Woods v Woods

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1973/97 GLENN WOODS & 1 OR v DESRE CLAIR WOODS & 2 ORS

JUDGMENT His Honour: 1 This is another episode in unfortunately bitter and protracted litigation between mother and son. In Woods v Woods [1999] NSWSC 275 I decided, on 31 March 1999, that in consideration of the mother, Desre Clair Woods (Desre"), contributing $11,500 to the purchase of a property at 24 Waite Street, Bateau Bay ("the property") the son, Glenn Woods ("Glenn"), and his wife, Marcia Woods ("Marcia"), agreed that she would be permitted to live in the property for life and that Glenn and Marcia would continue to pay the mortgage payments in respect of it ("the contract"). I held that Desre was entitled to a declaration of the subsistence of the contract, which had been denied by Glenn and Marcia. There had not at that stage been full argument as to whether Desre should have an order for specific performance, which up to that time had been the principal remedy that she claimed. Objection had been taken on behalf of Glenn and Marcia that the requirement of supervision by the Court of the payment of future mortgage instalments ought preclude such an order. The matter was then stood over for further hearing on the issues of relief. There was therefore no judgment in Desre's favour for specific performance in any form, only a finding that the contract subsisted and that Desre was entitled to a declaration of its subsistence. It should be added that, up to that time, there had been no litigation of the existence of a term of the contract, express or implied, that Glenn and Marcia were obliged to maintain the property during Desre's lifetime, far less as to whether there had been a breach, repudiatory or not, of that obligation, if it existed. 2 On 23 April 2000 on behalf of Glenn and Marcia it was announced in Court by their counsel that they now recognised the contract (in the face of the Court's declaration of its subsistence) and intended to abide by it. They had at all times up to that point fiercely denied its existence. They then contended that, by reason of their new found willingness to perform the contract, no specific relief was necessary. Thereafter, on the same day, it was announced in Court on Desre's behalf that she desired to obtain damages for loss of bargain, rather than any form of specific relief. Glenn and Marcia then said that, as Desre had at all times continued to live in the premises and had not in any way accepted the repudiation of the contract constituted by their denial of it before their change of heart, she could not now do so and obtain damages for loss of bargain. 3 On 15 September 1999 Desre filed a notice of motion seeking relief in relation to the alleged repudiation of the contract by reason of Glenn and Marcia's breach of its term for the maintenance of the property, and the acceptance of that repudiation by Desre. Declaratory relief to that effect was sought by the notice of motion. Whilst that was not relief appropriate to be sought by notice of motion, it seems to me that, no later than that time, an unequivocal stance was taken by Desre that she regarded the contract as at an end by her acceptance of a repudiation constituted by a refusal to meet an obligation to maintain the property. Subsequently, a more appropriate application was made, to amend her cross claim. That application was opposed, but was granted by me on 24 February 2000: Woods v Woods [2000] NSWSC 179. Pursuant to the leave granted, Desre filed an amended cross claim on 1 March 2000. The material portions of that cross claim are as follows: "3A Further to the agreement referred to in paragraph 2 above, there was at all material times an implied term as between the parties that the cross defendants would, in addition to paying the mortgage, maintain the selected property in a condition fit for habitation by the cross claimant during her lifetime, or alternatively, for as long as she chose to reside in the premises. Particulars of the Implied Term (a) The fact that prior to moving into Waite Street, the cross claimant resided with the cross defendants in their house which was properly maintained and fit for habitation. (b) The fact that the cross defendants promised to buy a house using the cross claimant's money and that she could move from the cross defendants' house into the newly acquired premises. (c) The fact that the cross claimant was being invited to move into the newly acquired premises by the male cross defendant in order to resolve interparty conflict caused by the cross claimant residing with the cross defendants. (d) Acceptance of the $11,500 from the cross claimant by the cross defendants. (e) The age and financial position of the cross claimant at the time of entering into the agreement. (f) The relationship of the cross claimant to the male cross defendant. (g) The previous financial and material support given by the cross claimant to the cross defendants. (h) The promise given by the cross defendants to the cross claimant that in exchange for the money being contributed by the cross claimant, such money to be used to purchase the residential premises, the cross claimant could reside in the premises for life or for as long as she chose. (i) The fact that residential premises from time to time require maintenance. (j) The fact that the cross claimant was paying money to the cross defendants to be allowed to reside in the selected premises. (k) The fact that the selected premises were inspected prior to purchase by the cross claimant and accepted as fit for habitation. (l) The fact that the selected premises were maintained by the cross defendants up unitl the cross claimant refused to give the cross defendants vacant possession. (m) The fact that the selected premises were purchased in the names of the cross defendants and that it would revert to them upon the death and/or vacation of the premises by the cross claimant. … 6A Further, in respect to the facts matters and circumstances pleaded in paragraph 3A above the cross defendants have since in or about April 1995 failed to maintain the property in a condition fit for habitation by the cross claimant despite requests by the cross claimant that they maintain the property. 6B The cross defendant's [sic] refusal to maintain the property constitutes a breach of the implied term. 6C The cross claimant has since April 1995 continually requested the cross defendants to repair and maintain the property. The cross defendants have ignored all requests and continue to be in breach of the Agreement. 