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Supreme Court 9 November 2001

Kelly v Clarke

[2001] NSWSC 1010

Other
CONTRACTS [77] GENERAL CONTRACTUAL PRINCIPLES STATUTE OF FRAUDS, S 4 NON COMPLIANCE WITH STATUTE DOCTRINE OF PART PERFORMANCE ACTS CONSTITUTING PAST PERFORMANCE

Citation: Kelly v Clarke [2001] NSWSC 1010
Court: Supreme Court of New South Wales (Equity Division)
Date: 9 November 2001
Judge(s): Hamilton J

Background

The plaintiff and defendant were former de facto partners who had purchased a residential property at Arncliffe as joint tenants in October 1996. Their relationship ended in late January or early February 1997, after approximately two years and eight months of cohabitation. No children were born of the relationship.

After the relationship ended, the plaintiff claimed he entered into an oral agreement with the defendant to purchase her half share of the property. He said he paid her $10,000 as the agreed price and subsequently took over the management of the property, collecting rents and assuming associated liabilities. The defendant denied that any such agreement had been made.

The plaintiff sought specific performance of the alleged oral contract. In the alternative, he sought a property adjustment order under the Property (Relationships) Act 1984 (PRA). The defendant denied the contract, relied on the writing requirement in s 54A of the Conveyancing Act 1919, and filed a cross-claim under the PRA seeking a sale of the property and an equal division of proceeds.

  • Whether an oral contract for the sale of the defendant's half share of the property was made between the parties
  • Whether the plaintiff's acts after the alleged agreement constituted sufficient part performance to take the contract outside the writing requirement in s 54A of the Conveyancing Act 1919
  • Whether, if the oral contract claim failed, either party was entitled to a property adjustment order under s 20 of the Property (Relationships) Act 1984
  • At what date property values should be assessed when making any PRA adjustment

Decision

Hamilton J preferred the plaintiff's evidence over the defendant's where they conflicted, noting that the plaintiff had been willing to make concessions against his own interests during cross-examination, and that independent evidence supported his version of key facts. The court found that an oral contract for the purchase of the defendant's half share had in fact been made.

On the Statute of Frauds issue, the defendant argued that s 54A of the Conveyancing Act required any contract for the disposition of land to be in writing, rendering the oral agreement unenforceable. The plaintiff responded with the equitable doctrine of part performance, which allows an oral contract relating to land to be enforced where one party has taken acts sufficiently referable to the contract. The court found that the plaintiff's payment of the $10,000 agreed price, his entry into receipt of rents from the property, and his assumption of liabilities associated with the property collectively constituted sufficient acts of part performance. Specific performance of the oral contract was ordered accordingly.

Because the specific performance claim succeeded, the court did not need to determine the plaintiff's alternative PRA claim. However, Hamilton J addressed the defendant's cross-claim under the PRA. He concluded that no adjustment of proprietary rights was warranted and dismissed the cross-claim. The court also held that, if a PRA order had been necessary, the appropriate date for valuing assets would have been the date of separation rather than the date of hearing. The reasoning was that the plaintiff had fulfilled his contractual obligations shortly after separation, and any subsequent increase in the property's value resulted solely from the defendant's failure to transfer her share as she was obliged to do.

Orders Made

• No adjustment of proprietary rights under s 20(1) of the Property Relations Act
• The defendant's cross-claim should fail
• The defendant should transfer her estate or interest in the property to the plaintiff
• Short minutes to be brought in to encompass the decisions
• Costs to be dealt with at the time of short minutes

Key Takeaways

  • Payment of an agreed purchase price, combined with entry into receipt of rents and assumption of property liabilities, can constitute sufficient acts of part performance to overcome the writing requirement for contracts for the disposition of land under s 54A of the Conveyancing Act 1919.
  • The equitable doctrine of part performance requires acts that are sufficiently referable to the alleged contract; a combination of financial and possessory acts directed at the subject property can satisfy that standard.
  • Under the Property (Relationships) Act 1984, the default position is that assets are valued at the date of hearing, but the court may depart from this where the circumstances warrant it, including where one party's failure to perform an obligation has caused the delay that produced the increase in value.
  • In dismissing the defendant's PRA cross-claim, Hamilton J found that no adjustment of proprietary rights between the parties was just and equitable once the oral contract was established and performed on the plaintiff's side.
  • Both parties' PRA claims were out of time, but neither opposed an extension, and the court indicated it would have granted one had PRA orders become necessary.

Legislation and Cases Referenced

Legislation:
- Conveyancing Act 1919 (NSW), s 54A
- Property (Relationships) Act 1984 (NSW), s 20

Cases:
- Cooney v Burns (1922) 30 CLR 216
- Evans v Marmont (1997) 42 NSWLR 70
- Jones v Grech (2001) DFC 95-234
- Maddison v Alderson (1883) 8 App Cas 467
- Parker v Parker (1993) 16 Fam LR 863
- Steadman v Steadman [1976] AC 536