from Annexure “A” to the plaintiff’s affidavit (at [45] above). Substantially that was an email from the defendant to Mr Byrnes terminating the litigation funding agreement to which the plaintiff was copied in. As indicated above, even if the defendant acknowledged, at least, that the plaintiff had “spent a huge amount of time with [the defendant] dealing with [the] case” and had done “a lot of filing work”, the defendant ascribed this to their friendship, not any agreement between them.

53. Annexure “B” of the plaintiff’s affidavit is an undated letter from the defendant to the plaintiff which I infer was sent by email on 19 September 2010 (Annexure “B” of Affidavit, Sarah Winter, 6 March 2017). In that letter the defendant asserts that until she entered into the agreement with Mr Byrnes she was resolved to go ahead with the earlier Heads of Agreement but desisted because the plaintiff became very upset with her over it, taking her to see Mr Byrnes. It is implicit in this that the defendant is saying that she signed the agreement because she accepted the plaintiff was looking after her interests and she was emotionally dependent upon her. I draw this from this part of the text:

“I felt intimidated when you told me “Jim is a very temperamental man” when I told you I didn’t want to sign an agreement with Jim. I intend to just go ahead with heads of agreement but you became very upset and even though you were not well, you dressed up and accompanied me to Jim’s house. I understood then that you were looking after my interest. I was so emotionally dependent on you and I was so depressed after the divorce …” (sic).

The defendant also asserted that the main reason she terminated the agreement with Mr Byrnes was because he reneged on his undertaking to pay for the plaintiff’s operation. She added “of course there are several issues that I could no longer remain associated with him”. She asserted that she had given the plaintiff “the love, care and prayer of a true friend”. It seems that the defendant continued to have friendly feelings toward the plaintiff because she apologised for being unable to attend the wedding of the plaintiff’s daughter as she would be overseas. She thanked the plaintiff for all her assistance.

54. There is also a post-scriptum in the following terms, upon which the plaintiff puts particular reliance:

“I have trusted you with everything I have and even gave you a “power of attorney” to act on my behalf. I could not trust you more than what I did and I always think of your future where to live and be comfortable. I hope [Mr Byrnes and his associate] will think of you the [way] I did”.

55. In her undated response, the plaintiff latched on to the post-scriptum as confirming the promise of a house. She wrote:

“You said to me when this was all over and you got your settlement, you would pay me enough money to buy me a house, as the [post-scriptum] confirms.

…

As I am not working for you, I would like you to clarify what and when you intend to pay me for the work I did for you and as you requested, Peter Tsu.

…

As for Jim, he asked for my assistance when you and I were having a meeting in his house. The work I was doing for you was because he knew I had prior knowledge and knew the story and had sorted out the mountains of documents. As you know I found much information that was needed. You asked me to make dozens of phone calls and even go to the police, which I did. Jim would ring me and ask me to sort things out or do things because he knew I was working for you and there was no need to contact you directly. Jim and I are not friends, but working associates.

We do have a verbal contract, and as from your letter dated 19th September 2010, it seems you are still going to honour your financial commitment to me. If this is so, perhaps you could reply to this letter and as I always have to you, do the right thing.”

There is no evidence of any reply or any further written correspondence passing between them.

Applicable principles of law

56. The issues in this case concern the formation and content of a simple contract. It is settled by the Common Law in Australia that the objective theory of contract is “in command of the field”: Taylor v Johnson (1983) 151 CLR 422 at 429. As explained in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 (“Toll”) at [40]:

“This Court … has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”

57. It is trite that not every promise, however sincerely made, is legally enforceable. In Ermogenous v Greek Orthodox Community (2002) 209 CLR 95; [2002] HCA 8 at [24] - [26], a plurality of four justices of the High Court said:

“To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts”.

Because the inquiry about this last aspect may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances,48 not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties49 (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.” (Footnotes omitted.)

58. As was made expressly clear in a later passage, when deciding whether an arrangement was made with an intention to create legal relations, the same objective approach applies. In particular, intention is:

“[U]sed 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 or actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties”. (Footnotes omitted.)

59. Ashton v Pratt (2014) 88 NSWLR 281; [2015] NSWCA 12 establishes that when considering the question of the intention of the parties to create legal relations, recourse should not be had to any presumptions arising out of the nature of the social relationship between the parties: (at 295 [73]), Bathurst CJ. However, the nature of the social relationship between the parties remains part of the relevant, objective, surrounding circumstance.

