STEVENS v HAYES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY (1), PRIESTLEY (2) AND MEAGHER (3) JJA 1 August 1989, 8 August 1989 [1989] NSWCA 200 Appeal from Equity Division — Arrangement between deceased and defendants for house to be bought, renovated and sold — Proceeds to be divided between them — Administratrix contested whether arrangement was made — Property sold and net proceeds held in Court — Held arrangement was made. Lack of writing — Not prevent enforcement of arrangement for division of proceeds — Partnership or joint venture — Proceeds held subject to terms of division in arrangement. Uncertainty — Any initial uncertainty not affect entitlement to share of fund held in Court. ORDER Appeal dismissed with costs. Mahoney JA The late Mr Stevens died on 19 May 1982. The plaintiff is his widow and his administratrix. When he died the land here in question was registered in his name. The defendants allege that the deceased held the land subject to an agreement between them that it be sold and the net proceeds divided between them. The plaintiff contested that there was such an agreement. The difference between them came before the court in the following way. At the date of the deceased's death the land was subject to two charges: one in favour of a building society for a sum in excess of $19,000; and one in favour of a finance company for something in excess of $5,000. The land was sold by the building society in accordance with its security. After deductions, an amount remained of $12,614.03. That amount was paid into court in September 1984 and is still held in court. In 1985 the plaintiff, as administratrix, brought proceedings on summons for a declaration that she was entitled as administratrix to such moneys and for payment of them to her. The defendants, in a cross claim, sought a declaration that they were "entitled each as to one third of the moneys paid into court" and for payment out accordingly. The proceeding was heard before Cohen J on 21 February 1986. On that day his Honour found in favour of the defendants and made orders accordingly. The plaintiff has appealed to this Court against his Honour's judgment. Before going to the issues of substance argued on the appeal, it is proper that certain things be recorded. It appears from what has been put to the court that, upon the hearing before Cohen J, the assumption was that, if his Honour found for the plaintiff, the whole of the moneys would be ordered to be paid to her; if he found for the defendants, they would receive, and receive only, each one third of the amount held in court. No issue was then taken to the quantification of the claims of the parties. It was not, for example, suggested that calculating the amounts to which the defendants were in the event entitled, the amount payable to the finance company should not have been deducted from the proceeds of the sale or that the amount paid to the finance company should have been debited, in effect, against any entitlement to the proceeds of sale which the deceased may have had. No point of this kind has been taken upon appeal. It is proper that the 2 UNREPORTED JUDGMENTS court therefore deal with the substantial issues raised below and before this Court for determination and without reference to matters of that kind. Mr AW Street, who now appears for the plaintiff, made submissions in relation to a number of matters. As far as is necessary for the determination of the present appeal, his submissions fell into three groups. He submitted, first, that his Honour was wrong in finding that there was between the parties an agreement of the kind on which the defendants based their claim; second, he submitted that, if there was such an agreement, their claim was barred for lack of the appropriate writing; and, third, that the agreement was unenforceable for uncertainty. It will be convenient to deal with the submissions by reference to these matters. 1. The arrangement: The defendants' case was that an agreement or arrangement was made between them and the deceased in about August 1977. There had been discussions and dealings between the parties prior to that time in relation to another or other matters. In an affidavit in evidence at the trial, Mr Hayes stated the arrangement that was made in the following terms: "In about August 1977 I had a conversation with Albert Stevens at my home in Katoomba. There was a general discussion about real estate in the Blue Mountains. Thereafter he said to me, 'I'd like to get into a property and to do it up. It would keep me occupied and off the drink. I've got some money but I wouldn't know how to go about it.' I said, 've seen a place in Dunmore Street that's a good buy. It would only cost a couple of thousand to do it up. The price is less than $13,000 and it should be worth $20,000 or more done up.' He said, Well I've got the deposit and money to do it up. How about I buy it, we all work together to do it up, and we use some of the materials you' ve got lying around from other jobs in the renovation. When it's finished we' ll sell it and split the difference between the purchase price and the sale price three ways, one third for me and one third each for you and Anna. We won't take off the sale price the amounts we' ve put in for renovations or the cost of the materials.' I said, 'That sounds alright, I'll arrange the finance in your name and look after the purchase. I'll also do the selling.'" His Honour held that there was such an arrangement or an arrangement generally to that effect. Mr Street submitted that his Honour's finding was wrong and that this Court, as on a re-hearing, should come to a different conclusion. Mr and Mrs Hayes gave evidence that they had acted upon that agreement or arrangement or generally in accordance with it. His Honour detailed the evidence which was given and it is not necessary for me to recount it. In short, Mr Hayes, as his Honour found, approached the agent for the property and took part in arranging the purchase. He saw a Mr Scott, the secretary of the building society, and arranged for a loan of $15,000 to be obtained on the property. Mr and Mrs Hayes worked together with Mr Stevens in renovating the house, over a period of some six or seven weeks. And, in the renovation, the deceased provided goods and paid for certain work and Mr and Mrs Hayes did work and provided certain materials. The work was substantially completed during the period of the contract and before the date of settlement. It had been the original intention that the house be sold after renovation and at or about the time of settlement. This did not happen. In explanation, Mr Hayes said that the period was a bad period for sale in the district and that later in the year values dropped and it was not a good time to sell. Various explanations were given why the property was not sold but in fact was rented. The rent was used to pay the interest and outgoings on the mortgage and, perhaps, otherwise. Ultimately there was discussion between the parties as to the URJ STEVENS v HAYES (Mahoney JA) 3 sale of the property and the deceased at one stage said that it would be sold when it suited him. It was not in fact sold before his death. Mr Street submitted that this Court should conclude that no agreement or arrangement of the suggested kind took place. The only direct