Chapman v Batman [2004] NSWSC 2

Reported Decision : (2004) DFC 95-293

New South Wales Supreme Court

CITATION : Chapman v Batman [2004] NSWSC 2 HEARING DATE(S) : 12/12/03 JUDGMENT DATE : 3 February 2004 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Contract declared void

CATCHWORDS : FAMILY LAW AND CHILD WELFARE - de facto relationships - termination agreement under Property (Relationships) Act - susceptibility to avoidance under Contracts Review Act - CONTRACTS - unjust contracts - avoidance by court - principles to be applied LEGISLATION CITED : Contracts Review Act 1980, ss.7, 9 Property (Relationships) Act 1984, s.46 CASES CITED : Elkofairi v Permanent Trustee Co Ltd (2003) 11 BPR 20,841 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 PARTIES : Glenda Faye Chapman - Plaintiff James Batman - Defendant FILE NUMBER(S) : SC 1899/02 COUNSEL : Mr M D Broun QC/Mr O W Harrison - Plaintiff Ex parte SOLICITORS : Chegwidden Solicitors - Plaintiff

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

TUESDAY, 3 FEBRUARY 2004

1899/02 – GLENDA FAYE CHAPMAN v JAMES BATMAN JUDGMENT 1 By her statement of claim filed on 14 March 2002, the plaintiff seeks relief under the Contracts Review Act 1980 in respect of an agreement made between her and the defendant dated 22 December 1997. The agreement in question is a termination agreement made under the Property (Relationships) Act 1984 (then styled the De Facto Relationships Act 1984). The parties lived together in de facto relationship from about 1982 until 10 December 1997. 2 The matter came before me on 12 December 2003, almost 21 months after the filing of the statement of claim. There was no appearance by the defendant and it seems that difficulties in locating him were the cause of the long delay between filing of the statement of claim and the hearing. 3 The absence of the defendant caused me to pay particular attention to the matter of service. An order for substituted service was made by Registrar Berecry on 27 July 2003. Evidence before the court at that time was that the defendant had left Australia and was thought to be living on an Indian Reservation at Yellowtail, Montana, USA. The plaintiff's solicitor deposed to having obtained a telephone number in the United States at which he spoke to a person purporting to be the defendant who refused to give his address and, when told that the address was needed for the purposes of service in these proceedings, said, "You should send everything to Peter Fowler". Mr Fowler is a solicitor practising at Caringbah. The Registrar ordered, pursuant to Part 9 rule 10 of the Supreme Court Rules, that the statement of claim be taken to have been served after seven days from the posting of it by ordinary prepaid post to Mr Fowler at his office address at Caringbah. 4 As it happened, the order for substituted service was not complied with strictly according to its terms. The statement of claim, with a covering letter, was sent to Mr Fowler's Caringbah office through the Document Exchange instead of by ordinary prepaid post. However, the plaintiff's solicitor received a letter from Mr Fowler dated 21 August 2003 acknowledging receipt. I am therefore satisfied that the order was substantially complied with and that the statement of claim came to Mr Fowler's attention as intended. The letter from Mr Fowler also said: "Unfortunately I still do not have instructions from Mr Batman and cannot see how I can possibly attended to filing an Appearance or a Defence. If and when I receive instructions from Mr Batman I will let you know." 5 No notice of appearance or defence has been filed by the defendant, despite a direction of the court that each be filed by 18 August 2003. By letter dated 8 December 2003, the plaintiff's solicitor notified Mr Fowler that the matter was listed for directions on 12 December 2003 and "we intend to seek to have the matter transferred to a duty judge". It was in that way that the matter came before me on the latter date, having been referred to me as Duty Judge by the Registrar. I caused the matter to be called outside the Duty Judge's court. There was no appearance for the defendant. I am satisfied that it is appropriate for me to deal with the claims in the plaintiff's statement of claim without having heard from the defendant. 6 The termination agreement between the plaintiff and the defendant is dated 22 December 1997. It recited that the parties had lived in a de facto relationship from about 1982 to 10 December 1997 and that, since about July 1995, they had occupied a property in Holmes Street, Kingsford owned by the plaintiff and said to have a value of between $420,000 and $450,000, which property was subject to a mortgage securing a loan of "about $68,000". The operative provisions dealt almost exclusively with the Holmes Street property. Their substance and effect was that the defendant would pay off one-half of the loan balance by 31 July 1998 and the plaintiff would, from the date of the deed, hold the property in trust for the two of them in equal shares, at the same time enjoying a right of possession for life or earlier marriage or de facto relationship and with the plaintiff paying outgoings during her occupation. There were acknowledgments that each party was to retain and enjoy his or her other property. There were also mutual releases of claims under statutory provisions dealing with de facto relationships. 7 The counterpart of the deed executed by the defendant and put into evidence by the plaintiff carries a certificate dated 22 December 1997 in Form 8 under the De Facto Relationships Act 1984 (as the Property (Relationships) Act 1984 then was) signed by Mr Fowler and saying that he had given the defendant independent advice on the matters referred to in s.47(1)(d) of that Act. The reference to s.47(1)(d) is obviously a reference to the section as it existed before the Financial Services Reform (Consequential Amendments) Act 2002. Evidence given by the plaintiff warrants the inference that, on 18 December 1997, she was similarly given such independent advice by Mr Hopper, a volunteer solicitor she contacted through the Salvation Army. The plaintiff does not, however, recall what Mr Hopper said to her. The plaintiff deposes that the deed was prepared by a solicitor retained by the defendant, that the defendant gave it to her and said she had to see a solicitor about it (and sign it) before he went away, that she contacted Mr Hopper through the Salvation Army and that, when she went to see Mr Hopper, she said words to the effect, "I am here to see you about this. I have been told by my partner I have to sign this". 8 It is conceded by the plaintiff that the deed is a "termination agreement" as defined by s.44(1) of the Property (Relationships) Act and that the formalities envisaged by s.47(1) (as in force at the material time) were observed in relation to its formation. The plaintiff also points to s.46 of the Act as to the status and effect of such an agreement: "Except as otherwise provided by this Part, a domestic relationship agreement or termination agreement shall be subject to and enforceable in accordance with the law of contract, including, without limiting the generality of this section, the Contracts Review Act 1980." 9 The plaintiff contends that she is entitled to relief, in relation to the termination agreement, under the provisions of the Contracts Review Act 1980 the applicability of which is expressly recognised by s.46 of the Property (Relationships) Act. The plaintiff says that the court should, in terms of s.7(1) of the Contracts Review Act, find that the deed was "unjust in the circumstances relating to the contract at the time it was made" and, applying that section, exercise the statutory discretion to declare the contract wholly void (s.7(1)(b)). In approaching the issue central to s.7(1), the court must proceed in accordance with s.9: "(1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract.