Facts
8 Adamson and Ede were friends. From time to time during the course of the events described here they have lived together. Ede was involved in difficult litigation with Esanda and Adamson offered to assist with that. They entered into a deed dated 4 October 1995. So that the matter can be understood I think it necessary to set out the deed in full and a copy is annexed to this judgment.
9 Prior to this deed being entered into Mr and Mrs Ede had entered into a deed with Adamson dated 10 September 1995, which looks like an employment contract, but which was probably a retainer agreement under which Adamson was to perform legal work for Mr and Mrs Ede for up to five hours per week for a retainer of $50 net of tax per week and thereafter at $10 per hour after tax for time spent over the five hours. This was the charge which was to apply other than in contentious matters, where the appropriate scale was to be charged instead. The deed included an extraordinary clause excluding any liability in Adamson for any act, omission, wrong advice, recklessness or negligence. There is no application in these proceedings to set it aside. It could, in any event, have been terminated by either side on notice.
10 In 1998Adamson lodged a caveat number 5388466 claiming a one half share over the property pursuant to a deed dated 10 September 1995. There is no evidence of any deed of that date apart from the one just mentioned. That deed gave no interest in the property. Adamson signed the declaration required for the caveat on 10 September 1998. He also purported to sign for the registered proprietors under power of attorney said to be dated 5 October 1995. There was no power of attorney of that date, although Ede gave an unlimited power of attorney to Adamson on 16 January 1996 and Mrs Ede signed a similar document on 14 January 1996. The result of the registered proprietors' consent being on the caveat document was that no notice was given of the caveat to the registered proprietors by the Registrar-General: Real Property Act 1900 s74F. It might have been possible to claim an interest under clause 3 of the deed of 4 October 1995, but the fact is that was not done.
11 On 30 January 2000 Adamson purported to assign his interest under the deed of 4 October 1995 to the Oz 1 Trust. The consideration was stated to be the market value or $10,000, whichever was the greater, with interest at 10 percent per annum. The consideration under the deed was to be paid in ten years or from the net proceeds of any sale of the interest in the property whichever occurred first. The assignment was signed by Adamson as assignor and as trustee of the Oz 1 Trust. He was one of three trustees. It is not clear the assignment was effective as there is nothing in the trust instrument which would have given the necessary power to one trustee. In any event the property the subject of the assignment was acquired while Adamson was an undischarged bankrupt. It is therefore 'after-acquired property' vesting in the trustee in bankruptcy under s58(1)(b) of the Bankruptcy Act 1966 (Cth) and thus is property devisable among creditors. Discharge from bankruptcy on 23 December 1995 did not affect that position. The limited protection of s126 of the Bankruptcy Act does not in my view apply.
12 On 28 July 2001 Adamson, as appointor under the Oz 1 Trust deed, removed the then trustees, namely himself, Phillip Jackson and Oz 1 Pty Limited and appointed A.C.N. as trustee. It was also resolved at the same time to change the name of the trust from Oz 1 Trust to the A.C.N. Trust.
13 Mr and Mrs Ede were involved in 2001, and perhaps earlier, in negotiations to settle their matrimonial affairs. On 19 July 2001 orders were made under the Family Law Act 1975 (Cth) in the Local Court at Forster, the effect of which was that in consideration of being released from any mortgage liability over the property and in consideration of receipt of $80,000 from Ede, Mrs Ede agreed to transfer her interest in the property to her husband. There was a note attached to the approved consent terms of settlement that the property was subject to a first mortgage to secure $80,000 and to an equitable charge in favour of Adamson for legal costs. The application for consent orders signed by Mr and Mrs Ede does show $30,000 due to Paclaw solicitors, Adamson's then firm, although Ede says that his initials against this addition are not his.
14 For the Family Law orders to be implemented Ede had to obtain $80,000 to pay out Mrs Ede, and in order to pay out the existing mortgage he had to organise a new mortgage loan through Suncorp Metway of about $82,000. The A.C.N. Trust agreed to lend Ede $80,000 or, it claims, $82,000 under a deed of loan dated 31 July 2001, which sum was to be secured on the property but subject to a first mortgage to Suncorp Metway for $82,000. On the same day and time as the deed of loan was signed three other documents were signed. There is a contest as to whether they were complete when signed. The first is a transfer in Real Property Act form, although not in registrable form. Under that as it now is Ede acknowledges receipt of the consideration of "deed dated 4 October 1995 and the forgiving of $80,000 loan" and transfers to the plaintiff company as trustee for the A.C.N. Trust "a two-thirds share and Kenneth John Ede as a one-third share as tenant in common A.C.N. Trust sole proprietor proposed Lot 1063 and tenant in common with Kenneth Ede as Lots 1061 and 1062 in equal shares". It is obvious enough that this document could not be registered as there was no plan of sub-division so far as the proposed lots were concerned. The third document signed on that date was a residential tenancy agreement from Ede to Adamson and the A.C.N. Trust for part of the property being the house and surrounding sheds and surrounding ground. This lease was for a term of three years. It purports to have two options each for a period of a further three years. It says nothing of the terms on which any option could be exercised. A notice to quit was served on both Adamson and the A.C.N. Trust in December 2004 with no result. Adamson remains in occupation. Whether the company does or not does not really matter. Adamson as solicitor lodged caveat AA 88405 against the title based on the transfer document apparently with the consent of Ede endorsed, although there may be some problem about that signature. The caveat is dated 22 October 2003.
