Pipikos v Trayans
High Court of Australia
[2018] HCA 39; 265 CLR 522; 92 ALJR 880
Case details
Court
High Court of Australia
Citations
[2018] HCA 39
(2018) 265 CLR 522
(2018) 92 ALJR 880
Judges
Kiefel CJ
Bell J
Gageler J
Keane J
Nettle J
Gordon J
Edelman J
Appeal from
Supreme Court of South Australia
(appeal dismissed)
Pipikos v Trayans
(2016) 126 SASR 436
(2016 SASCFC 138 ➤
Judges
Chief Justice Kourakis
Justice Kelly
Justice Hinton
Appeal from
District Court of South Australia
Pipikos v Trayans
[2015] SADC 149 ➤
Judge
Judge McIntyre
Issues
Formalities
Doctrine of Part Performance
Link
Jade ➤
Overview
Facts
The appellant (Pipikos) was the former brother in law of the respondent (Trayans). In 2002 the respondent and her then husband George, purchased a property (Clark road property) and built a house on it.
In February 2004 George signed a contract to purchase land at Taylor’s Road. George and the appellant agreed to purchase the property together. The property was to be financed by a loan, with the appellant, his wife, George and the respondent contributing the balance.
In July 2004, these four acquired another parcel of land at Penfield Road.
The appellant claimed that in July 2004 it had been agreed that the appellant would acquire half of the respondent’s interest in the Clark Road property (but only the unimproved interest) - this was said to be paid in part by funding the respondent’s share of the Penfield Road purchase.
This was an oral agreement, but was said to be supported by a handwritten note singed by the respondent in 2009 agreeing that the appellant was ‘the owner of half of the [Clark Road] land …’. The appellant later placed a caveat on the land. In 2012 respondent sought to have the caveat removed the appellant launched proceedings alleging half-interest in the property. The respondent and George separated in 2013, whereupon George surrendered his interest in the properties to the respondent.
The claims
At trial the appellant claimed that in July 2004 George had agreed the appellant would acquire half the respondent’s interest in the Clark Road property (but not the improvements) (this was said to be paid in part by way of funding her share of the Penfield Road purchase).
The appellant further alleged that, notwithstanding failure to comply with legislated formalities requirements, the doctrine of part performance should apply and specific performance should be ordered. The alleged acts of part performance were (at para 24 of the judgement of Kiefel, Bell, Gageler and Keane):
‘the payment of the deposit and the balance of the purchase price for the Penfield Road property;
the payment of $7,500 to $8,000 to George;
the payment in December 2009 of $2,500 on the Clark Road mortgage; and
the attempts to document or enforce the agreement by way of the respondent's signed note of 3 August 2009, the lodging of a caveat and the institution of the proceedings.
The findings
The trial judge found no agreement and, even if there was, no acts of part performance sufficient to invoke the doctrine. In relation to part performance, the trial judge held the acts said to constitute part performance were not unequivocally referable to a contract of the kind he was asserting.
The Full Court of the Supreme Court found that there was agreement, but there were no sufficient acts of part performance.
The High Court dismissed the appeal, considering at length the requirements for the doctrine of part performance. All members of the Court agreed that the requirement of ‘unequivocal referability’ to some such contract as alleged should be retained.
Legislation
Section 26(1) of the Law of Property Act 1936 (SA) provided:
"No action shall be brought upon any contract for the sale or other disposition of land or of any interest in land, unless an agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged".
Section 26(2) of that Act made clear that it does not ‘affect the law relating to part performance’
Catchwords
Equity – Doctrine of part performance – Where respondent sole registered proprietor of property purchased by respondent and her husband – Where respondent and her husband made improvements to property – Where appellant claimed agreement between appellant and respondent entitled appellant to half‑interest in unimproved land – Where alleged agreement did not meet formality requirements of s 26(1) of Law of Property Act 1936 (SA) – Where s 26(2) of Law of Property Act provides that s 26 does not affect law relating to part performance – Whether acts of part performance entitled appellant to specific performance of alleged agreement – Whether acts of part performance must be unequivocally, and in their own nature, referable to agreement of kind alleged – Whether sufficient for purposes of doctrine of part performance to establish that contracting party has knowingly been induced or allowed by counterparty to alter his or her position on faith of contract.
