Degnan v Fisher

CONTEXTUAL FACTS

1. Identification of the circumstances, surrounding the Deed, known to the parties at the time the Deed was made, requires a narrative account of their dealings with reference to the Sawtell land.
2. At the time of its purchase by Mr and Mrs Fisher, the land offered what both couples saw as an opportunity for Mr and Mrs Degnan to live in close proximity. Standing on the land was an existing dwelling and, behind it, space sufficient for the construction of a secondary dwelling. All parties turned their minds, one way or another, to the possibility that Mr and Mrs Fisher could acquire the land, construct a new home for themselves as a secondary dwelling and allow Mr and Mrs Degnan to occupy the existing, primary dwelling as their home.
3. Mr and Mrs Fisher purchased the land in their own names, for $390,000, by contracts exchanged in May 2011 and completed on 2 August 2011. Mr Oliver acted for them on the purchase. They were assisted in the purchase by a bank loan secured by a mortgage.
4. The Fishers proceeded thereafter to construct their secondary dwelling, where they were living at the time they executed the Deed dated 20 July 2012.
5. Upon completion of the Fishers' purchase, Mr and Mrs Degnan moved into the primary dwelling, paying rent.
6. At a time when Mr Degnan was about to come into possession of an inheritance long anticipated from the deceased estate of his brother, on 1 June 2012 Mr Degnan and Mrs Fisher met with Mr Oliver for an hour, during which time they retained him (on behalf of themselves and their respective spouses) to give effect to the business ultimately documented in the Deed dated 20 July 2012. The possibility that the land could be subdivided so as to provide separate titles for the primary and secondary dwellings was discussed.
7. On 4 June 2012 Mr Oliver made enquires of a local surveyor about a prospective subdivision of the land.
8. On 5 June 2012 Mr Oliver wrote a letter to Mr and Mrs Fisher and Mr Degnan reporting on his conference with Mr Degnan and Mrs Fisher on 1 June 2012 and noting the necessity for advice from a surveyor.
9. On 2 July 2012 Mr Degnan, on behalf of himself and his wife, transferred $250,000 into the bank account of Mr and Mrs Fisher, a transaction described in his banking records as a payment for "House Purchase". There is no evidence of how the transaction was recorded in the banking records of Mr and Mrs Fisher.
10. Matthew, the son of Mr and Mrs Degnan and brother of Mrs Fisher, deposes to having seen a handwritten receipt for the $250,000, signed by both Mr Degnan and Mr Fisher, when, as Mr Degnan's named executor, he was going through his late father's papers. He says he last saw the document when the principal dwelling (on Lot 270) was sold in February 2019. He says it was in a chest of draws now in the possession of Mrs Fisher. He says that the document bore a date which he does not now remember, and words to the following effect: "For the sum of $250,000 paid to K & G Fisher for the purchase of the front dwelling at … Sawtell". Mr Fisher denies giving a receipt for the $250,000 admittedly paid on 2 July 2012.
11. The significance of the receipt deposed to by Matthew (assuming his evidence is accepted) is not the fact of a payment having been made but the purpose of the payment recorded on the document: payment "for the purchase of the front dwelling".
12. The $250,000 having been paid, Mr and Mrs Degnan stopped paying rent and began paying a proportion of Council and water rates charged against the un-subdivided land.
13. In or about early July 2012 Mr and Mrs Fisher moved, with their children, to the newly constructed, secondary dwelling on the land. Their former home, at Celeste Place in Bonville, was sold on 12 July 2012.
14. On 10 July 2012 Mr and Mrs Degnan attended upon Mr Oliver to execute what became the Deed dated 20 July 2012 with him as their witness.
15. On 12 July 2012 Mr Oliver wrote a letter to the parties' surveyor confirming that his firm acted for each of the Degnans and the Fishers and recording that "all parties propose a subdivision [of the land], if possible by way of a Torrens Title subdivision".
16. On 12 July 2012 Mr Oliver wrote to Mr and Mrs Degnan a letter enclosing his letter to the surveyor and explaining the process of subdivision anticipated to result in a transfer of title into their names.
17. On 20 July 2012 Mr and Mrs Fisher executed the Deed of that date in the presence of Mr Oliver's partner, Mr Robson.
18. On 26 July 2012 Mr Oliver wrote a letter addressed to Mr and Mrs Degnan and to Mr and Mrs Fisher reporting on the fact that the Deed had been executed and enclosing his firm's Memorandum of Professional Costs and Disbursements.
19. Although Mr Oliver anticipated that he would receive supplementary instructions about the subdivision of the land after that date, he heard nothing more from the Degnans or the Fishers.
20. Coffs Harbour City Council granted development approval for a subdivision on 22 October 2012. The precise date upon which the parties were granted a Subdivision Certificate by the Council is not apparent from the evidence, but it appears to have been issued by the middle of 2013 or thereabouts.
