Toh v Su [2017] NSWLC 10

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Mr Toh (the plaintiff) and Ms Su (the defendant) were introduced by a mutual friend, starting going out together and decided to marry. The marriage was later called off. This unfortunate dispute concerns the broken engagement and a claim for return of property and money.Judgment

The plaintiff and the defendant met in 2015 and in about October agreed that in the future they would get engaged and marry. On about 17 October 2015 they opened joint bank accounts. On about 25 October they went to a jewellery store and the plaintiff bought a diamond engagement ring for $15,500, a male wedding band for $500 and a female wedding band for $800. On about 5 December the plaintiff proposed marriage and the defendant accepted. The engagement ring was presented to her. They re-enacted the scene for a photographer. On about 9 December the plaintiff gave the defendant the two wedding bands prior to their departure for a trip to China so that she could show them to her parents.

During the relationship the plaintiff bought some gifts for the defendant including an iPhone, a Longines watch, a diamond necklace, a Louis Vuitton handbag and a Samsonite suitcase. In total those five items cost about $5,000.

In about late February 2016 they purchased a bedroom suite for $2,640. The money initially came by way of a deposit of $1,000 from the joint account and the defendant says she provided that money to the joint account. The plaintiff says he later deposited $2,640 to the joint account and $1,640 was paid from the account to the shop. Later on the order was cancelled. The defendant received $1,000 personally from the owner of the shop, whom she knew, and $1,640 was refunded into the joint account. At the time of the refund of the money the account was empty because the plaintiff had removed a large sum from the account which he says he had put in there to pay for the wedding expenses, and the defendant had removed the balance from the account. The $1,640 remains in the account and is the subject of these proceedings, as is the engagement ring, the wedding rings and the five gift items

On 5 March 2016 there was a meeting between the plaintiff, the defendant and a friend at which it is agreed that the plaintiff said words to the effect that he no longer wished to marry the defendant or be in a relationship with her, and he said “everything that belongs to each party will be returned to each party”. The defendant said “okay”. Thereafter she requested him to take off the shoes he was wearing and return them to her on the basis she had paid for them. He agreed and did so. Later that day the defendant and her mother attended the plaintiff’s parents’ property and took away a wallet she had given him during the relationship, wedding clothes her mother had purchased for the plaintiff as a gift, and two items that her parents had purchased for the plaintiff’s parents and given to them as gifts. A solicitor’s demand to return the three rings and the five gifts was refused.

The plaintiff sues for the engagement ring on the basis that it was a conditional gift, that is a gift conditional on marriage proceeding, and as the marriage did not proceed the gift must be returned. He sues for return of the wedding rings on the basis they are his property and the defendant was a bailee. He sues for return of the five gifts (and if necessary, for the return of the engagement ring and wedding bands) on the basis of an agreement constituted by the words “everything that belongs to each party will be returned to each party” and conduct including the conduct in relation to the shoes and potentially the removal of the gift items by the defendant and her mother.

The plaintiff also sued for the $1,640 in the joint account on the basis it is his money, and the $1,000 paid by the furniture shop to the defendant on the basis that is his money too. The defendant denies that and also relied on a set off because she said she was about $5,000 out of pocket from the dealings with the joint account. The plaintiff responds to that reply by pointing out that he is $10,000 out of pocket in the dealings on the joint account.

The engagement ring

I will start with the engagement ring. The law in Australia about the status of an engagement ring given to a proposed bride when a marriage has not proceeded is not entirely clear based on the authorities to which I have been referred and my researches. In Cohen v Seller [1926] 1 KB 536 McHardie J held that the law had developed by 1926 to the point that where are an engagement ring is given by a man to woman there is an implied condition that the ring shall be returned if the engagement is broken off. An engagement ring still retained the character of a pledge or something to bind the bargain or contract to marry and was given on the understanding the party who breaks the contract must return it. If a woman who received the ring refuses to fulfil the condition of the gift she must return it, but if the man, without a recognised legal justification, refused to carry out his promise of marriage he cannot demand the return of the engagement ring. Of course that was at a time when the action for breach of promise to marry was still available.

By section 111A(1) of the Marriage Act 1961 (Cth), the Parliament abolished the right to recover damages for breach of promise to marry. Subsection 2 provides that the section does not affect an action for the recovery of any gifts given in contemplation of marriage which could have been brought if the section had not been enacted. Thus, whilst the action of breach of promise to marry was abolished, it was contemplated that there might still be recovery of conditional gifts.

I note as well since 1961 the development of the law of Australia represented by the passing of the Family Law Act 1975, which abolished all notions of fault with respect to divorce. It would be surprising, given that statute, if the common law still determined legal rights between parties to a proposed marriage by reference to whether or not their conduct in breaking off an engagement was justified or not. Fortunately in this case, although it was common ground that it was the plaintiff who in fact broke off the marriage, he said that there would be no attempt to demonstrate whose fault it was that the engagement was broken off (i.e. “justification”). On that basis much evidence was excluded on relevance grounds.

One question is whether Cohen v Seller is still good law.

