McMurtrie v Calver [2008] NSWSC 375 | Case summary

1 On 10 September 2007 Harrison AsJ struck out the plaintiffs' statement of claim in accordance with orders sought by the second defendant in her notice of motion filed 26 June 2007: see McMurtrie v Calver [2007] NSWSC 996. Her Honour granted leave to the plaintiffs to file and serve an amended statement of claim within 28 days and reserved costs. The second defendant had sought orders that the proceedings against her be dismissed pursuant to UCPR 13.4(1)(b) on the ground that no reasonable cause of action was disclosed or an order that the statement of claim against her be struck out pursuant to UCPR 14.28(1) (a) and (b) on the ground that it disclosed no reasonable cause of action or alternatively had a tendency to cause prejudice, embarrassment or delay, or both. 2 Under the heading "Summary judgment and strike out claim", her Honour set out in detail the relevant factual background and the pertinent authorities in relation to the application of these rules. I respectfully adopt her Honour's analysis for the purposes of these reasons and do not repeat the matters that she described. 3 On 11 October 2007 the plaintiffs filed an amended statement of claim. On 8 November 2007 the second defendant filed another notice of motion in which she sought the same relief with respect to the amended statement of claim as she had sought in her original notice of motion. 4 That matter came before me on Friday 18 April 2008. Mr Trebeck of counsel appeared to the second defendant. Mr Boote of counsel appeared for the plaintiffs. I reserved my judgment on that day. 5 The plaintiffs' amended statement of claim is a curious document. It has clearly not been prepared by, or with the benefit of, counsel or professional legal advice of any kind. I am informed by Mr Boote, if it was not otherwise apparent, that the document was prepared by the first plaintiff. The document is 37 pages long, confused and confusing, and is replete with inappropriate references to legal concepts and technical legal terms. 6 Briefly the plaintiffs allege that they entered into a contract with the first defendant on 7 February 2005 to lease, and to purchase, land owned by him. The land that is said to be the subject of the contract was at the date of the contract in fact owned by the first defendant and the second defendant as tenants in common. They were formerly married to each other. 7 The plaintiffs obtained default judgment against the first defendant in 2007, and an application by the first defendant to set aside that default judgment was also heard and determined, unfavourably to the first defendant, by Harrison AsJ in the decision to which I have earlier referred. A second application by the first defendant for identical relief came before me today and was dismissed with costs. 8 The amended statement of claim alleges against the second defendant that she "was informed personally by the plaintiffs of the existence and terms of the contract entered [into] by the first defendant and the plaintiffs on 1 and 2 August 2005 and the second defendant said she agreed with the terms": par 29. Particulars of that allegation reveal that in fact the assertion is that the second defendant said to the plaintiffs that she "was happy for the sale of the two acres to go ahead if it would help retire the mortgage held by the defendants and allow the second defendant to settle her matrimonial dispute with the first defendant". 9 As the second defendant was clearly not a party to the contract between the plaintiffs and the first defendant upon which the plaintiffs sue, the plaintiffs have sought in these circumstances to make her liable upon one or more of the following bases: - 9.1 That she ratified the contract.