21. Mr and Mrs Degnan paid a substantial part (more probably than not, at least one half) of the costs of subdivision of the land, including Mr Oliver's Memorandum of Costs and Disbursements dated 26 July 2012 and the surveyor's invoice dated 1 July 2013. An exact accounting for payment of the costs of the subdivision is beyond the evidence.
22. No criticism is made of delay in the parties' effecting a subdivision or registration of separate titles. Mr Fisher's evidence is that Mr Degnan was the active party in advancing the subdivision, although he and Mrs Fisher from time to time signed documentation required to effect the subdivision. He says that, when Mr Degnan reached a certain point in the subdivision process (whch, I infer, occurred after they were confident a subdivision could be had without any practical impediment), the two men had a conversation in which they agreed "to leave it for a while" so as to avoid having to pay "full rates" on two blocks of land instead of simply sharing rates on the one un-subdivided block.
23. Such an agreement is consistent with the objective fact that Mr Degnan paid Mr Oliver's Memorandum of Costs and Disbursements ($1,347.50) on or about 21 August 2020 and the surveyor's invoice ($6,120) on or about 31 July 2013. It is consistent also with Mr Oliver's evidence that despite his expectation that the parties would supplement his instructions after 26 July 2012 in relation to the subdivision process, they did not do so.
24. On the evidence of Mr Fisher, the agreement between him and Mr Degnan to pause the subdivision process did not involve abandonment of the parties' intention to effect a subdivision. Nor did it involve discussion about what would happen to the title of the land upon subdivision.
25. Mr Degnan died on 28 April 2015, leaving a will dated 15 or 16 March 2001 (it is not clear which) naming Mrs Degnan as his sole beneficiary. It has not been admitted to probate. It was on the basis of the will that an order was made in these proceedings for her to represent Mr Degnan's estate.
26. After Mr Degnan's death, Mrs Degnan and the Fishers in casual conversations contemplated that the land might be sold and proceeds of the sale might be applied in the purchase of another property with a granny flat so that all three surviving family members could live at the same address.
27. On or about 12 October 2018 Mr and Mrs Fisher listed both Lot 270 and Lot 271 for sale. In that context, their minds returned to a need to obtain separate titles for the two Lots.
28. In or about late October 2018 Mr and Mrs Fisher contracted to purchase a new home, at Toormina (a suburb of Coffs Harbour), with space enough to accommodate Mrs Degnan, upon an assumption that she would move there with them on the sale of the Sawtell land. The contract was completed on 12 February 2019.
29. There is no suggestion that Mrs Degnan was asked, or agreed, to contribute to the Fishers' purchase of the Toormina land.
30. The parties appear not to have turned their minds at this time to the operation of the Deed dated 20 July 2012 or, however the payment of $250,000 made on 2 July 2012 might be characterised, the accountability of Mr and Mrs Fisher to Mrs Degnan consequent upon subdivision of the Sawtell land.
31. On 29 January 2019 the Sawtell land was subdivided by registration of Deposited Plan 1250337. The front Lot, upon which the primary dwelling was constructed, was designated "Lot 270". The rear Lot, upon which Mr and Mrs Fisher had long since built the secondary dwelling, was designated "Lot 271".
32. Mr and Mrs Fisher sold Lot 270 for the sum of $485,000 by a contract exchanged on 31 January 2019 and completed on 15 February 2019.
33. Mrs Degnan and Mrs Fisher appear to have fallen out on 12 February 2019 when Mrs Fisher pressed her mother to expedite her departure from her home (on Lot 270) in anticipation of completion of the sale of the Lot. According to Mrs Degnan, Mrs Fisher confronted her with a claim to ownership of her home (the principal dwelling at the front of the land), a demand that Mrs Degnan vacate her home immediately, and a threat to call the police if Mrs Degnan did not leave immediately. This was the first time Mrs Degnan became conscious of a dispute about ownership of her home. She had always regarded it as her home and that of her late husband.
34. Mrs Degnan was aware that Lot 270 had been sold and she would have to move. However, she is not a sophisticated person, she is elderly and it is likely that there was a breakdown in communication between family members as to what was happening. The confusion about that appears to have crystallised concerns on the part of Mrs Degnan (counselled by her son, Matthew) about the business arranged in July 2012. Instead of moving with the Fishers, she went to live with Matthew. Battle lines were drawn.
35. Mr and Mrs Fisher sold Lot 271 for the sum of $645,000 by a contract exchanged on 15 November 2019 and completed on 29 January 2020.
36. Mrs Degnan claims that Mr and Mrs Fisher were obliged to transfer Lot 270 to her upon registration of DP 1250336 and that, having sold that Lot, they are liable to account to her for the proceeds of sale, net of agent's commission and conveyancing costs, and allowing for a payment of $250,000 made by them to her shortly after the commencement of these proceedings.
37. These proceedings were commenced by a statement of claim filed on 17 December 2019.
38. On their completion of the sale of Lot 271 on 29 January 2020, Mr and Mrs Fisher (in accordance with an interlocutory arrangement recorded by Henry J on 23 January 2020) paid to Mrs Degnan the sum of $250,000 which, they maintain, was a repayment of what was an interest-free loan (and nothing more than a loan) made to them by Mr and Mrs Degnan on 2 July 2012, governed by the terms of the Deed dated 20 July 2012. They contend that, objectively, there was never a concluded agreement between the parties for Mr and Mrs Degnan to purchase an interest in the land.