6D The cross defendants continual breach of the implied term pleaded in 3A above constitutes a repudiation of the Agreement, such repudiation being accepted by the cross claimant." 4 Glenn and Marcia's answer to this, by their amended defence to cross claim filed on 15 March 2000, was a denial of the implied term; a denial of "each and every fact asserted by way of particulars of the implied term"; a denial that they "had an obligation to maintain the property in a condition fit for habitation by the Cross Claimant or at all"; an allegation that if there were such an obligation, it had been met; and a denial that Desre had made any request for maintenance of the property. Equally, Glenn and Marcia in terms denied any repudiation of the agreement by them and its acceptance by Desre. It is significant in the light of the evidence later given that this amended defence to cross claim was on 15 March 2000 verified by the affidavit of Glenn Woods. 5 I have already had occasion to pass upon the credibility of the relevant witnesses: [1999] NSWSC 275 [19], [20] and [21]. I found that Desre, despite some difficulties in her evidence, gave the impression of attempting to tell the Court the truth about the matters she deposed to; on the other hand, I found Glenn a witness of very low credibility. My original impression of his credibility was not improved by the conflicts between his affidavits and his oral evidence on the recent hearing before me. Marcia I also found a witness of little credibility. These things should be borne in mind in relation to the various findings of fact that I make below. 6 Desre's evidence concerning this aspect of the case was as follows. She deposed that it was an express term of the agreement for her occupation of the property that Glenn and Marcia would, in addition to the mortgage, pay rates, insurances and all repairs and maintenance of the property. The mortgage has continued to be paid. From February 1994 until April 1995 Glenn provided regular maintenance of the property. He mowed lawns, did gardening and painted some rooms of the house. In March 1995 he commissioned and paid a plumber to fix taps. Things changed when in April 1995 Desre allowed her other son, Richard, and his wife, Amanda, to occupy the property along with her. At that time they were down on their luck. It was in my view not inconsistent with the contract for Desre's occupation of the house that she should for a period allow her other son and his wife to live in the house with her; it was her residence in which she could have guests as she chose. However, as was apparent at the earlier trial and again obvious at this trial, this infuriated Glenn and Marcia and was the point of the parting of the ways between Desre and Glenn. In June 1995 Glenn, at Desre's request, engaged and paid an electrician to replace the light and exhaust fan in the bathroom and some lights in the kitchen. Since that time, Glenn and Marcia have done no maintenance work on the property. In May or June 1998 the hot water system exploded. Desre saw the winter through without hot water. In August 1998 she wrote to Glenn indicating the need for replacement of the hot water system, stating her impecuniosity and asking if he could assist. The circumstances in which she says the note was sent were as follows. The claim for $17,000 in respect of which Desre has obtained judgment against Glenn and Marcia in this Court was originally pursued by her against them in a Local Court. When the present proceedings were commenced and that claim incorporated in them, she discontinued the Local Court proceedings. Thereupon, Glenn and Marcia obtained judgment against her in the Local Court for the costs of those proceedings. So bad is the blood between these parties that that judgment has been enforced and, by virtue of an order for payment by instalments, Desre has been paying out of her pension the sum of $10 per week by cheque in discharge of that obligation. It was with one of the weekly cheques that she says that the note concerning the hot water system was sent in about August 1998. All the cheques were negotiated. Nothing was done by Glenn to answer or otherwise respond to this request. Subsequently, Richard organised for a second hand hot water system to be installed in the property so that Desre did not have to go through winter 1999 without hot water. There was no further communication between mother and son until in October 1999 Desre wrote Glenn a further letter as follows: "I had the plumber put broken hot water cylinder in garage to show you where seam had split. It was old, they only last 12 to 14 years. As I told you in note with one of my cheques to you a long time ago, I knew you would'nt [sic] replace it for me, as the cost was between $900 and $1,000 for solar connected. I hesitated telling you, as I knew how pleased you both would be knowing my discomfort with no hot water that first winter. Rick could'nt [sic] stand me going through another winter, he replaced it with a smaller tank, not connected to solar, heats by off peak, but I had hot water. Wyong council will take tank when required, ring them, and leave on footpath. From the woman who used to be your mother." 7 In response to this evidence Glenn by affidavit denied that it was an express term of the contract that he and Marcia would pay all repairs and maintenance of the property. He denied that he ever performed any maintenance to the property; that he ever mowed the lawns; or that he ever did any painting. He denied that his mother ever asked him to have a plumber fix the taps or an electrician do work in the bathroom or kitchen; he denied that he ever engaged tradesmen to do any of that work. He specifically said that he has done no maintenance on the property since its purchase in 1994. He denied that he received his mother's handwritten note in August 1998 (although all her cheques were cashed) and says that the first communication he received is her note of October 1999 set out above. 8 However, his evidence in cross examination was quite different and ought be set out at length: "Q …. What did you say to her to bring this up? A I said to her if you want to move into Waite Street I will pay the mortgage and I will pay the rates and you look after the rest.

