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Cite as: November 2014 88 (11) LIJ, p.61

When evidence of oral agreement relevant and admissible in relation to subsequent written agreement

Manieri & Anor v Cirillo [2014] VSCA 227 (unreported, 17 September 2014, No S APCI 2013 0129, Nettle AP and Hansen and Santamaria JJA).

A solicitor had prepared a written agreement executed by the parties which read as follows:

“A. In consideration of the gift of $240,000 by the Donor [Mrs Cirillo] to the Donees [the appellants] the Donees hereby agree to look after and take care of the Donor for the rest of her lifetime in a manner that is just and appropriate in all the circumstances.

“B. The Donees agree to allow the Donor to reside in their home at [address in Coburg] or any other principle [sic] place of residence they may own free of rental or any other charges.”

At trial it had been argued for the respondent, Mrs Cirillo, Mr Manieri’s mother, that evidence of a prior oral agreement by the parties ought to be admitted. Under that agreement, there was a term that, if Mrs Cirillo sold her home and contributed $240,000 of the proceeds of sale to the appellants, they would apply the proceeds in reduction of their mortgage and thereafter permit her to live with them in the home indefinitely. The trial judge permitted evidence of the prior oral agreement to be admitted either on the basis that it was needed to give context to the written agreement or that the word “gift” in the written agreement was ambiguous and the prior conversations and conduct of the parties were necessary to construe the word “gift”.

In essence, the Court of Appeal agreed with the trial judge, save the finding at [24]-[25] that there was ambiguity in relation to the word “gift”. The Court stated the law at [13]:

“Whether or not an instrument in writing is intended to be the sole repository of a legally binding agreement is to be determined objectively, in the first place on the basis of the contents of the instrument itself. Accordingly, where a document is complete on its face and does not purport to be a record of only some of the terms of the agreement, it will be treated as the sole repository of agreement unless it is established by evidence dehors the document that it was not intended to contain all of the terms. In this case, the judge found, and we agree, that the evidence of events which preceded the execution of the instrument in writing strongly implied that it was not intended to contain all of the terms of the parties’ agreement . . .” [Endnotes omitted]

The Court of Appeal rejected an argument by the appellants that there was no binding oral agreement. It rejected a further argument that, because the written agreement had been produced by the solicitor as an agreement prepared “as per your instructions”, evidence of the prior oral agreement was inadmissible on the basis that the written agreement was the sole repository of the terms of the parties’ agreement. The Court noted that the solicitor was really the appellants’ solicitor.

Moreover, even if the written agreement was the sole repository of the terms of the agreement, the respondent was entitled to rely upon the oral statements as a collateral warranty. Reference was made to the judgment of Gillard J in Mihaljevic v Eiffel Tower Motors Pty Ltd [[1965] VR 545, 555. An intelligent bystander would draw a reasonable inference that a warranty was intended.

The Court of Appeal said at [26]-[28] that in case it was wrong:

“. . . the evidence of the oral arrangement was admissible in any event in equity as proof of facts which, in the circumstances that obtained, rendered it against conscience that the appellants should retain the benefit of the reduction in their mortgage debt funded by Mrs Cirillo (and thus the consequent increase in their equity in their home) without accounting to her for her ‘gift’. In substance, we accept the argument advanced in Mrs Cirillo’s notice of contention.

“As the Privy Council said in Chalmers v Pardoe, it is a general principle of equity that, where an owner of land has invited or expressly encouraged another person to expend money on part of the land on the faith of an assurance or promise that such part of the land will be made over to the person so expending the money, a court of equity will prima facie require the owner by appropriate conveyance to fulfil his obligation and, if it turns out to be impracticable to effect the conveyance, a court of equity may declare that the person who has expended the money is entitled to an equitable charge or lien for the amount so expended.

“The principle, which is calculated to guard against the unconscionability of a defendant departing from an assumption encouraged by the defendant on the faith of which a plaintiff has changed his or her position to their detriment, is sometimes described in terms of Dillwyn v Lewellan estoppel. But it is not limited to cases where one party has expended money on the land of another on the faith of an assurance that he or she will be granted an interest in the land. As McLelland J explained in Morris v Morris, it is a broad conception of equity which is sufficiently flexible to apply in a great variety of situations, including where a plaintiff has laid out money on the property of another on the faith of an assurance that the plaintiff will be accorded an indefinite right of residence in the property. As McLelland J said, in the latter context the assurance of an indefinite right of residence is the operative equivalent of an assurance or promise to make over part of a defendant’s land.” [Endnotes omitted]

Mrs Cirillo’s equity was best satisfied by an equitable lien or charge to secure repayment of her money and interest.

The appeal failed in substance.


PROFESSOR GREG REINHARDT is executive director of the Australasian Institute of Judicial Administration and a member of the Faculty of Law at Monash University, ph 9600 1311, email Gregory.Reinhardt@monash.edu. The numbers in square brackets in the text refer to the paragraph numbers in the judgment. The full version of this judgment can be found at www.austlii.edu.au.

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