39. Debate about the parties' respective rights and obligations focuses upon the proper construction of the Deed dated 20 July 2012.
40. It is entitled "Deed of Loan" and some of its provisions favour a characterisation of Mr and Mrs Degnan's payment of $250,000 as an interest-free loan. Other provisions of the Deed support characterisation of the payment as the price paid by Mr and Mrs Degnan to Mr and Mrs Fisher for their purchase from the Fishers of what became Lot 270.
41. Mr and Mrs Fisher have urged the Court to construe the Deed "strictly", according to its title, as nothing more than the embodiment of a loan transaction. Because they submit that the Deed is not ambiguous, they resist reference to evidence extrinsic to the Deed in construction of the Deed.
42. Whether, and for what purpose, notice can be taken of extrinsic evidence in construction of the Deed (evidence predating and subsequent to the Deed) is a question for consideration.
43. Interwoven with that question is the significance of particular correspondence written by Mr Oliver: a letter dated 5 June 2012 (before execution of the Deed) and a letter dated 26 July 2012 (shortly after execution of the Deed) addressed to all parties.

THE DEED DATED 20 JULY 2012

1. The Deed dated 20 July 2012 was executed by Mr and Mrs Degnan, whose signatures were witnessed by Mr Oliver, on 10 July 2012.
2. It was executed by Mr and Mrs Fisher, whose signatures were witnessed by Mr Oliver's partner Mr Robson, on 20 July 2012.
3. Viewed objectively, the parties had a concluded agreement no later than 20 July 2012.
4. The main impediment to a finding of a concluded agreement before that time was uncertainty about the purchase price payable by Mr and Mrs Degnan. Mrs Degnan's evidence of a family conversation at the site of the land when the two couples inspected it in mid-2011 is sufficient to establish that all four contemplated a possibility, if they did not form an expectation, that Mr and Mrs Fisher would acquire the land, allow Mr and Mrs Degnan to occupy the existing dwelling at the front of the land, construct their preferred dwelling at the rear of the land and subdivide the land into two lots, with a financial contribution to the project by Mr and Mrs Degnan when Mr Degnan received an expected inheritance. What was missing was agreement as to the quantum and timing of the Degnans' payment to the Fishers for the existing dwelling and quantification of the amount of rent paid by the Degnans pending their payment of the purchase price of the existing dwelling.
5. Mr Oliver's evidence is to the effect that the persons actively involved in instructing his firm were Mr Degnan and Mrs Fisher; and that, from his first contact with them, they had instructed him that they had agreed that Mr and Mrs Degnan would purchase the principal dwelling from the Fishers; but that the terms of the parties' agreememt were, at the outset, unsettled because of a lack of certainty about whether (and, if so, upon what terms) the land could be subdivided. He also confirmed, as did Mrs Fisher, that the Fishers were anxious to receive the Degnans' prospective payment (as it happened, the payment of $250,000 made on 2 July 2012) because they were experiencing "cash flow problems" in servicing their mortgage commitments.
6. I infer from this and the course of events that, in all dealings with Mr Oliver and generally, Mr Degnan (on behalf of himself and his quiescent wife) actively pursued arrangements for his and his wife's purchase of the principal dwelling for $250,000, taking up the running in pursuit of a subdivision; Mrs Fisher's focus (and that of her husband) was upon receipt of a capital sum to reduce their mortgage repayments; and, comfortable with arrangements for Mr and Mrs Degnan to occupy the principal dwelling as their own, they agreed to the terms of the Deed dated 20 July 2012 without ever expressing any objection to, or reservations about, the idea that, upon subdivision, the title to that part of the land occupied by Mr and Mrs Degnan would be transferred to them on the terms of the Deed, about which (with the death of Mr Degnan and the passage of time) they forgot.
7. What is common ground in these proceedings is that the respective rights and obligations of the parties are governed by the Deed dated 20 July 2012, properly construed. Although the plaintiff's case was presented in terms of an alleged oral agreement which led to the making of the Deed (as a result of which the defendant pleaded the "Statute of Frauds" provisions of sections 23C and 54A of the Conveyancing Act 1919 NSW), the focus for attention throughout the hearing was on the Deed and, incidentally, any extrinsic evidence of the parties' intention that may be admissible in construction of the Deed. There is no need to be deflected by a consideration of the "Statute Frauds" provisions and the equitable doctrine of part performance.