In Ikeuchi v Liu [2001] QSC 054 Muir J held that where a gift is made in contemplation of marriage, as a general proposition the gift is regarded as conditional and the property is returnable if the engagement is terminated, “at least where the termination is initiated by the donee or by mutual consent”: Cohen v Seller [1926] 1 KB 536 and Davies v Messner [1975] 12 SASR 333. In Jenkins v Wynen [1990] 1 Qd R 40 MacPherson SPJ expressed some doubt about the continuing authority of Cohen v Seller in the light of the abolition by section 111A of the Marriage Act of the cause of action for breach of promise of marriage. It was unnecessary in that case to consider the contractual position because of equitable arguments which dictated a particular result. If McPherson SPJ is correct and Cohen v Seller is not good law, it would be necessary to consider whether that makes the gift unconditional, or if still conditional, whether who ended the marriage still plays any role, notwithstanding that the fault aspect would be no longer relevant.

In Papathanaspoulos v Vacopoulos [2007] NSWSC 502 Smart AJ heard an appeal from the decision of a magistrate. In that case it appears the proposed bride had rejected the gift and it was held it wasn’t open to her as bailee to throw the ring in the garbage. The appeal of the proposed bride was dismissed. Justice Smart cited Cohen v Seller and discussed the concept of justification. His Honour held based on Cohen v Seller that if a woman receives a ring in contemplation of marriage and refuses to fulfil the conditions of the gift she must return it and equally if a man has without a recognised legal justification refused to carry out his promise of marriage he cannot demand the return of it. Further his Honour observed that it seems that a woman would also be able to raise a plea of legal justification of the decision to refuse to carry out her promise of marriage, for example, if there was repudiatory conduct and in those circumstances the woman could probably keep the ring. His Honour held the case before him was the reverse of that situation, i.e. if without legal justification the woman refuses to carry out her promise she can’t keep and must return the ring.

It does not appear that his Honour’s comments were necessary for the disposal of case or that his Honour was directed to any authorities subsequent to Cohen v Seller.

The only other authority of assistance is Public Trustee v Kukulu (1990) 14 Fam LR 97 in which the Court of Appeal referred to s111A and decided that not only did it abolish the cause of action of breach of promise to marry, but also any indirect enforcement of such a promise by operation of promissory estoppel.

The essential reasoning for the rule in Cohen v Sellar, as emphasised by McPherson SPJ in Jenkins, is that the ring is not recoverable by the donor if he was the one “in breach of the promise to marry”. It was a conditional gift, the condition being that the innocent party may keep the ring in the event of the marriage not occurring. That is because the party deemed to be in breach of contract loses “the deposit”. If the concept of breach of a promise to marry is no longer applicable, and that is my view based on s 111A and its essential philosophy, which is furthered by the no fault provisions of the Family Law Act, there is arguably no room for the operation of the rule as to recovery in the event the marriage does not proceed. In that event, the law would be that the gift of the ring is simply an unconditional gift.

The alternative is that the gift could still be treated as conditional. If so, on the end of the engagement is the ring returnable to the donor, regardless of who breaks off the marriage (scenario 1), or to the non-breaking party, with no subsequent relevant inquiry of justification (scenario 2)?

In my view given the abolition of the cause of action of breach of promise to marry the gift of an engagement ring should be seen as unconditional.

In my view the two conditional scenarios make little sense.

As to scenario 2 – if questions of fault are irrelevant, why would the law be any further concerned about who “broke off” the engagement? That was a question closely related to the concept of fault and breach of promise. It would give rise to undesirable analysis of how and why a planned marriage is called off.

The substantial reason the gift was considered conditional was that it was connected with the concept of the actionable promise to marry – if you broke the promise you lost the “deposit”. On that basis scenario 1 is now also inapplicable.

It is also not consonant with modern ideas. A gift of an engagement ring should be now seen, like other gifts, as given absolutely (subject of course to contrary intention). Many gifts are given in happy times and with optimism. Sometimes that optimism is borne out, sometimes it isn’t. Why would the law treat a gift of a ring between same sex couples as different? Or between couples who give a ring in anticipation of a de facto relationship starting and prospering?

Any conditional aspect should arise from words or conduct. Here there were none. Any unconscionability can be dealt with by application of different principles (c.f. Muschinski v Dodds [1985] HCA 78, (1985) 160 CLR 583; Baumgartner v Baumgartner [1987] HCA 59, (1987) 164 CLR 137). This court has no power to deal with those matters, and they were not raised.

I also note that the Family Law Act now contemplates property agreements prior to marriage, which gives parties an opportunity to bargain about these matters.

I should add that if Cohen v Sellar does still apply in New South Wales at this time, then on the analysis in Papathanaspoulos v Vacopoulos the defendant is entitled to keep the ring because she did not refuse to fulfil the condition of the gift. On Justice Smart’s analysis she had a legal justification in not carrying out her promise of marriage, namely that the plaintiff repudiated the agreement by refusing to marry her. Further, within the language of Ikeuchi v Liu, there was no termination “initiated by the donee or by mutual consent”. It was terminated by the donor.

I will not order return of the engagement ring.