60. Having regard to the terms in which the promises were allegedly made (at [41] above), it may be necessary to bear in mind the principles concerning the so-called unilateral contracts. In Australian Woollen Mills Pty Ltd v the Commonwealth (1954) 92 CLR 425 (“Australian Woollen Mills”), a unanimous High Court referred to such arrangements as a promise offered as consideration for the doing of an act at the request of the offeror: 456 - 458. Their Honours said at 457:

“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. In such cases as the present, therefore, in order that a contract may be created by offer and acceptance, it is necessary that what is alleged to be an offer should have been intended to give rise, on the doing of the act, to an obligation. The intention, must, of course, be judged in the light of the principle laid down in Freeman v. Cooke but, in the light of such an intention, actual or imputed, the alleged “offer” cannot lead to a contract: there is, indeed, in such a case no true “offer”.“ (Footnote omitted.)

The principle in Freeman v Cooke (1848) 2 Ex 654; 154 ER 652 (at 663) relates to a species of actionable estoppel which need not be further mentioned here as no such cause of action is pleaded. Doubtless, the question of intention in this context equally must be ascertained by application of the objective theory I have discussed above.

The written promise

61. As I have said (at [43] above), the defendant at all times denied that she had ever promised the plaintiff a house. But there is also the particular question about whether any such promise had ever been made in writing as the plaintiff asserts. I think it convenient to consider this question separately now, principally for two reasons. First, the existence of a written promise signed by the promisor may be an objective circumstance entitled to weight when deciding both whether an arrangement with the hallmarks of a contract was made and whether it was intended that the arrangement have legal effect. The second consideration is the resolution of that question may be germane to the reliability of the plaintiff’s evidence about the making of the promise and its terms.

62. On the plaintiff’s evidence (Affidavit, Sarah Winter, 6 March 2017 at par 103) the written offer signed by the defendant was in the following terms (at [41] above):

“I am so grateful to you for what you have done. I can’t wait until this is over and I can give you the money to buy you a house and you won’t have to worry anymore”.

Her case is that by this offer the defendant promised to buy the plaintiff a house, the consideration for which was the plaintiff continuing to perform clerical work and providing moral support to the defendant in her continuing efforts to obtain a more equitable property settlement in the Family Law proceedings. The context in which the offer was said to be made was the entry into the arrangement with Mr Byrnes to perform work outside the court system to achieve a result which better accorded with the defendant’s belief as to her due entitlements. I will leave aside for present purposes, that on one view the offer was expressed to be in return for the past performance of services, that is to say, past consideration.

63. I repeat that I allowed secondary evidence of the content of the written offer on the ground that if the plaintiff’s evidence were accepted, the document was unavailable for the purpose of s 48 of the Evidence Act.

64. I think it accords with the ordinary experience of life that a person who believed the content of such a document, (leaving side that subjective intention is not the test) and who accordingly had the expectation of the receipt of an extremely valuable future advancement would take good care of the document. The plaintiff was cross-examined about this topic extensively (82.10 - 85.48T). I will not set out all of the detail, suffice it to say that the plaintiff said she placed the letter in a box at home where she kept documents. She said it was an important box containing some legal documents which she kept in a cupboard in her home. She described the dimensions of the document as “a quarter of an A4, with lines, that had been folded and given to me” (84.15T). The plaintiff then retracted that statement and said rather she folded it and put it in her handbag. When she got home she didn’t place it in an envelope, but simply put it in the box which did not have a lid. She did nothing else to safeguard the letter. It remained there without her looking at it again until the dispute between the defendant and Mr Byrnes arose and Mr Byrnes’ lawyers asked her to provide them with relevant documents. She said that those lawyers asked her “for every document in [her] possession” (85.40T). She said, “it was all muddled up a little bit and I just gave it to them, because they asked for them” (sic). She didn’t take a copy of that “letter of value” (85.5T).