8. By the time the Deed dated 20 July 2012 was executed by all four parties, the following circumstances surrounding the Deed were common knowledge: 1. the land had been purchased by Mr and Mrs Fisher; 2. upon completion of the purchase of the land, Mr and Mrs Degnan had commenced occupation, and renovation, of the existing, principal dwelling on the land; 3. following their purchase of the land, Mr and Mrs Fisher had constructed, and occupied, the secondary dwelling in contemplation by them at the time the land was purchased; 4. on 2 July 2012 Mr Degnan had transferred to the bank account of Mr and Mrs Fisher the sum of $250,000; 5. between the time Mr and Mrs Degnan commenced occupation of the principal dwelling and the time of the $250,000 transfer, Mr and Mrs Degnan had paid rent to Mr and Mrs Fisher, in lump sums, equivalent to an agreed rate of $325 per week, a rate equivalent to the rent paid by outgoing tenants of the principal dwelling; 6. those rental payments had ceased upon payment of the $250,000; 7. the proposal that the parties' agreement be documented in the form of what became the Deed dated 20 July 2012 had originated with Mr Oliver, not any of the parties; 8. the parties had jointly retained Mr Oliver's firm of solicitors to act for them all in documentation of their agreement and in the provision of advice regarding subdivision of the land into two Lots so as to permit each dwelling on the land to be situated on a separate Lot; 9. by a letter dated 5 June 2012 addressed to Mr and Mrs Fisher and to Mr Degnan, Mr Oliver had outlined to the parties (without objection by any party) his understanding of their agreement; and 10. by a letter dated 12 July 2012, expressly written on behalf of all parties, Mr Oliver had instructed surveyors to act upon subdivision of the land.
9. Before the Deed was executed by Mr and Mrs Fisher on 20 July 2012, the terms of the Deed (including, specifically, clause 3) were read out to them by Mr Oliver's partner, Mr Robson. No protest was made by either Mr or Mrs Fisher to the effect that there was no agreement on their part to sell an interest in the land to Mr and Mrs Degnan or, upon subdivision of the land, to transfer to Mr and Mrs Degnan title to the principal dwelling.
10. The Fishers do not contend, and there is no evidence to suggest, that the $250,000 paid on 2 July 2012 was a gift.
11. The Fishers contend that, if not an agreement for a loan, the parties' agreement was a family arrangement unenforceable for want of an intention to create legal relations. That contention does not sit comfortably with the factual matrix: the parties' retained a solicitor to prepare legal documentation. Albeit poorly, the Deed is expressed in legal language. It includes provision for Mr and Mrs Degnan to lodge a caveat against the land during the currency of the Deed. Whatever the true character, and proper construction, of the Deed, it was objectively intended by all parties to affect their legal relations.
12. A fair inference from the form of the Deed is that it was adapted by Mr Oliver, as its draftsman, from an office precedent. Clause 2.8 contemplated that "the Borrower" (Mr and Mrs Fisher) may have been a corporation or cooperative, which they plainly were not. Clause 2.12 contemplated security documents, for the "loan" in the character of a mortgage or guarantee, which there was not (although clause 10, headed "the guarantee and indemnity", was simply marked "not applicable"). Clause 9 required "the Borrower" to procure the granting and execution in favour of Mr and Mrs Degnan of "the security and documents (if any) listed in item 7 [of the Deed] upon the execution of [the] Deed"; item 7 simply recorded that Mr and Mrs Degnan "will be entitled to lodge a caveat on the property … if and when required". Events of default referrable to repayment of the "loan" (in clause 11 of the Deed) were mostly drafted upon the assumption that "the Borrower" was a trading corporation engaged in carrying on a business.
13. The Deed dated 20 July 2012 is entitled "Deed of Loan". It is expressed to have been made, and executed, as a Deed. Each party's signature appears against the formulaic expression, "SIGNED SEALED & DELIVERED". As Mr Oliver's firm was acting for all four parties to the Deed, with instructions to render it operative, the Deed can be taken to have been "delivered" (according to the intention of the parties) on the date it bears, although copies of the Deed were not provided to the parties until 26 July 2012, under cover of a letter of that date written by Mr Oliver.
14. The first three clauses of the Deed are respectively headed "Parties", "Interpretations and Definitions" and "Recitals".
15. Between clauses 3 and 4 appear the words, "IT IS AGREED".
16. Clause 4 is entitled "Repayments of Principal" and subsequent clauses (numbered 5-11 inclusive) use the language of a loan.
17. After clause 11 appears a "SCHEDULE" with several items that, inter alia, identify the "Borrower", a "Principal sum" ($250,000), the "Purpose" of the loan and a "NIL" interest rate and make provision for "Repayments" and "Security Document(s)".
18. Clause 8 is headed "Use of Principal Sum". It provides that "[the] Borrower shall utilise the Principal Sum for the Purpose". Clause 11.3 provides for the Principal Sum to be repayable "without the necessity for any demand or notice if … [the] Borrower fails to use the Principal Sum for the Purpose". Item 4 of the Schedule describes the "Purpose" as being "To assist in purchasing of a property situate at [the address of the land at] Sawtell …"
19. The term of the "loan" is not defined otherwise than by reference to clause 4 of the Deed and Item 6 of the Schedule. Clause 4 reads: "The Borrower shall make payments of principal in accordance with the terms and conditions in Item 6". Item 6 reads simply, "Repayments: By agreement between the parties and failing agreement then upon demand."
