Mr Phillip Barnes seeks an order for possession of land at Nimbin from his brother Mr Darren Barnes, his co-executor of the estate of their late father Mr Lawrence Barnes. Leanne Barnes is their sister, who with her brothers is also entitled to a one third share of the estate. The Court earlier made consent orders about the estate in probate proceedings, noting an agreement which had been reached about the property.
This agreement required Mr Darren Barnes to vacate the property so that it could be sold, but he is still living there. There were later negotiations about his purchase of the property and chattels located there, for $340,000, other than a tractor, which he was to purchase for $15,000. But those sums have never been paid or the purchase completed. Mr Darren Barnes defends his co-executor's claims, relying on an agreement for his purchase of the property which he claims was reached in August 2021 and still binds the parties.
By a cross-claim Mr Darren Barnes also seeks orders for specific performance of that agreement. That is also defended, the existence of the agreement being denied by Mr Phillip Barnes; its validity put in issue; and in the alternative, its claimed termination pleaded. On his case Mr Darren Barnes has also not ever, even at the time of the final hearing, been ready, willing and able to complete the purchase of the property.
The reply to Mr Phillip Barnes' defence of the cross-claim relies, amongst other things, on Mr Darren Barnes' claimed part performance of the sale agreement. That is also disputed.
[3]
Issues
Put in issue on the cases the parties advanced was thus whether their original agreement, which required Mr Darren Barnes to vacate, was ever rescinded, varied or replaced by a later binding agreement, whereby Mr Darren Barnes' offer to buy the property was accepted and whether, even yet, if there was such an agreement which had not been terminated, he was ready, willing and able to complete, having earlier failed to comply with a notice to complete.
[4]
Refusal of adjournment and other applications
On Wednesday 19 April 2023 the duty judge, Sweeney J, granted Mr Darren Barnes' then solicitor, Ms Waring, who had represented him since the commencement of the proceedings, leave to withdraw, on her application: Barnes v Barnes (Supreme Court (NSW), Sweeney J, 19 April 2023, unrep). Costs were reserved.
Her Honour was satisfied that Ms Waring had been unable to obtain instructions from Mr Darren Barnes which were necessary in order for the Court's orders for preparation of the matter for hearing to be complied with. The result was that no joint statement of facts and issues or an outline of the submissions Mr Darren Barnes sought to advance, which on Ms Waring's submissions to Sweeney J were of some complexity, had been filed. Ms Waring also considered that a conflict of interest had arisen, which precluded her from continuing to act, even if the required instructions were given.
Before that hearing Mr Darren Barnes had emailed the Court, seeking an adjournment, an application which her Honour declined to hear, no motion seeking an adjournment having been put on, as the applicable Uniform Civil Procedure Rules 2005 (NSW) require.
This was an application which Mr Darren Barnes renewed at the final hearing, only that morning having emailed the Court a note and two documents, which he had not served and having still not filed either a motion or a supporting affidavit seeking an adjournment of the hearing.
After a short adjournment so that these documents could be provided and considered and the settlement which Mr Darren Barnes thereby pursued discussed, the adjournment application was pressed and refused: Barnes v Barnes (No 2) (Supreme Court (NSW), Schmidt AJ, 24 April 2023, unrep).
Despite the refusal of that application, it and the proposed settlement were repeatedly pressed again by Mr Darren Barnes, but the adjournments so sought were refused.
Mr Darren Barnes claimed that he was not in a position to advance his own case and needed to engage other solicitors, which had not been possible before the hearing, because of information which they required before accepting his instructions. That was information which he had not yet obtained from his former solicitors, but still he had not adequately prepared for the hearing. He also explained that he did not agree with the case Ms Waring had successfully advanced before Sweeney J, disputing that he had not given her the instructions necessary to comply with the Court's orders. That was not what he had claimed before Sweeney J.
Mr Darren Barnes had not prepared to advance his own case at the hearing, having been unable to engage other solicitors and having been warned that any further adjournment application would be opposed and might be refused. Unexplained as his repeated applications otherwise were, I was satisfied that they could not justly permit the adjournment of the hearing. Nor was the settlement which he repeatedly pursued within the Court's control.
From the cases advanced, it was apparent that the problems which had led to Ms Waring's successful application for leave to withdraw had been on foot for some time and there was no certainty that during any adjournment Mr Darren Barnes would be able to obtain other legal representation.
