Dixon v Garland HC Hamilton CIV 2004-419-1832
[2005] NZHC 1750
•26 May 2005
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV 2004-419-1832
BETWEEN HOWELL DIXON
Plaintiff
AND KATHLEEN MARGARET GARLAND
Defendant
Hearing: 17 - 19 May 2005 Appearances: L Ponniah for Plaintiff
D O’Neill for Defendant Judgment: 26 May 2005
JUDGMENT OF SIMON FRANCE J
This judgment was delivered by Justice Simon France on 26 May 2005 at 10:00 a.m. pursuant to r540(4) of the High Court Rules 1985.
Solicitors:
Corban Revell, P O Box 21180, Henderson, Auckland Counsel:
Mr David O’Neill, Barrister, P O Box 815, Hamilton
DIXON V GARLAND HC HAM CIV 2004-419-1832 [26 May 2005]
[1] The plaintiff seeks specific performance of one of two agreements alleged to have been entered into in relation to land owned by the defendant, Mrs Garland. The plaintiff seeks first to enforce as a concluded contract a Memorandum of Understanding dated 5 March, but signed by the parties around the 7th of March 2004. The defendant says it was no more than an agreement to agree, and that a settled deal was never concluded.
[2] Failing that, the plaintiff seeks to enforce an oral agreement reached, it says, in January 2003 and evidenced by an unsigned agreement prepared later. The defendant does not deny the existence of this earlier agreement, but says it was cancelled either by agreement or by the defendant following non-performance by the plaintiff. It further says it is an agreement that is long spent, has been superceded by subsequent negotiations, and cannot be revived.
Factual background
[3] Mrs Garland owns some rural land at Whitianga. The land comprises 35.022 ha. It has previously had subdivided off it land to the western side, and a small lot to the northern end. This small lot effectively comes between Mrs Garland’s land and the only road access. Accordingly, when this earlier subdivision was done, an access way was preserved to allow Mrs Garland to maintain a way onto her property. The access way reaches her land on the eastern boundary of the property.
[4] Mrs Garland knew Mr Dixon as he had previously done some work for her at another address. In 2001 she asked Mr Dixon to build on the land the shell of what the parties call a “shedottage”, which is a cross between a shed and a cottage. Some time at the end of 2001 the plaintiff indicated an interest in becoming the first tenant of the building. This eventuated. Over a period of time the plaintiff made improvements to the shell – a mezzanine floor was added and gradually walls were built, a kitchen installed, a bathroom/toilet installed and so on. There is a dispute as to the timing of some of these improvements and, more significantly, as to the basis on which they were done by the plaintiff.
[5] The shedottage is situated on a northern portion of Mrs Garland’s land. It is on a part of the land nearest the road. At some point in 2002 discussions took place between Mr Dixon and Mrs Garland concerning Mr Dixon obtaining a formal stake in the property. The general structure of the discussion was along the lines of shared ownership of the whole land. There were “plans” drawn which allocated specific areas of the to-be jointly owned land to each of the parties for their own exclusive use. Mr Dixon’s exclusive portion would encompass the shedottage, and Mrs Garland’s the back part of the property. A building would be erected on that for her use. Initially, the talk was seemingly of a 50/50 arrangement, but this soon, at Mrs Garland’s request, became a 75/25 arrangement with her retaining the bulk of the land.
[6] The bundle of documents has a proposed offer by Mrs Garland of a 25% shareholding for Mr Dixon. It suggests a $60,000 cash payment up front, plus the erection of a studio to the value of $25,000 to be built by Mr Dixon over the next two-and-a-half years.
[7] There were then seemingly further discussions, and an oral agreement emerged in January 2003 that would see Mr Dixon take a 25% holding. $40,000 was to be paid on 1 June 2003, $20,000 on 1 December 2003 and $10,000 per year for two years in materials and labour towards building a bush studio for Mrs Garland. This agreement is recorded in an unsigned agreement subsequently typed up by Mrs Garland’s sister. There is no real dispute that an oral agreement along these general lines was reached.
