Evans v Secretary Dept FaHCSIA
Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
Federal Court of Australia (Full Court) [2012] FCAFC 81 (I June 2012)
Case details
Court
Federal Court of Australia
(Full bench)
Citations
[2012] FCAFC 81
Judges
Rares J
Buchanan J
Griffiths J
Appeal from
Federal Court
Administrative Appeals Tribunal
Social Security Appeals Tribunal
Issues
Intention to create legal relations
Case links
Jade ➤
Overview
The case stemmed form alleged arrangements between parents (Gladys and Douglas Evans) and their son (Gordon Evans). It was alleged the son made an agreement with his father to become managing director of his parents’ business, pursuant to which he was promised that when the family home was sold he' would receive a share of the estate. There was no witness and no written record of the arrangement. A question arise about whether there was an enforceable contract (this had implications for Gladys’ right to a pension).
In the federal court one of the issues was whether it should be presumed family arrangements are not intended to be legally binding.
Held (on intention)
The Administrative Appeals Tribunal found there was a rebuttable presumption that family arrangements were not intended to give rise to legal obligations.
The Court disagreed, finding that at least following Ermogenous, no such presumption should be made.
The Court
On the main issue on appeal - intention to create legal relations:
[para 9] The tribunal observed there was “a rebuttable presumption of fact that close relatives such as parent and child do not intend their arrangements to create legal relations” and cited Jones v Padavatton [1969] 1 WLR 328; [1969] 2 All ER 616 in support of this proposition. The primary judge rejected the appellant’s argument that this presumption was not now the law in Australia. The appellant had relied below on what Gaudron, McHugh, Hayne and Callinan JJ had said in Ermogenous 209 CLR at 105-107 [24]-[28] where they doubted the utility of using the language of presumptions in the context of discerning whether parties intended to create legal relationships. The primary judge concluded, after reviewing Jones [1969] 1 WLR 328 and a number of subsequent Australian cases, that their Honours’ observations in Ermogenous did “no more than provide a salutary warning that the presumption is not necessarily determinative nor that its application is mandatory, and that it could be erroneous to afford it undue weight”. He concluded that Ermogenous did not indicate that the presumption applied by the tribunal was no longer good law.
[para 10] The Secretary relied on a number of authorities, some of which were considered by his Honour. In Gray v Gray [2004] NSWCA 408 at [56]-[58], Young CJ in Eq with whom Sheller and Bryson JJA agreed, upheld a trial judge who had distinguished Jones and found a legally binding agreement of loan between a mother and son. In Darmanin v Cowan [2010] NSWSC 1118 at [206]-[214] Ward J discussed the “presumption”, but examined only a part of what the plurality had said in Ermogenous 209 CLR at 105 [24] in respect of the need for an objective appraisal as to whether the parties intended to create legal relations. Her Honour did not refer to the subsequent passages in the plurality reasons that dealt with whether presumptions should be used at all in this context at 209 CLR at 105-107 [25]-[28].
[para 11] The primary judge also referred to Tadrous v Tadrous [2010] NSWSC 1388 at [5], Xu v Shi [2009] NSWSC 955 at [30] and Selen v Selen [2011] Fam CA 310 at [49]-[50]. In the first case, after referring to Ermogenous 209 CLR at 106 [26], Pembroke J said that presumptions in this area may sometimes be unhelpful and did not rely on the presumption in Jones. In the second case, Bryson AJ did not refer to Ermogenous all but, correctly, noted that in cases involving financial arrangements in families there is no legal rule involved apart from the need to consider the facts in each case in order to ascertain whether the parties intended to enter into legal relations. In the third case, Austin J said that there was a “usual expectation”, not a rebuttable presumption, that agreements made in a domestic or family context are not legally enforceable. …
In our opinion, Ermogenous 209 CLR at 105-107 [24]-[28] rejected the use of presumptions as a basis for ascertaining whether parties intended to enter into contractual relations. Their Honours explained that the question in every case was whether an objective assessment of the state of affairs between the parties, in the context in which they were dealing evinced an intention to create contractual relations. That enquiry can take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another and other surrounding circumstances. But, having regard to the potentially broad and diverse nature of those matters, as Gaudron, McHugh, Hayne and Callinan JJ said (209 CLR at 105 [25]):
“… not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so.” Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules”. (emphasis added)
[para 13] That is why their Honours went on to doubt the utility of using presumptions in the context of “family arrangements” or the engagement of ministers of religion, saying (209 CLR at 106 [26]):
“For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition.
More importantly, the use of the language of presumptions may lead, as it did in this case, to treating one proposition (that an intention to create legal relations is not to be presumed) as equivalent to another, different proposition (that generally, or usually, or it is to be presumed that, an arrangement about remuneration of a minister of religion will not give rise to legally enforceable obligations). References to “the usual non-contractual status of a priest or minister” and factors which “generally militate against” a finding of intention to create legal relations (cf Greek Orthodox (2000) 77 SASR 523 at 576 [207] per Bleby J) illustrate the point. The latter proposition may then be understood as suggesting, in some way, that proof to the contrary is to be seen as particularly difficult and yet offer no guidance at all about how it may be done. Especially is that so when the chief factor said to justify the proposition that an intention to create legal relations must be proved (the essentially spiritual role of a minister of religion) is then put forward as the principal reason not to find that intention in a particular case, and any other matters suggesting that there may be an intention to create legal relations are treated as dealing only with "collateral" or "peripheral" aspects of the relationship between the parties (Greek Orthodox (2000) 77 SASR 523 at 576 [207] per Bleby J). In practice, the latter proposition may rapidly ossify into a rule of law, that there cannot be a contract of employment of a minister of religion, distorting the proper application of basic principles of the law of contract.” (emphasis added)
[para 14] The fundamental question, whatever the circumstances of the parties, is whether in the situation in which they were, did their words and conduct objectively assessed, evince an intention that they intended to assume legally binding contractual obligations to each other? The family or other relationship is one circumstance that is relevant.
[para 15] Where a parent asks a child to change his or her life, such as by giving up a job or career to look after a family business or to nurse or care for the parent in old age, on the holding out of a reward, the circumstances may warrant the inference that a legally binding contract was intended: …
[para 16] Much depends on an evaluation of the actual circumstances. There will, of course, be situations in which language or conduct that is capable of being viewed as contractual if it were between strangers, could be viewed differently if it occurred between family members or friends. Although the characterisation of promises made between persons in family, domestic and social relationships is not be governed by a presumption that they are not contractual, nonetheless courts must be careful not to convert informal situations that frequently arise in circumstances that involve love, friendship and concomitant human emotional feelings of duty or responsibility, into the stuff of daily commercial life. Hence, the importance of considering, objectively, all the circumstances in arriving at a conclusion in respect of whether the parties intended to enter into contractual relations, free from suggested presumptions. The surest and safest way to proceed is, as the plurality held in Ermogenous 209 CLR at 106 [26]-[27], by examining objectively the actual circumstances and context of the parties’ dealings to ascertain whether what they said and did evinced an intention to contract as opposed to expressing a sincere, but legally insufficient, promise or commitment that reflected the trust or love shared between them.
[para 17] All that said, there was no error in the finding of the primary judge that the tribunal ultimately made an unappellable finding of fact that it had not been established that Mr Evans and his parents had intended to make a legally enforceable contract. Although the tribunal referred to a rebuttable presumption of fact that close relatives such as parent and child do not intend their arrangements to create legal relations, it is clear that the tribunal’s finding would have been no different if the reference had not been made. Accordingly, the tribunal’s finding that it was not satisfied that the alleged contract was made, has not been shown to be open to review.