In the result, despite the difficulties which he undoubtedly faced in appearing at the hearing unrepresented, I was satisfied that in the circumstances neither an adjournment, or the opportunity Mr Darren Barnes also sought, to put on further evidence, could be justly granted. He had been provided with a fair opportunity to advance his case.
The hearing then proceeded, Mr Darren Barnes further raising the difficulties which he had in advancing his case, not having adequately prepared for the hearing. At some points he also claimed to be having problems reading documents in the court book. There was, however, no evidence that he had medical issues which affected his ability to read and at other times, including during cross-examination, he had no difficulty at all reading things he was taken to.
During his submissions Mr Darren Barnes also sought and was refused leave to re-open his case to lead further evidence. By that point, that he had had a fair opportunity to advance his case was apparent from how he had conducted it. He had elected not to call a witness, Mr Bertram, whom he had claimed in his affidavit evidence was partly financing his purchase of the property. Mr Bertram was required for cross-examination. But he was not called, Mr Darren Barnes then claiming that he had entered different arrangements for financing the purchase of the property. But he led no evidence about what they were.
I am well satisfied that Mr Darren Barnes was given a fair opportunity to put on his case. An unexplained failure to give his former solicitors instructions necessary to comply with the Court's orders, including as to the service of evidence on which he wished to rely and the filing of his submissions, was not a just basis on which to adjourn the hearing of these proceedings.
The further cost and delay involved in the course Mr Darren Barnes sought to pursue, especially given the modest size of this estate, could not justly be permitted, given the obligations imposed on the Court and the parties by s 56 of the Civil Procedure Act 2005 (NSW). It requires that the overriding purpose of the legislative scheme be facilitated, namely, the just, quick and cheap resolution of the real issues in the proceedings.
Mr Darren Barnes' repeated applications, advanced without either an evidentiary basis or proper explanation, did not accord with that obligation. Nor did the grant of his applications. The course which he wished to pursue also did not accord with what the dictates of justice required in the circumstances which arose to be considered and did not give effect to other relevant statutory objectives, the elimination of delay and avoiding costs disproportionate to the importance and complexity of the subject matter in dispute: ss 58-60.
[5]
The evidence
The evidence was not extensive. Mr Darren Barnes did not cross-examine either his brother or sister, despite having required them for cross-examination. He was cross-examined, the evidence which he then gave not advancing his case.
The Court's consent probate orders had included a notation about the parties' original agreement. It included, in relation to the property:
"(c) The parties, as executors, shall instruct Parker & Kissane Lawyers, to collect the funds held in the deceased's bank accounts with the Summerland Credit Union and deposit the proceeds into the trust account of Parker & Kissane Lawyers, to be held pending the distribution of the deceased's estate.
(d) The Defendant will provide vacant possession of the Property (including by removing his caravan) within 28 days of the date of the making of these orders and notations.
(e) In the event that the Defendant does not provide vacant possession of the Property within 28 days of the date of the making of these orders and notations, the Plaintiff is at liberty to issue, and serve, a Writ of Possession which the Defendant will not oppose.
…
(h) The Defendant is to pay an occupation fee/mesne profits to the estate of the deceased in the amount of $4,000 in respect of his occupation of the Property after the date of death and up to the date he vacates the Property pursuant to notation (d) above, to be adjusted against his entitlement in the deceased's estate on final distribution.
(i) In the event that the Defendant fails to vacate the Property within 28 days of the making of these orders and notations, he shall pay an ongoing occupation fee of $350 per week, calculated from 28 days of the making of the date of the making of these orders and notations until the date he vacates the Property, to be adjusted against his entitlement in the deceased's estate on final distribution.
(j) The Property listed for sale with Wal Murray & Co within 28 days from the date Darren James Barnes provides vacant possession and both executors will do everything necessary (including promptly attending to cleaning the property and signing relevant paperwork) to enable this to occur.
…
(I) The sale price of the Property is to be set as agreed between the parties and failing agreement, each party is to obtain two market appraisals of the Property and the sale price will be determined within a range of 10% of the average of the four appraisals obtained."
The original agreement also included:
"(n) Within 7 days from the making of these orders and notations, Parker & Kissane Lawyers are to provide to each of the parties, an undertaking to him, in writing, that no estate funds will be distributed from its trust account without first obtaining the written consent of each of the parties.
(o) After all assets of the estate have been called in, the parties are to attend to the payment of all estate debts and expenses, and Parker & Kissane Lawyers is to prepare a proposed distribution statement for the approval of both executors, prior to attending to the final distribution of the estate.