Q What was the rest? A Phone, electricity, mowing the lawn, doing the garden etc.

HIS HONOUR: Q Were those things mentioned. The answer is a little unclear. Do you mean by that answer to say that those things were mentioned in that conversation or that that was what you understood by 'the rest'. Do you understand my question? A Yes. No she definitely said to me that she would maintain those items that I just said.

… RADOJEV: Q Did those items that you listed, did they constitute in your mind the maintenance of the property? A Yes.

Q Nothing more nothing less? A That is right. … RADOJEV: Q On that basis any major items such as repair and restoration of the roof would be matters that you were responsible for? A I was the owner so, yes.

Q Matters such as capital expenditure on stoves and other items would be your responsibility? A Yes.

Q Items such as water heaters would be your responsibility? A Yes.

Q Such as carpets would be your responsibility? A I don't know, we never discussed that.

Q It didn't come within the category of items that you say were her responsibility? A That is right.

Q Anything outside that area as listed by you would be considered by you as your responsibility? A Yes. …

Q You just defined it. You just defined it. Apart from those three items everything else was your responsibility, wasn't it? A As my being the owner, yes.

Q Save for paying the electricity, paying for the lawns to get cut, telephone all other items of maintenance were you responsibility? A If the roof caved in, of course.

Q Would you answer my question? A All other major items of the house.

Q Would the witness answer the question? A Yes.

Q That was your belief and understanding in January 1994, wasn't it? A Yes.

Q Yet today your attitude is you are not responsible for any of the maintenance of the property, correct? A That is right. …

Q You were still happy to be responsible for the maintenance of the property after your brother and your sister-in-law moved in with your mother? A No, I was not happy.

Q That is when you decided that that was not going to be your responsibility, is that right? A Yes.

Q And the reason you decided that was no longer going to be your responsibility had nothing to do with your mother but everything to do with your brother and his wife moving into the property? A That was the whole three of them.

Q But you didn't have a problem with your mother staying there? A Yes, I did.

