COULSON -v- WILLIS [2020] WASC 179 (29 October 2020)

Last Updated: 29 October 2020

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : COULSON -v- WILLIS [2020] WASC 179

CORAM : TOTTLE J

HEARD : 14 MAY 2020

DELIVERED : 14 MAY 2020

PUBLISHED : 22 MAY 2020

FILE NO/S : CIV 2785 of 2019

BETWEEN : TREVOR IAN COULSON

Plaintiff

AND

LORI ANN WILLIS

Defendant

Contract - Breach of contract - Whether breach rendered contract void - Right to terminate - Election to affirm contract - Waiver of right to terminate

Contract - Duress - Whether agreement entered into under duress - Where evidence insufficient to establish duress

Legislation:

Nil

Result:

Declarations made

Category: B

Representation:

Counsel:

Plaintiff	:	Mr G J Douglas
Defendant	:	In Person

Solicitors:

Plaintiff	:	West Family Lawyers
Defendant	:	In Person

Case(s) referred to in decision(s):

Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2020] WASC 14

Barton v Armstrong [1976] AC 104

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40

McKay v National Australia Bank Ltd [No 2] [1998] 4 VR 677

Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583

Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418

Westpac Banking Corporation v Cockerill [1998] FCA 43; (1998) 152 ALR 267

Woolwich Equitable Building Society v IRC [1993] AC 70

TOTTLE J:

(This judgment was delivered extemporaneously on 14 May 2020 and has been edited from the transcript.)

Introduction

1. The parties are in dispute over the net proceeds of sale of a residential property in the Perth suburb of Currambine (the Property). The Property was purchased by the parties in February 2000 with the assistance of a mortgage. At the time the parties were in a de facto relationship. They lived together in the Property until they separated in November 2002.
2. In 2003 the parties reached an agreement about the ownership of the Property. The agreement was recorded in a deed dated September 2003 (the Deed). The defendant agreed to transfer her interest in the Property to the plaintiff in consideration of $25,000 payable in two instalments. The agreement was subsequently varied to extend the plaintiff's time for payment of the second instalment. The plaintiff did not pay the second instalment on the due date but did pay it some seven weeks later.
3. The defendant's interest in the Property was not transferred to the plaintiff. She remained a party to the mortgage and liable in respect of the mortgage debt.
4. The Property was sold in 2019. The net proceeds of sale have been paid into the plaintiff's solicitors' trust account because the parties are in dispute about their respective entitlements to them. The plaintiff contends that he is entitled to all the net proceeds while the defendant maintains that she has a 50% interest in the net proceeds.
5. The present proceedings were commenced by the plaintiff by an originating motion filed on 10 October 2019. By that motion the plaintiff seeks a declaration that the defendant has no right or interest in the net proceeds of sale of the Property and that the moneys held on trust may be distributed in accordance with his directions.
6. The defendant has represented herself in these proceedings, though, she was represented by solicitors before the action was commenced.

Evidence

7. The plaintiff relies upon affidavits sworn by him on 27 September 2019 and 18 December 2019 respectively and on an affidavit sworn by Mark Anthony Cheveralls on 11 May 2020. Mr Cheveralls is the plaintiff's solicitor and he attached to his affidavit a copy of the stamped deed on which the plaintiff relies. The defendant relies on two affidavits sworn by her on 11 December 2019 and 24 December 2019 respectively. The plaintiff objected to certain paragraphs in the defendant's affidavit of 11 December 2019 and I upheld the objections and struck out those parts of the affidavit to which objection was taken.

The facts

8. On the basis of the affidavit evidence I make the following factual findings.
9. The parties commenced a de facto relationship in or about June 1998. They purchased the Property as 'a house and land package' for $122,000. The purchase price was fully financed by means of a loan through Keystart Loans Limited (Keystart). The parties signed the mortgage with Keystart on 3 February 2000.
10. The parties and the defendant's two children moved into the Property in August 2000. The relationship ended in November 2002. The defendant vacated the Property, having entered into a lease of another property on 28 November 2002.
11. In September 2003 the parties formalised their agreed division of assets in the Deed. The Deed was prepared by a solicitor. There was a conflict on the evidence as to who instructed the solicitor but it is unnecessary to resolve that conflict. The operative provisions of the Deed included the following:

In consideration of the mutual promises herein and in consideration of each party forbearing to sue the other the parties AGREE for themselves their executors and assigns as follows: -