Words and phrases – "enforcement of equities", "equitable estoppel", "equitable fraud", "equity of the statute", "fraud", "parol contract", "part performance", "specific performance", "Statute of Frauds", "unequivocally referable".
Trial
At trial the first issue was whether there was an agreement in relation to the appellant’s acquisition of a half share of the respondent’s issue in the unimproved land at Clark Road and, if there was, whether despite the failure to meet the formalities requirements in the legislation, the doctrine of part performance entitled the appellant a decree of specific performance.
The trial judge found no agreement and, even if there was, no acts of part performance sufficient to invoke the doctrine. In relation to part performance, the trial judge held the acts said to constitute part performance were not unequivocally referable to a contract of the kind he was asserting.
[para 107] It cannot be said that the acts relied upon by the plaintiff as part performance are unequivocal, nor can it be said that they must be referrable to the contract alleged.
[para 108] A number of matters are said to be part performance:
The payment by the plaintiff and his wife of the deposit and the balance of the purchase price of the Penfield Road property. This could be a loan to the defendant and her husband or it could be an unequal contribution to the partnership to be accounted for in other ways.
I am not satisfied that the asserted payment of the sum of $7,500 to $8,000 was made.
The December 2009 payment of $2,500 towards the Clark Road mortgage. I prefer the defendant’s evidence that this was a loan subsequently repaid by her. Even if I was wrong about this, the payment was made some years after the alleged agreement and cannot be said to be unequivocally referrable to the alleged agreement.
The subsequent attempt to document by way of a handwritten note, the lodging of a caveat and these proceedings. These are attempts to enforce an asserted agreement; they are not acts of part performance.
[para 109] In his statement of claim the plaintiff claims, inter alia, a registered interest in the Clark Road property but put his case differently in his evidence. His evidence was that he only seeks a half share of the value of the land. In other words, the plaintiff claims an interest in the land as distinct from the improvements. This is not an interest in land that is recognised by the law.
…
[para 124] There was no oral agreement to sell an interest in the Clark Road land between the plaintiff and the defendant. I further do not consider that the plaintiff has established an interest, legal or equitable, by way of the asserted oral agreement because of what I have found to be the ambiguities and uncertainties surrounding the agreement and because there is no compliance with section 26 of the Law of Property Act 1936. I further reject the plaintiff’s alternative contention that there is a constructive trust.
Supreme Court of South Australia
The Full Court found that there was an agreement, but that the requirements for application of the doctrine of part performance had not been established.
All members of the court agreed that acts of part performance must be ‘unequivocally referable to the agreement as alleged [per Chief Justice Kourakis at 94] and that in this case the purchase of the property is not in itself:
‘unequivocally referable to, and does not manifest the existence of, an agreement of any kind between the purchasers. It is certainly not unequivocally referable to, or indicative of a contract for the purchase by Leon of an interest in the Clark Road property. The purchase of the Penfield Road property is complete in itself. Importantly the payment of the whole of the owners’ contribution by Leon might be the manifestation of any number of arrangements and contracts of a very different kind to the one Leon alleges.’ [para 100]
High Court
Kiefel CJ, Bell, Gageler and Keane JJ
After setting out the legislation their Honours made extracted the following judicial statements on the law of part performance [footnotes omitted]:
[3] In Cooney v Burns, Isaacs J summarised the law relating to part performance as being that a "bargain in fact made, though devoid of an enforceability either at law or in equity, has been so acted upon by partly performing it that for the defendant to recede from it at that stage would be a fraud on the plaintiff." (emphasis in original)
[4] In Maddison v Alderson, the Earl of Selborne LC said that "the acts relied upon as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged".
The appellant in this case challenged the requirement that acts of part performance be "unequivocally, and in their own nature, referable" to a contract of the kind asserted (para 4). This was rejected by the Court.
The authorities
Their Honours considered at length Australian authorities (from para 37), including Regent v Millett (1976) 133 CLR 679) and McBride v Sandland (1922) 25 CLR 69, but rejected the claim that these authorities relaxed the ‘unequivocally referable’ requirement.
A rule of evidence or a principle of substance?
