Ashton v Pratt

BATHURST CJ: The first respondent is the executor of the will of the late Richard Pratt (Mr Pratt), a man of considerable means. The appellant (Ms Ashton) from time to time provided him with escort services for a period up to April 1997 and thereafter for a period from October 2003 towards the end of 2004.

The second and third respondents (the children) are the daughter and son of Ms Ashton.

These proceedings principally concern the legal effect of conversations between Mr Pratt and Ms Ashton in November 2003 (the November conversations). The effect of the November conversations, according to Ms Ashton, was that Mr Pratt promised to settle $2.5 million on trust for each of her children, pay her an allowance of $500,000 per annum, pay her $36,000 for rental accommodation and $30,000 per annum for business expenses. This was in consideration for her not returning to the escort industry but providing him with services as his mistress.

The primary judge held that such conversations took place, a finding not disputed on the appeal. However, the primary judge also concluded they were not intended to create legal relations, any contract if made was void as against public policy, the first respondent was not estopped from denying the conversations were legally binding and any binding obligations were released either in February 2005 or November 2005. It is these findings that are the subject of the appeal.

Unless I have stated otherwise, what I have set out below are the undisputed findings of the primary judge in Ashton v Pratt (No 2) [2012] NSWSC 3 (the primary judgment).

Ms Ashton had provided Mr Pratt with escort services for a period which had concluded in April 1997. They met again in October 2003 when a conversation to the following effect took place:

Thereafter Mr Pratt gave Ms Ashton $20,000 in cash. Upon resumption of their sexual relationship Mr Pratt indicated to Ms Ashton that he wanted her as his mistress and would support her financially.

One of the November conversations was in the following terms:

Thereafter, in the other November conversation, Mr Pratt suggested to Ms Ashton that she find a car for which he would pay. She paid a deposit of $10,000 on a second-hand Mercedes convertible. She advised Mr Pratt of this, he said he would fix it and a few days later the car was ready for collection.

Mr Pratt paid Ms Ashton $115,000 between February and May 2004 and a further $50,000 between July and October that year.

In December 2004 Mr Pratt indicated to Ms Ashton that their relationship could no longer continue but he would continue to support her financially.

Thereafter, according to Ms Ashton, she facsimiled a letter to Mr Pratt in the following terms:

Ms Ashton said that after she sent the facsimile the following conversation took place between her and Mr Pratt:

The primary judge noted that Ms Ashton’s telephone records indicated a telephone conversation of one minute on 19 January 2005, and the following day Mr Pratt refunded the $10,000 Ms Ashton had paid as a deposit on the car. Whilst his Honour did not find expressly that Ms Ashton sent the facsimile or that the subsequent conversation took place, he did not reject her evidence on these matters.

In February 2005 Ms Ashton met an associate of Mr Pratt, a Mr Tony Gray at the Wentworth Sheraton Hotel. A conversation to the following effect took place:

On 11 February 2005 a Mr Bowman, who was another associate of Mr Pratt and who for a period of time was in a relationship with Ms Ashton, forwarded an email to Ms Ashton, which omitting the formal parts, was in the following terms:

Ms Ashton responded as follows:

Payment of $100,000 was deposited into Ms Ashton’s account that day and subsequently the motor vehicle was transferred into her name. The primary judge rejected the evidence of Ms Ashton that she had a conversation with Mr Pratt before she sent the 11 February 2005 email in the course of which Mr Pratt said the payment was not in full satisfaction of her claim. He also rejected her evidence that she had further telephone conversations with him.

In November 2005 Ms Ashton signed a document handed to her by Mr Bowman, which was in the following terms (the November 2005 document):

The primary judge recorded that although Ms Ashton said she signed the November 2005 document because she was fearful of Mr Bowman, in cross-examination she said she agreed he did not pressure her but said she signed it because she did not want “Sean Bowman to hurt me or my family anymore”. She said she did not read it or know how much she was to be paid. The primary judge rejected the latter part of this evidence as “highly improbable”.

His Honour noted that Ms Ashton denied receiving $50,000. He noted that interests associated with Mr Pratt withdrew $50,000 cash on that day, although he said that that did not prove Ms Ashton received the funds.

The primary judge noted that Ms Ashton made no further claim on Mr Pratt even when she later spoke to Mr Gray to seek his assistance in obtaining an Apprehended Violence Order against Mr Bowman. He noted that at that stage she was impecunious and had returned to the escort industry. He said the probable explanation for failing to raise the matter was that Ms Ashton knew that she had released all claims.

I have set out most of the factual findings made by the primary judge.

Although the primary judge accepted that the November conversations took place, he considered that there was no intention to create legal relations, although he said the conversations were not so uncertain or incomplete to make a contract.

His Honour stated that an intention to create legal relations is an inference of fact determined objectively. He said that ordinarily family, social and domestic arrangements do not give rise to binding contracts because the parties lack the necessary intent. Referring to what Ward J (as her Honour then was) said in Darmanin v Cowan [2010] NSWSC 1118, his Honour stated that there was a rebuttable presumption of fact that arrangements or agreements made within a family are not intended to have legal force, the rationale being that, at the time of making the arrangements, the parties would not have regarded them in terms of legal consequence.

The primary judge concluded that the context in which the conversations took place was social. He pointed out that Ms Ashton had already left the escort industry, had embarked on establishing an alternative business and that neither party sought legal advice nor recorded the agreement in writing. He said there was force in the submission that it was unlikely that if Ms Ashton did not perform her role satisfactorily Mr Pratt could have claimed damages for disappointment.

The primary judge said that subsequent events could be taken into account in considering if a binding agreement was reached. He stated that Ms Ashton’s letter of 19 January 2005 did not rely on a legal right for performance of the contract.

The primary judge rejected the submission that even if it was intended to create legal relations, the contract was void for uncertainty.

Although the matter was not raised by the parties, the primary judge concluded that if a contract had been made it was void as contrary to public policy. He accepted that changes in social mores have resulted in a more liberal attitude to contracts providing for or relating to extramarital cohabitation. However, he said the old rule (under which contracts of the nature of that asserted in this case have traditionally and conventionally been held void and illegal-on the basis they are sexually immoral and/or prejudicial to the status of marriage) has not been completely obliterated.

The primary judge, after reviewing a number of relatively recent cases, said there were two notable features which saved the contracts in those cases from illegality; first, the contracts in question did not make provision for extramarital cohabitation but made provision in respect of cohabitation which already existed and, second, they did not involve meretricious sexual services but a sexual relationship as part only of a wider relationship that included cohabitation and aspects of material support.

The primary judge stated that as far as he was aware there was no case contrary to the proposition that it is still the law that a contract to provide meretricious sexual services is contrary to public policy and illegal. He said that in the present case the arrangements were not made to facilitate continuation of existing cohabitation but to establish the “mistress relationship”. He held it was an agreement to provide meretricious sexual services and no more, and, as a consequence, was void as against public policy.

The primary judge also rejected the claim based on estoppel. He noted that the case was put primarily on the basis of equitable estoppel. He noted the contention of Ms Ashton was that from late 2003 she acted on the assumption and expectation that she would remain Mr Pratt’s mistress on the terms identified in the November conversations. She also contended that Mr Pratt induced her to adopt that assumption and expectation and did nothing to dis-abuse her of it when he knew she was acting to her detriment in reliance on it.

The primary judge identified Ms Ashton’s claim of detriment as having given up the escort business, closing the accessories business and taking no steps to finalise the arrangement. However, he pointed out that she left the escort industry in the 1990’s and did not return until March 2006. He noted that she had already embarked on the accessories business and there was no evidence that Mr Pratt asked her to close it. His Honour also stated that in any event the business was making a loss.

In those circumstances the primary judge concluded that Ms Ashton suffered no detriment and the estoppel case failed. In addition, he held the estoppel claim could not afford a means to avoid the consequence that a contract of the nature contended for was void for illegality. He held therefore that even if Ms Ashton established relevant detriment, her estoppel claim would nonetheless fail on the same public policy grounds as her contract claim.

The primary judge also held that the February 2005 correspondence constituted an accord and satisfaction. He pointed out that the payment was offered expressly on the basis that it was in full and final settlement. He said the February 2005 correspondence referred to and stipulated undertakings to be given by Ms Ashton and that it could not be contemplated by any reader that Mr Pratt was seeking to make the payment other than on the terms set out in the correspondence. He said the acknowledgement by Ms Ashton constituted an agreement to those terms. In these circumstances he held there was an accord and satisfaction.

I have set out the factual findings made by the primary judge in respect of the November 2005 document in pars [20]-[22] above. His Honour concluded in those circumstances that Ms Ashton released any claim she may have had against Mr Pratt in November 2005.

The children were not parties to the proceedings in the Court below. Shortly prior to the hearing of the appeal they applied to be joined as parties, on the basis that their interests as beneficiaries under the trust Mr Pratt said he would establish were affected. The Court ordered they be joined as parties and made directions to prepare the hearing of the appeal.

The children filed a notice of cross-appeal and in addition summarised the contentions they wished to advance. They supported the submissions made by Ms Ashton but in addition asserted that they were in a fiduciary relationship with her. They claimed that Ms Ashton’s authority did not extend to circumstances where there was a conflict between her and the children.

