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Supreme Court 30 March 2001

Cavasinni v Cavasinni

[2001] NSWSC 223

Other
CONTRACTS [7][17] WHETHER A CONTRACT AGREEMENT BETWEEN BROTHERS TO SELL LAND ABANDONMENT TRUST STATUTE OF FRAUDS

Citation: Cavasinni v Cavasinni [2001] NSWSC 223
Court: Supreme Court of New South Wales, Equity Division
Date: 30 March 2001
Judge(s): Young J

Background

Two sets of proceedings arose from a dispute between two branches of the same family. One branch (the plaintiffs in the land claim) alleged that an oral agreement had been reached in 1983 for the purchase of a 10-metre-wide strip of land from the other branch (the defendants) for $20,000. Both sides acknowledged that words to that effect had been exchanged and that both parties had subsequently attended a solicitor's office to discuss the matter.

The parties' solicitor indicated that survey plans, council approval and formal documentation would all be required before the transaction could be completed. Survey plans were obtained and lodged with the local council, which granted conditional approval. However, certain conditions attached to that approval were never fulfilled, no plan was ever registered, and the matter lay dormant for many years before the plaintiffs commenced proceedings for specific performance in 1998 and 1999.

A separate but related dispute concerned the accounting of a joint venture between family members to develop townhouses at Merrylands. The plaintiffs in that claim alleged that one party had contributed more than his equal share of capital and sought an account of the joint venture proceeds.

  • Whether the oral discussions between the brothers in 1983 constituted a binding contract for the sale of the land, or whether the parties intended to be bound only once formal documents were exchanged
  • Whether, if a contract had been formed, it had subsequently been abandoned
  • Whether the acts relied upon by the plaintiffs (including lodging plans with the council and making payments) were sufficient acts of part performance to take the agreement outside the writing requirement under s 54A of the Conveyancing Act 1919
  • Whether the vendor had become a trustee for the purchaser upon any relevant point in time
  • Whether the joint venture constituted a partnership and, if so, what accounting obligations followed

Decision

The Land Claim

Young J found that the conversations between the brothers did not give rise to a binding contract. The solicitor's statement at the meeting, to the effect that formal documents would need to be prepared and signed, indicated that both parties contemplated that they would not be bound until formal exchange of contracts occurred. This placed the arrangement in the third category identified in Masters v Cameron (1954) 91 CLR 353, meaning the parties intended the legal relationship to come into existence only upon execution of formal documentation. No such documentation was ever executed.

Even if a contract had been formed, the court found that it had been abandoned. The plaintiffs took no steps to pursue the transaction for many years, and the circumstances were consistent with both parties having mutually abandoned whatever arrangement had been reached. On the question of part performance, the acts relied upon by the plaintiffs (principally lodging plans with the council and making cash payments that were disputed) were not sufficiently unequivocal to satisfy the equitable doctrine. Part performance requires acts that point to the existence of a contract of the kind alleged and are inexplicable on any other basis. The court found that threshold was not met. Fred therefore succeeded on the land claim.

The Money Claim

The court accepted that the joint venture to develop the Merrylands townhouses had the character of a partnership, being a single business venture entered into on the basis of equal contributions and equal sharing of profits and losses. Under s 24(3) of the Partnership Act 1892, a partner who has contributed more than their fair share of capital is entitled to interest at 7% per annum from the date of excess contribution. The court indicated that, absent consent to a verdict, the appropriate order was a reference to the Master to take accounts, with one of the plaintiffs as the accounting party. The court noted that if the parties consented to a verdict, the figure would be $211,292 (comprising $125,582 in principal and $85,710 in interest at 7% over approximately nine and three-quarter years).

Orders Made

  • The land claim (proceedings 1342/99) was resolved in favour of Fred, the registered proprietor; costs of the land claim were awarded to Fred
  • On the money claim (proceedings 3225/98), the matter was referred to the Master to take accounts, with the relevant plaintiff as the accounting party
  • No costs order was made on the money claim pending the outcome of the accounting, with the court indicating that if a consent verdict of $211,292 was entered, each party should bear their own costs
  • The proceedings were stood over to 24 April 2001 for further argument and the filing of short minutes

Key Takeaways

  • An oral agreement to sell land will not constitute a binding contract where, at the time of the agreement, the parties clearly contemplated that formal documentation would be prepared and exchanged before either side became legally bound. The court applied the Masters v Cameron categories to find this was such a case.

  • Abandonment of a contract requires conduct by both parties consistent with a mutual intention to treat the contract as no longer on foot. A prolonged failure to pursue contractual steps, taken alongside other surrounding circumstances, can satisfy that test.

  • Acts of part performance must be unequivocal: they must point specifically to the existence of a contract of the kind alleged and be incapable of explanation by reference to some other relationship or purpose. Lodging council plans and making disputed cash payments did not meet that standard here.

  • A single-venture joint arrangement can constitute a partnership where it involves shared capital contributions and equal sharing of profits and losses, attracting the statutory entitlement to interest under s 24(3) of the Partnership Act 1892 where one party has contributed more than their proportionate share.

  • Where accounts between former partners are in dispute and not fully resolved, the appropriate procedural course is a reference to take accounts rather than a final monetary judgment, unless the parties consent to a specific figure.

Legislation and Cases Referenced

Legislation
- Conveyancing Act 1919 (NSW), s 54A
- Limitation Act 1969 (NSW), ss 27(2), 36, 47
- Partnership Act 1892 (NSW), s 24(3)

Cases
- Masters v Cameron (1954) 91 CLR 353
- Balfour v Balfour [1919] 2 KB 571
- Chang v Registrar of Titles (1976) 137 CLR 177
- DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
- Eccles v Bryant [1948] Ch 93
- Edwards v Skyways Ltd [1964] 1 WLR 349
- Fitzgerald v Masters (1956) 95 CLR 420
- Paal Wilson & Co a/s v Partenreederei Hannah Blumenthal [1983] 1 AC 854
- Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274
- United Dominions Corp Ltd v Bryan Pty Ltd (1985) 157 CLR 1
- Wakeling v Ripley (1951) 51 SR (NSW) 183
- JC Williamson Ltd v Lukey & Mulholland (1931) 45 CLR 282
- Young v Queensland Trustees Limited (1956) 99 CLR 560
- McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656
- McCann v By-Dezign Pty Ltd [2001] NSWSC 161
- Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327