…
(t) Parker & Kissane Solicitors shall be entitled to pay from any funds held on behalf of the estate, any outstanding accounts payable on behalf of the estate as jointly authorised by the written consent of both executors pending final distribution."
There was no issue that Mr Darren Barnes was then living on the property, where he still continues to reside, not paying any rent and not having purchased it himself, despite the co-executors having agreed on a price of $340,000 for its purchase and $15,000 for the purchase of the tractor.
Mr Phillip Barnes' affidavits explained why he seeks to have the estate sell the property with vacant possession, his brother having failed to complete his purchase of the property. Despite the dispute over whether there was a binding agreement, in which they were separately legally represented, Mr Darren Barnes failed to complete the purchase even after a notice to complete was served and yet still refused to vacate the property, so that it could be sold.
There was no issue that Mr Darren Barnes still depends on his share of the estate to help fund his purchase, but the estate has also not yet been finalised, because of the ongoing dispute. On the case Mr Darren Barnes finally advanced, he claimed that he now has his own funds which would permit him to proceed with the purchase. But he led no evidence to establish this.
In his May affidavit Mr Darren Barnes said that he had lived part-time on the property with his father from September 2019, when he was not working at a coal mine, sleeping in a caravan he had parked there and otherwise living with his father in a dwelling on the property. He then helped maintain the property and kept his belongings there. His father died while he was away working at the mine in Queensland on 20 June 2020.
He then discussed with his brother and sister staying on at the property, which needed maintenance and upkeep, which they could not undertake, as they were both living in Queensland. He understood that was agreed. He acknowledged that he had not complied with the probate orders and explained the ongoing negotiations about vacating the property.
The August 2021 agreement was for purchase of the property "as is". But there were delays with approval of his financing, which resulted in negotiations about dates for completion and eventually, an application for a writ of possession was foreshadowed by Mr Phillip Barnes. That any binding agreement for the sale of the property came into existence was disputed in December 2021. The property was later extensively damaged in the February and March 2022 floods.
In his second June affidavit Mr Phillip Barnes denied giving his brother permission to continue living on the property; explained his concern that it was not being maintained, that adversely affecting its value; the negotiations about the sale price, selling the property as is, without approval of the dwelling; Mr Darren Barnes becoming a bankrupt; and his problems in obtaining finance for the purchase because there was no Council approval of the dwelling on the property. This had also affected the sale price.
In his third October affidavit, Mr Phillip Barnes referred to the notice to complete having been issued, despite the disagreement over whether there was any binding sale agreement; the failure still to complete; and the instructions then given to his solicitor to terminate any contract in September 2022 and to bring these proceedings.
[6]
Did a contract for sale come into existence?
Whether or not a binding agreement came into effect is usually resolved by considering the three classes of cases discussed in Masters v Cameron (1954) 91 CLR 353, [1954] HCA 72 at 360 and the fourth identified in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628, namely where the parties:
1. have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document;
2. have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract;
3. intend there not to be a concluded contract unless and until a formal document is executed; or
4. were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
In the case of the sale of land it is necessary to bear in mind that s 54A of the Conveyancing Act 1919 (NSW) precludes proceedings being brought on any contract for sale, unless the agreement or some memorandum or note thereof, is in writing, signed by the party to be charged or by some other person authorised by that party. Any variation to such a contract must also be evidenced in writing: Radoman Pty Ltd v Vexapu Pty Ltd [2008] NSWSC 8.
Accordingly, sales of land in the State are still usually by entry into a standard form contract following exchange, of the kind discussed in Allen v Carboe (1975) 132 CLR 528; [1975] HCA 14 at 533 and many cases which have later applied and followed it. Other forms of sale contracts are possible, that depending on the intention of the parties: McDonald v Commissioner of Taxation (2001) 109 FCR 207; [2001] FCA 305 at [20]-[21]. But such contracts require agreement between the parties "upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations": Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [57] quoting RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG [2010] 1 WLR 753 at [45].
There was no issue that a deed of family arrangement could have evidenced such an agreement and was discussed, but none has ever been entered.
In Woodhouse v Woodhouse [2022] NSWSC 204 at [200], it was explained how a contract in relation to land might also be evidenced by an exchange of correspondence. Ward CJ in Eq, as her Honour then was, explaining that in order to fall within the statutory requirement of a "memorandum or note" of the agreement which is "in writing" and signed as required, there must be a memorandum or note of all the material terms of the contract, in particular, "parties, price, property and summary of essential promises": Tweddell v Henderson [1975] 1 WLR 1496.