The children contended that, if there was an enforceable contract or, if Mr Pratt was estopped from denying that such a contract existed, then at all times there existed a fully constituted trust of the chose in action, namely the right to sue on the promise to establish the trust.

In relation to the February 2005 correspondence the children contended that the trust promise was not effectively compromised as the provisions of s 23C(1)(c) of the Conveyancing Act 1919 (NSW) had not been complied with. A similar contention was made in relation to the November 2005 document.

In addition, the children contended that to the extent claims were compromised in the February 2005 correspondence or the November 2005 document, the compromises were liable to be set aside as they involved a breach of the fiduciary duty owed by Ms Ashton to her children.

For the purpose of the appeal the children made the following admissions of fact:

It is not necessary to set out the grounds of appeal. The issues raised by the notice of appeal, the notice of contention filed by the first respondent and the cross-appeal of the children may be summarised as follows.

The first issue is whether the November conversations gave rise to a binding contract between Ms Ashton and Mr Pratt. This involves two separate but related questions. First, whether the parties to the conversation intended to create legal relations between them and, second, whether the terms of the conversation were sufficiently certain to constitute a binding contract.

The second issue is whether the primary judge erred in rejecting the claim based on estoppel. I have put this somewhat generally because as will be seen it will be necessary to pay close attention to the nature of the estoppel alleged to determine whether it forms the basis for any relief and the extent of such relief.

The third issue is whether the February 2005 correspondence, to which I have referred in pars [16] and [17] above, constituted an accord and satisfaction between the parties, thus relieving Mr Pratt of any further liability to Ms Ashton. This involves questions of construction of the email and the response. It also involves consideration of the contention of the children that Ms Ashton was a trustee of the promise by Mr Pratt to create a trust for their benefit and, to the extent that the transaction purported to dispose of this interest, it was ineffective for failure to comply with the requirements of writing in s 23C(1)(c) of the Conveyancing Act. It further involves consideration of the children’s contention that to the extent that the transaction constituted a release of the promise made by Mr Pratt to establish a trust for the children, it constituted a breach of trust by Ms Ashton or a breach of fiduciary obligations owed by her to the children and thus was liable to be set aside.

The fourth issue concerns the November 2005 document. Similar matters which arise in respect of the February 2005 correspondence arise in relation to this release. However, in addition, it was broadly argued that the circumstances surrounding the grant of the release involved unconscionable conduct or was unjust or oppressive and, in these circumstances, ineffective to release Mr Pratt from his obligations.

The final issue involves the question of whether any agreement reached was unenforceable as being against public policy and whether public policy precluded any reliance on any estoppel which might otherwise have arisen.

The parties correctly accepted that in determining the issue of whether there was an intention to create legal relations, what was required was an objective assessment of the state of affairs between the parties as distinct from the identification of any subjective reservation or intention: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (Ermogenous) at [25].

Ms Ashton criticised the apparent reliance by the primary judge on the presumption that arrangements of the nature in question in the present case are not intended to be legally binding. She contended that this was contrary to what was said by the High Court in Ermogenous at [27]. She also submitted that the matters relied upon by the primary judge to support his conclusion that there was no intention to create legal relations were either inconclusive or pointed towards an intention to enter into a contract.

Ms Ashton submitted that the relationship of kept mistress pointed towards, not against, an intention to create legal relations. She submitted that at all times the relationship was placed on a commercial footing involving a large amount of money. In this context, she pointed to the decision of the Supreme Court of Victoria in Popiw v Popiw [1959] VR 197 (Popiw), where an intention to create legal relations was found in respect of an agreement by a wife to return to live with her husband in consideration of a promise to transfer the matrimonial home into joint ownership.

Ms Ashton submitted that it was not significant that she had already left the escort industry. She said that her evidence was that she contemplated going back into the industry and it was agreed that she would not do so.

Ms Ashton submitted that there was no significance in the failure to seek legal advice or commit the agreement to writing. She submitted that neither of these factors was surprising given the illicit nature of the relationship. Senior counsel for Ms Ashton submitted that it was hardly a matter on which the family’s solicitor would be consulted.

In submitting that the conclusion of the primary judge (that ordinary people would not have intended the promise to be legally enforceable) was incorrect, Ms Ashton claimed that Mr Pratt clearly contemplated that she would sue him suggesting that that was why he sought the February and November 2005 releases. She also submitted that the question of whether Mr Pratt could claim damages for breach of the agreement would only occur to a lawyer and that the absence of any claim to a legal right to performance of the promise in the January 2005 letter was explicable on bases other than a lack of intention to create legal relations. In that context she referred to her evidence that shortly prior to writing the letter Mr Pratt had assured her that he would honour his promise.

Ms Ashton pointed to a number of factors that she said supported her contention that there was an intention to create legal relations. She said the obligations of the parties were specific, clear and complete and formed the basis of a relationship that the primary judge described as purely meretricious. She referred to the fact that the primary obligation was for the benefit of her two children and that her undertaking not to do escort work was a substantial and important matter for her and the amounts received by her were likely to be her sole means of support.

Senior counsel for Ms Ashton also emphasised that the undertaking given by Mr Pratt, to have “his people” set up the trust, supported the proposition that there was an intention to create legal relations. In that context he also referred to the precise amounts which were agreed to be settled on the children.

Senior counsel for Ms Ashton also submitted that the fact that the agreement would not be specifically enforceable or was not one in respect of which injunctive relief would be granted, did not compel the conclusion either that there was no intention to create legal relations or that the contract was void for uncertainty.

Ms Ashton submitted that the contract was not void for uncertainty. She said it was not necessary for the duration of the contract to be stated as the payments under it were required to be made on an annual basis and the courts would imply that the agreement was terminable on reasonable notice. She also submitted that there was an implied obligation to create the trust within a reasonable time. She submitted that a trust for a named beneficiary for a specified sum of money was sufficiently certain and that the law of trusts would supply the necessary duties, rights and liabilities.

Ms Ashton also submitted that the use of the term “mistress” did not lead to the contract being uncertain. She submitted that the language would be interpreted by a court broadly and fairly as consistent with the language in contracts generally. She pointed out that courts are astute to adopt constructions which will preserve the validity of a contract.

The children adopted the submissions of Ms Ashton on these issues. In addition, counsel for the children submitted that it was open to the Court to conclude that the promise to create the trust was legally binding although the other promises were not. However, if this was the case there would be no consideration for the agreement.

The first respondent submitted that the primary judge was correct in concluding that the parties would not have intended that their promises be enforced in a court. She submitted that an ordinary person in the position of Mr Pratt would not have envisaged that a breach by Ms Ashton of her obligations could be remedied by damages for disappointment or injunctive relief. Similarly, she submitted that a person in the position of Ms Ashton would not have envisaged that the “vast sums of money” referred to in the November conversations were recoverable by a court order.

The first respondent contended that the primary judge did not rely on any presumption in concluding that there was no intention to create legal relations. She said the fact that Ms Ashton was Mr Pratt’s mistress denoted a social arrangement. She pointed out that, unlike the present case, the parties to the arrangements in Popiw attended upon a solicitor and instructed him to transfer the house into their joint names. In relation to Ms Ashton’s promise to give up the escort business, she pointed out that Ms Ashton had left that industry in April 1997.

Senior counsel for the first respondent accepted that the Court could imply a reasonable time for the creation and settlement of the trust monies, but submitted that if there was a contract the obligation to do so accrued immediately. He submitted that it was most unlikely the parties could have intended this to occur in circumstances where they could terminate other aspects of the arrangement.

Senior counsel for the first respondent also referred to the fact that Ms Ashton put one of the promises in the alternative, namely, that Mr Pratt would pay her $36,000 rent per annum or buy her a house in the eastern suburbs. He submitted the imprecision of this promise demonstrated that there was no intention to create legal relations. However, it should be noted that the alternative of a house in the eastern suburbs was not referred to in the November conversations but only in the conversation with Mr Gray referred to in par [15] above. Ms Ashton did not contend at the hearing that the alternative formed any part of the contract.

Senior counsel for the first respondent submitted that the letter of December 2004 referred to in par [12] above told against any intention to create legal relations. He pointed out that the letter did not contain a demand but merely a request for financial help. He pointed out that the evidence established that the first time Ms Ashton saw a lawyer in respect of the matter was in January 2009.

Senior counsel for the first respondent also pointed out that the terms on which the trust was to be created were unknown. In particular the trustee was not identified nor were the powers of the trustee or when the children were to become entitled to the fund.

Senior counsel for the first respondent also pointed to the difficulty of identifying the obligations of Ms Ashton as Mr Pratt’s mistress.

The first respondent relied on the same matters in support of her assertion that any contract was void for uncertainty.

In Ermogenous, the High Court held at [25] that whether the parties intended to create legal relations required an objective assessment of the state of affairs between them.

In that case, the High Court doubted at [26]-[27] the validity of the use of a presumption that “family arrangements” were not intended to give rise to legal obligations. Subsequently, the Full Court of the Federal Court in Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] FCAFC 81; (2012) 289 ALR 237 concluded at [12]-[13] that the High Court had rejected the use of presumptions as a basis of determining whether parties had entered into contractual relations.