[8] It is also common ground that by 1 June 2003 Mr Dixon did not have the money. Mrs Garland says she gave him an extension of one to two months. Mr Dixon disputes there was a time limit. It is common ground that at the same time, and for the first time, Mr Dixon started paying Mrs Garland $100 per week. The basis of this was seemingly to assist Mrs Garland with existing mortgage payments she had, and because she was not getting the use of the $40,000.
[9] There is a dispute as what happened next. Mr Dixon says that in October 2003 he rang and said he had $60,000 available to put into Mrs Garland’s account.
No explanation was given by Mr Dixon as to why the offer was made at that time. By contrast, Mrs Garland says that by the time of Mr Dixon’s offer, she had already agreed with Mr Dixon that the agreement was at an end. She says Mr Dixon had not paid the deposit within the extended time and she was no longer interested in a shared ownership deal. She rang and told him as much. Mrs Garland says that Mr Dixon had accepted the oral agreement was no longer on the table, but then tried to offer the money.
[10] Following the October events, discussion continued but now the focus was on a subdivision that would lead to Mr Dixon getting a separate title. There is evidence about the various options. The general narrative can move on in time until March 2004, when a meeting was held at the house of Dorothy and Ian Meredith. Dorothy Meredith is Mrs Garland’s sister.
[11] Mr Dixon had suggested this meeting. He respected the Merediths and thought they could assist to broker a deal. There is significant conflict about what happened at this meeting and what documentation was present. Suffice to say at this point that after the meeting a memorandum of agreement emerged. It was signed by both parties in the two days or so following the meeting of 5 March 2004. The Memorandum of Understanding reads:
MEMORANDUM OF UNDERSTANDING
between
Kathleen Margaret Garland and Howell Dixon re
SALE AND PURCHASE OF LAND AT KAIMARAMA ROAD WHITIANGA
AGREED PRICE: $150 000 plus GST if any, plus subdivision related costs to a maximum of $20 000.
A DEPOSIT of $50,000 to be paid on the signing of a formal Sale and Purchase Agreement, and the balance of $100 000 to be paid on title.
Kath Garland to be responsible for the immediate control of the Woolly Nightshade, and Howell Dixon to be responsible for the immediate control of the Gorse on the existing boundaries.
Details regarding the access way to be further investigated and discussed before subdivision details are finalised.
This memorandum of understanding is made in good faith and was witnessed by the undersigned.
Signed: Vendor: Kathleen Margaret Garland “K. M Garland”
Purchaser: Howell Dixon “H Dixon”
Witnesses: Ian Noel Meredith “Ian Meredith”
Dorothy Elizabeth Meredith “D E Meredith”
Date: Friday March 5 2004
[12] No further agreement was ever entered into. At one point solicitors for Mr Dixon, no doubt apprehending the situation was drifting away from their client, forwarded a formal Agreement for Sale and Purchase. It contained extra terms from those in the Memorandum of Understanding and variations on some of the Memorandum’s terms. It was never signed.
[13] The plaintiff relies on the memorandum of agreement as a binding contract. The defendant says there was never a settled deal, the parties never considered there was, and in any event the document is too incomplete for a Court to fill the gaps.
Law
[14] The parties are agreed that the approach I should follow is set out in Fletcher Challenge Energy Limited v Electricity Corporation of New Zealand Limited [2002] 2 NZLR 436. Both parties set out the relevant principles, which are in fact taken from a ruling of Associate Judge Faire on caveat proceedings that required earlier determination in this present matter. I adopt the summation of the principles, which are as follows:
a)Whether a contract is formed is a question to be determined objectively;
b)It is permissible to look beyond the words of the agreement, to the background circumstances from which the agreement arose;
c)Evidence of the negotiations and surrounding circumstances is admissible, as is evidence of subsequent conduct;
d)The Court takes a neutral approach on the question of whether the parties intended to enter into a contract. There is no presumption one way or the other;
e)An agreement which omits an essential term, or a means of determining such a term, is not necessarily prima facie supportive of the conclusion that there is no contract. The issue is, is the Court satisfied that the parties intended to be bound? If so, the Court will strive to fill the gap;
f)If the Court takes the view that the parties did not intend to be bound unless they, themselves, filled the gap, the agreement will not be binding;
g)If an essential matter is not agreed and is not to be determined by recourse to some mechanism or to a formula or to an agreed standard, that may mean that the Court simply cannot fill the gap;
h)The deferral of an important term to be settled in the future does not mean, necessarily, that there is no intention to be bound;
i)Only if the lack of clarity or ambiguity in the express terms are such that the Court cannot determine what the parties meant by the particular term, will the Court conclude that the contract is void for uncertainty.