Q So you wanted your Mum out as well? A No, I had an argument with her regarding her allowing my brother and his wife to move in.

Q And it was only after they moved in and you knew you couldn't get them out that you decided you were no longer going to be responsible for maintenance of the property, that is right, isn't it? A Yes.

Q You decided unilaterally to no longer be responsible for maintenance of the property after your brother and his wife moved into the property with your mother. That is right isn't it? A Yes.

Q As far as you are concerned today it is still your responsibility to maintain the property save as for telephone, electricity and garden? A No.

Q Why? A Because of what has happened in the last five years.

Q What you took her to court? A That is right.

Q And she won is that right? A That is right.

Q Save for the court case, what in the last five years has occurred that makes you say you are no longer responsible for the maintenance of the property? A Because of the whole family situation.

Q What whole family situation is that? A The whole situation since my brother and his wife moved in and my mother's attitude etc.

Q Does that include your bringing an action to have her kicked out of the house? A Yes.

Q And her suing you for $17,000 which she lent to you? A Loaned to me.

Q Yes. Is that part of the family situation? A Yes.

Q And the fact that she sued you for her contribution to the purchase of this property? A That is right.

Q Is that another part of the family situation? A All of it.

Q What other ones are there? A As I said, it started back five years ago, the court case wasn't five years ago.

HIS HONOUR: Q It started when your mother allowed your brother and his wife to live in the house? A Yes.

RADOJEV: Q You were notified by your mother I suggest from time to time there were problems with the maintenance of the house? A I got one letter in October last year.

Q It wouldn't have mattered how many times your mother had written to you over the last five years saying there is a problem with the house and identifying it, you wouldn't have done anything about it anyway.

HIS HONOUR: Q Even if she had already had the hot water system put in and it had been paid for you, last October, were recognising an obligation to keep the house in repair, you could have made the obligation by reimbursing the moneys that had been paid out? A Yes.

Q But you at that time I think as you have already said in evidence, were not recognising that obligation? A That is right.

RADOJEV: Q Your attitude today if you were notified of a problem with the house, save for electricity bills, telephone bills and good gardening, would be 'It is not my problem.' A That is right.

Q So it wouldn't matter what maintenance was required on the house today for example you wouldn't do it? A That is right.

Q To that extent you would literally let the place fall down around her ears? A Yes.

Q (Shown annexure A to Mrs Desre Woods' affidavit of 17 May.)

Q In response to the list of complaints there I suggest to you they are matters that go to maintenance of the property? A Yes.

Q And certainly in September 1999 your attitude was 'I am not maintaining the property at all.' A That is right.

Q So your response to that letter would be 'It is not my problem'. A That is right.

Q And today your response in relation to those complaints would be exactly the same? A That is right.

Q And in the future in relation to maintenance of the property your attitude is it is not my problem? A Yes.

SANDERSON: Q You were asked several questions about your obligation to maintain the premises, you must recall those? A Yes.