By contrast, in Sion v NSW Trustee & Guardian [2013] NSWCA 337 (Sion), Emmett JA, with whom Basten and Barrett JJA agreed, stated at [40]-[41] that as a matter of known experience, when family members make a promise to each other it is unlikely they intend it to be legally binding and the vaguer the language of the arrangement and the greater its informality, the more difficult it will be to rebut the presumption.

Ms Ashton contended that the primary judge erred in applying the presumption. It is correct that his Honour accepted the presumption applied, but he stated that in any event he was satisfied that the parties did not intend to make a contract: primary judgment at [36]. For the reasons which follow, he was correct in reaching that conclusion.

Notwithstanding what was said by this Court in Sion, in my opinion the effect of the decision of the High Court in Ermogenous was that in considering the issue recourse should not be had to any presumption concerning the contractual or non-contractual effects of family arrangements. That does not mean that the relationship of the parties and the circumstances in which the arrangement was entered into are irrelevant to the question. To the contrary, these factors form part of the surrounding circumstances from which it will be determined whether or not a contract came into existence.

In the present case, the conversations took place after Ms Ashton and Mr Pratt had resumed sexual relations and Mr Pratt had already offered to support her in her business and paid her money (see pars [6]-[7] above).

The conversations said to give rise to legal relations started with a request by Mr Pratt for Ms Ashton to spend more money on haute couture. Thereafter, when Ms Ashton said she was thinking about going back to the escort business, he said he was prepared to financially support her so she did not need to. In that context, he offered to establish the trust.

It should be noted that at least this portion of the conversations was not framed in terms of ‘if you agree not to go back into the escort business I will establish the trust’. Rather, the thrust of the conversation was ‘I’ll help you by establishing the trust so you do not have to go back into the escort business’. Even ignoring the informality, this does not seem to me to be the language of a legally binding contract.

The conversations then proceeded with Mr Pratt asking Ms Ashton to forget about the escort business and offering to help her in her business venture. Once again it was not framed in terms of ‘I will support the business venture if you agree not to return to the escort business’.

The conversations then continued with Mr Pratt inquiring as to the amount of money Ms Ashton would need to support herself. Ms Ashton responded that she would need income if she did not go into the escort business. In that context the offer of $500,000 was made.

As part of that conversation Mr Pratt said “I don’t want you to work in that industry ever again. I want you to only concentrate on my needs and wants”, and Ms Ashton replied “That’s fine I wouldn’t complain”. This is the closest the conversations came to the language of contract.

Undoubtedly it is correct that formal language of offer and acceptance is not necessary to constitute a contract: see the discussion by Ormiston J in Vroon BV v Foster’s Brewing Group Ltd [1994] VR 32 at 79. However, it is relevant that with the exception of that portion of the conversation to which I have referred in par [79], the language was not cast in the language of obligation.

The obligations of Ms Ashton in the contract, as pleaded, were that she would cease providing escort services to other individuals and become Mr Pratt’s mistress. The nature of these promises tells against them having contractual effect. The conversations themselves made no reference to Ms Ashton becoming Mr Pratt’s mistress as distinct from requesting her to concentrate on his needs and wants.

Although it may be readily inferred from the context in which the conversations took place that it was intended that Ms Ashton would occupy a position which could be described as Mr Pratt’s mistress, apart from concentrating on Mr Pratt’s needs and wants there is no delineation of the extent of Ms Ashton’s obligations. There was no evidence to suggest that the position of mistress imposes any particular obligation on a person occupying that position. Reasonable persons would not expect that question to be determined by a court.

The difficulty is highlighted by the debate which took place at the hearing as to whether Ms Ashton was to provide sexual services to Mr Pratt on an exclusive basis. The November conversations are silent on that issue. However, in cross-examination Ms Ashton gave the following answers:

This passage highlights the difficulties of ascertaining what the obligations to be undertaken by Ms Ashton were.

Similarly, it is difficult to see how these obligations could be enforced. The parties accepted the remedy of specific performance or injunction would not be available and it was not suggested the measure of damages would be the expense involved in Mr Pratt obtaining a new mistress. At one stage damages for disappointment were suggested but no indication was given as to how such damages would be assessed.

The duration of the agreement is not specified. It was suggested in argument that this could be overcome by the implication of a reasonable time. However, there is no external standard by which a reasonable time could be measured: see Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 137 and 156.

Further, neither the terms of the trust nor the time at which it was to be created were spelt out. Whilst it is true that it could be implied that the trust was to be created within a reasonable time and some of the obligations of the trustee and his or her powers could be imposed by both the general law and by statute, the identity of the trustee, something crucial to the existence of the trust, was not stated nor was the time at which the beneficiaries would be entitled to the trust funds. The statement “at a mature age” may be able to be interpreted as upon reaching adulthood but even if it was, there is no basis to ascertain whether the interests of the children were contingent on them obtaining that age. If the agreement was intended to be enforced by a court it would have been expected that these matters would have been dealt with.

There is a more fundamental problem so far as the trust is concerned. The promise to create the trust was not said to be conditional on the performance by Ms Ashton of any services and presumably it was envisaged as arising immediately upon the mistress relationship commencing. Objectively speaking it would be surprising if Mr Pratt intended to legally bind himself to expend $5 million in these circumstances.

Further, no attempt was made to document the transaction. Senior counsel for Ms Ashton said that it was consistent with an illicit transaction that the parties would not consult the family solicitor. So much may be accepted. However, no doubt there were many lawyers not associated with the Pratt family who would have been in a position to document the transaction.

I do not think that the events which took place after the November conversations provide much assistance in dealing with the matter. Whilst it is correct that there was no evidence that anything was done to set up the trust and the payments made did not conform to the terms of the agreement, Mr Pratt and Ms Ashton entered into (or at least continued) their relationship. Further, although Ms Ashton’s initial request for money was not on the basis that Mr Pratt had bound himself in the terms of the November conversations, she did make reference to at least some of the promises in her initial request as she did in the subsequent conversations with Mr Gray.

Having regard to the matters to which I have referred above, I do not think that the trial judge erred in concluding that the parties did not intend to create legal relations. In particular the nature of the arrangement, it’s imprecision in the areas to which I have referred and the inherent improbability that a person in the position of Mr Pratt would bind himself to make significant payments in consideration of a promise that was essentially unenforceable, lead in my view to the conclusion reached by the primary judge.

Further, in my opinion, in the present case, if there was an intention to create legal relations, the contract was void for uncertainty. I recognise courts will strain to give effect to agreements reached between parties, particularly in circumstances where the obligations have been partly performed: The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Limited [1968] HCA 8; (1968) 118 CLR 429 at 436 and Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571 at 589. However, in my opinion, the contract in the present case is uncertain or incomplete in a number of essential elements. I have referred above to the fact that the duties of Ms Ashton, as Mr Pratt’s mistress, are not specified, the duration of the arrangement is uncertain and there is a failure to identify the trustee or the vesting date of the trust. These are not matters that can be resolved by a court implying terms of reasonableness.

It follows that no binding agreement of the nature of that pleaded was entered into.

Ms Ashton submitted that in considering the question of detrimental reliance, the primary judge erred in failing to consider the principal aspect of detriment relied upon, namely, being induced to become Mr Pratt’s mistress. She pointed to her evidence of having repeated sexual relations with Mr Pratt and that she continued to provide him with services in anticipation of the establishment of the trust fund and that in those circumstances she did not return to the escort industry. She referred to the fact that Mr Pratt asked her not to go back to the escort industry and she did not go back until 2006. She submitted that was a clear case of detrimental reliance in respect of a woman who she submitted the primary judge otherwise treated as a prostitute. She submitted, relying on Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 (Giumelli), that the prima facie relief to which she was entitled was that Mr Pratt (or his estate) be held to his promise.

Senior counsel for Ms Ashton emphasised that his client’s case was not that Ms Ashton gave up working in the escort industry but that she agreed not to return to it. He submitted that her evidence that but for Mr Pratt’s requests and promises, she would or may well have gone back into the escort industry, was not the subject of challenge. He referred to her evidence in her conversation with Mr Pratt that she would get around $500,000 per year in the escort business (although this was only admitted as evidence of her state of mind and not as to the truth of the underlying assertion) and her evidence that she received $300,000 before tax in the last year she worked as an escort.

Senior counsel for Ms Ashton submitted that the detriment suffered by her was not merely pecuniary. He described it as a life changing decision with irreversible consequences of a profoundly personal nature: Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 (Sidhu) at [84]. He submitted that the Court in Sidhu did not embrace the proposition that relief should not be disproportionate to the detriment suffered. In the present case he submitted that, having regard to the fact that Mr Pratt was a billionaire, the relief sought was not disproportionate.

The children adopted the submissions of Ms Ashton on the estoppel question.

The first respondent submitted that no detriment was suffered. She referred to the evidence of Ms Ashton that she had love and affection for Mr Pratt and stated that over a period of nine months she received $335,000, a Mercedes Benz vehicle, clothing and a computer. She also submitted that the detriment claimed at the hearing of the appeal, namely the entry into the mistress relationship, formed no part of Ms Ashton’s case at the trial.