65. She was later cross-examined about the circumstances in which the letter was handed to her. When asked to confirm that the defendant gave her the letter at the defendant’s home, she said: “I am not sure about that” (101.10T). When asked whether she was sure when she swore her affidavit she answered: “Probably, yes”. When asked whether she was sure when she made the affidavit she said, “Yes, I would say”. Watching and hearing her give this evidence I formed the impression that she was far from confident about that answer to the extent to which it may be understood as an affirmation of the proposition put. When tested about this she said “it’s been a long time” (101.20T). When asked again, “Did she hand you the letter at her house?” She answered “I cannot recall at this point in time”. She said it was after a meeting with the defendant and Mr Byrnes. When pressed about which meeting she could not answer. She gave various explanations for this including that she had progressively worsening pain at the time due to the condition of her knee. And she said that since her affidavit was made in 2017, “I have had a series of bad illnesses attack me and I am not sure. I’m sorry”. (103.22 - 103.24T)

66. When the cross-examiner reminded the plaintiff about the various meetings referred to between paragraphs 102 and 108 of her affidavit she said she was mistaken when she said the written promise was provided after the defendant signed the agreement with Mr Byrnes, as deposed to in paragraph 103 (106.30T). She eventually could only say that she was not sure when the written offer was provided (107.5T; 108.10T).

67. The plaintiff was then cross-examined about her response to the defendant’s email of about September 2008. She was unable to say when she wrote her response, again explaining that she had been “incredibly sick since” and “had lost a bit of understanding of years since” (109.20 - 109.23T). She was taken through the detail of what she wrote in Annexure “C” of her affidavit to the effect that the only contract asserted was “a verbal contract” (111.35T). Initially she accepted that her response did not refer “to any handwritten agreement” (111.42 - 111.45T). Then immediately she sought to latch on to the date of the defendant’s letter of 19 September 2010, referred to in Annexure “C”, as a reference to the written promise (111.50T). She was quite sure that was not the date of Annexure “B” (112.5 - 113.5T). When pressed about this obviously erroneous evidence she reverted to the statement that she had made a mistake about the date when the letter was given to her (113.15 - 113.35T). She accepted that the written promise could not possibly have been a letter dated September 2010 (114.35T). When it was put to her that the defendant had never given her a handwritten letter promising anything she answered “Yes she has”.

68. I have already referred to some of the extensive cross-examination about Ex 1 (see [49] - [50] above) which it will be recalled is a statement of claim issued by the plaintiff in the Local Court against Mr Byrnes alleging that he was indebted to her in the sum of $100,000 in respect of work she had done on the defendant’s Family Law case after 1 January 2010. The purpose of this cross-examination was twofold. First, it might be thought that an agreement that Mr Byrnes would pay for her work on the case after 2010 might be inconsistent with an agreement that she was to receive a house from the defendant in return for her efforts. Secondly, her failure to disclose that matter in her affidavit might have had an adverse effect upon her credit. I do not propose to go into the detail of this cross-examination, some of which has been referred to above. Suffice it to say, as I understood her evidence, the plaintiff was saying she had no agreement with Mr Byrnes in the earlier part of 2010, but after the breakdown in the arrangement between the defendant and Mr Byrnes she then felt that it was his responsibility to pay for the work because it had been done at his request or suggestion (121.5 - 121.20T).

69. Although this explanation may have some plausibility, there are, I think, difficulties with its reliability. The first is that she had the expectation that Mr Byrnes was paying for the trip to Manilla for the operation. This I think arises out of her failure to challenge the assertions made by the defendant in Annexure “B” about that matter, and her direct evidence (116.5 - 116.25T; 128.15T) that Mr Byrnes had in fact, at least to her belief, paid for the airfare. It’s difficult to understand where such an expectation on the part of the plaintiff would come from if there was no arrangement between them about reimbursement for her time and effort in relation to the case. There is no evidence suggesting Mr Byrnes may have had any moral obligation toward the plaintiff to look after her in relation to her health. Although Ex 1 is drawn by a layperson i.e. the plaintiff, it is verified and it does assert a legal obligation to pay in respect of the work the plaintiff says, for the purpose of the present case, she was performing for the defendant.

70. I wish to observe that during the course of her cross-examination when the plaintiff proffered ill health as an explanation for her difficulty in providing a clear narrative of events, she nonetheless told the cross-examiner that she was quite comfortable giving evidence (109.25T).

71. Making every allowance for the plaintiff’s advanced years, the ill health she may have suffered in recent years and the effluxion of time since the salient events occurred, I am not satisfied that her evidence about receiving a written promise from the defendant in or about January 2010, and what subsequently became of it, should be accepted as reliable. The plaintiff’s inability to remember when it was provided, her failure to keep it safely, her explanation about putting it in the box with a mix of other papers and handing the whole box over to reputable solicitors, who were subsequently unable to return it, is to my mind, unpersuasive. It seems very odd that the solicitors would have wanted her to hand over a box of documents without any prior attempt by her to sort them, something she was supposed to be good at. Even if that did occur, one would have expected that the solicitors would have handed back the documents which did not seem relevant to their case. And those that were relevant would have been kept safely. I am aware that evidence of promises said to have been made by the defendant to the plaintiff was given in the proceedings in the Equity Division before Sackar J. I am unaware of its content or its relevance to those proceedings. Moreover, whilst I would accept the force of the adage that ‘the cobbler’s children have no shoes’, I found her explanation that her personal record keeping was chaotic while she took care of “other people’s personal documents” unconvincing (130.30 - 130.45T).

