Horswill v McClellan

The plaintiffs and the defendants are the respective owners of two adjoining properties in West Portland Road, Sackville. By their Statement of Claim filed on 25 September 2017, the plaintiffs (Mr and Mrs Horswill) seek orders for specific performance of an oral agreement to purchase a portion of the defendants’ property. The plaintiffs seem to accept (correctly in my view) that, apart from the law relating to part performance, the agreement is not enforceable by reason of the operation of s 54A of the Conveyancing Act 1919 (NSW) for want of a note or memorandum of the agreement that satisfies the requirements of the section. However, the plaintiffs contend that there have been sufficient acts of part performance of the agreement to give rise to an equity to have the agreement completed.

The defendants, Adam McClellan and Jennifer McClellan were formerly a married couple. They are now divorced. Ms McClellan filed a submitting appearance. Mr McClellan opposes the plaintiffs’ claim. He filed an Amended Defence on 22 December 2017. By that pleading, Mr McClellan put in issue a number of the facts alleged by the plaintiffs, and denied that there were acts of part performance that would entitle the plaintiffs to the relief claimed. The Amended Defence also raised various other matters which are said to render the alleged agreement unjust within the meaning of s 7 of the Contracts Review Act 1990 (NSW), or unconscionable.

However, when the matter was called on for hearing, Mr McClellan failed to appear. An application for an adjournment of the hearing, made in an irregular and informal manner but treated as if properly made, was refused. The hearing proceeded in the absence of Mr McClellan pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 29.7.

The plaintiffs read affidavits sworn by Mr Horswill on 25 November 2018 and 7 February 2019, Mrs Horswill on 7 February 2019, and by Ms McClellan (now known as Ms Warren) on 26 November 2018 and 6 February 2019. Mr Horswill also gave some supplementary evidence in the witness box. Finally, some parts of an affidavit sworn by Mr McClellan were tendered and admitted into evidence as admissions.

In 2015 the plaintiffs were the owners of Lot 13 in Deposited Plan 258602 (351 West Portland Road, Sackville). The lot had an area of 1,100m2, with a frontage to West Portland Road about 21.5m wide. The defendants were the owners of Lot 11 in Deposited Plan 258602 (349 West Portland Road, Sackville). This lot, which could be described as a battle-axe block, was a much larger parcel of land that exceeded 10 hectares in area. Its handle extended in from West Portland Road on the southern side of the plaintiffs’ lot. Its frontage to West Portland Road was also about 21.5m wide.

By September 2015 there had been some discussions between the plaintiffs and the defendants about a boundary adjustment. Mr Horswill made some inquiries with Hawkesbury City Council (“the Council”) about such an adjustment. Mr Horswill deposed that on about 17 October 2015 he had a conversation with Mr McClellan in words to the following effect:

I note in passing that Mr McClellan deposed:

Mr Horswill further deposed that after he finished the conversation with Mr McClellan, he telephoned Mrs McClellan and had a conversation with her in words to the following effect:

Mr Horswill continued:

Ms McClellan deposed:

Later on 18 October 2015 Ms McClellan sent an email to the plaintiffs in the following terms:

Mr Horswill deposed that after receiving that email he had a further conversation with Ms McClellan in which she said words to the following effect:

On 21 October 2015 Mr Horswill sent an email to Ms McClellan, in response to her email of 18 October 2015, in the following terms:

On about 25 October 2015 Mr Horswill engaged a surveyor, Citisurv Pty Ltd (“Citisurv”) to prepare a plan of subdivision and assist with preparation of an application to the Council. It appears that the plaintiffs also engaged Country Lane Conveyancing in relation to the matter. Ms McClellan sent an email to Country Lane Conveyancing on 8 November 2015 stating that she had no objection to them “acting on behalf of both of us”.