In this case the solicitors' correspondence established the negotiations which the parties pursed, the $340,000 agreed as the purchase price being considerably less than the valuation of the property which the executors had obtained; and that the offer for the purchase of the property made and accepted was not subject to Mr Darren Barnes obtaining finance, the dwelling on the property being approved by Council, or the estate being finalised.
There was later a disagreement about whether the valuation reflected that the premises on the property had not been approved by Council. But there was no question that the price had been agreed in August 2021, with Mr Darren Barnes' solicitor then advising on 7 September 2021 that:
"Deed of Family Arrangement
We note your client has accepted our client's counter-offer on the property and to purchase the tractor for $15,000.00. We propose that the best way moving forward to record the agreement is by way of a Deed of Family Arrangement. Would you please confirm that your office is able to properly draft the Deed in accordance with the terms of their agreement and your costs to prepare same.
With regards to documentation in relation to settlement, we note that your office has been ordered to deal with the administration of the estate once Probate was granted. Please let us know if this is will be an issue.
Legal accounts
With regards to clarity as to our position involving the legal accounts for fees to be paid to Attwood Marshall, we confirm our fees and disbursements to date is $33,316.62 inclusive of GST. Our position is that our fees should be paid in full by the estate, given that our client has only ever acted in good faith and in accordance with his role as co-executor. We also note that our client has had to continuously seek guidance and representation in relation to your client's compliance with the Orders set out by the Supreme Court throughout the administration of the estate, whilst your client's position has been muddled between his role as co-executor and his own interests as a beneficiary in relation to wanting to retain residency and ownership of the estate property."
I thus consider that the evidence establishes that the parties reached agreement in August 2021 about the material terms of the purchase of the property, reflected in their solicitors' written exchanges. But there were other matters outstanding in relation to the estate, which could have been conveniently resolved by entry into a deed of family arrangement. While neither such a deed nor the estate accounts have ever been finalised, this does not preclude a binding agreement for the purchase of the property having been arrived at.
This accords with the further correspondence then pursued about the date of purchase, proposed for 28 September 2021 and the threatened pursuit of a writ of possession, if the sale did not complete.
No date was agreed, Mr Darren Barnes' solicitors advising on 28 September that he intended to proceed with the purchase and suggesting that settlement take place as soon as possible. But on 7 October they advised that his lender required Council approval for the dwelling, which had been sought, with the result that Council had imposed a 40-day timeframe for completion of specified work. An extension of time for settlement was then sought. On 8 October it was further advised that Council approval had not been obtained and it was proposed that there be settlement within 14-21 days after approval.
This was refused on 13 October; the sale price having been agreed on an "as is" basis without Council approval and the pursuit of that approval being considered to be outside the terms of the agreement. Mr Phillip Barnes' solicitors also advised that if approval as a certified dwelling was obtained, the offer of sale for $340,000 was withdrawn, the best interests of the beneficiaries then requiring a sale on the open market and a sale price of $420,000. If that was not accepted, a writ of possession would be pursued.
On 26 October Mr Darren Barnes' solicitors advised that subject to Council approval issuing, his finance approval should also be issued, so that the purchase could proceed. On 28 October they advised that acceptance of the offer made on 24 August for sale on an "as is" basis, had been confirmed so the offer could not be withdrawn, nor the resulting binding agreement terminated. Finance approval was then said to be imminent, and a deed of arrangement would be provided when it was.
On 5 November advice was given that finance had been approved and that a deed would be provided, together with details of settlement. That did not eventuate. On 24 November advice was given that there was no basis for termination of the purchase agreement, which Mr Darren Barnes was ready willing and able to settle. If that was resisted, an order for specific performance would be pursued. Neither eventuated and these proceedings were then commenced by Mr Phillip Barnes.
On 22 August 2022, while any binding agreement was still denied, a notice to complete the agreement by 9 September was given to Mr Darren Barnes, noting his claimed readiness, willingness and ability to complete. This was not complied with. On 9 September Mr Darren Barnes' solicitor responded:
"You are not in a position to serve a notice to complete a contract you deny the existence of. Any purported attempt to rescind the contract will be invalid.
If your client genuinely wishes to resolve the proceedings and/or proceed on the basis of the agreement between the parties, please advise.
Otherwise, please advise as to the orders you propose to seek at the next directions."
The response given on 12 September by Mr Phillip Barnes' solicitor was that having failed to complete the sale agreement, it was terminated.