Q To whom do you consider that obligation was owed? A My mother." 9 The simple fact of the matter is that Glenn's answers in cross examination belie his affidavit verifying the defence to cross claim and belie his affidavit read in evidence. I reject Glenn's affidavit evidence on the subject matter of maintenance. I accept Desre's evidence that there was an express agreement that Glenn and Marcia would maintain the property during her occupancy. I accept that Glenn did maintenance work on the property up to, and on one occasion after, the time Richard and Amanda moved into the property, but did nothing thereafter. I accept Desre's version as to the failure of the hot water system and its replacement by Richard. I accept that she wrote to Glenn in about August 1998 concerning the hot water service as she alleges. I find that Glenn, despite his denial, received that note. The truth is, as came out in cross examination, that he earlier recognised an obligation to maintain the property (including water heaters) and carried that obligation out but, infuriated by his mother's refusal to turn his brother out, took and acted on the stance that the property could fall down about her ears before he would do anything, and then lied about it. 10 As I have said, I accept that there was an express term that Glenn and Marcia would maintain the property during her occupancy of the premises. I find that Glenn had Marcia's authority to deal on her behalf with Desre concerning the property when he reached an oral agreement with her concerning the maintenance. If that express term did not exist, or did not extend so far as to require that it be maintained fit for her habitation, I should find that there was an implied term to that effect. The facts that justify or, indeed, necessitate the implication of such a term are the history between mother and son whereby, as previously found, most of Desre's financial substance had been lost by reason of a transaction of Glenn's and the consequential litigation. There is also the fact that Glenn and Marcia had borrowed $17,000 from Desre which had not been repaid, as previously found. Furthermore, the $11,500, contributed by Desre to the purchase of the property was the last of her financial substance, leaving her in effect with nothing but a pension. In those circumstances, when the transaction was entered into in 1994 under which she was provided with a home, she had no money which would permit her to carry out even ordinary house maintenance, much less deal with major items. It seems to me, in these circumstances, that (insofar as there was not an express term) a term that the house would be maintained fit for her occupation was a necessary and proper term which ought be implied in the contract. 11 The next question is whether there was in fact a repudiation of the contract. The answer to this question often involves nice considerations as to the nature and status of the term breached and the seriousness of the breach. However, the underlying question always remains whether a party refuses to be bound by the contract: see per Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 646. His Honour continued: "Repudiation may be express, as where a party expressly intimates that he refuses to perform the contract or to perform some part of it whether essential or not, or implied, as where he so conducts himself, whether in committing breaches or otherwise, as to show that he is refusing to perform the contract: Forslind v Bechely-Crundall [1922] SC (HL) 173 at 179, 190, 191; Withers v Reynolds 2 B & Ad 882; R A Munro & Co Ltd v Meyer [1930] 2 KB 312 at 330-1; Summers v The Commonwealth 25 CLR 144 at 152."

See also per Kitto J in Holland v Wiltshire (1954) 90 CLR 409 at 420 - 421. 12 In my view, it is easy in this case to conclude that there was a repudiation. It may well be able to be inferred from conduct alone. A breach of the term to maintain the property which left an old lady in a house in winter without hot water was a serious breach. Hot water is regarded as a basic amenity in virtually all Australian homes in the 1990s and certainly in a suburban cottage such as the property. That lack was remedied by someone else, although that was hardly a remedy of the breach by those committing it. Desre was quite frank in her evidence in conceding that once that lack was supplied, it could not be said that the property is at the present time uninhabitable and she did not suggest so. But there is no need to draw inferences from conduct. In my view it was under oath in the witness box that Glenn revealed his true attitude to the contract. I accept that his attitude was and had since April 1995 been that he would not carry out the term as to maintenance which he acknowledged was part of the contract, whatever happened. His counsel told the Court on 23 April 1999 that it was Glenn and Marcia's intention to perform the contract now that the Court had declared that it subsisted. The quite different attitude displayed by Glenn in the witness box was expressly that the house could fall down about his mother's ears and he would do nothing about it. In my view, there could be no clearer repudiation of the obligations of the contract. While it was not until 5 June 2000 in the witness box that this true attitude was declared, it was quite plain from the evidence that he there gave that it had been his attitude throughout, or, more accurately, since about the time Richard and Amanda moved into the property in April 1995. To my mind that evidence bespeaks an intention, however bad the state of the property, not to remedy it as required by the contract, so long as his mother continues to live in it. Marcia did not reveal her true attitude in the same way. However, her hostility to Desre has been well attested throughout the whole of the proceedings. She denied by her most recent affidavit that Glenn had to her knowledge carried out any maintenance whatsoever to the property. I do not accept her word that that was the state of her knowledge. I find that she shares Glenn's attitude on the issue of maintenance of the property. In any event Glenn has her authority to deal with the contract on her behalf as he desires. In my view, Glenn and Marcia have repudiated the contract by reason of their attitude to the performance of their obligation to maintain the property. The attitude was and is an ongoing one. The repudiation was, subject to the matters adverted to in [15] and [16] below, available to be accepted by Desre at the times mentioned in [14]. 13 It was suggested in submissions that Desre did not believe she had the benefit of an obligation to maintain the property since she spent the winter of 1998 without hot water and only drew Glenn's attention to the situation in August 1998. The reason she gave for not doing it earlier was that she knew the cast of Glenn's mind since 1995 was such that he would not meet the obligation. On the evidence as it now stands, it is easy to accept that that was her assessment of the situation in 1998, and that it was a correct assessment. A letter was written on her behalf by her solicitors to the plaintiffs' solicitors on 10 September 1999 listing the defects that had developed in the property. That letter concludes by stating that "(o) Our client regards your clients as continuing to repudiate a fundamental term of the contract and she has instructed the writer to advise you that she will accept the repudiation of the contract by your client and she will move out as soon as the Court has quantified the damages to which she is entitled." 14 It is clear that the law requires an election in favour of acceptance: see J W Carter, Breach of Contract (2nd ed, 1991) [1015]; J W Carter, "Acceptance of a Repudiation" (1994) 7 Journal of Contract Law 156. In my view, at the latest Desre elected to treat the contract as repudiated in September 1999, either by the letter of 10 September 1999 or by the filing of her notice of motion: see Heyman v Darwins Ltd [1942] AC 356 at 362 per Viscount Simons LC; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 570 per Brennan J. If neither of those acts effected the election, then the filing of the amended cross claim pursuant to leave on 1 March 2000 did. These acts all appear to me to be unequivocal. I do not regard her remaining in occupation of the house thereafter as detracting from this. First, it must be viewed in the light of the fact that she has since that time pursued her rights to have the contract declared terminated and to recover damages. Secondly, it must be viewed in the light that, having been left penniless by her financial history with Glenn which has been referred to above, there is little she could do to find other accommodation until put in funds. It well may be that from the time her contractual right to occupy the property was terminated she will have to allow for the value of her occupation in the final financial washup, and this is acknowledged on her behalf. 15 Some suggestion was made in submissions on behalf of Glenn and Marcia that Desre had at the time the judgment of 31 March 1999 was obtained made an election in favour of specific performance as a remedy which could not now be reversed: see United Australia Ltd v Barclays Bank [1941] AC 1, where Lord Atkin said at 30: "On the other hand, if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose. … [But] I … think that on a question of alternative remedies no question of election arises until one or other claim has been brought to judgment. Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one."