[15] The view I have formed on the facts of this case requires no further analysis of the law than these principles.
Issue One – Was the Memorandum of Understanding intended to be a settled contract, albeit with gaps to fill?
[16] As noted earlier, there was a meeting on 5 March 2004. The meeting was the culmination of the various efforts over the preceding 18 months to two years to reach agreement on how Mr Dixon might acquire an interest in the land. There were four people at the meeting – Mr Dixon, Mrs Garland, and Mr and Mrs Meredith. From the meeting there emerged the Memorandum of Understanding, drafted by Mrs Meredith and signed by Mr Dixon and Mrs Garland in the two days following the meeting.
[17] Pivotal to the status of the Memorandum is the issue of access to the new block of land which was to be owned by Mr Dixon. The Memorandum records the following:
Details regarding the access way to be further investigated and discussed before subdivision details are finalised.
[18] The parties’ contentions on what this clause of the Memorandum reflects are markedly different. Mr Dixon says that when he went to the meeting, his position was that he wanted to own his own access way. His vision was seemingly of a 10 metre wide access way, with each owning half of it. However, he says it was plain Mrs Garland only wanted a right-of-way to be given whilst retaining ownership of the land. He says that by the end of the meeting he had accepted this. The clause was inserted to allow the detail to be sorted out as he was not really sure how a right- of-way worked.
[19] Mrs Garland’s evidence that Mr Dixon was adamant throughout the meeting that without separate ownership there was no deal. This is a key plank in the defendant’s position that there was no settled agreement. As the Memorandum says, the parties were to go off and consider. Mrs Garland’s position is that there was to be no agreement until this was settled.
[20] Mrs Garland says that by the end of the meeting she had not formed a final view as to the best access option, but she had concerns with Mr Dixon’s idea of separate ownership. She wanted to take advice, and did take advice after the meeting, from various people – a surveyor, her lawyer, and a TCDC (Council) planning officer. This consultation led her to decide that giving Mr Dixon separate ownership of half the access way was not an option. The surveyor, Mr Middleton, testified and explained his advice. In essence, the property has a zoning compatible with forestry use. Attached to forestry use are Council conditions on width of a carriage way. If Mrs Garland was to preserve her ability to exploit this zoning, she needed to keep ownership of the necessary access land to allow a carriage way of that width.
[21] As noted, at Mr Dixon’s request, and because he respected them, the Merediths were present. Mr Meredith testified that in his view there was no settled agreement. He said that whilst his memory of some of the meeting was hazy, he could clearly recall that Mrs Garland wanted a single access lane and Mr Dixon a double. He says:
Howell [Mr Dixon] was absolutely adamant that if he did not get ownership of his own driveway there was to be no deal.
[22] Mrs Meredith also testified. She gave the same evidence. She also said that she found Mr Dixon very aggressive in the way he put this. She was taken aback because it was a side of him she had not seen. This had stuck in her mind and it is why she is in no doubt that Mr Dixon never wavered from his position.
[23] I am satisfied that the position at the end of the meeting is as described by the Merediths and Mrs Garland. This is not simply a weight of numbers assessment. Two factors influence me:
a)It is clear to me that Mr Dixon did not at the time have any real understanding as to what a right-of-way is, and how it works. He would, I am sure, have been persistent in his view of a single driveway of 10 metres width, but with each party separately owning one side each. I am satisfied he would not, because of his lack of appreciation of how legal rights-of-way work, have accepted anything else at that point in time.
b)I am also satisfied that Mrs Meredith’s description of events is correct. She impressed me with her fairness and sincerity. It is apparent that Mr Dixon had a sense of frustration about it all, and it would be consistent with this if he dug his toes in over what he considered important.
