Ford v Henry [2009] NSWSC 147 | Case summary

These Terms of Settlement were prepared by Roger James Clisdell." 14 The date, 2 September 2005, was inserted by hand and the signatures of the parties and their solicitors were subscribed, but the blanks in the heading of the document were not completed. The drafter of the document obviously intended that the agreement of the parties be reflected in orders of the Local Court. However, no such orders were made or even applied for; indeed no proceedings were commenced. Mr Henry's claim that he did not understand the Terms of Settlement 15 Mr Henry gave affidavit evidence that at the time when he signed the Terms of Settlement, he did not understand the content of the document he was signing, and that his intention was that Ms Ford would retain the $400,000 which he believed she had received from the claim against Westmead Hospital, and that he would receive the house. Later in his affidavit, he made a different claim, inconsistent with his assertion that he did not understand the agreement. He said that at the time of signing he believed the document meant that he was to give Ms Ford a sum equal to 40% of the value of the Property, as at the time of the agreement, should he later decide to sell, and he said he did not realise that the agreement meant he would have to list the property for immediate sale. That is inconsistent with his solicitor's correspondence with Ms Ford's solicitor in the months prior to the signing of the Terms of Settlement, in which the solicitors clearly envisaged that the Property would be sold and they were negotiating about the distribution of the net proceeds of sale. 16 Mr Henry also gave evidence that he felt pressured to sign the Terms of Settlement and that he felt intimidated. He said the meeting at which he signed took only 10 minutes. He claimed his solicitor and counsel did not provide any advice at the time he signed. He said if he had been properly advised he would not have signed the document. His evidence is at odds with Ms Lawrence's letter of 19 August 2005, in which she said that "after extensive discussions with our client" he had agreed to accept the offer set out in the terms of settlement provided by Mr Clisdell, which was apparently the document that became the Terms of Settlement. His evidence is also inconsistent with the terms of Ms Lawrence's certificate, as noted below. 17 Although Mr Henry has brought a cross-claim, he has not included any claim based on non est factum or any application to set aside the Terms of Settlement based on equitable grounds relating to unconscionability or lack of understanding or pressure or lack of advice. He would bear the onus of proving the ingredients of any such claim, if it were made. He has made a claim under the CR Act but in very unspecific terms, as I shall note later. There is some inconsistency in his affidavit evidence as I have explained, and his claim not to have understood the agreement stands in contrast with the clear terms of, in particular, clause 2. His claim not to have received legal advice is inconsistent with the terms of Ms Lawrence's certificate and her letter of 19 August 2005. His claim that as soon as he became aware of the meaning of the Terms of Settlement he advised Ms Ford that he no longer accepted them sits oddly with the fact that his solicitor did not challenge the Terms of Settlement until 22 June 2006, over nine months after the date of the document. Mr Henry claimed in his affidavit that he had a telephone conversation with Ms Ford in December 2005 or January 2006 in which he told her the Property was not for sale and the agreement was not valid, and that he was getting another solicitor, but even if that were accepted (Ms Ford gave a different version of the conversation), he had not challenged the agreement for a period about four months during which time there were negotiations and plans for sale of the Property. 18 In these circumstances, although Mr Henry was not cross-examined, it seems to me appropriate to conclude that Mr Henry has not established that he did not understand the Terms of Settlement or that he was pressured into signing them or that he did so without receiving proper legal advice. Were the Terms of Settlement a binding contract? 19 Counsel for Mr Henry contended that the making of orders by the Local Court was a precondition to a binding agreement, and therefore in the circumstances he was not contractually bound by the document. Although there is quite a rich case law in this area, no authorities were cited. In my view that submission fails for two reasons. 