72. I am not satisfied on the balance of probabilities that the defendant ever made any written promise to provide the plaintiff with a house in Double Bay after she had received a satisfactory outcome to the Family Law proceedings.

Was there an oral promise?

73. My finding about the unreliability of the plaintiff’s evidence in relation to the written promise naturally casts a shadow over the question of whether there was any oral promise, especially in the face of the defendant’s trenchant denials. Were there nothing else, after so long a time, I may have been left in the situation where I could not choose between their competing accounts. But given the closeness of their friendship and the undisputed assistance the plaintiff in fact provided to the defendant of a material, in terms of document management, and moral kind, it is entirely plausible that when confident about the prospect of a good result, the defendant may have made even extravagant expressions of generous intent to the plaintiff; and this, notwithstanding, the defendant’s evidence that her family would be more deserving objects of her generosity than her friends were she in a position to be expansive (182.20 - 182.35T). Such a level of generosity may not be a common incident of friendship, but most people would wish to help their friends if they could. The context in which the promise was said to be made was the confident expectation of the realisation of an entitlement that the defendant felt was hers to some tens of millions of dollars. Put in this way, as I have said an extravagantly generous promise is not completely improbable and could accord with the apparent logic of events. There is no doubt the defendant was generous to the plaintiff.

73. In my judgment, the defendant probably did make a promise to the plaintiff in terms to the effect of those set out at paragraph 100 of the plaintiff’s affidavit of 6 March 2017 (see [41] above). Although I would otherwise feel unable to choose between the competing evidence of the plaintiff and the defendant. I am satisfied that the existence of such a promise derives support from the content of the contemporaneous documents exchanged at the time of the repudiation by the defendant of her agreement with Mr Byrnes. I accept: first, that the post-scriptum to Annexure “B” in a small way corroborates the plaintiff’s evidence about the defendant’s expression of concern about her financial wellbeing; secondly, and perhaps more significantly, is the plaintiff’s assertion in Annexure “C”, “You said to me when this was all over and you got your settlement you would pay me enough money to buy me house”; thirdly, the insistence that there was “a verbal contract” and a reference to “financial commitment to me”; and fourthly, the complete failure of the defendant to fire back a response denying the plaintiff’s assertions in Annexure “C”. The defendant’s silence in this regard, in my judgment, is significant. This is the type of situation where human experience would expect an immediate denial if the statement were false. The course of the exchange of correspondence, coupled by the failure of the defendant to deny the promise when raised by the plaintiff in Annexure “C” corroborates the plaintiff’s account in this regard.

74. I am also persuaded on the balance of probabilities that the promise was probably made in or about January 2010. At that time, after the plaintiff had introduced her to Mr Byrnes, and she had received his bullish (if baseless) prognostication, the defendant would have been ebullient that her conviction about her true entitlements was going to be vindicated. Given the amount she then thought may be coming to her, in her bubbling excitement she was probably moved to promise to share her apparent good fortune with the plaintiff, who was an agent of it because the plaintiff had continued to support her, believe in her valuation of her entitlements, and introduced her to Mr Byrnes who was going to make it all happen. Only later did the scales fall from her eyes, either through the advice she received from Mr Beazley, or due to her realisation Mr Byrnes was very unlikely to bring about the result he had conjured in January. The probabilities, as I have expressed them are not affected by the logic of the defendant’s response were she in a position to display such generosity its objects could be found closer to home.

75. I should record that the defendant also gave evidence of mental health problems requiring treatment that affected her after the repudiation of her contract with Mr Byrnes (177.35 - 178.10T; 180.20 - 181.5T). There is no evidence that the defendant’s depression may have affected her memory of these events. It’s not necessary for me to arrive at a definite conclusion as to why she has now forgotten the promise she once made. The effluxion of time, her involvement in other distressing litigation, and, perhaps, her ill health combine to provide sufficient explanation.

