"A verbal contract isn't worth the paper it is written on"
"A promise is a promise."
The first quote above, sometimes erroneously attributed to Samuel Goldwyn, is typical of the scepticism sometimes found when someone wants to enforce an oral agreement. From a legal perspective, evidence of an agreement will always be critical and a document recorded in writing and executed by the parties will always be paramount. However, agreements that aren't written are not necessarily valueless.
In the case of land, the Statute of Frauds has meant that interests in land require written evidence for 350 years however, the law will not permit its processes to become instruments of oppression and will not countenance that the requirements of the law permit fraud – hence the maxim that fraud and justice cannot dwell together.
To remedy just this type of injustice, Courts of equity developed concepts including estoppel and part-performance. The latter, part-performance, is a legal principle that an agreement can be evidenced by the conduct of the parties to it, where they act in a manner that can only be attributable to the fact that a contract exists – and that the law ought then recognise the agreement and enforce it.
The former, estoppel, is a legal concept developed to prevent a party from inducing another to act in a particular way, then denying that position.
Moore v Aubusson – The Facts
So we come to the recent case of Moore v Aubusson1 of the Supreme Court of New South Wales.
- The Plaintiffs were Mr Moore and his partner Ms Andreasen.
- The Defendant was Mr Aubusson in his capacity as executor of the estate of Ms Murphy.
- The Plaintiffs acquired a property in the very desirable Sydney harbourside location of 70 Louisa Rd Birchgrove in 1999. After moving into the property they developed a close relationship with their neighbour, Ms Murphy.
- Ms Murphy was the owner of the two neighbouring properties, 66 and 68 Louisa Rd which each housed two units. Ms Murphy occupied one of those units.
- The Plaintiffs had intended to perform renovation and extension works to their property at 70 Louisa Rd, but after getting to know Ms Murphy they learned that she had water views from her unit which might be impacted by any renovation works; and that she had objected to works done on the other side of them (No. 72).
- Ms Murphy said that she was not close to any other family and that if the Plaintiffs agreed not to impact her views, and look after her until her death, that Ms Murphy would leave her properties to them.
- And so they did – their proposed extensions were altered and delayed to not to block Ms Murphy's view, and they helped look after her, including assisting with managing the units, caring for the property, and taking her to appointments.
- However, Ms Murphy's Will left her estate equally to her two elderly siblings, and only provided a $25,000 gift to the Plaintiff
Moore v Aubusson – The Claim
Following the discovery that Mr Moore and Ms Andreasen's receipt of only $25,000 from Ms Murphy's estate, they turned to the concept of Proprietary (also Proprietory) Estoppel, to claim that Ms Murphy's estate follow through and transfer the property as promised.
While in some cases the wronged party could argue an oral contract, because of the requirements of the Statute of Frauds this argument cannot succeed if the promised property is land. In this case an alternative argument – a testamentary contract – was argued but rejected.
The court's decision: Did this amount to Proprietary Estoppel?
The Court needed to be satisfied that the claimed promise – or assurance – had in fact been made, that the Plaintiffs had acted in reliance on that promise, and that they had or would suffer detriment if the promise were able to be withdrawn.
While there was conflicting and sometimes unsatisfactory evidence on the key points, the Court ultimately found that:
- the promise was sufficiently clear that a reasonable expectation was created,
- that the Plaintiffs acted in reliance on that representation, and
- that the detriment of increasingly taking on the burden of care for Ms Murphy in reliance on her promise made it unconscionable to permit Ms Murphy's property to go otherwise than to the Plaintiffs.
Finally, the Court considered whether enforcing the promise would be disproportionate – a factor that may be considered where the relief would be wildly disproportionate to the detriment. That was rejected.
As a result, the Plaintiffs became the owners of the two neighbouring properties – and made good on Ms Murphy's promise.
Parties should be aware that when making a promise or representation that induces another party to believe they will acquire ownership in some form of property if they act in a certain way, and they do so to their detriment, then the court may step in to enforce the transfer of property as promised. Equally, if you act on someone's promise to your detriment you may be able to obtain orders compelling that person to make good on their promise.
1 NSWSC 1466
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