1. Ms Willis shall forthwith transfer all her right title and interest in the land, all improvements on the land and all household contents and personal items on the land to Mr Coulson.
2. Upon Ms Willis signing this deed and any associated or necessary document Mr Coulson shall forthwith make payment to Ms Willis the sum of $10,000 and a further sum of $15,000 payable on or before the first anniversary of the date of the said transfer.
3. Mr Coulson hereby indemnifies and agrees to keep Ms Willis indemnified for all payments (including all arrears), claims, demands, suits and proceedings with respect to the mortgage, local government, water, electricity, gas, telephone and insurance, rates, taxes and charges.
4. Mr Coulson hereby indemnifies and keeps Ms Willis indemnified with respect to all other liabilities in his name as principal debtor.
5. ...
6. ...
7. The parties agree that this deed is in substitution for and in full and final settlement of all disputes or claims between them arising out of their financial dealings both during their relationship and subsequently to the finalisation of the relationship.
8. The parties shall respectively signoff further documents and do all further acts and things as shall reasonably be necessary for the purposes of completely effecting the provision of this deed.
9. ...
12. Although the Property was not valued at the time the agreement was made it appears to be common ground there was little equity in the property when the Deed was executed.
13. On 25 September 2003 the plaintiff's parents paid the sum of $14,500 to the defendant in respect of the plaintiff's obligation to make the first payment to the defendant under cl 2 of the deed.
14. On 24 November 2003 the plaintiff and the defendant made a joint statutory declaration in which they declared that:

All statements of deed and amended statements are true and binding, to the arrangements made between ourselves, being Lori Ann Willis and Trevor Ian Coulson

Amendments:

Section/1/2 Ms Willis will forthwith transfer all her right, title and interest in the land, all improvements on the land, upon receiving the final payment on the agreed sum of $25,000 which Mr Coulson will make, being payable on or before the first anniversary of the date of the said signing. Making this statement void, if transaction does not take place at such a time stated.

Section/4

Mr Coulson hereby indemnifies and keeps Ms Willis indemnified with respect to all other liabilities in his name as principle debtor. At such time when a creditor has been paid in full, Mr Coulson shall either contact Ms Willis or the credit provider and have her name removed from the joint account ...

15. The defendant was the proponent of the variation of the agreement and she was the author of the statutory declaration. The statutory declaration was made at the Joondalup Police Station and was witnessed by a police officer.
16. On 12 January 2005 the second payment of $10,500 was transferred to the defendant's bank account.
17. On 24 January 2005 the defendant prepared and signed an authority in the following terms:

24th January 2005

I, Lori Ann Willis, give authority to Keystart, to release my name as mortgagor to the loan: 224949, being of residence [Currambine].

I agree to sign all corresponding paperwork regarding to release of mortgage and title.

The cost of transfer, stamp duty and concerning costs are to be paid by Trevor Ian Coulson.

18. The defendant's evidence was that she signed the authority of 25 January 2005 in circumstances in which of the plaintiff had been sending her emails and had harassed her to sign the release. Her evidence was that she complied, 'under duress, drafted the document and I signed and delivered it, I left it in his letterbox. I thought that would get him to leave me alone and stop following me'. I will return to the issue of duress.
19. The plaintiff did not secure the release of the defendant from the loan agreement. The loan fell into arrears and over several years the defendant received many default notices and demands for payment from Keystart. I interpolate that the Deed did not require Mr Coulson to secure the defendant's release from the loan, Keystart was not a party to the Deed and would not have been obliged to release the defendant if the plaintiff had requested such a release.
20. On 26 October 2010 possession proceedings were commenced by Keystart in this Court. Both the plaintiff and the defendant were named as defendants in Keystart's proceedings. The proceedings were discontinued in January 2011.
21. Following the discontinuance of the possession proceedings the defendant continued to receive default notices and demands for payment from Keystart as well as demands for payment of shire rates and water rates.
22. I accept the defendant's evidence that the receipt of such default notices caused her stress and adversely affected her credit rating.
23. In August 2018, under pressure from Keystart, the plaintiff placed the property on the market and requested the defendant sign an authority appointing a real estate agent to conduct the sale, which the defendant did.
24. On 5 April 2019 the parties entered a contract for the sale of land for $360,000.
25. A settlement agent was engaged to conduct the settlement. The parties were unable to agree on who should receive the net proceeds and on 3 May 2019 the sum of $260,609.47 was paid into the trust account of the plaintiff's solicitors.