Did the parties enter into a contract?

77. Notwithstanding my acceptance of the plaintiff’s evidence about the oral promise, I am not satisfied that the promise was contractual. In my judgment, it was entirely unsupported by consideration and were I wrong about that, considering all of the circumstances objectively, the promise was not characterised by an intention to enter into legal relations.

78. In Australian Woollen Mills the High Court said at 456 - 457:

“In cases of this class, it is necessary, in order that a contract may be established, that it should be made to appear that the statement or announcement which is relied on as a promise was really offered as consideration for the doing of the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement. Between the statement or announcement, which is put forward as an offer capable of acceptance by the doing of an act, and the act which is put forward as executed consideration for the alleged promise, there must subsist, so to speak, the relation of a quid pro quo.”

After this passage (at 458) their Honours continued:

“A test which has not seldom been applied in such cases in order to determine whether a contract has been made or not is to ask whether there has been a request by the alleged promisor that the promisee shall do the act on which the latter relies. Such a request may, of course, be express or implied … it can hardly be denied that the presence or absence of an implied request to do the act may often provide a useful test for determining whether there has been a true offer and a true acceptance such as to bring a contract into existence”. (Citation omitted.)

The importance of the presence or absence of an express or implied request to do the very act upon which acceptance depends is well illustrated by the result in Australian Woollen Mills. There the Commonwealth had recouped a subsidy paid to the manufacturer of woollen products. The manufacturer claimed that the announcement of the availability of the subsidy constituted a standing offer capable of acceptance by the purchase of wool. On construction of the relevant documents, the High Court said at 461:

“It is impossible to find anywhere anything in the nature of a request or invitation to purchase wool, or anything which suggests that the payment of subsidy was put forward in order to induce any manufacturer to purchase wool, or which suggests that the payment of subsidy and the purchase of wool were regarded as related in such a way that the one was a consideration for the other.”

79. Although one is not bound, of course, by factual conclusions in the precedent, the same analysis is true here. When one considers the words attributed to the defendant by the plaintiff in paragraph 100 of her affidavit of 6 March 2017 (at [41] above). One can see the defendant’s ebullience after she spoke to Mr Byrnes. She expected to be “30 odd million dollars better off…” (Emphasis added.) She said, “We will win.” (Emphasis added.) Then follows the promise:

“When this case is over I will give you the money to buy a house to live in at Double Bay for all the help you are giving me and everything that you have done for me. At the end I will have the money for you to buy a home. That money will be nothing to me.” (Emphasis added.)

80. One can see that the circumstance or occurrence upon which the promise depended was the 30 odd million dollar win, not any future act of the plaintiff. There is nothing in the language which specifies an act must be done in exchange for the promise to buy the plaintiff a house. There is no implication in the language used by the defendant in making her “announcement” which can be construed as a request that the plaintiff provide the necessary clerical assistance as required to bring about the “30 odd million dollars better off … win” (Affidavit, Sarah Winter, 6 March 2017 at par 100). There is nothing about the language which suggests “a standing offer capable of acceptance” by the provision of clerical assistance in the future. In my judgment the language is consistent only with a statement of intention to make a very substantial gift to the plaintiff as a trusted and valued friend if things go as well in the Family Court proceedings as the defendant believed she then had reason to hope.

81. It’s important to bear in mind that there it is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations as the High Court put it in Toll at [40]. The common intention of the parties is, of course, to be understood by reference to what a reasonable person would understand the language used to mean. This requires a consideration not only of what was said, but also of the surrounding circumstances known to the parties and the purpose and object of the putative transaction. In my judgment, a reasonable person would understand the words in which the promise was expressed, as I have explained it.

82. A reasonable person aware of the surrounding circumstances known to the parties would be aware that such a promise had been previously made (perhaps more than once) going as far back as March 2009. These promises are alleged to been “contractual.” The reasonable person would also have understood that the plaintiff had been providing a certain amount of clerical assistance to the defendant in relation to the Family Law proceedings since the early part of 2009 and in circumstances where there was no suggestion of any obligation for payment. The plaintiff had provided ongoing moral support to the plaintiff in a tangible way by attending legal appointments and court with her and by fulfilling the role of a confidant. She had apparently provided the same type of assistance and support at the defendant’s request, and to some extent, to Mr Tsu. The defendant had also provided gratuitous services to the plaintiff. She had taken her on holidays to Thailand, shouted lunch or dinner, and acted as her driver. A reasonable person taken to know the circumstances I have described under the heading “The nature of the friendship” (at [22] - [32] above), and having regard only to those circumstances known to each when the promise was made in or about January 2010 and not after, would conclude that the mutual if different provision of support and assistance to each other was simply characteristic of their friendship. There is nothing about those circumstances which points in the direction of a common intention to change the footing of their relationship as at January 2010.