The first respondent submitted that for Ms Ashton to establish detriment she had to prove that her original change in position was a source of detriment if the promises were not performed. She submitted that becoming Mr Pratt’s mistress was not in itself a source of detriment to Ms Ashton.

The first respondent submitted that the primary judge did not misunderstand the detrimental reliance asserted by Ms Ashton. She pointed out that Ms Ashton’s pleading stated that she gave up her escort business, not that she resolved not to return to it.

Senior counsel for the first respondent also submitted that Ms Ashton did not rely on Mr Pratt’s promise in not working as an escort. He pointed to her evidence that she told Mr Pratt that her ambition was to start a business and that although the relationship concluded in mid-2004, she did not return to the escort business until March 2006. He submitted that in the present case the claim did not involve life changing decisions but simply a claim for money.

At the conclusion of the hearing the Court sought further submissions on the effect of the decisions of this Court in Saleh v Romanous [2010] NSWCA 274; (2010) 79 NSWLR 453 (Saleh) and DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348; (2011) 83 NSWLR 728 (DHJPM) on Ms Ashton’s estoppel case. These decisions are to the effect that a promissory estoppel only operates as a restraint on the enforcement of rights and, unlike a proprietary estoppel, must be negative in substance; that is, it will only apply to assumptions or expectations that existing or future rights will be suspended or extinguished rather than created. This raises the issue of whether Ms Ashton was prevented from relying on a promissory estoppel as the relevant promises concerned the creation, rather than the suspension or extinguishment, of existing rights.

In response to that request the first respondent submitted that the estoppel asserted by Ms Ashton was a promissory estoppel, which remains a discreet form of equitable estoppel. She submitted that, consistent with Saleh and DHJPM, such an estoppel must be negative in substance and cannot be used to confer positive rights on the promisee, as Ms Ashton was seeking to do.

The first respondent submitted that the assumption pleaded by Ms Ashton was that she had entered into a contractual arrangement with Mr Pratt and that it was a claim in respect of an in personam right. She pointed out that Ms Ashton had not contended that she had an expectation she would obtain an interest in any property and the case was thus not one of proprietary estoppel.

The first respondent acknowledged that the proposition that promissory estoppel must be negative in substance may be inconsistent with some passages in the judgment of various Justices of the High Court in Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387 (Waltons).

Ms Ashton submitted that the statements in Saleh and DHJPM should be regarded as authority for the proposition that “an orthodox promissory estoppel is negative in substance, that is, it operates only as an equitable restraint on the enforcement of the promisor’s rights”. However, Ms Ashton argued, essentially, that as the relevant estoppel asserted in her pleadings was equitable estoppel and the principle stated in Saleh and DHJPM did not extend to equitable estoppel generally, her claim was not precluded by Saleh and DHJPM.

Ms Ashton submitted that if the limitation on promissory estoppel, which was said to exist in Saleh and DHJPM, was given a wider application to equitable estoppel in general, it would be contrary to what was said by four of the Justices in Waltons at 406-407, 428-429 and 450-452, to the decisions of this Court in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 (Silovi) and Austotel Pty Ltd v Franklins SelfServe Pty Ltd (1989) 16 NSWLR 582 (Austotel) and to the decisions of the Full Court of the Federal Court in S&E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 and Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475. She submitted in those circumstances that the proposition should not be given an extended meaning to equitable estoppel generally.

In the pleadings the estoppel was described as an equitable estoppel. The pleading in effect claimed that Mr Pratt (and his estate) was estopped from denying that Ms Ashton and Mr Pratt had entered into a contractual arrangement that Ms Ashton would become Mr Pratt’s mistress and that he would perform his promises. It should be noted that the estoppel claimed was not a proprietary estoppel. Whether an estoppel by encouragement or an estoppel by acquiescence, the essence of these types of proprietary estoppel is that the person seeking to assert it has been led to alter his or her position detrimentally in the belief that he or she would have an interest in the property of the defendant: Dillwyn v Llewelyn (1862) 4 De Gex, Fisher & Jones 517; 45 ER 1285 and Sir J W Ramsden v Lee Dyson and Joseph Thornton (1866) LR 1 HL 129. No such claim was made in the present case.

As I indicated, the estoppel pleaded was described as an equitable estoppel. In Waltons, Brennan J described the elements of such an estoppel in the following terms at 428-429:

Earlier in his judgment Brennan J appeared to reject the proposition that such an equitable estoppel can only be used defensively and was essentially negative in effect. His Honour stated at 416 that equitable estoppel, unlike estoppel in pais, is a source of legal obligations arising on an actual state of affairs. He stated that whilst it is possible that the estoppel may be used to compel a party to fulfil another’s expectations, that was not the object of the estoppel. He stated at 423 that the object was to avoid the detriment which would be suffered by the party who has been induced to act or to abstain from acting thereon. He stated that if that object is kept in mind, the concern that a general application of the principle of equitable estoppel would lead to non-contractual promises becoming enforceable as contractual promises would be allayed.

Whilst pointing out at 425 that the remedy offered by promissory estoppel had been limited to preventing the enforcement of existing legal rights, his Honour made the following remarks:

In The Commonwealth of Australia v Verwayen [1990] HCA 39; (1990) 170 CLR 394 each of Mason CJ, Brennan J and Deane J adhered to the broad view of the scope of equitable estoppel at 413, 428-429 and 440 respectively.

In Giumelli, a case of proprietary estoppel, at [32]-[34] and [48]-[52] the plurality appeared to reject the proposition that the relief in the case of equitable estoppel must be confined to the minimum required to avoid the detriment: see also Sidhu at [85]. Notwithstanding, the plurality in Giumelli did not seek to limit what was said by the majority in Waltons concerning the potential scope of equitable estoppel. The plurality at [35] cited, without disapproval, the following passage of the judgment of McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 300-301:

It should be noted that in that passage McPherson J appeared to accept that an equitable estoppel could be applied to give effect to an agreement that for want of certainty or some other essential element falls short of constituting an enforceable contract.

However, this Court in Saleh and DHJPM appeared to take a more restrictive view of the doctrine of promissory estoppel.

Saleh involved a pre-contractual representation from the appellants, as vendors of a property, to the respondents, as purchasers, that if the owner of an adjoining property did not agree to a joint development of his and the appellants’ properties, the appellants would not require completion of the contract of sale existing between the parties. The Court held the appellants were estopped from enforcing their contractual rights in circumstances were the owner of the adjoining property declined to agree to the joint development.

Handley AJA, with whom the other members of the Court agreed, emphasised that a promissory estoppel is not enforceable as a contract “but as an equitable restraint on the enforcement of the promisor’s rights”. His Honour without reference to Waltons, made the following remarks at [74]:

This decision was described by White J in Construction Technologies Australia Pty Ltd v Doueihi & 4 Ors [2014] NSWSC 1717 at [130] as controversial.

In DHJPM the appellant entered into a lease and undertook a fit-out of certain premises on the basis of a communication in which the respondent had indicated it was going ahead with a sub-licence. Important terms of the licence had not been agreed upon.

The Court held that no estoppel arose. Handley AJA at [93] adhered to the views he expressed in Saleh as to the limited scope of a promissory estoppel.

Meagher JA emphasised the importance of identifying the assumption or expectation which the object of the estoppel is said to be estopped from denying or asserting. He noted that in the case before him, the assumption or expectation was that the appellant had believed there was an agreement with the respondent. He pointed out at [65] that the negotiations were between experienced businessmen who had been aware that they could not rely on a promise as legally binding without taking the necessary contractual steps or at least obtaining assurances that the promise was to be regarded as binding. Handley AJA at [124] expressed the view that Waltons was not binding authority for the principle that a proprietary estoppel recognises a binding contract where the content of that contract is unknown.

The remarks of Meagher JA at [65] and the comment of Handley AJA at [124] indicate a further difficulty confronting Ms Ashton in asserting an estoppel in the present case. That is, whether a party could be estopped from denying a contract came into existence in circumstances where, not only was the contract void for uncertainty, but objectively speaking there was no intention to create legal relations.

It may be accepted, as Meagher JA pointed out in DHJMP at [54], that for a proprietary estoppel to arise there does not need to be complete certainty in the promise or representation said to give rise to the assumption or expectation. However, where the estoppel said to arise is not a proprietary estoppel, but one which precludes a person from denying that a contract came into existence, the certainty of the mutual promises said to constitute the contract seems to assume particular importance.

In Silovi, a lease for a period of ten years was granted to the appellants by the respondents. The lease, to the extent it exceeded a period of five years, was invalid by virtue of the provisions of s 327AA of the Local Government Act 1919 (NSW). However, the respondents had assured the appellants they would not break the lease.

The Court held that the respondents were estopped from denying the validity of the lease. Priestley JA at 472 with whom Hope and McHugh JJA agreed, stated that the following propositions could be derived from Waltons:

In Austotel, the appellants withdrew from negotiations to grant a lease to the respondent after the respondent had significantly altered its position in contemplation of the lease being granted. At the time of withdrawal, no agreement had been reached as to the rent to be charged on the area of the site the subject of the proposed lease. The respondent contended that the appellants were estopped from denying that an agreement had been reached in terms outlined in two letters which had passed between the parties. This claim was rejected by all members of the Court. Priestley JA pointed out at 604 that such an estoppel would only prevent the appellants denying the existence of an agreement which was not a legal agreement at all: see also Kirby P at 584.

