DISTRICT COURT OF QUEENSLAND

1. [1]
   Sandra Clair Wallis (‘The plaintiff”) brings an application for summary judgment in her capacity as executor of the will of Iris Rose Houghton (‘Ms Houghton’).

2. [2]
   Ashley Bernard Crane (“the defendant”) has brought an application to strike out the plaintiff’s claim and statement of claim.

3. [3]
   As there is a cross applications the parties will be referred to as the plaintiff and the defendant in these reasons.

Background

4. [4]
   Ms. Houghton and the defendant lived together in a de facto marriage from 1989 until 30 October 2007.

5. [5]
   The property of the relationship included a house on acreage at 66-74 Amber Court, Jimboomba, described as lot 8 on registered plan 183336 County of Moffat, title reference 163280071 (‘the Amber Court property”).

6. [6]
   The defendant and Ms Houghton held the Amber Court property as joint tenants.

7. [7]
   After the breakdown of the relationship Ms Houghton moved to New Zealand.

8. [8]
   Both parties engaged solicitors with the intention of achieving a property settlement.

9. [9]
   A course of negotiations is evidenced by E-mails between the solicitors between 12 November 2007 and 21 December 2007.

10. [10]
    Those negotiations resulted in the drafting of separation agreement pursuant to the Property Law Act 1974.

11. [11]
    However, it is common ground that there was no recognised separation agreement because the draft agreement was not executed.

12. [12]
    Ms Houghton died on 1 January 2008.

13. [13]
    On 29 February 2008 title in the Amber Court property was transferred to the defendant by survivorship.

Chronology

• 1989Relationship commenced
• 30 October 2007The relationship ends
• 12 November 2007Negotiations commence between the parties through their solicitors.
• 21 December 2007The last e-mail is sent by Mr Jensen
• I January 2008The death of Ms Houghton.
• 29 February 2008The Amber Court property was transferred to the defendant pursuant to dealing no. 711468053 by survivorship.
• 8 August 2008Claim and Statement of claim filed (’the original statement of claim’).
• 12 September 2008Defence filed.
• 8 October 2008Application for summary judgment filed.
• 25 November 2008An amended statement of claim filed (’the amended claim’)
• 27 November 2008The defendant brings an application to strike out.

14. [14]
    The parties agree that it was appropriate for both applications to be heard together.

The Issues

15. [15]
    The plaintiff alleges that a debt arises out of a contract which was concluded by the legal representatives of the parties and evidenced by e-mails which are exhibited to the affidavit of Craig Graham Selwyn Lee Jensen Sworn 6 October 2008.

16. [16]
    The first issue to determine is whether there is a contract.

17. [17]
    The plaintiff amended the statement of claim to assert in the alternative that the joint tenancy was severed by conduct and that consequently the defendant holds half of the Amber Court property in trust for the estate of Ms Houghton.

18. [18]
    The defendant’s application to strike out the claim and statement of claim is based upon the competing propositions that there was no contract and that the joint tenancy was not severed.

Contract

19. [19]
    The Plaintiff claims summary judgment for the claim, interest and costs.

20. [20]
    The Plaintiff asserts that an enforceable contract arose out of the negotiations between the lawyers, paragraph 7 of the amended statement of claim:

“By an agreement constituted by emails passing between R L and Rosen Lawyers and Richardson Jensen, solicitors on 13 December and 14 December 2007 the deceased and the defendant agreed that the defendant would pay the sum of $210,000 to the deceased and perform certain other promises in final satisfaction and discharge of any claim which either the deceased or the defendant might otherwise have made against each other”. 

This was said to constitute the agreement. In order for there to be a contract there must be an offer and an acceptance. The Plaintiff asserts that the e-mails are sufficient to satisfy this requirement.

21. [21]
    The defendant argues that there is no agreement and that the e-mails represent no more than “mere negotiations”.

22. [22]
    Clearly, in some cases agreement to agree may amount to an enforceable contract, (see Masters v Cameron (1954) 91 CLR 353) however, before that point can be reached it is essential to ascertain precisely what the intention of the parties was.

23. [23]
    In the present case the plaintiff seeks to assert that a debt arises out of the course of negotiations which was to result in the creation of a recognised settlement agreement.

24. [24]
    Section 272 of the Property of Law Act provides that a recognised separation agreement must be signed by both de facto spouses and witnessed by a Justice of the Peace or solicitor.  As those steps had not been carried out it cannot be said that the document amounted to a recognised separation agreement.

25. [25]
    Both parties agree upon this point.

26. [26]
    Section 274 of the Property Law Act 1974 precludes a court from making a property adjustment order which is inconsistent with a recognised agreement provision on financial matters unless sections 275 and/or 276 are relevant.

27. [27]
    At paragraph 9 of the amended claim the plaintiff asserts that “the agreement amounts to a separation agreement as defined in s 265 of the Property Law Act 1974 and pursuant to s 272 thereof it is subject to and enforceable according to the law of contract”.

28. [28]
    The plaintiff’s application depends upon the contention that the drafting of the separation agreement is an enforceable contract for the transfer of property.