20. No clause of the Deed after the words "IT IS AGREED" contains an agreement on the part of Mr and Mrs Degnan to make a loan. All clauses from and including clause 4 assume that a loan has been made and either provide for its repayment or provide machinery for administration of a loan such as provision for the costs of enforcement of the Deed, interest on any judgment obtained against "the Borrower", payment of fees and stamp duty, use of the "Principal Sum" and events of default.
21. Any agreement on the part of Mr and Mrs Degnan to provide a "loan" to Mr and Mrs Fisher must be found in clause 3, curiously entitled "Recitals".
22. Mr and Mrs Fisher resist such a conclusion because clause 3 also speaks of an agreement by Mr and Mrs Degnan "to pay the Principal Sum to the Borrower for purchase of a property [being one of two on a dual occupancy property] at Sawtell." They submit that, as clause 3 is entitled "Recitals", it cannot be construed as an operative part of the Deed.
23. The problem with that is that, despite its title, clause 3 appears in fact to be an operative part of the Deed, both in recording the parties' intention that Mr and Mrs Degnan acquire an interest in the land for the payment of $250,000 and in characterising the "Principal Sum" as a loan. But for clause 3, there is no express agreement on the part of Mr and Mrs Degnan to lend money to Mr and Mrs Fisher.
24. Statements of principle about the limited use to which "recitals" can be put in the construction of a deed (for example, in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 695[379]-696[381]) are generally predicated upon an assumption that, in a manner that conforms to customary practice, a deed is structured so as to include introductory, contextual or purposive statements characterised as "recitals" and (in a binary contrast) later provisions characterised as "operative".
25. The Deed dated 20 July 2012 defies that form of structure. The text offers no clear distraction between "recitals" and "operative" provisions beyond inapt headings.
26. Mrs Degnan contends that clause 3 evidences the operative provision of the Deed, all else in the Deed (including the title "The Deed of Loan") being subordinate to it. In my opinion, that contention is correct.
27. Clause 3 reads as follows: "3. Recitals Degnan [that is, Mr and Mrs Degnan] has agreed to pay the Principal Sum [$250,000] to the Borrower [Mr and Mrs Fisher] for purchase of a property situate at … Sawtell … That property is one of two situated at that address, being a dual occupancy. The Borrower is in the process of a subdivision of the property by way of Torrens Title subdivision so that separate titles will issue for the two properties. At the request of the Borrower, Degnan has agreed to lend the Borrower the Principal Sum pursuant to the terms of this Deed. Degnan and the Borrower have further agreement that all costs associated with the subdivision of the property are to be borne equally by the parties. Degnan and the Borrower have further agreed that Degnan will cease making rental payments (currently $325 per week) following payment of the Principal Sum"
28. The first sentence of clause 3 records the essence of the parties' agreement: an agreement to pay $250,000 to Mr and Mrs Fisher "for purchase of a property" being one of two parts of "dual occupancy" land in the process of being subdivided into two separate titles. The parties cannot have been uncertain as to which of two Lots of a proposed subdivision they were to have. Mr and Mrs Degnan, of the first part, and Mr and Mrs Fisher, of the second, each had their address recorded in the Deed as the address of the land upon which there were, at the time of the Deed, "dual occupancy" dwellings, the front one occupied by the Degnans, the rear one occupied by the Fishers.
29. Implicit of the first paragraph of clause 3 is an understanding that, upon registration of a plan of subdivision, each of the Degnans and the Fishers would obtain a separate title for the Lot upon which, at the time of the Deed, they lived.
30. That subdivision of the land was a joint endeavour was confirmed by the agreement recorded in the second paragraph of clause 3: "All costs associated with the subdivision were to be borne equally by the parties."
31. The third paragraph of clause 3 is consistent with the agreement that Mr and Mrs Degnan would acquire an interest in the land because, upon payment of the sum of $250,000, they were to cease making rental payments for their occupation of the principal dwelling on the land. The capital payment had been made, and rental payments had ceased, by the date of the Deed.
32. I do not regard the title of the Deed (as a "Deed of Loan"), or the language of a "loan" scattered throughout the Deed, as determinative of characterisation of the Deed as a whole or of clause 3 of the Deed in particular. Clause 3 makes little sense if not read as embodying an operative agreement for Mr and Mrs Degnan to purchase their dwelling for $250,000, with title to be transferred to them upon registration of a subdivision to be effected at the shared cost of all parties.
33. Characterisation of the Deed as an agreement for a loan, and nothing more, simply because it bears the label "Deed of Loan" and uses language indicative of a loan, is not permissible. The Deed has to be read as a whole. The language of purchase in clause 3 is intractable.
34. Clause 3 cannot be discounted as a mere "recital", not intended to have operative effect. That is because the clause is instrumental in recording both an agreement for purchase and an agreement for a loan pending subdivision.