The parties' positions at hearing

26. The plaintiff argues that the Deed and the statutory declaration constitute an offer and acceptance, pursuant to which contractual relations were finalised between the parties. Consequently, the plaintiff argues the parties have reached full and final settlement, and the defendant has no further interest in the Property. Alternatively, the plaintiff claims that he is entitled to the full proceeds of the sale in equity by reason of his disproportionate financial contributions to the property since the parties' separation. In this latter respect the plaintiff relies on the principles in Muschinski v Dodds.[1]
27. The defendant has argued that the conditions of the contract were not fulfilled by the plaintiff, because (i) he failed to pay the balance of the $25,000 by the contractual date of 24 November 2004, and (ii) he failed to remove the defendant from the title or indemnify her in respect of all associated debt and liabilities. The defendant argues that as a result of the plaintiff's failure to keep the mortgage payments up to date and pay the shire and water rates she has been caused stress, and her credit rating has been damaged. She argues that the effect of these matters is that she was discharged from her obligation to transfer her interest in the Property to the plaintiff. These submissions were said to be supported by the amendment to the Deed contained in the statutory declaration.

Analysis

28. The Deed constituted an agreement between the parties, the material terms of which were that the defendant would transfer her interest in the property to the plaintiff in consideration of $25,000 paid in two instalments.
29. The agreement was varied by the statutory declaration. The effect of the variation was to make time of the essence in respect of the payment of the second instalment of the agreed consideration. More specifically, I hold that the amendment to cl 1 of the Deed effected by the statutory declaration conferred on the defendant a right to terminate the agreement in the event that the second instalment was not paid on the due date of 24 November 2004. I do not accept that the effect of the variation was that the contact was void immediately upon the failure of the plaintiff to pay the second instalment.[2]
30. Kenneth Martin J has recently synthesised the principles applicable when a breach of contract entitles the innocent party to terminate the contract or, at their election, affirm the contract.[3] It is unnecessary to refer to the applicable principles in details.
31. The second instalment was not paid on the due date. This constituted a breach by the plaintiff that entitled the defendant to terminate the agreement, but she did not do so. The defendant did not give notice to the plaintiff that she was terminating the agreement. When the defendant received payment of the second instalment she retained the payment and did not return it to the plaintiff. The defendant by her conduct in retaining the benefit of the second instalment elected to affirm the contract, and by doing so waived her right to termination.
32. The plaintiff's failure to pay the mortgage and to meet the other outgoings in respect of the Property may have constituted breaches of the plaintiff's express or implied obligations under the agreement but, at most, those breaches, if established, would have entitled her to compensation for breach of contract - any such breaches would not have the effect of discharging the defendant's obligation to transfer her interest in the Property to the plaintiff.

Duress

33. I return now to the issue of duress referred to in the defendant's affidavits. The defendant contends that her relationship with the plaintiff ended because of the plaintiff's misconduct towards her. On one occasion in October 2002 the defendant called the police to attend the property and she and her children left the property on a temporary basis. The defendant alleges that the plaintiff harassed her after the separation. The plaintiff denies that he conducted himself in the manner alleged by the defendant. The affidavit evidence concerning the plaintiff's conduct consists largely of allegation and denial. It is impossible to make findings on the basis of affidavit evidence as to the parties' conduct nearly 18 years after the event save to the extent to which there is documentary evidence.
34. The defendant attached to her affidavit sworn on 24 December 2019 copies of emails sent to her by the plaintiff and a copy of one email sent by her in reply. With the exception of one email sent in April 2003, the emails were sent in February and March 2004. The email sent in April 2003 attached a sound file but that was not played at the hearing. One of the emails sent in 2004 expressed aggression towards the defendant's husband (I do not suggest that the fact that the email concerned the defendant's husband made it any less unwelcome). The other contained criticisms expressed in strident terms of the defendant's personal beliefs. This is the email to which the defendant replied and, in effect, the defendant told the plaintiff to stop contacting her. I accept that the emails were not welcome and I accept that they may well have upset the defendant. Ultimately, however, the emails do not advance the defendant's case because she does not give evidence to the effect that she entered the Deed or the statutory declaration as a result of duress.
35. The defendant did not develop an argument to the effect that she had entered into the Deed and the statutory declaration on the basis of duress. In my view, on the basis of the materials placed before the court it would not have improved her position to have done so. Common law duress concerns the procuring of contractual assent by an illegitimate threat, and considers the quality of the consent or assent of the threatened party.[4] There is no closed category of improper pressure or compulsion which may constitute duress, it therefore includes every species of duress or conduct analogous to duress, actual or threatened.[5] The defendant's evidence falls short of the evidence required to establish duress in accordance with the applicable legal principles.