15 The fourth document dated 31 July 2001 is a charge stated to be imposed upon Ede's one-third share of the property "for the purpose of securing the payment of past and future legal fees for the benefit of Adamson, the payments to be made upon issue of accounts and thirty days." There was no underlying agreement for this document of charge.
16 All the documents signed on 31 July 2001 were witnessed by Mr Faddoul Faddoul JP.
Pleadings
Transferred detinue action
17 The amended statement of claim pleads judgments against Ede for costs under two orders, fails to plead non-payment, pleads that Ede has all or some of the contents of the file of Adamson in relation to the proceedings in defence of the claim by Esanda, does not plead the taking of that file by Ede, claims a lien over it and an unsatisfied demand for its return. The statement of claim seeks judgment for detinue or the value of the lien, damages and aggravated damages.
18 The amended defence is a very poorly expressed document. How it could have been prepared by a solicitor even for the Local Court I cannot comprehend. Insofar as it does anything it denies any amounts outstanding for costs, denies any obligation to return the file and says in any event that the file has no value.
Main action
19 The plaintiff A.C.N. pleads the 1995 deed, its assignment, the deed of loan and payment of the $82,000 thereunder and that further loans were made pursuant to the deed amounting to $16,164. It then pleads in paragraph 11 (as amended during the hearing) as follows:
11. The terms of the agreement are contained in a transfer dated 31 July 2001 duly executed by the defendant and the plaintiff. A term of the written agreement being that in consideration of the Deed dated 4 October 1995 [intended by the plaintiff and the defendant to mean that "in consideration [of the plaintiff forgoing the benefit] of the deed dated 4 October 1995"] and the forgiveness of the loan of $80000.00, the defendant transferred to the plaintiff a 2/3 share of Lot 106 DP 753156 land as tenant in common with the defendant as to the remaining 1/3 share and to the plaintiff as sole proprietor proposed lot 1063 and as tenant in common in with the defendant as to proposed lots 1061 and 1062 in equal shares (the written agreement).
20 The plaintiff then pleads a refinancing in August 2001 of the first mortgage, and its lodgement of caveat AA 88405 claiming an interest pursuant to the transfer. It also pleads entitlement to two-thirds of the agistments received from the property. The plaintiff seeks declarations as to its interest in the property, an order for specific performance by way of execution of documents required to give effect to the agreement as contained in the transfer, including obtaining the necessary consents to sub-division, and also seeks orders for partition or sale of Lots 1061 and 1062 and for an account of agistment moneys and repayment of the loan moneys.
Defence to main action
21 The defendant (a) says as to the 1995 deed it is unenforceable under the Contracts Review Act 1980 (NSW) and is void for uncertainty; (b) says as to the assignment it is void for uncertainty; (c) says the sum received under the deed of loan was $80,000 not $82,000 and denies further loans; (d) says that the transfer is void for uncertainty; (e) pleads as to specific performance, laches, hardship and unfairness and that any order would require supervision.
22 Defences based on lack of writing became unnecessary as the plaintiff's claim that the agreement was partly oral was not pursued and amendments to the further amended statement of claim as indicated in the transcript were deemed to be made. No argument was addressed to the defences of laches, hardship or supervision requirement.
Cross-claim I n main action
23 Ede brings the cross-claim against Adamson and A.C.N. Once again the document is quite inadequate. However, its general thrust is clear enough. It pleads (a) the two caveats, the lack of interest claimed by them, and seeks their removal; (b) that the 2001 documents were represented by Adamson as required for the Family Law proceedings; that the transfer was blank; that all the documents were signed in the presence of Mr Faddoul in his tobacconist shop at Kings Cross and that Adamson was present; that the documents were not required for the stated purposes, or not all of them were; and that the transfer was filled in at a later date and there was no consideration for it; (c) as to the 1995 deed it was signed without reading or explanation or independent advice and it was to the disadvantage of Ede and was either not binding or was unjust under the Contracts Review Act and should be set aside; (d) as to the deed dated 10 May 2001, it gave no caveatable interest, that the original retainer ended on 19 March 1996, but was revived for the Family Law proceedings and in any event was offset by rent paid by Ede on behalf of Adamson; (e) that Adamson occupies the property as trespasser.
24 Ede seeks in the cross-claim orders (a) for withdrawal of the caveat, (b) for cancellation of the transfer, (c) a declaration that the charge dated 30 July 2001 is of no force and effect; (d) that the deed of 10 May 1995 be rectified to say its term has expired and (e) to set aside the 4 October 1995 agreement under the Contracts Review Act.