The alternative submission made by the respondent was that the appellants’ conduct in declining to enter into a lease with the respondent was in the circumstances unconscionable and as a result an equity arose in the plaintiffs to relief on the principles discussed by the High Court in Waltons. The majority (Kirby P and Rogers AJA) rejected this submission. Priestley JA dissented and reformulated his fifth proposition in Silovi in the following terms:

Two things may be said about these cases. First, Austotel points out the difficulty Ms Ashton faces in asserting that the first respondent was estopped from stating a contract came into existence when the contract itself was void for uncertainty. Second, propositions 3, 4 and the reformulated proposition 5 set out by Priestley JA in the two cases seem to extend the boundaries of promissory estoppel beyond what was suggested by Handley AJA in Saleh.

The House of Lords considered some of these issues relatively recently in two cases. First, Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 (Cobbe) involved an oral agreement by which the appellant agreed to purchase a block of flats from the first respondent, which would be redeveloped by the appellant, with the proceeds of the development over a nominated amount being shared between the parties. The respondents withdrew from the agreement after the appellant had spent considerable money and resources in successfully obtaining planning permission. The appellant contended that the respondents were estopped from denying that the appellant held a beneficial interest in the properties, as the respondents had acted unconscionably in inducing and encouraging the appellant to carry out the work in the belief that the oral agreement which had been reached would be honoured. The case was put as one of proprietary estoppel.

The appeal was dismissed. Lord Scott at [14] described proprietary estoppel as a sub-species of promissory estoppel and arising where the right claimed is a proprietary right, usually over land, but, in principle, equally available in relation to chattels or choses in action. In dismissing the appeal his Lordship pointed out at [18] that the appellant’s expectation was that upon the grant of planning permission there would be a successful negotiation of the outstanding terms of the contract for the sale of the property. He stated at [27] that the appellant did not spend his money and time in the mistaken belief that the agreement was legally enforceable and his expectation was always speculative. In those circumstances he held that no estoppel arose.

Lord Walker referred to the commercial nature of the negotiations, pointing out at [66] that, in that context, ‘hopes’ by themselves were not enough to found a proprietary estoppel. He pointed out at [87] and [91] that what the appellant was expecting to get was a contract, that both parties were aware that there was no legally binding contract and either were free to discontinue negotiations without legal liability. In these circumstances he also found that no estoppel arose.

In the present case, unlike Cobbe, Ms Ashton believed there was a binding agreement. However, the difficulty remains that the contract was void for uncertainty and there was no expectation that she would receive an interest in property. It does not seem to me that an agreement to settle a cash fund on trust for children on undefined terms amounts to an expectation that would give rise to a proprietary estoppel.

The second case is Thorner v Major [2009] 1 WLR 776. This involved a claim based on proprietary estoppel arising out of a domestic arrangement that the appellant would have an interest in a farm property on which he had worked for many years up to the time of the death of the promisor. The House of Lords held that the estate of the deceased promisor was estopped from denying that the appellant held such an interest.

Lord Walker, with whom Lord Rodger and Lord Neuberger agreed and Lord Scott generally agreed, pointed out that whether the assurance to give rise to a proprietary estoppel is sufficiently clear depended on context. He cited with approval the following remarks of Hoffmann LJ in Walton v Walton [1994] CA Transcript No 479:

However, Lord Walker clearly drew the distinction between proprietary and promissory estoppel at [61]:

Lord Neuberger agreed with Lord Walker. He pointed out at [97] that the relationship between the promisor and the appellant was familial and personal and that at no time had the parties contemplated a formal contract. He referred with approval to the distinction drawn in Gillett v Holt [2001] Ch 210 between the commercial context and the domestic and family context.

Two matters emerge from this case. First, the distinction between promissory estoppel and proprietary estoppel was maintained in a manner which appears consistent with statements in this Court in Saleh and DHJPM. Second, the case emphasises the importance of the context in which the circumstances said to give rise to the estoppel occur.

This analysis of the authorities demonstrates two significant obstacles to Ms Ashton’s claim based on equitable estoppel. First, there is a significant body of authority in this Court, as well as at least one decision of the House of Lords, which has maintained the distinction between the scope of promissory and proprietary estoppel. These cases indicate that the former only acts as a restraint on the enforcement of legal rights whilst the latter can be a source of obligation. However, it must be acknowledged that there is significant dicta contrary to this limitation on promissory estoppel.

Second, assuming that promissory estoppel can be the source of enforceable obligations, can the doctrine extend to requiring the promisor to adhere to an obligation said to arise under an assumed contract, which itself was void for uncertainty or incompleteness? Cases such as Cobbe and Austotel suggest to the contrary. However, these cases involve commercial transactions. Although there is an element in which this case could be said to involve a commercial transaction it seems closer to a domestic arrangement where a more liberal approach to the issue of certainty has been applied, at least in the case of proprietary estoppel.

However, it is unnecessary to resolve these issues as to my mind Ms Ashton has failed to establish that she suffered detriment as a result of Mr Pratt resiling from his promise such as to give rise to the relief claimed. The detriment said to have been suffered in the present case was that Ms Ashton became Mr Pratt’s mistress and did not return to the escort business.

The relevant detriment is that which the party asserting the estoppel would suffer, as a result of her original change of position, if the assumption which induced it was repudiated by the party estopped: Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 at [42] (Delaforce), Grundt v The Great Boulder Proprietary Gold Mines Limited [1937] HCA 58;(1937) 59 CLR 641 at 674-675 and Sidhu at [81].

What now appears clear is that there is no need to mould any remedy in the case of equitable estoppel to reflect the minimum relief necessary to remove the detriment: Giumelli at [48], Delaforce at [56]-[57] and Sidhu at [75]. Prima facie the courts should enforce a reasonable expectation which the party bound created or encouraged. However, relief will be limited where the enforcement of a plaintiff’s expectation would be out of all proportion to the detriment: Delaforce at [62] and Sidhu at [85]. This is because in those circumstances good conscience does not require the promisor be held to his or her promise.

Ms Ashton submitted that the alteration of her position in becoming Mr Pratt’s mistress and not returning to the escort business was a life changing event with irreversible consequences of a profoundly personal nature such that the only appropriate relief was the enforcement of the promises: Donis v Donis [2007] VSCA 89; (2007) 19 VR 577 at [30] and Sidhu at [85]. I cannot agree. It is difficult to see what detriment, if any, Ms Ashton suffered by becoming Mr Pratt’s mistress. Her evidence was that prior to the November conversations she had embarked on a sexual relationship with him and the continuation of that relationship, particularly when she did not regard it as exclusive and where she said there was affection between them, did not seem to amount to a detriment. Indeed, any detriment involved in simply becoming Mr Pratt’s mistress was removed when he indicated the relationship could no longer continue.

The only other detriment identified by Ms Ashton was that she was unable to return to the escort business. However, during the period she was Mr Pratt’s mistress, a period of about 12 months, she received gifts totalling $165,000, together with the use of a car. This amount does not include the $20,000 cash she received in October 2003 from Mr Pratt, nor the $160,000 and the title to the motor vehicle that she received subsequent to the termination of the relationship.

Further, there was nothing to suggest that the period during which she acted as Mr Pratt’s mistress in some way disabled her from returning to the escort business. She in fact did return to the industry in 2006.

In these circumstances it does not seem to me that Ms Ashton suffered any detriment in Mr Pratt resiling from his promise, certainly not one that good conscience requires his estate to be held to the promises made by him.

As was stated by Gageler J in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 88 ALJR 552 at [150] the detriment or harm required to ground an estoppel can be any material disadvantage. Such material disadvantage must be substantial, although it need not be quantifiable in the same way as an order of damages. In the present case Ms Ashton suffered no material disadvantage, certainly not one which could be described as substantial.

In these circumstances the primary judge was correct in dismissing Ms Ashton’s claim so far as it was based on estoppel.

Ms Ashton submitted that the onus was on the first respondent to establish an accord and satisfaction. She submitted that clear words would be required before finding a contract worth well in excess of $5 million was settled for $100,000. She referred to the absence of evidence of the text message from Mr Bowman of 9 February 2005 (referred to in the February 2005 correspondence), the failure of the first respondent to call either Mr Gray or Mr Bowman, the absence of any reference to the trust and the absence of any reference to the amounts being paid in full satisfaction of any claims.

Ms Ashton also submitted that the terms of the February 2005 correspondence were inconsistent with an accord and satisfaction. She referred to the reference to expectations, the failure to identify all claims, the fact that the transfer had already been arranged, which she said was inconsistent with the making of an accord and the absence of any invitation to accept the offer. She submitted that her email acknowledging receipt of the 11 February 2005 email and providing bank details did not amount to an unequivocal acceptance of such an offer. She stated that acknowledgement of a communication did not amount to an acceptance.

Ms Ashton also suggested that the primary judge erred in rejecting her evidence of a conversation with Mr Pratt prior to her sending her email. She claimed during this conversation Mr Pratt stated that the money was not in full satisfaction of her claims.