On about 15 January 2016 Mr Horswill received a survey plan from Citisurv. As he explained in the witness box, this was a Plan of Subdivision of Lots 11 and 13 in DP 258602 which depicted a boundary adjustment between the lots which would produce a new Lot 1 with an area of 1919m2 (compared to the existing area of Lot 13 of 1,100m2). The width of the West Portland Road frontage for the new Lot 2 would be 5.5m (rather than the existing 21.5m for Lot 11).

The plaintiffs provided a copy of the plan to Ms McClellan on 30 January 2016. Mr Horswill gave oral evidence, which I accept, that he provided a copy of the plan to Mr McClellan on about 27 January 2016.

On 11 February 2016 the plaintiffs received a letter from the Council which included the following:

Mr Horswill deposed that he spoke to Mr McClellan and said:

Mr Horswill also gave oral evidence to the effect that he similarly informed Ms McClellan of the need to proceed in two stages. I infer that by proceeding in that way the proposed development could be considered as “exempt development”.

In any event, instructions were given to Citisurv to produce an amended Plan of Subdivision. A plan was prepared which would produce a new Lot 1 with an area of 1,450m2 and a new Lot 2 with a frontage to West Portland of 9.175m. It seems that this amended plan was the basis of a subdivision application made to the Council on about 2 March 2016. The Council provided a certificate of approval in respect of the proposed subdivision on 10 March 2016.

The Deposited Plan Administration Sheet which was subsequently lodged with the Land Titles Office in respect of the proposed subdivision was signed by both plaintiffs and by both defendants. The Plan of Subdivision of Lots 11 and 13 in DP 258602 was registered on 8 August 2016 to create Deposited Plan 1222450. The “first stage” of the proposed boundary adjustment was thus complete.

In the meantime, there were some further discussions between the parties. Ms McClellan deposed that in early March 2016 she had a conversation with Mr Horswill to the following effect:

Mr Horswill deposed that on 16 March 2016 there was a discussion with Ms McClellan to the following effect:

Ms McClellan sent an email to the plaintiffs on 16 March 2016 in the following terms:

It appears that instructions were given by the plaintiffs to Citisurv to produce an amended plan. By about 18 July 2016 Citisurv had prepared an amended Plan of Subdivision. This plan depicted the new Lot 1 with an area of 1,868m2 and the new Lot 2 with a West Portland Road frontage of 6.5m.

Also by that time, Mr McClellan had placed a number of star posts into the ground “consistent with the 1 meter [sic] shift from the surveyed markings requested by you to Rob” and “approximately 6.5 metres away from and parallel to our side boundary” as a visual reference “so it is understood what is being proposed and expected to be agreed to for all vested parties”.

However, the “second stage” of the proposed boundary adjustment has not proceeded. Mr McClellan has declined to sign the further subdivision application to the Council even though that application, if approved, would result in the defendants’ new lot having the requested 6.5m frontage to West Portland Road.

The position thus remains as it was when Deposited Plan 1222450 was created on 8 August 2016. Under that subdivision, Lot 1 has an area of 1,450m2. Part of the lot (that which was formerly in Lot 13 in DP 258602) is owned jointly by the plaintiffs, and part of the lot (that which was formerly in Lot 11 in Deposited Plan 258602) is owned jointly by the defendants.

The principal issue in the proceedings is whether there are sufficient acts of part performance to give rise to an equity in favour of the plaintiffs to have the agreement they allege completed. If such an equity is found to exist, the Court may order specific performance of an agreement that would otherwise be unenforceable due to a want of writing.