35. Characterisation of the $250,000 as a loan can be explained by uncertainty as to whether the land would be approved for subdivision. Implicit in both the first and the second paragraphs of clause 3 was an agreement on the part of all parties to seek subdivision approval and, upon subdivision of the land, to generate separate Torrens Title Deeds for each dwelling on the land.
36. On my reading of the Deed as a whole, the agreement between the parties included: 1. an implied term that each contracting party would cooperate with each other party in the doing of acts which were reasonably necessary for the performance of the contract: Secured Income Real Estate (Australia) v St Martins Investments Pty Ltd (1979) 144 CLR 596; and 2. an implied term that no party would hinder or prevent the fulfilment of the purpose of their agreement to subdivide the land into two separate titles, one for each family referable to their respective dwellings: Service Station Association v Berg Bennett (1993) 45 FCR 84 at 92-94, citing Dixon J in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359.
37. Mr and Mrs Fisher resist the construction of the Deed that I favour by reference to the "Purpose" stated in the Deed. They submit that the "Purpose" stated in the Deed must be read as the provision of assistance to them in the purchase of the land, not as the provision of assistance to Mr and Mrs Degnan to purchase an interest in the land. In my assessment, the definition of "Purpose" is a reference to Mr and Mrs Degnans' "purchase of a property" identified in clause 3. By the time the Deed was executed, Mr and Mrs Fisher had already purchased the land, and Mr and Mrs Degnan had recently paid the sum of $250,000. Clause 8 of the Deed is consistent with a requirement that Mr and Mrs Fisher treat the Degnan's payment as payment for their purchase of a property to be defined by subdivision.
38. On my reading of the Deed as a whole, characterisation of the $250,000 paid by Mr and Mrs Degnan as a "loan" would have operative effect if and only if the parties, despite their best endeavours, could not effect a subdivision of the land. In that circumstance, the Deed contemplated that the $250,000 would be repaid "[by] agreement between the parties and failing agreement then upon demand". Characterisation of the $250,000 as a loan was subordinate to characterisation of it as a purchase price for that part of the land upon which the principal dwelling was located.
39. There is no contention that identification of that part of the land was attended by uncertainty. Clause 3 of the Deed speaks of the land being "in the process of a subdivision". There is no suggestion that the parties were not ad idem in their identification of the two Lots.
40. By the time the Deed was executed, much of what was ostensibly required by it to be done had been done. In particular, Mr and Mrs Degnan had paid the Fishers $250,000 and ceased paying rent for their occupation of the principal dwelling, and surveyors had been retained to effect a subdivision of the land.
41. What remained to be done was completion of the process of subdivision, the registration of separate titles and the transfer to Mr and Mrs Degnan of title to their home. By clause 3 of the Deed each party implicitly promised to work together to cause that business to be done.

EVIDENCE EXTRINSIC TO THE DEED

1. The parties reduced their arrangement of July 2012 to writing with the intention that the writing would record their agreement. It can be construed in light of the parties' common knowledge of circumstances surrounding execution of the Deed dated 20 July 2012, but the Court cannot substitute for the terms of the Deed some different form of agreement based upon acceptance, or otherwise, of their conflicting evidence about conversations in negotiations: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347-353.
2. In any event, without intending any disrespect to any member of the Degnan and Fisher families, and accepting that they all endeavoured to give their evidence honestly, I am inclined to the view that each of them gave evidence about long ago conversations coloured by their self-interest, and closely aligned views, on the proper construction of the Deed. Nor am I comfortably satisfied that Matthew's secondary evidence of a lost receipt should be accepted over Mr Fisher's denial that he ever gave Mr Degnan a receipt.
3. The parties' common knowledge of "surrounding circumstances" has already been noted.
4. My construction of the Deed is based upon the terms of the Deed itself, read in the light of those surrounding circumstances.

Mr Oliver's pre-Deed correspondence

1. To the extent it may be permissible to have regard to correspondence of Mr Oliver written shortly before execution of the Deed, that correspondence supports a finding that the parties' agreement was one for the purchase of land by Mr and Mrs Degnan, not merely an agreement for a loan. This evidence goes to the existence of an agreement for the Degnans to purchase an interest in the land, not particular terms of the agreement.
2. The construction of the Deed dated 20 July 2012 I favour is consistent with a letter dated 5 June 2012 addressed by Mr Oliver to Mr and Mrs Fisher (then living away from the land) and Mr Degnan (then living on the land) following a conference he had with Mrs Fisher and Mr Degnan on 1 June 2020.