Ms Ashton also submitted that for there to be an accord and satisfaction there must be a real and genuine dispute in relation to the claims in question. She submitted that no such dispute existed as at 11 February 2005.

Senior counsel for Ms Ashton, referring to what was said by Dixon J (as his Honour then was) in McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 (McDermott) at 184-185 and by his Honour in Ballantyne v Phillott [1961] HCA 17; (1961) 105 CLR 379 (Ballantyne) at 389, submitted that it was necessary to be sure that Ms Ashton agreed to accept the sums referred to in the February 2005 correspondence in full satisfaction of her claims. He submitted that the requisite degree of satisfaction had not been established. He pointed to what he said was the difficulty in determining whether what was being taken by Ms Ashton in satisfaction of her claims was $100,000 as found by the primary judge or $100,000 plus the Mercedes car as contended for by the first respondent.

As I indicated, the children generally speaking adopted Ms Ashton’s submissions on the question of whether the November conversations gave rise to a contract. However, the children contended that Ms Ashton was a trustee of the promise by Mr Pratt to create a trust in their favour. They relied in that context on the reference in the conversations to a trust being created for their benefit.

The children submitted that two consequences flowed if this submission was correct. They submitted, referring to Grant v John Grant & Sons Proprietary Limited [1954] HCA 23; (1954) 91 CLR 112 (Grant), that the general words of a release are constrained by the particular occasion and that a release would not be taken to include matters not the subject of dispute and the release would not apply to something of which a party was ignorant. In that context they pointed out that the February 2005 correspondence did not refer to the trust promises and that having regard to the conversations between Ms Ashton and Mr Gray in February 2005, it was not disputed at the time that the promise was made.

Second, it was submitted that if the release included the trust promises it constituted a disposition of a subsisting equitable interest which by virtue of s 23C(1)(c) of the Conveyancing Act was required to be in writing and signed by the person disposing of it. They pointed to the fact that the definition of “disposition” in s 7 of the Conveyancing Act included a release. They submitted that the document was not signed by the person disposing of it.

The children also submitted that the first respondent could not rely on the doctrine of part performance. They submitted that for reliance to be placed on that doctrine it would be necessary for the first respondent to rely on something in the nature of fraud or moral turpitude that would bind the conscience of the children and make it unreasonable for them to rely on s 23C(1)(c) of the Conveyancing Act. They submitted that nothing of that effect was shown in the present case.

Further, the children submitted that the acts relied upon must be unequivocally referrable to the release. They submitted that the payments in the present case were not so referrable.

They also submitted the doctrine of part performance is one which applies to a contract in respect of which specific performance will be granted. They submitted, referring to JC Williamson Limited v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 (JC Williamson) at 301, that the doctrine cannot be relied upon as affording a title to an injunction restraining breach of a negative agreement, in this case an agreement not to enforce the promise.

Further, on the question of part performance, counsel for the children submitted that the primary judge found that Ms Ashton accepted $100,000 in full and final settlement. In those circumstances he submitted that the only act of part performance was the payment of money, which was insufficient to enliven the doctrine.

Alternatively, the children submitted that the release was a breach by Ms Ashton of the fiduciary obligations owed by her to them. They submitted that Mr Pratt obtained the release with knowledge of such breach as a consequence of which they were entitled to rescission of the release. They submitted that in obtaining the release Ms Ashton was in a position of conflict and could not release the trust promises without the informed consent of the beneficiaries. As a consequence the release was voidable.

The first respondent submitted that Ms Ashton’s 11 February 2005 email referred to the acceptance of the $100,000 and the motor vehicle in full and final settlement of the claims. She submitted that this showed conclusively that all claims were the subject of the release. She submitted that there was no basis for an appellate court to interfere with the finding of the primary judge that the conversation which Ms Ashton alleged she had with Mr Pratt on 11 February 2005 did not occur.

So far as the children were concerned, the first respondent submitted that a trust of a chose in action constituted by a contractual promise only exists if the promisee to the agreement clearly intended the third party should be entitled to insist on performance and receipt of a benefit. She submitted that such a trust would not be established merely because there was a benefit to a third party.

The first respondent submitted that there was no evidence that either Mr Pratt or Ms Ashton had the requisite intention to create such a trust. She referred to the comments of Ms Ashton “[h]ow will the trust work?” and the fact that it was a precondition of receipt to any benefit that the children attain mature age.

The first respondent also submitted that the consequences which would flow from the imposition of a trust tended against the conclusion that Ms Ashton and Mr Pratt had the requisite intention, citing as an example that it would probably prevent Ms Ashton from resiling from her agreement to be the mistress of Mr Pratt. In that context senior counsel to the first respondent pointed out that if the trust was fully constituted as at November 2003, the children could call upon it to be enforced regardless of the length of time Ms Ashton had continued as Mr Pratt’s mistress.

The first respondent also submitted that there was no basis for concluding that the February and November 2005 releases were not intended to encompass the children’s claims. She pointed out that the February 2005 release followed a letter from Ms Ashton to Mr Pratt referring to these claims and that they were referred to in the subsequent conversation between Ms Ashton and Mr Gray.

So far as s 23C(1)(c) of the Conveyancing Act was concerned the first respondent submitted that as the release involved a compromise of the children’s claims there was no variation of the beneficial interests in any trust and thus no disposition within the meaning of the subsection. Alternatively, senior counsel for the first respondent submitted that if there was a disposition of the trust property it was a disposition of the whole of the legal and equitable estate and s 23C(1)(c) had no application: see Vandervell v Inland Revenue Commissioners [1967] 2 AC 291.

The first respondent further submitted that there was part performance of the release such that a court would enforce it. She submitted that the acts of part performance were not only the payments of money but also the transfer of the motor vehicle which could only relate to the February 2005 release. She submitted that notwithstanding what was said by Dixon J and Evatt J in JC Williamson, a court would have granted an injunction restraining Ms Ashton from bringing proceedings against Mr Pratt in circumstances where Mr Pratt had wholly performed his obligations under the February 2005 release.

The first respondent also submitted that Ms Ashton did not breach her fiduciary duty in entering into the release. She submitted there was no sensible possibility of conflict in the present case. She pointed to the fact that the children were a family unit for which Ms Ashton was the primary financial provider. She also pointed to the fact that the trust promise did not address the children’s immediate needs. In these circumstances, receiving a cash settlement for, what was at best, an arguable claim, did not put Ms Ashton in a position of conflict.

The first respondent also submitted that even if there was a breach of fiduciary duties the release should not be rescinded. They submitted that there was no evidence that Mr Pratt had the requisite knowledge that would indicate any real or sensible possibility of conflict. Second, she submitted that in any event restitution in integrum was not possible.

Having regard to the conclusions which I have reached on the questions of contract and estoppel, this issue can be dealt with relatively briefly.

As was pointed out on behalf of Ms Ashton, there are a number of pre-conditions for an agreement to constitute an accord and satisfaction. First, the agreement must resolve a genuine dispute between the parties, otherwise it fails for want of consideration: Ballantyne at 398-399 and see also Wigan v Edwards (1973) 47 ALJR 586 at 594-595.

Second, the agreement in question must clearly demonstrate that Ms Ashton intended to release Mr Pratt from her claims in consideration of the payment to be made. As Dixon J pointed out in McDermott at 185, it is necessary to be sure of the intention to take the payments offered in satisfaction of the rights and claims Ms Ashton had against Mr Pratt. Contrary to what was submitted by senior counsel for Ms Ashton, the reference to being sure does not involve some standard of proof over and above the usual civil standard, but that the acceptance must be clear and unequivocal: Ballas v Theophilos (No 2) [1957] HCA 90; (1957) 98 CLR 193 at 196.

Third, to the extent the agreement constituted a release, general words of a release will be constrained by the particular occasion on which it is given: Grant at 123, 125 and 129-130.

The context in which the February 2005 release falls to be considered includes, first, the facsimile letter written by Ms Ashton in December 2004 to which I have referred in par [12]. That letter, written shortly after the termination of the mistress relationship, outlines some of the promises said to have been made and asks for a payment figure for the position in which Ms Ashton found herself.

There followed the conversation in par [13] where Ms Ashton raised the $500,000. Whilst Mr Pratt did not deny the promises, all he indicated he would do was to ask Mr Gray to act on Ms Ashton’s facsimile and transfer the car.

There followed a conversation with Mr Gray referred to in par [15] above. Although Mr Gray said he did not doubt Ms Ashton’s sincerity, his words “Richard will say anything and will do anything to have people like you in the sack” followed by a statement “What will it take for you to go away” does not constitute an acknowledgement of legal liability to make good the promise. Further, Mr Gray made it clear that if the matter was sorted out Ms Ashton would be required to sign an agreement.

In that context it seems to me that a genuine dispute between the parties existed. At least by the time of the conversation with Mr Gray, Ms Ashton was seeking the monies promised whilst Mr Gray on behalf of Mr Pratt was not indicating liability to make the payments claimed but rather indicating that if Ms Ashton signed an agreement, which could only in context mean a release, Mr Pratt was prepared to make a payment to have her go away.

In the circumstances it seems to me that the February 2005 correspondence was offering $100,000 together with the transfer of the car in full satisfaction of the claims against Mr Pratt. That is what is clearly expressed in the email.