And see Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 at 459 - 462 per Gibbs, Mason and Jacobs JJ. I do not think this problem arises since, as pointed out in [1] above, that judgment went as far only as deciding that the subsistence of the contract ought be declared. At that time further discretionary defences were maintained and the issue whether specific performance (or any relief other than declaratory) should be ordered had not been determined in Desre's favour. Far less were any orders of that nature made in her favour. She could not be said to have made an election, by obtaining judgment for equitable relief, so as to be precluded from seeking the common law remedy of damages. And where, after the Court's vindication of her claim that the controverted contract subsists, it is established that the other parties' real attitude still is that they will not perform the contract, she should not be precluded from accepting the repudiation, bringing the contract to an end, and recovering damages for loss of the bargain. 16 Equally, and particularly bearing in mind that no issues of remedy were dealt with at that time, I do not think it could be said that there had been such a judgment as amounted to an Anshun estoppel against Desre: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. The only subject matter litigated up to that time was the subsistence of the contract, not issues as to its terms and their breach or performance, nor what entitlement there was to relief. If there were a judgment which could amount to an Anshun estoppel, then it would have to be considered whether in all the circumstances there should be regarded as being such an estoppel. In my view, bearing in mind the limited nature of the matters litigated in the earlier proceedings and the discrete nature of the questions relating to the terms of the contract as to maintenance, even if the judgment were of such a nature as potentially to create an Anshun estoppel, there ought not be held to be such an estoppel in the circumstances. 17 I therefore propose to declare that the contract was subject to a term that Glenn and Marcia maintain the property in a state fit for Desre's habitation during her occupation of the property; that the contract was repudiated by Glenn and Marcia; and that that repudiation was accepted by Desre, so that the contract came to an end in September 1999. 18 Short minutes should be brought in to encompass this decision and any necessary consequential orders. …oOo…

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