3. The letter is addressed to Mr and Mrs Fisher and Mr Degnan by their respective first names. It reads as follows (with emphasis added): "Re: Subdivision and sale to John [Mr Degnan] Property: [the land at Sawtell] We refer to the above and in particular to the writer's conference with Karen [Mrs Fisher] and John [Mr Degnan], and advise as follows. Firstly, we note that John is keen to acquire freehold [sic] the front older residence for a figure of approximately $250,000 to $260,000. We note that at the moment, the new home that is being constructed [by Mr and Mrs Fisher] is only a few weeks away from completion, and that it has been undertaken as a dual occupancy. This therefore means that there is only one title deed. We note that in order to provide two separate titles, there needs to be a subdivision either by way of a Torrens title subdivision or a strata subdivision. Either way, it would appear to be achievable, subject to surveyors advices. We understand that there are separate driveways to the two homes, and given that they are not sharing any common wall, it would be the writer's view that if possible, you should go by way of a Torrens title subdivision. This has some commercial advantages if and when the parties proceed to sell. We are aware that John will be in a position to advance some funds to reduce George and Karen's [Mr and Mrs Fisher's] indebtedness to the St George Bank. We advise that this is capable of being done by way of a loan agreement, which could be secured by way of a caveat or a second mortgage over the property, pending subdivision. Clearly the terms and conditions of the loan, the duration of sale, and other particulars that would need to be put into the loan agreement can be obtained from you later, however the initial step should be confirming with a surveyor that it is capable of being subdivided, which we are sure that it can. Once that assurance has been received, we can then proceed to having an agreement put in place between John, Karen and George which will basically be to the effect that for John paying the agreed amount of money, he will receive, following subdivision, all right, title and interest in the front home. There will clearly be some costs involved with respect to the bank, the surveyor and this office in pushing through such a subdivision, and agreement can be reached between the parties as to how that is going to be funded. What we can say, however, is that if John is in a position to advance the money from his inheritance in the next week or so, then we can certainly prepare the loan agreement to provide protection to John, and that loan agreement would regulate the conduct of the parties leading up to subdivision and transfer of the front home to John. What to do now? At this stage, would you please consult a surveyor and hopefully we can receive some written advices from that surveyor confirming that subdivision is available, the type of subdivision (either strata or Torrens) and then when we have received that information, we can then inform the bank to ensure that there is no difficulty from their end. We would also at that time need to prepare the loan agreement between John, George and Karen, and for that we would need to know what the purchase price is for the front property, noting that stamp duty will need to be paid on it in due course, who will fund or whether it will be split 50/50 in regard to the subdivision costs, and what, if any security John will require pending the subdivision (a caveat, second mortgage?). At this stage we will await your advices from the surveyor and then if John has received the funds, we should proceed immediately to preparing that loan agreement. Thank you for consulting us in regard to this matter, and we look forward to your further advices and instructions."
4. In giving his evidence, Mr Fisher could not recall receiving this letter, but accepts that he may have received it and read it. Mrs Fisher's evidence is that she received and read the letter after her husband had read it.
5. Neither of them protested to Mr Oliver that there was no agreement for the Degnans to purchase the principal dwelling or for title to be transferred to the Degnans upon a subdivision of the land. Neither asserted that any agreement about land acquisition was no more than an "agreement to agree" or an informal, non-binding family arrangement.

Mr Oliver's correspondence to all Parties after the date of the Deed

1. An incident of the objective theory of contract which governs guideline principles for identification of contractual intent is that evidence of conduct after a written contract has be made cannot be used as an aid to construction of the contract unless it provides retrospectant evidence of surrounding circumstances known to the parties at the time the contract was made: Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 616[13] and 681[320]-683[327].
2. On 26 July 2012, in a letter reporting to all parties the fact that their Deed dated 20 July 2012 had been executed by all parties, Mr Oliver canvassed circumstances surrounding the Deed at the time of its execution, identifying the Degnans' payment of $250,000 to the Fishers as being, in effect, for the purchase of the primary dwelling on the land.
3. Although it post-dates the date of the Deed, the letter is so closely associated with execution of the Deed as to be fairly characterised as contemporaneous with it.
4. Its utility in identifying the subject matter of the Deed derives not so much from its content as from the absence of any dissent by its recipients.
5. On 26 July 2012 Mr Oliver wrote his letter to both Mr and Mrs Degnan and Mr and Mrs Fisher in the following terms (with emphasis added): "Dear John, Judith, George & Karen, Re: JA & JA Degnan loan to GA & KA Fisher - Deed of Loan concerning property subdivision and acquisition of home We refer to the above and note that things are now progressing fairly quickly, and in particular we note that George and Karen [Mr and Mrs Fisher] have sold Celeste Place [their former home]. We also note that John [Mr Degnan] has received part of his inheritance sufficient to advance the principle [sic] sum to George and Karen. No doubt this has assisted greatly in further prosecuting the subdivision. At the time of dictating we haven't heard further from the surveyors, but note that they should be in touch with you concerning the subdivision, and certainly the writer can strongly endorse the approach taken, namely to subdivide the two properties thus enabling separate titles to issue. The surveyors in due course will be in touch with us when the plans have been completed, and of course we will then take the legal steps necessary to formally have the property subdivided. We note that John and Judith have extended the sum of $250,000 to George and Karen, which in effect is for the purchase of the home sitting at the front of the property. Clearly this needed to be evidenced in writing to protect both parties, and the easiest and simplest way to do it was by way of a capital Deed of Loan. Please find enclosed the following: 1. Copy of Deed of Loan signed by all parties and dated 20th July, 2012. 2. Our Memorandum of Professional Costs & Disbursements addressed to all parties. Firstly generally speaking when people borrow money, it is the borrower that in fact pays for the costs of preparing the necessary documentation. We have been advised and instructed however that the parties will meet the account 50/50, and that is why we have addressed the account in the way we have. Secondly, the original Deed of Loan will remain in our securities free of charge, pending [any] future requirements the parties might have. At this stage we do not see any need to proceed a caveat on the property, given that it is a family transaction and given that the agreement has been evidenced in writing. If however the parties require the agreement to be registered on title by way of a caveat, then certainly the document contemplates that. We further note that now that the funds have in fact been advanced to George and Karen, there is no rent being paid by John and Judith for occupation of the front home, and we further note that no interest is running on this advance. At this stage, nothing further need be done in regard to this matter as this is at an end, although clearly the writer will liaise with you concerning subsequent subdivision, but of course we are reliant on the surveyors before we can take that aspect further. Pending your further advice and instructions, the writer sends his very best wishes to all of you."