It also seems to me that Ms Ashton’s response constitutes an acceptance of the offer. Ms Ashton was asked to acknowledge acceptance of the communication and confirm her bank details. Her acknowledgement of the email in these circumstances and her confirmation of her bank details amounted, in my view, to an acceptance of the offer in final satisfaction of her claims.

Ms Ashton in her submissions referred to the discrepancy between the amount she claimed and the settlement sum. That seems to me just as likely to reflect the parties’ views as to the merits of the claim as distinct from evidencing an intention not to be bound in accordance with the terms of the February 2005 correspondence. Nor do I think the absence of the text message from Mr Bowman or the failure to call Mr Gray can have any effect on the construction of the documents.

Both Ms Ashton and the children relied on the absence of any reference to the trust for the children in the February 2005 correspondence in contending that that particular claim was not released. However, the facsimile letter of December 2004 clearly referred to a gift to the children, albeit described as a “bequeathment”, whilst the conversation with Mr Gray made express reference to the trust. In these circumstances, release from liability to establish the trust was within the contemplation of the parties.

Further, it does not appear to me to be open to this Court to find that the primary judge was in error in rejecting Ms Ashton’s evidence that she had a conversation with Mr Pratt prior to acknowledging the 11 February 2005 email in which he told her that the payment would not be in full satisfaction of the claim. The primary judge had the advantage of seeing Ms Ashton in the witness box and his conclusion could not be said to be glaringly improbable: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29].

It remains to consider the children’s contention that Ms Ashton held the promise to create the trust as trustee for the children. The consequences of this would be that the release was ineffective for non-compliance with the requirement of writing in s 23C(1)(c) of the Conveyancing Act and that Ms Ashton was in breach of her duty as trustee or in breach of the fiduciary obligations owed by her to her children.

It should be noted that the trust contended for by the children is not manifest or proved by the express words of the conversation: see Associated Alloys Pty Limited v ACN 001 452 106 Pty Limited (In Liquidation) [2000] HCA 25; (2000) 202 CLR 588 at [34]. This is because the relevant trust is not the trust contemplated to be established by Mr Pratt for the benefit of the children but rather a trust of the promise to create that trust.

In In re Schebsman; Ex parte The Official Receiver, The Trustee v Cargo Superintendents (London) Limited and Schebsman [1944] Ch 83 at 104, du Parcq LJ stated that “unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the Court ought not to be astute to discover indications of such an intention”. That passage was approved by Mason CJ and Dawson J in Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604 at 618 and by Gummow and Hayne JJ in Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [49].

In the present case, it does not seem to me that an intention to create the trust contended for can be inferred either from the terms of the conversations or the surrounding circumstances. The trust was offered by Mr Pratt so that Ms Ashton would not go back into the escort business and so as to enable her to support the children. It was offered at least in the expectation that Ms Ashton would provide personal services to Mr Pratt on an ongoing basis. It is difficult in these circumstances to see how Ms Ashton could be a trustee of the promise. For example, would she be in breach of her duty as trustee if she breached her promise to provide services in a fundamental respect, thus entitling Mr Pratt to terminate the arrangement and relieving him of his obligation to establish the trust within a reasonable time (if the latter condition can be inferred).

Further, the terms of the trust were by no means settled. Mr Pratt said he would get “his people” to put it together for Ms Ashton. Presumably the precise terms would be the subject of some further negotiation. That tells against Ms Ashton being a trustee for the promise as the subject matter of the promise had not been settled.

In these circumstances, I do not consider that Ms Ashton held Mr Pratt’s promise, to create a trust for her children, as trustee for the children.

It follows that the children’s argument based on s 23C(1)(c) of the Conveyancing Act does not arise. However, it should be noted that the disposal of an agreement to assure property in the future does not fall within that subsection: Baloglow v Konstantinidis [2001] NSWCA 451; (2001) 11 BPR 20,721 at [191] and Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241 at [53].

If, as I have concluded, that promise was not held on trust for the children, then on my view there can be no breach of any fiduciary obligation. In those circumstances the chose in action will be owned legally and beneficially by Ms Ashton, who was entitled to deal with it, including by releasing Mr Pratt from his obligation for a cash sum and a car.

It follows to the extent that Mr Pratt had any obligations arising out of the November conversations, they were released in February 2005.

Ms Ashton submitted that notwithstanding the comment by the primary judge that there was no application to set aside the release under the Contracts Review Act 1980 (NSW) or otherwise, it was clear from the manner in which the case was conducted that she contended that the release was unenforceable. She referred to the reply filed on her behalf, which contained a denial that an agreement was reached in November 2005, particularising that she “lived in fear of and was under the influence of Bowman”, that there was no fresh or sufficient consideration and that it was not the intention of either her or Mr Pratt that the payment of $50,000 would operate as an accord and satisfaction. She pointed out that similar submissions were made in the skeleton argument delivered prior to the commencement of the trial and in the closing written submissions.

Ms Ashton also pointed to the submissions at the trial made by senior counsel acting for her at that time and in particular his description of Mr Bowman as a terrifying character and his statement that what occurred was a continuation of Mr Pratt’s unconscionable conduct.

Ms Ashton said that a number of matters warranted a finding that the November 2005 release was unenforceable. She described the consideration as absurdly inadequate. She pointed to her lack of commercial nous and educational experience, the fact that she received no independent legal advice and that she had no time to review the November 2005 document.

Ms Ashton also contended that the judge should have concluded that the $50,000 was not received by her, submitting that the evidence relied upon by the primary judge was not persuasive and a Jones v Dunkel inference should have been drawn arising out of the failure to call Mr Bowman. Senior counsel for Ms Ashton, pointed to the fact that Mr Bowman was the person selected by Mr Pratt to deal with her and that in those circumstances it would be expected that he be called by the first respondent. Ms Ashton pointed out that no representative of Mr Pratt’s company (Visy) had given evidence, noting that such persons would be in the first respondent’s camp. Senior counsel for Ms Ashton also pointed to the fact that Ms Ashton had denied receiving the $50,000.

Ms Ashton also submitted that the primary judge was incorrect in stating that the effect of her evidence was that Mr Bowman did not force or pressure her to sign the release. She stated that her evidence that he did not force her should be confined to a reference of physical force. She pointed to her evidence that she feared how Mr Bowman would treat her and her family, that she had broken up with Mr Bowman shortly prior to her signing the November 2005 document and that Mr Pratt had told her that Mr Bowman was a mercenary who killed for a living. She also pointed to her evidence that at the time she signed the November 2005 document she wanted Mr Bowman out of her house.

Ms Ashton also pointed to her evidence that the violence and threats of violence from Mr Bowman were overwhelming, that he had previously threatened to kill one of her children and that in October 2005 he had raped her and threatened to kill her children if she reported it.

Ms Ashton submitted that the primary judge did not find that she had read the November 2005 document but only that she had read enough to correct her name and that it was improbable that she did not look at the amount she was receiving.

Ms Ashton submitted that in those circumstances it could not be concluded that she read the receipt clause in the November 2005 document, particularly having regard to the fraught state she was in at the time. She also adopted the submissions of the children, namely, that as a matter of construction the November 2005 document did not release the promise to create the trust.

Senior counsel for Ms Ashton submitted that there was a pleading of unconscionability. That is not strictly correct. In her reply, Ms Ashton alleged no binding agreement was reached. However, it is correct that a number of the matters referred to above could provide the basis for a claim to set aside the agreement as being obtained by unconscionable conduct: see The Commercial Bank of Australia Limited v Amadio [1983] HCA 14; (1983) 151 CLR 447 (Amadio) at 462 and 474-475.

Senior counsel for Ms Ashton sought to overcome the absence of a strict pleading of unconscionability by pointing out that, first, prior to the Judicature Act 1873 (36 & 37 Vict c. 66) at common law a release of a cause of action was required to be by way of deed; and second, that it was, however, possible to have a release in equity, equity enforcing the release by a common injunction preventing the bringing of proceedings based on a cause of action the subject of the release. He submitted, referring to McDermott at 187-188, that the prima facie right to obtain such an injunction was subject to the rules and principles upon which a court of equity acts and that relief would not be granted if the agreement were unfairly obtained or oppressive and the consideration was not illusory or inadequate. He submitted that the same principles applied in considering the efficacy of a release post Judicature Act and Ms Ashton was thus entitled to relief.

The children relied on the same submissions as were made in respect of the February 2005 release and otherwise adopted Ms Ashton’s submissions. Counsel for the children emphasised that if the $50,000 had not been received by Ms Ashton a precondition to the operation of the release would not have been satisfied.

The first respondent submitted that there was nothing in the November 2005 document which would result in it being unenforceable. She submitted that Ms Ashton accepted she was not forced or pressured into signing the November 2005 document and it was open to the judge to find she reviewed the document and noted the payment of $50,000.

Senior counsel for the first respondent pointed out that at the time the document was presented to Ms Ashton she was in a sexual relationship with Mr Bowman so it could not be suggested that his mere presence generated fear. Although he did accept the evidence established Mr Bowman was a volatile character who was capable of instilling fear.

