Part Performance

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According to the doctrine of part performance, a contract for sale of land which fails to meet the requirement for written signed contracts (eg, an oral contract) will raise an equitable title if it has been partly performed. When determining whether part performance applies, the court examines (:McBride v Sandland)[1]:

  1. Whether the acts imply the existence of an agreement?
  2. If so, What are the terms of the agreement?

In this inquiry, the following requirements must be satisfied (:McBride v Sandland)[2]:

  • The acts relied on must unequivocally, and in their own nature, be referable to (indicative of) some agreement of the general nature of that alleged.
    • This requires that the acts could only have been done for the purposes of fulfilling the alleged agreement - there can be no other reason why they were performed.
  • The party performing the acts must have been doing so in reliance on the alleged agreement (ie under the assumption that the agreement exists), and the other party must have permitted the acts to be done also because of the agreement.
  • The acts must have been done by a party to the alleged agreement.
  • The alleged agreement must have been complete.
  • The acts must have been done in compliance with the terms of the oral agreement.

If these requirements are satisfied, the court may rule that, since the agreement has been partly performed, it is binding despite the failure to meet the requirement that a contract for sale of land must be in writing. This will transfer an equitable title to the purchaser.

This article is a topic within the subject Property, Equity and Trusts 1.

Contents

Required Reading

Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 312-319 [4.36-4.46]

Introduction

Despite the requirement for written signed contracts for the sale of land, contracts that fail to meet the requirements may still bind the parties in equity under the doctrine of part performance.

  • This means that if there is evidence that an oral agreement to sell or lease land has been partly performed, it may be enforced by the courts.

A quick example of how the doctrine of part performance is applied is the case of Mason v Clarke:[3]

  • Facts: An oral agreement to allow hunting rights and profit-aprendre a lessor and an individual named Mason. The lessee (Clarke) tried to prevent Mason from exercising these rights on the claim that there was no written agreement.
  • Held: Although there was no sufficient memorandum for the oral agreement, the acts done by Mason (preparing and actually hunting rabbits) constituted acts of part performance. He has thus acquired his relevant interest in the land, and can take actions the lessee who tried to deprive him of them.

When Do Acts Constitute Part Performance?

[4] The proper course to determine whether acts of part performance are sufficient to attract the equitable jurisdiction of the court is set out in McBride v Sandland:[5]

  1. Do the acts imply the existence of an agreement?
  2. What are the terms of the agreement?
  • In this inquiry, the following requirements must be satisfied:
  • The acts relied on must unequivocally, and in their own nature, be referable to (indicative of) some agreement of the general nature of that alleged.
    • This requires that the acts could only have been done for the purposes of fulfilling the alleged agreement - there can be no other reason why they were performed.
  • The partying performing the acts must have been doing so in reliance on the alleged agreement (ie under the assumption that the agreement exists), and the other party must have permitted the acts to be done also because of the agreement.
  • The acts must have been done by a party to the alleged agreement.
  • The alleged agreement must have been complete.
  • The acts must have been done in compliance with the terms of the oral agreement.

Application

The test set out above in McBride is a pretty narrow approach - Australian courts are more reluctant in determining that acts constitute part performance.

A good demonstration of the strict approach, and when acts do constitute part performance in Australia is ANZ v Widin:

  • 'The acts of the bank, seen in this context, lead to the conclusion that they are unequivocally and in their own nature referable to a contract of the general nature of that alleged by the bank; namely, that there was an oral agreement between the bank and the bankrupt that the bankrupt would grant a mortgage to the bank over the Bellevue Hill property to secure to the bank its right of indemnity. In rendering itself liable on the bills, the bank altered its position on the faith of the oral agreement'.[6]

Another example of the strict approach is given in Ogilvie v Ryan:

  • Facts: Defendant claimed that she had orally agreed with testator that, in return for her looking after him, she’d be able to live in the house for as long as she wished.
  • Held: The Defendant's actions of changing house and providing unpaid care were not unequivocally referable to a promise to give her an interest in land. They were also consistent with a voluntary association maintained through love and affection, perhaps with an element of greed.
    • Note: this is probably a gender biased decision.

Part Performance in England

Note: this part doesn't apply to Australia. You may choose to just move on to the next section, Examples of Part Performance.

[7] In England, a more liberal approach is adopted when examining whether acts constitute part performance. This can be seen in Kingswood Estate v Anderson:[8]

  • Facts: a life tenancy was created pursuant to an oral agreement. The landlord supplied the tenants a weekly tenant rent book, and eventually gave the tenant notice to quit as if they had a weekly tenancy. The tenants claimed that they had a life tenancy according to the oral agreement.
  • Held: the sole fact of going into possession amounted to part performance. Once there is some evidence of part performance, it is enough to allow the admission of parol evidence to prove the exact terms.

[9] And also in Steadman v Steadman:[10]

  • Facts: a divorcing couple reached an oral settlement (one of the clauses stating the husband make a payment to the wife). When the agreement was drafted, the wife refused to sign. The husband, who already made a payment, claimed part performance; the wife countered that his acts could not be unequivocally referable to an agreement of the kind alleged.
  • Held: the husband’s actions of payment to his wife and forwarding the transfer deed amounted to part performance of the oral agreement.

However, in ANZ v Widin, it was stated by the court that these cases are not followed in Australia.

Examples of Acts Considered Part Performance

[11] There are some acts which are generally considered good examples of part performance:

  • Deposit/taking possession of title deeds - a lender would usually take the borrower's title deeds for security.
    • Equity views this transaction as effective to create a mortgage.[12]
    • It sees the deposit as evidence of an agreement to create a mortgage. It is considered to be part performance by both parties.[13]
  • Improvements to the property by the lessor at the request of the lessee.[14]
  • Payment of the purchase price and making improvements.[15]
  • Taking possession of land.[16]

Examples of Acts Not Considered Part Performance

[17] There are some acts which are generally considered insufficient to constitute part performance:

  • For contracts for sale of land, mere payment of purchase money is insufficient.[18]
  • The making of an application for a planning permission is insufficient.[19]

End

This is the end of this topic. Click here to go back to the main subject page for Property, Equity and Trusts 1.

References

Property Textbook refers to Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008.

Equity Textbook refers to Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012.

  1. (1918) 25 CLR 69.
  2. (1918) 25 CLR 69.
  3. (1955) AC 778
  4. Property Textbook, pp. 313-4 [4.39].
  5. (1918) 25 CLR 69.
  6. [1990] FCA 474 at [77].
  7. Property Textbook, pp. 314-5 [4.40].
  8. [1963] 2 QB 169.
  9. Property Textbook, p. 315 [4.41].
  10. [1976] AC 536.
  11. Property Textbook, pp. 317-8 [4.44].
  12. Russel v Russel (1783) 1 Bro CC 269.
  13. Theodore v Mistford (2005) 219 ALR 296.
  14. Rawlinson v Ames [1925] Ch 96.
  15. Pejovic v Malinic (1959) 60 SR (NSW) 184
  16. Regent v Millett (1976) 133 CLR 689.
  17. Property Textbook, p. 318 [4.44].
  18. Britain v Rossiter (1879) 11 QBD 123.
  19. New Hart Builders v Brindley [1975] Ch 342.
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