[24] Accordingly, I am satisfied that on the night of the 5th the parties had not concluded an arrangement concerning the access way. I am also satisfied that Mr Dixon did leave matters on the basis that if he did not get his way, there would be no deal. Further, I am satisfied that the access way issue was sufficiently important to both parties that it cannot really be imagined that either thought there was a settled deal until it had been sorted out. Finally, I am satisfied that nothing occurred between the meeting and the signing of the Memorandum to change this.
[25] Mr Ponniah pointed to some events that did occur between the meeting and the actual signing of the Memorandum. The next day, for example, Mrs Garland raised with Mr Dixon the issue of back rent, something that annoyed Mr Dixon. Agreement was, however, reached concerning this and Mrs Garland then asked her sister to fax to Mrs Garland the agreement for signing. There is some merit in Mr Ponniah’s submission that this sequence of events could be interpreted as her settling all outstanding matters before signing. However, I am satisfied that the access way remained pivotal. The reference in the agreement to further access way inquiries in Mrs Garland’s mind meant that there was to be no deal until this was sorted. She did not intend to be immediately bound to an agreement to sell. Equally, Mr Dixon was obstinate in his desire for ownership of half the driveway. He would not agree to anything else and would only have changed his mind once he took legal advice some time later.
[26] This finding really settles the matter concerning the Memorandum of Understanding. It was not intended to represent a concluded contract. However, I will briefly comment on associated factual conflicts that were the subject of submission.
[27] The defendant placed weight on uncertainty as to the definition of the northern and eastern boundaries. A consequence of the access way dispute was that the eastern boundary of Mr Dixon’s new lot could not be settled until the access way issue was determined. I agree that this is so, but do not see it of major significance. The boundary would clearly be the western side of the access way, wherever that was. Similarly, I accept there was a conflict, as Mrs Garland says, about the northern boundary in terms of whether it was to be the fence line or the formal existing boundary. I am less sure this uncertainty was pivotal in there being no final agreement. Looking at the evidence objectively, there does not seem much that suggests her desire for a change in the boundary was made of any significance to the discussion between the parties.
[28] A more significant issue that arose concerned what documents were at the 5 March meeting. In particular, whether a sketch map drawn by Mr Dixon was presented by him at the meeting, or some days afterward. Mr Dixon said he took it
to the meeting. However, I am satisfied that he did not, and that it was faxed to Mrs Garland and to the Merediths some days after the meeting. The fax machine that sent the map bears a name no-one apparently knew – S & J Partnership. It does not therefore attribute Mr Dixon as the sender. However, I regard Mrs Meredith’s evidence on this as important. She kept the records at the meeting, and photocopied for the parties the documents that were present at the meeting. She is adamant about what she copied and I accept her memory as being reliable.
[29] This means the sketch map was sent later. The map clearly depicts Mr Dixon’s conception of a dual ownership access way. The fact this was sent some days later reinforces my view that the access way issue remained pivotal, and that both Mr Dixon and Mrs Garland were still addressing it after the meeting in their own ways. Further, it reinforces that neither party would have considered there to be a concluded agreement until the matter was settled. At this point, after signing, Mr Dixon was still pushing for his position to be accepted.
[30] Following the meeting, instructions were given to Mr Towgood, an experienced bulldozer operator, to clear an access way. There was a dispute as to what Mr Dixon said and what Mrs Garland said to Mr Towgood, who was called as a witness. The plaintiff did not satisfy me that there was anything in this issue that supported his proposition that there was a concluded agreement. I accept Mr Towgood’s evidence on what transpired. I do not see the fact that action was taken in relation to the access way as determinative of a settled agreement. Considerable work has been done by the parties at various times without there being a settled contract. It suited both parties to have it done for differing reasons.
[31] A letter written by Mrs Garland to Mr Dixon on 10 May 2004, tends, in my mind, to confirm that no contract had been reached, or was thought to have been reached in March 2004. Not too much weight can be placed on such a letter because by 10 May 2004 it was clear Mrs Garland considered there was no contract, and the letter assumes that starting point. However, it does overall reflect a belief there had never been an agreement. I regard it as a genuine communication and I do not see it as a self-serving letter.
