Wood v Crow

[2005] NSWSC 983

CITATION:	Wood v Crow [2005] NSWSC 983
HEARING DATE(S):	23 September 2005
JUDGMENT DATE :	23 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Application for extension of caveat or interlocutory injunction refused.

CATCHWORDS:	CAVEAT - INJUNCTION - ORAL AGREEMENT - PART PERFORMANCE - Whether sufficient evidence of part performance of oral agreement for sale of land to justify extension of caveat or injunction - whether any interest pursuant to oral agreement vested in official receiver on Plaintiff's bankruptcy.
LEGISLATION CITED:	Bankruptcy Act 1966 (Cth) - s.58 Conveyancing Act 1919 (NSW) - s.54A
PARTIES:	Jennifer Wood - Plaintiff Michael Robert Crow - Defendant
FILE NUMBER(S):	SC 5099/05
COUNSEL:	J-P. Redmond - Plaintiff J.B. Conomy - Defendant
SOLICITORS:	Betar Lawyers - Plaintiff Reimer Winter Williamson - Defendant

LOWER COURT JURISDICTION:

Ex tempore

1    The Plaintiff seeks two orders in the alternative. One is an order that the operation of a caveat which she has placed upon the subject land be extended, and the second is an order restraining the Defendant from selling the subject property.

2    The Plaintiff claims that she has an equitable interest in the subject land by reason of an oral agreement made between herself and the Defendant in about January or February 1999. The agreement is said to be as follows.

3    Because the Plaintiff and her husband were in financial difficulties in early 1999, they were considering selling their house. They knew the Defendant as a fellow parishioner. The Defendant agreed to assist them in their difficulty by buying their house and paying the market price for it, less some deductions in respect of repairs which had to be carried out.

4    The Plaintiff says that the Defendant agreed that he would permit the Plaintiff and her husband to continue living in the property, which was their family home, upon payment of a certain rent, and that when the Plaintiff and her husband were free of their financial difficulty, he would sell the property back to them at the price which he had paid for it. The Plaintiff says that that oral agreement has given her an interest in the land which she now seeks to enforce. In order to support her interest in the land she has placed a caveat on the title.

5    The Defendant denies that any agreement was made between the Plaintiff, her husband and himself in the terms alleged. He says that he simply bought the property from the Plaintiff and agreed to lease it to them.

6    The issues which have been raised on this application are as follows:

– bearing in mind that the alleged agreement is not in writing, is the agreement enforceable at all under s.54A of the Conveyancing Act 1919 (NSW);

– if it is not otherwise defeated for want of writing, are the terms of the agreement so vague and uncertain, particularly as to the time for performance of the oral agreement, as to be unenforceable so as not to constitute a binding agreement;

– if the agreement does not fail for want of writing and was sufficient to create some equitable estate or interest in the land in the Plaintiff, has the Plaintiff been divested of that interest by operation of s.58 of the Bankruptcy Act 1966 (Cth) when, some time after that agreement was made, she became bankrupt?

7    Mr Redmond of Counsel, in a very able argument for the Plaintiff, says that the alleged oral agreement does not fail for want of writing because it has been partly performed. He says that:

– it was agreed that the Plaintiff and her husband would pay to the Defendant a rent which was above the market rent in consideration of his agreement to resell the house to them;

– such a term would not be consistent with a lease relationship between the parties;

– the Plaintiff and her husband have in fact paid above the market rent for their occupation of the property;

– that act is unequivocally referable to an agreement of the nature which the Plaintiff alleges and qualifies as an act of part performance.

8    I do not think that there is sufficient evidence to support, even on a prima facie basis, the assertion that there was an agreement between the parties that, whatever the relationship between them might be, the Plaintiff and her husband would pay a rent which was above the market rent. Clearly there would have to be some such express agreement to support the Plaintiff’s case because an agreement to pay market rent would be consistent with the normal landlord and tenant relationship between the parties and nothing more. It is only if the Plaintiff can adduce sufficient evidence that there was an agreement to pay above market rent and that she paid above market rent that one could say that there have been acts which are referable, not to an ordinary landlord and tenant relationship or lease, but to some other agreement of the character which the Plaintiff alleges.

9    Although there is evidence in the affidavits of the Plaintiff and her husband that various amounts in rent were paid by them to the Defendant from time to time during the period between 1999 and the present, there is no evidence in clear terms of an agreement between the parties to the following effect: “If you [the Defendant] agree to resell this house to us at a time when we are able to afford its repurchase, we will in the meantime pay you a rent which is above the market rent for our occupation”.

10    The Plaintiff's case is made more difficult by reason of what she has stated to the official receiver when, after the Defendant was made bankrupt, the official receiver inquired as to the sale of her home to the Defendant.

11    By a letter dated 18 December 2000 to the Plaintiff, the official receiver inquired about this very transaction and asked a number of questions including the reasons for the sale to the Defendant, the basis for calculating the amount of the rent, and the nature of the relationship between the Plaintiff and the Defendant.

12    By letter dated 29 September 2000, the Plaintiff responded to those questions as follows. As to the reasons for sale, she said that she and her husband were struggling to make repayments on a loan secured over the property. As to the basis for calculating the amount of rent she said, "My understanding is that the rent is paid on market value". In answer to the question as to the nature of the relationship between the Plaintiff and the Defendant she said, "The relationship is that of landlord and tenant". There is no reference in that response to an agreement that the rent would be paid at above market rental rates. There is no reference to the Plaintiff and the Defendant being in a relationship of vendor or purchaser or, to take it at the lowest, the grantor and grantee of an option given to the Plaintiff to repurchase the land.

13    It seems to me, therefore, that the Plaintiff has failed to adduce sufficient evidence to demonstrate a serious question to be tried as to whether there was an oral agreement and part performance of it, as she alleges. On the contrary, the evidence which is available, even at this stage, suggests that there was no agreement between the parties that above market rent would be paid in consideration of the agreement alleged by the Plaintiff.

14    There are other major difficulties in the Plaintiff's case. I put aside for the moment the question whether the contract alleged is too uncertain as to time for performance to be enforceable. There may be an argument that the agreement may be salvaged from uncertainty by the implication of a term for a reasonable time for performance.

15    The other fatal flaw in the Plaintiff's case is that if there was an interest in the subject land created by the agreement which she alleges, then that interest would have been property of the Plaintiff, within the definition of property for the purposes of the Bankruptcy Act. That property would have vested in the official receiver upon the sequestration of the Plaintiff's estate in 2000. It is clear from the correspondence to which I have referred that the Official Receiver was concerned to identify whether the Plaintiff had any interest in the subject property which might be available for creditors of the Plaintiff's bankruptcy. So much is inescapable from the nature of his inquiries to the Plaintiff. It is equally clear that the Plaintiff did not reveal to the Official Receiver the interest in the property which she now asserts that she had at that time.

16    It seems to me that in those circumstances it is clear that if the Plaintiff did have an interest in the subject land at the time of her bankruptcy, it has vested in the Official Receiver and is no longer in the Plaintiff.

17    Accordingly, for those reasons I do not think that the Plaintiff has made out a case on the evidence sufficient to support the interest in the land which she claims such as to justify either the extension of the caveat or the grant of an injunction which she seeks.

18    The Notice of Motion will be dismissed. The Plaintiff is to pay the Defendant’s costs of the motion. The Summons will be stood over for further directions in the Registrar's list on 21 October 2005.

- o0o -