20 First, clause 5 purports in its terms to be a present acknowledgement by the parties, who have signed it, that the document is "intended to operate in full and final settlement of all financial dealings between the parties arising out of their relationship". These words clearly express an intention to be presently bound by signing the document. Although the words "The parties consent to the following orders" appear, as a matter of formatting, to govern all five clauses, clauses 4 and 5 are not expressed in a manner appropriate for orders, but instead, clause 4 expresses an undertaking and clause 5 expresses an acknowledgement, in each case by both parties. The most the court could do in response to those paragraphs would be to note the arrangements that they express. But noting such arrangements implies that the arrangements have already been made. 21 In those circumstances, although formally all of the clauses of the document are governed by the introductory words, it should not be concluded that the undertaking in clause 4 and the acknowledgement in clause 5 had no effect unless and until Local Court orders were made. Since clause 5 expressed an intention of the parties to be bound in full and final settlement, it follows that all of the paragraphs of the document were intended to operate as a binding agreement without Local Court orders. 22 Secondly, the circumstances surrounding the making of the Terms of Settlement demonstrate an intention to be contractually bound once the document had been signed by both parties and certified, and without Local Court orders. I have referred to the chain of correspondence between the solicitors of the parties up to 19 August 2005, when Ms Lawrence on behalf of Mr Henry wrote to Mr Clisdell on behalf of Ms Ford saying that "after extensive discussions with our client" he had agreed to accept the offer set out in the terms of settlement that had been provided by Mr Clisdell on 2 June 2005. The letter of 19 August said that it enclosed signed terms of settlement, and asked Mr Clisdell to have his client sign the "documents" and arrange to have them filed with the court. I take it that the signed document enclosed with the letter of 19 August was the Terms of Settlement that are in evidence, at that stage signed by Mr Henry and presumably undated. The letter of 19 August is significant because it speaks in terms of accepting an offer of settlement, and the filing of the document in court appears to be in the nature of a step to be taken after the agreement had been made and signed. 23 On 5 September 2005 Mr Clisdell wrote to Ms Lawrence advising that Ms Ford had signed the Terms of Settlement, and enclosing a copy of the signed Terms. Mr Clisdell's letter continued: "Rather than proceed to Court orders we can proceed on the basis that both Solicitors provide their respective clients with Certificates under Section 47 of the Property Relationships Act. Are you prepared to proceed in that way? We await your advices." 24 Ms Lawrence replied by letter dated 16 September 2005, saying "we … agree to provide a Certificate pursuant to Section 47", and she enclosed a copy of the certificate that she said she had provided to Mr Henry. In my view, although she did not expressly say so, Ms Lawrence's letter and her action in forwarding the certificate clearly imply that she agreed with Mr Clisdell's proposal to proceed by issuing certificates without Local Court orders. Therefore, any intention the parties may have had that the Terms of Settlement be rendered binding upon filing with the Local Court was superseded. 25 The solicitors' certificates, considered in more detail below, certified that the respective solicitors had advised their clients prior to the signing of the agreement about various matters including the effect of the agreement on certain rights of the parties. 26 In my view the correspondence shows that the parties, by their solicitors, abandoned the previous proposal to obtain Local Court orders in favour of proceeding by s 47 certificates, thus implying that the Terms of Settlement would be fully effective upon the issue of the certificates. The certificates themselves imply that rights were affected by the signing of the agreement and the terms of the agreement suggest, as I have said, that it was intended to be immediately binding. 27 For these reasons, my conclusion is that the Terms of Settlement became a binding contract no later than the time when the solicitors had issued certificates. On balance, it seems to me probable that the Terms of Settlement were binding as soon as they had been signed by the parties, even without the issue of certificates, as a matter of construction of the document and the certificates. The absence of Local Court orders did not affect the validity and enforceability of the contract. 28 Counsel for Mr Henry submitted that at the time of the signing of the Terms of Settlement, no court had jurisdiction to make orders in terms of the document. This was because, she said, there could be no "application for adjustment" under s 20 of the PR Act because at that stage the parties were not parties to a domestic relationship, and there had been no granting of leave under s 18 (nor even an application for leave) to commence an application more than two years after the domestic relationship between the parties ceased. Moreover, she submitted, the Terms of Settlement contemplated orders of the Local Court but the value of the property was greater than the jurisdictional limit applying to the Local Court. 