The agreement to return property

The next issue is whether or not there was a contract constituted by the words “everything that belongs to each party will be returned to each party”, and what was its scope. I find there was no enforceable agreement to return the gift items, for three reasons.

First I do not think the brief exchange of words was intended to have contractual force.

It was a domestic setting, in which an inference against intention to have binding agreements can arise. It was put by the plaintiff that the presumption (of fact) against an intention to contract is inapplicable, despite the domestic setting, because the context was the property of parties ending their relationship (see Merritt v Merritt [1970] 1 WLR 1211). I accept that can be an exception to the presumption against intention to contract in such circumstances, but that only means there is no presumption either way (Merritt at 1214D), and the question is ultimately one of objective intention. I find there was no intention to contract. It was a domestic, emotional setting. The plaintiff suggested they should both give back things belonging to the other. The defendant said “ok”. It was not intended to affect legal rights to retain completed gifts if a party wished to do that.

Second, there is no real content or consideration to the agreement – they were already obliged to do that. The plain meaning of the words was that it related solely to items that belonged to the other party. Items that have been unconditionally gifted by one party to another do not belong to the person who purchased them – they belong to the person to whom they were given. The agreement if it exists does not extend to items which were given by the plaintiff to the defendant during the relationship. The objective meaning of the words used did not constitute an intention to agree to give back completed gifts.

It is put that the defendant’s demand that the plaintiff take off his shoes and give them to her was part of the contract or is post contractual conduct which somehow throws light on the meaning of the contract. I do not agree. I think those words were said in a heightened emotional state by a woman who was very upset at having her engagement broken off by the plaintiff. She was not entitled to have those shoes back because they were gifts made by her; however he gave them back to her because she asked him to. He wanted her out of his life and was in conflict avoidance at that time. He did not want to see her again. He may have felt a little guilty for breaking off the engagement 10 days before the wedding. Those considerations also explain why he permitted the removal of the wallet and items that had been given to him by her parents and items which had been given from her parents to his parents. They had nothing to do with the contract which I find if it existed, was constituted by the words only.

County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 does not require a contrary result. It says that conduct can form part of a contract. However here I find the contract was constituted by the words used. The plaintiff’s emotional demand cannot change the objective meaning of the words. If the contract is constituted by words only, post contractual conduct has no part to play in these circumstances (c.f. Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, which held that the legitimate use of subsequent conduct to construe written agreements is very limited. For example it can be used as probative of surrounding circumstances at the time the contract was made). Here the agreement was oral but the legitimate use of later subsequent conduct is similarly limited. I do not think post contractual conduct here assists in determining the subject matter of the contract or that it constitutes any admission. It is irrelevant.

Wedding bands

The wedding bands are in a different category. The plaintiff purchased those in contemplation of the marriage and with a view to them being exchanged at the ceremony. He gave them to her for safe keeping as a bailee. He paid for them and in my view they remained his property and they should be returned to him. They were his property and he did not intend to give them away to her when he asked her to keep them prior to their trip to China. There was no exploration of or argument about any religious concept that the wedding band given by one party to another must be the donor’s property.

The $2,640

There is a partial agreement on this topic but an analysis is necessary because it is not fully resolved.

There was insufficient evidence to permit a full analysis of the transactions on the joint account and accordingly it is not possible to attempt to equalise the parties’ overall contributions through that joint account. I accept in general terms the plaintiff’s evidence that he is out of pocket about $10,000 and the defendant’s evidence that she would be out of pocket about $5,000 on the account. There was no detailed exploration of the joint account or the arrangements about who would be responsible for what expenses.

The defendant said that she put $1,000 into the bank account and used it to pay a deposit on the furniture. The evidence is that then the plaintiff put $2,640 into the joint account so that as between them he would be responsible for the cost of the furniture. $1,640 of that money was paid out for the balance price of the bedroom furniture. Then he removed a large sum of money from the account which represented money that he had put in for wedding costs. He was probably quite entitled to do that. Then the defendant removed the balance of the account, which sum would have included the $1,000 left of the money that the plaintiff had put into the account representing the cost of the furniture. That had the effect of reimbursing the defendant her $1,000.

The account was then empty. When they cancelled the bedroom furniture purchase, she received $1,000 back directly from the store and $1,640 went back to the joint account.

I find there was an agreement between them express or to be implied that he would contribute the full price into the joint account specifically for that purchase. The purchase did not go ahead and it is an implied term (as so obvious that it goes without saying) that he would get the money back. Therefore he would be entitled to the $1,640 returned to the account. Following the hearing the parties agreed that the $1,640 has been resolved between them.

The plaintiff however sues for the $1,000 which was paid back to the defendant directly. I am satisfied she has been doubly reimbursed for her $1,000 contribution, so must pay him $1,000.

Conclusion

In the circumstances I propose to order that the defendant deliver to the plaintiff the two wedding bands and pay the plaintiff $1,000. The balance of the claim will be dismissed.

I will hear submissions on the precise orders to be made, including as to interest and costs.

Magistrate R Brender

Downing Centre Local Court

27 June 2017

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