29. [29]
    In my view it was any such agreement was an agreement to enter into a recognised separation agreement.

30. [30]
    It would seem that the purpose of entering into a recognised separation agreement was to ensure that the parties’ rights would be enforceable under part 19 of the Property Law Act 1974.

31. [31]
    In my view the negotiations between the lawyers were subject to the approval and instructions of their clients. This point is illustrated clearly in Mr. Jensen’s e-mail to Mr. Rosen at 2:05pm on Friday 14 December 2007 “OK, she’ll accept $210000 provided that you draw up the agreement with reasonable celerity and present it to us for her to sign”.^[1]

32. [32]
    At 3:13pm on Friday 21 December 2007 Mr. Jensen sent a further e-mail to Mr Rosen noting that a personal signature was required, that “something was missing from Clause 5” and that “there was no first schedule attached”. This demonstrates to me that there was no agreement as negotiations were not concluded.

33. [33]
    It seems clear from the language used by Mr Jensen that it was intended that the defendant make an offer to Ms. Houghton which she would then accept.

34. [34]
    It is also clear that Mr. Jensen required further drafting of the separation agreement before his client would sign.

35. [35]
    In my view the defendant was the offeror and Ms. Houghton was the offeree.

36. [36]
    In determining whether there was a contract the death of Ms. Houghton is of significance.

37. [37]
    The death of an offeree before acceptance is problematic. The authors of Cheshire and Fifoot (Ninth Australian Edition) make the following observation.

“Where the offeree dies, there appears to be no authority, and the only assistance to be found in a dictum by Warrington LJ in Reynolds v Atherton. He was of the opinion that an offer ceases, by operation of law, on the death of an offeree, though he regarded the language of revocation in this context as inappropriate:

I think it would be more accurate to say that, the offer being made to a living person who ceases to be a living person before the offer is accepted, there is no longer an offer at all. The offer is not intended to be made to a dead person or to his executors and the offer ceases to be an offer capable of acceptance.”

38. [38]
    In my view the offer made by the defendant was not accepted and therefore there was no contract.

39. [39]
    The test to be applied in an application for summary Judgment was settled by the Court of Appeal in Deputy Commissioner of Taxation –v- Salcedo [2005] QCA 227 where in the leading judgment Williams JA held^[2]

“That review of the authorities clearly establishes to my mind that there has been a significant change bought about by the implementation of r292 and 293 of the UCPR. The test for summary judgment is different, and the Court must apply the words found in this rule. To use other language to define the test (as was contended for in this case by Counsel for the appellant relying on the reasoning of Chesterman J in Gray –v- Morris) only diverts the decision maker from the relevant considerations. But, and this underlies all that is contained in the UCPR, ultimately the rules are there to facilitate the fair and just resolution of the matters in dispute. Summary judgment will not be obtained as a matter of course and the judge determining such an application has established some real prospect of succeeding a trial; if that is established then the matter must go to trial. In my view, the observations on summary judgment made by the judges of the High Court in Fancourt –v- Mercantile Credits Ltd [1983] 154 CLR 87 at 99 are not incompatible with the application of r292 and r293; what is important is that in following the broad principle laid down by their Honours the test as defined by the rules is applied”.

40. [40]
    In my view as the defendant does have a “real prospect of succeeding on trial”, and consequently the plaintiff’s application for summary judgment should be dismissed.

41. [41]
    In an oral application Mr. Jensen for the plaintiff sought further relief based upon the amended statement of claim.

42. [42]
    Mr. Jensen made an oral application for a declaration that the defendant held half of the property in trust for the estate of Ms. Houghton pursuant to Section 68 (1) (b) (viii) of the District Court Act 1967.

43. [43]
    The Plaintiff’s application for summary judgment was brought prior to the filing of the amended statement of claim.

44. [44]
    The plaintiff did not seek to amend the application prior to the hearing.

45. [45]
    Mr. Hanlon for the defendant conceded that the plaintiff was entitled to amend the statement of claim, but maintained that as the plaintiff had not amended the application for summary judgment it should be limited to the application for summary judgment based upon the alleged debt.

46. [46]
    I accept that argument.

47. [47]
    Summary judgment was sought based upon a liquidated debt. The alternate claim involves an application for equitable relief and the defendant is entitled to respond by way of filing an amended defence before such issues are considered by a court.

48. [48]
    The defendant brings an application to strike out the claim and statement of claim, in oral argument Mr. Hanlon recognised that there was “an overlapping of the issues”.

49. [49]
    The principal overlapping issue is whether the joint tenancy was severed.

50. [50]
    The defendant seeks to strike out the whole of the statement of claim.

51. [51]
    Both parties accept that CAG v The Public Trustee of Qld (as personal representative of the estate of JM, dec’d) [2008] QCA 252 is authority that the estate of Ms. Houghton could not bring an application pursuant to part 19 of the Property Law Act 1974.  

52. [52]
    In making an amendment to the statement of claim the plaintiff asserts that a trust has been created as a consequence of the joint tenancy being severed.