[32] A formal Agreement for Sale and Purchase was sent by Mr Dixon’s lawyers a week after this 10 May letter of Mrs Garland. It clearly was an attempt to regularise matters, and is said in the accompanying letter to “fairly encapsulate the intention of the parties”. It is interesting, however, that it does not reflect the Memorandum of Understanding:
· the purchase price is changed. The potential $20,000 subdivision liability of Mr Dixon is capitalised into a new price of $170,000;
· a possession date is given. It is not a date arrived at on the basis of any evidence before me;
· a deposit of $70,000 is provided for, with structured dates for payment;
· numerous necessary resource consent matters are addressed;
· the right for Mr Dixon to further subdivide is preserved;
· a water easement is expressly ruled out (something I am satisfied Mrs Garland would never have agreed to);
· the scheme plan prepared by Mrs Garland’s surveyors is accepted subject to the water easement and an issue as to where the right-of-way would end.
[33] The variations and additions reflect the lack of essential detail in the Memorandum of Understanding. I was hesitant to refer at all to this Agreement as the covering letter said it was forwarded without prejudice. However, the parties placed it before me as part of the agreed bundle. Mr Ponniah refers to it in his opening, and Mr Dixon in his brief. Any privilege would seem to have been waived.
[34] The Memorandum of Understanding contains an express clause saying that the parties will enter into a formal agreement for sale and purchase. Mr O’Neill referred me to Carruthers v Whitaker [1975] 2 NZLR 667 and Wilmott v Johnson [2003] 1 NZLR 649 as examples of the great weight that is to be placed in land sales
on the common understanding that a formal proper agreement is required. Ultimately, of course, it remains a matter of intention. However, Mr O’Neill submits it is a clause that is indicative more of a preliminary understanding than of a settled contract. Certainly this clause supports the inference that the parties were recognising that there were some significant matters still to be addressed. Mr Ponniah submits everything that was left was just detail, but I consider the clause was more than that – it was a recognition of advice being needed before it was all finalised. It is notable, for example, that a deposit was only to be payable once this further agreement was signed. Normally a vendor would want payment the moment there is an enforceable deal.
[35] One further matter from the Memorandum itself needs comment. The Memorandum provides that each of the parties is to take immediate responsibility for particular weed control. I accept that this undertaking of immediate obligation is consistent with a fixed deal. However, it does not outweigh the other indicia to which I have referred. As it happens, the gorse work that Mr Dixon was responsible for under the Memorandum was not done. Despite Mr Dixon’s view of the matter, I am satisfied that it was no fault of Mrs Garland that the gorse work did not happen and I accept Mr Towgood’s evidence on this. He testified that Mr Dixon was wrong when he alleged that Mrs Garland stopped him from doing the gorse work. He said it was not done because of the unsuitability of Mr Towgood’s bulldozer for the work.
[36] Apart from the express terms of the Memorandum itself, Mr Ponniah relied on various post 5 March matters as evidencing a concluded deal. Most of them, however, are equally consistent with the actions of an optimistic man (Mr Dixon) who thought a deal would be concluded. There was a long history of loose arrangements between the parties under which Mr Dixon did considerable work. That he did some subsequent to the Memorandum of Understanding does not necessarily mean a more concluded bargain had been reached. I see the work on the access way that was done following the agreement, and paid for by Mrs Garland, as coming within this category. Mr Dixon was willing to expend energy on getting it done because he hoped to own the subdivided lot. Mrs Garland was willing to spend money because she clearly intended to subdivide, whether it be to sell to Mr Dixon or someone else.
[37] Similarly, the actions of Mrs Garland in, for example, having a surveyor prepare a draft plan were indicative of this determination to subdivide.
[38] It is important to recall that for there to be a concluded agreement both parties must have agreed to be immediately bound. I am certainly satisfied Mrs Garland had not reached that stage. Nor, on the basis of her evidence and the Merediths, did she induce that belief in Mr Dixon. Mr Dixon may well have been more positive in his mind as to where things had got but, as I have found, he was still pushing for his concept of separate ownership. I have already found that he did stipulate that there would be no deal if he did not have separate ownership and that this stipulation remained operative at the time of signing the Memorandum.