Senior counsel for Ms Ashton pointed out that by 2008 Mr Bowman and Mr Pratt had gone their separate ways and had signed a deed of settlement dated 9 September 2008. He submitted that in those circumstances Mr Bowman was not a person who either party would have been expected to call to give evidence.

Irrespective of whether the matter is considered from the perspective of the pre Judicature Act position that equity would not grant an injunction restraining the bringing of a cause of action the subject of a release where the release was unfairly obtained or oppressive or the consideration was illusory or inadequate (McDermott at 187), or from the perspective of unconscionability in the sense described in Amadio, such a claim should have been pleaded. It was not.

However, even if unconscionability was capable of being raised by reference to the pleadings, in my opinion it was not made out.

The first matter Ms Ashton relied on was her fear of Mr Bowman. In her affidavit evidence she said Mr Pratt told her in October 2003 that Mr Bowman was a mercenary who killed for a living. Notwithstanding, she formed a relationship with him. She described it as violent and abusive in the following terms:

In cross-examination she gave this evidence:

She gave this evidence as to her relationship with Mr Bowman in October and November 2005:

She gave evidence that Mr Bowman was in gaol at the time of the hearing.

This evidence does not demonstrate that Mr Bowman executed any undue pressure on Ms Ashton to sign the document. Although she may have been in fear of him there is no evidence that he threatened her or for that matter pressured her into signing the November 2005 document. Unconscionability or unfairness or oppression on this basis is not established.

Having regard to my earlier conclusion that Ms Ashton had previously released her claims, the contention that the consideration was inadequate or illusory cannot be sustained. Further, there is no reason to doubt that the reference to certain financial claims in the first paragraph of the document included the claim that Mr Pratt would set up the trust for the benefit of the children.

The primary judge said that it was logically improbable that Ms Ashton did not examine the November 2005 document to see how much she was going to receive. That conclusion, made in circumstances where he had the advantage of seeing the witness, was open to him. He was also entitled to proceed on the basis that Ms Ashton had received the money having regard to the receipt contained in the November 2005 document. Although this involved rejecting Ms Ashton’s denial that she received the funds, in my opinion that was a conclusion available to him. Further, his Honour was correct in not drawing any inference against the first respondent arising out of the failure to call Mr Bowman. Mr Bowman was in gaol and he had severed his relationship with Mr Pratt some three years prior to the hearing.

As the promise to create the trust for the children was not held by Ms Ashton as trustee for the children it follows that s 23C(1)(c) of the Conveyancing Act had no application and there was no breach of any fiduciary obligations owed by Ms Ashton to the children.

It follows that, to the extent necessary, the November 2005 document was effective to release Mr Pratt from the claims made by Ms Ashton.

Having regard to the conclusions I have reached and where no reliance was placed by the first respondent on unenforceability on the grounds of public policy, it is unnecessary to deal with this issue.

It follows that the appeal should be dismissed. Ms Ashton should pay the costs of the first respondent. I am presently of the view that there should be no order for costs in favour of the first respondent against the children. Should the first respondent wish to apply for such an order, she should do so within seven days. Directions can then be made for the disposal of such an application on the papers.

Since writing the above, I have had the benefit of reading in draft the judgment of Meagher JA, I agree with his Honour’s observations.

I would make the following orders:

MCCOLL JA: I agree with Bathurst CJ’s reasons and the orders his Honour proposes.

MEAGHER JA: I have had the benefit of reading in draft the judgment of Bathurst CJ. Subject to what follows, I agree with his Honour's reasons for his conclusions concerning the four issues identified at [44] - [47]. The following brief observations are added in support of my conclusions in relation to the first and second of those issues.

As to the first: whether Mr Pratt and Ms Ashton are to be taken to have intended by their conversation in November 2003 to create legal relations turns on whether in the circumstances, by what they said and did, they objectively conveyed such an intention in the sense that reasonable persons in their position would have understood that to have been intended: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 at [24] - [26]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22].

At no stage in the conversation was anything said by either party that conveyed to the other that what was being promised was to be legally enforceable. However, as Windeyer J observed in Placer Development Limited v Commonwealth [1969] HCA 29; 121 CLR 353 at 367, that is not determinative of the matter in question.

The parties to the conversation were a highly successful businessman of mature age and extraordinary wealth - Mr Pratt described himself as having "billions" - and an escort with two children to support who, in the past, had provided her services to Mr Pratt. They had recently resumed their sexual relationship and Mr Pratt wanted Ms Ashton to be his mistress.

The subject matter of the conversation (which is set out by the Chief Justice at [8]) was the satisfaction of Mr Pratt's "needs and wants" which he described as including Ms Ashton providing him with "affection and love". At the same time Mr Pratt sought to emphasise that in offering to make somewhat extravagant payments to Ms Ashton he was not "just there to use (her)" but wanted to help her financially.

At no stage were any promises given by either party that were expressed to be in return for promises from the other. Instead the conversation proceeded with Mr Pratt saying what he wanted and proposed to do. He announced at the outset that he was going "to give" Ms Ashton some money; and, because he cared for her, that he was "prepared to financially support you and your children". There was no identification of any conditions or requirements to be satisfied in return for the making or fulfilment of those generally expressed statements of intention.

Having stated that he would "establish a trust" for the two children, Mr Pratt described why he wanted to do so in terms which conveyed no sense of legal obligation on his part. He said: "I want to do this for you. I am happy to help you. I want you to totally forget about the escort business and I want to support your business venture because I want you to be with me. I want you to do the same thing that Shari did and I want to provide you the luxurious lifestyle that you deserve". Mr Pratt continued: "The only thing I don't have in my life is somebody like you who can provide me with affection and love. I would do anything for you because from the first time I met you I have loved you and whenever you were away all those years I dreamt the day that we would be back together and this time I will make sure that I don't lose you".

Ms Ashton's responses did not suggest that she was undertaking legally enforceable obligations in return for what was proposed or that Mr Pratt would be legally obliged to carry out the various promises that he had made. Her response included: "I can't believe what you are offering me" and "Thank you, thank you very much. I am indebted to you for the rest of my life, I know that". Mr Pratt's replies "I am happy to give this to you" and "You are not indebted to me" were consistent with the position being, as he asserted, that his offers were made out of affection and because he was a "good" person and concerned to provide financial security for Ms Ashton.

There was also an absence of attention in the conversation to matters of detail. Those matters included - the duration of any arrangement; how it might be terminated; what should happen upon its termination; the definition of the services which Ms Aston was required to provide in return for the payments to be made; when the trust was to be established and whether there was to be any qualifying period before the obligation to establish it arose.

The absence of attention by either party to these matters, or at least some of them, would have conveyed or confirmed to a reasonable person in the position of the other what the subject matter and terms of the exchanges already suggested, namely, that the promises or statements of intention made were not to be legally enforceable.

As to the second of the issues identified by Bathurst CJ: the expectation that Ms Ashton pleaded Mr Pratt had induced and on which she relied was that "she had entered into a contractual arrangement with [him] to become his mistress and that [he] would perform the promises the subject of the offer" giving rise to that arrangement. Expressed in this way, the expectation was that there was a legally binding contract between them and that Mr Pratt would perform his promises that were the subject of that contract.

Ms Ashton's case was that after November 2003 and in reliance on the expectation that Mr Pratt was bound to perform those promises, she became his mistress, provided sexual and other services to him and did not provide escort services to others. In those circumstances she maintained that she would suffer material detriment or disadvantage if Mr Pratt was permitted to resile from performance of those promises as he was said to have done about one year later, in December 2004.

I agree with Bathurst CJ that there was no detrimental reliance by Ms Ashton. She had provided escort services to Mr Pratt before and did so again from November 2003. Between November 2003 and October 2004 Ms Ashton received significant sums of money (totalling at least $185,000) in circumstances where she had not but was thinking about providing escort services to others. In 2006 she returned to providing those services and the evidence did not suggest that she was disabled or prevented in any way from doing so from December 2004.

This conclusion makes it unnecessary to consider other questions raised by Ms Ashton's claim to an equitable estoppel. One question is whether the doctrine of equitable estoppel extends to assumptions or expectations created in relation to the fulfilment of promises which are not negative in substance and do not suspend or extinguish existing contractual or other rights, as Brennan J considered to be the position in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; 164 CLR 387 at 425-426. See also the discussion in DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348 at [43]-[48].

Another question, which arises irrespective of whether the doctrine of equitable estoppel extends to such promises, is whether in the circumstances of this case Mr Pratt induced Ms Ashton to assume or expect that there was a contract in existence between them under which Mr Pratt made legally binding promises. That is a necessary element of Ms Ashton's estoppel claim because that is the basis on which it is said that she was induced to act to her detriment by a promise that was intended by Mr Pratt and understood by her to affect legal relations between them: see Waltons v Maher at 405 - 406 (Mason CJ and Wilson J) and 421 - 423 (Brennan J) and the discussion in DHJPM at [50] - [58]. Where nothing express was said to suggest that the parties intended by their conversation to create a contractual relationship and the conversation and circumstances would not have conveyed as much to reasonable persons in their position, the basis upon which it could be found that Mr Pratt made a promise which was intended by him and understood by Ms Ashton to affect their legal relations is not readily apparent.