Citation: Khouri v Khoury [2004] NSWSC 770
Court: Supreme Court of New South Wales, Equity Division
Date: 26 August 2004
Judge(s): Barrett J
Background
The parties were three adult siblings from the same Lebanese-Australian family. The two defendants, a brother and sister, were registered as co-owners in equal shares of a residential property at Bass Hill, which they had purchased in 1988 for $175,000. Their parents lived in the property until 1996.
The plaintiff, a middle sibling, claimed that in 1992 he entered into an oral agreement with his brother (one of the defendants) under which he paid $30,000 and agreed to cover the brother's share of ongoing mortgage repayments. In return, the brother allegedly promised either to transfer his half-interest in the property to the plaintiff or to hold it on trust for him.
The brother denied any such agreement with the plaintiff, instead asserting that he had agreed with his co-owner sister to give her his share in exchange for her meeting his loan repayments. The sister supported that version. Because the alleged agreement was oral, questions about the Statute of Frauds and the doctrine of part performance became central to the dispute.
Legal Issues
- Whether an oral agreement existed between the plaintiff and the defendant, and if so, what its proper construction was (an agreement to create a trust, or an agreement to transfer land)
- Whether sections 23C and 54A of the Conveyancing Act 1919 (the modern embodiment of the Statute of Frauds) applied to bar enforcement of that oral agreement
- If the Statute of Frauds did apply, whether the plaintiff had performed sufficient acts of part performance to render the oral agreement enforceable
- Whether the equitable defence of laches defeated the plaintiff's claim due to his delay in asserting his interest
Decision
Existence of the agreement. Barrett J accepted the plaintiff's account that an oral agreement was reached in 1992. Although no bank records corroborated the $30,000 payment, the plaintiff's evidence was supported cumulatively by several pieces of evidence, including a document prepared by the late bishop of the family's church, which referred to the plaintiff's interest in the property. The defendant's competing account of an agreement with his sister was found less convincing in light of this and other evidence.
Characterisation and the Statute of Frauds. The court characterised the agreement as one requiring the defendant to transfer his legal interest in the property rather than merely to hold it on trust. This meant the Statute of Frauds provisions in the Conveyancing Act did apply, and the oral agreement could not be enforced in the ordinary way without writing. However, the plaintiff pressed his case on part performance.
Part performance. Barrett J was satisfied that the plaintiff's conduct, including the payment of $30,000 and the subsequent payment of approximately $70,000 routed through the bishop to cover the defendant's mortgage share, constituted sufficient acts of part performance. Those acts were adequately referable to the agreement alleged, allowing the plaintiff to overcome the Statute of Frauds bar and obtain specific performance.
Laches. The defendants argued that the plaintiff had waited approximately ten years before formally asserting his interest by lodging a caveat in August 2002. Barrett J rejected the laches defence, finding that in the context of close family dealings, a reasonable person would not have pressed the matter earlier. The caveat was lodged promptly once the sister indicated she intended to sell the property without accounting to the plaintiff.
Orders Made
- Declaration that the defendant (Peter) holds his undivided half-interest in the property at 93 Johnston Road, Bass Hill on trust for the plaintiff
- Parties directed to file short minutes of orders within 21 days to give effect to the judgment
- Costs to follow the event, with liberty to either party to seek a hearing on costs
Key Takeaways
- An oral agreement to transfer a legal interest in land, rather than merely to hold it on trust, engages the Statute of Frauds provisions in ss 23C and 54A of the Conveyancing Act 1919, requiring either writing or sufficient part performance for enforcement.
- Part performance can be established by a combination of acts, such as a substantial lump-sum payment and ongoing contributions to mortgage repayments, where those acts are adequately referable to the alleged contract.
- In family property disputes, the absence of formal documentary evidence (such as bank records) does not automatically defeat a party's claim; courts will assess the totality of available evidence, including informal documents prepared by third parties.
- The laches defence requires more than mere delay: the defendant must show the claimant's delay was excessive compared to how a reasonably assiduous person would have acted. Here, the Supreme Court found that delay within a close family context, where no inconsistent dealing had yet occurred, did not attract laches.
- Where part performance is established, equity will intervene to prevent a party from using the Statute of Frauds as a shield against an otherwise proven oral agreement relating to land.
Legislation and Cases Referenced
Legislation
- Conveyancing Act 1919 (NSW), ss 23C, 54A
- Evidence Act 1995 (NSW), s 63
- Statute of Frauds
Cases
- Australian and New Zealand Banking Group Ltd v Widin (1990) 102 ALR 289
- Baloglow v Konstantinidis & Ors (2001) 11 BPR 20,721
- Barclay v Messenger (1874) 30 LT 351
- Brittain v Rossiter (1879) 11 QBD 123
- Clinan v Cooke (1802) 1 Sch & Lef 40
- Eads v Williams (1854) 4 De G M & G 674
- Fletcher v Burns, NSWCA, unreported, 19 March 1997
- Lamshed v Lamshed (1963) 109 CLR 440
- Maddison v Alderson (1883) 8 App Cas 467
- McBride v Sandland (1918) 25 CLR 69
- Miller & Aldworth Ltd v Sharp [1899] 1 Ch 622
- Regent v Millett (1976) 133 CLR 679
- Steadman v Steadman [1976] AC 536
- Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387