Get it in writing: why high stakes agreements are best written up.

In this case, Ms Velika Trayans had bought a property in 2002 at Clark Road, Virginia South Australia (“Clark Property”) with her then husband George. In 2004, George’s brother, Mr Leon Pipikos, with his wife Sophie funded the balance of the purchase price on a different property located at Penfield Road, Virginia, South Australia (“Penfield Property”). The Penfield Property was registered in the name of Velika, George, Leon and Sophie even though Velika and George did not contribute to the purchase price.

Leon claims that in 2004, he and George had agreed that Leon would acquire half of Velika’s interest in the Clark Property for $45,000 to be paid largely by funding Velika and George’s share in the Penfield Property. There was no agreement in writing, but in 2009 Velika signed a handwritten note agreeing that Leon was a part-owner of the Clark Property. Apart from this, Leon made mortgage payments on the Clark Property in 2008 and in 2012 he lodged a caveat on the Clark Property claiming an ownership interest.

When the matter went to Court, Leon was arguing that Velika had to convey half of her interest in the Clark Property to him. Leon relied on the doctrine of “part-performance” which, if made out, would give him an interest in the land even though there was no written contract. Leon said that acts such as him funding the purchase price for the Penfield Property, his payment of the mortgage of the Clark Property, the signed note from Velika and the lodging of the caveat entitled him to an interest in the Clark Property.

The High Court did not agree with him. The Court made it clear that the doctrine of part-performance is only made out where the acts relied on “unequivocally and of their own nature” indicate some agreement of the general nature of that alleged. The Court found that the acts that Leon relied on were consistent with some other transaction (such as a loan to George or Velika) rather than the sale of the Clark Property to him. As a result, the Court did not grant him any interest in the Clark Property.

It is clear that “part-performance” or similar doctrines such as “estoppel” are designed to stop injustice where there is no written contract. However, the Court’s narrow approach to part-performance in Pipikos v Trayans makes it clear that it is best to get your agreement in writing if you can, especially if a lot is at stake.

For assistance with drafting any business agreements, please contact Peter North, Director of Business Practice Group at Lewis Holdway Lawyers on (03) 9629 9629.