25 In the defence to cross-claim Adamson says he did work for the cross-claimant from 1995 to 2003 and that the documents were all signed for a proper purpose. In addition it is claimed that the cross-claim cannot succeed because so far as the 1995 agreement was entered into, it was entered into for the purpose of the business of Ede, namely his painting business, and that it is barred by time under s16 of the Contracts Review Act.
Stamping of documents
26 When the hearing commenced before me the only document which had been stamped was the charge over the land for past or future legal costs. The deed of 4 October 1995, the deed of assignment and the deed of loan had not been stamped. I allowed the 4 October 1995 deed and the deed of assignment into evidence on appropriate undertakings although I had some doubts about that. I refused to allow the deed of loan into evidence until it had been stamped. It was subsequently placed into evidence having been stamped with what appears to have been an interim stamp. This matter is of some significance. On the case made out by the plaintiff it is perfectly clear that the documents were liable for stamping. It was a solicitor, Adamson, who was in charge of the documents. It was the solicitor, or his company, that was liable to stamp duty on the original deed and on the deed of assignment. It is not necessarily easy to find that a solicitor liable for stamp duty on documents intends them to operate on their terms if they have not been stamped for many years.
Problems
27 A significant problem in determining this action is the inadequacy of the pleadings. While it is desirable to determine matters between the parties, so they can so far as possible go their separate ways, that can only be done so far as it would be reasonable and fair to order the pleadings be amended to coincide with the evidence. While the main action has been on foot for about five years it is perfectly clear that inadequate consideration has been given to any proper attempt to plead so as to define the issues.
28 Instances of this problem are: (a) the only claim under the Contracts Review Act is to set aside the deed of 4 October 1995. Submissions were made as to relief under that Act in relation to the costs deed of 10 May 1995 and residential tenancy lease, but the matter cannot be dealt with by somehow making a claim at the hearing in oral or written submissions without any amendment; (b) an argument was raised and evidence led about the bankruptcy of Adamson and its effect on the October 1995 deed. That raises problems for each side which on one view are not able to be properly dealt with without the trustee in bankruptcy being made a party. The defence denying that Adamson obtained an interest under the deed of 4 October 1995 did not properly raise or give notice of the argument now raised. A non-admission of the assignment by Adamson to A.C.N. of the benefit of the deed and a claim it is void for uncertainty likewise does not properly plead the facts relevant to the argument put forward.
29 It is of some significance to note that the proposed amended defence was notified on 25 October when new solicitors were engaged. There has been no amendment to the cross-claim. There was time to get appropriate pleadings notified and ready. As the evidence of the bankrupt estate was allowed in I think it proper to deal with that particular problem, partly as it goes both ways, but I do not consider it would be fair to the cross-defendant to allow the cross-claim to be dealt with on the basis of matters not raised in it or in respect of some matters which were only raised in submissions.
30 It is also necessary to say that apart from the Contracts Review Act matters there is no specific defence or cross-claim based on undue influence. I do not accept any evidence of Adamson that Ede had an opportunity to obtain independent advice in respect of the documents which he signed. It seems extraordinary that this was not raised in circumstances where the documents relied upon by a solicitor confer a considerable benefit on that solicitor as against the client.
Deed of 4 October 1995
31 If this deed vested any property rights in Adamson the said rights would be after-acquired property which would vest in the trustee in bankruptcy. There was no evidence of any notice to the trustee of the property. To proceed to declare it to be void or to set it aside under the Contracts Review Act would, I consider, require the joining of the Official Trustee in Bankruptcy as a party. Whatever property there is that was acquired by the deed remains in that trustee.
The deed of assignment dated 30 January 2000
32 It follows from the previous paragraph that Adamson could not assign any interest under the deed of 4 October 1995 without the consent of the trustee. Thus, apart from the problems that might otherwise arise with it, the assignment was ineffective as the property was not vested in the assignor.
Deed of 10 September 1995
33 As the caveat which claimed an interest in the land arising under this deed had lapsed or been removed, there is really no claim in the cross-claim which relies on this deed. It is clear that the document gave no interest in land. No claim for money based on that deed is made under the statement of claim probably because Adamson is not the plaintiff. Under the cross-claim it is alleged that the deed was a contract of employment, which employment ceased on 19 March 1996, after which Ede no longer employed, retained or instructed Adamson as his solicitor. It is also pleaded that any costs were set off against rent due by Adamson to Ede for premises leased by Ede but occupied by Adamson. Adamson, in his defence to cross-claim says that he continued to do work for Ede up to June 2003. The point is that, leaving aside the charge to which I will come, no judgment is sought for costs under this deed.
34 I should say there is no evidence of any costs due by Ede to Adamson but I do not consider that the cross-claimant has proved the facts alleged in paragraph 21B of the cross-claim. Nor has he shown that he is entitled to the only relief sought in respect of that deed, namely an unpleaded claim for rectification and a claim that on its true construction the deed is of no force or effect.