29 In view of the finding I have made, namely that the Terms of Settlement in themselves and by virtue of the issue of the certificates gave rise to a binding contract without any need for Local Court orders, the question whether any court had jurisdiction to make such orders does not arise. Conversely, to the extent that there may have been jurisdictional problems for the Local Court if an application for orders had been made, this consideration tends to reinforce my view that even before the rearrangements evidenced by the solicitors' correspondence of 5 September 2005 and subsequently, the making of Local Court orders was not intended by the parties to be a condition precedent to a binding agreement. 30 Counsel for Mr Henry submitted that the fact that Ms Ford did not commence proceedings to enforce the Terms of Settlement for more than two years after the date of the document, even though on 22 June 2006 Mr Henry's solicitor advised that Mr Henry did not consider himself bound, was evidence indicating that the parties did not intend to be legally bound by the Terms of Settlement when they were made. I reject that submission. The evidence that I shall recount shows that after the Terms of Settlement were signed, Ms Ford took various steps to either negotiate a buy-out of Mr Henry's interest or to give effect to the Terms of Settlement, and it was only when Mr Henry refused to sign an agency agreement, thereby thwarting the sale process pursuant to the Terms of Settlement, that she found it necessary to take proceedings. The Property (Relationships) Act and the prescribed form of certificate under s 47 31 Counsel for Mr Henry submitted that the solicitors' certificates were defective. To assess this submission, it is necessary to review the main provisions of the PR Act concerning property interests. 32 The PR Act makes provisions with respect to the rights and obligations of people in domestic relationships, including de facto relationships. Part 3 of the Act permits a party to a domestic relationship to apply to a court for an order for the adjustment of interests with respect to property of the parties to the relationship or the granting of maintenance (see s 14(1)). Sections 15-18 set out some prerequisites for making an order, including under s 15 a requirement of residence within New South Wales, under s 17 a requirement that the parties have lived together in a domestic relationship for a period of not less than two years (unless one of the exceptions in s 17(2) applies), and under s 18 a requirement that if a domestic relationship has ceased, an application for an order under Part 3 can only be made within a period of two years after the date upon which the relationship ceased, unless the court grants leave. Where an application is made for an order adjusting interests with respect to property, the court is to have regard to the matters set out in s 20 and 21. 33 Part 4 of the Act deals with domestic relationship agreements and termination agreements. Only termination agreements are relevant here. The definition of "termination agreement" in s 44(1) includes an agreement between two persons made after the termination of a domestic relationship between them, that makes provision with respect to financial matters. The Terms of Settlement in this case, being (according to my finding) an agreement in the contractual sense, were made after the termination of the domestic relationship between the parties, and they make provision with respect to financial matters, namely the distribution of the net proceeds of sale of the Property. Therefore the Terms of Settlement are a "termination agreement" as defined. 34 Section 46 provides that a termination agreement shall be subject to and enforceable in accordance with the law of contract, including the CR Act. In the present case Ms Ford seeks a declaration that the agreement is valid according to the law of contract, and Mr Henry seeks to invoke the CR Act. 35 Section 47 is significant in the present case. It has the effect that, on an application for an order under Part 3, if the court is satisfied that there is a written termination agreement between the parties to the relationship, signed by the party against whom it is sought to be enforced and certified in the manner described below, then (generally speaking) the court is not to make any order under Part 3 that is inconsistent with the terms of the agreement. Note that non-compliance with s 47 does not invalidate the termination agreement but merely prevents it from having the restricting effect on the court's power to make a Part 3 order that s 47 would otherwise impose. 36 Under s 47(1)(d) and (e), the certification requirement for a termination agreement is as follows: "(d) that each party to the relationship was, before the time at which the agreement was signed by him or her, as the case may be, furnished with a certificate in or to the effect of the prescribed form by a solicitor which states that, before that time, the solicitor provided legal advice to that party, independently of the other party to the relationship, as to the following matters: (i) the effect of the agreement on the rights of the parties to apply for an order under Part 3, and (ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement, and (e) that the certificates referred to in paragraph (d) are endorsed on or annexed to or otherwise accompany the agreement". 