It can be difficult to determine the terms of an agreement if the agreement only comprises oral conversations between the parties. This issue arose in the case of Joudo v Joudo [2024] NSWSC 232 which concerned a dispute between a family about the existence of a rental agreement. This case unveils how a court will determine the existence of an agreement and the type of evidence it will rely on.

Background

1. The plaintiff/cross-defendant, Ravina Joudo (Ravina):
   1. alleged that on or around November or December 2011 she entered into an oral agreement with the defendant/first cross-claimant, Marie Joudo (Marie);
   2. the oral agreement concerned a lease of the property situated and known as 25 Robey Avenue, Middleton Grange in New South Wales (Property) by Ravina to Marie for $600 per week in arrears;
   3. claimed that she was owed $181,800 from Marie in unpaid rent.

2. Marie and the second cross-claimant, her husband Ronnie Joudo (Ronnie):
   1. contended that an agreement between the parties provided for Ravina to build a house for Marie and her family to live in for life and that Marie and Ronnie would help complete construction of the house, pay part of the mortgage, pay utilities and maintain the Property; and
   2. further, Maria and Ronnie contended that upon the sale of the Property, the proceeds should be distributed based on their contributions and any surplus should be split equally. Alternatively, Ronnie and Marie sought equitable compensation.

3. The Property was purchased by Ravina and the loan documents were in her name. However, Ronnie and Marie made contributions to the Property by way of payments towards the mortgage, utilities, maintenance of the house and other expenses.

Issues 

For this case note we will focus on Ronnie and Marie’s claim. To establish their joint endeavour constructive trust claim, Ronnie and Marie needed to establish the three elements identified by Parker J in Woods v MacKinlay (No 2) [2021] NSWSC 1510 being:

1. that a joint endeavour was formed between the parties;
2. the parties acquired the property pursuant to their joint endeavour; and
3. that there was a premature termination of the joint endeavour, leaving one party with a legal interest that it was not intended to enjoy beneficially in those circumstances.

Judgment

His Honour:

1. noted in circumstances where each party relies on an oral agreement occurring many years ago, there needed to be “actual persuasion” that the alleged conversations occurred and that reliable contemporaneous records provide the most reliable evidence and assist in assessing the reliability of witness testimony;
2. had concerns about the reliability of Ravina’s evidence. Ronnie was also a combative witness that had lengthy and evasive answers. Marie gave clear evidence to the court and was seeking to do her best in assisting the court, thus, his Honour was more confident in accepting her evidence;
3. dismissed Ravina’s claim and accepted Ronnie and Marie’s claim that there was a joint endeavour;
4. in making his decision, referred to the fact that Ronnie and Marie were involved in making certain choices and carrying certain works in the construction of the home. Additionally, that rent had never been paid by Marie and there was no probative evidence that there were any further discussions about a rental agreement after the first alleged conversation;
5. looked at the contributions to the mortgage, construction of the driveway, removal of soil, landscaping and other improvements to the property in order to determine the value of the respective parties’ contributions; and
6. Ronnie and Marie were to pay rent, but only for the period when the relationship had broken down until the Property was sold, as they were not entitled to occupy the Property and allowed the parties to determine the market rent for the Property themselves.

Takeaway

This case demonstrates how the court will deal with oral agreements where there is a dispute as to the terms. It shows that a court will typically undertake a careful examination of the relevant witnesses to determine their credibility and only accept oral evidence if it is supported reliable physical contemporaneous records. It serves as a reminder to others that it is always best for agreements to be in writing to avoid further complicated disputes as to the terms.

Emerson Lewis has significant experience in drafting different types of agreements. If you require our assistance, please do not hesitate to reach us on (02) 9300 9406.