evidence available as to the arrangement came from Mr and Mrs Hayes. Mr Hayes gave primary evidence as to the conversation and he was supported by Mrs Hayes. If their evidence be accepted, the agreement or arrangement, or one substantially of the kind suggested, was made. His Honour considered carefully whether he should accept the defendants' evidence in this regard. He properly directed himself as to the manner in which the evidence should be approached. The defendants' claim was against a deceased person and there was, it would appear, no serious contest as to the principles applicable in such a case. And his Honour examined carefully the evidence given and the manner of its giving. I am inclined to the view that, in determining to accept the defendants' evidence, his Honour was influenced by the advantage which he had in seeing and hearing the witnesses. Mr Street was, I think, not disposed to contest this. On that basis, I see no sufficient ground for this Court interfering with his Honour's conclusion in this regard. The principles upon which an appellate court must act in such a case are not in dispute. There was, eg, no misuse or failure properly to use the advantage which his Honour as a trial judge had. For the plaintiff, it was suggested that there were indications in the evidence inconsistent with the existence of such an agreement or arrangement. Reference was made, for example, to the fact that, as it was suggested, the parties in what they did departed from what had been agreed or arranged and, the suggestion was, this cast doubt upon the evidence given as to what had been said. It was submitted that the failure of the defendants effectively to call for a sale of the property earlier or to press their claim upon Mr Stevens suggested that they had no such claim as was suggested. And the acts of Mr Stevens in charging the property to the finance company suggested, it was put, that he saw himself as the owner of the property. Some of the matters to which Mr Street referred are not without cogency. But at the end, I do not think that they should lead to the rejection of the defendants' evidence as to what took place in August 1977. The defendants did work upon the property in the manner to which I have referred: it was not, I think, suggested otherwise. There was no reason why they should do so unless there was in existence some arrangement for their benefit. The evidence given by Mrs Hayes as to her close relationship with Mr Stevens and the effect which, as I would infer, it continued to have upon her provides at least some indication as to why the matter was not pressed, or pressed by litigation, by the defendants. Such departures as were made from the original agreement or arrangement are, I think, understandable having regard to the nature and scope of it. Mr Stevens was repaid his deposit, not on the sale but out of the loan raised when the property was contracted to be bought. And the property was sold, not immediately but only much later, by the mortgagee. But the fact that there were changes such as these is not, I think, a matter which should lead to the conclusion that the original agreement or arrangement was not made. The changes were, I think, the kinds of changes which might be made by parties of this kind and in these circumstances, in the working out of their relationship. 4 UNREPORTED JUDGMENTS I have dealt with these matters at some length in deference to Mr Street's submissions. However, having considered all of the submissions which have been made, I am of the same opinion as his Honour upon this aspect of the matter. 2. The lack of writing: It was submitted for the plaintiff that the agreement was either an agreement concerning an interest in land or one providing for an express declaration of trust and that therefore, in accordance with the Conveyancing Act 1919, it was unenforceable in the absence of appropriate writing. At the trial, in reply to such a submission, the defendants appear to have submitted that there was part performance of the agreement or arrangement sufficient to take it out of the statutory requirements. His Honour accepted that the defendants were not barred by the statutory requirements. I do not differ in principle from what his Honour found. But I would prefer to deal with the matter upon a different basis. What is in issue is the interests of the parties in the sum now held in court. It may be arguable that, in considering the rights of the parties to a sum held by the court, the merits and not the formalities should determine their entitlements. But, however that be, I am of opinion that what was said and done by the parties imposed a trust upon the deceased in respect of the land so that the proceeds of sale of it, as now in court, are divisible between the parties. I incline to the view that the agreement or arrangement made between the parties in August 1977 was of the nature of a partnership or joint venture. On either basis, the relevant asset, viz, the land would be held as an asset of the partnership or joint venture in accordance either with the law of partnership or the fiduciary obligations existing between joint venturers. The effect of those obligations would be that, on the completion of the partnership or joint venture, the reduction of the assets into money and the discharge of the obligations, the moneys would be held divisible between the parties in the shares to which they have agreed. It is not necessary for present purposes to pursue the distinctions and qualifications to which the conclusions which I have stated are or would be subject. In the end, it is the money, as the proceeds of the partnership or joint venture, which is to be divided. Whether the interests of the parties be personal or proprietary, the basis of the division is properly as I have indicated. 3. Uncertainty: Mr Street submitted that the terms of the arrangements were so uncertain as to be, in contractual law, unenforceable. This, the argument suggested, went to the existence of the rights claimed by the defendants. I have referred to what took place as an agreement or arrangement. I do not think that, insofar as it was an agreement, it was bad for uncertainty. But I incline to the view that what took place was or at least functioned as an arrangement according to which the parties acted and that it was that arrangement and what they said and did consequent upon it which resulted in their rights to the ultimate proceeds being as the defendants claimed. In such a context, any original uncertainty has no relevant operation. The appeal should be dismissed with costs. The learned judge made a special order as to costs of the trial: he ordered that, with a certain exception, they be paid out of the moneys held in court before payment out to the parties. There has been no cross appeal against that order. I see no reason why the ordinary result upon the dismissal of the appeal should not follow in respect of the costs of the appeal. The costs of the trial will remain as his Honour ordered. Priestley JA I agree with Mahoney JA. URJ STEVENS v HAYES (Meagher JA) Meagher JA I agree with Mahoney JA. Appeal dismissed with costs. 5 Counsel for the Appellant: AW Street Solicitors for the Appellant: Windeyer Dibbs Counsel for the Respondent: A Lidden 10 Solicitors for the Respondent: RW Quilty and Co