37 Section 48 should also be noted. It provides, inter alia, that where a termination agreement does not satisfy any one or more of the matters referred to in section 47(1)(b), (c), (d), or (e), the provisions of the agreement may be enforced in proceedings other than an application for an order under Part 3. 38 The Property (Relationships) Regulation 2005 came into force on 10 August 2005, just before the certificates were given in the present case. Form 3 prescribed by the Regulation provides relevantly: "I [ name ] solicitor, certify that, in relation to an agreement in writing proposed to be entered into between [ the parties ], I advised [ my client ], independently of the other party and before the time at which my client signed the agreement, of the following matters: 1 the effect of the agreement on the rights of the parties to apply for an order under Part 3 of the Property (Relationships) Act 1984, 2 the advantages and disadvantages, at the time that the advice was provided, to my client of making the agreement." 39 An older version of the prescribed form, namely Form 8 prescribed by the Property (Relationships) Regulation 2000 as in force between 2000 and 2002 ("the old form"), was different in that, instead of para 2 above, the old form provided that advice was to be given as to "2 whether or not, at that time, it was to the advantage, financially or otherwise, of my client to enter into the agreement; 3 whether or not, at that time, it was prudent for my client to enter into the agreement, 4 whether or not, at that time, and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable." Was there a failure to comply with s 47(1)(d) in the present case? 40 Both Mr Clisdell, acting for Ms Ford, and Ms Lawrence, acting for Mr Henry, signed certificates purporting to be issued under s 47. Both of the certificates were substantially in accordance with the old form (although there was one possibly material departure in the case of Ms Lawrence's certificate in respect of Mr Henry, noted below). It was not submitted that the use of the old wording of paras 2-4, rather than the current para 2, itself constituted failure to comply with the requirement of s 47(1)(d) that the certificate be "in or to the effect of the prescribed form". It seems to me that certification in terms of the old paras 2-4 is probably tantamount to certification of the advantages and disadvantages of making the agreement, as required by the current para 2, and so there would be nothing in a submission relying on the departure from the current prescribed form, were such a submission to be made. 41 Section 47(1)(d) requires that each party to the relationship be furnished with a certificate in the prescribed form "before the time at which the agreement was signed by him or her". Counsel for Mr Henry submitted that the solicitors for both parties failed to comply with s 47(1)(d) in this respect. 42 In the case of Mr Clisdell's certificate in respect of Ms Ford, it appears from the evidence that the certificate was given on about 23 September 2005, whereas the document was signed by Ms Ford no later than 5 September 2005 and probably on 2 September. The evidence upon which I rely for those conclusions is as follows. As to signature by Ms Ford, Mr Clisdell's letter of 5 September, referred to above, states that Ms Ford had signed the document and purported to enclose a copy of the signed document. Although the enclosure to the letter is not in evidence, as such, it is consistent with the evidence that what was enclosed was a copy of Terms of Settlement signed by Ms Ford and dated 2 September and signed also by Mr Henry on about 19 August. As to the date of the certificate, the evidence is not entirely clear because the certificate itself refers to an agreement "proposed to be entered into". On the other hand, the certificate is dated 23 September, and it appears from the terms of the letter of 5 September that Mr Clisdell had not, at that stage, given the certificate. He asked in that letter whether the matter could proceed on the basis that both solicitors provide certificates, implying that his certificate had not at that stage been issued. On the evidence, therefore, my view is that the requirement of s 47(1)(d) that Ms Ford be furnished with a certificate before she signed the agreement was not complied with. 43 In the case of Ms Lawrence's certificate in respect of Mr Henry, it appears from Ms Lawrence's letter dated 19 August that he signed the Terms of Settlement on or shortly before 19 August, for that letter purported to enclose the signed document and advised that Mr Henry had agreed to accept the offer. The certificate is dated 19 August and there is nothing in the subsequent correspondence to show that it was in fact given at a later date. Specifically Ms Lawrence's letter of 16 September purports to enclose "a copy of the Section 47 Certificate that we have provided to our client" (emphasis supplied). 