[39] Accordingly, I find against the plaintiff on the claim that the parties entered into a contract in March 2004.
Issue Two – Specific performance of the earlier oral agreement
[40]The pleadings of the plaintiff, as amended, claim:
a)an oral agreement was reached in January 2003 and that it is evidenced by an unsigned written agreement prepared by Dorothy Meredith in May/June 2003;
b)that, under the agreement, Mr Dixon was to purchase an unspecified 25% share in the existing property;
c)that the purchase price was to be settled by -
· $40,000 plus GST (if any) to be paid on 1 June 2003;
· $20,000 plus GST (if any) to be paid on 1 December 2003;
· $10,000 per year for two years commencing June 2003, to be paid in materials and labour towards building Mrs Garland a bush studio;
d)that there would be designated areas of exclusive use;
e)that there would be a 10 metre wide access way strip.
[41] Specific performance of this agreement is sought on the basis of alleged part performance, namely:
· the payment of a $3,000 deposit;
· the payment of $2,200 by way of assistance with mortgage payments;
· gorse clearing;
· improvements to the shedottage;
· entering into further discussions, presumably about the purchase.
[42] It is common ground there was an oral agreement along the lines described. It is also common ground that the deposit was not paid by Mr Dixon on 1 June 2003.
[43] Mrs Garland says she agreed to an extension of the 1 June deposit date for one or two months, but that when this was not forthcoming the parties agreed that the contract was at an end. She says Mr Dixon reluctantly accepted this. The detail of when this happened is rather sketchy but is said to have been by way of telephone call from her to him around 6 October. More concrete evidence of Mrs Garland’s state of mind is provided by a letter she wrote on 9 October 2003. It beings:
I have been thinking about the two shared deals we have tried to get together over the past year or so.
[44] The letter goes on to say she no longer considers a shared deal a good idea, and if anything is to happen it should be along the lines of a subdivision. She expresses regret for going back on her word in relation to a shared ownership but says that Mr Dixon has done the same. There is no doubt that clearly by this time the oral agreement is over in her mind at least.
[45] Mr Dixon disputes that there was ever a time limit on the extension to the deposit. He says that on or about 5 October he rang Mrs Garland to advise her that he would put the $60,000 into her account as payment of the balance, but that she rejected this on the basis she had changed her mind. He proffered bank statements in support of his version of events. In her evidence in chief Mrs Garland says that Mr Dixon’s offer was made two days after she had already told Mr Dixon in the phone call that the offer was no longer available.
[46] The sequence of events concerning the money is not easy to resolve. The bank accounts proffered by Mr Dixon indicate the money only went into his account on 7 October. This is more consistent with Mrs Garland’s account, but not fatal to Mr Dixon’s version. He could have just got the dates wrong. It is clear that $60,000 was deposited by his partner’s mother on 7 October. However, $10,000 of the money went straight back to the mother the next day. This sequence of events is equally consistent with Mrs Garland’s recollection that she told him the deal was off before the money was offered. Certainly, the money suddenly appeared and was then almost immediately reduced by $10,000. No explanation from Mr Dixon was given as to why it was the money became available suddenly in October, when it had not been previously.
[47] It is apparent that shortly after these events the parties moved on to new negotiations, and the focus from then on was on subdivision. Mr Dixon clearly accepted at that stage that the events of 5 to 9 October had ended the shared ownership deal, albeit that he might have wished to preserve it. He thereafter consistently acted as if the agreement was at an end. Mr Ponniah accepted in closing that his argument concerning the first agreement was not strong, and that the focus of his case was on the Memorandum of Understanding. I think this properly reflects an acceptance that the parties treated the agreement as at an end and moved on to trying to sort out different options.
[48] It is not easy to fit a formal contract analysis over the top of what has been several years of loose arrangements and negotiations. However, I am satisfied that the position was reached about 8-9 October, or sometime in the preceding days, that both parties agreed the January 2003 shared ownership option was off.