On this question their Honours observed that it was a principle of substance (my emphasis):
[para 49] The view that the court enforces the equities arising from partial performance, rather than the rights conferred by the parol contract itself, while attended with a degree of subtlety, has the powerful merit of being consistent with the Statute of Frauds. The view that part performance is concerned with matters of proof of the parol contract cannot stand with the Statute of Frauds, the evident purpose of which is to prevent the enforcement of a parol contract, however clear may be the proof of its making.
[para 54] The equity to have the transaction completed arises where the acts that are proved are consistent only with partial performance of a transaction of the same nature as that which the plaintiff seeks to have completed by specific performance. At that point, regard may be had to the terms of the oral contract in order to ascertain the appropriate orders by way of specific performance.
Part performance and equitable estoppel
Their Honours discuss the differences between equitable estoppel and part performance, noting ‘discernible differences in the scope and operation of these doctrines’ (from para 58)
Conclusion
The acts alleged as part performance were consistent with transactions other than the one alleged; they were not ‘unequivocally referable’ to the oral contract alleged.
Justices Nettle and Gordon
Their Honours agreed with the majority, for the reasons given, but added some additional reasons.
Their Honours began by exploring the origins of the doctrine (from para 84), and the requirement of unequivocal referability, in particular (from para 103). Developments in other jurisdictions were explored (the UK, US, Canada and New Zealand) before concluding that requirement for unequivocal referability has been:
[para 121] … acted on repeatedly, by this Court and by other courts in this country, for more than a century, and there is little reason to doubt that the comparatively stringent requirement continues to serve the objective that it was created to achieve: to prevent recurrence of the mischief which the Statute was enacted to suppress.
Their Honours concluded that the ‘appellant's contentions in support of some broader principle of equity not subject to the requirement of unequivocal referability should be rejected.‘ (para 122)
Justice Edelman
Justice Edelman also traced the history of the doctrine, arguing that the rationale for the doctrine was not the Statute of Frauds, nor that the court enforces ‘equities’ from part performance, but that the ‘court enforces the contract itself’. (para 125)
[para 125] The rationale is the imposition of a moral principle despite the terms of the statute. The historical basis for that rationale for part performance lay in the 17th century doctrine by which a court would ignore matters falling within the terms of a statute if they were outside the statute's "equity". The doctrine of the "equity of the statute" permitted an imposition of external morality despite the terms of the statute. Although that view has long been discarded … the construction of the Statute of Frauds is not res integra. Nor is the construction of the equivalent statutory provisions. Relevantly, on this appeal, the doctrine of part performance is expressly preserved by s 26 of the Law of Property Act 1936 (SA). The doctrine cannot, and should not, be abolished judicially. But it certainly should not be extended. The appeal must be dismissed.
His Honour then traced the doctrine and its development (from 126) and the rationales for the doctrine (from 134), then concluded (footnotes omitted):
[158] The requirement that the act be unequivocally referable to some such agreement as that alleged involves loose terms. There has been much room for dispute about (i) when an act will sufficiently relate to a contract, so as to be unequivocally referable to it, and (ii) when a contract will be "some such agreement" as the agreement that is alleged. Each of these questions may ultimately depend on evaluative conclusions based upon all the circumstances surrounding the act or acts. Those conclusions should be drawn with regard to the nature and rationale of the doctrine of part performance and the need to keep the doctrine within narrow limits. Certainly, the doctrine of part performance should not be shorn of this well-established constraint of unequivocal referability.
[159] The need for the acts to be unequivocally referable to "some such agreement as that alleged" requires only that the acts be referable to an agreement "of the general nature of that alleged". For instance, the giving or taking of possession will generally be a sufficient act of part performance of a contract for the sale of land, even though it is an act that may be equally referable to a contract of lease. It is unnecessary to explore these issues on this appeal. As Kiefel CJ, Bell, Gageler and Keane JJ explain, the appellant's acts were consistent with transactions other than those of the general nature of a sale of the Clark Road land. The appellant conceded in oral submissions that the acts were not unequivocally referable to a contract of the general nature of a sale of that land. The appeal must be dismissed and the order made as proposed by Kiefel CJ, Bell, Gageler and Keane JJ.’
Further resources
See Katy Barnett, ‘Pipikos v Trayans’ (Opinions on High Blog, 13 September 2018)