44 Counsel for Mr Henry drew attention to the fact that Ms Lawrence's certificate departed from both the old and new prescribed forms by certifying "in relation to an Agreement in writing …" rather than "in relation to an agreement in writing proposed to be entered into …". However, in my view the wording of Ms Lawrence's certificate does not in itself imply that the agreement had already been signed before the certificate was issued. One might refer, perhaps imprecisely but not inaccurately, to an "agreement in writing" when giving a certificate just before the document is signed by the client. In summary, the evidence does not lead me to conclude that Ms Lawrence's certificate was given after Mr Henry signed the agreement, and therefore failed to comply with s 47(1)(d) in that respect. 45 My finding that s 47(1)(d) was not complied with in respect of Ms Ford appears to have the effect that the Terms of Settlement could not be relied upon against Ms Ford as a termination agreement complying with s 47, if she took Part 3 proceedings against Mr Henry seeking an order adjusting property interests in a manner different from the terms of that document. Whether the Terms of Settlement could be asserted against Mr Henry if he took Part 3 proceedings for an adjustment of property interests is perhaps more debatable as a matter of statutory interpretation. However, I need not resolve either question in the present proceedings. It is sufficient in these proceedings for me to conclude, and I do conclude, that the non-compliance with s 47(1)(d) that I have identified does not affect the validity of the Terms of Settlement as a contract or their enforceability in proceedings other than under Part 3. Nothing in s 47 suggests that it was intended to have that effect; s 46 expressly preserves the law of contract except as otherwise provided in Part 4; and s 48 confirms that a non-complying termination agreement is enforceable in proceedings other than under Part 3. Facts after the signing and certification of the Terms of Settlement 46 Mr Henry gave some evidence, contested by Ms Ford, about renovations and other improvements he claims to have made to the Property since entering into the Terms of Settlement. It is unnecessary for me to make any finding on those matters in the present proceedings, because any such improvements (if made) cannot affect any claim for relief in the summons or cross-claim. The post-contractual making of improvements would not go to the validity and enforceability of the Terms of Settlement as a contract at general law. Nor would that evidence affect the application of the CR Act. Relief under s 7(1) of that Act requires the court to find that the contract was unjust "in the circumstances relating to the contract at the time it was made". While, under s 9(5), the court may have regard to conduct of the parties in relation to performance of their contract after it was made, no submission has been made to the effect that the conduct of Mr Henry in making improvements to the Property (if he did so) after the Terms of Settlement were made is relevant to establishing a case under s 7. In this case it cannot be said that any subsequent conduct of Mr Henry by way of making improvements to the Property is, of itself, evidence that the contract was unjust when made: any improvements would presumably increase the value and therefore the sale price of the Property and accordingly the amount of net proceeds received by both parties. 47 According to Ms Ford, attempts to sell the Property after the Terms of Settlement had been finalised proved fruitless. She gave evidence that she offered to purchase Mr Henry's interest but those negotiations were unsuccessful. In approximately April or May 2006 Mr Henry instructed a new solicitor, Ms Picker. 48 On 22 May 2006 Mr Clisdell wrote to Ms Picker stating that Ms Ford was withdrawing her offer to purchase the Property, though she was still prepared to sell her interest in accordance with previous correspondence. He said that if Mr Henry elected not to purchase Ms Ford's interest, then his instructions were to approach the President of the Real Estate Institute of NSW for a selling agent to establish a sale price in accordance with the Terms of Settlement. In his cross-claim Mr Henry relied upon this letter as evidence that the parties by their actions resiled from their agreement and attempted to negotiate alternative arrangements. In my view the letter provides some evidence, as does Ms Ford's first affidavit, that the parties did indeed attempt to negotiate alternative arrangements with respect to the ownership of the Property after the Terms of Settlement were signed, namely the buy-out one party's interest by the other, but those attempts failed. Nothing about the evidence suggests that in embarking on those negotiations the parties or either of them intended to resile immediately from the Terms of Settlement, although presumably they would have agreed to terminate the arrangements reflected in the Terms of Settlement had they been able to negotiate an alternative solution. 49 Ms Picker wrote to Mr Clisdell on 22 June 2006, asserting that full and frank financial disclosure had not been given of Ms Ford's true financial position leading up to the signing of the Terms of Settlement. The letter proposed that it would be prudent to Ms Ford to execute a transfer of her share of the Property forthwith, with indemnity from Mr Henry (presumably in respect of the mortgage on the Property), though apparently without any payment by him to her. On 3 July 2006 Mr Clisdell replied to that letter, denying any failure of disclosure of Ms Ford's assets or income during the course of negotiations. 