9.4 That she has been unjustly enriched. Ratification 10 The agreement propounded by the plaintiffs was entered into between them and the first defendant on 7 February 2005. The second defendant submits that the facts pleaded do not in law make out a claim that she ratified the contract. 11 Ratification is the adoption of a contract purportedly made by an agent on behalf of a principal, but without authority. See, for example, Bowstead & Reynolds on Agency, 18th ed, Article 13 at par 2-047 as follows: "Where an act is done purportedly in the name or on behalf of another by a person who has no actual authority to do that act, a person in whose name or on whose behalf the act is done may, if he had believed the act to be authorised, by ratifying the act, make it as valid and effectual . . . as if it had originally been done by his authority, whether the person doing the act was an agent exceeding his authority, or was a person having no authority to act for him at all". 12 In the present case the contract alleged was made between the plaintiffs and the first defendant only. There was never any question of the first defendant asserting that he was acting on behalf of the second defendant, as the plaintiffs allege he did, when he said "The land is mine and I can sell it if I want to". According to the second defendant, it was impossible for her to have ratified the agreement since it was never purportedly entered into on her behalf in the first place. "It is clear that ratification only applies where the person whose act is in question professed or purported at the time of acting to do so as an agent": Bowstead & Reynolds on Agency, par 2-061. 13 The particulars to par 31 of the amended statement of claim are headed "Particulars of ratification and intention to be bound". None of the matters particularised, taken alone or in combination, or even if recast into a proper pleading in accordance with the rules, is capable in law of constituting an act of ratification. For example, the plaintiffs allege that on 22 September 2005 the second defendant said that she wanted any money from the sale of the land to be paid off the mortgage. At best, this would appear to be no more than a statement of desire. The plaintiffs then allege that the second defendant "accepted the contract" on 1 August 2005. The second defendant had no alternative but to do so having regard to the fact that the first defendant, as a tenant in common with her, had entered into a contract with third parties, as he was free to do. 14 The plaintiffs also particularise a series of statements alleged to have been made by the solicitor for the second defendant in the course of settlement negotiations with the first plaintiff. It is clear from the terms of the words used that they were incapable of amounting either to a statement of ratification or of an intention to be bound, quite apart from the question of whether or not they would be admissible in any event. 15 The plaintiffs also rely upon a letter written by the solicitor for the second defendant requesting information. The letter is consistent with the acceptance by the second defendant of the fact that her co-owner had entered into a contract on his own behalf and of a reservation by the second defendant of her position with respect to a property settlement with the first defendant. The letter has nothing to do with ratification of the agreement. 16 Finally, the plaintiffs rely upon a conversation on 1 March 2006 between the second defendant and the plaintiffs in which the second defendant is alleged to have informed them that they had protection, in the form of a right to occupy the property, as a result of their lease. There was on the date of that conversation a lease on foot between the plaintiffs and the first defendant and the statement by the second defendant is no more than an accurate statement of the law. Nothing in that statement amounts to a ratification of the agreement either. Estoppel 17 Although headed "Claim for Estoppel", the facts alleged in pars 34 to 37 of the amended statement of claim could not support a claim for any variety of estoppel. As already discussed, the plaintiffs allege that they have a contract with the first defendant who was one of two co-owners and who purported to grant a lease and an option to purchase to the plaintiffs. That agreement binds the first defendant. It does not bind the second defendant. Her rights to enjoy her land are unaffected by any alienation by the first defendant of his interest, just as the first defendant was within his rights to dispose of it. 18 The plaintiffs' allegations of estoppel will have to be considered in this context. Acknowledgement, without more, of the existence of an agreement between the plaintiffs and the first defendant does not give rise to any estoppel. The plaintiffs would be required to plead facts on the basis of which the second defendant is alleged to be precluded from denying that she was bound by the contract entered into by her former husband without her knowledge. No such facts have been pleaded. 19 Nor does an examination of the particulars inform the debate. A simple statement that the second defendant "accepted" the contract is inadequate for this purpose. The payment of rent by the plaintiffs deposited to an account held jointly by the defendants does not constitute "consideration". Consideration of itself would not give rise to an estoppel. The payment of rent to the second defendant and acceptance of rent by her may be relevant, but payment of rent to a joint account is equivocal. Nor does the fact that the second defendant failed to make any objection to these matters give rise to an estoppel. As earlier discussed, the first defendant was free to alienate his interest in the land and the second defendant had no basis upon which to object to that course. The fact that the second defendant signed an application for subdivision of the land provided to her by the first defendant is self-evidently neutral. So is her confirmation in writing of the agency relationship with the first defendant on 20 December 2006 for him to effect service of a notice to vacate on each of the plaintiffs. None of these matters, if proved, could support any variety of estoppel by which the second defendant would be prevented from denying the existence of a contract to which she was bound. Misleading and deceptive conduct 20 The plaintiffs allege that if there was no contract between either of them and the second defendant then her conduct was somehow misleading and deceptive and unconscionable in the circumstances and that she is estopped from denying the existence, and her ratification, of a contract between the plaintiffs and both of the defendants. Whatever that combination of allegations might mean, the plaintiffs do not allege that it occurred in trade or commerce. Even if such an allegation were made, none of the matters particularised as misleading and deceptive conduct could support such an allegation. Unjust enrichment 21 The second defendant submitted that for a claim in restitution to be successful the plaintiff must establish that the second defendant received a benefit for which she did not pay, that the benefit was at the plaintiffs' expense and that it would be unjust for the second defendant to retain the benefit without payment: see, for example, Torpey Vander Have Pty Ltd v Mass Constructions Pty Ltd [2002] NSWCA 263 at par [34] per Spigelman CJ. 22 There are at least two reasons why the plaintiffs cannot make out a claim for restitution against the second defendant in the present case. First, the recipient of the funds paid by the plaintiffs to which the plaintiffs direct attention was a liquidator, not the second defendant. Any distribution to the defendants by the liquidator was a payment of a different character to the payment by the plaintiffs to the liquidator. Secondly, the receipt of a dividend from a liquidator is not unconscionable. In the present circumstances, the allegation is in any event that the payment was made for the purchase of a shed bought and paid for relying only upon the misrepresentation of the first defendant but not of the second defendant. Embarrassment 23 Finally, the second defendant contends that the pleading as a whole is embarrassing and that in several locations it contains inconsistent allegations of fact pleaded in an impermissible way and in a way that is unintelligible, ambiguous and imprecise. This is discussed below. Consideration 24 Her Honour Harrison AsJ expressed the opinion that the claims as pleaded by the plaintiffs in their original statement of claim against the second defendant were hopeless but that their claim was arguable if re-pleaded. The subject matter of the application before me was, of course, the plaintiffs' attempt to do so in accordance with the opportunity given to them by her Honour. Having regard to the product of that attempt, and the significant advantage that it has provided me that was necessarily not available to her Honour, I am of the view that the claims as pleaded by the plaintiffs in the amended statement of claim against the second defendant also hopeless and that they will continue to be unarguable even if re-pleaded. 25 It seems apparent on the material available that the second defendant became unwillingly embroiled in the dealings between her former husband and the plaintiffs. One can well understand why the plaintiffs may wish to extend the reach of the causes of action pleaded against him to the second defendant. However, the plaintiffs' attempts to formulate some cause of action against the second defendant appears transparently to be an attempt by the plaintiffs inappropriately to recover from the second defendant losses allegedly suffered by them as the result of their dealings with the first defendant alone. The plaintiffs' amended statement of claim gives me no confidence that they have, or will ever be able adequately to formulate, any cause of action against the second defendant at all. In my view, the document described as the first amended statement of claim filed 11 October 2007 should not merely be struck out. I consider that the proceedings commenced by the plaintiffs against the second defendant should be dismissed. Orders 26 Accordingly, I make the following orders: -

McMurtrie v Calver

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