[49] Addressing for completeness, however, the part performance submissions of Mr Ponniah, I am satisfied that there was no part performance such as would lead a Court to grant specific performance. Nor is there any material from which to infer that Mrs Garland induced or allowed actions pursuant to the oral agreement to continue or generally encouraged Mr Dixon to expend money and effort on the property.
[50] Mr Ponniah accepted that many of the pleaded events could not properly be part performance. Gorse clearing and work on the shedottage were no part of the 2002 contract. That contract provided for work on a separate bush studio for Mrs Garland, and that work was never done. It was silent on weed control.
[51] It is, however, common ground that Mr Dixon gave Mrs Garland $3,000 by way of deposit. It was seemingly a part payment of the initial $40,000 that was due. There was a dispute as to whether Mrs Garland ever offered to give it back. I do not resolve that, but am satisfied that it has always been recognised between the parties that whatever the ultimate outcome there needs to be a credit for it. There is no claim before me concerning it, but Mrs Garland indicated in evidence an on-going acceptance it should be either returned or credited.
[52] The other payment of $2,200 defies analysis. It was seemingly to help out Mrs Garland on another mortgage whilst she did not have the use of the deposit. There was no agreement that the $2,200 would reduce the size of, or be credited to, the deposit. It was not therefore part performance of the contract.
[53] The terms under which Mr Dixon took occupation of the shedottage in 2002 was the subject of some debate. Was the work done by Mr Dixon lieu of rent? Again, Mr Dixon and Mrs Garland had competing views. Mr Dixon said the agreement was that he would clear the land for rent. The work on the shedottage was never part of any rent arrangement. Mrs Garland, on the other hand, said the work on the cottage was indeed to be in lieu of rent. She was supported in her position by evidence from her daughter, who said she was present at the meetings when the issue was discussed. Mr Dixon, on the other hand, disputed that the daughter was ever present at any meeting, although it is accepted she was living on
the same land during the relevant time – 2002. There was no development in the evidence by either party of this conflict – for example, no information was elicited as to when the meetings occurred, where they occurred, and what the context was.
[54] Mrs Garland’s alleged arrangement concerning the work on the shedottage may seem particularly beneficial to her, as she gets a completed shed in return for occupation of what was initially a spartan shell. On the other hand, it gave Mr Dixon somewhere to live; he acknowledged occupying the land was good for his dogs and his hunting interests, and there were downstream opportunities created. These opportunities eventuated but Mr Dixon never really took advantage of them.
[55] I am satisfied that the work on the shed was done for rent. This is supported by Mr Dixon’s own analysis. At the meeting of 5 March 2004, he presented an itemised account for work done on the shedottage. This work represented the money and time he had expended on the shedottage. He said he would walk away if he were paid that money – about $18,000. Interestingly, however, Mr Dixon then deducted $4,000 from the $18,000 as a credit for two years rent. If the work he had done on the section was to be for rent, there would have been no need for him to then acknowledge a rent credit against expenses incurred on the shedottage.
[56] It is not necessary for me to resolve other factual conflicts. I find that the earlier oral agreement was terminated by consent, but at the instigation of Mrs Garland. Mr Dixon had not paid the deposit. This allowed Mrs Garland to reflect on the proposal. She reached the view that a more traditional subdivision proposal would be better, and so suggested they scrap the talk of shared ownership and move onto that. Mr Dixon reluctantly agreed.
Conclusion
[57]I find:
a)the first oral agreement was terminated by agreement;
b)there was never a second contract, and the parties did not intend to be immediately bound by the agreement reached on the evening of 5 March and signed two days later. Important items were still to be settled, and at that time Mr Dixon would not agree to anything that did not include separate ownership of his access way.
[58] The defendant is entitled to 2B scale costs, together with reasonable disbursements, to be fixed by the Registrar if necessary. I am also to fix costs for the caveat proceedings. The parties were agreed some discounting would be appropriate, given a measure of overlap. I accordingly award the defendant 50% of scale costs on the caveat proceedings, again with reasonable disbursements.
[59] Finally, I direct that caveat number X6015079.1 registered by Howell Dixon against the land owned by Kathleen Garland under Certificate of Title SA 70A/457 (South Auckland Registry) be discharged.
Simon France J
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