50 On the same day Mr Clisdell wrote to the President of the Real Estate Institute inviting him to appoint a selling agent for the Property. On 14 August 2006 the Real Estate Institute wrote to Mr Clisdell nominating Mr John Haslem of Batemans Bay for that purpose. Ms Ford had obtained a valuation of the Property earlier in 2006, which estimated the present value as at 15 February 2006 at $650,000. She later supplied a copy of the valuation to Mr Haslem. 51 On 6 September 2006 Ms Picker wrote to Mr Clisdell asserting that the terms of the "agreement" between the parties did not take into account all the financial resources and property of the parties, that her client instructed her that he would no longer consent to the Terms of Settlement as framed, and that the Terms of Settlement were invalid. Mr Clisdell responded on 7 September 2006 rejecting the suggestion that the agreement was void and advising that Ms Ford was proceeding with the listing of the Property for sale by the agent appointed by Real Estate Institute. There were then some communications between the real estate agent and Mr Henry about access to the Property for inspection, Mr Henry asking for time to complete some work in progress that would increase the valuation. The agent wrote to Mr Henry on 24 November 2006 saying he had inspected the Property at the invitation of Ms Ford and that it was in excellent condition. By subsequent undated letter to the agent Mr Henry objected that the agent had gained access without his permission. 52 On 4 December 2006 Ms Picker wrote to Mr Clisdell requesting that his client transfer her interest in the Property subject to an indemnity in relation to the mortgage and indicating that proceedings were in contemplation. On 15 December 2006 Mr Clisdell wrote to Ms Picker saying that his client would abide by the terms of the property settlement. 53 On 5 February 2007 the agent wrote to Mr Henry informing him that he had received a signed listing agreement from Ms Ford and asking for an equivalent signed document from Mr Henry. On the same day the agent wrote to Mr Clisdell saying that he could not commence to market the Property until a listing agreement signed by Mr Henry was to hand. The sale process appears to have stalled at that stage. The summons in the present proceedings was filed on 5 December 2007. 54 In his cross-claim Mr Henry contended that Ms Ford had failed to commence proceedings to enforce the agreement until approximately 18 months after his solicitor wrote disputing the validity of the agreement (presumably referring to Ms Picker's letter of 22 June 2006). But the evidence shows that during that period Ms Ford appointed a real estate agent to sell the property and the agent eventually inspected the property (notwithstanding apparent lack of co-operation from Mr Henry) and then was unable to proceed because Mr Henry refused to sign an agency agreement. The evidence does not reveal what happened between about February and December 2007 but a delay in commencement of proceedings for that period would not, in the absence of evidence of laches or estoppel, disqualify her from relief. 55 The parties gave affidavit evidence about conversations in which Ms Ford asked Mr Henry to sign the agency agreement and he refused to do so. They disagree as to the reasons he gave for not doing so. I need not resolve that conflict of evidence, having regard to the relief sought in the proceedings. Mr Henry's other claims: non-disclosure and CR Act 56 Apart from his submission (unsuccessful for reasons given above) that the Terms of Settlement are not binding and enforceable as a contract, and his submission that the solicitors' certificates did not comply with s 47 (partly successful but not affecting the validity or enforceability of the Terms of Settlement), Mr Henry has made two other principal submissions. 57 First, in his cross-claim seeking a declaration that the Terms of Settlement were not valid and binding and relief under the CR Act, Mr Henry contended that Ms Ford had failed to make "full and frank disclosure of her true financial position" prior to the signing of the Terms of Settlement, in that she failed to disclose the money she had received in settlement of her claim against Westmead Hospital and she failed to disclose the money she had received from Centrelink and the fact that she was claiming a sole parent pension during the relationship. 