In this case, like in Woodhouse, the correspondence must be accepted as having established sufficient certainty about the essential terms of the sale agreement, its subject matter and price, with there being no fixed date for completion of the contract not being fatal to the agreement reached. That is because "one would surely infer that it was to be within a reasonable time of the relevant parcel of land becoming capable of transfer": at [268].
The existence of such an implied term was pleaded in the February 2022 cross-claim, where it was claimed that period had elapsed by 24 November 2021.
On the evidence I am satisfied that the offers made and accepted by the solicitors' correspondence evidenced that these parties were content to be bound immediately and exclusively by the terms which they had agreed in August 2021 about the purchase of the property, even though expecting later to enter a deed of family arrangement, which would have dealt with other outstanding matters, including the amount of what the beneficiaries would each inherit. Like in Woodhouse, there having been no agreement as to when the purchase would be completed, it must also sensibly be inferred that completion would occur within a reasonable time.
What was reasonable in the circumstances is also established by the evidence, as is that the contract was terminated, the purchase never having been completed within such a time.
[7]
Part performance
Mr Darren Barnes claimed that he had part performed the contract. I am satisfied that this was not established, given the various problems with the documentary evidence on which he relied, as established by his cross-examination.
They included that some invoices in evidence, he agreed, were directed to the estate, not him; there is no documentary evidence that those directed to him were ever paid; some invoices did not relate to work he claimed he undertook on the property; and others were of dubious authenticity.
[8]
Is the contract still on foot?
That the agreement no longer remains on foot, with the result that it cannot be relied on by Mr Darren Barnes to resist the order for possession and advance his claim for specific performance was, however, also established.
That is because the contract was not subject to finance and the solicitors' correspondence also established that the contract was terminated, following Mr Darren Barnes' failure to complete within a reasonable time. Not even when given a final opportunity to complete, following service of the notice to complete, was the purchase completed.
Mr Darren Barnes' solicitor had advised in November 2021 that finance had been obtained and he was ready to settle. Despite this and the later notice to complete having been served as it was in 2022, he did not settle his purchase, with the result the valid termination of the agreement by the letter of 12 September 2022.
That there was then a proper basis for its termination, given the failure to complete within a reasonable time, must be accepted. There is simply no basis on which it could be concluded that Mr Darren Barnes had earlier complied with the implied term to complete his purchase within a reasonable time. His solicitors' contention that a notice to complete could not be served, given the denial that a binding agreement had come into existence, with the result that it could also not be terminated, was plainly wrong.
The notice was given on the assumption that a binding agreement did exist. The agreement contained an implied term as to completion, as I have explained. The result of the failure to complete the purchase within a reasonable time, even when the notice to complete was given, was the termination of that agreement.
This reflects that Mr Darren Barnes had never proffered the purchase price, despite earlier advice by his solicitors that he was ready, willing and able to settle, the commencement of these proceedings, the service of the notice to complete given in 2022 and the hearing of these proceedings.
The termination of the agreement does not permit an order for its specific performance.
[9]
If the agreement was still on foot, could any order for specific performance be made?
Even if that conclusion was not reached, an order for specific performance could not be made.
That is because what that requires "is that the Court be persuaded on balance that the purchaser wishes, intends and in substance has the ability to complete": Carydis v Merrag Pty Ltd [2007] NSWSC 1220 at [34]. There is no evidence on which this persuasion could be arrived at.
Absence of readiness, willingness, and ability to complete while the contract was on foot may not be fatal to an application for specific performance: Mehmet v Benson (1965) 113 CLR 295; [1965] HCA 18. But Mr Darren Barnes had to establish an evidentiary basis for his claim at the hearing, that he could then make payment of the purchase price, that being an essential obligation: at 307.
No evidence established this and so no order for specific performance can be made in his favour.
[10]
Orders for possession must thus be made
Mr Darren Barnes' resistance of the order for possession resting as it did on the purchase agreement, in circumstances where he has still not demonstrated any ability to complete the purchase, it follows that orders of possession, so that the property can now be sold by the estate, must be made.
In the result there must be judgment for Mr Phillip Barnes.
Proposed orders reflecting the conclusions which I have reached should thus be filed within 14 days, together with short written submissions if there is any dispute about them, including in relation to the costs which the parties indicated they wish to be heard about.
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Decision last updated: 10 May 2023
Parties
Applicant/Plaintiff:
P Barnes (as executor of the estate of the late Lawrence Barnes)