Ford v Henry [2009] NSWSC 147

New South Wales Supreme Court

CITATION : Ford v Henry [2009] NSWSC 147

HEARING DATE(S) : 27 February 2009

JUDGMENT DATE : 13 March 2009

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : Declaration that agreement is valid and binding; declaration as to beneficial interests of parties; orders for trust for sale; cross-claim dismissed.

CATCHWORDS : CONTRACT - parties to terms of settlement intend to obtain consent orders - intention later abandoned - whether intention to be contractually bound - whether grounds for orders under Contracts Review Act - FAMILY LAW AND CHILD WELFARE - de facto relationships - termination agreement - whether binding - whether solicitors' certificates complied with s 47 - consequences of non-compliance

Contracts Review Act 1980 (NSW) ss 7, 9 LEGISLATION CITED : Property (Relationships) Act 1984 (NSW), ss 14, 17, 18, 20, 21, 44, 46, 47, 48 Property (Relationships) Regulation 2005 (NSW), Form 3

CATEGORY : Principal judgment

PARTIES : Debra Anne Ford (Plaintiff/Cross-Defendant) George Francis Henry (Defendant/Cross-Claimant)

FILE NUMBER(S) : SC 5854/07

COUNSEL : T J Morahan (Plaintiff/Cross-Defendant) E Cohen (Defendant/Cross-Claimant)

SOLICITORS : Hozack Clisdell Lawyers (Plaintiff/Cross-Defendant) Nicholl & Co (Defendant/Cross-Claimant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