58 The main answer to this submission is that if there were failure to disclose these matters, it would not lead to invalidity of the Terms of Settlement as a contract. The PR Act does not impose on a party to a termination agreement an obligation of "full and frank disclosure" prior to the making of a termination agreement, and so the effect of non-disclosure on such an agreement is left for determination under the general law and the CR Act. I shall consider the CR Act below. So far as the general law is concerned, while non-disclosure can be, or at least be part of a case of, fraudulent or innocent misrepresentation inducing a contract, giving rise to a right of rescission, the facts of the present case are well outside what would be necessary to make out such a case. 59 As far as the non-disclosure of the proceeds of the Westmead Hospital claim are concerned, Ms Ford's unchallenged evidence was that the settlement money was received well after the parties separated. The evidence shows that by 10 December 2004 Mr Henry had a belief that the settlement amount received by Ms Ford was $500,000 gross and approximately $400,000 net. According to Ms Lawrence's letter to Mr Clisdell of that date, she had been instructed by Mr Henry that this was the amount of the settlement, and she made an assertion to that effect in order to show that Ms Ford had become financially secure. In his affidavit Mr Henry gave evidence that he believed Ms Ford had received $400,000. It seems to me appropriate to infer from the evidence that Mr Henry took into account his belief about Ms Ford's settlement money when deciding to enter into the Terms of Settlement. Therefore the evidence does not support a case of misrepresentation inducing a contract. 60 As far as the Centrelink and pension payments are concerned, Mr Henry claimed that he was unaware of these payments until after signing the Terms of Settlement and that if he had been aware, he would not have signed. The difficulty for Mr Henry is that there is no evidence that anything done or omitted by Ms Ford amounted to an inducement to him to enter into the Terms of Settlement. 61 In my view, therefore, Mr Henry's claims about non-disclosure do not establish a case of misrepresentation affecting the validity or enforceability of the Terms of Settlement as a contract. 62 The other principal submission made on behalf of Mr Henry is under the CR Act. Section 7 of that Act applies "where the Court finds a contract … to have been unjust in the circumstances relating to the contract at the time it was made". The section permits the court, in those circumstances, "if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result", to refuse to enforce the contract or to make various orders including an order declaring the contract void or an order varying it. Section 9(1) says that in determining whether a contract is unjust in the circumstances relating to the contract at the time it was made, the court is to have regard to the public interest and to all the circumstances of the case, including consequences or results arising in the event of compliance or non-compliance with the contract. Section 9(2) says that without affecting the generality of s 9(1), the matters to which the court is to have regard shall, to the extent that they are relevant to the circumstances, include twelve listed matters. Section 9(4) says that in determining whether a contract is unjust, the court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. 63 Mr Henry's pleaded case under the CR Act is very sketchy (for example, it is striking that no attempt is made to invoke any of the sub-paragraphs of s 9(2)). 64 It appears that Mr Henry relies on Ms Ford's alleged failure to make full and frank disclosure of her true financial position and in particular, her failure to disclose the amount she received from the claim against Westmead Hospital and her failure to disclose the money she received from Centrelink and for the sole parent pension. Assuming that she did not disclose either of these matters to Mr Henry, in my view their non-disclosure does not provide any basis for the court to conclude that the Terms of Settlement were unjust in the circumstances relating to that contract at the time it was made. As far as the settlement money is concerned, it appears from the evidence, as noted above, that Mr Henry negotiated and entered into the Terms of Settlement believing that the amount was $400,000 net. Therefore he agreed to the substance of the Terms of Settlement and in particular the 60%/40% split believing that she had substantial other funds. As far as the Centrelink and sole parent pension payments are concerned, they are not quantified and the court is therefore not in a position to conclude that Mr Henry's lack of knowledge about those payments at the time of the Terms of Settlement renders that contract unjust. 65 Mr Henry's cross-claim refers to improvements made after the signing of the Terms of Settlement, but any such improvements would not bear upon the claim under the CR Act for the reasons I have given above. 66 The cross-claim refers to Mr Henry's assertion that he was not given adequate advice, but I have found that this claim has not been proven. The cross-claim also refers to other matters alleged to have occurred after the making of the Terms of Settlement, which therefore cannot be relevant to a claim under the CR Act. 67 In written submissions, counsel for Mr Henry contended that the Terms of Settlement, if they are a contract, are unjust because the contract was to the detriment of Mr Henry, since Ms Ford was getting 15% more than that to which she was legally entitled. The reference to Ms Ford's legal entitlement is apparently a reference to the way the title to the Property was held. But Mr Henry conceded that the Terms of Settlement, if they were a contract, were a "termination agreement" and therefore that they were in settlement of claims after termination of a domestic relationship. In those circumstances there is no foundation for the assertion that it was unfair that her entitlement under the contract was more than the entitlement reflected in legal ownership. 