Conclusion

36. For these reasons I made a declaration that the defendant was not entitled to any of the proceeds of sale held in the plaintiff's solicitors' trust account and the plaintiff was entitled to direct that those moneys be paid out to him.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AS
Associate to the Honourable Justice Tottle

22 MAY 2020

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : COULSON -v- WILLIS [2020] WASC 179 (S)

CORAM : TOTTLE J

HEARD : 14 MAY 2020 & ON THE PAPERS

DELIVERED : 29 OCTOBER 2020

FILE NO/S : CIV 2785 of 2019

BETWEEN : TREVOR IAN COULSON

Plaintiff

AND

LORI ANN WILLIS

Defendant

Costs - Discretion to award indemnity costs - Calderbank offers - Where defence hopeless or doomed to failure

Legislation:

Nil

Result:

Indemnity costs ordered

Category: B

Representation:

Counsel:

Plaintiff	:	Mr G J Douglas
Defendant	:	In person

Solicitors:

Plaintiff	:	West Family Lawyers
Defendant	:	In person

Case(s) referred to in decision(s):

Coulson v Willis [2020] WASC 179

TOTTLE J:

37. On 14 May 2020 I determined a dispute between the parties over the net proceeds of sale of a property that the parties had purchased at a time when they were in a de facto relationship.[6]
38. The plaintiff was successful in his claim. After delivery of ex tempore reasons for judgment the plaintiff's counsel applied for an order that the defendant pay the plaintiff's cost on an indemnity basis. The application was made on the basis that the plaintiff had made a Calderbank offer to the defendant prior to the commencement of proceedings, which if accepted would have represented a better outcome from the defendant's perspective than the eventual outcome and that refusing that offer was unreasonable in the circumstances. It was also submitted on the plaintiff's behalf that the defence the defendant had attempted to raise was hopeless and this was an additional basis upon which indemnity costs should be ordered.
39. The defendant has represented herself throughout these proceedings. I explained the nature of the application to the defendant and stated that in my view the plaintiff was entitled to an order for indemnity costs essentially for the reasons advanced by the plaintiff's counsel. In order to provide the defendant with an opportunity to consider her position with the benefit of a transcript of the hearing I made an order in the following terms:

Unless by 14 June 2020 the defendant files and serves written submissions concerning the question of the basis upon which the plaintiff's costs should be paid in this matter, the defendant is to pay the plaintiff's costs save as to any costs that are unreasonable in amount or have been unreasonably incurred so that subject to the above exceptions the plaintiff is completely indemnified for his costs.

40. The defendant filed a document entitled 'Written Submission - Issue of Costs' on 12 June 2020. Perhaps understandably, given the defendant was representing herself, the points made by the defendant in her submission did not engage in a meaningful way with the principles that guide the exercise of the costs jurisdiction and this point was taken (quite appropriately) by the plaintiff's solicitors. The material filed by the defendant on 12 June 2020 did not constitute a 'written submission concerning the question of the basis upon which the plaintiff's costs should be paid' and it follows that the defendant should pay the plaintiff's costs on an indemnity basis as provided for in the order made on 14 May 2020.
41. I would add this comment, however, the defendant's submissions provide an explanation of why the defendant conducted her defence of the plaintiff's claim in the way she did. It is difficult not to have a degree of sympathy for the defendant but the discretion in respect of costs must be exercised dispassionately. None of the matters raised by the defendant in her submission cause me to alter my view that her defence of the plaintiff's claim was hopeless and it was unreasonable for her to have rejected the Calderbank offer. Thus, even if I had been aware, on 14 May 2020, of the matters contained in the defendant's written submission of 12 June 2020 I would have made an order that the defendant pay the plaintiff's costs on an indemnity basis.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AS
Associate to the Honourable Justice Tottle

29 OCTOBER 2020

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[1] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583.

[2] Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 440 – 442.
[3] Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2020] WASC 14 [257].

[4] Barton v Armstrong [1976] AC 104, 120 (Lord Cross); Westpac Banking Corporation v Cockerill [1998] FCA 43; (1998) 152 ALR 267, 289 (Kiefel J, Northrop & Lindgren JJ relevantly agreeing).
[5] Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, 46 (McHugh JA, Samuels & Mahoney JJA agreeing); Woolwich Equitable Building Society v IRC [1993] AC 70; McKay v National Australia Bank Ltd [No 2] [1998] 4 VR 677, 689 ‑ 690 (Tadgell JA, Batt JA agreeing).

[6] Coulson v Willis [2020] WASC 179.