53. [53]
    The defendant predicates his argument to strike out the claim and statement of claim on two bases; firstly that there is no contract and secondly that the joint tenancy was not severed. While I have little difficulty in accepting that there is no contractual arrangement, in my view the argument that the joint tenancy was not severed is not sustainable.

54. [54]
    Fundamental to a joint tenancy is the issue of survivorship and it is for Court to determine if the parties have acted in a way which is inconsistent with their mutual intent that upon the death of either party the property will be transferred to the other by survivorship. In “Australian Real Property” Braddock, McCallum and Moore the authors described the manner in which a joint tenancy can be terminated:

“Page Wood VC in Williams v Hensman stated that there may be a severance “by any course of conduct sufficient to intimate that the interests” of all joint tenants are to be treated as interests under a tenancy in common.  The authors go on to state “a course of dealing such that the interests be mutually treated as held in common” implies that all joint tenants must be parties to negotiations constituting the course of dealings.  Thus, a declaration of unilateral intention to sever by one joint tenant whether communicated or not to the other joint tenants does not, in Australia, constitute a severance of the joint tenancy pursuant to the third method of severance”.^[3]

55. [55]
    In Sprott v Harper [2000] QCA 391 the Court held

The tests for determining whether parties have by their conduct severed a joint tenancy are wider than this. The classical statement is that of Page Wood VC in Williams v Hensman which was identified by Mason CJ and McHugh J in Corin v Patton as the starting point in such an exercise. The relevant statement recognises that a joint tenancy may be severed in three ways. The first of these is by an act on the part of one of the persons interested such as, for example, disposing of his or her own interest. The second is severance by mutual agreement; and the third is by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy-in-common. Obviously then, it is not a pre-condition of effecting a severance that a binding agreement be made between the relevant parties.

56. [56]
    Justice Chesterman (as he then was) in Saleeba v Wilke [2007] QSC 298 observed at paragraphs 25 and 26:

What seems to underlie the reasoning in these cases is that the right of survivorship is an essential incident of joint ownership. A sale of their jointly owned property and a division of the proceeds destroys the possibility of survivorship. After the sale none of the co-owners can succeed to the interests of any others who might die. Accordingly an intention to sell has implicit within it an intention to destroy the co-owners’ right to survivorship which is essential to joint ownership. The agreement to sell is a manifestation of the intention to bring the joint tenancy to an end.

To apply the analysis provided by the cases one first asks was there an agreement between the co-owners for a sale of the property and a division of the proceeds? If the answer is affirmative one then asks: did the terms of the agreement evince an intention, common to both owners, that the tenancy be severed on the making of the agreement?

Chesterman J went on to find:

In my view the parties through their legal representatives whilst not concluding the agreement to the point where it is legally enforceable as a contract have nonetheless acted in such a way as to be inconsistent with the notion of survivability and therefore in my view the joint tenancy was severed by conduct.”

57. [57]
    With respect I adopt the reasoning of Chesterman J, clearly while there was no contract in the present case the parties have acted in a manner which is inconsistent with the “notion of survivability” and as such I am satisfied that the joint tenancy was severed by conduct when the parties commenced negotiations through their solicitors.

58. [58]
    It follows from what I have said above that I order that paragraphs 7 to 11 of the amended statement of claim should be struck out.

59. [59]
    Section 69 (2) (a) of the District Court Act 1967, gives the District Court power to make a declaration as to the rights of parties.

60. [60]
    I find that the joint tenancy was severed by the conduct of the parties at the commencement of their negotiations.

61. [61]
    The defendant sought costs on an indemnity basis.

62. [62]
    The defendant has not been completely successful in his application.

63. [63]
    Rule 703 of the Uniform Civil Procedure Rules 1999 (“UCPR”) provides a discretion to the Court to order costs to be assessed on an indemnity basis.  Sub-rule (2) provides for three specific circumstances in which the Court may order that costs be assessed on an indemnity basis, none of which are relevant to this matter; however sub-rule (2) does provide that the Court is not limited by these circumstances.

The general principles in relation to the exercise of the discretion to order for costs on an indemnity basis is found in the judgment of Sheppard J in Colgate Palmolive Co. v Cussons Pty Ltd (1993) 118 ALR 248.  The principles set out in Colgate Palmolive v Cussons were adopted by the Queensland Court of Appeal in Cosgrove v Johns [2000] QCA 157.  The principles to be distilled from Sheppard J’s examination of the authorities are as follows:

1. The ordinary rule is that costs are payable on the standard basis;

2. The Court ought not usually make an order for the payment of costs on some basis other than the standard basis unless the circumstances of the case warrant the Court in departing from the usual course; and

3. The categories in which the discretion may be exercised are not closed

64. [64]
    I am not persuaded that I should depart from the normal course in the present case.

65. [65]
    I order that the application for summary judgment by the plaintiff be dismissed. I order that paragraphs 7 to 11 inclusive of the statement of claim be struck out. I order the plaintiff to pay the costs of and incidental to both applications to be agreed between the parties failing agreement to be assessed on the standard basis.