68 Counsel for Mr Henry asserted that another aspect of unfairness was that the contract conferred a benefit on Ms Ford notwithstanding that she was outside the limitation period to commence Part 3 proceedings against him. But such proceedings can be commenced with leave outside the limitation period (indeed, counsel for Mr Henry foreshadowed that he may yet seek leave to commence such proceedings), and therefore a financial settlement that would have operated as a termination agreement if it complied with s 47 could plausibly be regarded as in substitution for any Part 3 claim she might bring with leave. 69 Counsel for Mr Henry made some other submissions which, it seems to me, were designed to run a Part 3 case under the cloak of proceedings testing the validity of a termination agreement. I made various rulings at the hearing excluding evidence going to financial and other contributions on the ground that they were irrelevant to the present proceedings, having regard to the relief sought in the summons and the cross-claim. The written submissions made on behalf of Mr Henry, prepared before my evidentiary rulings, relied on various assertions to do with financial contributions to the purchase price of the Property, payment of outgoings, indirect contributions of various kinds and improvements to the Property during the relationship, but these matters were not proven at the hearing having regard to my evidentiary rulings. In any event, such matters, if proven, would be unlikely to be relevant to a claim under s 7 of the CR Act. 70 Counsel for Mr Henry referred to lack of "independent legal advice" and said that the advice received by Mr Henry was "inadequate and incorrect", on three grounds. First, counsel referred to Mr Henry's evidence that he did not understand that he had to sell the property, but I have not accepted that evidence. Secondly, she submitted Mr Henry would have recovered the whole of the Property had there been a Part 3 proceeding, but that is no more than an unsupported assertion. Thirdly, she contended that Mr Henry was not advised that there was no right for either party to commence a Part 3 application because, at the time of the Terms of Settlement, two years had passed since the party separated. That alleged lack of advice is not proven. I doubt whether the second and third matters, had they been proven, would have established that the Terms of Settlement were unjustified in the circumstances relating to the contract at the time it was made, for the purposes of s 7. 71 For these reasons, the cross-claim under the CR Act is unsuccessful. Beneficial entitlements and trust for sale 72 In addition to a declaration that the Terms of Settlement are a valid and binding contract, Ms Ford seeks a declaration that she and Mr Henry are beneficially entitled to the Property in the shares of 60% for him and 40% for her. That is in accordance with the Terms of Settlement. In my view that declaration should be made. The Terms of Settlement, being a valid and enforceable contract, are prima facie specifically enforceable and there is no condition precedent to performance. The parties are equitably entitled to the Property in the proportions provided for in that contract (subject, of course, to prior encumbrances), and the court should recognise those equitable interests pursuant to the maxim that equity regards as done that which ought to be done. 73 Ms Ford seeks an order that an identified accountant and solicitor be appointed trustees of the Property, that the Property be vested in them subject to any encumbrances affecting the entirety of the Property but free from any encumbrances affecting any undivided share in it, and that the Property be held by the trustees upon statutory trust for sale under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW). The accountant and the solicitor have consented to act as trustees. In my view it is appropriate that I should make these orders to give effect to the rights of the parties under the Terms of Settlement, taking into account the evidence that Mr Henry has refused to co-operate in the voluntary sale of the Property. The only submission to the contrary made by counsel for Mr Henry was that there was no evidence of consent of the proposed trustees, but the affidavits that were read during the hearing have overcome that objection. Conclusions 74 Ms Ford has established that she is entitled, in substance, to the relief sought in paras 1-4 of the summons, although the declaration that the Terms of Settlement are a valid and binding agreement between the parties should not refer to s 56 of the PR Act. Mr Henry's cross-claim has failed and will be dismissed. 75 I shall direct the plaintiff to bring in draft short minutes of orders, which will presumably reflect paras 1-4 of the summons with that adjustment, and fix a time for the making of orders and the hearing of submissions as to costs. **********

Ford v Henry

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Legislation Cited (4)

Cited By (2)