As lawyers, we sometimes get asked to prepare a “simple agreement”. A ONE PAGER. And I’d love to be able to fit all the possibilities of what might occur in future on one page. Love to.
But we need to level with you: most of the time its just not possible. And if we prepare something that covers the possibilities, in an effort to protect you, its too “wordy”.
So what do you want? Do you want a document that addresses the possibilities and actually aims to provide some protection and some certainty (which, after all, is the reason for the document in the first place), or do you want to deal with the “fall out” if you have a one pager which doesn’t.
You can rarely have both.
Here is a case in point:
Mr F owned a property in Gisborne. In 1993 he transferred a half share in the property to his wife. Mr F’s wife died in 2005 and her estate was administered by the Public Trust.
Mr F was bankrupted in 2006. To avoid his half share of the property being sold by the Official Assignee, a Ms B agreed to pay off the money owed by Mr F to his late wife’s estate and any money owed to his creditors.
A Deed was entered into between Mr F and Ms B under which;
- Ms B would make the agreed payments.
- The Public Trust would transfer the half share in the property of the late Mrs F to Mr F.
- Ms B would need to borrow funds from BNZ to make the payments. Ms B would make the payments on the mortgage. To achieve this, the deed recorded that the property would be transferred to her sole name.
It further recorded that on the fifth anniversary of the Deed, The property would be transferred to Ms B and Mr F so that Ms B would hold a 29th share and Mr F a 71th share in the property. The parties would consider the feasibility of subdividing the property at that time.
There was a falling out in 2008. The fifth anniversary of the Deed came and went and no transfer took place.
Mr F applied to the High Court to have the terms of the Deed carried out or that he be paid damages for breach of contract. Ms B applied to have the claim stuck out. The strike out application was considered by the Court. A ”strike out” application is not a full hearing where credibility of witnesses is assessed. The parties merely have to show an arguable claim.
The Court found that Mr F was an owner and therefore had the ability to bring his claim (despite his name not being on the title). The Court did not accept the claim by Ms B that the transfer could not take place as the BNZ could not be forced to give up its security and accept Mr F as a mortgagor.
The Court also found that there was no evidence before it of the BNZ’s attitude to the transfer and secondly, the Deed clearly made provision for the transfer of the title and the need for Ms B to get the mortgage.
So the application to strike out Mr F’s claim failed.
What’s the moral of the story?
Go back to the top of the article. Obviously this was a complicated arrangement which someone thought could be recorded in a simple agreement.
Unfortunately the simple agreement didn’t work. And it rarely does.
Get proper advice. There is a time and place for DIY and its not when you are dealing with complicated matters like this. Contact Scott Young on firstname.lastname@example.org for professional help, and avoid the “falling out”.