6. No party protested, upon receipt of this letter, that the Deed did not operate as, or evidence, an agreement for Mr and Mrs Degnan to purchase the principal dwelling on the land for $250,000, with title to that part of the land to be transferred to them on subdivision of the land into two Lots.

MRS DEGNAN'S CLAIM FOR AN ACCOUNT

1. Upon registration of the plan of subdivision of the land, the agreement for purchase of land by Mr and Mrs Degnan embodied in the Deed dated 20 July 2012 was, on the part of the Degnans, fully executed. They had done everything required of them in performance of their obligations under the Deed. All that remained to be done for the agreement to be fully performed, on both sides of the Deed, was for Mr and Mrs Fisher to transfer legal title to Lot 270 to Mrs Degnan.
2. Upon approval of a subdivision of the land, the parties' agreement for Mr and Mrs Degnans' purchase of Lot 270 became unconditional: McWilliam v McWilliam's Wines Pty Ltd (1964) 114 CLR 656 at 660-661; Brown v Heffer (1967) 116 CLR 344 at 351-352; Cf, Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (5th edition, 2015), paragraph [20-240]. The Degnans having paid the purchase price for Lot 270, and the parties' contract being amenable to an order for specific performance, the Fishers became constructive trustees of the property for the Degnans: McWilliam v McWilliam Wines Pty Ltd (1984) 114 CLR 656 at 660-661; Chang v Registrar of Titles (1976) 137 CLR 177 at 184-185 and 189-190; Meagher, Gummow and Lehane, op. cit., paragraph [6-050]. All that remained to be done was to register the plan of subdivision and to transfer Lot 270 to the Degnans.
3. Having taken the benefit of the $250,000 paid to them by Mr and Mrs Degnan as the purchase price for Lot 270, and the Degnans' performance of their incidental obligations, under the Deed Mr and Mrs Fisher were contractually bound to register the approval plan of subdivision and to transfer the Lot to her upon its registration. They held it on trust for her in the meantime.
4. Upon their sale of Lot 270, Mr and Mrs Fisher held the proceeds of sale (net of agent's commission and conveyancing costs) on trust for Mrs Degnan.
5. Mrs Degnan does not seek a declaration that she is entitled to trace into other property the funds to which she is entitled. She seeks an order that Mr and Mrs Fisher pay her equitable compensation in an amount equivalent to the sale price of the land ($485,000) less the sum of: (a) agent's commission paid on the sale; (b) conveyancing costs incurred on the sale; and (c) the $250,000 paid to Mrs Degnan on 29 January 2020. Mrs Degnan also claims interest under section 100 of the Civil Procedure Act 2005 NSW, section 100 on the net amount.
6. Although these proceedings have been conducted on the basis of a claim for an accounting for trust money, crystallising in a claim for equitable compensation, a similar outcome might have been achieved on a claim for common law damages, the implications of which were not pursued by either side of the record. In substance, the parties' dispute has focused upon the question whether, properly construed, the Deed dated 20 July 2012 was an agreement for the purchase of an interest in land or simply a loan agreement.
7. The precise amount to be allowed for agent's commission and conveyancing costs is not yet the subject of evidence or agreement between the parties. Accordingly, I will refrain from entering judgment until the necessary evidence is adduced, or the parties agree upon the amounts for which allowance must be made, and interest calculations are to hand.
8. I will allow the parties an opportunity to make submissions about the costs of the proceedings.
9. The proceedings will be listed before me at 9:00am on 27 October 2021 for the purpose of dealing with any outstanding questions about quantification of the judgment to be entered in favour of Mrs Degnan and the question of costs.
10. Each party should, no later than 26 October 2021, file and serve any draft orders and written submissions they seek to make on those questions.
11. If the parties reach agreement as to the orders to be made they are at liberty to apply for orders to be made in chambers.

Amendments 20 October 2021 - Amendments to paragraphs 6 and 27 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 October 2021