I recently considered the law relating to part performance in Phung v Phung [2019] NSWSC 117 at [59]-[63] where I stated:

In the present case, the plaintiffs principally rely upon the following as constituting acts of part performance:

It is necessary that acts relied upon as part performance be unequivocally, and in their own nature, referable to some such agreement as that alleged. Here, the plaintiffs allege a contract to acquire a portion of the defendants’ land lying to the south of the plaintiffs’ land. In applying the test of “unequivocal referability” the Court is not concerned with proof of the alleged agreement itself, or the terms of such agreement. The enquiry is not directed to whether the acts are unequivocally referrable to the particular contract alleged, but rather whether they are unequivocally referable to some contract of the general nature alleged. In the present case, the Court must consider whether the acts are unequivocally referable to a contract for the sale of part of the defendants’ land. To that end, the proved circumstances in which the acts were done must be considered (see McBride v Sandland (1918) 25 CLR 69 at 78, cited with approval by Nettle and Gordon JJ in Pipikos v Trayans (2018) 92 ALJR 880; [2018] HCA 39 at [99]).

In my opinion, the acts relied upon by the plaintiffs are unequivocally, and in their own nature, referable to some agreement whereby the plaintiffs would acquire a portion of the defendants’ land. Whether viewed individually, or taken together, those acts demonstrate that the parties were taking steps towards an outcome in which the parcel of land owned by the plaintiffs (Lot 13) would be augmented by incorporating an area of land to be excised from the parcel of land owned by the defendants (Lot 11). That in itself is indicative of a contract of the nature of that alleged by the plaintiffs. Moreover, even though no transfer of ownership has yet occurred, the acts, so far as they went, effected an alteration of the titles to the land held by the respective owners. The plaintiffs now own part of the new Lot 1 in DP 1222450, whilst the defendants now own the remaining part of that lot, as well as new Lot 2 in DP 1222450. The very nature of these dealings between the parties indicates that they are “in the midst of an uncompleted contract for the sale or other disposition of land” (see Pipikos v Trayans (supra) at [50]). It is my view that the acts of part performance relied upon by the plaintiffs are sufficient to give rise to an equity to have the transaction completed. In these circumstances, regard may be had to the alleged agreement itself, including its terms, in order to ascertain the appropriate orders by way of specific performance (see Pipikos v Trayans (supra) at [54]-[55] and [99]).

I am satisfied on the evidence adduced by the plaintiffs that by no later than February 2016, the plaintiffs and the defendants had reached a concluded agreement to the effect that in consideration of the plaintiffs taking the steps required to effect the boundary adjustment, and meeting all associated expenses, the defendants would transfer to the plaintiffs that portion of Lot 11 to the south of its boundary with Lot 13 save for that necessary to preserve road access to West Portland Road of a width of 5.5m (as shown on the Citisurv Plan of Subdivision produced in January 2016) for a price of $50,000. By that time, the extent of the area to be transferred had been clarified by the said Plan of Subdivision which had been provided to both defendants. The parties thereafter proceeded to take steps, consistent with the two stage approach suggested by the Council, towards effecting the necessary subdivisions. The agreement was later varied (on about 16 March 2016) to accommodate the defendants’ request for the road access to be widened to 6.5m.

I should add that I consider that it is plain on the evidence that Ms McClellan acted as Mr McClellan’s agent in her dealings with the plaintiffs. Moreover, it is clear that Mr McClellan held her out to the plaintiffs as his agent in that regard. In any event, Mr McClellan did not plead that any agreement made by Ms McClellan on his behalf was invalid due to a lack of authority.

The agreement, as varied, remains in a state of partial completion. The “second stage” of the envisaged process remains unperformed. A number of other steps would no doubt be required to be undertaken, culminating in the issuing of titles to new parcels of land in accordance with the agreement, and the payment by the plaintiffs to the defendants of the outstanding purchase price.

The circumstances of this case well illustrate the choice spoken of by Lord Selborne in Maddison v Alderson (1883) 8 App Cas 467 at 476 between undoing what has been done (which may be difficult), and completing what has been left undone. I cannot discern any grounds to withhold the making of orders for specific performance. Orders of that character are, of course, normally appropriate in relation to contracts involving the sale of land, and in my view are appropriate here.

The Court directs that within 14 days the plaintiffs bring in Short Minutes to give effect to these reasons. The Court will further order that the first defendant pay the plaintiffs’ costs of the proceedings.