FRIDAY 13 MARCH 2009

5854/07 DEBRA ANNE FORD V GEORGE FRANCIS HENRY JUDGMENT 1 HIS HONOUR: By a summons filed on 5 December 2007, the plaintiff (Ms Ford) seeks relief designed to enforce, as a contract, a document signed by the parties entitled "Terms of Settlement" dated 2 September 2005. Ms Ford seeks a declaration that the agreement reached between the parties and evidenced by that document is a valid and binding agreement. (The summons adds the words "pursuant to section 56 of the Property (Relationships) Act 1984 (NSW)" but the parties agreed at the hearing that that reference was nonsensical and that the claim to relief should be treated as a claim for a declaration of the validity of the contract generally.) Ms Ford also seeks a declaration that she and the defendant, Mr Henry, are beneficially entitled to a property at Jeremadra ("the Property") in the shares of 60% to Mr Henry and 40% to her, and orders for the appointment of trustees for sale. The proposed trustees have consented to that appointment. 2 Mr Henry has filed a cross-claim seeking a declaration that the alleged agreement is not a valid and binding termination agreement under the Property (Relationships) Act 1984 (NSW) ("the PR Act") and in the event that the court determines that the agreement is a valid termination agreement under that Act, relief under the Contracts Review Act 1980 (NSW) ("the CR Act") by way of an order that the agreement is wholly void. Grounds for this relief are pleaded and I shall consider them later in these reasons for judgment. Background facts 3 Ms Ford and Mr Henry commenced a relationship in about 1995. She is about 45 years of age and he is about 37. There have been two children of the relationship, a girl called Shannon born in September 1997, who is now deceased, and a boy called Geordie born in May 1999. Initially the parties lived either with Ms Ford's mother or in rented accommodation, and Mr Henry spent about 90% of his time in Sydney working on construction sites, living with Ms Ford only on weekends. They purchased the Property in about April 1997. Apparently Ms Ford and Mr Henry are joint tenants in a one-half share in the Property and they hold the other one-half share as tenants in common, though their proportionate holdings as tenants in common are not clear from the evidence. 4 There is some evidence, partly contested, about financial contributions to the purchase price, mortgage repayments and improvements and renovations to the Property, and also about the previous payment of rent. It is evidence of a kind that would be relevant on a Part 3 application for the adjustment of property interests under the PR Act. However in these proceedings the only issues raised by the prayers for relief are whether the Terms of Settlement to which I shall refer are valid and binding and give rise to equitable interests that should lead to a trust for sale, and whether the Terms of Settlement should be avoided under the CR Act. It is consequently unnecessary for me to make findings about contributions and improvements, and it is undesirable to do so in proceedings where the scope of cross-examination of Ms Ford was strictly limited to matters relevant to the prayers for relief, and Mr Henry was not cross-examined at all. 5 The little girl, Shannon, was born with a hole in her heart, and she died in surgery about one year later, in the presence of Ms Ford. According to Mr Henry, there was a coronial inquest into Shannon's death and the doctor was found to have been negligent. Ms Ford made a damages claim against Westmead Hospital and the doctor. Mr Henry said that Ms Ford was funded on a "no-win/no-pay" basis but there were disbursements and court costs. He said he funded these expenses, but she denied that he had done so; that is not a matter I need to resolve in the present proceedings. 6 Ms Ford received some money in settlement of her claim. Mr Henry gave evidence that he was aware at the time when he signed the Terms of Settlement that Ms Ford had received some money in settlement of the claim; then he said she refused to disclose the amount that she received at any time; and he also said (inconsistently) that Ms Ford did tell him how much she had received but the amount she told him kept changing. He said it was his understanding and belief that she received about $400,000 though he did not explain the source of that belief. 7 Ms Ford gave evidence that she did not disclose information about her compensation claim because she had signed a confidentiality clause and the settlement of the claim took place a couple of years after they had separated. 8 Mr Henry also gave evidence that he became aware, after signing the Terms of Settlement that are the subject of the present proceedings, that during the course of their relationship Ms Ford had been receiving Centrelink payments and was claiming a pension, even though they were living together. He said she received a sole parent pension after they separated which, according to Mr Henry, she had to pay back to Centrelink when she received settlement money from her claim against Westmead Hospital. Ms Ford did not deny these allegations in her affidavit in reply. 9 Mr Henry said that had he known about the Centrelink payments and also the amount of damages received from Westmead Hospital before he signed the Terms of Settlement, he would not have signed them. I shall return to this claim. 10 The parties separated approximately at the end of 2001, although there were some brief periods of reconciliation and it appears that the final separation may not have been until August 2002. I was informed during the hearing that there are some issues about the application of the concept of "domestic relationship" under the PR Act to the facts of this case. As I understand the position of the parties, it is common ground that there was at one stage a de facto relationship and therefore a domestic relationship between them, that had come to an end more than two years before they entered into the Terms of Settlement to which I shall refer. But there is apparently some disagreement as to precisely when the domestic relationship ended and for how long it lasted. I need not resolve that disagreement in the present proceedings. The Terms of Settlement 11 Ms Ford instructed her solicitor, Mr Clisdell, in November 2004 to seek a property settlement with Mr Henry. Both parties accept that by that time, the two-year limitation period upon commencement of proceedings for the adjustment of property interests under Part 3 of the PR Act had expired. The evidence indicates that Mr Henry was represented by a solicitor, Ms Lawrence, during the negotiations for property settlement. 12 Although not all of the correspondence between the solicitors is in evidence, one can piece together the following chain of communications: · on 19 November 2004 Mr Clisdell wrote to Ms Lawrence, evidently making various claims about the purchase price of the Property and the contributions of the parties, of a kind that would be relevant to a claim under Part 3 of the PR Act; · on 10 December 2004 Ms Lawrence responded, making claims about various matters that would be relevant to a Part 3 application, including an assertion, said to be on instructions, that Ms Ford had received a net amount of $400,000 in respect of her claim for damages for nervous shock following the death of Shannon (this is relevant to Mr Henry's claim of lack of disclosure), and proposing a 70%/30% split of the balance of proceeds of sale of the Property; · Mr Clisdell replied on 21 December 2004 proposing that the proceeds of sale of the Property be divided equally; · on 13 January 2005 Ms Lawrence wrote to Mr Clisdell offering Ms Ford 35% of the proceeds of sale; · on 1 March 2005 Mr Clisdell wrote indicating that Ms Ford was not prepared to increase her offer beyond the offer made on 21 December; · on 16 May 2005 Ms Lawrence wrote making "one final offer of settlement", that the balance of net proceeds of sale of the Property be divided 60% to Mr Henry and 40% to Ms Ford, and contemplating proceedings if that offer was not acceptable; · on 2 June 2005 Mr Clisdell wrote again, evidently enclosing proposed terms of settlement; · on 10 June 2005 Ms Lawrence wrote saying that the terms of settlement should be amended to provide for payment of $65,000 to Mr Henry in refund of the deposit and the cost of improvements before the balance of the net proceeds was divided 60%/40%; · on 15 July 2005 Mr Clisdell wrote saying Ms Ford did not agree to the payment of $65,000; · on 19 August 2005 Ms Lawrence wrote saying that, "after extensive discussions with our client", he had agreed to accept the offer set out in the terms of settlement forwarded on 2 June. 13 Subsequently there was an exchange of correspondence between the solicitors as to the method of giving effect to the settlement arrangements reached on 19 August. I shall refer to that correspondence below. The result was that the parties signed a two-page document, which is short enough to set out in full: " Property Relationships Act 1984 TERMS OF SETTLEMENT