When Can A Deed Of Release And Settlement Be Set Aside?

To set aside a deed of release, there must have been duress or undue influence, fraud or misrepresentation or illegality. A deed may also be set aside if the deed is invalid because of legal deficiencies.

A deed of release and settlement is commonly used to resolve disputes between parties and can be an effective way to end a dispute while avoiding the cost and uncertainty of going to court.

However, not all deeds of release and settlement are enforceable. And some may be deemed unenforceable for a variety of reasons.

There are a number of circumstances that can lead to an application to set aside a deed of release and settlement. When a deed of release is set aside, the release is declared to be of no effect. The parties are then returned to their original positions prior to the execution of the deed.

This article will discuss the reasons why a deed of release and settlement may be declared unenforceable.

Prosper Law is an Australian law firm. Our contract lawyers provide legal advice to individuals and businesses across Australia. Would you like a fixed-fee, no-obligation quote from a contract lawyer? Contact us at onlinelawyer@prosperlaw.com.au or phone 1300 003 077.

Setting aside a deed because of duress and undue influence

A deed of release is unenforceable where it was executed under duress or undue influence.

Duress is when one party is coerced into signing a document against their will. This might include when they are threatened with physical harm or violence.

Undue influence occurs when a party is subjected to undue pressure to sign a document. This might include pressure being applied by a family member or trusted advisor.

In either scenario, signing a release document under duress or unjustified influence may lead to the deed being invalid.

In McPhie v McPhie [2010] HCA 12, the High Court of Australia ruled that a deed of release was unenforceable. This is because the signature was obtained through undue influence. The Court determined that the plaintiff used undue influence over the defendant by threatening to cancel the sale of a property unless the defendant signed it.

Void on the ground of fraud or misrepresentation

A deed of release may be set aside if it was acquired through deceit or fraud.  Fraud happens when one party intentionally misleads the other party in order to get them to sign the document.

For instance, the other party may be able to claim that the deed is invalid if the first party misrepresents the nature or scope of the dispute.

The Queensland Court of Appeal ruled in Eales v Waller [2000] QCA 405 that a deed of release was unenforceable. This was because it was obtained through fraudulent misrepresentation. The Court found that the defendant made false representations to the plaintiff. The defendant falsely represented the amount of money the plaintiff would receive for signing the deed.

Further, in Mitchell v Raza [2003] NSWCA 240, the Court found that the plaintiff had threatened to terminate the defendant’s employment. That is unless the defendant executed a deed of release. For this reason, the Court agreed to set aside the deed.

Illegality can cause a deed of release to be set aside

A deed of release is unenforceable if it is illegal or if it runs counter to public policy.

A deed that releases a person from their obligations under a statute would be unenforceable if it is prohibited by the statute.

One example is a deed that relieves a person of an obligation to pay child support or comply with environmental regulations.

In Pearson v State of New South Wales [2011] NSWCA 31, the New South Wales Court of Appeal held that a deed of release was unenforceable because it was given in exchange for an illegal consideration. The Court determined that the deed was signed in exchange for the defendant not pursuing a workers’ compensation claim against the plaintiff, which was illegal under the Workers Compensation Act of 1987.

Moreover, in the case of The State of New South Wales v Pyne [2002] NSWCA 58, the Court set aside a deed of release also due to an illegal consideration. The Court found that it was executed in exchange for the defendant’s agreement to discontinue criminal proceedings. Because this was illegal, the Court set aside the deed.

Invalidity as a means to set aside a deed

A deed of release may be set aside if it is not executed in accordance with the requirements of relevant legislation. For example, there are requirements for executing a binding contract in Australia.

To be enforceable, a deed must be executed in writing and signed by the parties (among other things). If it is not executed in accordance with these requirements, the deed may be set aside.

In Cooper v Hobart City Council [2010] TASSC 47, the Court found that a deed of release was unenforceable. This was because it was signed by someone who lacked the legal capacity to enter into the agreement. Because the plaintiff had suffered a traumatic brain injury, she lacked the capacity to understand the nature and effect of the deed. Because of this, she could not enforce the deed and it was invalid.

It is important to note that the enforceability of a deed of release and settlement, as well as the grounds for setting it aside, are complex. The legal issues and the specific circumstances of each case must be taken into account.

If you have any concerns about the enforceability of a deed of release, you should seek the advice of an experienced contract lawyer.

How can Prosper Law help?

Prosper Law is a fixed-fee law firm. We provide contract legal advice (including in relation to deeds of settlement and release) for an upfront, fixed price. We help individuals and businesses across Australia.

If you need a lawyer that understands contract law and that will work with you to resolve your legal matter, contact us today for a fixed fee, no-obligation quote.

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