83. A reasonable person would also appreciate that at the time the promise was made, the defendant had just entered or was about to enter into a formal written contract with Mr Byrnes entitling him to a large success fee. The absence of a written contract between the plaintiff and the defendant containing the relevant promise tells against an intention to change the basis of their prior relationship. It seems unlikely that she would legally commit to paying Mr Byrnes an amount likely to run into millions and bind herself to buy the plaintiff a house in an expensive suburb whatever the outcome of the Family Law proceedings.

84. Moreover, the purpose and object of the promise was to provide for the plaintiff at a personal level. It was to provide a secure home for her. Looking at the language used, it was not to provide recompense for the provision of services. Indeed, even if one assumed that the plaintiff was to work full time on the defendant’s Family Law proceedings for a year or two, the recompense was out of all proportion to the value of the labour of a clerical nature to be provided. I mean no disrespect by this. But the disproportionality between the pro and the quo is a powerful objective factor telling against the formation of a contract and suggesting no more than a statement of intention to make a gift.

85. If I am wrong in my conclusion that the evidence does not support the entry of the parties into a contract, in my judgment the same circumstances to which I have referred “show that they did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts”: South Australia v The Commonwealth (1962) 108 CLR 130 at 154, Windeyer J. That is to say in all of the circumstances I am not satisfied that there was an intention to create legal relations.

86. For these reasons, the plaintiff has failed to prove her case in contract.

Alternative matters

87. As I have said, the pleaded statutory alternative was abandoned at the outset of the trial. During addresses there was some discussion about actionable estoppel. However, no such case was pleaded and Mr White for the defendant made it quite clear that the defendant could not meet such a case. It did not rear its head in any way until addresses and I am not satisfied this case falls into the category where the parties allowed the evidence and the arguments to run beyond the confines of the pleadings.

88. Mr Hanrahan did argue that if I was not satisfied as to the contract in the terms contended for by the plaintiff, I should assess compensation for services provided by the plaintiff to the defendant on the quantum meruit basis. As I have concluded not only that there was no contract as averred, but also that there was no contract between the parties at all, there is no discernible basis upon which compensation on a quantum meruit could be allowed. This is not a case where an attempted contract was vitiated by operation of law, frustration or was otherwise rendered legally unenforceable. There simply was no contract at all in this case.

Damages

89. Given the findings I have made, it is unnecessary for me to assess any damages for breach of contract being the amount necessary to put the plaintiff in the position she would have been in had the contract been performed. However I am conscious that generally a trial judge should make such an assessment on a contingent basis to avoid the need for an otherwise unnecessary re-trial in the event of a successful appeal.

90. The plaintiff’s claim for damages is supported by a report of Mr Stuart Rowan, a certified practising valuer. He was asked to “value a small cottage in the Sydney suburb of Double Bay” as at December 2011 and as at the date of his undated report which is understood to have been produced in the latter part of 2017.

91. Mr Rowan analysed a range of sales results for the purpose of expressing his opinion. In his view the most appropriate exemplar was a property in South Avenue selling for $1,340,000 in November 2012. It featured two bedrooms and two bathrooms but without off-street parking. Making adjustments for the temporal variations he was asked to assume and adding stamp duty, he expressed the opinion, which he regarded as “quite conservative” and based upon “the most modestly priced property that our sample identified”, that as at December 2011, the value of a small cottage was $1,257,820. As at late 2017, the same property would be valued at $2,264,290.

92. Given that Mr Rowan’s expert opinion is the only evidence on the topic, and I have no reason to question it, had the plaintiff established an entitlement to damages for breach of contract I would have accepted his opinion.

93. As the claim is one for pure economic loss involving a loss that would have crystallised at or shortly after the time the Family Law proceedings were settled, I am of the view that the appropriate date for the assessment of damages is December 2011 and the relevant figure is $1,257,820; to which would be added pre-trial interest under s 100 of the Civil Procedure Act 2005 (NSW).

94. My orders are:

1. Judgment for the defendant;

2. The plaintiff to pay the defendant’s costs.

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Decision last updated: 16 May 2018